Basics of Livelihood Plan Preparation
54
Transcript of Basics of Livelihood Plan Preparation
Resource Centre, SPADE52, Garfa Main Road, Kolkata- 700 075
Ph: 033 2418 5452, 2418 6171
Income Enhancement Plan PreparationA Handbook for the Livelihood Facilitators
Income Enhancement Plan Preparation : A Handbook for the Livelihood Facilitators
First Edition : May, 2010Second Revised Edition : January, 2014
Copyright : Publisher(None of the parts of this Book could be published or utilized commercially without written permission of the Publisher)
Published by : Resource Centre, SPADE52, Garfa Main Road, Kolkata-700075, Ph: 033 24185452, 24186171,Email: [email protected],Website: www.spadewb.in
Printer: Mudrakar, 18A, Radhanath Mullick Lane, Kolkata - 700012Email: [email protected]
Since the last decade, SPADE – as a leading Capacity Building Institution, is providing Livelihood Promotion and Facilitation supports to the rural as well as urban poor in West Bengal and beyond through securing support from agencies like NABARD, Panchayat & Rural Development Department, Women Development Undertaking besides the local and International NGOs. In fact, Institution Building and Livelihood Promotion have became the major focus of SPADE and besides facilitating the poor in preparing their Income Enhancement Plans, SPADE is also providing Hand Holding Support in implementation of such Plans, providing Skill Training on selected trades, capacitating the Community Resource Persons in such activities, facilitating Linkage Development with different Government Departments and organising Exposure Visits for small and micro entrepreneurs so as to empower the poor women economically and socially
Income Enhancement Plan (IEP) is basically an innovative tool that has been developed by SPADE to facilitate the members of Self Help Groups (SHGs) to identify suitable trades or activities for themselves with minimal external intervention or influence. This step by step user-friendly tool had already been used by some thousands of SHG members in rural areas and Thrift & Credit Group members of urban areas. In many cases, the SHG members have reported an impressive growth of their income. In fact, preparation of IEP enables the SHG members to think critically before initiating a particular Income Generating Activity and thus helps them to make informed choices – choices based on some valid criteria or good reason.
Introduction
During the process of preparing Income Enhancement Plans, the SHG members would get ample scope to understand: What is the information required? What are the costs involved? What kind of supports or assistances is required? Where or to whom to contact for securing such supports? Thus, a comprehensive business outlook will get developed that will further be fine tuned through conducting local market or Haat Survey. Hence, the process has an in-built mechanism of assuring an ideal blending of conceptual learning and the scope for application of the concepts learned.
One of the interesting features of IEP is that it can not only accommodate the existing Income Generating Activities of the SHG members but also can supplement them so as to make them more profitable. This is so because the tool had been developed in consonance with the reality that poor people earn from a variety of sources and alongside adopts a number of measures to save expenditure.
As a tool IEP is equally effective for both on-farm and off-farm activities. Also, it can be applied across the different business types, viz., Production-oriented, trading or Service-oriented. Thus, it can not be denied that IEP is a highly flexible tool that assists the poor to make their own choice on the basis of some valid reasons.
Thus, we have reasons to believe that the present Handbook shall be of immense help for the Livelihood Facilitators, Federation Leaders, Community Resource Persons and NGO Workers who are actually involved in the task of promoting livelihood for the poor. We hope that the users shall properly follow the methodology described.
The Handbook had been developed by Anubrata Datta. Rajkumar Laskar and Dr. Dipak Bara Panda had also assisted him through providing some invaluable inputs. I am thankful to all of them who have directly or indirectly cooperated in bringing out the publication in time.
With Best Wishes,Baidya Nath PaulGeneral SecretarySPADE
Chapter 1 : About “Jibika”
1.1 What is “Jibika”
1.2 Distinctive features of “Jibika”
1.3 Objectives of this guidebook
1.4 Role of the Facilitators1.5 Methodology ---- at a glance
Chapter 2 : Area and Group
2.1 Selection of area
2.2 Rapport build-up with the area
2.3 Collecting primary data on SHGs
2.4 Information on members2.5 Rapport build-up with the SHGs
Chapter 3: Quick Rating
3.1 What is Quick Rating and why is it necessary
3.2 What steps to take to make a Quick Rating
3.3 Methodology for a Quick Rating
3.4 Making a Quick Rating and giving the certificate
3.5 Analysing the results of a Quick Rating3.6 Training according to the gaps identified of the group
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Content
3.7 Planning and training to fill the gaps
3.8 Follow up of training
Chapter 4 : Introduction of Income Enhancement Plan Preparation (IEPP)
4.1 Why should we plan for livelihood
4.2 Different types of generating activities
4.3 Various stages of IEPP
4.4 Fixed costs and variable/recurring costs4.5 Feasibility analysis
Chapter 5 : Implementation of Income Enhancement Plans
5.1 Various stages of IEPP
5.2 Implementation of IEPs
Annexure 1 : Detailed Methodology of Quick Rating
Annexure 2 : Feasibility Analysis
Annexure 3A : Income Enhancement Plan Preparation -- Production
Annexure 3B : Income Enhancement Process ---- Trading
Annexure 3C : Income Enhancement Process ---- Service
Annexure 4 : Information collected on sellers and buyers for feasibility analysis
Annexure 5A : Information sheet
Annexure 5B : Individual Member's Income Enhancement Plan
Annexure 6 : Consolidation of IEPs (Micro Credit Plan) of SHGs
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1.1. What is 'Jibika'?
1.2. Distinctive features of 'Jibika'
Jibika is the acronym of Income Enhancement Plan Preparation. The word 'Jibika' is built with the three initial letters
of 'Jibika Bikash Karyakram'. In English it is known as Income Enhancement Process. This is a continuous process.
Members of an SHG or TCG, who are either individually or together with other members of a group might get involved
or are already involved in a particular livelihood activity; need to have certain basic information at every stage, on the
various requirements of the business or trade. These are as follows:
Probable fixed and recurring costs,
The technical hitches or complications which may arise subsequently,
Who could be approached for assistance and who would be responsible for which job
Devising a project proposal with all this necessary information is generally called as Income Enhancement
Process or 'Jibika' in short.
