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Livelihoods 101

Rural & Urban Livelihood Strategies, Informal Economy & Sustainable Pathways
ImpactMojo Workshop Series • Building Economic Resilience in India
75-90 Minutes

Workshop Overview

Target Audience: Development practitioners, livelihood program managers, microfinance officers, NGO workers, and professionals working on economic empowerment

Prerequisites: Basic understanding of development economics helpful but not required

Materials Needed: Notebooks, calculators, flip chart paper, colored markers for mapping exercises

Learning Objectives

By the end of this workshop, participants will be able to:

Part 1: Understanding Livelihoods - Beyond Jobs and Income

20 minutes

Three Livelihood Stories from India

Meera (Rural Farmer, Rajasthan): Grows millet on 2 acres, raises goats, works as ASHA, migrates seasonally for construction work. Income varies from ₹3,000-15,000/month.

Raju (Urban Migrant, Mumbai): Street vendor selling vegetables, drives auto-rickshaw at night, wife does garment piecework at home. Lives in slum, sends money to village.

Priya (Small Town Entrepreneur): Runs tailoring business, teaches computer classes, manages women's SHG. Started with ₹5,000 loan, now employs 3 people.

What do these stories tell us about how people make a living in India?

Defining Livelihoods

What is a Livelihood?

DFID Definition: "A livelihood comprises the capabilities, assets, and activities required for a means of living. A livelihood is sustainable when it can cope with and recover from stress and shocks, maintain or enhance its capabilities and assets, and provide sustainable livelihood opportunities for the next generation."

Key Components:

  • Capabilities: Skills, knowledge, health, ability to work
  • Assets: Resources people can use to build livelihoods
  • Activities: How people use assets to generate income/wellbeing
  • Institutions: Rules, customs, organizations that shape access
  • Outcomes: What people achieve through their livelihood strategies

The Sustainable Livelihoods Framework

Five Types of Capital Assets

Human Capital
Skills & Health
Natural Capital
Land & Resources
Financial Capital
Cash & Credit
Physical Capital
Infrastructure
Social Capital
Networks & Trust

People combine these assets in different ways to create livelihood strategies

Human Capital

What: Knowledge, skills, health, ability to work

Examples: Education, training, experience, physical strength, mental health

Indian Context: Low literacy, skill mismatches, health challenges

Natural Capital

What: Natural resources and environmental services

Examples: Land, water, forests, biodiversity, clean air

Indian Context: Land fragmentation, water scarcity, degradation

Financial Capital

What: Financial resources available for livelihood activities

Examples: Cash, savings, credit, insurance, remittances

Indian Context: Limited formal credit, high informality

Physical Capital

What: Infrastructure and tools that support livelihoods

Examples: Roads, buildings, equipment, technology, utilities

Indian Context: Infrastructure gaps, digital divide

Social Capital

What: Social networks, relationships, and institutions

Examples: Family, community groups, caste networks, SHGs

Indian Context: Strong family ties, caste influences, gender barriers

Asset Mapping Exercise (12 minutes)

Case Study: Analyze assets for a specific livelihood situation

Scenario: Sunita, a 35-year-old woman in rural Uttar Pradesh

  • Education: 8th grade pass
  • Family: Husband works as daily laborer, 2 school-age children
  • Resources: 0.5 acre land (mostly rainfed), 2 buffaloes
  • Skills: Dairy management, vegetable cultivation, basic tailoring
  • Social: Active in women's SHG, good relations with neighbors
  • Challenges: Irregular income, no formal credit access, seasonal migration

Asset Analysis (Work in groups of 3-4):

Capital Type Current Assets Strengths Limitations Potential for Growth
Human
Natural
Financial
Physical
Social

Discussion Questions:

  1. Which assets are strongest? Which are most limiting?
  2. How could Sunita combine her assets to create new livelihood opportunities?
  3. What external support might help her strengthen weak assets?

