NRLM: Transforming Rural Livelihoods in India

Millions of women in rural India start their week with a small ritual: a group meeting, a little cash pooled together, and a shared ledger. This is not a bank in the traditional sense, but for many households, it works like one. Behind this quiet transformation is the National Rural Livelihood Mission (NRLM), one of the government’s most ambitious efforts to fight poverty by building institutions that the poor themselves manage. Let’s understand what NRLM does, why women are at its center, and where the programme still struggles.

What is NRLM and why it was created 🔗

The National Rural Livelihood Mission was launched in June 2011 by the Ministry of Rural Development, restructuring an earlier scheme called the Swarnajayanti Grameen Swarojgar Yojana. The redesign drew on lessons from successful community-based poverty programmes in states like Andhra Pradesh, Kerala, and Tamil Nadu. In 2016, the mission was renamed Deendayal Antyodaya Yojana-NRLM (DAY-NRLM) to honour Pandit Deendayal Upadhyaya and sharpen its focus on the poorest households.

At its core, NRLM works on a simple but powerful idea: poor households already possess the drive and capability to improve their lives. What they lack is a platform. So instead of handing out subsidies directly, the mission organises rural poor households into Self Help Groups (SHGs), and then federates these groups into larger institutions, so people build assets, skills, and financial credibility collectively rather than in isolation.

The building blocks of the mission 🔗

NRLM’s approach rests on four interconnected tasks: mobilising poor households into SHGs and their federations, improving access to credit and financial services, building skills for self-employment and wage work, and strengthening market linkages. Each SHG typically has 10 to 20 members who save small amounts regularly, lend to each other, and gradually become eligible for bank credit. These groups are then federated into Village Organisations and Cluster Level Federations, creating a layered structure that can negotiate with banks, panchayats, and markets far more effectively than an individual household ever could.

Why women and SHGs are at the heart of NRLM 🔗

NRLM deliberately targets women. The idea is to mobilise at least one woman from every identified poor rural household into an SHG network, since women are more likely to reinvest earnings into family welfare, and because they have historically been excluded from formal financial systems. Today, the numbers reflect the scale of this effort: the mission has mobilised over 8 crore women into more than 87 lakh SHGs across the country.

Financial inclusion as a starting point 🔗

For many rural women, an SHG is their first real interaction with the formal banking system. Regular savings and internal lending build a credit history, which eventually opens doors to bank loans without collateral. This has translated into massive numbers on paper: SHG-linked bank credit is now reported to have crossed several lakh crore rupees, with a comparatively low rate of loan default. This matters because it proves that women, when organised and supported, are reliable borrowers, something that traditional banking had long doubted.

Beyond money: skills, voice, and Sakhis 🔗

NRLM doesn’t stop at credit. It trains SHG members as community resource persons who then support their peers, such as Krishi Sakhis for farming advice, Pashu Sakhis for livestock care, and Bank Sakhis for banking services. This peer-to-peer model is deliberate. Instead of relying only on external experts, the mission builds a pool of trained women within the community who can extend services, which is both cost-effective and more trusted at the grassroots level.

The mission also uses SHG platforms to raise awareness on issues like domestic violence, nutrition, sanitation, and girls’ education, treating economic empowerment and social empowerment as two sides of the same coin. Research backs this connection. A 2020 survey in Maharashtra found that SHG membership under NRLM had a strong positive effect on political participation, financial literacy, mobility, and household decision-making, with the strongest gains seen among women from marginalised caste and tribal communities, who are the mission’s core priority group.

The impact NRLM has made 🔗

It would be fair to call NRLM one of the largest social mobilisation efforts in the world. Millions of women who once had no independent income or bank account now run micro-enterprises, sit on village-level federations, and take decisions that affect their households and communities. The government’s “Lakhpati Didi” initiative, which tracks SHG women earning over one lakh rupees annually, illustrates how far some participants have progressed from mere subsistence to genuine entrepreneurship.