The methodology of using team work to enhance the present income status
The process is participatory in nature
It helps the members to become self sufficient in developing their programme by utilising their own practical knowledge and experience
It teaches members to modify and improve the present livelihood and plan for a better job or, trade
The economic activity or, plan is better understood with pictures and flow chart
Members are in a position to clearly realise their own roles and those of others.
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About 'Jibika'Chapter 1:
1.3. Objectives of this guidebook
1.4. Responsibilities of Facilitators
Facilitators assist the SHG members in designing the income enhancement plans and thus they are in need of technical
help themselves; this handbook serves the purpose of capacity building of the facilitators to make 'Jibika' a successful
programme.
Sensitisation of group members on the methodology of Income Enhancement Process or, 'Jibika
Preparation of plans of individual members
Consolidating all the individual plans of the members at the group level
Building linkages with banks and other line departments for mobilising necessary assistance
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1. Area selection Communicating with SHGs,Clusters etc.
2. Rapport building with localities Awareness Campaign with “Jibika” leaflets
3. Collecting primary information on the local Gathering primary information from the SHG register of SHGs with information of the area the Gram Panchayat and filling up Chart-1 with the same
4. Collecting information about the individual members Filling up Chart-2
5. Establishing regular contacts through the facilitatorsEstablishing contact and interacting with the SHGs
1.5.Methodology - at a glance
Steps Ways in which steps are to be taken
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6. Getting ready for the Quick Rating by fixing Bringing out a half-page leaflet which is area specificvenue, date and time. and subject based and filling up Chart-3 for collecting
necessary information required for Quick Rating.
7. Quick Rating and giving Certificates (certificates Quick Rating ( Chart-4)will be awarded to the groups getting A and B. Strategies for groups who get C will be decided upon later).
8. Functioning for analysis of the results of Quick Description of specific weaknesses both area and groupRating and removing the gaps of the groups specific (Chart - 5,6,7) and training program based on(planning and training, with necessary assessment Specific weaknesses (Chart-8,9) according to progress made)
9. Follow up of training program Chart-10
10. Increased awareness level on “Jibika” fixing up Modules, leaflets and flow chart (production oriented,venue, date and time for next meeting service and trade specific), distribution of IEP formats
(Chart-11A,11B,11C and12 , Annexure-3A,3B,3C)
11. Survey of Hat and other markets Annexure-4
12. Accepting advise to implement project plans, Responsibilities accepted according to work planfixing responsibilities for implementation, and arranging for monitoringmonitoring and evaluation
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To form a preliminary idea watch the videodeveloped by SHG Promotional Forum
'Setu Bandhan'
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2.1 Selection of Area
2.2. Rapport build-up in the Area
In case the donor agency makes the area selection we have nothing to comment on it, but if we have the option to
identify and select an area, we should be alert on certain matters. There should be a fair scope of creating rapport with
the Panchayet, Banks and Government departments and other Non-Governmental Organisations. SHGs in those areas
should be of a good standard and the members should have an entrepreneurial attitude. The above mentioned criteria
will be the deciding factor in the success of 'Jibika'.
It is essential to develop an understanding with the people of our project area. Even though we shall build up rapport
with the whole populace, we shall put stress on building cordial relations with the following ones:
Panchayet Pradhan, Panchayet Members, officials of Panchayat and especially who entrusted with the
responsibility of SHG affairs and ofcourse the Community Resource Persons (CRPs).
Local Self Help Promoting Institutions (SHPIs) or NGOs
Local opinion leaders particularly those who are enthusiastic about the empowerment of women
The officials of the local bank
The office bearers and members of SHGs, Clusters and Federations
Leaflets have to be prepared stating what we wish to do, why and where. As a result, the people of the area will have a
clear understanding of what we are actually going to do. Common people also can easily remember the same. Here we
present a sample of the leaflet. According to requirement this leaflet could be modified and enlarged.
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Chapter 2: The Area and the Group
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Boost your income with 'Jibika'
You have formed an SHG or are a member of an SHG, but have failed to make yourself or others self- reliant. There was much espectation during the formation of the group, now the feeling is of dejection. But don't be disappointed. With the help of 'Jibika' you can advance towards self-reliance.
Members, either individually or together with a few others are planning to be engaged or are already engaged in a business or trade. They really need to collect information on the basic requirements at various stages of the trade, the probable amount of fixed or recurring costs involved, complications or problems, which may surface, whom to approach for various kinds of assistance and who among the group would be responsible for coordinating with them; 'Jibika' is there to assist you to plan well in advance by providing guidance. Years of experience has proved that 'Jibika' methodology is quite successful in income enhancement. We invite you to avail of this opportunity for implementing the income enhancement plans.
Matter of the leaflet:
2.3. Collection of Primary Information on the SHGs (including area-related information):l
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Why is collecting primary information vital?Collection of primary information on the existing SHGs in the area where we are supposed to work with the SHGs is
essential. We shall come to know about the exact status of the groups from these data and it is impossible to move
forward without them.
Where will the information be available?To get this information we must first visit the GP office, where the SHG register would be of immense help. Banks are
another great source of information on SHGs. Here is a format on the subject of the information to be collected.
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Name of District: Name of Block:Serial Name of Name No. of SHG Name of Name and Remarks
No. Gram of SHGs members Mouza/ Gram Tel. No. of
Panchayat Samsad office bearer
Chart-1 Format for collecting primary information on local SHGs
2.4 Information on Members:
The required format for collecting information of members is shown here:
Chart -2: Individual Information schedule of Members:
2.5 Building rapport with the SHGs:
Its better, if communication has already been in vogue with other SHGs. Otherwise, arrangements will have to be made for an open session of interaction with the groups. In this session, we have to be honest and transparent while talking to all present about the objectives of our work. We must ensure that the SHG members feel comfortable with our facilitators.
District: Block: G.P. Name of SHG: ˛
Name of the Member
Serial no
Age
Caste
AP
L / B
PL
Fam
ily Occupation
Gross M
onthly Incom
e of family(in R
s)
Present O
ccupation of M
ember
Average m
onthly incom
e(in Rs)
Special skill, if any
Willing to get involved
in new occupation
If so, why
What kind of assistance
required
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3.1 What is Quick Rating and why is it Important?Quick Rating is a process of determining the strengths and weaknesses of the Self Help Groups to get loans from the Banks, Federations and other Financial Institutions before assisting in the livelihood related activities of the members of the groups. This rating is done within a short span of time by applying a special method named Panchasutra. The methodology of this rating process is a quite distinctive one. The principal objective of Quick Rating is to determine whether the members of a particular SHG are capable of running a trade successfully with loans from financial institutions.