Share-out: Each group presents one insight about asset combinations (5 minutes)

Part 2: Rural and Urban Livelihood Dynamics

20 minutes

Rural Livelihood Patterns

Characteristics of Rural Livelihoods in India

Diversification is the Norm:

  • Average rural household has 3-4 income sources
  • Only 20% depend solely on agriculture
  • Mix of crop farming, livestock, wage labor, non-farm activities

Seasonal Patterns:

  • Kharif Season (Jun-Sep): Crop cultivation, farm labor demand high
  • Rabi Season (Oct-Mar): Different crops, irrigation dependent
  • Lean Season (Apr-May): Limited agricultural work, migration peaks

Key Constraints:

  • Small and fragmented landholdings (average: 1.08 hectares)
  • Dependence on monsoon and climate variability
  • Limited access to technology, credit, and markets
  • Weak rural infrastructure and connectivity

Urban Livelihood Strategies

Rural Livelihoods

  • Primary: Agriculture, livestock, fisheries
  • Secondary: Agro-processing, handicrafts, construction
  • Services: Trade, transport, domestic work
  • Characteristics: Seasonal, weather-dependent, low cash income
  • Assets: Land, traditional skills, family labor
  • Challenges: Market access, technology, climate risks

Urban Livelihoods

  • Formal: Manufacturing, IT, services, government jobs
  • Informal: Street vending, domestic work, construction
  • Self-employed: Small shops, services, home-based work
  • Characteristics: Daily wage, high competition, irregular
  • Assets: Skills, networks, location advantages
  • Challenges: Housing, health, social security

The Informal Economy

India's Informal Economy Reality

Scale: 90% of India's workforce is in the informal economy

Characteristics:

  • No formal contracts: Verbal agreements, daily negotiations
  • Irregular income: Daily/weekly earnings, seasonal variations
  • Limited social protection: No insurance, pension, or job security
  • Workplace vulnerability: Poor working conditions, safety risks
  • Multiple activities: Portfolio approach to income generation

Examples by Sector:

Sector Rural Examples Urban Examples
Manufacturing Handloom weaving, pottery, food processing Garment workers, shoe making, electronics assembly
Services Transport, small retail, hair cutting Domestic work, security guards, street vendors
Construction House building, farm structures Building construction, road work, painting
Trade Weekly markets, door-to-door sales Street vendors, wholesale trade helpers

Migration and Livelihoods

Internal Migration in India: 139 million interstate migrants (2011 Census), with millions more seasonal/circular migrants not captured in official data

Migration Type Duration Common Routes Livelihood Activities Challenges
Seasonal 3-6 months Rural → urban/industrial areas Construction, brick kilns, sugarcane cutting Family separation, poor working conditions
Circular Regular short trips Villages → nearby towns Daily wage labor, market trading Transport costs, irregular work
Permanent Long-term relocation Distressed areas → growing cities Informal services, manufacturing Housing, documentation, social integration
Step Migration Gradual movement Village → town → city Progressive skill building, network expansion Multiple adaptations, identity shifts

Livelihood Mapping Exercise (10 minutes)

Choose one context and map the livelihood ecosystem:

Option A: Urban Slum (Delhi/Mumbai)
  • Mixed migrant and local population
  • Proximity to industrial areas
  • Limited formal services
  • Strong social networks
Option B: Drought-Prone Village (Maharashtra)
  • Rainfed agriculture dominant
  • High seasonal migration
  • Water scarcity issues
  • Traditional caste-based occupations

Mapping Questions (Individual then pair discussion):

  1. Main Livelihoods: What are the 5-6 most common ways people earn income here?
  2. Seasonal Calendar: How do opportunities change through the year?
  3. Value Chains: What are the links between local activities and broader markets?
  4. Constraints: What limits people's ability to improve their livelihoods?
  5. Opportunities: What potential exists for livelihood enhancement?

