SELF HELP GROUPS IN INDIA – A STUDY ON KAVACH SHG

BY ABHISHEK KARISHIDDIMATH

ABSTRACT:
Poverty is one of the major problems in India. It is the root cause of many socio-economic problems
including population explosion, unemployment, and child labour and rising graph of crimes. Poverty
alleviation should be the main target of the nation so as to make it a prosperous and developed country.
For a multi-pronged and concerted attack on the poverty, the Government of India launched an integrated
program for self-employment of the rural poor, with effect from 1 April 1999, known as Swarnajayanti
Gram Swarozgar Yojana (SGSY). Self-Help Group refers to a group of 10-20 people who come from similar
socio-economic backgrounds for various development programmes or to solve common problems. Such
groups are recognized by the governments and banks and can open bank accounts in the name of the SHG.
This assignment tries to explain all fundamentals and meticulous facts required to understand the SHGs
concept completely.

INTRODUCTION:
Poverty is one of the major problems in India. It is the root cause of many socio-economic problems
including population explosion, unemployment, and child labour and rising graph of crimes. Poverty
alleviation should be the main target of the nation so as to make it a prosperous and developed country.
Thus, poverty elimination is a matter of fundamental importance. Alleviation of poverty remains a major
challenge before the Indian Government. Acceleration of economic growth, with a focus on sectors, which
are employment intensive, facilitates the removal of poverty in the long run. According to the 2011 Census
of India has a population of 1.21 billion people as of 2011. The figures provided by Population Census of
India shows that the country represents 17.31% of the world population. The latest poverty estimates by
the Planning Commission show that poverty in India has declined by 7.4 per cent. According to the latest
data, 29.8 per cent or 360 million Indians were poor in 2009-10 as compared to 37.2 per cent or 400
million in 2004-05. However, the decline is based on a poverty line calculated at Rs.22.43 per person per
day in rural areas, and Rs.28.65 per person per day in urban areas, which is lower than the earlier Rs.32 a
day mark.
The only way to lower the risk that the rural poor face would be to reduce their vulnerability through the
use of microfinance to engage positively in capacity building. The strategies used for capacity building
through microfinance can be divided into Ex Ante, that is, measures that are implemented before a
disaster hits, and Ex Post, which refers to measures that are implemented to deal with a disaster after it
has taken place. Some ex ante strategies include the diversification of income, the building up of assets in
the form of cash, houses, livestock and land, and investments in education, health care and social
networks. Some ex post strategies in dealing with disasters are cutting down on consumption, the
mobilization of labour, the liquidation of personal assets, and the obtaining of loans from informal and
formal institutions. The micro finance revolution, a recent product of development, ensures the availability
of institutional credit and financial inclusion to the poor, who were so for excluded from the institutional
credit system
KEY ELEMENTS:
MICROFINANCE AND POVERTY
In developing economies and particularly in rural areas, many activities that would be classified in the
developed world as financial are not monetized: that is, money is not used to carry them out. This is often
the case when people need the services money can provide but do not have dispensable funds required for
those services, forcing them to revert to other means of acquiring them. The advocates of microcredit
argue that microcredit can help to substantially reduce poverty. According to the latest research done by
the World Bank, India is home to almost one third of the world’s poor (surviving on an equivalent of one
dollar a day). Though many central government and state government poverty alleviation programs are
currently active in India, microfinance plays a major contributor to financial inclusion. In the past few
decades it has helped out remarkably in eradicating poverty. Reports show that people who have taken
microfinance have been able to increase their income and hence the standard of living.
THE CONCEPT OF SELF HELP GROUP
For a multi-pronged and concerted attack on the poverty, the Government of India launched an integrated
program for self-employment of the rural poor, with effect from 1 April 1999, known as Swarnjayanti Gram
Swarozgar Yojana (SGSY). The scheme is an amalgamation of six earlier programs, viz. (1) Integrated Rural
Development Program (IRDP), (2) Training of Rural Youth for Self-Employment (TRYSEM), (3) Supply of
Improved Tools for Rural Artisans (SITRA) (4) Ganga KalyanYojana (GKY), (5) Million Wells Scheme (MWS)
and (6) Development of Women and Children in Rural Areas (DWCRA). The objective of the scheme is to
bring the assisted poor families above the poverty line by organizing them into Self Help Groups (SHGs)
through the process of social mobilization, training and capacity building and provision of income
generating assets through a mix of bank credit and government subsidy.
The concept of SHG is based on the following principles:

