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Policy Making involves various stages 

• Problem Definition: In this stage, policymakers identify and define a particular issue or problem that requires attention and action from the government. 
• Agenda Setting: Once a problem has been defined, it should be placed on the political agenda for consideration and action. Agenda setting involves determining which issues receive attention and priority from policymakers. This stage often involves debates, lobbying, advocacy efforts, and the formulation of policy proposals.
• Policy Development: In this stage, policymakers and relevant stakeholders work together to formulate potential policy solutions or approaches to address the identified problem. 
• Implementation: Once a policy has been developed, it needs to be put into action. Implementation involves the actual execution of the policy, including the allocation of resources, the establishment of procedures and guidelines, the coordination of various stakeholders, and the enforcement of regulations. 
• Policy Evaluation: After a policy has been implemented, evaluating its effectiveness and impact is essential. Evaluation can involve collecting and analyzing data, conducting research, measuring key indicators, and soliciting feedback from stakeholders and affected communities. The findings from policy evaluation provide valuable insights for policymakers to determine if adjustments, modifications, or alternative approaches are necessary to improve the policy or address any shortcomings.

Policy implementation is the fourth stage of the Policy cycle in which adopted policies are put into effect. 

Different Types of Policy Implementation

Policy Implementation 1.0

• It is the ability to deliver a standard product or carry out a standard procedure across the country. 
• It can work well when one size fits all— the same dose of the same polio vaccine, the same procedure for voting, the same identity card etc. 
• India has already proved its mettle in this area. For example – conducting the world’s largest election, ADHAAR project, 100% coverage of UIP (Universal Immunization Program), etc. 

Policy Implementation 2.0

• In addition to carrying out the standard procedure, it also entails a change in behaviour. This policy implementation depends not solely on administrative actions but also on fostering behavioural change among the target population.  
• The best example is the Swachh Bharat Abhiyan (Clean India Campaign). Here, the challenge was not limited to the construction of toilets and infrastructure; it also required a fundamental shift in societal norms and individual behaviours related to sanitation.

Policy Implementation 3.0

• It requires coherence amongst many policies, coordination among many agencies, and cooperation of many stakeholders. The successful execution of a policy often relies on its alignment and integration with other related policies to ensure a comprehensive and harmonized approach to addressing societal challenges.  
• For example, the Industrial Policy of 1991 requires Policy 3.0 competencies. Implementing the Industrial Policy of 1991 necessitated a comprehensive approach that considered the interconnectedness of various policies, ensuring their compatibility and coherence to drive economic growth and development.

Excessive fragmentation in thinking and action

When multiple departments or ministries are responsible for addressing different aspects of a particular sector, it can lead to challenges such as lack of coordination, conflicting objectives, and duplication of efforts. For example, 

• Five departments/Ministries in India deal with the transport sector, whereas in the US and UK, it is a part of one department. 
• Environmental protection in India involves multiple ministries and departments, including the Ministry of Environment, Forest and Climate Change, the Ministry of Water Resources, River Development and Ganga Rejuvenation, and the Ministry of Power.

Excessive Overlap between Policymaking and Implementation

• Those who formulate are themselves involved in implementation. Hence status-quo or a minimum amount of changes are presented in the new policy. E.g., In the education sector, policymakers who formulate education policies often include officials from the Ministry of Education and other relevant government bodies. However, these policymakers are also responsible for implementing the policies they create. This overlap can result in limited innovation and transformative changes in the education system. 

Lack of Non-governmental Inputs and Informed Debates

• In India, policymakers exclude or marginalize inputs from non-governmental actors, such as NGOs and civil society organizations. Hence, the resulting policies may fail to adequately address the needs, perspectives, and concerns of the affected communities. For example, in the formulation of public health programs, the exclusion of NGOs working with marginalized communities can result in policies that inadequately address their specific health challenges. 

Lack of Evidence-based Research

In India, the policies are often developed without a robust foundation of empirical data, analysis, and research, leading to suboptimal outcomes. E.g.,

• Implementing the National Health Insurance Scheme (Ayushman Bharat) faced challenges due to a lack of evidence-based research. While the intent was to provide health coverage to economically vulnerable populations, the design and implementation of the scheme encountered issues related to inadequate infrastructure, limited healthcare provider networks, and low awareness among beneficiaries. Insufficient research on existing healthcare systems, demand patterns, and cost projections hindered the effectiveness of policy implementation and limited the scheme’s impact.

Politically Motivated policies

Politically motivated policies can lead to inadequate policy formulation, flawed design, and suboptimal implementation in India. These policies are driven primarily by political considerations, such as electoral gains or appeasing specific interest groups, rather than being based on sound evidence, expert advice, or the long-term welfare of the nation. E.g., 

• Agriculture Sector: The introduction of populist measures like loan waivers and high minimum support prices (MSP) for crops, without considering market dynamics or fiscal sustainability, can distort market forces, create inefficiencies, and burden the government finances. 
• Education Sector: The introduction of reservation quotas in educational institutions based solely on political calculations rather than the principles of merit and equal opportunity can undermine the quality of education and compromise the overall academic environment. 
• Infrastructure Sector: Projects driven by electoral considerations rather than economic viability can result in poor planning, cost overruns, delays, and inadequate infrastructure quality. 