Quick Rating is a process whereby the eligibility and competency of an SHG are assessed. Generally rating of a SHG is done at definite (e.g., 6 months / 1 year) intervals. To decide the merit or relevance of a particular issue, some corresponding indicators are identified and each indicator is given a score. The sum of the scores obtained against the various indicators is considered to be the outcome of the particular evaluation.
The indicators generally being used in this rating are as follows:---1. a) Number of regular meetings held
b) Members' attendance at the meetings2. On time deposit of savings by members3. Internal lending within the group4. On time loan repayment by members
5. Maintenance and up-dated posting of books of accounts
To be very specific, Quick Rating is important to know the status of SHGs prior to starting livelihood related activities
for the SHG's members. The following information is generated through Quick Rating:-
What is the present status of the SHG
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Chapter 3: Quick Rating
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What are the main problems of the SHG
How the said problems could be resolved
a) A meeting has to be organised with all the members of the SHG at a fixed venue, date and time, with emphasis on
the location or venue, which is convenient for everyone.
b) The members will have to be informed about the Quick Rating at least a week before the fixed date.
c) At the time of Quick Rating the presence of all the members of the SHG is a must
d) Members will have to be requested to bring all the documents lying with them, for example -- (1) Individual
Passbooks (2) Minutes Book/Meeting Register, (3) Savings Ledger, (4) Loan Ledger, (5)Bank Passbook and (5)
Cash Book etc. will have to be brought at the venue of the meeting
e) The members must be informed about the time required at the meeting, i.e., 2 – 3 hrs -- well in advance
f) Seating arrangements must be made for all the members at the venue
The fact that a Quick Rating is going to be performed - must be made known well in advance to:-The office bearers of the SHG
The facilitators or organisations involved in nurturing the SHG
3.2 What are the steps for conducting Quick Rating correctly :-
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Recognize the status of your Self Help Group
You have formed the Self Help Group over a long period, yet you can not avail of any loans or any other
advantages. But have you tried finding out, why you are unable to get these? Is your group really strong, or
quite shaky? Have you identified the present standard of your group? Through the process of Quick Rating
you will come to know the actual status of your group. Banks carry out the necessary tests with certain
parameters for grading purposes. Before such grading is conducted by the bank, you better know the status
of your group with the help of Quick Rating. Quick Rating process will identify the exact weaknesses or,
gaps present in your group. You will get the opportunity to fill up the gaps or get rid of the
underperformances of your group. When you have removed the weaknesses of your group apply for Bank
Grading. If weaknesses remain in the group, then there is a high possibility of failing in the Bank Grading
process which is quite strict in nature. To find out the gaps or, weaknesses, Quick Rating is therefore
essential. It increases the acceptability of the SHG to the Banks and other supportive financial institutions.
A leaflet will have to be developed for convenience of group and the format of the leaflet is shown here :-
Matter of the Leaflet:
Name of the District Name of Block
Serial Name of Mouza / Name of Name of Telephone Date of Time of Venue ofno Gram Sansad SHG group leader number Quick Rating Quick Rating Quick Rating
Chart – 3: Plan of Mouza or, Gram Sansad based Quick Rating
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3.3. Methodology of Quick Rating:
Generally the activities of the past six months of a group are assessed to perform Quick Rating of that group. The indicators of Quick Rating are as follows……..
Indicator Value
No. of regular meetings 10
Attendance of members at the meetings 10
On time deposit of savings by members 20
Internal lending 20
On time loan repayment by members 20
Maintenance and up-dated posting of Books of Accounts 20
1. a)
b)
2.
3.
4.
5.
To measure the indicators stated above a systematic review will have to be done of the following registers:-
1. Minutes Book/Meeting Register 2. Attendance Register
3. Savings Ledger 4. Loan Ledger
5. Bank Passbook 6. Individual Pass-book7. Written Bye- laws of the group 8. Cash Book
The methodology of Quick Rating is illustrated in detail in Annexure – 1A
Grade A and B will be awarded on the basis of obtained marks. Based on the certification appropriate measures will be taken by the facilitators, Cluster and Banks. Granting of Grade:- C depending upon the marks obtained by the SHG will have to be considered after assessing the situation.
3.4. Quick Rating and Certification:
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Name of Indicator Value Marks obtained
a. No. of regular meetings
b. Attendance of members at the meetings
On time deposit of savings by members
Internal lending
On time loan repayment by members
Maintenance and up-dated posting of Books of Accounts
Total
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1. 10
10
2. 20
3. 20
4. 20
5. 20
100
Chart -4: Quick Rating Report of SHG
Name of SHG : Name of Village :
Name of Gram Panchayat : Name of Block :
No. of Members : Date of group formation :
Rate of Monthly Savings (in Rupees) : Marks obtained by the group in Quick Rating
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Observations of the Evaluator:
Sl No. Weaknesses of the SHG Strategies to be adopted forelimination of weaknesses of the SHG
Date of Quick Rating Signature of Evaluator
3.5. Analysing the results of Quick Rating:Use the following formats
Chart – 5 : Gram Samsad or Area wise Review Report of Quick Rating
Chart – 6: Classification of Self Help Groups on the basis of Quick Rating
District Block
Gram Total No. Total No. of Grade-A Grade-B Grade-C Unsuccessful RemarksPanchayat of SHGs Members
Name of District Name of Block Name of Gram Panchayat
Date of Reporting Evaluator's Signature
Sl. Name of Date of Meeting Attendance Savings Internal Loan On time Marks Remarks No. SHG Quick Lending Disbursement Repayment Obtained
Rating of Loan
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3.6. Training Program based on gaps of SHG:
Identify the gaps of SHGs with the help of Quick Rating and take necessary measures and also arrange for requisite training of the said SHGs.