 Self-help supplemented with mutual help can be a powerful vehicle for the poor in their
socioeconomic development;
 Participative financial services management is more responsive and efficient;
 Poor need not only credit support, but also savings and other services;
 Poor can save and are bankable and SHGs as clients, result in wider outreach lower transaction cost
and much lower risk costs for the banks;
 Creation of a common fund by contributing small savings on a regular basis;
 Flexible democratic system of working;
 Loaning is done mainly on trust with a bare documentation and without any security;
 Amounts loaned are small, frequent and for short duration;
 Defaults are rare mainly due to group pressure; and
 Periodic meetings non-traditional savings.
Self-Help Group refers to a group of 10-20 people who come from similar socio-economic backgrounds
for various development programmes or to solve common problems. Such groups are recognized by
the governments and banks and can open bank accounts in the name of the SHG. These groups tend to
be autonomous and tend to involve themselves in various activities, including social causes. So if a
group of fifteen women in a village would like to apply for a loan start a small enterprise selling bags
and cushions, they would be considered an SHG. These SHGs, by way of enterprise tend to create more
employment opportunities and inspire others to get involved in small enterprises as well.
THE SHG SYSTEM:
The members form a group of around twenty members. The group formation process may be facilitated by
an NGO or by the MFI or bank itself, or it may evolve from a traditional rotating savings and credit group
(ROSCA) or other locally initiated grouping. The process of formal „linkage‟ to an MFI or bank usually goes
through the following stages, which may be spread over many years or which may take place within a few
months.

 The SHG members decide to make regular savings contributions. These may be kept by their
elected head, in cash, or in kind, or they may be banked.
 The members start to borrow individually from the SHG, for purposes, on terms and at interest

