LEVERAGING JFMCS FOR POVERTY ALLEVIATION BY UTILIZING OPPORTUNITIES THROUGH MICROFINANCE INTERVENTIONS FOR ENHANCING VALUE ADDITION OPTIONS OF FOREST OUTPUTS Prof. B.P. Pethiya, PGDM (IIMA), Ph D Dean, Indian Institute of Forest Management, Bhopal 462 003, INDIA. Email: firstname.lastname@example.org, email@example.com Key words : Community Self-Help Groups (CSHG), Microfinance, Non-Government Organizations (NGOs) Non-Timber Forest products (NTFP), Forest dweller, Moneylender Abstract There is an urgent need to look for strategies for eradication of poverty particularly with reference to poor people, who traditionally been dependant on forests for livelihoods. The experience from India could give us some alternatives to form Strategies for poverty alleviation through dove-tailing potential of Microfinance Practices with value addition options for Non-Timber Forest Products. These options have to be created at local level to increase the share of NTFP collectors for produce collected from forests in ultimate consumer's payments. This would require institutional and financial inputs. The formation of Community Self Help Groups (CSHG) amongst the NTFP collectors within exiting Joint Forest Management Committees (JFMC) and getting the recognition from formal banking sector for extending financial services, based on only social collateral, departure from traditionally physical collateral based financing has been very successful in alleviating poverty . The provision of accessibility to credit for poor NTFP collectors has enabled them to adapt value addition options through adoption of appropriate technology. The bank linkage program with smaller group of the poor such as CSHG is a major revolution for poverty alleviation and has also been proved to be very effective. The paper observes that in India, the NTFP collectors largely depend on Non Timber Forest Products (NTFP) for their survival and growth where as revenue from timber goes to states. The very seasonality of NTFPs and un-accessibility to formal lending system earlier use to force them to take help from local moneylenders. The exploitation was not only limited to exorbitantly very high interest rate but also used to force the NTFP collectors to part the collected NTFPs at un-remunerative prices, many a time without any value addition immediately after harvest(to the local traders/ money lenders). It was also experienced that microfinance along with proper institutional support has lead to adopt appropriate technologies. Many developed appropriate technologies are just confined to research laboratories, merely as demonstration units due lack of proper dissemination and accessibility to hassle free credit. The experience of India by providing accessibility to financial services to NTFP collectors under micro finance through CSHGs - Bank linkages, is an innovative approach for getting rid of exploitations and thus ultimately leading to alleviate poverty. Paper to be presented in International Conference on Poverty Reduction and Forests: Tenure, Market and Policy Reforms, organized by the Regional Community Forestry Training Center for Asia and the Pacific (RECOFTC) at Bangkok, September 3-7, 2007. Abbreviations & Acronyms and Notes JFMC Joint Forest Management Committees NTFP(s) Non-Timber Forest Products CSHGs Community Self-Help Groups NABARD National Bank for Agriculture and Rural Development Conversion rate : Rupees 40 = 1 US$ Select NTFP local name and Botanical name Local name Botanical name Aonla Emblica officinalis Mahua Madhuca indica Tamarind (Imli) Tamarindus indica Chironjee (Achar) Buchanania lanzan Bel Aegle marmelos Van-Tulsi Hyptis spp. Jamón Syzygium cumini Chirayata Swartia chirayta Mango Mangifera indica Introduction Poverty alleviation is buzz word in the present days. The poor differs from country to country but in the present context of India, we are concerned with the definition given by the Government of India (GoI). The GoI defines the poverty line by way of income and said that income below Rs.10/- per day per person (approximately Rs.3600/- equivalent to US$ 90, per year per person) considered as below poverty line. As per GoI, this amount would be sufficient for the people to buy the food equivalent to 2200 calories per day per person. However, here we are not questioning the definition of poverty line, but for our reference, we are referring to that target group of NTFP collectors, who do not have accessibility with the formal lending system, money to buy the enough food to meet their calories’ requirement for survival. These NTFP collectors do not have options/choices and also the opportunities for having the healthy, free and self esteemed life of their own. The percentage of population below poverty though has a decline trend in India as per the poverty estimates carried out by the Planning Commission from 1973- 74 to1999-00 (Table- 1) and still about 27% rural population is still below poverty line. Table – 1:Percentage of Population below Poverty Line in India Rural Urban Total 1 2 3 4 1973-74 56.44 49.01 