Introduction

Hindustan Unilever Limited (HUL) and its constituent companies have

been in India since 1931.Over these decades, while HUL has benefited

from the developments in the country, it has contributed equally to these

developments. The company’s main contributions include developing and

using relevant technologies, stimulating industrialization, boosting

exports, adding value to agriculture and generating productive

employment and income opportunities. HUL has been proactively

engaged in rural development since 1976 with the initiation of the

Integrated Rural Development Programme in the Etah district of Uttar

Pradesh, in tandem with the company’s dairy operations. So the company

is contributing towards rural India over three decades.

This Programme now covers 500 villages in the district. Simultaneously,

the factories that HUL has established in less-developed regions of the

country have been engaged in similar programmes in adjacent villages.

These factory-centred activities mainly focus on training farmers, animal

husbandry, generating alternative income, health & hygiene and

infrastructure development. The company has acquired a wealth of

experience and learning from these activities. The principal issue in rural

development is to create income-generating opportunities for the rural

population. Such initiatives are successful and sustainable when linked

with the company’s core business and is mutually beneficial to both the

population for whom the programme is intended and for the company.

Based on these insights, HUL launched Project Shakti in the year

2001, in keeping with the purpose of integrating business interests

with national interests.

HUL envisions the creation of 1,00,000 Shakti Entrepreneurs covering

5,00,000 villages, and touching the lives of 600 million rural people by

the year 2010.

Reasons for Project Shakti

There are mainly three important reasons why the company like HUL has

started with such a project:

1. Empowering women in rural India

The objective of Project Shakti is to create income-generating

capabilities for underprivileged rural women, by providing a sustainable

micro enterprise opportunity, and to improve rural living standards

through health and hygiene awareness. Several institutions like NGOs and

Government bodies have been working closely, for nearly five years, to

establish Self Help Groups (SHGs) of rural women in villages across

India. Their experiments clearly indicate that micro-credit, when carefully

targeted and well administered can alleviate poverty significantly. It was

also learnt was that rural upliftment depends not only on successful

infusion of credit, but on its guided usage for better investment

opportunities This is where HUL's Project Shakti is playing a role in

creating such profitable micro enterprise opportunities for rural women.

2. Catalysing prosperity in Indian villages

Under the project, HUL offers a range of mass-market products to

the SHGs, which are relevant to rural customers. HUL is investing

significantly in resources that work with the women on the field and

provide them with on-the-job training and support. This is a key factor in

ensuring the stabilization of their fledgling businesses.HUL imparts the

necessary training to these groups on the basics of enterprise management,

which the women need to manage their enterprises. This translates into a

much-needed, sustainable income contributing towards better living and

prosperity.

3. Risk-free micro enterprise that yields high returns

A typical Shakti entrepreneur conducts a steady business which

gives her an income in excess of Rs.1,000 per month on a sustainable

basis. As most of these women live below the poverty line, and hail from

extremely small villages (with populations of less than 2000), this earning

is very significant, and almost twice the amount of their previous

household income. For most of these families, Project Shakti is enabling

families to live with dignity, with real freedom from want. In addition to

money, there is a marked change in the woman's status within the

household, with a much greater say in decision-making. This results in

better health and hygiene, education of the children, especially the girl

child, and an overall betterment in living standards.

The most powerful aspect about this model is that it creates a win-win

partnership between HUL and the consumers, some of whom will depend

on the organization for their livelihood, and builds a self-sustaining cycle

of growth for all.

The Current Scenario

The model was piloted in Nalgonda district of Andhra Pradesh in 50

villages in the year 2000. The Government of Andhra Pradesh took the

pioneering step of supporting the initiative by enabling linkages with the

network of DWACRA Groups of rural women set up for their

development and self-employment. Most SHG women view Project Shakti

as a powerful business proposition and are keen participants in it. It has

since been extended to in Andhra Pradesh, Bihar, Chhattisgarh, Gujarat,

Haryana, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa,

Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh and West Bengal with the

total strength of over 40,000 Shakti Entrepreneurs.

Other activities: To improve the business skills of the SHG women,

extensive training programmes are being held. Such workshops have

already covered a large number of Shakti Entrepreneurs in Andhra

Pradesh, Karnataka, Gujarat, Madhya Pradesh, Uttar Pradesh, Tamil Nadu,

Chhattisgarh and Orissa.

