Urban Livelihood Mission Faces Funding Uncertainty Across Five States

5 States governed by different political parties have approached the Union government over uncertainty surrounding funding for the urban livelihood mission. They have warned that delays in financial support could affect women’s self-help groups (SHGs), access to bank loans and livelihood opportunities for the urban poor.

Why in the News?

Tamil Nadu, Karnataka, Maharashtra, Madhya Pradesh and Tripura have written to the Union government seeking the release of pending funds or clarity on financial support under the Deendayal Antyodaya Yojana National Urban Livelihoods Mission (DAY-NULM) and its proposed successor programme.

• The scheme ended in October 2024, while a pilot programme was implemented during the transition to a new urban livelihood mission.

1. Financial Demands of the States

The States have reported funding shortages and concerns over pending payments. The States have warned that funding gaps could affect staff salaries, interest subsidies on bank loans, revolving funds for SHGs and the continuation of services to beneficiaries.

2. DAY-NULM: Objectives and Achievements

Launched in 2014, DAY-NULM aimed to improve the livelihoods of the urban poor, particularly women, through skill development, self-employment and access to institutional credit. Major achievements included:

• Creation of 10.02 lakh self-help groups, covering nearly one crore women across cities.
• A ₹10,000 revolving fund for each eligible SHG.
• Skill training and placement support.
• Interest subsidies on eligible bank loans.
• Assistance in establishing micro-enterprises and strengthening bank linkages.
• More than 39.43 lakh livelihoods were created through skill training and placement, as reported by the Ministry of Housing and Urban Affairs (MoHUA).
• More than 6.56 lakh SHGs received bank linkages, as of September 30, 2024.

The Centre and States spent around ₹9,000 crore during the mission’s ten-year period, according to MoHUA sources.

3. Transition to the New Urban Livelihood Programme

After DAY-NULM ended in October 2024, MoHUA launched a pilot programme called Deendayal Jan Aajeevika Yojana–Shehari (DJAY-S). The pilot operated in 25 cities across 13 States. It focused on six vulnerable occupational groups:

• Gig workers
• Transportation workers
• Construction workers
• Waste workers
• Care workers
• Domestic workers

The pilot was intended to support the development of a new urban livelihood programme. However, the new scheme’s future remains uncertain. In December 2024, the Ministry informed States and Union Territories that in-principle approval had been received to expand the pilot. States were asked to prepare action plans and retain existing administrative structures to ensure continuity of services during the transition.

4. Why Are States Concerned?

The funding uncertainty has created several challenges for State governments and beneficiaries. Madhya Pradesh has specifically argued that the closure of the scheme does not remove the government’s financial obligations for eligible interest subsidies already accrued on loans.

• Disruption of SHGs: Financial shortages could weaken community institutions developed under the mission.
• Reduced access to credit: Delayed funding may affect bank linkages and interest subsidies on eligible loans.
• Pending liabilities: States have reported unpaid interest subsidies and other financial commitments.
• Staffing difficulties: Karnataka reported a shortage of funds to pay salaries of mission staff.
• Livelihood risks: Women and other vulnerable urban workers could face difficulties in sustaining income-generating activities.

5. Centre’s Position and Convergence with Other Schemes

MoHUA has stated that no State demand is pending for consideration and that the design of a new livelihood programme is being explored using lessons from the pilot. The Ministry has also highlighted the use of existing SHGs under other government programmes, including:

• Pradhan Mantri Awas Yojana (PMAY)
• Swachh Bharat Mission
• AMRUT
• PM Surya Ghar Muft Bijli Yojana
• Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme

This approach, known as convergence, involves using existing community groups and institutions to implement multiple government programmes.

Conclusion

DAY-NULM helped organise urban poor women into SHGs and improved their access to credit, skills and livelihood opportunities. The current funding uncertainty has raised concerns about pending financial obligations and continuity of support. A clear transition plan, timely settlement of eligible dues and predictable funding arrangements are important for protecting the livelihoods of vulnerable urban communities.