54.88 1977-78 53.07 45.24 51.32 1983-84 45.65 40.79 44.48 1987-88 39.09 38.20 38.36 1993-94 37.27 32.36 35.97 1999-00 27.09 23.62 26.10 Source: Planning Commission, Govt. of India Poverty Statistics in Major States of India Barring Punjab, Haryana and Gujarat, all other states are having population below poverty line is above 10 percent of population. The repeated natural calamities like droughts, floods and cyclones, further increases the poverty of poor people, particularly small and marginal farmers, forest dwellers and landless laborers, as they are neither equipped to fight such uncertainties nor they have financial capacity to augment the required resources. Table-2 elaborates poverty statistics in major states of India. Table – 2: Incidence of Poverty in Major States of India during 1999-00 Sl. State People Below Poverty No. Line (%) 1 2 3 1 Andhra 15.77 Pradesh 2 Bihar 42.6 3 Gujarat 14.07 4 Haryana 8.74 5 Karnataka 20.04 6 Kerala 12.72 7 Madhya 37.43 Pradesh 8 Maharashtra 25.02 9 Orissa 47.15 10 Punjab 6.16 11 Rajasthan 15.28 12 Tamil Nadu 21.12 13 Uttar Pradesh 31.15 14 West Bengal 27.02 All India 26.10 Source: Planning Commission, Govt. of India Lack of Physical Collateral, Exploitation and scope for Microfinance Intervention: This is also a proven fact that the bottom lined poor including majority of Non Timber Forest Products (NTFP) collectors, who do not have any worth while physical assets in India, could not get the accessibility to the formal financial systems for the want of collateral. In such circumstances, in order to meet their credit requirements, they are dependant on money lenders/ large farmers who exploited them by advancing micro loans on very exploitative terms. The exploitation is not only limited to exorbitantly high interest rate but also forces the poor to part the collected NTFPs at un-remunerative prices. It was observed that many times even without any value addition, immediately after harvest, these poor were forced by the circumstances to opt for distress sale to the local traders/money lenders. The concept of microfinance has emerged as a solution to check these exploitations, which is based on social collateral rather then physical collateral for providing access to the credit and using the community concept with proper group dynamics for creating the peer pressure to enforce the financial discipline. The poor can become bankable if financial services are made easy, their social capital is given more value than physical assets and credit terms like repayment of loan made small installments, suitable to their cash in flow. JFMCs and Microfinance : The JFMCs in India have already under gone through the various stages of group formation, storming, stabilization and have been in performing stage since number of years. Taking the advantages of the culture evolved of taking participatory decisions in JFMCs and to do own problem analysis in the groups to arrive options available to overcome such problems like enhancing income through income generating activities, the JFMC are best suited platform for forming number of small groups within JFMC, without affecting the normal JFMC functioning. These groups, with a maximum size of twenty members, known as Community Self-Help Groups (CSHGs) can have a access to the micro finance without physical security through Bank linkage program of National Bank for Agriculture and Rural Development (NABARD). This bank linkage program has brought a major revolution in India for enhancing forest’s role in rural development through offering NTFP value addition options, leading to ultimate poverty alleviation by utilizing opportunities through microfinance interventions. Value addition options for JFMC Members in India : The Value addition options in India generally consists of primary processing of NTFPs, which usually done at Primary collector level (consisting of removal of unwanted parts like leaves, stems twigs etc., cleaning, shaping, bundling, drying, grading, storing, boiling, peeling, pulping). However it has been observed in the field that in India, the option of increasing in earnings through value addition by way of Pre and Post harvest care of NTFP production system at primary collector level is yet to be popularized amongst the NTFP collectors. For meeting the immediate consumption needs, the NTFP collectors generally finance their needs by way of advance trading of NTFP with traders and thus submit themselves for exploitation, as they have no other options. The moneylenders are also an easy option for NTFP collectors especially at the places where either, the volume of NTFP is low or the absence of NTFP traders. Thus compulsions of meeting requirements of their utmost basic needs, the NTFP collectors at the time when they are in real financial crisis, are exploited by the traders. These traders offer to take NTFPs against the advances given by them to the collectors, at much lower value than the market value. It was also observed that the trader have accessibility to the market, information and infrastructure