Schemes for Rural Industrialization

 

National Programme for Rural Industrialization (NPRI) :

 

The setting up of Rural industrial units is primarily the concern of private entrepreneurs. However, the Central Government have formulated many schemes for the development and promotion of such units throughout the country.  The Finance Minister in his Budget Speech for 1999-2000 announced the National Programme for Rural Industrialization (NPRI) to promote clusters of units in rural areas aiming to set up 100 rural clusters in each year. Office of the Development Commissioner (SSI) has been designated to coordinate the programme with various Ministries/agencies who are also engaged in similar programme.  No separate budgetary allocation were made for the purpose.  It was, therefore, decided to coordinate and synergies the efforts being made by various Ministries/Departments/organizations and the State Governments so as to have a concerted effort towards setting up rural clusters. Khadi & Village Industries Commission has taken up 50 rural industrial clusters for development during the year 1999-2000. SIDBI also has selected 25 clusters for development.  The rest have been taken up by Office of the DCSSI, NABARD and the States.  The implementation of the programme is being done at district level by an implementing committee under the District Magistrate with members from other related Ministries/agencies.  A state level Committee has also been constituted under the Chairmanship of Secretary, Industrial/Rural Development to oversee the implementation of the programme.  A Third Committee at National level has been constituted under the Chairmanship of Development Commissioner (SSI) to formulate policy and guidelines, set up target for the year and coordinating among the heads of the various Ministries/agencies.  The identification of cluster has already been completed and diagnostic studies taken up for identifying the needs of the cluster. On the basis of the diagnostic studies, implementation strategy will be drawn up. In some cases, implementation is already under way. The resources/funds needed for the programme are being pooled from various Ministries/agencies.

 

Integrated Infrastructural Development (IID) Centres :

 

Besides this, Central Government formulated another Scheme for setting up Integrated Infrastructural Development (IID) Centres in rural and backward areas of the country since the 8th Five Year Plan Period.  During the 8th Five Year Plan a target of 50 such IID Centres were set.

 

During the 9th Five Year Plan also the scheme has been allowed to continue.  Under this scheme, the Central Government provides aid in the form of grant up tp Rs. 2.00 crores (Rs. 4.00 crores in case of North-East Regions) for a project with an investment of Rs. 5.00 crores excluding the cost of land to State Governments for setting up IID Centres, there is a provision of loan from SIDBI upto Rs. 3.00 crores.  A project of 15 to 20 hq. is expected to accommodate about 400 Small Industrial Units in rural and backward areas.  The cost over and above Rs. 5.00 crores is borne by the State Government who are expected to select appropriate site for the project and implement through an Implementing Agency of their own. A statement showing the IID Centres which have already been sanctioned so far, is enclosed.

 

RURAL INDUSTRIAL UNITS

 

The setting up of rural industrial units is primarily the concern of private entrepreneurs. However, the Central Government have formulated many schemes for the development and promotion of such units throughout the country.

 

Assistance given by KVIC for setting up units in rural areas

 

Up to 1994, KVIC was assisting for establishment of rural industrial units for the selected number of industries under the purview of KVIC from the budgetary sources. Under the pattern approach, there was liberalised patter of assistance with higher grant for hill, border, tribal and weaker section areas. As per the recommendations of High Power Committee, constituted under the chairmanship of the then Prime Minister, from 1.4.1995 KVIC has switched over to project approach and KVIC is providing margin money grant for establishment of industrial units in the rural areas. The grant component is 25% of the project cost in normal cases however in NE region, Andaman & Nicobar and Sikkim state this grant component of margin money is 30%.

 

Bamboo & Cane industry

 

KVIC took over the development of bamboo and cane industry in 1968-69 and emphasis was laid on manufacture of fancy, value added articles in addition to traditional items which would fetch relatively better income for artisans.

 

The activity of this industry is prominent in the states of Maharashtra, U.P., Rajasthan, J&K, West Bengal, Punjab and A.P.

 

The KVIC’s developmental activities emphasises in bringing of scattered artisans under the institutional framework of cooperative and registered institutions by providing them finance, improved tools and equipments and marketing facilities.

 

During the year 1998-99, various cluster development programme to facilitate the surrounding scattered units with technical and financial assistance were identified. Rs. 24.15 crores is outstanding loan under this industry as on 31.03.99 through the budgetary source.

 

The industry has good potential to provide employment to scheduled castes, scheduled tribes and weaker sections of the community which accounts for 44% of the employment under cane and bamboo. Women’s participation is around 40%.

 

Mat Weaving (Fibre) industry

 

This industry under the purview of KVIC has grown consistently during the past years.

