Formation Of Self-Help Group Federation,Adilabad District, Andhra Pradesh, India

Country	India
Funding Source:	International Fund for Agricultural Development (IFAD)
Timeframe:	September 2002 - September 2003
Partner Organization:	Inter-Tribal Development Agency Andhra Pradesh Forest Department
Contact Person(s):	Navin Mittal	Ramesh Kalaghati	Dr. Urmila Pingle	Mr. Emmanuel D'silva
Address:	ITDAUtnoor-504 311 Adilabad District Andhra Pradesh India	AP Forest Department Aranya Bhavan Saifabad Hyderabad 500 004 India	3-34/5 Madhuvan Enclave St. No. 4, Habshiguda Hyderabad 500007AP India	4620 N.Pakr #205W Chevy Chase Maryland 20815 USA
Telephone:	91-08731-75242	91-40-3235488	91-40-7171106	(301) 656-3054
Fax:
Email:	navimittal@cheerful.com	kalaghatfi@yahoo.com	pnreddy@hd1.vsnl.net.in	ehdsilva@hotmail.com

Over the past decade, billions of dollars have been channelled into rural Indian communities in an effort to address poverty problems and improve the management of natural resources. The effectiveness of this investment is under increasing scrutiny. Rural Indian communities, especially those comprised of tribal peoples, have often been caught between the exploitative forces of usurious moneylenders, corrupt government officials, unscrupulous political representatives, and violent insurgent groups. These rent seeking actors have created significant barriers to community development efforts, not only by draining the capital assets of the community, but also by creating an environment of uncertainty and eroding community authority and capacity to take effective action in addresses socio-economic problems. Development investments and poverty alleviation projects have frequently failed to achieve their stated goals, as they are captured by vested interests that control project funds, diverting much of the capital into their own pockets. Since project resources are often controlled by a nexus of local government staff, political representatives, and contractors, communities may have little influence in decision making and project implementation, except in the role of manual labourers.

In 1994, IFAD approved the Andhra Pradesh Participatory Tribal Development Project, an eight-year, US$ 50 million initiative. The goals of the component projects include raising income levels, ensuring food security and improving the quality of life of the tribals within the context of the traditional tribal environment cultures and values. The project also promotes greater self-reliance amongst communities on a sustainable basis and seeks to reduce and reverse environmental degradation. The project has targeted 385,000 beneficiaries. IFAD contributed US$ 26.72 million in the form of a loan with co-financing increasing the project value to US$50.30. The project, that was originally scheduled to close in 31st March 2002, has received a one-year extension. The orientation of development in the past six to eight years in Andhra Pradesh has shifted away from top-down, bureaucratic implementation of development projects. There is an increased emphasis on people's participation in government schemes, empowerment of women and other marginalized groups, and use of thrift as an entry point for development activities. The IFAD financed project has contributed to this shift in development strategy.

As part of its project, IFAD has been supporting the expansion of female-dominated self-help groups (SHGs). In Adilabad, a predominantly tribal district in northern Andhra Pradesh, over 13,000 groups have been formed. Usually comprising 10 to 12 women, the SHGs in the district currently involve some 150,000 women who have been able to save Rs 200 million. This constitutes roughly Rs 1,282 per participating household, or about 10% of average income in the district (D'Silva 2001). Throughout Andhra Pradesh, 5 million women belong to 400,000 thrift groups and have saved about US$ 240 million. The women have been able to use this revolving fund to finance agriculture, education, health, and other household needs on the lines of the Grameen Bank in Bangladesh. Starting with meager savings, women have learned how to keep accounts, develop their entrepreneurial abilities, and plan for the financial security of their families. This has led to an increase in family expenditures on education and health. Financial and social-capital capacity building offers tribals and other low-income communities with new opportunities for development and investment, especially if they are able to leverage their savings with local finance institutions.