which otherwise is not availability to the NTFP collectors. Due to the advances taken from the traders they are bound to sell their collections immediately with little value addition or even without value addition. Has not been forced by the circumstances, the same NTFP collections would have fetched more price. Hence, there is great potential for micro finance sector to play a pivotal role to safe guard the interest of the NTFP collectors and promote the livelihood enhancement by combining NTFP value addition options with micro finance. This will relive them from the clutches of money lender/ NTFP traders on one side and will provide number of options for taking up of NTFP primary value additions and infrastructure at local level on the other hand. Poverty Alleviation and Contribution of NTFPs : The following facts regarding contribution of NTFP to India reveal their importance (Shiva,1998). 1. Nearly five hundred million people living in and around forests in India depend on NTFP for their sustenance and supplemental income (Tewari, 1994). 2. Studies in Orissa, Madhya Pradesh, Himachal Pradesh and Bihar indicate that over 80% of NTFP collectorsdepend entirely on NTFP, 17% landless depend on daily wage labour mainly on collection of NTFP and 39% people are involved in NTFP collection as a subsidiary occupation (Negi, 1993). 3. It has been estimated that many village communities derive as much as 17-35% of their annual household income from sale of the NTFP (Tewari, 1994). 4. NTFP provide 50% of the income to about 30% rural people. (Gupta & Guleria, 1982). 5. After processing of NTFP, value added products are obtained which increase the employment opportunities and income to the people eg., fore- based small scale enterprises, many of the based on NTFP, provide up to 50% 50% of income for 20 to 30 times of the rural labour force in India (Campbell, 1993). 6. An estimate made in West Bengal indicated that an average return of Rs. 2720 ha/year is obtained from NTFP which is 25% more than the polewood harvest which fetches Rs. 16,000 per hectare after 10 years (Malhotra et al.,). 7. Over 50% of the revenues earned by the forest Department comes from NTFP. Growth of revenues from NTFP have generally been 40% higher than timber e.g., compound growth rates in revenues from NTFP and timber during 1968-69 to 1976-77 period were respectively 15.1% and 10.8%, the former being 40% higher than the latter one (Gupta Guleria, 1982). 8. It has been found that the share of export earnings from NTFP has been ranging from 56.5% to 75% out of the total exports of forest produce including both the timber and NTFP during 1959-91 (Gupta & Guleria, 1982). Thus on prima facie, it can be said that the distress sale and lack of value addition options are leading for exploitations of poor NTFP collectors. The exploitation further gets aggravated due to lack of value addition skills, awareness and/or appropriate technology for value addition. Though in rare cases, when such technology is available, the financial resources required to acquire the technology is missing. Destructive harvesting practices adopted by NTFP collectors: It was observed that the continuous shrinking of the NTFP production sources is leading to an undue competition amongst the NTFP collectors for premature and unsustainable harvest of NTFP for immediate financial gains by way of increasing the quantity of collection. The thirst for maximizing quantity, has resorted to destructive harvesting practices and thus also resulting in damaging the natural forests which ultimately degrading the environment too. For maximizing the volume of harvested NTFP, eventually resorting to removal/damaging of the basic production system to have the one time maximum harvest and loosing/ destructing the production system for ever. Hence, one of the basic problems of NTFP collectors is sustainable livelihood options which can be addressed by providing micro finance. Women's employment in forest based enterprises is estimated to be approximately 571.533 million days annually of which 90 percent is in small scale enterprises using NTFP (Khare, 1987). Vicious Cycle of Low Income amongst NTFP Collectors : The NTFP collectors get trapped in to the vicious cycle of low income, further aggravating the cause for poverty. Therefore, it is necessary that for improving the economic position of the forest dwellers, residing in and around the forest by providing them livelihood options consistent with conservation of forest and its sustainable management. Figure- 1 Vicious Cycle of Low Income amongst NTFP Collectors No or very Less Investment Get trapped in Inadequate income vicious debt cycle to meet consumption needs Loan from Money lenders The poverty amongst the NTFP collectors, who are generally at socially and economically disadvantaged situation, can be over come in sustainable way only by exploring the options of engaging them in economic activities, which can give them continuous stream of income in cash or kind. Though engaging them in sustainable economic activity is