A government-commissioned evaluation of central rural sector schemes, including the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM), has found that most self-help groups (SHGs) for women did not start income-generating businesses with the funds provided. Instead, the revolving fund of Rs 20,000- Rs 30,000 offered per group as part of the Centre’s flagship programme to organise poor rural women into SHGs and train them for small enterprises was often spent on household expenses, according to the report submitted to the Rural Development Ministry.The review is significant given that the Finance Ministry last year directed that no centrally funded scheme will be extended beyond March 31, 2026, unless it undergoes a third-party evaluation. This assessment will therefore decide whether and how the DAY-NRLM will continue in the five-year 16th Finance Commission cycle beginning in April 2026.The study titled ‘Evaluation of Centrally Sponsored Schemes in Package 5-Rural Development Sector’ also flags that there was pressure on officials to form SHGs quickly to meet targets, even in villages where business opportunities were limited.The Rural Development Ministry did not respond to questions on the evaluation’s findings.Also Read | Agriculture Ministry asks Krishi Bhawan babus to drive private participation at Vidisha farm fair“Only a small proportion of SHGs have initiated group-level enterprises, and nearly half did so without accessing loans. This is primarily driven by the pressure to form SHGs after the PIP [Participatory Identification of the Poor] exercise to meet targets, despite a significant disconnect between SHG formation and the availability of viable business opportunities in rural areas,” the report notes.The report shows that the SHG members used bank loans for building houses, constructing toilets, medical purposes, etc.The report states, “Many SHG members are reluctant to take loans because there is no assured market for the products made through group enterprises. Due to this uncertainty, they fear being unable to repay the loan, discouraging them from borrowing.”Story continues below this adWith weak demand for products and fear of loan defaults, many members were unwilling to borrow from banks. As a result, “the RF (Revolving Fund) is often equally distributed among members and utilised to meet their immediate consumption needs.”Access to other financial support under the scheme was also low: fewer than half the respondents received the Community Investment Fund (CIF), only 42 per cent accessed bank loans, and less than 4 per cent received the Community Enterprise Fund (CEF) meant for larger ventures. Limited ground-level support from facilitators and federations added to the problem.While access to RF was reported by 74.6 per cent of respondents in 13 surveyed states, just 49.9 per cent of respondents reported receiving the CIF, 41.8 per cent had access to bank loans, and only 3.8 per cent reported access to the CEF. “This was primarily due to limited on-ground support from VOs [village organisations], CRPs [community resource persons], and CLFs [cluster-level federations] coupled with the fact that only 15 per cent of the SHGs had initiated group enterprise activity,” noted the report.“The uptake of bank loans/cash credit limit (CCL) was even lower, mainly due to fear of loan defaults, as SHG members perceived weak market demand for their products,” the report states.Story continues below this adAlso Read | No mention of VB-G RAM G in Budget speech, Finance Minister allocates Rs 95,692.31 crore2,206 households, 11 states, 2 UTsThe evaluation was undertaken by Sambodhi Research and Communication Pvt Ltd, a think tank roped in by NITI Aayog’s Development Monitoring and Evaluation Office (DMEO) for the purpose.The evaluation exercise involved a survey of 2,206 households across 11 states (Andhra Pradesh, Bihar, Chhattisgarh, Maharashtra, Rajasthan, Tripura, Arunachal Pradesh, Himachal Pradesh, Kerala, Odisha, Uttar Pradesh and two Union Territories (Jammu and Kashmir, and Dadra and Nagar Haveli and Daman and Diu).Of the 2,206 households surveyed, about 86 per cent (1,895 households) availed benefits of the NRLM.The DAY-NRLM schemeLaunched in 2011 by the UPA government as the National Rural Livelihood Mission and renamed in 2016, DAY-NRLM aims to reduce rural poverty by mobilising women into SHGs and linking them with banks, markets, and government support.Story continues below this adApart from the revolving fund at the rate of Rs 20,000-30,000 per SHG, groups can get up to Rs 2.5 lakh as a Community Investment Fund (CIF) to support their income-generating and livelihood activities, including entrepreneurial ventures.According to government data, more than 10 crore rural women have been mobilised into over 90 lakh SHGs, which together have received nearly Rs 59,000 crore in capital support since the scheme began.