Empowering Women through Financial Inclusion: The Lakhpati Didi Scheme, 2023

Policy Update
Apekshya Basnet

Background

It is commonly recognised that women’s economic empowerment accelerates social advancement and sustainable development. In India, where gender inequality still plagues society, programmes such as the Lakhpati Didi Scheme have become important tools for addressing these inequalities.

In August 2023, Prime Minister Modi unveiled a vision to create two crore ‘Lakhpati Didis,’ or prosperous sisters, in villages through the collective power of Women’s Self-Help Groups (SHGs). Subsequently, the Lakhpati Didi scheme was launched on 23 December 2023 by the BJP Government of Rajasthan.

The purpose of the Lakhpati Didi scheme is to help women from disadvantaged backgrounds break free from the cycle of poverty by giving them access to opportunities, resources, and financial services.

Objectives of the Lakhpati Didi Scheme

The primary objectives of the Lakhpati Didi scheme include:

  1. Encouraging financial literacy and awareness among women.
  2. Enabling access to formal banking services, including savings and credit facilities.
  3. Supporting entrepreneurship and income-generating activities among women.
  4. Establishing a conducive environment for women’s economic empowerment through institutional assistance and capacity building.

Functioning

Any member of a Self-Help Group (SHG) with a household income of Rs 1,00,000 or more per year is considered a Lakhpati Didi. This scheme’s sustainability is ensured by evaluating a potential Lakhpati Didi’s income across a minimum of four business cycles or agricultural seasons, with an average monthly income exceeding Rs 10,000.

To be eligible for this program, female applicants must meet the following criteria:

  1. The applicant woman must be a permanent resident of the state.
  2. The annual income of the applicant woman’s family should not exceed Rs 3 lakh.
  3. No member of the applicant woman’s family should be employed in a government position.

In addition, upon the Lakhpati Didi scheme’s inception, the government introduced a free app under the business and productivity category with the express purpose of assisting SHG households and their members in tracking their revenue both before and after joining the National Rural Livelihood Mission (NRLM). With the use of this app, the government strives to swiftly offer the scheme’s members a variety of services, perks, and information.

Moreover, by encouraging collaboration between different government departments, ministries, private sector organisations, and market actors, this scheme supports several livelihood activities. Overall, the scheme’s strategy includes careful planning, efficient implementation, and continuous monitoring at every stage.

The Lakhpati Didi scheme’s implementation processes further involve: (i) identifying potential Lakhpati Didis, (ii) creating a pool of master trainers, (iii) training Community Resource Persons (CRPs), (iv) planning the Lakhpati Didi’s livelihood, and (v) providing implementation support.

The following are additional components of the Lakhpati Didi scheme’s strategy:

  • Deepening, Strengthening and Expanding Livelihood options: The program aims to enable and support households in engaging in a variety of income-generating activities. The livelihood planning is further facilitated by trained CRPs who utilize a tool to submit completed documents to a digital platform for further consolidation and resource linkages.
  • Implementation Support: The SHG members/federations will receive timely and adequate support to improve their livelihood. This might take the form of market support (branding, packaging, e-commerce, etc.), asset support (input, equipment, infrastructure), skill support (knowledge and practical skills), and access to finance (bank linkage, leveraging departmental schemes, corporate social responsibility, etc.).
  • Training and Capacity Building: Regular and systematic capacity building and exposure of mission staff, line department officials, community cadres, community institutions, and resource persons is crucial for enhancing livelihoods. Thus, training in diverse knowledge and skill areas relevant to livelihood activities will be provided. In addition, in order to fulfil the capacity-building mandate, cooperation with eminent technical universities and civil society organisations will also be further guaranteed.
  • Convergence and Partnerships: Implementation of convergence across various programs (both inter- and intra-departmental) will be initiated to utilize financial, technical, and SHG federation capacity-building resources.