As part of their training programme, all HUL Management Trainees spend

about 4 weeks on Project Shakti in rural areas with NGOs or SHGs.

Assignments include business process consulting for nascent enterprises

engaged in the manufacture of products such as spices and hosiery items.

Advent of i-Shakti

A key factor that has inhibited the development of rural India has been

lack of access to critical information and services. As we know, India has

large geography and weak infrastructure; it is often difficult to reach out to

the rural areas.

In order to impact both livelihood opportunities and living standards of

rural communities ‘i-Shakti’ - an IT-based rural information service has

been developed to provide information and services to meet rural needs in

agriculture, education, vocational training, health and hygiene. The

premise of the i-Shakti model is to provide need based demand driven

information and services across a large variety of sectors that impact the

daily livelihood opportunities and living standards of the village

community. The i-Shakti kiosk will be operated by the Shakti

Entrepreneur, which further strengthens the relationship we have already

cultivated and builds new capacity. HUL expects that the information

provided would improve the productivity of the rural community and

unlock economic and social progress.

Introduction

e-Choupal is an initiative of ITC Limited (a large multi business

conglomerate in India) to link directly with rural farmers for procurement

of agricultural / aquaculture produce like soybeans, wheat, coffee, etc. The

company has initiated an e-Choupal effort that places computers with

Internet access in rural farming villages; the e-Choupals serve as both a

social gathering place for exchange of information (choupal means

gathering place in Hindi) and an e-commerce hub.

e-Choupal is a Hindi word which means “village meeting place”. Market

is a meeting place where vendors and customers come together to do

transactions. e-Choupal is a virtual market place where farmers can

transact directly with a processor and can realize better price for their

produce. e-Choupal has the advantages of the market but spans very large

varieties of vendors and customers. Geographical distances do not restrict

participation in the e-Choupal. The main disadvantage of conventional

market is that information asymmetry is inherent in the market where as e-

Choupal provides for transparent transactions. This enables the

participation of smaller as well as larger players. Elimination of some

layers of intermediaries allows for larger share of profits to reach the

lower end of value chain. The main attractiveness of e-Choupal is that it

can be used for connecting large producers/small producers and small

users/large users, thereby eliminating the need for hierarchy of brokers.

Internet is used as a low transaction cost backbone for communication.

Physical delivery of produce to the processor is still done through the

existing intermediaries. e-Choupal does not attempt total elimination of

intermediaries, as intermediaries are indispensable in economy like India

where intermediaries are adding value to the every step of value chain at a

low cost. Intermediaries have the expertise in storage, transportation,

quality assessment and counter party risk reduction, which are difficult to

replicate. e-Choupal provides farmers with all the market information and

this helps them to become market oriented. In e-Choupal intermediaries

are leveraged but they are disintermediated from the market information

flowing to the farmers.

Unique Business Model: e-Choupal

The e-Choupal model has been specifically designed to tackle the

challenges posed by the unique features of Indian agriculture,

characterized by fragmented farms, weak infrastructure and the

involvement of numerous intermediaries, who block critical market

information from passing to the farmers and use that information for

getting a big margin for themselves. The intermediaries capitalized on the

economies of information and economies of physical things, which are

tied together in a bundle. Due to this, the farmer does not get the proper

price of its product & they continue to live below the poverty line. But e-

Choupal sets things in order as it smoothens the flow of information to the

farmers by disinter mediating intermediaries from the chain of information

flow and at the same time leverages the physical transmission capabilities

of the them as they deliver critical value at every link for a very low cost

in a weak infrastructure environment. The structure of e-Choupal is shown

in figure.

The project e-Choupal is ITC’s unique click & mortar initiative e-Choupal

is an ICT (Information and Communications Technologies) platform for

carrying out trade at a number of locations. In this, ITC sets up a back-up

physical service support at the village level, called Choupal, through

Sanchalak: a lead farmer, who acts as the interface between computer and

the farmer. ITC accumulates information regarding weather, modern

farming practices, and market prices from sources like Meteorological

Department, Agri-universities, mandis (regional market) etc., and upload

all information on to e-Choupal web site. All information is customized

according to local farmers requirements and provided into the local

language through computer set up by ITC in Sanchalak’s house.

