Author : Sunaina Kumar

Issue BriefsPublished on Jul 23, 2021 PDF Download
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The National Rural Livelihoods Mission: Drawing Lessons from the First Ten Years

The National Rural Livelihoods Mission was launched in June 2011 to create institutional platforms for the rural poor, enabling them to increase household incomes through livelihood support and access to financial services. This brief evaluates the achievements of the programme in its first 10 years. It finds that the Mission has met with some successes in improving the lives of rural women, who are the backbone of the programme, and consequently their families. These achievements are mainly in the areas of social capital building, community mobilisation, and a certain degree of access to finance. Today the Mission will have to shift its focus to livelihoods, especially amidst the massive economic fallout of the COVID-19 pandemic.


Attribution: Sunaina Kumar, “The National Rural Livelihoods Mission: Drawing Lessons from the First Ten Years,” ORF Issue Brief No. 478, July 2021, Observer Research Foundation.


India has had a long history of organising Self-Help Groups (SHGs), which are voluntary groups of around 10 to 20 women that meet on a regular basis and pool savings from each member. The group funds are used for internal lending to the members. The SHGs are linked to banks that give them loans at low interest rates to enable them to take up livelihood activities. The NGO, Myrada, from the south started the SHG movement in India in the 1980s.

In 2011, the UPA government launched the National Rural Livelihoods Mission (NRLM) with support from the World Bank to improve the livelihoods of poor rural people and boost the rural economy,[1] through the concept of “universal social mobilisation.”[2] The NRLM utilised the ecosystem of SHGs in these rural districts to execute the Mission. In 2015, the NDA government renamed the Mission, Deendayal Antayodaya Yojana (DAY-NRLM).

Today, ten years since the NRLM was first launched, India has the largest network of women’s SHGs across the world. As of May 2021, there are 6.9 million SHGs in India with 75 million members across 783,389 villages.[3] During its launch, the programme declared its goal of covering 70 to 80 million rural poor households in ten years,[4] to include every last village in India. In the current era of COVID-19, the SHGs across the country’s rural districts are proving themselves to be crucial in mitigating the manifold impacts of the pandemic. In Bihar, for example, the initiative, didi ki rasois (literally, “sister’s kitchens”)[5] took off—community kitchens run by SHGs in district hospital grounds. Community kitchens in states like Kerala, Odisha, Jharkhand, and Uttar Pradesh have fed migrant workers and other poor families. Women in SHGs who work as ‘bank sakhis (banking correspondents)’, facilitated access to cash transfers for the COVID-19 relief package. SHG members have also conducted information campaigns, and under their own roofs produced essential pandemic-era commodities like masks, sanitisers, and protective gear.

This brief makes an assessment of the first 10 years of the NRLM. It outlines the history of the self-help movement in India; examines the specific elements of the NRLM that have contributed to its successes in creating economic and social impacts; and looks ahead at the next phase of NRLM, which will focus on building livelihoods as well as promoting greater convergence with government schemes such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the Public Distribution System (PDS), National Rural Health Mission, and National Social Assistance Programme.

NRLM has multiple, overlapping goals: poverty reduction, women’s empowerment, and improving outcomes in health, nutrition, and education. The programme has been effective in providing members access to finance by promoting savings, providing grants, and linking them to banks so they can obtain loans. It has also contributed to improved development goals related to education, health, and access to public services. There are specific, undeniable achievements: for example, the presence of an SHG in a village is associated with improved maternal and child health knowledge and practices.[6]

Various factors have contributed to the successes of NRLM. These include the scaling up that took place through a unique public, private and community partnership model with thousands of institutions involved such as NGOs, banks, and central and state governments; and investment in building capacity of SHGs by gathering them in a federation of grassroots SHGs at the village level. 

The Beginnings of NRLM

Across India, it is the southern states—Andhra Pradesh, Tamil Nadu, Kerala, and Karnataka—that had a headstart in mobilising women into SHGs. With active support from their governments, these states have been most effective in widening the coverage and expanding membership into the SHGs, which are the main conduits of the NRLM.

Figure 1: Rural Poor Households Organised into Groups (2011, in %)[7]

As the graph shows, there was a gap in SHG strength at the time the NRLM was rolled out in 2011. For states like Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh, Rajasthan, Orissa (now Odisha) and Chhattisgarh, only an average of 14 percent of the rural poor households were organised at the time, compared to an average of 87.5 percent of the rural households in Andhra Pradesh, Kerala, and Tamil Nadu. The Mission was first rolled out in the states with the highest poverty rates,[a] which altogether accounted for 90 percent of the rural poor in the country.

