June 22

Sriram Gutta

Cut Off From Infrastructure, Not From Support: SKS NGO Builds Self-Reliance in Isolated Communities

Ratnagiri Divakar is the vice president-programs at SKS NGO and currently heads all its initiatives. Divakar has an M. Sc., (Ag) and PhD with 29 years of experience in rural development, rural banking and finance, livelihoods and women’s empowerment programs.

Earlier this week, I had the opportunity to speak with him about SKS NGO’s ultra poor pilot in Orissa, exploring some of the challenges he faced while working with such isolated communities and gathering his thoughts on the scalability of these models. (Full disclosure: the Orissa pilot was part of the Sorenson / Unitus Ultra Poor Initiative, for which I was the program manager).

The purpose of SKS’s ultra poor programme is to create sustainable livelihoods so that those living in extreme poverty can graduate into one of two paths:

• Join an existing microfinance programme in the area (for the few that wish to expand their business or diversify into other activities)

• Continue saving in groups and use their savings to strengthen and diversify their asset base (a viable transition for most)

Sriram Gutta: The program in Orissa was the second ultra poor pilot for SKS NGO; can you explain a bit about the decision to test the model in the north and why you chose to work with the tribal community in Orissa?

RD: After a successful pilot in the Narayankhed region in the Medak district of Andhra Pradesh, we wanted to replicate the model in other parts of the district. However, there was some thought that our Narayankhed pilot was successful because of the strong presence of SKS Microfinance in the area and benefited from the progressive Andhra government. Addressing these issues head-on, we challenged ourselves to successfully replicate the model in a totally different geography. With this in mind, we selected the KBK Districts (Koraput, Bolangir and Kalhandi Districts) of Orissa state for our next pilot as they were ultra poverty hot spot districts with core ultra poverty indicators.

SG: The first pilot was based on SKS NGO’s CGAP-Ford Foundation Graduation Program-modeled Ultra Poor Program (UPP) in Andhra Pradesh. Were there components of the original pilot that you thought would translate well but didn’t? Were there elements that you did not expect to succeed but did?

RD: SKS works on these pilots with the belief that we must work with the ultra poor within the context of the way they are currently living, so the one size fits all approach of the first pilot couldn’t be replicated. We define the ultra poor as those at the very bottom of the socio-economic ladder with an income less than $1.25/day and lives marked by instability and vulnerabilities. So in adapting the model for Orissa, we had to contextualize the model to the local socio-economic characteristics of the area where we work.

For example, in our Narayankhed and other graduation pilots based out of rural locations, asset transfer of cows and goats worked because, for the pilot’s participants – women – , it did not interfere with their other work of dairy cultivation and rearing. However, in Orissa’s tribal context, the women had very few avenues for earning outside of these assets.

Our team thus used a combination of skills training for a new livelihood enterprise and asset transfer for the women. We identified the key needs of the people, such as electricity, hygiene, and eating well during a celebration, and developed livelihoods like candle making, detergent manufacturing, and mushroom cultivation that, in part, met those needs. SKS NGO identified what the beneficiaries most needed, trained them on the necessary skills, and helped them sell the products within their village and in weekly fairs. This reduced their overall dependence on external markets to buy and sell these items, improving their economic independence.

Furthermore, in our earlier pilot, we had a voluntary savings component where members had the option of saving a flexible amount. In Orissa, most members had never saved and failed to understand the importance of savings during an income shock. Through a series of group sessions and role-playing games, we educated participants on the need for regular savings, and made it mandatory for each member to save at least Rs 10 (US $0.20) per week. By the end of the intervention, some of members had managed to save over Rs 10,000 (US $200), amounts that could easily cushion a household against future shocks. These regular savings made it easier for us to form self help groups (SHG) of 10 to 15 members each with our pilot participants. Self help groups refer to groups of people that save together and pool their resources to lend funds to members of the group as needed. Members make small regular savings contributions over a few months until there is enough capital in the group to begin lending. The linkage was critical as after the program withdrawal, members would have needed additional resources to grow their businesses. In the absence of microfinance institutions, SHG group loans were their only option to access credit.

SG: Working in a community as physically and economically detached as that in the pilot forced the team to get creative to meet their goals – how did you come up with the ideas such as the food bank scheme and community health professionals?

RD: Our main goal was to make the pilot participants self-reliant and develop capabilities within the tribal communities to cope up against issues around healthcare, income generation, and access to credit.

Geographically, the area is very challenging due to limited access to goods and services; for example, poor women have to travel 40 km to get a simple tablet for a basic ailment like a cough or a cold. The villagers needed a local and healthcare option, so we created last mile medical services delivery through our “barefoot doctors” – a paid female village member trained to identify basic symptoms and treat through a color-coded packaging system.

As for the food bank, we found that most households that we worked with ate only one meal a day and were often malnourished with a hemoglobin count of <9. With any sort of shock, these people had to rely on neighbors for food or borrow at high interest rates. To ensure year-round access to rice in case of an emergency, we started a community food bank programme that asked each member to save a fistful of rice everyday and to add it to a community pot at the weekly meeting. Eventually, the food bank scheme was so popular that even the non-ultra-poor members of the village started replicating it.

SG: Several months have passed since the initial pilot concluded – how have the components designed to promote self-reliance fared?

RD: The pilot officially concluded in December 2011, but we are conducting random checks to verify the continuation of the community food bank scheme, savings, bank linkages, medical services and regular group meetings. We have been thrilled to see that women are continuing with the various practices even after concluding the pilot. . We are also planning to commission a short study to analyze the impact of each component after pilot conclusion.

But to detail further on each of the above programs – the food bank has become a community institution. The barefoot doctors are not only dispensing medication for primary ailments, but also coordinating with local primary health care centres to dispense free medication from the government for diseases such as malaria and tuberculosis. And with the SHGs linked to State bank of India, 59 out of 61 groups have been able to obtain at least one loan from the bank. The repayment rate has been 100% so far and the total loan amount sanctioned has already exceeded the project investment that we put up over 24 months.

What’s next for SKS NGO’s UPP?

RD: According to a World Bank report, India has over 400 million ultra poor who live on <US $ 1.25a day. A complete eradication of ultra poverty on a pure grant model would warrant hundreds of billions of dollars in spending. With such a model we might not be able to eradicate ultra poverty in our lifetime.

We need sustainable models that can scale and thus bring down the cost per beneficiary. We have taken a first step in this direction in our current pilot in Andhra Pradesh, India. Instead of giving assets and skills free of cost, we have taken a two pronged approach – a soft loan that members repay over a period of time and a grant component to cover skills training and healthcare. If applied, this model will help in reducing the cost to half of that in Orissa and help us reach double the beneficiaries with the same amount. Additionally, we are planning to stagger our intervention timeline, where instead of graduating all members together at the end of 24 months, we will graduate members as soon as they meet our criteria.

To read more about the SKS NGO pilot in Orissa, please visit

microcredit, poverty alleviation, skill development