The missing link in rural prosperity

Why India’s next development dividend lies in connecting livelihoods with water, sanitation and health

India may be sitting on one of the world’s largest—and least appreciated—development assets. It is neither a highway network nor a digital platform. It is a vast institutional ecosystem of rural women, built patiently over more than a decade through the Deendayal Antyodaya Yojana–National Rural Livelihoods Mission (DAY-NRLM).

Today, over 10 crore rural women are organised into more than 92 lakh Self-Help Groups (SHGs), supported by a robust network of Village Organisations and Cluster-Level Federations. Together, these women-led institutions have cumulatively accessed more than Rs. 12.88 lakh crore in institutional bank credit and are at the heart of India’s aspiration to create six crore Lakhpati Didis.

These achievements are remarkable. Yet they also invite a more fundamental question. Have we fully recognised what India has actually built?

DAY-NRLM is no longer merely a poverty alleviation programme. It has evolved into one of the world’s largest platforms for women’s collective action, financial inclusion and local institution-building. The challenge before policymakers is therefore no longer confined to expanding credit or creating more enterprises. It is to transform these community institutions into engines of sustained rural prosperity.

That transformation, however, requires us to acknowledge a critical but often overlooked reality. Livelihoods do not exist in isolation from health. Economic productivity does not begin with markets or finance. It begins with healthy people, productive time and resilient households.

This is where India’s development discourse needs a significant shift.

For decades, water, sanitation, health and livelihoods have largely been designed and evaluated as separate sectors. Each has its own ministry, budget, targets and performance indicators. Yet rural households do not experience development through administrative silos. They experience it as a single, interconnected reality.

A woman who spends hours collecting water has less time to participate in an SHG or run an enterprise. A household burdened by repeated illness loses wages, incurs healthcare expenses and often falls into debt. Poor sanitation contributes to disease, which diminishes productivity and educational attainment. Every preventable illness therefore represents not only a health setback but also an economic loss.

The World Bank’s landmark assessment that inadequate sanitation imposed losses equivalent to 6.4 per cent of India’s GDP may have been based on earlier data, but its underlying message remains highly relevant: poor sanitation is not merely a public health concern; it is an economic constraint.

Health should therefore be viewed not simply as an outcome of development but as one of its most important productive assets.

The same reasoning applies to water.

The Jal Jeevan Mission is widely recognised for expanding access to safe drinking water through Functional Household Tap Connections. Its public health benefits are well documented. What deserves far greater recognition, however, is its economic significance.

Every hour that a rural woman no longer spends fetching water is an hour that can potentially be invested in farming, livestock rearing, entrepreneurship, education, childcare or participation in community institutions. Safe drinking water does more than improve health. It releases productive time.

That time is an economic resource.

Seen through this lens, water is not merely infrastructure. It is productivity infrastructure.

The relationship is both simple and profound.

Safe water and improved sanitation reduce disease. Better health enhances productivity. Higher productivity generates higher incomes. Rising incomes enable greater investment in nutrition, healthcare, sanitation and education, which in turn further improve health and productivity.

Development is not a sequence of disconnected interventions. It is a virtuous cycle.

This perspective also invites us to rethink the idea of the Lakhpati Didi.

The programme rightly celebrates women whose households sustain annual incomes exceeding Rs. 1 lakh. It is an important milestone in financial empowerment. But income alone cannot fully capture prosperity.

Two households earning the same annual income may experience vastly different levels of economic wellbeing. One may enjoy reliable drinking water, safe sanitation, better nutrition and lower healthcare expenditure. The other may repeatedly lose income to illness, spend heavily on medical treatment and devote several hours each day to collecting water.

Their reported incomes may be identical.

Their productive capacity is not.

India therefore needs to move beyond measuring income alone towards measuring what may be called productive wellbeing—the combined outcome of income, health, nutrition, safe water, sanitation, productive time, financial resilience and women’s agency.

This is not merely a conceptual refinement. It has profound implications for public policy.

DAY-NRLM’s community institutions already possess deep social capital and trusted local leadership. They can become far more than platforms for savings and livelihoods. They can emerge as active participants in the rural water, sanitation and public health ecosystem.

Women-led enterprises can provide services related to water quality monitoring, toilet maintenance, solid and liquid waste management, faecal sludge management, menstrual hygiene products, cleaning materials and decentralised environmental services. Village Organisations and Cluster-Level Federations can aggregate demand, negotiate procurement, supervise service delivery and support local entrepreneurs.

Such convergence would generate livelihoods while simultaneously strengthening public health.

Most importantly, it would reposition rural women not merely as beneficiaries of government programmes but as entrepreneurs, service providers, institution builders and custodians of community wellbeing.

This is perhaps the most important lesson for India’s next phase of rural development.

The country has invested enormously in creating institutions, extending credit, building toilets, providing tap water and strengthening primary healthcare. These investments should no longer be viewed as parallel achievements. Their greatest value lies in how they reinforce one another.

The next development dividend will come not from launching more schemes but from integrating existing investments into a coherent strategy centred on healthy, productive and economically resilient households.

India has already demonstrated that when rural women are organised, trusted and financially empowered, they become agents of economic transformation.

The next leap will come from recognising that livelihoods, water, sanitation and health are not competing priorities. They are mutually reinforcing investments in the same development outcome.

The true measure of rural prosperity is therefore not simply whether a household earns more than Rs. 1 lakh a year. It is whether that income is sustained by good health, productive time, resilient community institutions and women’s economic agency.

When India begins to measure and design development in those terms, the journey from Lakhpati Didi to a healthy, resilient and prosperous rural India will truly begin.

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