 

The development strategy of the KVIC envisages introduction of different improved tools for processing different fibres so as to make the product competitive in quality and finish. Some of the other objectives of the KVIC are identification of new sources of raw materials and development of improved methods of extraction of fibres. Scope for introduction of power loom in kora mat weaving for increasing productivity and wages was explored. Study was also conducted for manufacturing of design mats out of kora grass for improving marketability and value addition.

 

Prominent states under this industry are U.P., Maharashtra, Rajasthan, Punjab and West Bengal.

 

About 43% of the employment under fibre industry is shared by SC and ST. The women’s participation is around 56%.

 

An amount of Rs.24.26 crores is outstanding as on 31.03.1999 under this industry.

 

A developmental unit is functioning at Srikariyam, Thiruananthpuram (Kerala) where new designs of different articles are developed, case studies of different items under fibre industry are undertaken. So far, 650 new designs (in addition to 36 designs during 1998-99) and 36 case studies have been done by the centre for development of the industry.

 

Assistance provided by Coir Board

 

The board has taken several steps for the development of coir industry in India through implementing various schemes under the following activities:-

 

·        Science & technology and training.

·        Domestic market development.

·        Export promotion and trade information service.

·        Welfare measures.

·        Quality improvement.

·        Development of brown fibre sector.

·        Mahila coir yojana under targeted programme for coir development.

·        Integrated coir development project under co-operativisation scheme.

 

The thrust of research and development efforts under the science and technology is on modernization of production infrastructure, elimination of drudgery in spinning and weaving, improving productivity and efficiency. Development of motorized ratt and automatic spinning machine for spinning coir yarn and sem automatic loom and fully automatic loom for weaving coir matting motivated the entrepreneurs to set up units for spinning coir yarn and weaving mats and mattings. To meet the requirement of trained manpower Coir Board runs its training institutions located in Kerala, Taminadu, Karnataka, Andhra Pradesh, Orissa and Assam.

 

Financial assistance

 

The financial assistance scheme an entrepreneur is eligible for a one-time subsidy of 25% of the cost of equipment and infrastructural facilities with a ceiling limit of Rs.1.5 Lakhs to set up a coir unit. For renovation/modernization of the existing units, the board provides financial assistance to the tune of 25% of the cost subject to a maximum of Rs.0.50 Lakhs. The financial assistance to coir industrial units is not granted on the basis of any statewise allocation.

 

A total outlay of Rs.657.54 Lakhs has been provided for extending financial assistance to set up coir units during IX five year plan. For the current financial year (1999-2000) an outlay of Rs.75 Lakhs has been provided for this purpose.

 

Assistance provided by the office of the DC(SSI)

 

Integrated Infrastructural Development Scheme

 

The scheme of Integrated Infrastructural Development (IID) for small scale industries facilitates setting up of industries in the rural/backward areas.  The scheme covers backward districts/rural areas which were not covered under the Growth Centres Scheme

 

The objective of the IID scheme is to create and develop infrastructural facilities like developed sites, power distribution network, water, telecommunication, drainage and pollution control facilities, roads, banks, raw materials, storage and marketing outlets, common service facilities and technological back up services.  Under the scheme, the concerned State Governments are required to select suitable sites  in the rural/backward areas, firm up the project proposals and get the project appraised from SIDBI.  The estimated cost to set up an IID Centre is Rs. 5 crores (excluding cost of land) which is shared between the Government of India and the Small Industries Development Bank of India (SIDBI)in the ration of 2:3.  For North-East Region the share basis is 4:1. 

 

Funds allocated for 1997-98 were Rs. 15 crores, for 1998-99 Rs. 24 crores and Rs. 15 crores for 1999-2000.  As on date 52 IIDs have been sanctioned, out of which 5 have been official abandoned, 47 IIDs are at various stages of implementation. So far a sum of Rs.2725.28 Lakhs has been released as government grant for this purpose.

