Kudumbashree: Life-Line of Kerala’s micro-finance

Kudumbashree: Life-Line of Kerala’s micro-finance

Abstract

Micro-finance has emerged as a very important sector which gives economic freedom to the
poor people. Micro-credit fulfils the credit requirements of under-privileged, who until
recent times were not a part of formal banking system however; micro credit is not the
ultimate solution to improve the well-being of poor people. Research proves that most of the
Indian micro finance institutions (MFIs) only focus on micro-credit rather than giving a
significant to other products. Now one organisation that really focus for the overall
development for poor people known as –Kudumbashree. Kudumbashree, which means
prosperity of the family, is well known government of Kerala project which focus for the
overall the development of the poorest of the poor. This paper deals with empirical study of
Kerala Kudumbashree project.

Author: -- Amarjeet kumar

(PGDM, Marketing and Finance)

Freelancer Researcher

amarsxcran@gmail.com
Kudumbashree: Life-Line of Kerala’s micro-finance

INTRODUCTION

With the objective to eradicate poverty in the state within 10 years , state government with
the support of central government and national agricultural development bank set up a
establishment called state poverty eradication mission or kudumbasree

This mission has taken poverty alleviation as primary aim and tries to implement through the
leadership of local self government and society based groups. In spite of the commendable
development we could achieve in health, literacy and social sectors multiple manifestations
of poverty still linger in our state. More than 15 lakhs of Kerela families are still in the
clutches of poverty and women and children are the prime victims of the curse. Most of the
anti-poverty programmes implemented in the country during the last decades though
seemingly well conceived, had failed to reach the poorest of the poor, which lacked people‟s
participation and was susceptible to under reporting manipulation etc. The programmes were
also centrally planned with little flexibility to suit the local needs and were individual
oriented and did not harness community‟s group action. The programmes tried to meet only
one of the disadvantages and were implemented by various agencies without any
coordination. All these experiences emphasized the necessity to adopt a holistic approach to
fight poverty with the active participation of the community.

The first spark of the community based, women oriented, participatory approach to poverty
eradication occurred in Alappuzha Municipality in 1993 through UBSP with the assistance of
UNICEF. The same model was experimented in the entire district of Malappuram also with a
unique poverty alleviation programmed called CBNP and PAP . The success CDS systems of
Alappuzha town and Malappuram district prompted the State Government to accept the
Community Development Society of poor woman as a meaningful strategy to bring about
holistic development of the poor with active participation of poor women and extended the
strategy to the rest of the State. In tune with the 73rd and 74th amendments to the Indian
Constitution, the CDS can act as a sub system of the pachayats and Municipalities and taken
decentralization further to the grass root level.

Thus the concept of Kudumbasre took shape the new project, the Magna Carta of the poor ,
rightly named “Kudumbasree”(prosperity of the family) was approved by Government in
October 1997 vide G.O.(MS)No.240/97/LAD dated 29.10.1990.

The Kudumbasree is multifaceted programme organize by the Government of Kerela and

NABARD is cooperation with Panchayat Raj institutions through Community Development
societies of poor women based on a Self Help strategy backed by Thrift-linked credit.

Kudumbashree is the State Poverty Eradication Mission (SPEM) was launched by

Government of Kerala in 1998 with the active support of Government of India and NABARD
for wiping out absolute poverty within a period of 10 years .The project is regulated by local
self government empowered by 73rd and 74th Constitutional amendments. The slogan of the
Kudumbashree: Life-Line of Kerala’s micro-finance

Mission is “Reaching out to families through Women and reaching out to community through
Families” (concept:kudumbashree 2009). Micro finance is the essence of rural areas which
ultimate result the rural development .The development must required creating a society with
social justice and equal opportunity to realize the great potential for the poorest of the poor
and Kudumbashree is doing the same. The Mission Statement of Kudumbashree “to
eradicate absolute poverty in ten years through concerted community action under the
leadership of local governments, by facilitating organization of the poor for combining self-
help with demand-led convergence of available services and resources to tackle the multiple
dimensions and manifestations of poverty, holistically” (concept:kudumbashree 2009).The
working pattern of Kudumbashree is based on a strategic based pattern divided into basically
three phase , identification of poor , organising the poor and empowerment of the poor.
Identification of poor is based on poverty based index which having nine non monetary
different parameters. for urban and rural people the parameters are different and family who
having four or more than four factors , consider as family at risk.