Livelihood diversification is another visible outcome. Programmes under the NRLM umbrella, such as the Start-up Village Entrepreneurship Programme, have helped women move into micro-enterprises like food processing, tailoring, and handicrafts, rather than depending solely on agricultural wage labour. Financial institutions have also benefited, since SHG lending has proven to be a low-risk, high-repayment segment, encouraging banks to expand rural outreach they might otherwise have avoided.

Where the evidence is mixed 🔗

Not every study paints an unqualified success story. A World Bank assessment covering Jharkhand, Maharashtra, and Madhya Pradesh examined the mission’s effect on women’s labour force participation and self-employment outcomes, offering a more cautious picture than the aggregate mobilisation numbers suggest. Similarly, the Maharashtra survey mentioned earlier found that more than 90 percent of SHG members had not used their group’s funds to start any new income-generating activity, meaning that for many women, SHG membership improved confidence and financial habits more than it directly created new businesses.

The challenges in scaling NRLM 🔗

Running a programme of this scale across diverse states, languages, and local economies is never simple. Several recurring problems show up in evaluations and field studies.

Uneven group functioning 🔗

Not all SHGs are equally active. Studies have flagged issues such as groups holding zero meetings for extended periods and weak member enthusiasm, which undermines the entire model since SHGs are meant to function through regular savings and collective decision-making.

Training that doesn’t translate into livelihoods 🔗

The mission invests heavily in skill training, but a review of rural development programmes found that many training sessions end up becoming an end in themselves, with neither trainers nor participants following through to ensure the skills actually lead to income-generating projects. Weak monitoring at the grassroots level often means that outcomes are not tracked closely enough to fix these gaps.

Low diversification into higher-value activities 🔗

A decade-long review of the mission noted that most SHGs remain concentrated in low-productivity, primary-sector work, mainly agriculture, with limited adoption of technology. Moving members into higher-value non-farm enterprises remains an unmet goal, even years after the mission was designed with exactly that ambition.

Funding constraints 🔗

Compared to other flagship rural schemes, NRLM has historically received smaller budget allocations relative to the scale of its mandate. While recent years have seen year-on-year increases, the mission’s champions argue that matching its funding to its ambition, especially post-pandemic, is necessary if it is to remain transformative rather than merely functional.

Weak convergence and capacity gaps 🔗

The mission’s own implementation framework acknowledges inadequate capacity building, weak banking linkages, and underutilisation of funds as persistent hurdles. Coordinating across district administrations, banks, and multiple government departments is administratively demanding, and gaps in this coordination often slow down what should otherwise be a fast-moving, community-led process.

What the road ahead looks like 🔗

NRLM’s basic architecture, mobilising the poor into self-managed institutions rather than treating them as passive beneficiaries, is widely regarded as sound. The real test lies in execution: strengthening weak SHGs, ensuring training actually leads to sustainable enterprises, pushing diversification beyond agriculture, and matching funding with ambition. As states experiment with direct benefit transfers routed through SHG platforms and expand the role of community resource persons, the mission is gradually shifting from being a poverty relief scheme to a more permanent institutional presence in rural India.

What do you think? Do you think peer-led models like SHGs are more effective at building financial habits than direct cash transfers? And what would it take for more SHG members to actually convert their skills training into a running enterprise?

References

1. https://manipursrlm.gov.in/day-nrlm/
2. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2181702&reg=3&lang=2
3. https://www.orfonline.org/research/the-national-rural-livelihoods-mission-drawing-lessons-from-the-first-ten-years
4. https://thedocs.worldbank.org/en/doc/62141abf1152d94953e76c11345c869f-0310022021/related/SARL-India-Final-Report-Final-May22.pdf
5. https://www.academia.edu/105570384/A_STUDY_OF_COMPONENTS_OF_DAY_NRLM_IN_PROSPECT_OF_RURAL_WOMAN_EMPOWERMENT
6. https://www.ideasforindia.in/topics/governance/rural-development-programmes-implementation-challenges-and-solutions
7. https://msrls.nic.in/sites/default/files/nrlm-framework.pdf