 

Other measures

 

The Finance Minister in his Budget Speech for 1999-2000 announced the National Programme for Rural Industrialisation (NPRI) to promote clusters of units in rural areas aiming to set up 100 rural clusters in each year. Office of the Development Commissioner (SSI) has been designated to coordinate the programme with various Ministries/agencies who are also engaged in similar programme. No separate budgetary allocation were made for the purpose. It was, therefore, decided to coordinate and synergies the efforts being made by various Ministries/Departments/organizations and the State Governments so as to have a concerned effort towards setting up rural clusters. Khadi and Village Industries Commission has taken up 50 rural industrial clusters for development during the year 1999-2000. SIDBI also has selected 25 clusters for development. The rest have been taken up by Office of the DC(SSI), NABARD and the States. The implementation of the programme is being done at the district level by an implementing committee under the Districit Magistrate with members from other related Ministries/agencies. A state level committee has also been constituted under the Chairmanship of Secretary, Industrial/Rural Development to oversee the implementation of the programme. A third committee at national level has been constituted under the chairmanship of Development Commissioner (SSI) to formulate policy and guidelines, set up target for the year and coordinating among the heads of the various Ministries/agencies. The identification of cluster has already been completed and diagnostic studies taken up for identifying the needs of the cluster. On the basis of the diagnostic studies, implementation strategy will be drawn up. In some cases, implementation is already under way. The resources/funds needed for the programme are being pooled from various Ministries/agencies.

 

 


 

 

 

 

 

 

 


Rural Employment Generation Programme (REGP)

 

 

INTRODUCTION

 

On the basis of recommendation of the High Power Committee report, submitted in May 1994, headed by the then Prime Minster of India, the KVIC launched Rural Employment Generation Programme (REGP) with effect from 1st April, 1995 for generation of two million jobs under the KVI sector in the rural areas of the country.  The term rural areas has been defined under the KVIC Act, 1956 as under:

 

Any area classified as village as per the revenue records of the state, irrespective of population. 

It also includes an area classified as town, provided its population does not exceed 20,000 as per 1991 census.

 

Similarly, the term village industries has been defined as "any industry located in rural area which produces any goods or renders any service with or without the use of power and in which the fix capital investment per head of artisan or worker does not exceed Rs. 50,000 or such other sum as may be specified by Central Government from time to time". All activities which do not appear in the negative list circulated by KVIC are eligible for financing under the scheme.

 

MAIN OBJECTIVES

 

To generate employment in rural areas.

To develop entrepreneurial skill and attitude among rural unemployed youth.

To achieve the goal of rural industrialization.

To facilitate participation of financial institutions for higher credit flow to rural industries.

 

SALEINT FEATURES OF THE SCHEME

 

The scheme is applicable to all village industries project set up in rural areas.

The eligible agencies under the scheme are (i) individuals (rural artisans/entrepreneurs) ii) institutions cooperative societies, Trusts & SHGS for projects upto Rs. 25.00 lakhs.

Partnership Firms Private/Public Limited companies, Joint ventures, Jt. Borrowers, Co-obligators of HUF are not eligible under the Scheme. 

Under this programme, capital subsidy in the form of margin money is provided at the rate of 25% of the project cost upto Rs. 10 lakhs and 10% on the balance project cost upto Rs. 25 lakhs.

In case of weaker section beneficiary viz.  SC/ST/OBC/ Women/Physically Handicapped/Ex-servicemen and for Hill border and Tribal Areas, North Eastern Region, Sikkim, Andaman & Nicobar Islands, Lakshadweep, Margin Money grant will be at the rate of 30 per cent of the remaining cost of the project.  Cost of land should not be included in the project cost.

Under the scheme, the borrower is required to invest his own contribution of 10 per cent of the project cost.  In case of SC/ST and other weaker section borrowers, the beneficiary’s contribution will be 5% of the project cost. 

Banks will sanction 90 percent of the project cost in case of general category borrowers and 95 percent of the project cost to the weaker section beneficiaries/institutions and disburse full amount of the loan.  After the sanction of the credit facility by the Bank branch, eligible amount of Margin Money will be kept in Term Deposit of two years in the account of the borrower at the leading bank branch, which will be credited to the borrower’s loan account after a period of two years from the date of first disbursement of loan. 

 

IMPLEMENTATION

 

            Presently KVIC is implementing REGP through :

 

All Public Sector Banks,

All regional Rural Banks,

Co-op. Banks approved by the State/U.T. KVIBs, Private Commercial Banks approved by the state KVIBs and 

Other Financing Institutions of State & Central Govt. as approved by KVIC.

 

Sponsorship – Sponsoring of Project by any agency is not mandatory. However, KVIC’s State/Regional Offices and State KVI Boards/DIC may sponsor the project if approached.

 

EDP Training -  Once the project is sanctioned by financing branch of the Bank, before releasing the second installment of loan, beneficiary is to be imparted 3-day training arranged by the State/Regional Director.

 

Status and Progress of REGP

 

The programme has been showing a regular growth for last 5 years and the performance during the year under report shows even better performance.  During the year 2003-2004, the number of projects financed was 24,747 as against the 21024 number of projects financed in the previous year.  Further in Employment Generation through the Scheme, the West Bengal stood at No. 1 followed by Rajasthan, U.P., Kelrala, Tamilnadu and Assam. 

