RURAL BUSINESS HUBS

MINISTRY OF PANCHAYATI RAJ

CENTRAL SECTOR SCHEME ON

RURAL BUSINESS HUBS

(2007-08 to 2011-12)

As revised on 13.08.2009

KRISHI BHAWAN

NEW DELHI

1. Introduction

There is a steady influx of rural people to urban areas in search of

employment and economic opportunity. Also, there is a wide gap between

rural and urban areas in terms of public services like health and

education, in the quality of life and levels of income. This gap is perceived

to be widening. The 73

Panchayats as Institutions of Self Government, to plan and implement

programmes of economic development and social justice. Government of

India has recognized that Panchayati Raj is the medium to transform rural

India into 700 million opportunities. There is also a felt need to ensure

that the benefits of rapid economic growth, unleashed through the reforms

of the last two decades, need to flow to all sections of society, particularly

to rural India.

The Ministry of Panchayati Raj has adopted the goal of “

Hypermarket

(RBH), initiative aimed at moving from mere livelihood support to

promoting rural prosperity, increasing rural non-farm incomes and

augmenting rural employment. RBHs set up in association with

Panchayati Raj Institutions (PRIs) could thus constitute the fulcrum of

“inclusive growth” – the theme of the Eleventh Plan.

The objective of the RBH initiative is to promote at least one RBH in each

development block of the country by bringing to the attention of business

houses, in both the public and private sectors, the unique product or skill

in each development block deriving from local resource endowments, felt

needs of the people and relative absorptive capacity of the local

community. Ministry of Panchayati Raj is attempting, in this manner, to

develop and promote the 4 Ps, that is, Public-Private-Panchayat

Partnerships into RBHs through a governance relationship between the

rural entrepreneur, the business partner and the PRIs. The role of the

Panchayat is to facilitate the convergence of extant schemes of State and

Central governments, together with initiatives of banks, financing

institutions, and promotional bodies. This will help develop holistic and

integrated partnerships between decentralized rural production units, and

larger corporate entities.

rd Constitutional Amendment, 1992, has mandatedHaat to” as the overarching objective of the Rural Business Hubs

2. Aim

Usher in prosperity to the Rural areas of the country and all sections of

the society by reaping the benefits of rapid economic growth unleashed

through the economic reforms and synergistically harnessing the

resource/ skill rich rural areas and technology/ marketing skills of the

industry, the entire process mediated/ facilitated by empowered PRIs.

3. Objectives

To identify rural products which have potential for national/ international

markets and standardize their quality.

To ensure value addition in rural products and increase production

volumes to levels viable for marketing.

To promote Rural Non-Farming Enterprises (RNFE) which utilise local

skills and/or resources and promote rural employment.

To foster mutually beneficial relations between the producers and

industrial houses as identified above.

4. Strategy

·

competent agencies, to plan for economic development of their area and

implement these plans.

Build the capacity of PRIs, if necessary, by extending the services of

·

State) at the Panchayat level for filling in gaps in the infrastructure and

services required to facilitate the development of the RBH in the area.

Achieve convergence of Institutions and schemes (both Central and

·

introduce and ensure compliance of high process/product standards.

Retain the decentralised production units where they exist but

·

opportunities in the Panchayat area which could not be developed so

far.

Engage the competent business professionals to identify business

·

technical skills.

Identify interested Business Partners having required marketing /

·

business partners to secure a non exploitative, mutually beneficial

business relationship.

Handhold the PRIs so that they can effectively negotiate with

5. Roles and Responsibilities of Key Stakeholders

Business partners for RBH can be members of industry, Central/State

supported agencies like PSUs, Promotional Organisations, large

Cooperatives etc. having access to wider markets and interested in taking

up rural products. They will play a lead role in establishing and

maintaining RBH.

Any of three levels of PRIs can initiate RBH, but production base of

reasonable size will be a necessary criteria. In the initial phase, focus will

be on Intermediate (Block) Panchayats. Ideally, Panchayat will play the role

of a governance partner and not necessarily that of a business partner.