Chart – 7: Description of identified weaknesses/gaps of SHGs as per Block based on Quick Rating
Sl. No. Name of Block Indicators Gaps/ Weaknesses
To eliminate weaknesses and gaps of SHGs, necessary provisions should be made for appropriate planning and hand-holding training programs, necessary discussions in an extensive manner. Work must be done .according to progress achieved gradually.
Proper schedule of training should be formed to reduce gaps and weaknesses of SHGs.
Chart – 8: Capacity Building Training Program
Name of Month Name of Trainer
Block G.P. Gram Date of Venue of No. of Number of Participants RemarksSamsad Training Training SHGs
3.7. Training, participatory discussions, particular planning is required to eliminate weaknesses and action must be taken according to progress achieved.
Members Others Total
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Chart – 9: Assessment Chart of Training Program
District Block G.P. Gram SamsadSl. Name of Name of SHG Initial Present RemarksNo. Trainer Status Status
Training programs should be regular, need based and continuous. To assess the training programs an appropriate format should be used. A sample format is illustrated here…
Chart – 10: Evaluation of Training Program
District Block Gram Panchayat
Contents/ Sub-contents Understood Not understood Remarks
3.8.: Follow up of Training Program
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4.1. What are the needs for planning for 'Jibika'?
4.2. Various types of Income Generating Activities
1. To bridge the gap between imagination and reality
2. To become successful in the initiative of enterprise and income enhancement
3. Participating critically in enterprise selection and project planning for its successful implementation
4. Before commencing an income generating enterprise one should be aware of the essential primary activities involved, viz., where to go, who are the people to meet, what are the inputs and materials required, how to get those resources, rates, costs involved, where's the market to sell products, expected profit margin from trading of the same etc, All this is necessary to be to achieve the desired success..
5. Everyone should have a clear idea about how much capital is required at different phases and how much profit could be generated in a certain period of time.
6. Income enhancement process should be followed to increase profit and there should always be an effort to reduce the margin of losses, if any.
7. It is mandatory to present a Micro Credit Plan to Banks and other financial institutions to avail of loans for business and the IEP helps one to put into words the said plan for Banks etc.
8. IEP is essential not only to get subsidy or, loans from Banks etc, but also for successfully putting into practice a sustainable income generating activity.
The members of Self Help Groups could be associated with three broad categories of income generating activities.
These are as follows:
Chapter 4: Introduction of Income Enhancement Process (IEPP)
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Production: Raw materials are purchased from the market and passed through several processes and
converted to produce a finished product which is then sold in the market to earn profit, for example, paddy
cultivation, goat rearing, pisciculture, jam making, weaving of towel etc.
Trading: Buying and selling of any particular product on a continuous basis to earn profit is known as trading,
for example grocery shop, clothing outlet, fertiliser or pesticide selling etc.
Service: There is another sector which is different from the businesses of producing or trading of anything
which you can see or touch, i.e., service, where you serve the consumer in a specific manner. Such as band
party, van/rickshaw driving, CD shop, beauty-parlour etc.
1. Inputs:Once purchased or built, these can be utilised for quite a long time.
There is no direct relation between the quantity of inputs with that of the produce or finished product.
In course of the production processes there are no fixed or tangible changes with the inputs. Such as in case of goat rearing, the inputs are the rope used to tie up the goats, water container, goat shelter etc. which is used over and over again.
2. Raw Materials:Repeated procurement of raw materials is a must for production.
The quantity of finished goods are directly proportionate to the quantity of raw materials.
There is a tangible change of raw materials in production processes and raw material is converted into a part of the new produce, e.g. in case of goat rearing, raw materials are kids, grower feed, medicines, grass etc. Raw material is converted into functional produce and is illustrated here:
4.3. Various Stages of IEPP
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Income generating activities Inputs Raw Materials
House Diary Tying Rope, Fodder, Water Container, Calves, Cereal, Grass, MedicineCowshed
Tailoring Sewing Machine, Scissors, Tape, Chair Thread, Cloth, Machine Oil
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3. Production Process or Value Addition:Production or value addition is a process which involves several steps.
In this process capital and labour is mixed with the raw materials procured from market.
As a result a new product is produced which is both usable and marketable.
e.g., molasses created from sugarcane.
4. Marketing:Generally marketing is defined as anticipation of buyer's demand, producing or procuring merchandise accordingly, fixing the right price of the said merchandise or service and earning a profit by the sale of the same.
Prerequisites of right kind of marketing:Who are the prospective customers? What should be the quality and price of the product- which is of utmost importance to these customers? What are the quality factors they look for in a product?
Find out the exact nature of their demands?
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Find out the target group whose demands are to be fulfilled
Find out how to fulfil those particular demands
Find out who are your competitors in the market and gather information on the quality and pricing of their products or services
Find out how to improve the quality of your products or services
What kind of infrastructure is required for marketing (Permanent shop, electricity / water connection, furniture etc.)?
Will you sell the products yourself or, through wholesale distributors?
Will you sell your products from home/ local market / hats / nearby town?
Is transport available there to reach the market and how much expensive is it?
Try to figure out the exact nature of demand of the product, duration of the demand, target group and also quantify the demand level in the market
You need to know when the rates of your products go up, find out the reasons behind it
More than a few forms of expenditures are associated with initiating a new enterprise or to continue with an established one. Proper accounting of all the expenditures associated with the business must be done in order to keep a track on the profit and/or loss made by the enterprise. Otherwise it would be difficult to keep the business operational. The expenditures associated with business are divided into two major heads:
Fixed Costs: There are certain expenses which occur only once to begin or run the businesses. These have no or little relation with the production or sale in the business and are known as fixed costs. With the increase in volume of
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4.4. Fixed Costs and Recurring/Variable Costs:
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production or more sales, there shall be no change in the fixed expenditures. That is why, in the beginning, if production could be raised, per unit cost of production with respect to fixed expenditure will be minimised.
Recurring/Variable Costs: The expenditures made repeatedly or quite often are called recurring expenditures. Recurring expenditures also change with the variation in production or sales. Recurring expenditures could be daily/weekly/monthly ones, or as per the business cycle. Fixed and recurring expenditures are illustrated here:
Income Generating Activities Fixed Cost Recurring Cost
Goatery Shed, Food bowl, Water container, Rope, Cereal, Medicine, Transport,Hessian Cloth, Cost of Goat Selling expenses
Pisciculture Fishing Net, Basket, Pong, Lime, Cost of Fish Spawn,Bucket Selling expenses
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Please discuss amongst yourselves to decide which are fixed costs and which are recurring costs from the chart shown here;
Identification of fixed and recurring costs: Goat rearing
The different expenditures are listed here. To identify the fixed and recurring costs please tick (ü) in the right box.