The following table outlines the schedule for convergence:

Picture1
Source: Lakhpati Didi website, Government of India (Lakhpati Didi Strategy – Lakhpati Didi)

Performance

As stated by the Minister of Rural Development, Giriraj Singh, the government’s goal of “women-led development” is mostly being driven by the over 10 crore families that were organised into Self-Help Groups (SHGs).

Since its inception, the Lakhpati Didi Scheme has added a feather to India’s cap by making significant strides in empowering women across India. The programme has provided women the tools and resources to withdraw from the cycle of poverty and dependency, fostering a feeling of agency and independence. Evidently, this scheme paints a positive picture of women’s empowerment and economic development in rural India through the SHG mass movement.

According to the Ministry of Rural Development, with more than 13.65 lakh of these registered ladies, Andhra Pradesh is in the lead, followed by West Bengal (10.11 lakh) and Bihar (11.16 lakh). Lakshadweep is the state and union territory with the fewest “Lakhpati Didis”—there are now none—followed by Andaman & Nicobar Islands (242) and Goa (206).

In addition, there are 6.68 lakh registered “Lakhpati Didis” in Uttar Pradesh, 2.64 lakh in Tamil Nadu, and 2.31 lakh in Kerala. This number is 8.99 lakh in Maharashtra, 2.02 lakh in Rajasthan, and 9.54 lakh in states like Madhya Pradesh.

Interestingly, Jammu & Kashmir has 29,070 women in this category, whereas Ladakh, a small union region, has 51,723 “Lakhpati Didis.” Assam leads the northeast with 4.65 lakh women, followed by Nagaland (10,494), Meghalaya (33,856), Mizoram (16087), and Manipur (12499).

Impact

A number of success stories demonstrate how this initiative has been transformative for women and their socioeconomic development in their local communities. For instance, Prime Minister Modi recently presented a video in his International Women’s Day 2024 speech that highlighted Nikita Maarikam’s achievements as a recipient of the Lakhpati Didi Yojana. The film narrated the story of Nikita, a Chhattisgarh native who, with the help of this initiative, became a successful entrepreneur who currently runs multiple profitable ventures. These days, the Self-Help Group (SHG) of Nikita Maarikam is essential in providing healthy lunches to several local schools.

Building on these achievements, the finance minister, Nirmala Sitharaman, declared in February 2024 that “83 lakh SHGs with nine crore women are transforming the rural socio-economic landscape with empowerment and self-reliance. Their success has assisted nearly 1 crore women to become Lakhpati didi already. Buoyed by the success, it has been decided to enhance the target of Lakhpati didi from 2 crore to 3 crore.”

Additionally, the programme is being carried out under the Deendayal Antyodaya Yojana—National Rural Livelihood Mission. It currently has a three-year timeline as its aim.

According to the latest data, there are 1,66,05,173 prospective Lakhpati Didi identified in 28 states, out of a total of 90,42,215 SHGs and 7,79,63,619 SHG members. Bihar (19.27%), Odisha (9.74%), Andhra Pradesh (8.80%), Maharashtra (8.61%), Madhya Pradesh (7.46), West Bengal (6.91%), Rajasthan (6.80%), Telangana (6.77%), Karnataka (5.47%), and Kerala (5.37%) are the top ten states with the highest proportion of potential Lakhpati Didis.

Based on the latest data, the highest number of potential Lakhpati Didis identified in each state/Union Territory are as follows:

Picture2
Source: Lakhpati Didi website, Government of India (https://lakhpatididi.gov.in/our-impact/)

The data above suggests that the states in southern India have the greatest concentration of potential Lakhpati Didis and would therefore benefit the most from the successful execution of this programme. These states include Andhra Pradesh, Telangana, Karnataka and Kerala. 