In the recent years, the SHG movement has grown deep roots in states in the east. Figures from 2021 show that Bihar has 991,102 SHGs, Odisha has 470,406, and West Bengal has 877,953.[8] So widespread is the movement across the rural landscape of these states that there are emerging reports of SHGs becoming a reliable voter base for political parties.  In Odisha, for example, media accounts say these organised women “have stood rock-solid” behind the ruling BJD party.[9]

The initial rollout phase for NRLM faced delays, though implementation has improved in recent years. From 2014-15, SHG formation became a universal and integral strategy for rural development, as states from North and North East India saw a considerable expansion.[10] The NRLM now covers 34 states and Union Territories.

Figure 1. The Scale of NRLM (as of March 2020)

Note on Key: VOs – Village Organisations; CLFs – Cluster-Level Forum
Source: World Bank, ‘”Institution Building and Capacity Building in NRLM”
What Has Worked for the NRLM

Federation of SHGs

The uniqueness and strength of the NRLM lies in two features that studies have underlined:[b] building community-managed institutions for the rural poor, and creating a community cadre of SHG members. Under the NRLM, SHGs are federated into village organisations (VOs), which are grouped further into Clusters and Blocks. These federations are supported by units at the national, state, district, and sub-district levels. Federations provide a platform to the members and also act as knowledge centres, as well as hubs of production and commerce.

The system of federating the SHGs has become key to the NRLM’s successes. It has led to higher household expenditure on education and ownership of productive assets like livestock and farm equipment. Federated SHGs showed an improvement in women’s confidence, especially if they were educated, when dealing with local government officials and community leaders.[11]

Creation of community cadre

Based on the premise that the community learns better from its own, the programme strengthens the capabilities of rural women by creating a cadre of them. In every village, women with higher levels of schooling and leadership potential are identified by the SRLM coordinators and trained in skills like bookkeeping, social and group management, business management, and financial literacy. These community resources persons (CRPs) then train other SHG members.[12]

Social Impacts of NRLM

The NRLM has enabled rural families to negotiate for greater access to essential services such as education and healthcare. It has had an impact on food security, improved school enrolment, access to land for women to grow food, and on gender issues with women’s groups taking on issues like dowry, child marriage, and discrimination against girls.[13]

A 2015 sociological analysis by the World Bank of the State Rural Livelihood Mission in Bihar has demonstrated how the NRLM has led to higher levels of empowerment and mobility among women.[14] It found that the programme has provided economically and socially disadvantaged women access to a network of people and new systems of knowledge, which then enabled them and allowed them to challenge deep-seated, traditional structures of power in their families and communities that were biased against women.

Bringing women into the public sphere

A 2019 report in Odisha by the World Bank shows that members of SHGs were likely to pursue the various important issues facing their communities, such as domestic violence, the functioning of the PDS, and the provision of mid-day meals in schools.[15] The report found a 12.8-percent increase in an index of willingness among the women in the state, to pursue institutional responses to such community problems.

Meanwhile, a 2020 survey by Ashoka University in Maharashtra reported that SHGs—in the overall context of the NRLM—have had a strong impact on a range of indicators related to women’s empowerment, including political participation, knowledge of administration, financial literacy, mobility, and decision-making.[16] This, despite the fact that more than 90 percent of SHG members did not take part in any new income-generating activity that used SHG funds. The results in the Ashoka University survey were stronger for members from among the most marginalised caste and tribal groups, who are indeed the priority for the NRLM.

Increasing women’s participation in the work force

In 2019 the World Bank examined the NRLM’s impact on female labour force participation through women’s self-employment.[17] The study covered the states of Jharkhand, Maharashtra, and Madhya Pradesh, and collected data from 2011, the year the mission was rolled out, up to 2016-17. Over those five years, the villages with NRLM intervention experienced an overall increase of 20.4 percent in self-employment livelihood activities, which in turn led to a 13.6-percent increase in women’s participation in the work force.

The implications of this study are important in the context of India’s overall declining labour force participation rate. According to the Periodic Labour Force Survey 2018-19, the Female Labour Force Participation rate (FLFPR) was 19.7 percent in rural India.[18] The gap is only likely to widen amidst the COVID-19 pandemic.[19]

Economic Impacts of NRLM

In the country’s most backward rural districts—the very targets of the NRLM—the poor, especially the women among them, do not have access to formal credit and are dependent on local money lenders who charge usurious interest rates. The NRLM has established structures for financial literacy and credit counseling for women. It has mobilised household savings, and provided access to credit and linkages to banks. It enrolled SHG members and their spouses for health, life and disability insurance. It has developed skills and capabilities for women’s self-employment.