For urban family the different parameters are :-

 Less than 5 cents of Land / No Land

 Dilapidated House / No house
 No Sanitary Latrine
 No access to safe drinking water within 150 meters
 Women headed household
 No regular employed person in the family
 Socially Disadvantaged Groups SC/ST
 Mentally retarded / Disabled / Chronically ill member in the family
 Families without colour TV

The different parameters for rural family:-

A Family Having

 No Land /Less than 10 cents of Land

 No house/Dilapidated House
 No Sanitary Latrine
 No access to safe drinking water within 300 meters
 Women headed house hold/ Presence of a widow, divorcee / abandoned lady / unwed
mother
 No regularly employed person in the family
 Socially Disadvantaged Groups (SC/ST)
 Presence of Mentally or physically challenged person / Chronically ill member in the
family
 Families with an illiterate adult member
Kudumbashree: Life-Line of Kerala’s micro-finance

Organisational and Working structure

The hierarchy thet should be followed for the plan formulation is like that given
below :-

Kudumbashree follows an unique organisational structure which called community based

organisation (CBO) starts from Neighbourhood group and ends with Governing Body.

Neighbourhood group (NHG)

Source: - www.kudumbashree.org

The bottom tier of the organisational structure known as NGH , there are 20-40 families are
the part of NHG and the woman of the families are the part of weekly meetings. The main
objective of NHG to collect the micro deposits and distribute the loan among members
family. In each Neighbourhood Group from among the poor women Five Volunteers are
selected for undertaking various functional activities. Five volunteers are :-

1. Community Health Volunteer (CHV) 2.Income generation activities volunteer (IGA)–

3.Infrastructure Volunteer (IV) 4.Secretary – 5.President
Kudumbashree: Life-Line of Kerala’s micro-finance

The second tier of the organisational structure knows as Area Development Society (ADS).
In a very precise term the groups of NHG formed An ADS at ward level .the all the decision
is taken from the women elected from various NHGs.

Area Development Society: organisational structure

The functions of ADS are as follows:-

1). General Body - consisting of all President/Chairpersons, Secretaries & 3 sectoral

volunteers such as Health, Income Generation and Infrastructure volunteers of federated
NHGs.
2). Governing Body - constituted by electing a President, Secretary and five member
Committee from among the General Body.
Linkage with LSG

1. Rural

In Gramapanchayats the ward member is the Patron of the ADS.

2. Urban
In Urban Local Bodies a separate Monitoring & Advisory Committee is constituted with
ward Councilor as chairperson. (Source: - www.kudumbashree.org )
Kudumbashree: Life-Line of Kerala’s micro-finance

Community Development Society (CDS)

At the Panchayat / Municipal level a Community Development Society (CDS), a registered

body under the Charitable Societies Act is formed by federating various ADSs.CDS is the
primary body to regulate and form of plans at Panchayat level .In the other words CDS is the
middle level body close link with NHGs and LSG (Local Self Government ) .

Functions of CDS

1. LSG liaison at the level of CDS

2. Linkage Banking co-ordination
3. Information Dissemination
4. CBO Strengthening Activity
5. Facilitating Income Generating Activity
6. Facilitating Identification of Poor for the purpose of LSG led Development
Programmes
7. Articulation of Community demand for Development
8. Leadership of NHGs
9. LSG Plan Intervention

- Anti Poverty Sub Plan,

- Women Component Plan,
- Local Economic Development

10. Legal Literacy

10. Facilitation of Centrally Sponsored Schemes

Kudumbashree: Life-Line of Kerala’s micro-finance

Working structure of Kudumbashree

The role of Kudumbashree in the local plan formulation

Some of the changes that have been implemented in the society through the involvement of
Kudumbasree in the Local Panchayat Plan formulation is the implementation of housing
facility for the BPL families .The other concept implemented through the Destitute
Rehabilitation Centre.(ASRAYA).The hierarchy thet should be followed for the plan
formulation is like that given below