The government’s state-level goals (2024–25) for the top 10 states mentioned above are as follows:

Picture3
Source: Lakhpati Didi Website, Government of India (State Wise Targets – Lakhpati Didi)

In contrast, data suggests that the states and union territories with the lowest shares of potential Lakhpati Didi include:

Picture4
Source: Lakhpati Didi website, Government of India (https://lakhpatididi.gov.in/our-impact/)

In contrast, the northeastern states are home to the least number of Lakhpati Didis. These states include Nagaland, Mizoram, Manipur, and Arunachal Pradesh. 

Emerging issues

While the Lakhpati Didi scheme has been instrumental in empowering women and promoting financial inclusion in India, it also faces several general challenges including:

  • Limited Awareness: One of the main challenges is the lack of awareness about the scheme among its target population. Initiatives such as the Lakhpati Didi scheme rely on widespread awareness and participation to achieve their objectives. Without adequate awareness, implementation efforts may falter, leading to suboptimal outcomes, reduced effectiveness of the policy and low participation rates.
  • Socio-cultural Barriers: The Global Entrepreneurship Monitor (GEM) claims that family obligations and cultural standards are major obstacles for women entrepreneurs in India. Women’s key responsibilities in deeply ingrained conventional roles include caregiving and household administration, with little opportunity for them to pursue entreprenurship opportunities. Social norms can also restrict women’s freedom of movement and autonomy, which prevents them from taking advantage of networking opportunities that are essential for the growth of businesses. Furthermore, setting up a firm in India presents difficulties in breaking into markets, particularly for women entrepreneurs who may encounter prejudice or mistrust in sectors with a predominance of male employees. Thus, gender biases, restrictive social norms, and limited mobility may limit women’s ability to engage in income-generating activities and benefit from the scheme.
  • Access to Credit: Data demonstrates a systematic difference in credit consumption by gender. Studies have found that in India, women only receive credit equal to 27% of the deposits they make, whereas men receive credit equal to 52% of their deposits. This could be because women do not apply for loans based on their credit history, or it could possibly be because financial institutions do not treat women equally when it comes to credit. Even so, programmes like the Pradhan Mantri Jan Dhan Yojana (PJMDY) have helped to normalise using official banking channels and lessen the gender gap in account ownership. Yet despite such initiatives and the Lakhpati Didi scheme’s aim to provide financial assistance to women entrepreneurs, accessing credit remains a challenge for many beneficiaries. Limited access to formal banking services, stringent loan requirements, and high-interest rates may further deter women from availing themselves of the scheme’s benefits.
  • Lack of Infrastructure: Inadequate infrastructure, including poor transportation facilities, limited access to markets, and inadequate storage facilities, may hinder women’s ability to start or expand their businesses. This lack of infrastructure can impede the growth and sustainability of enterprises supported by the scheme.
  • Documentation Challenges: Documentation requirements such as Aadhar card, family ration card, and income certificate, for availing benefits under the scheme may pose challenges for women, particularly those with limited literacy or access to information. In addition, completing paperwork, providing necessary documentation, and meeting eligibility criteria may be daunting tasks for some beneficiaries.
  • Limited Institutional Support: The success of the Lakhpati Didi scheme relies heavily on the support of local institutions, including government agencies, financial institutions, and community-based organizations. However, inadequate institutional support, bureaucratic hurdles, and lack of coordination among stakeholders may hamper the effective implementation of the scheme.

Recommendations

The following recommendations may further aid in maximising the impact of the scheme:

  • Increasing awareness initiatives: Intensify efforts to raise awareness and promote participation among women, leveraging community-based approaches and local networks.
  • Expand community engagement: Women may be deterred from pursuing entrepreneurial endeavours by cultural expectations and traditional gender norms, especially in predominantly male industries. Therefore, it is imperative to adopt a gender-sensitive strategy. To encourage women to participate in this scheme, targeted lobbying, sensitization programmes, and community engagement should be implemented to address cultural and societal conventions that impede women’s economic empowerment. Furthermore, overcoming sociocultural obstacles necessitates initiatives to provide women the necessary networks, resources, and support they require to succeed in the business world in addition to a shift in societal attitudes towards gender roles.
  • Access to Credit: In addition to socio-economic, inactive accounts are possible explanations for women’s low credit adoption in India. Thus, policies and practices that can help increase women’s financial usage should take into consideration the reasons why people have inactive accounts. According to the Global Findex (2021), these reasons include not requiring one, a large distance from a financial institution, and not trusting financial institutions.
  • Bolstering the potential of agencies and frontline workers: Improving the capacity of implementing agencies and frontline personnel to deliver high-quality financial services and support to female beneficiaries could help overcome the challenge of limited institutional support within this scheme.
  • Addressing document barriers: In order to overcome documentation barriers, policymakers and implementing agencies must devise plans that streamline documentation procedures, guarantee inclusion and accessibility, and reduce challenges that women encounter. Thus, it is essential to raise awareness and understanding of documentation needs and processes, this may also entail developing outreach and education programmes, streamlining documentation procedures, encouraging digital documentation options, and offering support services.
  • Nurturing partnership opportunities: It is imperative for policymakers to cultivate partnerships with local agencies, private sector enterprises, and civil society organisations in order to gather resources, knowledge, and technical support for programme execution and scale-up.

Way Forward

With initiatives like the Lakhpati Didi Scheme, which highlights the accomplishments and tenacity of the “Lakhpati Didis” as emblems of development and change, we are gradually moving towards a “Viksit (developed) Bharat.” Evidently, the growing number of Lakhpati Didis’ and their success stories demonstrate the program’s ability to change lives and advance more general socioeconomic development objectives. However, for the programme to reach its full potential, coordinated efforts are required to overcome existing obstacles – which will guarantee the initiative’s sustainability and scalability.

In summary, overcoming these challenges necessitates a multifaceted strategy that includes raising awareness about the scheme, facilitating better access to credit and financial services, eliminating sociocultural barriers, funding infrastructure development, offering specialised training and capacity-building initiatives, and strengthening institutional support for women entrepreneurs. Thus, the Lakhpati Didi scheme can serve as a model for inclusive and gender-responsive development methods through ongoing expansion, collaboration, and innovation, opening the door to a more prosperous and equitable future for all.

Apekshya Basnet is a research intern at IMPRI. She graduated with a BA (hons) Economics in 2023.

Acknowledgement: The author expresses gratitude to Ankita Nawani and Aashnaa Mehta for their constructive feedback, thoughtful comments, and valuable suggestions that have enriched the article.

References:

  1. Klapper, L., & Arora, T. (2022, October 12). Improving women’s access to credit in India. World Bank Blogs. https://blogs.worldbank.org/en/allaboutfinance/improving-womens-access-credit-india
  2. Chakrabarty, S. (2024, February 1). Interim budget increases target for Lakhpati Didi scheme. The Hindu. https://www.thehindu.com/business/budget/interim-budget-increases-target-for-lakhpati-didi-scheme/article67800679.ece
  3. GEM (Global Entrepreneurship Monitor) (2023). Global Entrepreneurship Monitor 2022/23 Women’s Entrepreneurship Report https://www.gemconsortium.org/reports/womens-entrepreneurship
  4. NIC. (n.d.). Lakhpati Didi Analysing Report. https://nrlm.gov.in/LakhpatiHHAction.do?methodName=showLakhpatiAnalyseView 
  5. Chauhan, P. (2020) Women’s Access to Banking in India: Policy Context, Trends, and Predictors. Review of Agrarian Studies. https://ras.org.in/women_s_access_to_banking_in_india
  6. Minister for Rural Development and Panchayati Raj, Shri Giriraj Singh chairs National Conclave on Enabling 2 Crore ‘Lakhpati Didis’ today.Ministry of Rural Development. https://pib.gov.in/PressReleseDetail.aspx?PRID=1955239
  7. Lakhpati Didi State-Wise Targets. https://lakhpatididi.gov.in/state-wise-targets/

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