The ultra poor in urban India: Can ‘livelihood’ programs help break the cycle?

The plight of the ultra poor poses a set of almost intractable problems. How can anyone struggling for day-to-day survival achieve lasting economic security?

It’s not an easy question. In one 2008 paper on creating a “graduation pathway” from poverty, BRAC (originally the Bangladesh Rehabilitation Assistance Committee) characterizes the nature of extreme poverty as resistant to “existing development approaches.” And economists Esther Duflo and Abhijit Banerjee have extensively documented the complexities of helping people escape cycles of extreme poverty.

Pilots seek to help families achieve economic stability

But for all the challenges, a series of pilots are providing valuable insights into interventions that may help. Since 2006, CGAP and the Ford Foundation have been investigating livelihood-based, holistic support paths to help the ultra poor graduate to higher economic levels. This work, which spans 10 pilot projects and eight countries, is primarily focused on rural communities.

But one pilot, begun in 2009 and funded by the Michael & Susan Dell Foundation, has sought to address extreme poverty among 1,500 families in urban West Bengal. Run by Bandhan, a Kolkata-based microfinance institution, the urban pilot was designed as a graduation program to help the ultra poor move up the economic chain by introducing them to new ways of earning livelihoods and by helping them access other support services, including financial and health education.

Replicable strategies for dealing with these context-specific challenges are the key to helping families achieve the next rung of economic stability.

Strengths and challenges unique to an urban setting

The families who participated in the program demonstrated both differences and similarities to their rural counterparts. On the plus side, members of urban families typically had:

  • Greater confidence and higher goals than their rural counterparts
  • Greater tolerance for risk on higher income-producing activities
  • Easier access to markets and other critical elements of infrastructure

The Bandhan pilot also uncovered some practical challenges unique to poverty in the urban environment: For example, simply holding a community meeting to identify project beneficiaries – which may need to include as many as 70 or 80 families at a time – can be a challenge in congested slum.

In terms of extending this approach to other communities and making it sustainable over the long term, the most critical findings of the pilot were two:

  1. The importance of  helping members of these communities access existing services (rather than going through the costly exercise of reinventing the wheel)
  2. The need to not only train people in viable new ways of making a living, but also to support trainees in sticking with these occupations long enough to escape the near panic cycle of living meal to meal.

Replicable strategies for dealing with these context-specific challenges are the key to helping families achieve the next rung of economic stability. Pilots like Bandhan’s West Bengal program can help us identify pragmatic solutions to very concrete challenges.

To learn more about the pilot, read my recent CGAP post and the associated paper, Graduation Lessons Learned So Far: Bandhan’s Targeting the Hard Core Poor Program in Urban Settings.