with the bank or MFI, for such funds as may not be needed by members, or in order to qualify for a
loan from the bank.
 The bank or MFI makes a loan to the SHG, in the name of the Group, which is then used by the
Group to supplement its own funds for on-lending to it members.
The SHG need never go through all these stages; it may satisfy its members‟ needs quite effectively if it
only goes to the second or even to the first stage, saving money and possibly not even withdrawing it
(Harper M 2000, pp. 39-42).The SHG carries out all the same functions as those required by the Grameen
system, but they do this on their own behalf, since the SHG is effectively a micro-bank, carrying out all the
familiar intermediation tasks of savings mobilisation and lending. The MFI or bank may assist the SHG in
record keeping, and they may also demand to know who are the members and impose certain conditions
as to the uses of the loan which they make to the SHG, but the SHG is an autonomous financial institution
in its own right.The members have their accounts with the SHG, not with the MFI or bank, and the MFI or
bank does not have any direct dealings with the members.
IMPACTS OF SELF-HELP GROUP IN INDIA:
Saving and Financial Decision Making: One of the primary benefits of participation in a SHG is the
opportunity to save regularly, access formal savings institutions and participate in the management of
these savings. They save regularly, have their own bank accounts and make deposits into these accounts.
SHG is having a good impact on members, in their ability to save their hard earned money.
Access to credit: A corollary of participation in SHGs is an improvement in a woman’s access to credit.
Since the project is perhaps too early in its implementation to directly improve women’s access to credit.
The financial mobility due to participation in the SHG has led to an improvement in the quality of life,
according to some of the successful groups. Overall, many families were able to address their basic needs
better than before. Some of NGOs reports have shown that the record on the repayment of loans by
women was often better than that of men, and that women were also more likely to spend the income
earned, on their families, leading to improved health and nutrition of the poor population and for
improving the quality of their lives.
Employment: The implementation of SHG has generated Self-employment opportunities for the rural poor.
Theprogress of the program since inception assisted in formation of 35.7 lakh SHGs; assisted 1.24 Cr.
Swarozgarisin establishing their own micro-enterprises. The Government of India released Rs.11, 486
Crores under the program; bank credit mobilization is Rs.19, 017; Total subsidy provided is Rs.9, 318 Cr.
The program helped many participants in improving their economic conditions. Another good
accomplishment of the program is that it has adopted the SHG strategy. The number of assisted SHG/
group Swarozgaris has increased from 35,000 in1999 – 00 to 1.15 million in 2007 – 08. At the same time
the number of assisted individual Swarozgaris has declined from 586 thousand in 1999 – 00 to 254
thousand in 2007 – 08. The National Bank for Agriculture &Rural Development (NABARD) will create a
Rs.15 billion fund to cater to women's Self-Help Groups in economically weaker districts in the country,
After joining the self-help group the women are economically and socially empowered. This empowerment
cannot be transformed or delivered it must be self-generated such that it enables those who are
empowered to take control over their lives.
Decision-making within the household: The social impact of the SHG program increased involvement in
Decision-making, awareness about various programs and organizations, increased access to such
organizations, increased expenditure on Health and Marriage events, there is a Change in the attitude of
male members of the families, now they are convinced about the concept of SHG and encourage women
to participate in the meetings and women reported that they have savings in their name and it gives them
confidence and increased self-respect. Within family the respect and status of women has increased.
Children Education has improved significantly. Especially girl education was very low but now SHG
members are sending their children including girls to school. The Sanitation in members‟ households has
improved and it has led to better health in members‟ families. Now women are taking treatment from
qualified doctors, even if they have to travel to nearby towns. Members are now confident enough to raise
social status.
Participation in local government: Because of SHG, women know about their local political institutions such
as the Gram Panchayats and have better knowledge of where to report certain types of grievances. As part
of the political empowerment process, it is a pertinent fact that many women have not only been elected
to the Gram Panchayats but have become the role holders too. In a majority of the cases, the women
perceived themselves as now having some influence over decisions in the political life of village, and in a
smaller number of cases, the women named their participation and influence in village political life as an
important and note-worthy change. However, in general, the opportunities available to the women to
participate in village life were limited, as most of the village processes were still being male-dominated and
patriarchal. Though the SHGs generate positive impact on the rural economy through empowering women
and enhancing the rural income of those participant households, the issue of group size has been of long
standing concern.
Communication Level of Members: Microfinance movement is having a good impact on members, in their
ability to express their feelings and has made people more confident to express themselves.
Self Confidence among Members: The group formation brought out the hidden talent and leadership
qualities among the members. Therefore, it can be concluded that after joining the SHG the members have
improved their status in family, become helpful in family finance and sometimes helped others too. Now,
most of the SHG people feel that they get more respect; not only in the village, but our own family
members treated us more respectfully. People of the village now invite us for social and community
functions. Now our family members value our opinions whereas earlier they had no use for it. They
encourage us and support us in our activities. Now they get respected in the village society and have a
definite identity in society. Family members think of them as a working woman and encourage them in
their work. Improve their knowledge of banking, of how to undertake the different banking transactions, as
also of dealing with government officials. They now feel confident about these things. They too feel an
improvement in their social status. Family members changed their attitudes towards them after they
started participating in the SHG. They now regard them brave women. The people of the village too give
much more respect than before. Family members seek her opinion in many of the family decisions.
Moreover, people from the society in general respect them.

