CLUSTER DEVELOPMENT

A cluster is generally defined as a geographically bounded concentration of similar, related or complementary businesses with shared infrastructure, markets and services and faced with common opportunities and threats.

National Programme for Rural Industrialisation (NPRI) for development of Clusters

The National Programme for Rural Industrialisation (NPRI) was proposed by the Union Finance Minister in his budget speech for the financial year 1999-2000, with a mission to set up 100 rural clusters every year for the next five years to, give a boost to rural industrialisation. As a part of its commitment to NPRI programme, 65 clusters were developed by NABARD (against the self imposed target of 50) during the five year period 1999-2000 to 2003-04.

New Cluster Policy

Considering the excellent potential in the cluster approach for rural industrialisation and the recognition of NABARD's role in rural clusters by several agencies including the GoI, NABARD had decided in 2005-06, to go in for development of selected clusters on its own by partnering with other government agencies.

Cluster Philosophy

• Focussed assistance.
• Demand based assistance.
• Flexible instruments of assistance to meet specific needs of cluster.
• Close monitoring to spur continuous development and innovation.

Objective

Strengthening of existing clusters, and development of new clusters in exceptional cases, towards sustainable competitive advantage through technology upgradation & transfer, raw material access, skill development, managerial inputs, credit support and marketing assistance.

• Identification of the Cluster.
• Identification of Cluster Development Agency (CDA) and Cluster Development Facilitator (CDF)
• Conducting Base-line Survey & Diagnostic Study
• Drawing up Action Plan
• Implementation of the Action Plan
• Review & Monitoring (Concurrent)
• Documentation (Concurrent)
• Evaluation and documentation of changes as a result of interventions after the project period.

Preparation of Cluster Status

Cluster status will give details such as, the number of people / families employed, nature of activity, age of the cluster, source of raw material, skill levels, marketing strategy, credit linkages and other details of the activity/ product line etc.

Action Plan

Cluster development Action Plan broadly covers expected credit year-wise, for three years (in case of clusters developed in Partnership with other agencies) and 5 years (Intensive development model) and promotional intervention suggested during each year.

The Action Plan is to be prepared in a Logframe format i.e. containing the following definitions :

• the overall Goal to which the project contributes;
• the Purpose to be achieved by the project;
• the Outputs for achieving this Purpose;
• the Activities for achieving each Output.

Cluster Development Committee

The suggested composition of the Cluster Development Committee is the District Collector or Head of the DRDA as Chairman and DDM, NABARD as Member Secretary and the following officials as members :

Lead Bank Officer General Manager, District Industries Centre, NGO/ VA/ Developmental Agency, Artisan / Entrepreneur representative from the Cluster, Representatives of local banks, other local Govt. agencies such as KVIC/ KVIB/ SISI and any other suitable local resource person. Representative of SIDBI, if available.

The Committee will have to review the cluster status and action plan suggesting stage-wise action for the project period, so that total strategy for skill development, resource mobilisation, raw material supply, marketing strategy, organisation and management, etc., could be covered. The Committee may meet atleast once in a quarter to monitor the progress.

Role of different partners

NABARD

DDM will oversee the implementation of the programme in the identified cluster. Besides providing refinance support to the eligible units under various refinance schemes of NABARD, need based promotional support may also be considered.

VAs/ NGOs(CDA/CDF)

The identified NGO will act as the Cluster Development Agency (CDA) for implementing the project. The CDA will identify a key personnel to implement the programme. He will be designated as Cluster Development Facilitator (CDF). His close rapport with the cluster artisans is very important particularly in identification, planning, monitoring and assessing the development of clusters from their (artisans') point of view.

Govt. Departments/ Promotional/ Developmental Agencies

The involvement of these agencies is to be ensured right from the beginning and efforts may also be made for deriving support from higher level officers.

• Integrating Cluster Action Plan into Service Area Plans.
• Identifying potential entrepreneurs / enterprises.
• Ensuring focussed attention to meet the credit needs of the entrepreneurs.
• Ensuring qualitative lending with close supervision and support services.
• Sponsoring potential entrepreneurs to participate in the Rural Entrepreneurship Development Programmes (REDPs).
• Deputing field level functionaries to various training programmes, meets, workshops.
• Associating with Cluster Development Committee,
• Monitoring the progress of Cluster Action Plan and
• Maintaining proper data base.

SFURTI

During 2005-06 Govt. of India, Ministry of Agro and Rural Industries had introduced a new scheme, "Scheme of Fund for Regeneration of Traditional Industries"(SFURTI) with an initial allocation of Rs.100 crore with the objectives of making traditional industries more competitive and more market-driven, strengthening the local governance systems of industry clusters with the active participation of the stakeholders and build up innovated and traditional skills, improved technologies, advanced processes, market intelligence and new models of public-private partnership, so as to gradually replicate similar models of cluster-based regenerated traditional industries.