The question is, what will happen to the SHGs after project support terminates in March 2003? Emmanuel D'Silva of the World Bank Institute, who spent three years in the district (1999-2001), has recommended a transition strategy to assist the women-managed SHGs to sustain their institutions and operations after the termination of the IFAD project. This transition project would build the capacity of the rural poor and their organizations to sustain livelihood generating activities by developing a federation of SHGs to support women's groups in the Asifabad range of Adilabad district. Over the long term, the creation of a federation can serve four goals: (i) institutional development of SHGs to enable them to receive, manage, and use public funds; (ii) financial management to handle the funds, and leverage these funds with local financial institutions to ensure more equity for poor women and other marginalized groups; (iii) developing investment strategies to shift the self-help groups' main focus from savings mobilization to providing services, including environmental services, such as trading in carbon emission and preserving biodiversity; and (iv) meeting the equity and sustainability concerns of development to ensure that women are empowered, marginalized groups are represented, and the federation of community is sustained beyond the life of development projects.

This project also fits within part of Community Forestry International's (CFI) initiative to develop sustainable financing for rural community development activities through environmental service-based payments. These include: forest carbon offset credits, hydrological services, and biodiversity conservation. The project that CFI is currently developing for forest carbon offset credits under the Clean Development Mechanism includes four phases (see chart in Annex 1). Phase III is divided into two broad areas, labelled A & B. This project would be limited to the activities in Phase III-A, with additional co-funding to help support the total activities in Phase III (see Annex 1).

Project Objectives
This project seeks to strengthen the capacity of women-administered SHGs to manage natural resources and develop livelihood-generating activities. The strategy relies on a number of supportive activities including developing apex bodies that can assist the SHGs to build coalitions that can enhance their bargaining power with outside institutions. The project seeks to improve the target group's access to natural resources by linking the SHGs with forest protection committees that now hold formal responsibilities for the management of local watersheds. A state working group will be organized to oversee the project, allowing learning regarding federation formation to be reviewed for its policy implications and its extension into other areas across the state. The goals and strategies reflected in this transition project are consistent with IFAD's Strategic Framework and respond to IFAD's mandates to address livelihood concerns, gender issues, and sustainable development.

Project Rationale
Almost half of the self-help groups in India are in the state of Andhra Pradesh. There is evidence that these groups have done well in mobilizing small savings and inculcating the thrift habit. But despite the growth of these groups, they have been able to meet just 10% of the credit needs in Adilabad and unable to undercut the power of local moneylenders who charge about 5% in interest per month. Many of these groups are still dependent on government subsidy and external funding. IFAD has made a significant investment in the growth of SHGs in Andhra Pradesh over the past decade, but the sustainability of these groups in the absence of subsidy is uncertain. For longer term sustainability, the SHGs will need to do two things. First, they need to leverage their savings with local financial institutions to increase their credit line three- to five-fold. They also need to shift their focus from mobilizing savings to providing services. The creation of a federation will increase the bargaining power of the SHGs in their dealings with financial institutions, government agencies, and donors. For IFAD, a small investment of $99,600 (the cost of this activity) might provide an answer to its $50 million concern on the sustainability of its investment in the Andhra Pradesh project.

Project Site
The State of Andhra Pradesh
The project would be sited in a cluster of up to 30 villages in Adilabad District in Andhra Pradesh (see map). Andhra Pradesh (AP for short) is the fifth largest of the 27 states in India with a population of 73.3 million in 1997. It is a major link between north and south India. The climate is hot and humid with rainfall averaging 1,250 millimeters. The state has 23 districts, 1,123 mandals (sub-districts), 26,586 villages, and 264 towns. Hyderabad is the state capital. Though rich in natural resources, AP is poor in human resource development. In 1991, the literacy rate was 35.7 percent, below the national average of 52.2 percent (UNDP 1999). However, in recent years, the state government has been focusing its energies to improve the human resource and building the capacity of local institutions recognizing their linkages to poverty.

The government's vision statement has set the target of 2020 for the "total elimination of poverty" from the state. Participation of local people in government programs and empowerment of women are two strategies advocated by Chief Minister N. Chandrababu Naidu to eradicate rural poverty. Government machinery is regularly used to mobilize millions of rural poor to take part in public schemes, such as planting of trees and cleaning of village commons. Over the past decade, the government of Andhra Pradesh has moved away from top-down, bureaucratic implementation of projects. Increasingly, there is emphasis on people's participation in government schemes, empowerment of women and other marginalized groups, and use of thrift as an entry point for development activities. The government is positioning itself as a facilitator of development from one of being an implementer of development.

