Analysis of India’s Proposed Urban Livelihoods Mission Phase 2

UNDP partners with Deendayal Antyodaya Yojana - National Urban Livelihoods Mission to empower women entrepreneurs | United Nations Development Programme


The article discusses the Indian government’s plans for a second phase of the Deendayal Antyodaya Yojana-National Urban Livelihoods Mission (DAY-NULM), which aims to provide skills training and access to credit for urban poor.

Analysis of this news for a layman:

DAY-NULM is an Indian government program that stands for Deendayal Antyodaya Yojana-National Urban Livelihoods Mission. It focuses on helping the urban poor by providing skills training and access to loans to start small businesses.

The article mentions that the Indian government cabinet will soon consider approving a second phase of this program. The goal is to build on the first version of DAY-NULM and expand support for the urban poor.

Some key details:

  • DAY-NULM provides skills training to help people find jobs. It also gives small loans to individuals and groups to start their own micro-enterprises and become self-employed.
  • In the next version, the government may double the revolving fund for self-help groups (SHGs) to Rs 20,000. SHGs are small groups that people form to pool their money and resources.
  • The new phase aims to address issues specifically facing urban areas, like migration, homelessness, and informal settlements/slums. It will focus livelihood support on professions common in cities.
  • The government wants to improve implementation at the local level compared to the first phase of DAY-NULM.

Original Analysis :

The proposed second phase of India’s DAY-NULM program could provide meaningful support for urban livelihoods if executed effectively. Expanding skill development and access to credit enables people to secure employment or start micro-enterprises. This empowers them economically and reduces poverty.

However, the success depends heavily on targeting the right beneficiaries, ensuring proper delivery of services, and monitoring outcomes. The government should focus on supporting migrant laborers and residents of informal settlements who lack identities or assets to access existing schemes. Procedures should be simple and decentralized to facilitate uptake. Extensive capacity building of local bodies is essential.

Awareness campaigns should promote services among intended beneficiaries. Mechanisms for transparency, accountability and community participation in planning and monitoring can improve delivery. Robust MIS systems are key to gauge reach and impact. The credit component should balance adequate checks with quick disbursal. Interest rates must not be prohibitive. Partnerships with civil society organizations can aid effective last-mile connectivity.

If implemented well, the urban livelihoods mission can promote inclusion, empowerment and dignity for the marginalized urban poor. But the risks of exclusion, leakage, and lack of outcomes remain real. The success lies as much in the design architecture as the willingness to learn, innovate and adapt the approach through time.

Impact on Retail Investors:

  • This government scheme for urban livelihoods is unlikely to directly impact retail investors in the stock market. The beneficiaries are mainly the urban poor who gain from skills training and access to microcredit.
  • However, if the mission succeeds in empowering people economically, it could stimulate urban consumption and demand. A revitalized and inclusive urban economy creates a wider consumer base for companies serving mass market segments. Stocks of such firms could benefit over time.
  • Specifically, companies in sectors like low-cost housing, affordable healthcare, education, essential consumer goods, budget hospitality and transportation could witness long-term demand tailwinds. As per capita incomes rise gradually at the bottom of the pyramid, this shapes consumption patterns.
  • Retail investors should track urban-centric consumption sectors and the low-ticket discretionary space. Stocks that cater to this demand could see expanding growth runways. Moreover, financial inclusion of the urban informal workforce allows channeling household savings into financial products. Insurers, lenders and investment platforms could benefit.
  • But the positive effects will likely be gradual over years. In the near term, execution risks exist in this government program. Retail investors should consider the long-term demographic and structural consumption thesis here rather than direct stock ideas immediately.

Impact on Industries:

The proposed expansion of DAY-NULM could positively impact several industries that align with the scheme’s goals of empowering the urban poor through skills and micro-enterprise development.

Key beneficiaries would be:

  1. Vocational training and education providers: DAY-NULM partners with training institutes for skills development in trades relevant for urban jobs. Scaling skill programs bolsters training providers focused on this target group.
  2. Microfinance institutions (MFIs) and small finance banks: Expanded microcredit facilities and self-help group (SHG) funding will drive greater lending by MFIs and niche banks. They could gain more customers in urban centers.
  3. Technology and digitization enablers: Large-scale skill training and credit access can be enabled by education technology companies offering digital content, assessment tools; fintech firms providing scoring models, digital lending platforms; and payment systems integrating SHGs.
  4. Grassroots NGOs / SHPIs: The scheme’s effective design and delivery requires deep grassroots connectivity. Scaling operations, administration and beneficiary connect would open up more partnerships for SHPIs and NGOs working on financial literacy, livelihoods etc.

Among industries that could witnessincremental demand are essential goods & services, affordable healthcare& housing, budget hospitality, transportationetc. benefiting from higher urban disposable incomes. But such consumption-led impact would only accrue over the long term.

Long Term Benefits & Negatives:

If executed efficiently over the next 5-10 years, DAY-NULM phase 2 can deliver important structural changes:


  1. Productivity enhancement of urban informal workforce: Skills training improves workers’ access to employment and ability to transition jobs. Over time, this enhances productivity and earnings.
  2. Financial and digital inclusion: Access to microcredit, digital payments integrates poorer groups into formal systems enabling larger investments like education and enterprise.
  3. Boost to micro-entrepreneurship: By supporting self-employment initiatives for ~10 years, a culture of entrepreneurship builds at grassroots. This advances economic dynamism.
  4. Reduced urban inequality: Improved livelihoods and reduced vulnerability of the informal workforce helps narrows the income divide in cities over decades.
  5. Broader formalization of urban economy: Extending digital financial tools and enterprise education assists worker groups to incrementally transition informal activities to formal structures, expanding the tax base.


