SELF HELP GROUPS

SELF HELP GROUPS

Self-Help Group refers to any self-governed, peer controlled, informal group of people with similar socio-economic background who have voluntarily come together to collectively perform common purposes.

What Makes SHGs Unique?

• Collective efforts, rather than individual efforts.
• Peer-controlled group of people, hence minimum chances of default.
• People with similar socio-economic background, leading to least social friction.
• People having a desire to collectively perform common purposes.

Benefits of Self-Help Groups

1. Economic benefits
   • Income generation: For the poor, especially women.
   • Self-reliant: Availability of microfinances from the group enables members to become self-reliant and self-dependent.
   • Financial Inclusion: SHGs have reduced the dependency on informal money lenders.
   • Inculcating financial discipline: As per a study, households with self-help group members were 8% more likely to have formal loans and 9% less likely to have informal loans.
2. Social benefits
   • Gender Equity: Economic empowerment of women, development of leadership skills.

• Example: Pramila Bisoi, a SHG leader from Odisha, was nominated as a candidate for a Lok Sabha constituency, signaling that rural women can also aspire to reach higher echelons in politics.

• Improvement in Social Indicators: Women empowerment leads to positive externalities on aspects of health, education, nutrition, etc.

• Example: Food for all – State-funded community kitchens. TN’s Amma Unavagam had become successful by involving peers in SHGs employing the poor to eradicate hunger problems on the streets of TN.

• Social Inclusion: Forum for members to discuss their social and economic problems and allows marginalized sections to participate in political and socio-cultural affairs.

1. Governance
   • Act as pressure groups: They can influence policy-making and help in improving efficiency of government schemes and reducing corruption through social audits.
   • Improved Efficiency of Government Schemes: SHGs help in reducing corruption through social audits.

Issues with Self-Help Group

1. Economic issues:
   • Poor infrastructure: Mostly situated in rural areas which lack proper connectivity, electricity.
   • Non-Performing Assets: Concerns of increased NPA of the loans given to SHGs in absence of economically viable businesses.
   • Access to market: Lack of access to large markets due to rural location.
   • Dependence on informal sector: [In 2018, 8% of SHGs had to borrow money from informal sources – NABARD].
   • Technology: Use of rudimentary technology by SHGs affects their productivity.
   • Dependence on primary sector: Many of the activities undertaken by the SHGs are still based on primitive skills related mostly to primary sector enterprises [II ARC].
   • Less increase in income: Due to poor value addition per worker and prevalence of subsistence level wages, such activities often do not lead to any substantial increase in the income of group members [II ARC].
2. Socio-cultural issues: These have resulted in regional imbalance in location of SHGs. Majority of the SHGs [around 70%] are from the southern region consisting of Andhra Pradesh, Karnataka, Kerala, and Tamil Nadu, stifling the growth of SHGs.
   • Feudal society: Society lacks entrepreneurial spirit and hence does not promote SHGs.
   • Patriarchal society: It hinders the mobility of women in SHGs, they leave groups after marriage, shift in location, family responsibilities take majority of their time, hence there is no continuity in their workings.
   • Social differences: Intra-group politics, caste dynamics, landholding size, etc., result in the strong and literate members cornering the benefits by misguiding the illiterate members.
3. Governance/Policy related issues
   • Politicization: Political affiliation and interference affects the independent working of SHGs and is often a major reason for group conflicts.
   • Lack of capacity building: Poor training and skill development support to individual SHGs.
   • Monitoring: Reports and data show growth and spread of SHGs without questioning the process and internal health of the SHGs.
   • Improper books: Almost all the successful SHGs are observed to not be conducting regular meetings and keeping accounts [II ARC].

Steps taken to promote Self-Help Groups 

The earliest example of a concerted effort to organize the rural poor to establish micro-enterprises can be traced to the establishment of Grameen Bank across rural Bangladesh. Muhammad Yunus took the initiative to establish micro-finance institutions or community development banks that make small loans to the impoverished without requiring collateral.