Change in Family Violence: Involvement with SHG has reduced this violence in 25 per cent cases especially
due to reduction in economic difficulties. In most of cases the members revealed that their husbands
should also be involved in SHGs.
Frequency of Interaction with Outsiders: Members generally, got lesser opportunity to interact with
bankers, Government officials, NGOs and others in the Pre-SHG period. It can be seen that in the Pre SHG
period 25 per cent of the members were not interacting with officials whereas after associating with SHGs,
91 per cent members had interacted with the outsiders and out of total 44 per cent have interacted more
than 4 times with outsiders. This interaction helped them to articulate their problems and improved their
self confidence.
Status of Access to Amenities: Since SHG programme has economic as well social implications. It can be
seen that there has been an increase of 40 per cent in SHG members in terms of their status of access to
amenities factors. Therefore, it can be concluded that after joining the SHG the members have improved in
getting access to amenities like medical, sanitation, education, market, water supply, transport.
Community Participation: SHG members undertook a lot of community activities which they earlier could
not have imagined themselves to have done. They distributed school uniforms to poor students; they
undertook a plantation drive, distributed pen and notebook sets to poor students and donated some
money to a charity during a national calamity. They participated in several social initiatives like the “Clean
Village Drive” and other such social upliftment programmes since their involvement in the SHG. They
organized a small function on India’s Republic day. Perspective of the Social Worker Women who have
participated in this have benefited economically. They are now able to buy household goods like
televisions, furniture, telephones, jewellery and most importantly are able to save for the future. Now they
are much more confident in their dealings with government officials, bank officials, electricity board
officials, Medical officers, the revenue officer, health scheme officials etc. They also participate in
elections. Moreover, they make use of the various government welfare schemes available.
Increased Nutritional status: They find positive impacts on empowerment and nutritional intake. Female
social and economic empowerment in program areas increased irrespective of participation status.
Evidence of higher consumption is not income or asset formation. The program's main economic impact
had been through consumption smoothing and diversification of income sources rather than exploitation
of new income sources.
SHGs and Environmental Management: Research and policy has tended to focus on the relationship
between poverty and environmental degradation in terms of pointing out that the poor are both victims
and agents of environmental degradation. They are victims in that they are more likely to live in
ecologically vulnerable areas, agents in that they may have no option but deplete environmental resources
thus contributing to environmental degradation. As a result of increasing awareness, social conditions and
poverty alleviation, are necessary to support environmental sustainability.Today SHGs have a role to play
in poverty alleviation through empowerment of women in India. Moreover, women tend a greater
involvement in environmentally sustainable activities and environmental management than men.
Therefore, involvement of women in development programmes through SHGs can effectively increase
awareness of society to ward environmental sustainability.

MAJOR CHALLENGES OF SHG’S:

Women as compared to men have always been delicate and therefore they have to face many problems
when they come out of the house to work with men. Women in developed economy do not face the
problems which are faced by the Indian women. Despite many achievements, women get trifled by many
difficulties. Some being common for both male and female and some are the curse only to the women.
There are many psycho-social factors which hinder the path of women empowerment and her stepping
towards entrepreneurship. Women have always been criticized by the male dominant society for their out
of home activities. Indian women are confronted with many such problems. Indians believe in the
philosophy that “Women should never be left independent she should be under the control of her father in
childhood, under the control of her husband after marriage and under the control of her son in old age”.
Some of the major difficulties in this respect can be illustrated as below.
1. Family discouragement: As women in India have to work amidst social taboos, restrictions etc., they are
not supported much to undertake entrepreneurship by their family members.
2. Social Barriers: Women SHG in India are always seen with suspicious eyes, particularly in rural areas,
they face more social barriers.
3. Caste and Religion: Though India is a secular country in practice, caste and religious systems dominate
with one another and it hinders women SHGs.
4. Lack of self-confidence and risk bearing capacity: Women lack self-confidence and always feel that they
may not be successful and hence hesitate to take risks.
5. Psychological factors: Always women feel that she is „women‟ and less efficient than men and hesitates
to take risks. She has to play a dual role if she is employed or engaged in work. She has to strive hard to
balance her family life with care hence feels better to be housewife.
6. Lack of practical knowledge: Though women may be educated and have qualified knowledge, she lacks
practical knowledge and hence hesitates to establish her own venture.
7. Problem of finance: Women entrepreneurs lack property in their own name and hence banks and
financial institutions may hesitate to finance women based projects.
8. Lack of information: Women SHG lack knowledge of availability of raw materials, finance facilities and
government help and subsidy etc.; they lack knowledge of advanced technology also and hence cannot
widen their markets.
9. Problems of middlemen: Women SHG have to face the problems of middlemen more, as they generally
depend more on them. Their margin of profit will be more and hence cause for higher selling price, which
affects consumer’s attraction towards women’s products.
10. Problem of Marketing: As generally women SHG will have small scale business they have to strive hard
to sell their products in the modern competitive world. Their marketing knowledge will be less and lack of
marketing skills as compared to men.
11. Delay in obtaining credit facilities: Loan facilities, though extended by banks and other financial
intermediaries, quite often there is delay in getting the loan sanctions and receiving the disbursement of
such facilities.
12. Female child discrimination: Most of the Indian families treat female child as a curse. There is biasness
in case of promoting education and business opportunities for a girl. Although a girl is well in studies, she is
not given an opportunity for higher studies. However this perception is lowering down day by day. It is also
advisable that we should start the task of promoting a girl child from our own self. The integrated effort by
all of us will definitely lead to women entrepreneurship at the top level.
13. Lack of financial and family support: Indian SHG women also suffer from the problem of acquiring
venture capital and other financial resources for starting a business. Further, they also lack a moral support
from their family members including parents, husband etc. They are enclosed within their personal and
family obligations, which are greater barriers to them. They play various role at the same time (i.e.,
mother, wife, daughter, etc.) so they also face problem of role conflict.
14. Problems inherited in women: Indian women also fight, with the perception of the society. They are
not so easily accepted as a business organizer by the people in the society. Women lack courage and self
confidence in starting a new venture. They even do not have access to entrepreneurial training and lack
confidence from within. Moreover they lack role model and experience, thus being a problem for lower
confidence of finances and suppliers.
15. Market risk and uncertainties: Women are not fully aware about market uncertainties and they also
lack the skill of boldly facing the market risks. They are afraid of such risks and uncertainties. They face
difficulty in capturing market and enhancing product sales. There is a need for training to women
entrepreneurs so that they are able to fight with the uncertainties very well.
16. Lack of technical knowhow: Most of the Indian women do not have much knowledge about the latest
technologies used in business. Due to this problem they fail to grow along with the flow of the economy.
There is a need of technical training for them.
17. Lack of self-confidence, will-power, strong mental outlook and optimistic attitude amongst women
creates a fear from committing mistakes while during their piece of work. The family members and the
society are reluctant to stand beside entrepreneurial growth of SHG members.
18. Women in India lead a protected life. They are less educated, economically neither stable nor self
dependent which reduce their ability to bear risks and uncertainties involved in a business unit.
19. The old and outdated social outlook to stop women from entering in the field of entrepreneurship is
one of the reasons for their failure. They are under a social pressure which restrains them to prosper and
achieve success in the field of SHG entrepreneurship.
20. The greatest deterrent to women entrepreneurs is that they are women. A kind of patriarchal male
dominant social order is the building block to them in their way towards business success. Male members
think it is a big risk financing the ventures run by women.
21. Male chauvinism is still prevalent in many parts of the country yet. Women are looked upon as “abla”
i.e weak in all respects. In a male dominated society women are not treated equal to men that acts as a
barrier to women entry into business.
22. Indian women give more emphasis to family ties and relationships. Married women have a make a fine
balance between business and family. The business success also depends on the support of the family
members extended to women in the business process and management.
23. Women’s family obligations also bar them from becoming successful entrepreneurs in both developed
and developing nations. The financial institutions discourage women entrepreneurs in SHG on the belief
that they can at any time leave their business and become housewives again.
24. Unlike men, women mobility in India is highly limited due to many reasons. A single women asking for
room is still looked with suspicion. Cumbersome exercise involved in starting with an enterprise coupled
with officials humiliating attitude towards women couples them to give up their spirit of surviving in
enterprise altogether.
25. Women SHG entrepreneurs have to face a stiff competition with the men entrepreneurs who easily
involve in the promotion and development and carryout easy marketing of their products. Such a
competition ultimately results in the liquidation of women SHG entrepreneurs.

CONCLUSION:
India is fiercely diverse as a nation, and most communities are also diverse in caste, opinion and religion.
Indians are also known for their sense of personal independence, which is often translated into
indiscipline, whether on the roads, in political assemblies or elsewhere. The SHG system reflects this
independence and diversity. It allows people to save and borrow according to their own timetable, not as
the bank requires, and SHGs can also play a part in a whole range of social, commercial or other activities.
SHGs can be vehicles for social and political action as well as for financial intermediation. This flexibility and
freedom also has its price. Politicians are driven by their need for popularity and power, and bureaucrats
by their need to achieve numerical targets. SHGs can provide both with a ready-made vehicle. If their
members can identify and resist the disadvantages of being „used‟ by outsiders, and can exploit them
rather than be exploited, the movement may in time play an important role in the reduction or even the
elimination of India’s main claim to fame, its leadership in world poverty. If not, however, they will become
no more than another milestone in the nation’s long list of failures.
CASE STUDY:

How One Women-Run SHG Helped 500 Widows Across 68 Villages in

Less Than 4Years..
Women of self-help groups in the Gir region of Gujarat are going beyond microfinance to fight social
taboos about widows to helping them lead a better life.