Charge Officer
CDS
ADS
Grama Sabha
Women Members Of NHG.
The Plans formulated will be scrutinized by the charge officer through visiting the places of
concerned requirement and if it is found genuine the fund will be granted. The benefits
gained through the local Panchayat Plan formulation through Kudumbasree are as follows

1) Women empowerment.
2) Basic Need Fulfilment.
3) Improve standard of living.
4) Improve hygiene Sanitation.
5) Social Welfare.
6) Poverty Eradication.
7) Micro Enterprises.
8) Source of living.
Kudumbashree: Life-Line of Kerala’s micro-finance

The purpose of including Kudumbasree in local Panchayat Plan formulation is to give focus
on the needs of women, which otherwise was ignored or the plans formulated were not
properly implemented the other advantage of including women is that women are patient till
the plans are implemented

PURPOSE OF INCLUDING KUDUMBASREE IN PLAN FORMULATION

The needs of women and their families are known better by the Kudumbasree, otherwise the
plans are formulated only by few top men members .Only the most eligible persons will be
provided with the funds .Care is taken not to distribute the funds to in eligible persons .the
working group presents the rough copy of the proposal to the higher levels of Kudumbasree
which manly focuses on empowerment of people who fall under the BPL category .A
development seminar is conducted before the plan is accepted .the main purpose of
participation of Kudumbasree in plan formulation is

 Empowerment of women
 To provide a platform for the women to express their needs in public
 To set up micro enterprises

Focus area of Kudumbashree

The mission and vision of Kudumbashree is directly related to the focus areas .The
followings are the focus area of Kudumbashree in the micro perspective

1. Training for Change

2. Education
3. Share and Care
4. Community Health Care
5. Environmental Sanitation
6. The Poor Women‟s Bank, and
7. Community Financial Management
Kudumbashree: Life-Line of Kerala’s micro-finance

Various program which are taken by Kudumbashree

Ashraya (The Destitute Identification , Rehabilitation and Monitoring Programme)

The Ashraya which means depending is one of the flagship program of state government
with the help of Kudumbashree . State mission Ashraya project through Kudumbasree
for finding destitute through the survey. Some of the criteria for identifying a person
as a destitute are as follows :-

 Diseases
 No house/ land
 Handicap/ mentally retorted
 No income
 No one depend on
 No sanitations facilities

Bhavanashree/ Micro Housing

Bhavanashree is the initiative for poor families , who are in dire need of construction
of house or in the other words , they are on the streets. They are able to avail bank-
loan on very marginal interest rate with the help of Bhavanashree yojana.

Haritashree/ Lease Land Farming

It is a very unique program run by Kudumbashree, in this scheme the uncultivated land is
taken on rent and provide the willing cultivators for agricultural operations. This scheme also
help to increase the productivity of the state.

Balasabha/ Childrens’ Neighbourhoods

BALASABHA

Children between the age group of 5-15 will be in Balasabha and this includes children from
both APL and BPL families

 Any mother from NHG leads Balasabha weekly

 The main activities of Balasabha are in the area of extracurricular activities,
empowerment of children etc.
 Not only from the children from the Kudumbasree members but also children
from other families get benefits from Balasabha
 The kudumbasree funds for the activities of Balasabha besides the Panchayat
provides Rs.50000 yearly.
Kudumbashree: Life-Line of Kerala’s micro-finance

BALASABHA SANGAM
Children from various places are brought and made to stay with families of
different religion, culture etc. This is done in order to bring a sense of equality
and unity among the children. If there are many children it is called
balpanchyat.

Solid Waste Management./Clean Kerala Business

This program is also under the umbrella of Kudumbashree which is mainly implemented so
far in urban area. Kudumbashree mission tries to tackle this problem by setting up „Clean
Kerala Business‟ units in an organized and planned manner entrusting to women entrepreneur
groups to segregate, collect and transport solid waste from the households, commercial
establishments, hotels .

