States seek urgent funds to sustain women livelihood mission, no word on NULM 2.0 yet

Why in the News

Support for urban poor women’s self help groups (SHGs) has gone from a centrally funded mission reaching about 1 crore women to a funding pause with no successor scheme. At least five States ruled by different parties, Tamil Nadu, Karnataka, Maharashtra, Madhya Pradesh and Tripura, have written to the Prime Minister and the Ministry of Housing and Urban Affairs (MoHUA) warning that the pause will cut SHGs’ access to bank credit.

What was DAY-NULM, and how did it work?

1. What it is: The Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM) organised poor urban women into SHGs, groups that save together and borrow from banks as one unit, like a savings club.
2. Term: It began in 2014, replacing the Swarna Jayanti Shahari Rozgar Yojana, and ran until October 2024.
3. Support given: Each group received a revolving fund of Rs 10,000, seed money members lend among themselves. Training, interest subvention (a subsidy lowering the interest on bank loans) and micro enterprise support followed.
4. Reach and cost: It created 10.02 lakh SHGs at a cost of about Rs 9,000 crore to the Centre and States.
5. The takeaway: Mission staff and subsidies kept these groups able to borrow from banks, and the money for both has stopped.

What has happened since the mission ended?

1. Pilot in place of a scheme: MoHUA ran a pilot, the Deendayal Jan Aajeevika Yojana-Shehari (DJAY-S), until December 2025 as a bridge to a new scheme.
2. Expansion approved, then dropped: A MoHUA letter of 4 December 2024 recorded the Department of Expenditure‘s in principle approval to extend the pilot nationwide. It has since been dropped.
3. No word on NULM 2.0: MoHUA has not announced a successor. It says a new livelihood programme is under discussion and no State demand is pending.

What are the States asking for?

1. Tamil Nadu: The Chief Minister sought Rs 350 crore, noting that the State’s mission funds were exhausted by April 2025.
2. Maharashtra: The State mission sought Rs 80.99 crore of central share, having last received funds in March 2024.
3. Madhya Pradesh: It sought Rs 101 crore, including Rs 13.71 crore of interest subsidy owed on loans that run beyond the scheme’s closure.
4. Tripura: Without fresh funds for two years, it sought Rs 6.5 crore owed to groups running mid day meals, canteens and uniform stitching.
5. Karnataka: Unable to pay staff since July 2025, it asked to use pilot money for salaries.

Why does the funding pause matter?

1. Credit chain at risk: Tripura warns that without mission support, group links to banks built over years will weaken. Maharashtra reports staff pay and subsidy dues piling up monthly.
2. Borrowers in good faith: Madhya Pradesh argues that closing a scheme does not cancel subsidy already earned, so borrowers would bear the cost.
3. Centre’s convergence case: MoHUA says other missions now use SHGs to deliver their work, such as PM Awas Yojana, Swachh Bharat Mission, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and PM Surya Ghar: Muft Bijli Yojana.

Challenges

1. No successor design: Without NULM 2.0, States cannot plan staffing or new group formation.
2. Convergence is not support: Delivering other schemes gives SHG women work, not the credit and enterprise backing the mission funded.
3. Groups going dormant: Unsupported groups stop meeting and saving. Eg. National Bank for Agriculture and Rural Development (NABARD) records defunct SHGs.

Way Forward

1. Clear committed dues: MoHUA should release the central share owed for interest subsidy and revolving fund liabilities.
2. Notify NULM 2.0: Announce the successor’s design and timeline, drawing on the pilot’s lessons.
3. Bridge funding for staff: Permit pilot funds or a transition grant to pay mission staff until the new scheme starts.

Conclusion

Urban SHGs built over a decade still exist, but the money and staff that kept them creditworthy have lapsed. Whether MoHUA settles committed dues and notifies a successor mission, or relies on convergence alone, will decide if this urban credit chain holds.

Key numbers

1. Tamil Nadu SHGs: 1.72 lakh groups with 18.70 lakh members.
2. DJAY-S pilot: 25 cities in 13 States.
3. Tripura SHGs formed under NULM: 6,796.
4. SHG convergence: over 1.5 lakh SHG women with Swachh Bharat Mission, 50,000 as AMRUT Mitra, about 38,000 SHGs under the PM Formalisation of Micro Food Processing Enterprises scheme.

Back2Basics: SHG-Bank Linkage Programme

1. Origin: NABARD pioneered it in 1992, letting banks lend to SHGs as groups.
2. Joint liability: The group shares responsibility for repayment, so peer pressure keeps repayment above 96%.

Matching Previous Year Question

“[2021, GS2, 10 marks] Can the vicious cycle of gender inequality, poverty and malnutrition be broken through microfinancing of women SHGs? Explain with examples.”