State Government and Ministry of Panchayati Raj will provide overall

supporting and enabling environment.

Roles and responsibilities of key stakeholders are as follows:

Panchayati Raj Institutions

·

support to viable business activities, which will benefit the rural

populace.

As institutions of Local Self Government, extend institutional

·

concerns on new business initiatives in rural areas.

Allay fears and doubts of local inhabitants and address their

·

resources in the Panchayat area.

Identify skills and endowments of people as well as natural

·

business interest and the community to the same platform.

Jointly organise awareness programmes to bring together the

·

Facilitate acceptance of business plan for establishment of RBHs.

·

initiative into the overall decentralised planning process at the

Panchayat level.

Integrate the economic development plan emerging from the RBH

·

with the RBH approach wherever relevant.

Dovetail and converge government schemes and other initiatives

·

Provide infrastructure support to enterprises.

·

centers, incubators and other supports for starting up small and

micro enterprises

Facilitate rural entrepreneurship by setting up common facility

·

and partnerships.

Demonstrate continued community support through joint programs

·

the community in terms of better livelihood opportunities, better and

more sustainable use of naturally available resources etc.

Evaluate impact of the initiative in terms of what it has achieved for

Business Partner

·

Identify local skills/products with wider market potential.

·

accepted

Formulate business plans which are Panchayat based & Community

·

Facilitate acceptance of business plans by Panchayat

·

Provide sustainable local employment and skill development

·

Use one or more local resources.

·

programs and partnerships.

Demonstrate continued interest in the community through joint

Government

·

Facilitate policy

·

Help in dovetailing government schemes

·

Create basic minimum infrastructure

·

Empower Panchayats as single window

6. Geographical coverage and phasing of the scheme

Through the Scheme, RBHs will be developed as a pilot project in the

selected districts of the country. In the first phase, districts included under

BRGF will be covered. However, in case of 8 North Eastern States, pilot

projects will be selected from among all the districts.

7. Funding from the Ministry of Panchayati Raj

Under the Scheme, following supports will be extended to the

implementing Panchayats / Organisations.

A. Components of Funding

i(a) District / Sub district level RBH Workshop

The RBH process in pilot districts would start with a sub district level

workshop followed by a workshop under the Chairpersonship of

Chairperson Zila Parishad of the identified district, which will be attended

by District Collector, CEO Zila Panchayat, heads of all line departments

and partnering organizations. The RBH concept, components of RBH

Scheme, convergence with other Schemes/Institutions and leveraging

BRGF fund for RBH will be explained. The Workshop which will also

identify champion products (block-wise), potential sources for funding,

develop action plan and timelines for setting up RBHs, constitute a

Working Group for effective coordination and a Monitoring Committee for

timely implementation.

Maximum eligible assistance for this will be Rs. 60,000/- per district

Where found necessary and for further reinforcing the district workshop,

similar workshops can be held at sub district level also. Maximum eligible

financial assistance will be Rs. 15,000/- per sub-district workshop.

i(b) Professional Facilitators:

Preparatory to setting up RBHs, detailed appraisals/assessment studies

are to be carried out with a view to identify the business potential that

different blocks have to offer and to formulate strategies and

implementation plans to harness the same and providing lead for

achieving convergence and synergy between business, financial

institutions, government agencies and the Panchayats. Pilot projects also

require support and hand holding activities so that they are able to take off

and become self-sustaining.

Panchayats which are Institutions of local self Governance do not have the

required skills nor can they provide the dedicated attention that a pilot

project demands. Panchayats can avail the services of professionals to

identify potential business activities, bring about convergence, access

resources and to nurture the RBHs through their formative stage. Gateway

Agencies have been assigned the responsibility of handholding Zila

Panchayats in the focus districts for which no remuneration is paid. To

help them extend the required professional support, Gateway Agencies can

also avail financial assistance under this component.