Items Fixed Cost Recurring Cost
Hessian Cloth
Cost of Goat
Subscription for market committee
Rope
Water container
Grower feed
Medicines
Medicines
Cost of shed
Insurance charges
Food for seller
Transport
Food bowl
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Total expenditures:In case of IEP the sum of fixed costs and recurring costs over a certain period of time is the amount of total investment or expenditure.
Net Profit:A part of the fixed costs and recurring costs are deducted from gross turnover to calculate the surplus and this surplus amount is the net profit. The formula is thus: Net Profit=Gross turnover less Recurring costs less Interest loan less Depreciation.
Why feasibility analysis of a project is necessary:
Before the commencement of a particular income generating activity, the SHG members ought to analyse the feasibility of the same if it's really to be useful in the preparation of the project proposal. If this could be done – the project would be a sustainable and a profitable one. The process or method of analysing an income generating activity before it has commenced, to validate its appropriateness is generally known as feasibility analysis. If the feasibility analysis is done well before the commencement of the project, certain advantages are there, viz,
Certain most necessary precautionary measures and alternative arrangements are identified and undertaken to reduce the risks associated with the implementation of the project
Out of a bunch of projects the most viable one is chosen carefully for implementation
The project could be anticipated, if the members of the SHGs are skilled enough to properly utilise the funds received from Banks/SHGs
It can also be conceptualised whether or not the members of SHGs would be able to implement the project successfully and refund the loans taken for the same project.
It could be ascertained If the project would be a profitable one.
Feasibility Analysis is illustrated in Annexure -2
4.5. Feasibility Analysis:
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5.1. Different stages of IEPP and how to get it done:
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Members are sensitised on the introductory concepts of various forms of income generating activities. Then with
the help of pictorial charts, all the activities related to the particular activity is explained to the members.
Annexure -3A, B, C).
Information are provided with the drawings on various problems related to the trade -- how the difficulties
develop, how to reach out for help and information related to income and expenditures
We have to keep in mind that in the case of 'Jibika' planning the steps mentioned above are very important. With
the help of these we can have a first-hand knowledge of all the nitty-gritties of 'Jibika' and we also become aware
of what are the requirements for that particular work or, trade, the possible expenditures, who could be of help in
case of need etc. Suppose we think of fish seedlings for pisciculture. Members should know whether locally
available items are better or whether those are apt to die prematurely. Members should be aware of all the pros and
cons of the matter. All the members of the family should be involved in this exercise from the beginning. This is
because; in many cases family members are associated with all the financial activities.
The market survey for the said income generating activities shall have to be carried out(Annexure-4).Whatever
be the IEP plan, market survey is very crucial for production, trade or, service. For an IEP the information on
Chapter 5: Implementation of Income Enhancement Plan Preparation (IEPP)
22
market or hat, functional time in a week, management of market, general footfall at the hat or market is essential.
What are the products or service available largely here; to what extent is there demand? How is the demand for
other products and are the buyers unable to get those products? If so, why? All these information can be made
available from the market or hat. These would be of immense value to the SHG members pursuing an IEP.
Market is directly or indirectly related to any form of income generating activities. It might be related to
marketing of the finished goods, procurement of raw materials, production, the requirements related to
production or necessary technology etc
These formats are to be filled up after completion of market survey. Ensure the participation of family members.
Knowledgeable persons in the trade should be included in the discussion in an open manner. The formats should
be filled up in such participatory manner. This should be the first draft of members' income enhancement plans.
The format should be filled up based on all available information. An example is shown on Muri making
(Annexure -5A, B).
Based on these plans, a consolidated Micro Credit Plan (MCP) is prepared for all the members of the SHG. The
amount of loan required, type of training required, type of assistance to be made available from a certain sector --
everything should be there in this plan. With this MCP; Banks, Panchayat, other line departments and NGOs
should be approached for possible assistance. The SHG can take all necessary steps including discussions with
the Community Resource Persons and Clusters with the help of this draft plan (Annexure- 6).
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District Block
G.P. Mouza / Sansad
Name of SHG Date of MCP
Serial Name of Principal Availability of Duration ResponsibleNo Trade Responsibility assistance from persons
Once the MCP is ready, find out the necessary assistance required by members. Roles and responsibilities
are to be allocated among the members. Everyone has to accomplish the responsibilities assigned to her
maintaining coordination amongst all to succeed as a closely knit team.
A plan has to be made compiling all the group activities at the Cluster of NGO level to figure out the necessary support and monitoring mechanism to be adopted
Systematic monitoring is essential for a flawless implementation of IEPP. The facilitator will prepare a format of his/her own for the purpose of monitoring.
5.2 Implementation of the IEPP:
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Consolidation of all the assistance required by the members of the SHG and linkage with various departments are to be done in the way shown here in the Chart below:-
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1. a. Number of regular meetings held:
The Minutes Book/Meeting Register of the SHG is to be checked to measure this indicator. The Minutes Book
indicates how many meetings were held in the past six months. The actual number of meetings scheduled to be held in
the last six months as per the bye-laws of the SHG has to be found out from the members. Hence, a calculation has to be
done of the number of meetings scheduled to be held and the actual number of meetings held in the past six months to
find out the Meeting Indicator of the period.
For instance, suppose Nibedita Group was scheduled to have (as per the bye-laws of Group) 4X6=24 No. of meetings
in the past six months.
The Real Picture:
January February March April May June Total no of meetings held
3 4 2 3 3 2 17
Formula:
Total number of regular meetings held
Total no of meetings scheduled
The numerical value of meeting indicator of Nibedita SHG is 7.08 in the last six months
It is to be remembered that this issue cannot be raised in any special or, emergency meeting.
