Self Help Groups (SHGs) - 2 | Agriculture Optional Notes for UPSC PDF Download

Weaknesses of SHGs

• Group members do not necessarily originate from the poorest households.
• While there has been progress in the social empowerment of the impoverished, the economic benefits to effect a significant change in their lives have been less than satisfactory.
• Many of the SHGs engage in activities that rely on basic skills, primarily associated with primary sector enterprises. These activities, characterized by low value addition per worker and meager wages, often fail to substantially increase the income of group members.
• Rural areas often lack qualified professionals who could assist in enhancing or acquiring new skills among SHG members. Additionally, there is a dearth of institutional mechanisms for capacity building and skill training.
• Poor accounting practices and instances of fund misappropriation are prevalent issues.
• The absence of resources and access to markets for their products poses challenges for SHGs.
• SHGs rely heavily on their supporting NGOs and government agencies. The cessation of this support frequently results in their dissolution.

Challenges

• Insufficient knowledge and proper guidance among SHG members to pursue suitable and lucrative livelihood opportunities.
• Gender Biases: The presence of patriarchal beliefs, outdated thinking, and social responsibilities dissuade women from engaging in SHGs, limiting their economic prospects.
• Limited Rural Banking Infrastructure: With approximately 1.2 lakh bank branches and over 6 lakh villages, rural areas face a shortage of banking facilities. Moreover, many public sector banks and micro-finance institutions are reluctant to offer financial services to the economically disadvantaged due to high servicing costs.
• Questions Surrounding Sustainability and Operational Quality: The long-term viability and effectiveness of SHGs have been the subject of significant debate.
• Lack of Security: SHGs operate based on mutual trust and members' confidence. Deposits with SHGs are not guaranteed or protected.
• Limited Progress: Only a minority of Self-Help Groups manage to elevate themselves from a micro-finance level to that of micro-entrepreneurship.

Measures to Make SHGs Effective

• The government should assume the role of a facilitator and promoter, creating an enabling environment to support the growth and advancement of the SHG movement.
• Expanding the SHG Movement into Areas with Limited Access to Credit, such as Madhya Pradesh, Rajasthan, and the North-Eastern States.
• Facilitating the rapid expansion of financial infrastructure, including that of NABARD, by employing extensive IT-based communication and capacity-building measures in these states.
• Extending Self-Help Groups to Urban and Peri-Urban Areas, with a focus on enhancing income-generating opportunities for urban underprivileged populations, given the rapid urbanization and persistent financial exclusion.
• Encouraging a Positive Approach: Government officials should regard the impoverished and marginalized as viable and responsible customers and potential entrepreneurs.
• Monitoring: The establishment of dedicated SHG monitoring units in each state, directly linked to district and block-level monitoring systems. These units should gather both quantitative and qualitative data.
• Tailored Approach: Commercial banks and NABARD, in collaboration with state governments, should continuously innovate and design new financial products catering to the needs of these groups.

Case studies

Kudumbashree in Kerala

• Initiated in 1998 in Kerala, Kudumbashree aims to eradicate extreme poverty through community efforts.
• It is the largest women's empowerment project in India and consists of three key components: microcredit, entrepreneurship, and empowerment.
• Kudumbashree operates through a three-tier structure: neighborhood groups (SHGs), area development societies (comprising 15-20 SHGs), and community development societies (a federation of all groups).
• Kudumbashree is a government agency funded and staffed by the government, and all three tiers are overseen by unpaid volunteers.

Mahila Arthik Vikas Mahamandal (MAVIM) in Maharashtra

• In Maharashtra, Self-Help Groups (SHGs) faced challenges in managing their growing volume of financial transactions and required professional assistance.
• To address this need, the Community Managed Resource Centre (CMRC) was established under MAVIM, with the goal of delivering financial and livelihood services to SHGs.
• CMRC is financially self-sustaining and provides services based on the specific needs of the SHGs.