1. Government initiatives

• 7th Five Year Plan (1985-90): SHG as an organized way for poverty eradication emerged during this period.
• MYRADA: In the mid-1980s, formation of SHGs for savings and credit, and their linkage to commercial banks was initiated in India by MYRADA (Mysore Resettlement and Development Agency), an NGO.
• NABARD-SHG bank linkage pilot program: SHGs became significant when the RBI issued a circular in 1992 to link about 500 groups under the NABARD-SHG bank linkage pilot program.
  • This success has led to the mainstreaming of SHGs into the financial landscape and the Indian banking system.
• Swarnjayanti Gram Swarozgar Yojna (SGSY): As a part of poverty alleviation measures, the Government of India launched the Swarn Jayanti Gram Swarozgar Yojna (SGSY) in April 1999 where the major emphasis was on SHG formation, social mobilization, and economic activation through micro-credit finance.
• National Rural Livelihoods Mission (NRLM): A massive community mobilization initiative by the Government of India as National Rural Livelihoods Mission (NRLM) in 2011.
• Priyadarshini scheme: NABARD aims to empower women through SHGs.
• Priority Sector Lending: RBI has allowed the lending to SHGs as a part of lending to ‘weaker sections’ under the Priority Sector Lending norms.

2. Other initiatives

• Textile Labour Association (TLA): The first organized initiative was taken in Gujarat in 1954 when TLA, Ahmedabad formed its women’s wing to organize the women belonging to households of mill workers in order to train them in primary skills like sewing, knitting, embroidery, typesetting, and stenography.
• SEWA: In 1972, Self Employed Women’s Association (SEWA) was formed as a Trade Union under the leadership of Ela Bhatt. She organized women workers such as hawkers, vendors, home-based operators, and small producers with the objective of increasing the income and assets of the members, enhancing their food and nutritional standards and providing them with leadership skills.
• Chaitanya: Further in 1988, ‘Chaitanya’ Gramin Mahila Bal Yuvak Sanstha started promoting SHGs in Pune District, informally.

Way Forward

1. Policy Support

• Role of Government: It should be that of a facilitator and promoter. The objective should be to create a supportive environment for this movement [II ARC].

2. Promotion of SHG

• Expansion of movement: Use NABARD to facilitate the expansion of SHGs movement in low presence areas such as Bihar, Jharkhand, Uttar Pradesh, Uttarakhand, Orissa, Madhya Pradesh, Chhattisgarh, and Rajasthan [II ARC].
• Areas: The SHGs should be actively promoted in semi-urban and urban areas [II ARC].

• Incentivize: The Government should reward the successful SHGs as an incentive for good work.

3. Banks and other Institutions

• SHG – Bank Linkage model: It deserves to be encouraged as the preferred mode for financial intermediation throughout the country [II ARC].
• Innovate: Commercial Banks and NABARD in collaboration with the State Government need to continuously innovate and design new financial products for these groups [II ARC].
• Biases against rural credit: Rural credit is often viewed as a potential Non-Performing Asset. There is a need to educate government employees and Bank personnel in this regard [II ARC].

4. Addressing interpersonal differences: Through counselling and organizing special training programmes for them.
5. Effective monitoring mechanism: It would prevent the discrimination of members based on caste, religion, or political affiliations.

Case Studies:

• Kudumbashree in Kerala: Launched in Kerala in 1998, it is the largest women-empowering project in the country. It has three components i.e., microcredit, entrepreneurship, and empowerment. It has three-tier structures – neighbourhood groups (SHG), area development society (15-20 SHGs), and community development society (federation of all groups). The role of Kudumbashree women was appreciated during Kerala floods.
• SHGs Role during COVID-19: The World Bank praised the role of Indian SHGs in producing face masks, running community kitchens, delivering essential food supplies, sensitizing people about health and hygiene, and combating misinformation during pandemic times. In Odisha, for instance, poor rural women who were once engaged in stitching school uniforms are sewing masks instead. More than 19 million masks have been produced by some 20,000 SHGs across 27 Indian states, in addition to over 100,000 liters of sanitizer and nearly 50,000 liters of hand wash.
• Mahila Arthik Vikas Mahamandal (MAVIM) in Maharashtra: SHGs in Maharashtra were unable to cope with growing volume and financial transactions and needed professional help. The Community Managed Resource Centre (CMRC) under MAVIM was launched to provide financial and livelihood services to SHGs.