Centralized Policy Making

Centralized policy making, which follows a one-size-fits-all approach, can lead to challenges in policy formulation, design, and implementation in India. This approach overlooks the diversity of contexts, needs, and challenges across the country’s different regions, sectors, and communities. E.g.,

• A uniform Minimum Support Price (MSP) for crops across the country does not account for variations in production costs, market dynamics, and local demands, leading to unequal benefits and discontent among farmers.
• Centralized educational policies, such as uniform curriculum frameworks or standardized assessments, may not align with the specific needs and aspirations of students and communities in different states or regions. 

Insufficient Capacity and Expertise

Effective policy formulation and implementation require skilled personnel, adequate resources, and institutional capacity. Limited technical expertise and a lack of capacity-building initiatives can impede the implementation of policies. For example

• Implementing the Continuous and Comprehensive Evaluation (CCE) system in schools faced challenges due to a lack of trained teachers, resulting in inconsistent implementation and ambiguity in assessment practices.
•  Implementation of Crop Insurance Schemes has faced difficulties due to limited awareness among farmers, inadequate risk assessment capabilities, and challenges in timely claim settlements.
• Implementation of pollution control measures in industrial sectors has been hampered by limited expertise in monitoring and enforcement.

Complex Procedures

• Complex procedures in policy implementation can hinder the participation of individuals, especially those from disadvantaged backgrounds. 
• According to a World Bank report, when schemes are designed with intricate procedures that require poor individuals to visit offices, fill out forms, and navigate complex rules, their participation decreases significantly, often to as low as 10%. However, when these schemes are revamped and local officials, such as Asha workers or postmen, go door-to-door to implement them, participation increases substantially, reaching as high as 70%.

Fear of Unknown

• The fear of the unknown, particularly prevalent among individuals with limited resources, can contribute to challenges in policy formulation, design, and implementation in India. This fear stems from the constant worry about potential financial loss and the inability to absorb setbacks.
• Due to their precarious financial situations, individuals with limited resources may prioritize immediate gratification over long-term investment. Individuals with limited resources may not show significant interest in schemes designed to promote financial inclusion. Despite the potential long-term benefits of financial inclusion, immediate concerns and the need for immediate gratification take precedence for these individuals.
• Programs focused on skill development and vocational training may struggle to attract individuals from economically disadvantaged backgrounds. The fear of investing time and resources in acquiring new skills without a guaranteed immediate return on investment can discourage participation, hindering the effectiveness of such initiatives.
• Addressing the fear of the unknown and aligning policies with immediate needs and concerns can contribute to better policy formulation, design, and implementation in sectors aiming to uplift the economically disadvantaged population.

Social Dynamics and Obligations

Policies must be formulated and implemented while keeping in mind the social dynamics and obligations that influence the behaviour and decision-making of the poor. When policies are formulated, designed, and implemented without considering these factors, they might not work. E.g., 

• In rural India, where agriculture is a predominant occupation, poor farmers often face pressures to conform to social expectations. It can influence their cropping decisions and practices. For instance, if a farmer chooses to cultivate a crop that differs from what their neighbours or relatives cultivate, they may face the risk of crop theft or vandalism. 
• Microfinance plays a crucial role in providing financial services to the poor, especially in rural India. However, some poor individuals may take microfinance loans not necessarily because of their dire need for cash but to signal their relatives and neighbours that they do not have spare money. This stems from the social obligation to help others in times of need, even if it means taking on debt. If policymakers fail to recognize this underlying motivation, it can lead to misinterpretation of the actual financial needs of the poor and the effectiveness of microfinance interventions. 

SHGs are an association of people(20-30 persons, primarily women, from similar socio-economic backgrounds) who choose to come together (either on their own or organized by outside Institutions like NGOs) to find ways to improve their living conditions. They help build social capital by providing mutual support, encouraging savings, and promoting entrepreneurship among their members. 

Success stories include ​Kudumbashree in Kerala, Jeevika in Bihar, Mahila Arthik Vikas Mahila Mandal in Maharashtra, and recently, Looms of Ladakh.

 The main functions of SHGs are

• Financial Inclusion: SHGs encourage savings and provide access to small loans and credit facilities. Members pool their savings, which are then used to provide loans to members at affordable interest rates. 
• Skill Development and Capacity Building: SHGs focus on enhancing the skills and capacities of their members by providing training and support in various areas
• Empowerment and Social Support: SHGs create an environment where individuals (particularly women) can share their experiences, discuss issues, and collectively find solutions. 
• Collective Bargaining: SHGs enable members to negotiate collectively with various stakeholders, such as banks, suppliers, and local authorities. 
• Social Capital to solve livelihood problem: Social Capital is the network of relationship among people living and working in a particular society, enabling that society to function effectively. Self Help Groups use the concept of Social Capital to solve the problem of livelihood and income generation by organizing the poor and marginalized people to come together to solve individual problems. They do this by pooling their resources, creating a common fund to make small interest-bearing loans among themselves.