The District of Adilabad
Adilabad is the northernmost district of AP. It is surrounded by rivers on its three sides, but is still frequently prone to drought. The average rainfall is 1,100 mms. Despite having a network of rivers and tributaries, only 9 percent of the total cropped area was irrigated in 1991. The main crops grown are jowar millet, or sorghum vulgare (32 percent), cotton (27 percent), and rice (12 percent). The 1991 Census placed the population of Adilabad at 2.08 million. In 2000, the population should have reached 2.5 million people. In 1901, the density of population was 28 per square km; in 2000, it was estimated at 155. A large part of the population influx occurred in the 1940s and 1970s as a result of government policies that encouraged migration from neighboring districts. This increase of 550 percent in the last century has put tremendous pressure on the carrying capacity of the land and led to the depletion of the district's once extensive and dense forests.
The literacy rate in Adilabad district was 36 percent in 1991 comparable to the state average, but below the national average of 52 percent. The literacy among the tribal population is about one fourth of the general population. The low enrollment rate coupled with a high drop-out rate results in a huge waste of public resources in a district known as one of the poorest areas in Andhra Pradesh. Most rural schools lack basic infrastructure to encourage learning and to keep students in the classroom.

The People of Adilabad
The social composition of the district includes three groups: tribals, scheduled castes, and upper castes. The indigenous people comprise 17 percent of the population, represented by Gonds (52 percent), Lambadas (22 percent), and Kolams (8 percent). Another 18 percent of the population belongs to the poor, lower Hindu castes, known legally as the 'scheduled castes.' Tribals, landless, and low-caste families are most heavily dependent on forest resources, and tend to reside in more remote hamlets that neighbor or are enclosed by forestlands. About 65 percent of the district's population comprises higher-caste Telugus and Marathas.

The Forests of Adilabad
Forests comprise 42 percent of the district. With some 700,000 hectares of mixed teak forests, Adilabad has immense potential for afforestation and environmental services. The 1,000 forest protection committees protect some 300,000 hectares of degraded forests. The indigenous population has been concerned about forest loss and, therefore, has been participating in joint forest management (JFM)-a partnership between the forest department and local communities. The JFM has been fairly successful in rejuvenating the once degraded forests. Satellite imagery indicates an improvement in the forest cover at a rate of 1-2 percent per year in Adilabad brought about, in large part, because of community protection. However, there is concern in the government that once external support for forest management ceases, the regeneration process might be seriously affected. For this reason, it is important to identify alternative sources of funding community efforts in forest protection, watershed protection, and other natural resource management.
Institutions in Adilabad
Of the nearly 1,700 villages in the district, 1,008 have formed forest protection committees (FPCs) and have been participating in joint forest management since the mid-1990s. Nearly half of the forests in Adilabad have coverage by the FPCs, but this coverage is uneven. While some FPCs have done a fairly good job in forest protection, many others have not done so for a host of reasons ranging from a lack of local leadership to inadequate support from local forest officials. Men dominate the FPCs. Barely 5 percent of the FPCs are headed by women, though by law at least a third of the executive of the FPCs comprise women.

In recent years, there has been a growth in the number of other informal groups-such as water users' association, watershed committees, education committees, and credit-based self-help groups. Men control most of the resource-based user groups, but women have more say in running the thrift groups. The relationship between these various groups and the local government (panchayat) is still evolving. The state government has been encouraging the growth of these groups as a means to disperse political power and authority. The empowerment of women through the growth of the self-help group forms part of the strategy.

Women Run Self-Help Groups
Women run self-help groups (SHGs) go by various names, including awal (or mothers') committees, DWACRA (development of women and children in rural areas) groups, and thrift groups. They are modelled on the lines of Grameen Bank's credit groups in Bangladesh. In Adilabad, some 13,000 SHGs from 1,700 villages-usually 10 to 12 women constitute a self-help group-involving some 150,000 women have been able to save Rs 200 million (C$ 5.8 million). A large number of these groups were formed under the auspices of various government programs, including joint forest management. While most groups function to mobilize household savings, a few have attempted to deliver services previously rendered by government agencies (eg, forest nurseries, building check-dams, generating electricity, etc.).