«
× 10 = × 10 = 7.081724
Annexure – 1: Detailed methodology of Quick Rating
25
1.b. Attendance of members at the meetings:
To measure this indicator the Minutes Book/Meeting Register is to be checked. How many meetings were held and the
attendance in each of these meetings could be summed up to figure out the total number of members present in the
meetings held in the past six months. Apart from this find out the total number of members of the group and as per rule
how many members ought to be present at the meetings held so far in the past six months? Calculations are to be made
as per formula to find out the numerical value of Attendance Indicator in the past six months. Suppose, the total number
of members of Nibedita Group is 10.
Hence, if there were 4 meetings held every month during the past six months the total number
members should have been present at the meetings. There were 17 meetings held in past six months. We
suppose, the attendance of members at the meeting was
Attendancest nd rd thMonth 1 meeting 2 Meeting 3 Meeting 4 Meeting Total Turnout
January 9 7 8 No meeting 24
February 8 6 7 7 28
March 9 No meeting 10 No meeting 19
April 10 No meeting 9 7 26
May No meeting 10 9 6 25
June No meeting 8 No meeting 7 15
Total members present in past six months 137
10 × 4 6 = 240
=
×
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Formula:
Total number of members present
Total number of members should have been present
Attendance indicator of Nibedita SHG in the last six months is 5.7
The measurement of this indicator Savings Ledger and Bank passbook of the SHG must be checked. If necessary the
Cash Book might also be checked. Find out the total number of members and the scheduled monthly savings amount of
each member every month. There we come to know the total amount of savings deposit each month. For instance, no of
members is 10 and monthly savings deposit is Rs. 30/- for each member every month, then savings deposit every
month should be 10 30=300/- and total amount of savings in six months should be 300 6 = 1800/- and Bank Pass
Book should reflect the same amount in the past six months.
For instance, suppose each of the 10 members of Nibedita group deposits 30/- each month and the monthly amount is
300/-.. Then in six months the amount should be 300 6=1800/-
Savings deposited in last six months:
January February March April May June Total
«
× ×
×
300 240 330 300 270 300 1740
2. On time deposit of savings by members:
× 10 = × 10 = 5.7137240
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Formula:
Total amount of on time payment of savings
Total amount planned to be saved
The savings deposit indicator of Nibedita SHG is 19
To measure this indicator one has to check the internal lending part of the Loan Ledger and Cash Book. We have to find
out the velocity of internal lending. Let us find out the amount of loan disbursed in the first six months, and then we
must check the group corpus in the last six months. Now we see, Group corpus = total savings + bank interest + interest
on loan received from members + collection of penalties + other incomes of the SHG. Bank loan is not added here.
Average corpus of the group in the last six months has to be calculated. That means, (Opening corpus at the beginning
of 6 months + Closing corpus on the last day of 6 months period) 2 = Average corpus of the group.
Now we have to calculate the exact value of internal lending Indicator by using the formula.
For instance, we suppose the savings of Nibedita SHG till date is 3600/- + bank interest 25/- + interest on internal
lending 150/- = Group corpus 3775/-. Till date internal loan disbursed is 2000/- . Suppose the opening
corpus of the group 6 months back was 1975/- . Hence the average corpus= (1975+3775) 2 = 2875/- .
«
÷
÷
3. Internal Lending :
× 20 = × 20 = 19.3317401800
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Formula:
Total Amount of internal loan
Average corpus
According to formula we get the numerical value which is equivalent to the loan disbursed out of corpus.
Standardisation will be based on this value.
A. Over 1.5 times
B. Between 1 – 1.5 times
C. Between 0.5 – 0.9
D. Less than 0.5
The internal lending indicator of Nibedita SHG is 5.
To measure this indicator we need to check the Loan Ledger, members Passbook and Cash Book. The number of
members granted loan and the amount due from each of them in the last 6 months must be ascertained. The recoverable
loan amount of the SHG in the last 6 months must also be known. The total amount of loan repaid by the members in the
same period must also be checked. Then the value of on-time loan repayment indicator can be deduced.
20
10
5
0
«
4. On Time Loan Repayment:
2000
2875= = 0.69
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For instance, Nibedita SHG was due to receive loan repayment from 5 members in last six months.
Amount of Recoverable Loan:
Members A B C D E Aggregate
Month
January
February
March
April
May
June
Total
The amount of recoverable loan is Rs.4714.00
Realisation of Loan:
Members A B C D E Aggregate
Month
January
120 120 240 120 120 720.00
118 118 236 236 118 826.00
116 116 232 232 116 812.00
114 118 228 228 114 802.00
112 112 224 224 112 784.00
110 110 220 220 110 770.00
690 694 1380 1260 690 4714.00
120 120 240 120 120 720.00
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... 118 36 236 ... 390
134 116 336 232 236 1054
114 114 332 228 114 902
150 112 200 224 ... 686
110 110 150 220 112 702
628 690 1294 1260 582 4454
February
March
April
May
June
July
Formula:
Total amount of loan repaid
Total amount of recoverable loan
The acquired numerical value of on-time loan repayment is 18.89
To measure this indicator, at least 5 types of registers of the SHGs, viz. Individual Passbook, Meeting Register,
Savings Ledger, Loan Ledger and Cash Book need to be checked. Marks are allotted for each register. If the registers
are up-to-date in all respects then the Group receives full marks. If registers are not updated then the marks will be
reduced proportionately.
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5. Maintenance and Updated posting of Books of accounts:
× 20 = × 20 = 18.894454
4714
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Suppose the Individual Passbook, Meeting Register and Savings ledger of Nibedita SHG were updated in the last 6 months. Loan Ledger and Cash Book were not done for 1 month and 2 months respectively.
Formula:
Register Value
1. Individual Passbook 4
2. Meeting Register 4
3. Savings Ledger 4
4. Loan Ledger 4
5. Cash Book 4
Total Marks 20
In this case the marks obtained by Nibedita SHG will be
Register Marks Obtained
1. Personal Handbook 4
2. Meeting resolution register 4
3. Savings Ledger 4
4. Loan Ledger
5. Cash Book
Total Marks
«
17.99
× 4 = = 3.33
× 4 = = 2.66
2
23
3
56
46
103
83
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Grading of SHG:
Indicator Indicator Value
1. a) Number of regular meetings held 10
b) Attendance of the members at the meeting 10
2. On time deposit of savings by members 20
3. Internal lending 20
4. On time loan repayment by members 20
5. Maintenance and up-dated posting of books of accounts 20
Total value for 5 indicators 100
Here 5 indicators have been used. Now we have to calculate the marks obtained by the group. The sum of the values of indicators is the marks obtained by group.
