The Central Government has changed the funding process under the National Rural Livelihood Mission (NRLM) as the existing method led to widespread misuse and has not leveraged bank credit to the required extent. Capital subsidy of the existing system has been abolished and replaced with interest rate subsidy.
Union Rural Development Minister Jairam Ramesh informed this to Chief Minister Naveen Patnaik in a letter while apprising him about six important decisions taken on NRLM by the Union cabinet in its last meeting.
“So far, funding process to the poor households was being approved in the form of capital subsidy linked to bank credit,” Ramesh said and added, “Our experience has been that this led to widespread misuse and has not leveraged bank credit to the extent needed.”
At present, 20 per cent of the NRLM allocation is earmarked for special projects, out of which 15 per cent is for placement linked skill development projects and five per cent for innovative projects.
The Union Minister said the earmarking for placement linked skill development projects have been increased from 15 per cent to 25 per cent as these have huge potential to provide employment to the rural youth.
Ramesh said a National Rural Livelihood Society will be set up by the Centre under the Society’s Registration Act to provide technical and management expertise to the State Governments to implement NRLM.
The States would be represented in the executive committee of the society, the Minister said adding that the society structure would enable recruitment of high quality professionals and provide flexibility to create partnerships and facilitate innovations.
Under existing implementation framework, only rural households included in the official BPL list could be included in the NRLM. Now the BPL requirement has been done away with and membership of the women SHGs to be formed under the NRLM will be determined through a well defined, transparent and equitable process of participatory identification of the poor, he said and added that this process has already been adopted in Andhra Pradesh, Kerala, Tamil Nadu and Odisha.
The list finalised through this process will be prepared under the responsibility of the gram sabha and approved by the gram panchayat, he said and added that the process will also have a set of exclusion criteria, automatic inclusion criteria and set of deprivation indicators for giving priority to rural women to be enrolled as members.