  1. Inadequate job creation in metros: Upskilling helps workers compete for existing jobs rather than directly accelerating new employment or output growth in advanced cities. Impact is capped.
  2. Debt risks: Loose lending norms or partial loan waivers risk saddling poorer groups with unviable debt. Needs prudent design.
  3. Exclusion errors: Inability to accurately target the neediest urban poor and migrant workers defeats the purpose. Could widen inequity.
  4. Long gestation lags: A 8-10 year horizon is needed for measurable metrics like incomes, consumption, net worth. Political patience is vital.

Short Term Benefits & Negatives:

In the shorter run, the DAY-NULM expansion over 2023-25 may deliver relatively limited direct economic gains but lays essential groundwork:


  1. Signals pro-poor policy priority for ruling party to its voter base.
  2. Visibility of large government schemes improving – primes activity across related ecosystems like training, microcredit ahead of actual capital infusion.
  3. Administrative and technological mechanisms instituted have demonstrative potential for future urban welfare programs by center and states.


  1. Time lag between project approval and actual on-ground implementation risks losing momentum.
  2. Comes at time of likely global slowdown – constrains domestic fiscal position given borrowing costs are high.
  3. Error risk in hurried beneficiary targeting and delivery agency empanelment unless carefully calibrated.
  4. Lack of grassroots connect limits citizen interface and monitoring to ensure funds reach end beneficiaries. Accountability barriers.

The short term economic dividends are unlikely to be significant. The small business loans can assist marginal activity expansion but not fundamentally alter worker incomes or productivity in just 2-3 years.

The accent is on laying the broadband such that capabilities, infra, databases are instituted for larger transformations in the 5-10 year window when continued resource support combines with behavioral change at scale among citizens.

Companies will gain from this:

Listed companies that could gain from the scale-up of DAY-NULM skills training and microenterprise programs include:

  1. NIIT Ltd: A leading vocational skills trainer well positioned to partner governments given domain expertise in employability related curriculums. New contract wins will aid growth.
  2. Tech Mahindra: Entry into skilling, digital literacy verticals widens accessible project pipeline. Consultancy, content provision/platform roles possible.
  3. InfoEdge: Naukri Fastforward offers digital skilling helping tech-based customer acquisition. Vulnerable segments are untapped opportunities.
  4. HCL Tech: Platforms, content provision partnerships feasible given education/community connect solutions. Bolsters ESG profile.
  5. BSE: Bombay Stock Exchange runs India Inx to skill unemployed youths and connect to jobs. Scheme synergies likely.
  6. SBI: As largest public sector bank, big lead banker role for driving financial inclusion via microcredit and SHG funding partnerships. Expanding priority sector advances.
  7. Spandana Sphoorty: Leading NBFC-MFI tapping rural/semi-urban unbanked segments. Urban microcredit big adjacency leveraging data analytics and distribution.

Added beneficiaries over 2023-25 may be limited at ~5-7% of revenue for these stocks near term. But trusted partnerships and long project timelines make this a valuable frowth avenue alongside economic inclusion gains.

Companies which will lose from this:

The negative impact will be quite limited for listed entities due to DAY-NULM’s structural reformist nature over the long term.

However, pockets such as:

  1. High-end housing developers like Oberoi Realty, Godrej Properties – could see slight demand risks. As government programs improve affordable housing access for poorer households, appetite for premium houses faces headwinds.
  2. Luxury goods retailers – Titan’s jewelry sales, Shoppers Stop, Asian Paints’ premium decor segment – urban consumption may orient slightly toward essentials, limiting high-end discretionary purchases as income shifts remain gradual.
  3. Urban infra contractors, municipal services – HCC Infra, Va Tech Wabag; market size for private player opportunities shrinks as government service delivery expands.
  4. Microfinance startups lacking scale, grassroots presence – credit access programs make customer acquisition slightly tougher for sub-scale fintech lenders relying only on digital targeting.

But targetingVulnerable low-middle income segmentsimplies these stocks won’t witness material top line pressures beyond 2-3%. Premium categories still have urban room to grow. Incremental Share loss expected earlier.

Silver lining is higher tax base over time enables Urban infra upgrades. So temporary share pressures expected, with cylical recovery likely as economy formalizes.

Additional Insights:

Effective design and delivery of India’s urban livelihoods mission requires an EMPATHETIC policy approach – one that combines ethnographic study of target citizens, data-led accountability systems, and an agile setup incorporating multiple grassroots partners for last mile connectivity alongside government agencies.

Metrics tracking should balance qualitative life quality advancement of beneficiaries with output targets like loans disbursed or jobs placed since resilience, self-agency matter more than short-term earnings alone.

Providing market-linked skills and micro entrepreneurship seed capital needs sustained engagement over ~10 years for measurable productivity shifts rather than quick disengagement after disbursals.


In totality, the proposed scale-up of India’s urban livelihoods mission holds substantial promise on multiple social and economic fronts provided implementation challenges are addressed through a collaborative approach involving stakeholders across central, state and local tiers of governance.


Kumar, Suryash. “Govt may Consider 2nd Phase of Urban Livelihoods Mission.” The Economic Times, 3 Dec. 2023,


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