Sanchalak access this information and facilitates its dissemination to

farmers. Information regarding weather and scientific farming helps

farmers to select the right crop and improve the productivity of their

farms. Availability of market information helps farmers to become market

oriented. They know what price ITC is quoting and the price prevalent in

the local market, thereby helping better price realization for farmers. If

farmer decides to sell to ITC, Sanchalak works as the aggregator of small

farmers produce to sell them to ITC. Sanchalak also aggregates farmers

input purchase orders for various items like seeds, pesticides and places

them directly with the suppliers through internet and facilitate supply of

high quality farm inputs as well as purchase of farm produce at farmer’s

doorstep with the help of intermediaries as shown in figure previously. It

can be deciphered that e-Choupal has added critical value to the existing

supply chain through innovative application of information technology.

ITC-IBD has successfully reached the vastly scattered farming villages of

India and facilitated the smooth flow of rich information to them by

disintermediating the intermediaries in flow of information. Power of

information is working as the catalyst of transformation of the life of

farmers by helping them to get improved yields from their farms and

better price realization. Usually it is tough to maintain the expanding scale

of reach and richness into the products or services but e-Choupal is

achieving it easily and we find that overall value chain has been shifted

horizontally on the scale of reach and richness. e-Choupal is an ICT

platform that facilitates flow of information and knowledge, and supports

market transactions on line.

It transmits Information (weather, prices, news),

It transfers Knowledge (farm management, risk management)

It facilitates sales of Farm Inputs (screened for quality) and

It offers the choice of an alternative Output-marketing channel

(convenience, lower transaction costs) to the farmer right at his

doorstep

It is an interlocking network of partnerships (ITC + Met Dept +

Universities + Input COs + Sanyojaks, the erstwhile Commission

Agents) bringing the “best-inclass” in information, knowledge and

inputs.

e-Choupal is, thus, distributed transaction platform that brings together

sellers, buyers along with information and service providers. e-choupal is

a model with a number of non-conventional characteristics namely:

customer centric

capable of being used for many commodities and multiple

transactions

easily scalable once it is verified

uses local talent and local people and develops local leaders

can be extended to local as well as global procurers

stimulates local entrepreneurs to extend their innovativeness

uses all the existing institutions and legal frameworks and

many others can join the market as transaction time is low.

Critical Success Factors

The e-Choupal experience highlights that ICT platforms can provide rural

connectivity and e-commerce support. These platforms have enormous

potential provided they are conceptualized for the specific needs of the

community and business. Some of the elements that helped the e-Choupal

to work successfully are discussed below:

Comprehensive knowledge of rural markets: Rural markets are both

economic and social networks and there is a strong connection between

the operation of social and economic transactions. Understanding the

operations is vital before the systems are conceptualized. Use of local

population, as much as possible helped the network to get the acceptance

closely.

Designing a Win-Win transaction model: The success of e-Choupal

comes from the condition in which both the farmer and the processor share

the benefits coming out of the elimination of middle men and hence due

to timely information availability.

Leveraging the logistics channels: The existing logistics of the rural

markets are leveraged but they are not able to exploit the information

asymmetry (unlike that in a conventional market). In that sense e-choupal

uses the local institutions but eliminates the information asymmetry that

they used previously.

Selection of Sanchalak: Both the selection of Sanchalak and the

acceptance of Sanchalak by the community are very critical for the

success of e-Choupal. ITC used a trial and error method for developing the

procedure for selecting Sanchalaks. In the platform terminology Sanchalak

is the interface for maintaining the platform. For the farmer the Sanchalak

is the e-Choupal. Training and sensitizing him for the crucial role has been

the main reason for the acceptance of the Sanchalak by the farmers.

Sanchalak, thus, acts as the coordinator of the knowledge community, and

a representative of farming community.

Evolving an appropriate user interface: The Technology interface used

in rural areas has to be very simple. Interface has to be tried for rural

settings and only after its validation it has to be used. Firstly, one has to

understand the user pattern and secondly, it has to be tried, tested and

validated. For example, farmers do not understand the concept of

insurance. e-Choupal evolved a simple interfacing arrangement that a

farmer can understand.

