What is SHG?
SHGs, or Self-Help Groups, are small voluntary associations of individuals, predominantly women, who come together for a common purpose. In India, SHGs have gained significant importance as a grassroots-level institution for poverty alleviation, women’s empowerment, and community development. Here are some key characteristics and features of SHGs in India:
- Composition: SHGs typically consist of 10 to 20 individuals who belong to a common socio-economic background and reside in the same geographical area. While women are the primary members, some SHGs also include men or are exclusively composed of men.
- Voluntary Association: Participation in SHGs is based on voluntary membership, where individuals join the group willingly to address their socio-economic needs and challenges collectively.
- Savings and Credit Activities: One of the primary functions of SHGs is to encourage members to save small amounts regularly. These savings are pooled together and used to provide internal loans to group members. SHGs also facilitate access to formal financial services and credit linkages from banks and microfinance institutions.
- Social and Emotional Support: SHGs provide a platform for members to share experiences, seek advice, and provide social and emotional support to each other. They act as forums for discussing and addressing issues related to health, education, gender equality, and other social concerns.
- Capacity Building: SHGs offer training and capacity-building programs to members, focusing on various aspects such as financial literacy, bookkeeping, entrepreneurship, skill development, and leadership. These initiatives aim to enhance members’ knowledge and skills, enabling them to effectively manage their group activities and pursue livelihood opportunities.
- Collective Decision Making: SHGs operate democratically, with members actively participating in decision-making processes. They engage in discussions, develop internal rules and regulations, and make collective decisions related to savings, loans, and other group activities.
- Income-Generating Activities: SHGs encourage members to engage in income-generating activities to improve their livelihoods. This may include activities like handicrafts, agriculture, animal husbandry, small-scale enterprises, and entrepreneurship. SHGs often provide support in terms of skill development, market linkages, and access to credit for such activities.
- Federations and Linkages: SHGs often form federations or larger networks at the village, district, or state levels to amplify their collective voice, negotiate better deals, and access additional resources and opportunities. These federations enable SHGs to undertake larger-scale initiatives and represent their collective interests.
Benefits of SHGs
- Mobilizes women from rural areas: According to the estimates, about 46 million rural poor women are mobilized through SHGs architecture. These organizations have been an effective vehicle, especially in providing financial intermediation solutions for unbanked rural women.
- Socio-economic benefits: It includes economic self-independence, participation in village affairs and awareness about education.
- Special Focus: Under National Rural Livelihood Mission, special attention has been given to women living below poverty line (BPL). The scheme has also focused on capacity building and institutionalization of SHGs. It has also helped in social mobilization, institution building, communization and creation of human resource.
- Improves the status of women in family and society: Regular process of group meetings helps women build social capital which raises their status in the family and the society. It also leads to economic empowerment which helps them take decision making role in the family. Thus help them break shackles of patriarchy.
- Improves health and standard of living: A research has also shown that Women practicing ‘participatory learning and action’ showed 49 % reduction in maternal mortality and 33 % reduction in neonatal mortality.
General Issues related to SHGs
- Agricultural Activities: Most of the SHGs work at local level and engaged in agricultural activities. SHGs in rural areas should be introduced to non-agricultural businesses too and should be provided with state-of-the art machinery.
- Lack of Technology: Most of the SHGs work with rudimentary or no technology.
- Access of market: Also the goods produced by SHGs do not have access to larger market place.
- Poor Infrastructure: Most of these SHGs are situated in rural and far reach areas that lack connectivity via road or railways. Access to electricity remains an issue.
- Lack of training and capacity building: Most of the SHGs work on their own without outreach from the state for skill development and capacity building.
- Credit Mobilization: A study has shown that about 48% of the members had to borrow from local money lenders, relatives and neighbours because they were getting inadequate loan from groups. Also issues like hoarding of money was witnessed.
- System of monitoring: The general reports on the progress of SHGs show statistics of growth and spread of SHGs without questioning the process and internal health of the SHGs.
The government, through various initiatives and programs, has recognized the potential of SHGs in promoting socio-economic development, women’s empowerment, and poverty reduction. As a result, SHGs have become an integral part of many government schemes and interventions aimed at inclusive growth and sustainable development in India.
The Indian government has implemented several steps to support and assist SHGs across the country. Here are some of the key measures taken:
- National Rural Livelihood Mission (NRLM): The NRLM, launched in 2011, aims to promote and strengthen SHGs in rural areas. It provides financial assistance, capacity-building training, and livelihood support to SHGs. The program also focuses on promoting federations of SHGs to enhance their collective strength.
- Financial Inclusion and Microfinance: The government has encouraged financial inclusion by facilitating access to formal financial services for SHGs. The Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme promotes opening bank accounts for every household and facilitates access to credit and insurance services. SHGs also receive microfinance support through schemes like the National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI).
- Interest Subsidy and Credit Linkage: SHGs are linked with various credit schemes to provide financial support for income-generating activities. The government provides interest rate subsidies to reduce the burden on SHG members and enhance their repayment capacity. The Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM) offers capitalization support and interest subvention to SHGs.
- Capacity Building and Skill Development: The government focuses on capacity building and skill development of SHG members. They are provided with training programs on financial literacy, entrepreneurship, market linkages, and management skills. The programs are designed to enhance their overall capacity to manage and sustain their enterprises.
- Market Linkages and Promoting Enterprises: Efforts are made to connect SHGs with markets and value chains. The government supports market linkages for SHG products through initiatives like the Rural Haat Bazaars, Marketing Assistance Scheme, and procurement programs by government agencies. SHGs are encouraged to engage in various income-generating activities such as handicrafts, agriculture, dairy, and small-scale industries.
- Legal and Policy Support: The government has implemented policies and legal provisions to facilitate the functioning and empowerment of SHGs. The Companies Act, 2013, allows SHGs to register as Producer Companies, enabling them to access markets directly. The National Rural Livelihoods Promotion Society (NRLPS) provides policy and technical support to promote SHGs.
- Government Schemes: SHGs are actively involved in the implementation of various government schemes at the grassroots level. They play a significant role in initiatives such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Swachh Bharat Abhiyan, and National Rural Drinking Water Program, among others.
These steps taken by the government are aimed at strengthening SHGs, providing them with financial support, enhancing their skills, and promoting their overall development and empowerment.