Most of the SHGs have come through the help of mentor bodies (either government or NGO), which provided initial information and guidance to them.

1. Identification of Potential Members: The first step is identifying individuals willing to join and participate in an SHG. 
2. Formation Meeting: Once potential members are identified, a formation meeting is organized. This meeting serves as a platform to explain the concept, purpose, and benefits of an SHG.
3. Group Formation and Membership: During the formation meeting, interested individuals formally express their commitment to forming an SHG. They agree to abide by the group’s rules and regulations and actively participate in its activities. 
4. Group Registration (Optional): SHGs have the option to register themselves formally under various government schemes, programs, or society acts.
5. Regular Meetings and Activities: Once the SHG is formed, regular meetings are held at a mutually agreed frequency, such as weekly or monthly. These meetings serve as a platform for members to discuss and plan their activities, share experiences, address issues, and make collective decisions. 
6. Savings and Internal Lending: A crucial aspect of SHGs is promoting savings and internal lending. Members contribute a predetermined amount of money as savings during each meeting. These savings are pooled together and kept as a common fund, which can be used for internal lending within the group. 
7. Capacity Building and Linkages: SHGs often collaborate with NGOs, government agencies, or other stakeholders to access training programs, skill development initiatives, market linkages, and government schemes.

Earlier Issue

SHG Movement was mainly started in the 1980s with the help of NGOs which wanted to provide alternate models of Credit Services to the poor. All the members of SHG were saving and anybody in the group who wanted the money could take out money from that collective savings at a nominal interest rate. 

But these groups comprised poor women. Their savings were low & hence, members cant get large loans. As a result, linking SHGs with banks was necessary, which could provide credit in multiple of savings of the SHG.

Main feature of the loans under SHG – Bank Linkage Program 

• Lending is to the group as a whole.
• The group decides how to use loan without outside interference 
• Lending is without any collateral
• SHGs have to practice the ‘Panchasutra’, i.e. regular meetings, savings, regular inter-loaning, timely repayment and updated account books to avail of loans from banks.
• The loan is in Multiple of the savings. For groups having a good credit history, this can be up to 1:4 wrt their savings. Hence, they can get loans as large as 4 times their savings without collateral. It was the major turning point in the whole movement. 
• NABARD refinances the banks for this project. It is the money of NABARD that these banks give to SHGs. 

Models of SHG-Banking Linkage

• In the first model, Banks give loans to NGOs or some Microfinance Institutions, and these NGOs and MFIs lend this money to SHGs. Banks provide loans to MFIs at commercial rates, and these MFIs / NGOs charge around 24% so that they can make their administrative costs out of the difference
• In the second model, NGOs act as facilitators between SHGs and Banks and charge 6% of the loans given by Banks to SHGs as their commission (to make up their administrative charges)

How does making groups help?

• SHG work as a collective guarantee system for members who propose to borrow from organized sources. As a result, commercial banks and other institutions which otherwise are not receptive to the demands of marginalized individuals start considering such groups as their potential customers. 
• The loan is issued in the name of SHG & not to a particular person. Hence, it is the collective responsibility of the group to repay that loan. It is the main reason the repayment rate is very high in SHG loans. If the person is not paying, extreme peer pressure works in that situation 

Fodder to be used in answers: NGOs involved in SHG Movement

SHG Bank Linkage Program

• Discussed above

Village Poverty Reduction Plan

• All the SHGs are involved in the preparation of Village Poverty Reduction Plans 

StartUp Village Entrepreneurship Program (SVEP)

• It is a component of the Deen Dayal Upadhaya National Rural Livelihood Mission.
• The program helps SHG members to setup non-farm enterprises at the village level.

In rural India, where the wind of development is yet to reach, farm labour is the primary employment for women, but this doesn’t fulfil all their needs. Hence, participation in SHG helps them in saving some money out of their daily household expenses & can also avail of loans with lower interest which has the potential to  change the situation

1. Social Empowerment

• Members of SHG are mainly women. They can save money & invest in SHG & can use it in time of need. With money in hand, they get status in their family & this increases their self-confidence & esteem. 
• SHGs discuss women-centred issues which help them in gaining social security. 

2. Political Empowerment

• SHGs gave women a taste of leadership which they had never experienced earlier and gave them the aspiration to become leaders of society. 
• Also, SHGs organized women, and they started acting as local pressure groups for and against particular candidates.

3. Social Justice

• SHGs have taken up issues like domestic violence, bigamy, dowry deaths, prevention of child marriage, support for separated women to remarry etc.

4. Financial Inclusion

• SHG program has contributed to reduced dependency on informal money lenders & other non-institutional sources 
• This financial inclusion has led to increased spending on the education of children, lower drop rate, reduction in child mortality, improved maternal health & ability of the poor to combat diseases through proper nutrition. 
• Due to loans, they have managed to come out of poverty. With these loans, women started small businesses, bought dairy animals, or helped their husbands start some work. It is argued that this program has played a most important and effective role in reducing poverty. 

5. Skill Development

• SHGs often organize training programs to enhance the skills and capacities of their members. Women are trained in various areas, such as entrepreneurship, vocational skills, financial literacy, and leadership development.