Quick Sketch: Draw a simple diagram showing the main livelihood flows and connections

Part 3: Vulnerability, Risks, and Coping Strategies

15 minutes

Understanding Livelihood Vulnerability

Vulnerability = Risk + Inability to Cope

Risk: Probability of adverse events that threaten livelihoods

Coping Capacity: Ability to manage, resist, or recover from risks

Types of Risks:

  • Covariate: Affect entire communities (drought, floods, economic shocks)
  • Idiosyncratic: Affect individual households (illness, job loss, death)
  • Predictable: Known patterns (seasonal unemployment, aging)
  • Unpredictable: Sudden shocks (natural disasters, health emergencies)

Common Livelihood Risks in India

Risk Category Specific Risks Who's Most Affected Typical Impacts
Climate/Environmental Drought, floods, crop pests, soil degradation Farmers, agricultural laborers Crop loss, food insecurity, migration
Economic Market price volatility, unemployment, inflation Informal workers, small producers Income loss, debt, asset sales
Health Illness, disability, death of breadwinner Poor households, elderly Medical expenses, income loss
Social/Political Discrimination, conflict, policy changes Marginalized groups, minorities Exclusion from opportunities, displacement
Life Cycle Marriage, childbirth, education costs, aging All households at different stages Increased expenses, reduced earning capacity

Coping and Adaptation Strategies

How People Manage Livelihood Risks

Risk Management Strategies:

  • Prevention: Diversification, skill development, asset building
  • Mitigation: Insurance, savings, technology adoption
  • Coping: Borrowing, asset sales, labor adjustments
  • Recovery: Rebuilding assets, learning from experience

Common Coping Mechanisms in India:

  • Economic: Multiple income sources, seasonal migration, credit
  • Social: Family support, community networks, reciprocity
  • Asset-based: Livestock sales, land mortgaging, gold pawning
  • Consumption: Dietary changes, postponing expenses, child labor
  • Mobility: Temporary migration, changing occupations

Resilience vs. Survival

Survival Strategies

  • Focus: Immediate crisis management
  • Time horizon: Short-term relief
  • Examples: Borrowing at high interest, selling productive assets, child labor
  • Outcome: May worsen long-term situation
  • Emotion: Desperation, limited choices

Resilience Strategies

  • Focus: Building adaptive capacity
  • Time horizon: Long-term strengthening
  • Examples: Skill development, asset accumulation, network building
  • Outcome: Better prepared for future shocks
  • Emotion: Hope, agency, planning

Risk Assessment and Strategy Planning (8 minutes)

Scenario: COVID-19 impact on different livelihood groups

Context: During COVID-19 lockdowns in India:

  • 122 million jobs lost in April 2020
  • Informal workers most affected (no work, no pay)
  • Migrant workers faced transport restrictions
  • Small businesses closed, daily wage work stopped

Analysis Framework (Choose one group):

Group A: Urban Street Vendors

Selling fruits/vegetables, no fixed shop, daily earnings, live in rented accommodation

Group B: Rural Agricultural Laborers

Work on others' farms, seasonal migration, limited land ownership, daily wage income

Questions to Analyze:

  1. Immediate Impact: How did lockdown affect their livelihoods?
  2. Coping Strategies: What did they do to survive?
  3. Support Systems: What formal/informal support was available?
  4. Recovery Strategies: How could they build back better?
  5. Future Preparedness: What would make them more resilient?

Discussion: Share insights about the difference between survival and resilience strategies

Part 4: Livelihood Development Approaches and Programs

15 minutes

Livelihood Intervention Approaches

Common Livelihood Development Strategies

1. Asset Building Approach

  • Focus: Strengthen the five capitals (human, natural, financial, physical, social)
  • Examples: Skills training, microcredit, infrastructure development
  • Strength: Addresses root causes, builds long-term capacity
  • Challenge: Takes time, requires sustained investment

2. Value Chain Development

  • Focus: Improve market linkages and value addition
  • Examples: Producer groups, quality improvement, direct marketing
  • Strength: Market-oriented, sustainable income growth
  • Challenge: Requires market knowledge, coordination

3. Social Protection

  • Focus: Reduce vulnerability through safety nets
  • Examples: Employment guarantee, insurance, cash transfers
  • Strength: Immediate relief, predictable support
  • Challenge: May create dependency, targeting challenges

4. Ecosystem Development

  • Focus: Create enabling environment for livelihood growth
  • Examples: Business development services, financial inclusion, policy advocacy
  • Strength: Systemic change, benefits many
  • Challenge: Complex, requires multi-stakeholder coordination