Increasing incomes

The NRLM has had a significant effect on household incomes. Its multi-sectoral approach to financial inclusion—combining micro-loans and savings, asset transfers, social networks and skilling—has been found to be influential in increasing family incomes.

In 2020, researchers from the International Initiative for Impact Evaluation (3ie) examined the impact of NRLM in nine of India’s poorest states.[20],[21] They found that an additional 2.5 years of membership in SHGs increases total household income by 19 percent, and gains in savings of 28 percent. At the same time, while 48 percent of SHG loans were used for consumption purposes, only 19 percent were used for productive purposes like supplementing their livelihood. Only 65 groups across the nine states that were studied, had initiated some form of entrepreneurial activities.

Improving decision-making for women

Certain studies have found that the NRLM has had positive effects on giving women more voice in household decision-making, albeit marginal so far. A March 2021 report by 3ie, for example, has found that the loan amounts offered by most SHGs may be too small to have an impact on how women are accorded decision-making powers in their families.[22]

The report specifically looked at the state of Rajasthan, where each SHG receives an average of INR 100,000 in community investment funds (CIF).[c] Bihar, meanwhile, channels a much lower INR 30,000 in CIF per SHG. Therefore, according to the findings of the report, any improvement in women’s household decision-making is related to access to more significant amounts of funds and loans. The study recommends centralised intervention from the NRLM in the poorer states whose SRLM funds may not be able to match the level of funding available in those that are better-off.

Persistent Challenges

The NRLM prioritises livelihoods as primary pathway to subsidiary (or social) impacts including improvement in health, nutrition, education, mobility, and women’s empowerment. To be sure, however, the social impacts of the programme have been demonstrably stronger.

In September 2011, the Planning Commission set up a Working Group on National Rural Livelihoods Mission[23] to review its framework for implementation. A forward-looking document, it laid out a roadmap for the next two decades. The report was prescient in underlining the main problem of the Swarnjayanti Gram Swarozgar Yojana, the predecessor to NRLM. This challenge persists with NRLM: most SHGs remain crowded in low-productivity, primary-sector activities, mainly agriculture, and are bogged down by low absorption of technology. The report indicated that the success of NRLM would depend on raising the abilities of members to diversify into other high-productive activities. A decade since the NRLM was launched, it is an objective that the programme has yet to achieve.

The NRLM recognises that livelihoods for the three “layers” of the poor population—i.e., ‘less poor’, ‘middle poor’, and ‘poorest/vulnerable poor’—are not identical. In order to target them correctly, there is a need to map their livelihoods, vulnerabilities, and social realities, and then evolve strategies to counter these specific vulnerabilities.

There have indeed been policies and interventions that have sought to bridge this gap. To begin with, loans extended to SHGs are collateral-free and can be given without specification of purpose or activity. In 2020, the government announced a stimulus as part of the COVID-19 relief package by doubling collateral-free loans to women’s SHGs from INR 1 million to INR 2 million. Yet, the average ticket size of loans taken by these women is INR 1.8 million.[24] Most SHGs remain confined to being microfinance units rather than vibrant business entities. Often, women themselves are unwilling or inhibited to scale up businesses or do not find support within their families.

Imperatives for the Next Phase

In its next phase, the NRLM aims to improve livelihoods by expanding entrepreneurship and creating income opportunities both on- and off-farm. In 2019, the central government signed an agreement with the World Bank for the National Rural Economic Transformation Project (NRETP)[25] in 13 states.[26] It will build on the existing work done by NRLM to promote women-owned and women-led enterprises, enable them to build businesses and access finance, markets and networks, and generate employment.

NRETP will include start-up financing options for enterprises and plans to integrate digital financial services to help small producer collectives scale-up and engage with the market. It will target nearly 64,000 women-led or women-owned enterprises to have access to funds from financial institutions. The project aims to enable 500,000 SHG member households in accessing digital financial services by 2023-24.

The NRLM has now set itself the target of leveraging bank credit of some USD 42 billion, and aims to deploy SHG members as banking correspondents for doorstep delivery of financial services in about 200,000 Gram Panchayats (about 80 percent of total Gram Panchayats in the country) and covering 40 million SHG members under life and accidental insurance schemes.[27] Increasing the network of female banking correspondents has two advantages: it represents employment opportunity, and boosts the confidence of other women to be part of the banking system.