a complex reality due to various marketing forces. However such economic activities has to become a way of life for them, using their capabilities, for meeting their own and family needs.. Hence encouragement of setting up micro-enterprises, whether forest based (NTFP processing) or otherwise, will also effectively increase the income for them but it requires composite planning and project management. Micro Finance: Breaking the Cycle of No or Low Income of NTFP Collectors: The long term income, especially in the context of reducing pressure on forests, necessitates peoples’ ability to make choices on their own and engage in NTFP value addition option for their own benefit, on a continued basis. Most of the NTFP collectors are the members of JFM Committees formed for the better forest management and protection. Therefore, horizontal intervention, including providing Micro Finance will not only help in increasing income, but also empower them to make choices. Figure- 2 Micro Finance: Breaking the Cycle of No or Low Income Micro Finance based on Social Collateral Gradual Investment First in Consumption then for NTFP value addition group Surplus re- Though not invested to break adequate But the vicious circle some income Meet Consumption Needs Repayments of installments Building economic confidence amongst NTFP collectors by encouraging savings: A CSHG has an average size of about 15 members (11-20) but we have to make sure that they should be from a homogeneous class amongst the JFMC members. They come together for addressing their common problems of livelihoods. They should be encouraged to make voluntary thrift on a regular basis to start with. Thrift means savings generated by cutting down on current expanses which is not necessary for survival. They use this pooled savings to make small interest bearing loans to the needy members. This process will lead to imbibe the process of financial intermediation, prioritization of financial needs and accounts keeping. This process will gradually build financial discipline amongst NTFP collectors (now CSHG members). Gradually, they will also learn to handle large transactions. The CSHG members will start to appreciate that the financial resources are limited and have a cost. Once the CSHG groups show this mature financial behavior, banks will be eager to make loans to the CSHG in certain multiples of their accumulated savings. The bank loans are given without any collateral and at market interest rates. The CSHG members themselves have to decide the terms of loans to their own members. The members own accumulated savings are part of the aggregate loans made to the members, peer pressure ensures timely repayments. The formation of CSHG, will in addition to financial help at the time of need, provide social security to the NTFP collectors. Dove-tailing of potential of value addition of NTFP and Micro-finance amongst JFMC members : The involvement of the community participation through group approach has been a very successful model in India for achieving the objectives mentioned. Small groups have been formed amongst the JFMC members themselves or with their family members with a maximum size of twenty members known as Community Self-Help Groups (CSHGs). These CSHGs have been provided access to the microfinance without physical security through Bank linkage program. The CSHG-bank linkage program is a major revolution for poverty alleviation and proved to be very effective including. The people living below poverty line usually need small financial assistance initially for subsistence, health etc and as credit requirement gets graduated, they need more microfinance to opt for NTFP value additions options. NTFPs have features which are attractive from the gathering and processing point of view, they may not necessarily be strengths in marketing the products, but rather the contrary. For instance, the following have been listed as advantages of NTFPs gathering and processing activities: Small in size and often household-based Often involve diversity of a product Frequently seasonal in nature Labour intensive and use simple technologies Provide direct benefits to the local economy Accessible to low income and socially disadvantaged groups and are most often managed by women (Sekhar et al., 1993). As observed from the field that the gap between supply and demand for micro finance has led the NTFP collectors to go for distress sale (e.g. at very minimal price generally for mahua flower (Madhuca Indica), between Rupees 4–6 per Kilogram (1 US dollar equals to 40 Indian Rupees) to the middlemen or petty traders of NTFP collected by them, to meet their immediate subsistence needs. The provision of micro finance may lead to the accruing following benefits to the forest dwellers: Freeing from the exploitation of money lenders and NTFP traders Generation of self employment opportunities in form of value additions to NTFP Checking the destructive harvesting of NTFP Conserving the forest and environment Facilitation of adoption appropriate technology for value