 

 (a)       Flow of Funds: For extending support to the entrepreneurs for providing margin money and other backward forward linkages, an amount of Rs. 209.92 was released to meet the margin money claims of the entrepreneurs and another Rs. 14.09 crores for the purpose of arranging backward, forward linkages for the REGP units in the Country. The banks which include the nationalized commercial banks as well as cooperative banks, extended financial assistance of about Rs. 800 crores which helped the entrepreneurs to establish the units.

 

(b)  Categorywise distribution of projects: The number of projects sanctioned (category-wise) during 2003-04 are as under:- 

 

Sr. No.

Category

No. Projects

1.

Scheduled Castes

2123

2.

Scheduled Tribes

1160

3.

O.B.Cs.

6207

4.

Minority Community

1942

5.

Ex-Servicemen /physically handicapped

468

6.

General

12847

 

Total

24747

 

Women

5726

 

From the above table, it may be seen that the percentage in each category to the total number of projects was fairly good for all the categories i.e. for Scheduled castes it 12.82%, for Scheduled Tribes 10.54%, OBCs 15.81%, women entrepreneurs 29.51% and others which include ex-servicemen, Physically handicapped, hill and border areas 3.68%.

 

(c)        Cost-wise Range of REGP Projects: Though the units that have been set up differ from State to State with respect to size and industry, the financing pattern shows that there has been a distribution of all type of industries with respect to project cost e.g. the share of projects upto 1.00 lakhs was 32.92%, Rs. 1.00 lakh to Rs. 5.00 lakhs was 27.69%, Rs. 5.00 Lakhs to Rs. 10.00 lakhs was 29.55% and 10.00 lakhs to Rs. 25.00 lakhs was 12.84%.  This shows that the number of small projects on the whole was on the higher side.

 

(d)        Industry-wise Development: The KVIC has broadly classified all village Industries into 7 groups and care is taken to see that the development in all industries is according to the availability of local needs, raw material, technical competency and the market requirement.  The maximum number of units established was in the Agro and Food Processing followed by the services sector. 

 

(e)        Physical Performance of REGP:       During the year 2003-04, a total of 24747 projects have been financed under the scheme generating 469030 number of employments.  A sum of Rs. 264.38 crores have been utilized as margin money for this period.  The State-wise performance under the scheme for the year 2003-04 is given at Table-I.  The cumulative figures in respect of number of projects financed, cumulative employment generated, cumulative investment and cumulative margin money utilizes under the REGP scheme till 31.03.2004 are given at Table-II, Table-III, Table-IV and Table-V, respectively.

 

f)          Backward and Forward Linkages:    The KVIC provided financial assistance to its State Offices as well as the State Khadi and Village Industries Boards for establishing backward and forward linkages of the entrepreneurs/institutions.  Under this an amount of Rs. 140.90 lakhs was released which was utilized for organizing 187 Nos. of workshops, 293 awareness camps, 170 Nos. of exhibitions, 284 Bio-Manufacturing Projects. 78 Entrepreneur Development Programmes (EDPs) were also organized during the year 2003-04.

 

NEW INITIATIVES

 

For smooth implementation of the programme, the Commission took the following new initiatives during the year 2003-04:-

 

·        Decentralisation of the implementation of the scheme by making payment of margin money through State Offices and State KVI Boards.

·        Fixation of targets for projects and Margin Money for all field offices based on Rural Population of the State.

·        Financing of units based on coir as raw material was allowed.

·        Financing of auto-rickshaws in Andaman and Nicobar Islands, house boat, shikara and tourist boat in Jammu and Kashmir were also allowed under rural transport, keeping in view the special requirement of these States.

·        For providing information/guidance to the new entrepreneurs, REGP helping counters were opened in all the field offices of the Commission and the State KVI Boards. 

·        For payment of margin money besides 33 States KVI Boards, 346 number of model branches of Public Sector Banks were identified.  They were provided margin money in advance on quarterly basis. 

·        Training to all KVIC/KVIB’s field offices staff was provided to acquaint them with the implementation of the programme.

·        Extensive publicity programme was made through workshops, awareness camps, exhibitions etc.

·        A system of awarding best banks, field officers and the staff for their contribution to the programme was introduced.  Awards to Punjab National Bank, Central Bank of India and Oriental Bank of Commerce have been given under this scheme. Awards to KVIC Officers and staff were also given in recognition to their active performances in implementation of the REGP scheme.