The implementation of NRETP has been set back by the pandemic. Given the constraints on economic growth in rural India, compounded by COVID-19, NRETP will likely face more serious challenges. Building the capacity of SHG members by training them in digital and financial literacy will be critical, but a daunting task considering systemic challenges and low literacy levels of women in rural India (56.8 percent, according to National Sample Survey, round 71). Digital literacy continues to be the missing link for women in rural India and although the programme has taken on the task of digitisation of processes of SHGs for monitoring and evaluation, and imparting digital skills to members, there is no clear trajectory to achieving it.

Need for greater convergence

Since 2015-16, ‘convergence’ has been a key strategy for the NRLM.[28] It links SHG members with other government schemes like the MGNREGS, PDS, social insurance, and pensions. However, the March 2021 study by 3ie reported that only 40 percent of SHGs in the sampled states were linked with such convergence activities.[29]

As with other community-based and development projects, the members of SHGs—all of them poor and marginalised—remain mere beneficiaries of the programmes and have little control over the decision-making process.[30] Seeking the convergence of SHGs with panchayats will address this concern. The southern states[d] have taken a lead in promoting the participation of women in SHGs in gram sabhas.[31] Other states like Odisha, Assam, and Jharkhand are learning from best practices in these states to support their own convergence strategies.

As of 2020, the central government announced, SHGs under the NRLM are being trained to participate in the ambitious Gram Panchayat Development Plan (GPDP) by preparing the Village Poverty Reduction Plan (VRRP) that will be integrated with the GPDP. The demands under VRRP fall under five categories: social inclusion; entitlement; livelihoods; public goods and services; and resource development and social development. It will provide a platform for women’s voices to be included in village development, although it is too early to know the kind of impact that VRRP could potentially have.

Extending convergence to livelihoods

In the succeeding years, convergence can be extended for livelihoods and market access. Kudumbashree, State Rural Livelihood Mission in Kerala, has demonstrated how convergence can be reimagined by linking it with government procurement. Across the state, 242 Kudumbashree units, owned and operated by more than 2,000 women, supply dietary supplements for children to 33,000 anganwadis (rural childcare centres). They have a collective annual turnover of over INR 1 billion.[32]

Moreover, the NRLM should tap the startup and private sector space. Here, it is Kerala’s Kudumbshree which again has shown the way. In 2019, it tied up with Amazon for its programme Amazon Saheli, through which it promotes women entrepreneurs by selling their products to Amazon customers in categories like grocery, and home and fashion accessories.[33] If the Mission is to transition from the old world to the new world, every SRLM will need to create these models.


The COVID-19 pandemic has disrupted the functioning of SHGs—the backbone of the NRLM. Consequently, there has been a massive impact on the savings and income-generating activities of these SHGs. The NRLM should be strengthened in its next phase.[34]

Compared to MGNREGS, the other flagship programme by the Ministry of Rural Development that also plays a pivotal role in income-generation for the rural poor, the NRLM has historically received minuscule allocations. In the Union Budget for 2020-21, MGNREGS was allocated INR 615,000 million, which was later enhanced by an additional INR 400,000 million, while NRLM received a much lower INR 92,100 million. For 2021-22, the NRLM was allocated INR 136,780 million, or an increase of 48 percent from last year.

That the current FY budget is channeling more funds to the NRLM is a step in the right direction. Putting more money into the Mission can help make it a truly transformative programme that will address livelihood challenges that have only worsened because of COVID-19. If the most crucial issues identified in this brief could be addressed as a matter of urgent concern, the NRLM could yet prove to be key to rebuilding lives in rural India.

About the Author

Sunaina Kumar is a Senior Fellow with the Centre for New Economic Diplomacy at Observer Research Foundation.


[a] Assam, Bihar, Chhattisgarh, Jharkhand, Gujarat, Maharashtra, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh, West Bengal, Karnataka, and Tamil Nadu.

[b] Among the studies on federation of NRLM, see: SHG Federation: An Institutional Innovation to Sustain SHGs, Pradan, 2012.

[c] Under the NRLM, SHGs receive various kinds of funds, among them, CIF. The other funds fall under Revolving Fund as corpus to meet the members’ credit needs directly. It also provides Vulnerability Reduction Fund to SHG Federations at village level to address vulnerabilities like food security, health security.

[d] Kerala, Tamil Nadu, Andhra Pradesh, and Karnataka.