addition. Micro Enterprise for NTFPs and other local produce from allied activities : The Micro Finance, exclusively for setting-up of micro enterprise for forestry products may not be feasible until and unless we also take in to account micro enterprises based on allied sectors like, agriculture to make this approach viable. The Micro-enterprise to be taken-up by NTFO collectors be forest based or otherwise could be either at individual basis or could be household basis or it may even be at CSHG level micro enterprise. Most of these enterprises employ/use the family labour or the labour of friends/ relatives. However, in case when the CSHG takes-up the micro-enterprise, then it is necessary to follow a system to reward the members for the labour put in by them. . The NTFP value addition options at local level gives an opportunity to NTFP collectors to generate cash income while remaining at their native places and enjoying their traditional customs. However such options have some dis- advantages too like related to the shortage of technical and practical information about NTFPs. During entire value addition chain process i.e. from management and cultivation to marketing, harvesting, and processing, the poor NTFP collectors are facing uncertainties. Marketing information is also scarce for most NTFPs. Information such as price, the volume required by the market and quality standards for the product is difficult to access. If at all information is available, it may be difficult to apply to a new set of circumstances. Even after NTFPs are successfully harvested, they may not be marketable. Institutional requirements for delivering the micro-finance effectively and efficiently, along with promotion of small micro enterprises. A CSHG is a registered or unregistered group of either JFMC members themselves or their family members having homogenous social and economic background, voluntarily coming together to save small amounts regularly, to mutually agree to contribute to a common fund and to meet their emergency needs on mutual help basis. The group members use collective wisdom and peer pressure to ensure proper end-use of credit and timely repayment thereof. In fact, peer pressure has been recognized as an effective substitute for collaterals. With the growing importance of the micro-credit through CSHG-bank linkage in India, the Reserve Bank of India (RBI) in 1996 included financing to CSHGs as a mainstream activity of banks under their priority sector lending. Initially CSHGs are formed, developed and strengthened to evolve into self- managed people's organisations at the grassroots level. There after, CSHG gets stabilized through thrift and credit activity among the members and building their own corpus — the CSHG takes up internal loaning to the members from the corpus. The CSHG corpus is supplemented with Revolving Fund sanctioned as cash credit limit by the banks to take livelihood. Then comes the micro enterprise phase, where, the CSHG takes up economic activity, of its choice for income- generation. Solidarity and cohesiveness amongst JFMC members It has been the experienced that there exists solidarity and cohesiveness amongst the JFMC members. Hence the group formation and stabilization culture already exits. Therefore, for formation of new CSHGs, office bearers of JFMCs along with representatives from Gram Panchayat, and the Forest Department (FD) local officials, in association with the local NGO (if genuine NGO is present) can conduct meetings. This would lead to form number of CSHGs, involving family members of JFMC. In such meetings office bears of CSHGs can be elected to initiate the working of CSHGs. To start with, CSHGs can form oral by-laws, which can later on, can be modified and converted in to written forms.. Different Models of CSHG linkages with banks for enhancing Credit : Banks have been given freedom to formulate their own lending norms to give credit to CSHGs, keeping in view ground realities. They have been asked to devise appropriate loan and savings products and the related terms and conditions including size of the loan, unit cost, maturity period, grace period, margins, etc. Such credit covers not only consumption and production loans for various farm and non-farm activities of the poor but also include their other credit needs such as housing and shelter improvements. Model I: CSHGs formed and financed by banks In this model, it is envisaged that the Banks will act as the promoters of forming and nurturing the CSHGs themselves, which slightly a new kind of additional developmental role expected, departure from traditionally banking role. This model will require forest department official to approach the local branches or banks in JFM area for taking their help in forming CSHGs amongst JFMC members. However, the success of this model has been observed to be very limited. It has been observed that Banks prefer the organization like NGOs or Forest department to act as catalyst before Bank’s advancement to CSHGs. Figure- 3 CSHG BANK LINKAGE MODEL – I FORMING AND