Guidelines for engaging professionals are given in the Annexure.

i(c) Bridging critical gaps in local infrastructure

Several RBH proposals include setting up of common facilities /

infrastructure (like common facility centers for artisans / pooling centers

for farm products / minor equipment / connectivity). This fund can be

used for filling small but critical gaps in such facilities. Improvement of

skills is another critical gap hindering wider marketing of rural products

for which training by master artisan / experts are required. In such cases,

fee for trainers, purchase of minor training equipment, training material

(including raw material), stipend for trainees, labour compensation etc.

can be supported. This assistance can also be availed for design

intervention and technical upgradation. In case of raising plantations with

long gestation period, labour compensation for the pre-yielding phase can

also be supported. This fund will be placed at the disposal of

implementing Panchayat / implementing agency after the Ministry

approves the proposal and MoU is signed between Panchayat / rural

producers and the business partner.

Financial support from MoPR under this component will not exceed Rs. 25

lakh per project.

(ii) RBH Cell, documentation, information and communication

CII, the leading institutional partner for RBH, has set up an RBH

Secretariat with professionals and support staff who are helping in

identifying interested business partners, developing mutually beneficial

business proposals and coordinating the initiative. CII provides required

office space, furniture / office equipment and remuneration of the

personnel. In addition to the above – mentioned scope of work, CII – RBH

Secretariat will receive and process proposals under the Scheme, short –

list eligible ones and present them before the Empowered Committee of the

Ministry for final approval. Ministry will share the cost of an adequately

staffed RBH Secretariat including their travel expenses as per the eligibility

and restricted to actuals. The provision under this component will be

limited to 10% of the annual allocation or Rs. 50 lakh per year, whichever

is less, and subject to actual.

B. Proposals

Interested Panchayats, companies interested to link with rural producers

and other reputed organisations who can effectively link the rural

producers and interested buyers can submit proposals. Panchayats who

have identified an economic activity with potential to be developed as RBH

can seek assistance of professionals for conducting feasibility study and

develop the proposal as per the guidelines for engaging professionals.

Proposals from other organisations should be accompanied by a proper

analysis of the cluster / product / economic activity with gaps / weakness

in the existing system identified and the proposed interventions. Such

proposals should also have willingness of at least one Business Partner to

enter into relation with rural producers.

Proposals can be submitted directly to the Ministry or through the

concerned Panchayats / State Government. However, proposals from other

than Panchayats should have been discussed / developed in consultation

with the Panchayats

C. Approval of Proposals

CII – RBH Secretariat, along with representative of Ministry, will screen the

proposals and place them before the Empowered Committee with the

following Constitution:

1.

Secretary, Ministry of Panchayati Raj Chairperson

2.

Addl. Secretary, Ministry of Panchayati Raj Member

3.

JS/FA (Ministry of Panchayati Raj) Member

4.

Director, Ministry of Panchayati Raj Member

Secretary

Empowered Committee will consider each proposal and approve the ones

to be funded under the Scheme.

D. Funding of RBH under BRGF

Panchayats / Implementing Organisations can seek similar assistance

from Backward Region Grant Fund (BRGF) implemented by the Ministry of

Panchayati Raj for which the proposals are to be initiated by the concerned

Panchayats and processed through the planning mechanism laid down in

the BRGF guidelines.

8. Release of funds

The fund for sanctioned projects will be released to the implementing

Panchayats / Organisations after it is approved by the Empowered

Committee. In case of proposals from Panchayats for Professional

Facilitators, entire assistance will be released in one instalment. In case of

other proposals, 75% of total assistance will be released as one instalment.

Remaining 25% will be released on receiving the utilization certificate.

9. Monitoring and evaluation of the scheme

National RBH Executive Committee chaired by Secretary Panchayati Raj

will monitor the implementation of the Scheme. The Committee will review

the progress of the pilot projects assisted under the scheme and provide

necessary guidance. Performance of the RBHs, their sustainability and

future course of action will be evaluated through professional researchers

also.