The massive growth of female-dominated self-help groups illustrates a shift in the development paradigm in Andhra Pradesh. Community empowerment and reducing the role of the government to a facilitator are elements of the state government's new paradigm. The SHGs are widely viewed as being better managers of money, more transparent, and accountable than most other community groups (D'Silva 2001). The growth of SHGs has the potential of revitalizing the countryside. At least three positive impacts can be expected from the proposed project. The first is financial leveraging. From no savings, the poor women of Adilabad have built a fund of approximately Rs. 2,000 per family over several years. By channelling government and donor funds through SHGs, it should be possible to leverage their increased savings with financial institutions to get better credit terms for women and other vulnerable groups.

The second impact expected is in the social areas of health, education, and family planning. Women who participate in savings plan and group meetings are prone to spend more money on the education of their children and the health of their families. The third impact that can be expected is in the area of empowerment. Local capacity building through imparting skills (eg, in book keeping and accounts), leadership training (eg, to serve as FPC president or panchayat chief), and participatory dialogue (eg, to determine local development priorities) can help to build confidence and human capacity. The state government would be very supportive of these activities.

Study of SHGs
An analytical study of SHGs is important to understand their strengths and weaknesses, their membership, and linkages and overlaps with other village-level institutions, such as the forest protection committees (FPCs), watershed committees, education committees, and panchayats. No comprehensive study of the over 400,000 SHGs that exist in Andhra Pradesh has been conducted by government agencies, international donors, or research groups. In Adilabad alone, some 13,000 SHGs, 1,000 FPCs, and numerous other user groups co-exist. Some of these groups are strong and functional; some others are weak. The study will outline a capacity-building strategy for these various groups that will be an important output of the project. This should be of great interest to state government, local bodies, NGOs, and others.

Participatory Needs Assessment
The technical study on SHGs will be followed by a participatory dialogue with local communities where the findings of the study will be discussed. Local community views on ways to strengthen SHGs and other peoples' institutions, creating a federation of SHGs, and meeting their various training and other needs will be discussed in an open forum. Several follow-up sessions will be needed to finalize the needs assessment to achieve project goals.

Establishing a Federation
This is an important step toward empowerment of women and enhancing the bargaining power of SHGs. A federation will be established at the sub-district level to facilitate the flow of funds from state and local government, and donors with minimum transaction costs. Various modalities for creating and registering a federation will be examined before taking such a step. Before registering the federation, byelaws and articles of incorporation will be drawn up, government regulations on the flow of funds examined, and local communities familiarized with the institutional set-up.

Preparing a Capacity Building Plan
The project will include a series of actions, such as workshops, to increase awareness of the importance of forests in providing environmental services, the need for supporting individual and community assets, and the community obligation to protect their natural resources. Skills training in accounting and bookkeeping, managing financial resources, and taking up entrepreneurial activities will be part of the project. Team building, leadership training, and negotiating skills will also be included.

The outcome for the project includes a study on self-help groups; a needs assessment report; an organizational framework for the federation containing the byelaws, rules, and regulations for registration; and capacity-building plan. Equally important to outputs would be the project's expected outcomes: an empowered federation of community groups enjoying increased incomes from investments in agriculture, energy, and environmental services; and investing some of these funds in individual and community assets from which they can enjoy the benefits of an improved forest cover, more water for agriculture, and better education and health care for their families.

Build capacity in federation to leverage funds with local banks to increase credit access to women and other marginalized groups.

Report Dissemination
Reports will benefit a number of audiences, including national and state planners, the Indian private sector, international utility companies, development agencies and NGOs supporting rural communities. Reports would also be useful to delegates to international climate change policy fora. Some of the reports will be translated into the local Telugu language to be of use to local communities in Andhra Pradesh interested in establishing a federation of community institutions.

Implementation
The project would be managed by Community Forestry International in close collaboration with the Director of the Inter-Tribal Development Agency (ITDA) that is supervising the IFAD project in Adilabad District, Andhra Pradesh staff under the leadership of the Director of the Asia-Pacific Division. A state-level working group would be formed comprising representatives of the Andhra Forest Department, the ITDA, NGOs, and research institutions to act as advisors to the project team. A team of three consultants-two international and one local- would complete the implementation team.

Project Summary