Successful Livelihood Programs in India

Program Approach Key Features Impact Lessons
MGNREGA Employment guarantee 100 days work, local implementation, asset creation Income security, rural infrastructure Scale matters, community participation crucial
SHG-Bank Linkage Financial inclusion Group formation, savings, credit access 120M women reached, ₹7 lakh crore credit Social capital enables financial inclusion
Skill India Mission Human capital development Industry-aligned training, certification, placement 50M people trained by 2022 Quality and relevance matter more than quantity
Producer Companies Value chain development Farmer collectives, market linkages, value addition 8,000+ FPOs, improved farmer incomes Professional management and market access key
PM-KISAN Income support Direct cash transfer, ₹6,000/year to farmers 11 crore beneficiaries Technology enables efficient delivery

Design Principles for Effective Livelihood Programs

Key Design Considerations

1. Context Specificity

  • Understand local livelihood systems and constraints
  • Build on existing assets and strategies
  • Consider cultural and social factors

2. Participation and Ownership

  • Involve communities in planning and implementation
  • Build on existing social institutions
  • Ensure representation of marginalized groups

3. Integrated Approach

  • Address multiple constraints simultaneously
  • Link different types of interventions
  • Coordinate across sectors and levels

4. Market Orientation

  • Understand demand and market dynamics
  • Build sustainable business models
  • Focus on quality and competitiveness

5. Sustainability and Scale

  • Build local capacity and institutions
  • Create financial sustainability mechanisms
  • Design for replication and scaling

Program Design Challenge (10 minutes)

Your Mission: Design a livelihood intervention for post-COVID recovery

Target Group: Urban migrant workers who returned to villages during COVID

Profile: 25-45 years old, some skills, limited rural livelihood options, reluctant to migrate again

Assets: Urban work experience, some savings, village connections, basic education

Constraints: Limited local opportunities, skill-employment mismatch, financial stress

Design Framework (Work individually, then pair):

  1. Theory of Change (3 min): If we do X, then Y will happen, leading to Z outcome
  2. Intervention Mix (3 min): Which combination of approaches would you use?
    • □ Skills development □ Financial services □ Market linkages
    • □ Asset building □ Technology □ Social protection
  3. Implementation Strategy (2 min): How would you sequence and deliver interventions?
  4. Success Indicators (2 min): How would you measure impact?

Pair Discussion: Share your design and get feedback on one key assumption

Key Takeaway

Effective livelihood development goes beyond creating jobs or increasing income - it's about building people's capabilities and assets so they can pursue diverse, sustainable, and dignified economic opportunities that fit their context and aspirations.

Resources for Continued Learning

Frameworks and Methods:

  • DFID Sustainable Livelihoods Guidance Sheets: Comprehensive framework
  • ILO Decent Work Framework: Quality employment standards
  • FAO Rural Livelihoods Assessment: Tools and methodologies
  • Oxfam Livelihoods Assessment Toolkit: Practical guidance

Indian Livelihood Programs:

  • DAY-NRLM: National Rural Livelihoods Mission documentation
  • Ministry of Skill Development: Skill development schemes and outcomes
  • MGNREGA: Employment guarantee program analysis and data
  • NABARD: Financial inclusion and rural development reports

Research and Data:

  • Centre for Monitoring Indian Economy (CMIE): Employment and income data
  • National Sample Survey (NSS): Employment, consumption, and livelihood surveys
  • India Labour and Employment Report (IHD): Annual analysis
  • Periodic Labour Force Survey (PLFS): Current employment statistics

Sector-Specific Resources:

  • Agriculture: ICRISAT, IFPRI research on smallholder agriculture
  • Urban Informal: WIEGO (Women in Informal Employment) research
  • Migration: Internal migration studies, circular migration research
  • Microfinance: MFIN, Sa-Dhan sector reports and best practices

Next Steps in ImpactMojo:

  • Decent Work for All 101: Labor rights and fair employment
  • Women's Economic Empowerment 101: Gender dimensions of livelihoods
  • Community-Led Development 101: Participatory livelihood planning
  • Development Economics 101: Economic theory behind livelihood development

This handout is part of the ImpactMojo 101 Knowledge Series
Licensed under CC BY-NC-ND 4.0 • Free to use with attribution • www.impactmojo.in

For the complete Livelihoods 101 course with detailed case studies, value chain analysis tools, and program design templates, visit the ImpactMojo platform.