NURTURING BANK CSHGs CREDIT LINKED TO SAVINGS JFMC MEMBERS/ FAMILY MEMEBERS Model II: CSHGs formed by FD/ NGOs : This model likely to be more successful model. Here, Forest Department officials or selected NGOs or other Developmental Agencies (DA) act as facilitators. They facilitate organizing, forming and nurturing of CSHGs, and train them in thrift and credit management. Banks give loans directly to these CSHGs. Figure- 4 CSHG BANK LINKAGE MODEL – II FD, FEDERATION OF CSHGs, NGOS, DA FORMING, NURTURING MONITORING CREDIT LINKED TO SAVINGS BANK CSHGs SAVINGS JFMC MEMBERS/ FAMILY MEMEBERS Model III: CSHGs financed by Banks using financial intermediaries like FD/ NGOs/ other Development Agencies : This is the model wherein the FD/Selected NGOs /Federation of CSHG/ other DAs take on the additional role of financial intermediation. In areas where the formal banking system is having constraints, then only this model can be tried. This, in turn, is used by the FD /NGO for onlending to the CSHGs. In areas where a very large number of CSHGs have been formed, intermediate agencies like Cluster/Federations of CSHGs can act as links between bank branch and member CSHGs. It is difficult for FD to act as financial intermediaries, hence federations/clusters/selected NGOs can be encouraged to act as financial inter- mediaries. Figure- 5 CSHG BANK LINKAGE MODEL – III NGO, FD,FED OF CSHGS, OTHER DEVT AGENCIES FORMING, NURTURING, WHOLESALE MONITORING CREDIT SAVINGS ? BANK CSHGS SAVINGS ? JFMC MEMBERS/ FAMILY MEMEBERS Capacity building of JFMC members in Micro-finance & NTFP based Micro enterprises: The NABARD can provide training to the lower hierarchy forest department officials, who in turn can orient the CSHGs. Based on the training need analysis on continuation basis CSHG members have to be trained in documentation processing as well as has to be made aware about the availability and adoption of appropriate technology based on local resources. In addition to the CSHG bank linkage, numbers of private banks as well as micro finance institutions exist and they can also be tapped because of their innovations in building-up of micro finance. CSHG and Micro-finance initiatives are not the recent concepts. During the last two decades, substantial work has been done in developing and experimenting with different concepts and approaches to reach financial services to the poor, with the initiatives of NGOs. However, in true sense, to reap the benefit of micro finance, setting up of micro-enterprise requires acceleration. Though savings are encouraged amongst the CSHGs members but if savings are not used for inter-loaning, then it means that the credit absorption capacity among NTFP collectors is yet to be enhanced. Hence, there is an acute need of identifying and encouraging setting up of micro-enterprises. In CSHGs, every member of the group is required to have regular savings on weekly or fortnightly or monthly basis. The frequency of savings and group meetings may vary but are mandatory. Once these savings are regular, then depending upon the need of the members and quantum of savings, group gets into credit activity. In this fashion, the NTFP collectors by forming CSHGs, manages their own revolving fund to meet their micro finance requirements. However, catalytic support and guidance by NGO’s and forest department officials is required for effective functioning. Thus, the NGO remains with the group from formation stage till it reaches the take-off level, which in case of NTFP collectors may be bit long. During the field survey, it was observed that NGO’s and CSHG’s functioning have been able to cater primary micro finance needs of NTFP collectors on a cost-effective basis. Setting up NTFP based Micro enterprises: Before setting up NTFP processing unit, one has to give due consideration for basic consumption pattern, i.e. how it is consumed (raw/semi-processed/ processed) and how much (quantity/period) it is consumed? The consumption pattern varies at various socio-economic levels viz. the poor prefers to consume in raw form and the rich consumer wants it in processed form who is prepared to pay bit more for it. The following figure depicts various consumption patterns of NTFP. Figure 6 : NTFP Consumption Pattern Consumption of NTFP Raw Form Semi-processed Form Processed Form (forest dwellers) (middle income group) (middle/higher income group) Eg. Aonla, (primary collector), Imli, Bel, Eg. Aonla, Mahua, Eg. Aonla, Chironjee, Van Tulsi, Jamun, Mango, Chirayata Jamun, Chirayata Chirayata (Dried) (Powdered) Source: Primary Data These forms of consumption are directly related to the purchasing power of an individual. As the one who are primary collector are bound to look for the short term and immediate gains, as observed in case of Mahua. It was observed that during the Mahua Season, the primary collectors collects Mahua flower and sell the same at very minimal price generally between Rs. 4 –6 k.g. to the middlemen or petty traders. The NTFP collectors do not have the hoarding capacity for mahua flowers since they