Marks obtained by Nibedita SHG in Quick Rating:
Indicator Indicator Value
1. a) No of regular meetings held
b) Attendance of the members at the meeting
2. On time deposit of savings by members
«
7.08
5.7
19.33
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5
18.89
17.99
73.99
3. Internal lending
4. On time loan repayment by members
5. Maintenance and up-dated posting of books of accounts
Total
Henceforth, the following formula will have to be used to find out the grade of the SHG in Quick Rating ---
Total marks obtained Rating
80 or more A
70 – 79 B
60 – 69 C
Below 60 D
Hence, the grade of Nibedita SHG is “B”.
If there are many SHGs in a Cluster or, Federation, please prepare a list as illustrated here.
Assessment Report of SHGs:
34
Name of G.P. ...........................................................................................................................
Name of Block ........................................................... District ...............................................
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Sl. Name of Age of SHG Members Date of Marks Grade RemarksNo. SHG (month /year) at present Rating obtained
A roll of Grades obtained by the SHGs in a Cluster / Federation
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Name of the Evaluator: Name of Block:
Name of G.P.: District:
Format for Assessment of SHGs
Date of Q
uickR
ating
Serial N
o
Nam
e of SH
G
Address
No of m
embers
Age of S
HG
Marks obtained in Quick Rating
Rating of the
SH
G
In case ofQuick Rating
Difficulties observed
Benefits experienced
Total
Maintenance of
Accounts
On-tim
e loan repaym
ent
Internal lending
Savings
Attendance
Meetings
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To analyse the feasibility of a certain income generating activity, one has to verify the following areas:
Technical Feasibility–
Financial Feasibility–
Commercial Feasibility–
A) Technical feasibility can be defined as to whether the infrastructure, equipment, raw
materials, production process to be utilised as described in the IEP are the right matter and sufficient for the project. At this stage more stress is exerted on the technology used for the production, raw materials, infrastructure, optimal utilisation capacity of the machines and the limits thereof etc. These are the most important matters. How the raw materials have been sourced and from where and what would be the quality of the same. How and where the machines are going to be installed, whether sufficient precautionary measures have been taken for machines etc. Supply of raw materials is to be ensured throughout and production capacity to be used fully to achieve the time frame of the project. A continuous supply of water and electricity will have to be ensured to achieve production targets. How the effluents and garbage disposal will be taken care of successfully or the pollution level will be tackled effectively, all these have to be analysed at this stage.
B) Generally the financial transactions and related issues are analysed in this phase. If the
pricing of the services or of products have been correctly done; if there is any crisis related to the working capital after the project has begun; at various stages, the amount of money to be held in as cash balance or, in Bank remaining as such – all these will have to be checked. How to curtail escalating costs, if cash in handy is enough to operate the project at various stages; if ratio of labour to production is in right proportion; whether production capacity is proportionate to the storage capacity and distribution strength. All these are analysed in financial feasibility study.
C) At this stage the commercial viability of the project is being analysed – if the project
as a business will be a profitable one. Generally the SHG members are interested in producing the items they are capable of, but they fail to realise the fact that these products must have a demand in the local market and even if
È
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Annexure – 2: Analysis of Feasibility
37
there's a demand, their products may fail in the quality test. Members must realise that other products have already flooded the markets which are machine made and of better quality. For instance we may consider the making of petticoats, blouses etc. They know the tailoring job and as they have the sewing machine at home, they think it's a better option for them. But today, there are machine made better quality products coming from outside and their dress materials are falling behind. It is really difficult for them to compete in the market with their products, and there comes the question of commercial viability of a particular trade or occupation. When we discuss about commercial feasibility it's important to give stress on the following :-
If the product or service has demand in the marketIf the products would be able to compete with similar products available in the marketHow is the level of competition of the product in market and what is the pricing of competitors' products compared to oursIf the demand of local market can be fulfilled by the produce in our proposed project – i.e. if the demand in local market is of higher quantity or lower than our production capacityWhether produce from the proposed project can be sold in local market for cash or on credit. If we have to sell the products on credit then when do we get the payment and in between how we arrange for working capital
D) In this phase we try to analyse the social factors related to the project. Before the
implementation of a project one must analyse the social stigma, values, local culture and customs etc. What is the status of the member in her family, if the other family members will support her project. The status of the families in society and the way local people think, all these factors should be thought of before we initiate a project in an area. All the pros and cons of a particular project in a region must be analysed: such as the family custom, values and social stigma. These play significant roles in the success or failure of the project involving women. During the project preparation we should think if the family members and her neighbours would be of any help or create trouble for the project selected. While analysing the social probability of a certain project we should try to find out the following answers :-
Will it be necessary to travel outside the village for business related matters?
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Social Feasibility–
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If objections would come from other family members?How many visits to other places will be required? And how far will a member have to travel?How much time it would take?Are there necessary public transport arrangements to travel safely?If the duties and travel will be finished by the day and she will be back at home the same day? Because it would not be possible for her to stay out of village at night.Is it necessary to take permission from any Government department or any other authority to begin a business or trade?Is license required? If so, where to visit for the purpose? What are the procedures involved? Does it require money to get license? What are the documents required?
Here we resolve to decide if there is a demand or, market of the
proposed product /services of our project and if so, where and how it could be sold. We do also analyse the reaction of the buyers and that of our competitors. If we do not analyse the feasibility of marketing logically, it will be extremely difficult afterwards to sell our products or services when products are ready for the market. During the market feasibility study we should look for answers to the following queries :-
Is there any demand in the market? Frequency of use? If the product is for everyone's usage or for the use of a particular section of people? Used throughout the year or during a certain period?How's the competition in market?Price or quality, what do customers look for?Where to sell the product?Who are the buyers?How the buyers decide on the quality of the product and pick and choose the sameIn present circumstances from whom are the buyers purchasing?At what price they are buying the product or service?Whether product will be sold by the SHG itself or through wholesalers?
