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ADB approves $150 mn grant for Khadi Reform Programme

16
Oct '08
The Asian Development Bank (ADB) has sanctioned $150 million grant to revatilse the Khadi Sector. This was announced by the Union Minister for Micro, Small and Medium Enterprises, Shri Mahabir Prasad in New Delhi on October 15, 2008.

The Minister said that the Grant would revolutionise the Khadi Sector and generate lots of employment opportunities, improve productivity and provide higher wages to artisans. This money will benefit 300 identified institutions in the first phase he further added.

The ADB would provide the assistance over a period of three years from 2008-09 to 2010-11.

The Reform Programme envisages introduction of modern management practices and strengthening of human resources to ensure sustainability of Khadi, enhancement of artisans' welfare, empowerment of marginalized sections of the society, growth in the non-farm rural sector and resurgence of traditional village industries.

The Programme also addresses sensitive and longstanding issues and socially significant measures to enhance employment for the poor and marginalized. Comprehensive reform seeks to increase the involvement of private entrepreneurs by providing more equal opportunities by phasing out subsidies, ensuring professionalism in design & marketing, and enabling the use of “khadi mark”. Removing restrictions on product pricing is expected to improve links between production and marketing.

The reform of khadi institutions, the primary producers, will enhance quality, design and artisan welfare. Nearly three fourths of programme resources are directed to supporting khadi institutions. The institutional reforms at KVIC will strengthen its development role and minimize its direct production and marketing activities.

At the macro level, the Program is expected to support poverty reduction by enhancing employment & incomes and thus contribute to stability and peace in rural areas.

The Programme is expected to have positive impacts in terms of reducing poverty. Increase in household incomes will lead to a change in expenditure patterns in favour of education and health. The impact of khadi on rural development and in reducing rural–urban migration can also be significant.

Development of khadi will therefore promote inclusive growth, involving women, and socially and geographically marginalized groups. Anchored in an overall strategy of inclusive growth, the Program will enhance artisans' employment and earnings through production, marketing and governance reforms for khadi institutions.

Governance reforms ensure artisan representation on boards of directors to empower artisans by involving them in decisions relating to wages and distribution of surplus.

The licensing conditions for the use of a khadi mark and the removal of restrictions on pricing of products is expected to help provide higher wages to artisans. Production of khadi by new entrepreneurs encouraged by conducive policies established under the Program is expected to generate further employment.

Ministry of Micro, Small & Medium Enterprises


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