[1] The World Bank, “The National Rural Livelihoods Project”, July 5, 2011.

[2] Deendayal Antyodaya Yojana (DAY-NRLM).

[3] SHGs under NRLM, Ministry of Rural Development.

[4] Deendayal Antyodaya Yojana (DAY-NRLM).

[5] Vijay Swaroop, “Bihar government plans Didi ki Rasoi canteens in all district hospitals”, The Hindustan Times, January 3, 2021.

[6] S Saha, M Kermode, PL Annear, “Effect of combining a health program with a microfiance-based self-help group on health behaviors and outcomes” November 2015.

[7] National Rural Livelihoods Mission, Programme Implementation Plan, Ministry of Rural Development.

[8] SHGs under NRLM, Ministry of Rural Development.

[9] Debabrata Mohanty, “Separate department for Odisha SHGs as their growth continues under Naveen Patnaik”, March 02, 2021, The Hindustan Times.

[10] The World Bank, “Institution Building and Capacity Building in NRLM“, March 2020.

[11] Harsh Vardhan Sahni, Bidisha Barooah, “Impact Evaluation of the National Rural Livelihoods Mission”, October 2020.

[12] The Financial Express, Anjini Kochar, “How National Rural Liveilhoods Mission Can Help in Transforming Women’s Lives“, November 23, 2019.

[13] The World Bank, “The National Rural Livelihoods Project”, July 5, 2011.

[14] Paromita Sanyal, Vijayendra Rao, Shruti Majumdar, “Recasting Culture to Undo Gender”, September, 2015.

[15] Shareen Joshi, Nethra Palaniswamy, Vijayendra Rao, “Impact Evaluation Framework and Results: Odisha Rural Livelihoods Project”, 01 January 2019.

[16] Ashwini Deshpande, Shantanu Khanna, “Can Weak Ties Create Social Capital? Evidence from Self-Help Groups in Rural India” February 2020.

[17] Vivek Pandey, Abhishek Gupta and Shivani Gupta, “Labor and Welfare Impacts of a Large-Scale Livelihoods Program” June 2019.

[18] Periodic Labour Force Survey 2018-19.

[19] The International Labour Organization, “Women at Work in G20 Countries”, 2020.

[20] Bihar, Jharkhand, Odisha, West Bengal, Uttar Pradesh, Chhattisgarh, Madhya Pradesh, Maharashtra, and Rajasthan

[21] Anjini Kochar, Bidisha Barooah, Chandan Jain, Geeta Singh, Nagabhushana Closepet, Raghunathan Narayanan, Ritwik Sarkar, Rohan Shah, “Impact Evaluation of the National Rural Livelihoods Project”, October 2020.

[22] Anjini Kochar, Closepet Nagabhushana, Ritwik Sarkar, Rohan Shah, Geeta Singh, “The Policies that Empower Women”, March 2021.

[23] Report of Working Group on National Rural Livelihoods Mission”, September 2011.

[24] Divya J Shekhar, “The Economic Potential of Women Self-Help Groups”, Forbes, August 3, 2020.

[25] Press Information Bureau, March 5, 2019, “Government of India and World Bank Sign $250 Million Agreement for the National Rural Economic Transformation Project (NRETP) to boost Rural Incomes across 13 States in India”. 

[26] Assam, Bihar, Chhattisgarh, Jharkhand, Gujarat, Maharashtra, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, West Bengal, Karnataka and Tamil Nadu

[27] Gayatri Acharya, Alreena Renita Pinto, Deepti Kakkar, Deepti Kakkar, “Social Inclusion: Implementation, Outcomes and Key Learnings“, March 2020.

[28] Deendayal Antyodaya Yojana.

[29] Harsh Vardhan Sahni, Bidisha Barooah, “Impacts of the National Rural Livelihoods Project on institution building, women’s empowerment and convergence“, March 2021.

[30] Parijat Ghosh, “The Unintended Consequences of SHGs”, September 18, 2018, Indian Development Review.

[31] Paromita Sanyal, Vijayendra Rao, Umang Prabhakar, “Oral Democracy and Women’s Oratory Competency in Indian Village Assemblies“, September 2015.

[32] Shantanu Kumar, Alreena Renita Pinto, Arshia Gupta, “Leveraging Institutional Platforms to Promote Convergence“, March 2020.

[33] Business Standard, “Amazon India partners with Kudumbashree to empower women“, February 27, 2019.

[34] UN Women, “COVID-19 and its economic toll on women: The story behind the numbers“, September 16, 2020.

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