Feasibility study of Market and Marketing–
39
Name of Project: Muri making Type of Project: Production related
Stages Information required Income Expenditure Remarks
Annexure – 3A: Income Enhancement Plan Preparation
40
Project name: Trading of Vegetables Project type: Trading
Stages Information required Income Expenditure Remarks
Annexure – 3B: Income Enhancement Plan Preparation
41
Project: Mobile Tailoring unit Project type: Service
Stages Information required Income Expenditure Remarks
Annexure – 3C: Income Enhancement Plan Preparation
42
Name of Market: Address/Location of Market:Name of G.P.: Name of Block:District :
Name of Market: Address/Location of Market:Name of G.P.: Name of Block:
Information collected on Sellers/Vendors for feasibility analysis of the productAnnexure – 4:
Remarks
Serial N
o.
Nam
e of IEP
Activity
No. of S
hops
Type of activity
Descriptionof Products
Location ofproduction
Feasibility of the activity
Low
Quantity
Am
ount(R
s)
From
own
village
From
outsidethevillage
High
Medium
Information collected on Buyers in the market for feasibility analysis:
Remarks
Serial N
o
Price of the
product
Quantity
purchased
Why do you buy from this market?
Unavailable
elsewhere
Low
Price
Good
Quality
Product
Provision
ofbargaining
Availability
of several
types of
products
Extended
durationof them
arket
43
SHG: Amader Sankalpa Swanirvar Gosthee Member: Kalyani Halder Name of Activity: Muri making
4500.00 .............1000.00 .............
225.00 ............. 60.00 .............
800.00 .............30.00 .............
400.00 .............
............. ............. 90.00 .............
200.00 .............
200.00 .............
300.00 ............. 3000.00 .............
200.00 .............195.00 .............
............. 7700
11200 7700
Information required Expenditure IncomeParticulars (Rs) Particulars (Rs)
Rice- Krishnahati BazarKhari- Bamna BazarKuron- Meerut Rice MillSalt- Barisal ParaKadai- Amtala BazarLarge Spoon- Amtala BazarDhali and Khejur Pati- Krishnahati Bazar
Labour- SelfHessian Bag- Nepalganj BazarPlastic Bag-Amtala Bazar
Sign Board- Pailan Bazar
Weighing Scale- Amtala BazarCycle- Amtala BazarWeights-AmtalaPolybags/Paper Bags – Amtala BazarSale proceeds
Total
Pictures
Annexure – 5A: Information Sheet
44
Activity:Muri making Member: Kalyani Halder Group:Amader Sankalpa SHG Village: BarishalparaG.P.:Amgachia Block: Bishnupur-1 Production scale: 1000 Kg. Rice daily (25 days in a month)
Various
Stages
Essential Information Cost Difficulties/
ProblemsAssistance required Responsibility
Fixed Cost RecurringCost
What type From whom
Input &
Raw
materials
Production
and
Value
Addition
Marketing
of
Product
Rice- Krishnahati BazarKhari- Bamna BazarKuron- Meerut Rice MillSalt- Barisal ParaKadai- Amtala BazarLarge Spoon-Amtala BazarDhali- KrishnahatiKhejur Pati-Krishnahati Bazar
Labour- SelfHessian Bag-Nepalganj BazarPlastic Bag and Rope –Amtala Bazar
Sign Board- Pailan BazarWeighing Scale- Amtala BazarCycle – Amtala BazarWeights-AmtalaPolybags / Paper Bags
Amtala Bazar
– 4500.00– 1000.00 – 225.00– 60.00
800.00 – 30.00 –
100.00 – 300.00 –
– – 90.00 – 200.00 –
200.00300.00
3000 .00
– 125.00
200.00 70.00
o ˛ o ˛ o ˛ o ˛o ˛
o ˛ o ˛ o ˛ o ˛o ˛
o o ˛ o ˛ o ˛o ˛ o ˛
o ˛ o ˛o
o o o o ˛o o o ˛
o o ˛o
o
Lack of Good Rice Self required capital quality rice wholesaler SHGNon- Loan SHG Clusteravailability of assistance Bankgood qualityrice for Muri locally
Process is Loan Bank Self
difficult in assistance SHG SHG
monsoon Space for Cluster
Lack of storage storagespace in monsoonCredit sale Loan SHG Self
Transport assistance Business SHG
problem Initiative of community Cluster
Problems of Business local market Association
PermanentShop
5220.00 5980.00
Annexure – 5B: Individual Income Enhancement Plan
- -
- -
-
Total capital: Rs. 11,200.00a) Fixed cost : Rs. 5220.00b) Recurring : Rs. 5980.00
Total Income: Sale value of Muri -- 7700.00Less Recurring costs– 5980.00Profit: 1720.00
Signature of SHG member/plannerDate
Signature of SHG office bearer with sealDate
45
SHG: Amader Swanirvar Gosthi Village: Barisalpara
G.P: Amgachia Block: Bishnupur-1 District: 24 Pargana (S)
Sl. Member Proposed Project Cost Amount of Capital (Rs) RemarksNo. Scheme
1 11200.00 1000.00 1000.00 9200.00 11200.00
2 û 7500.00 500.00 1000.00 6000.00 7500.00
3 7500.00 500.00 500.00 6500.00 7500.00
4 10000.00 1500.00 1500.00 7000.00 10000.00
5 13000.00 3000.00 1500.00 8500.00 13000.00
6 10000.00 1000.00 1000.00 8000.00 10000.00
7 7500.00 500.00 1000.00 6000.00 7500.00
8 11000.00 1500.00 1000.00 8500.00 11000.00 –
9 7500.00 500.00 1000.00 6000.00 7500.00
10 8500.00 1000.00 1000.00 6500.00 8500.00
Kalyani Halder Fried Rice –
Pratima Thaku Goatery Insurance required
Kalpana Das
Srabani Pal Poultry Insurance required
Rita Mistri Fishery Insurance required
Dipana Sil Fried Rice –
Babi Majumder Goatery Insurance required
Rita Das Grocery Shop
Rina Mondal Goatery Insurance required
Krishna Halder Jute Bag School trained
Annexure – 6: Consolidation of IEPs (Micro Credit Plan) of SHGs
Own Group Bank Total
Use ofOrganic manure
VegetableCultivation
46
Signature with seal of SHG Office Bearers :
President Secretary TreasurerDate Date Date