An Implementation Coordination Committee consisting of members from

Panchayats, business partner and implementing organisations, if any, will

monitor the field implementation of individual scheme.

In successful pilot RBHs, producers and business partners are expected to

develop a sustainable commercial relation benefiting both the partners. In

such cases implementing Panchayats will gain experience in facilitating

economic activities for local area development. Impact of the pilots in

these aspects will be assessed by the members of the RBH Cell before the

direct funding concludes. Suggestions will also be made on the future

course of action so that the RBHs sustain as a business activity.

Annexure 1

Guidelines for engaging Professional Facilitators for setting up pilot

RBHs

RBH initiative works on the 4P model of public-private-panchayatpartnership.

The primary role of Panchayats will be to facilitate a mutually

beneficial business relation between rural producers and business

enterprises through convergence of central / state schemes, financial

institutions and implementing agencies.

Professional Facilitators can be engaged to assist the Panchayat in

identifying the project proposal, preparation of detailed project reports and

right up to establishing marketing linkages. They will also help in bringing

in convergence and nurture the RBHs through their formative stage.

As per these guidelines the professionals can be engaged in two phases by

the Panchayats / Implementing Agencies.

First Phase

·

organisations can use as starting material.

Prepare profile of products / clusters, which industries/marketing

·

level, identify at least one product per block, which can form the

core of the RBH.

In consultation with officials of development departments at district

·

short listed RBH.

Identify the schemes / institutions, which can converge on to the

·

investors and short list one product / cluster per district Panchayat

for setting up RBH.

In collaboration with members of industry, arrange meet of potential

·

the fund available to them, including that of BRGF.

Help Panchayat to plan for required common infrastructure using

·

industry/marketing organisation.

Support the Panchayat in discussion / negotiation with the

·

Plan and also specify well defined roles and responsibilities for each

partner.

Timeframe: Not more than 6 months.

The facilitator may support more than one RBH in contiguous areas.

However, the remuneration of Professional Facilitator

should be based on the time they spent & their

expertise, and not the number of RBHs supported by

them.

Second Phase

Reduce the mutually agreed working relation to MoU with Action

·

the Action Plan.

Facilitate timely implementation of the provisions of the MoU and

·

Handhold the Panchayat at all stages until the RBH is operational.

·

that they can facilitate RBHs in their own Panchayats.

Organise training sessions for Panchayat Pradhans of the district so

·

replication.

Timeframe: 6 to 12 months

Qualification and experience of professional facilitator:

Document the processes so that it can be used for further

·

Social Sciences.

Degree / Post Graduation in Rural Development / Management /

·

desirable.

Job requirement

First hand experience in economic development of rural area

·

Good knowledge of working of Panchayats

·

Ability to work with Government Officials and Panchayat leadership

·

/ expectations and achieving the desired goals.

Capability to coordinate stakeholders with different views / priorities

·

Ability to work without close supervision.

·

Extensive traveling within the area of jurisdiction

·

Reporting

Ability to communicate in the language of Panchayat and industry

·

who in turn will report to State Government and MoPR

Remuneration

Reporting to head of implementing PRIs / CEO of Zilla Panchayat

·

purposes (including TA/DA, office expenses, etc) and actual

remuneration may be fixed on a case-by-case basis by the

Empowered Committees / Division.

Selection

Rs. 50,000/- per month which is an indicative figure for calculation

·

candidates through open invitation.

Zilla Panchayat / CII will secure the candidature of potential

·

Panchayat and having representative of State Government / CII.

Short listing / selection may be done by a committee chaired by Zilla

·

phase). At the end of this phase Zilla Panchayat may take a

decision, based on the past performance, on whether to continue

the engagement during the second phase.

Candidates may be initially engaged for period of six months (first

·

facilitator (with the consent of the Panchayat of the area where the

hub is planned).Where the implementing agency is a NGO, it can itself engage the