The S3 Programme

Kudumbashree has evolved a project to build a model in select pachayats on the concept of
comprehensive development. The projects focus on self sufficiency, self reliance and
sustainability (S3) of the village panchayats. The project envisages to address the problems of
Child Development, Geriatric care, Mentally and Physically Challenged, Education,
Adolescent care, women Empowerment, Enterprise development, Unemployment of the
educated youth, Agriculture/Animal husbandry/ Dairy development, Revamping the
traditional sectors Basic minimum Needs and Destitute Identification and
Rehabilitation.(Raghavan: LIVELIHOODS AND EMPOWERMENT)
Special School for the disabled children /Buds

Buds are the special school for physically and mentally challenged children. These children
are getting necessary equipment, studying material , transportation facilities , mental therapy
, vocational and job oriented trainings .

Nutrimix- The Babyfood Products Production Project

The Nutrimix Baby food Production Project is an ambitious project recently launched by
Kudumbashree mission. The Project envisaged to start 500 baby food production
Units in different parts of Kerala. (Raghavan: LIVELIHOODS AND EMPOWERMENT)

FINISHING SCHOOL
Capacity building to improve the employability of educated youth from poor families is a
major challenge that has to be undertaken by the State. The Government of India through the
special SGSY stream, sanctioned an innovative project for this purpose... The Finishing
School project is designed by Dr. Reddy‟s Foundation, Hyderabad .
Kudumbashree: Life-Line of Kerala’s micro-finance

GENDER RESOURCE CENTER

Gender Resource Centre focuses on addressing gender concerns, and capacitating
Kudumbashree NHGs and LSG representatives to develop gender sensitive policies and to
prioritize gender sensitive action. This would require constant collation and analysis of local
gender issues and supporting a resource pool of gender experts to facilitate equitable policy
setting and action in the field.

SOCIAL AUDIT
In Kerala, the process of social audit has not really taken root. In its 11th Five Year Plan the
state government chose the Kudumbashree NHGs as the main forum for social audit. This
will be started in the districts where the NREGA programmes are being implemented. The
quality of the work, the labour card distribution system, the wages and the time period etc
would be audited and the report would be presented in Grama Sabhas. A dimension of this
intervention is that women are being empowered through a democratic process.

Some problems which is faced by Kudumbashree

 Lack of enthusiasm once the enterprise started

 Lack of training
 Social factors
 Competition
 Ineffective marketing
 High price of raw materials
 Presence of middle man

Conclusion

In this era of global recession and collapsing banking institutes, little thought has been
given for the poorest of the poor. Micro finance has emerged as an important sector which
gives economic freedom to the destitute. No doubt Kudumbashree is doing the same for
God‟s own country (Kerala Nowadays majority women in Rural areas work in
Kudumbashree and so it is the easy way of achieving the women empowerment and also
Poverty Alleviation in the society .Hope this unique mantra is also helpful for other state.
Now at the last ). I would like to quote Mr Bono, probably most famous philanthropists of
our time.

„‟ Give a man a fish; he'll eat for a day. Give a woman microcredit, she, her husband, her
children and her extended family will eat for a lifetime‟‟
Kudumbashree: Life-Line of Kerala’s micro-finance

References

 The Kudumbashree Mission is functioning under the directorate of the Government of

Kerala.

 Hulme, D (1999). “Impact Assessment Methodologies for Microfinance: Theory,

Experience and Better Practice ” Finance and Development Research Program,
Working Paper no. 1, IDPM, University of Manchester.

 Yasthish Kumar (2008) “Micro finance as a tool for rural development” Cooperative
Perspective, April-June (2008)

 Anand , Jaya S,(1999), “ Self-Help Groups in Empowering Women: A Study of selected

SHGs
 and NHGs in Kerala”, KKRPLLD, Centre for Development Studies, Trivandrum, Kerala,
India.

 Dr. Neela Mukherjee (2003) Alternate Model/s to Micro-savings for the „Bottom-of-the
Pyramid‟ in Rural Areas Lessons from India, Bangladesh and Nepal and Some Policy
Doable.

 Himanshu (2007): „Recent trends in Poverty and inequality: Some Preliminary

results‟, Economic and Political Weekly; February 10.

 RAGHAVAN (July 2006 ) LIVELIHOODS AND EMPOWERMENT:THE

KUDUMBASHREE PROJECTS IN KERALA, INDIA –A NEW PARADIGM OF
PARTICIPATORY ECONOMY , Mondragon University ( Basque Country, Spain)

 www.kudumbashree.org