do not have sufficient alternatives for meeting their subsistence during the rainy season, hence, resorting to distress sale. After the rainy season, they purchase back the same at higher price Rs. 10 – 12 k.g. for their own consumption. The NTFP collectors are neither generally concerned with the future returns nor sustainable harvesting. Hence, setting up NTFP based micro enterprises, can contribute substantial to enhance the well- beings of NTFP collectors on one side and will arrest the un-sustainable NTFP harvest. Role of assured markets for adopting the NTFP value addition technology In all the study area it was observed that most of the NTFP collectors are concerned with the assured market for the value added NTFP products. The role NGOs in the study area was appreciated but the outreach is still limited. Hence, some of the NTFP collectors still have to depend up on middle man and thus realizing un-remunerative prices for the their NTFP products. In addition the general market uncertainties as applicable to other products are also having bearing on the returns. Due to this uncertainty, the concerned CSHG’s as well as NGO’s either may loose heavily or even if they earn, the earnings will not be substantial. The existing channel from collectors to the consumer involves the middle man as a major link. The CSHGs on their own can not reach to the consumers until and unless, they form a cluster and federation of their own or the big NGO makes the marketing interventions to replace the service of the existing middlemen. Conclusion Poverty in India is one of the major problems, as amongst other developing countries. Number of Government sponsored rural development program were initiated after the end of colonial rule in India including the famous Integrated Rural Development Programs (IRDP). It was observed that these programs were mainly focusing on providing subsidy and could not convert the ―Un-economic active rural poor ―in to ―Economically active rural people‖. The major reasons were availability of Economic asset, Microfinance and Institutional support. In the later years, the socio-economic role of forests had been recognized, particularly to address the subsistence economic needs of the poor, who are dependant on collecting NTFPs. This has been done by creating the value addition options at local level for rural poor in order to increase their share in ultimate consumer’s payments for the produce collected by them from forests. Thus forests had started serving as economic asset for poor. But, this was not possible in isolation until unless, required financial services through Micro-finance programme of India by innovative approach of setting up NTFP based Micro enterprises by CSHGs and catering to the need of micro finance and credit plus activities. Hence, the combine effect of NTFP value addition options with utilization of potential of Microfinance Practices opened new doors for rural development from forests. The provision of micro finance through CSHG-Bank linkage programme through JFMC has a great potential to overcome the problem of distress sale and poverty. It appears that there is a great potential and the scope of leveraging the micro- finance for setting up micro-enterprises/income generating activities for forestry sector with an aim to alleviate policy amongst NTFP collectors. The approach will certainly reduce the undue pressure on forest for economic gains to the forest dwellers through microfinance interventions on one side and indirectly contributing to the forest regeneration and forest productivity augmentation on the other. The provision of income generation opportunities by exploring the possibilities of setting up of micro enterprises through leveraging micro-finance for value addition to NTFPs for forest dwellers and other non-forest based vmicro- enterprise avenues, will ultimately lead to reduction in illicit removals from the forest. The need for horizontal interventions, including providing Micro Finance will not only help in increasing income, but also empower the NTFP collectors to make choices. The Micro Finance, exclusively for setting-up of micro enterprise for NTFP value addition may not be feasible until and unless we also take in to account micro enterprises based on allied sectors like, agriculture to make this approach viable. Note: This paper is based on the research project “Assessing the Impact of Microfinance as a tool for adoption of appropriate Technology and conserving the Environment (with specific reference to NWFP)” sponsored by the Indian Institute of Forest Management, Bhopal, INDIA, under taken by the author of the paper with Dr Teki S. as Co-investigator in 2003. Bibliography 1. Hammet, T. 1999. Special Forest Products: Identifying Opportunities for Sustainable Forest-based Development. Virginia Landowner Update, Virginia Tech. 2. Khare, A. 1989. Small Scale forest Enterprises in India with special reference to the role of women. Wasteland News. November, 1989–January 1990. 3. 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