Bottom-up model for entrepreneurship: e-Choupal encourages

enormous amount of creativity at the local level along with local

entrepreneurship stimulation. The farmer and Sanchalak are free to use the

e-choupal and develop new uses. e-Choupal unleashes the creative spirit in

the rural India.

Introduction

While no definitive date has been determined for the actual conception

and propagation of SHGs, the practice of small groups of rural and urban

people banding together to form a savings and credit organization is well

established in India. In the early stages, NGOs played a pivotal role in

innovating the SHG model and in implementing the model to develop the

process fully. In the 1980s, policy makers took notice and worked with

development organizations and bankers to discuss the possibility of

promoting these savings and credit groups. Their efforts and the simplicity

of SHGs helped to spread the movement across the country. State

governments established revolving loan funds which were used to fund

SHGs. By the 1990s, SHGs were viewed by state governments and NGOs

to be more than just a financial intermediation but as a common interest

group, working on other concerns as well. The agenda of SHGs included

social and political issues as well.

The spread of SHGs led also to the formation of SHG Federations which

are a more sophisticated form of organization that involve several SHGs

forming into Village Organizations (VO) / Cluster Federations and then

ultimately into higher level federations (called as Mandal Samakhya (MS)

in AP or SHG Federation generally). SHG Federations resulted in several

key benefits including:

Stronger political and advocacy capabilities Sharing of knowledge and experiences Economies of scale Access to greater capital

NABARD defines SHGs as a group of 20 or less people from a

homogenous class who are willing to come together for addressing their

common problems. They make regular savings and use the pooled savings

to give interest-bearing loans to their members. The process helps them

imbibe the essentials of financial intermediation including prioritisation of

needs, setting self-determined terms for repayment, and keeping books

and records. It builds financial discipline and credit history that then

encourages banks to lend to them in certain multiples of their own savings

and without any demand for collateral security. To this definition can be

added the affinity dimension and the need to acquire the 6 organisational

characteristics of Vision/Mission, Organisational Management Systems,

Organisational Accountability Norms, Financial Management Systems,

Learning and Evaluation Systems and Networks and Linkages with other

institutions.

Generally all members of the group should belong to families below the

poverty line. However, if necessary, a maximum of 20% and in

exceptional cases , where essentially required, upto a maximum of 30% of

the members in a group may be taken from families marginally above the

poverty line living contiguously with BPL families and if they are

acceptable to the BPL members of the group. This will help the families of

occupational groups like agricultural labourers, marginal farmers and

artisans marginally above the poverty line, or who may have been

excluded from the BPL list to become members of the Self Help Group.

However, the APL members will not be eligible for the subsidy under the

scheme. The group shall not consist of more than one member from the

same family. A person should not be a member of more than one group.

The BPL families must actively participate in the management and

decision making, which should not ordinarily be entirely in the hands of

APL families. Further, APL members of the Self Help Group shall not

become office bearers (Group Leader, Assistant Group Leader or

Treasurer) of the Group. The group should devise a code of conduct

(Group management norms) to bind itself. This should be in the form of

regular meetings (weekly or fortnightly), functioning in a democratic

manner, allowing free exchange of views, participation by the members in

the decision making process. The group should be able to draw up an

agenda for each meeting and take up discussions as per the agenda. The

members should build their corpus through regular savings. The group

should be able to collect the minimum voluntary saving amount from all

the members regularly in the group meetings. The savings so collected

will be the group corpus fund.

The SHG Model

Structure of SHG

A SHG is a group of about 10 to 20 people, usually women, from a similar

class and region, who come together to form savings and credit

organization. They pooled financial resources to make small interest

bearing loans to their members. This process creates an ethic that focuses

on savings first. The setting of terms and conditions and accounting of the

loan are done in the group by designated members.

SHG Federation

As mentioned previously, SHGs have also federated into larger

organizations. In Figure below, a graphic illustration is shown of a SHG

Federation. Typically, about 15 to 50 SHGs make up a Cluster / VO with

either one or two representatives from each SHG. Depending on

geography, several clusters or VOs come together to form an apex body or

an SHG Federation. In Andhra Pradesh, the Village Organizations, SHG

Clusters and SHG Federations are registered under the Mutually Aided

Co-operative Society (MACS) Act 1995. At the cluster and federation

level, there are inter-group borrowings, exchange of ideas, sharing of costs

and discussion of common interests. There are typically various

subcommittees that deal with a variety of issues including loan collections,

accounting and social issues.