“It was time to break the silence against the social evil. We announced that widows would not wear
black to please the regressive society we live in,” 39-year-old Motiben said in a resolute voice. Motiben’s
voice echoes the sentiments of many women within the Sorath Mahila Vikas Mandali (SMVM), an umbrella
organisation connecting nearly 500 self-help groups (SHGs).

A group of women from Kodinar block in Gir Somnath district of Gujarat came together in 1999 to
form a self-help group with the support of Ambuja Cement Foundation. The SHG was started with the
objective of encouraging women to get into the habit of saving. The savings were pooled and used for
internal lending among members and for clearing bank loans, if any. But with a plea for help from a young
widow, the group transformed into a platform to get rid of meaningless stigmas and ensure social equity
and justice to widowed women.
Fighting stigmas

In the southern part of Gujarat where Gir Somnath district is situated, widows are mistreated and
are expected to be in perpetual mourning. They are compelled to wear black dresses and are ostracised
from auspicious ceremonies. Seeking new horizons beyond their regular activities, the women decided to
work on overcoming the hurdles widows women faced. The communities in Kodinar include Kharva, Kodi,
Kumbhar, Karadiya Rajput, Dalit, Darbar and Ahir, among others. The women of SMVM put aside the caste
divide and united to focus on social equity and justice for women.

The revolutionary change began when Rasilaben from Malgam village lost her husband in a bus
accident when she was 24 years old. As an SHG member, she sought the mandali’s help. Women from
SMVM visited her and presented her with a colourful saree, bangles, nose ring and bindi; everything that is
strictly prohibited for a widow according to social customs.

Women gift a widow colorful bangles, saree and bindi once the rituals for the deceased are over, as
a first step against social stigmatization. (Photo by Coastal Salinity Prevention Cell) “Doesn’t she have an
equal right to live like you and me? Happily? It’s time that women are given their basic rights as fellow
human beings. We cannot tolerate the injustice meted out to widows,” 55-year-old Jayaben, a proud
member of the mandali told.
Respect for widows
In 2011 they started the Widow Recognition Program, a social protection initiative.
The first joint decision by the women was that there would be no room for caste, community and
denominations. They started creating awareness among villagers about giving widows due respect and
equality in society. They motivated the family members of a widow to help her lead a normal life.
Overcoming this social evil was not an easy task as the community was reluctant to accept the changed
attitudes immediately. The members received allegations and accusations from the community. The
charges never deterred them from addressing the issue. They continued their efforts through rallies,
community meetings, awareness camps and house visits. It took four years to see results. The mandali has
helped more than 500 widows lead a normal life, with the acceptance and support of communities across
68 villages.
Social security for widows
Protesting against the sexual assault and death of a woman, women of self-help groups brought the
issue to the police when no one else dared to, and ensured the capture of perpetrators. After ensuring
social equality and justice for widows, the SHG formed Sorath Mahila Suraksha Kavach Yojna to give them
social security. Most often the widowed women in rural areas face severe hardship due to lack of sources
for regular income and find it difficult to sustain their families.
All the SHGs which are members of SMVM contribute Rs 1,000 annually from their savings. With
this money, a fund has been created to help widows who are in need of assistance.
The efforts have resulted in a fund of Rs 1,00,000 which the women strive to increase. SMVM has started
helping needy widows and provided cheques worth Rs 11,000. The members believe that in future they
will be able to provide economic assistance up to Rs 51,000 to destitute widows.
Collective power of women. With more than 6,000 women members in 484 SHGs and their savings ranging
from Rs 300 to Rs 5,000 per month as per their capacity, crossing Rs 10 million, SMVM remains a strong
platform. Sorath Mahila Vikas Mandali’s is a voice of its women in unison against social discrimination.
Theirs is a journey of hardships and lessons that conveys the necessity to identify and address the
problems women face in our society.
Their journey also conveys how the collective power of women can bring about progressive change
and transform lives. Palak Gosai is Documentation and Communication Officer at Coastal Salinity
Prevention Cell, a non-profit organization based in Ahmedabad, Gujarat. Views are personal.