As already described, SHG Federations have presented some key benefits

to SHGs as a result of their greater scale. Increasingly, SHG Federations

are being seen as a key interface with the SHG movement because of their

formal registration under the MACS and recognition from bankers. But, in

addition to the benefits of SHG Federations, there are some drawbacks, or

constraints, that should be noted. An SHG Federation is a formal group of

informal common-interest groups. As a result of its rather informal

members, there are internal constraints that it faces. Namely, it has a poor

capacity for self-governance, average to low quality managers and systems

and process are poorly defined. Further, there is significant financial cost

to organizing and registering a SHG Federation which has been estimated

to be about Rs 7,000 per SHG member. To bridge these internal

constraints requires savvy external assistance and there are few good

quality NGOs to provide this assistance to a burgeoning number of SHG

Federations.

SHG Bank Linkage

A most notable milestone in the SHG movement was when NABARD

launched the pilot phase of the SHG Bank Linkage programme in

February 1992. This was the first instance of mature SHGs that were

directly financed by a commercial bank. The informal thrift and credit

groups of poor were recognised as bankable clients. Soon after, the RBI

advised commercial banks to consider lending to SHGs as part of their

rural credit operations thus creating SHG Bank Linkage. The linking of

SHGs with the financial sector was good for both sides. The banks were

able to tap into a large market, namely the low-income households,

transactions costs were low and repayment rates were high. The SHGs

were able to scale up their operations with more financing and they had

access to more credit products.

Advantages of SHGs (Self Help Groups)

An economically poor individual gains strength as part of a group.

Besides, financing through SHGs reduces transaction costs for both

lenders and borrowers. While lenders have to handle only a single SHG

account instead of a large number of small-sized individual accounts,

borrowers as part of an SHG cut down expenses on travel (to & from the

branch and other places) for completing paper work and on the loss of

workdays in canvassing for loans.

In other words the organization provides micro loans and a package of

services, including self help groups (SHG) for economic empowerment,

education, sharing lessons learned and presumably networking.

Additionally, they are used to create an “ecosystem for wealth creation”

and bear some elements of self-organizing, given they are bottom up in

nature. These groups can help overcome some of the pitfalls of launching

a new business and are sometimes integrated as part of the overall debt

repayment model.

Introduction

According to Jammu and Kashmir’s former Chief Minister Jb.

Ghulam Nabi Azad, the revolutionary Roshni Act passed under his regime

i.e. the Congress-Led Government had far-reaching effects and it had gone

beyond the expectations of the people, particularly farmers. Free

ownership rights of 16.60 lakh kanals of state land costing Rs 20,000 crore

were being given to poor farmers with a definite goal to achieve self-

sufficiency in agriculture production.

The Government through the same Roshni Act will be able to retrieve

huge amounts from those who have illegally encroached on various parts

of Jammu and Srinagar cities and were using the land for commercial and

non-agricultural purposes.

Jammu and Kashmir Government has received over 2.5 lakh applications

for grant of proprietary rights to the people who are possessing

unauthorised government land in the state this year only.

As many as 2,55,222 applications have been recieved from public for

grant of proprietary rights to unauthorised occupied government lands for

decades under the Roshni Scheme.

Key Features

Under the act, farmers have been granted ownership rights of government

lands which were in their occupation for several decades. However, the act

prohibits them from selling the land for commercial purposes.

The refugees of 1947, 1965, 1971 and others have been debarred

from this Act while as for the benefit of peasantry class, the Government

has fixed a slab of 12.5 acres which was sufficient for farmers. The classes

fall under LB-6 and LB-7 categories have been already exempted from

this Act.It has been urged upon the State Government to exempt all those

who have been living Below Poverty Line (BPL) from the purview of the

Roshni Act. Many a times various flaws in the erstwhile Roshni scheme

formulated by the previous National Conference regime has been

pinpointed.

It has been argued upon by various members in the legislative assembly

that market prices should be fixed for land which has been utilized for

commercial purposes as well as encroached by land mafia.