Self-Help Groups (SHGs) represent informal coalitions of individuals who collaborate to improve their living conditions. Typically composed of people from similar socio-economic backgrounds, these groups rely on the concept of self-help to encourage self-employment and eradicate poverty. The India government, aiming to uplift these marginalized communities, plans to escalate the annual income of each woman in SHGs to Rs 1 lakh by 2024.
Objectives and Functioning of SHGs
The primary objectives of SHGs include developing the operational capacity of the poor and marginalized in terms of income-generating activities and employment. They aim to resolve disputes through mutual discussion and collective leadership. By collecting their savings in banks, they can gain easy access to loans with minimal interest rates to kick-start their micro-unit enterprises.
The Need for SHGs
Rural poverty in India is significantly influenced by the low access to credit and financial services. Dr. C. Rangarajan, heading a committee responsible for preparing a comprehensive report on ‘Financial Inclusion in the Country’, identified four major reasons contributing towards financial exclusion: inability to provide collateral security, poor credit absorption capacity, inadequate institutional reach, and weak community network. SHGs, therefore, play a vital role in providing credit accessibility to the poor, consequently aiding in poverty reduction, especially among women.
The Significance of SHGs
SHGs have tremendous socio-economic impact. They foster social integrity by encouraging collective efforts against customs like dowry and alcoholism. Additionally, they empower women, fostering leadership skills and active participation in local governance. Women’s involvement in SHGs enhances their societal status, improves socio-economic conditions, and boosts self-esteem. Most beneficiaries are from weaker, marginalized communities, highlighting the importance of SHGs in social justice.
Financial Inclusion through SHGs
Priority Sector Lending norms and the assurance of returns incentivize banks to lend to SHGs. The SHG-Bank linkage program, pioneered by NABARD, has made credit more accessible and reduced dependence on traditional money lenders and other non-institutional sources. SHGs also act as an alternative employment source, aiding in the establishment of micro-enterprises.
Challenges Faced by SHGs
Despite their significance, SHGs face a series of issues. These include inadequate skill up-gradation, weak financial management, inadequate training facilities, lack of unity and stability, and insufficient financial assistance. These challenges limit the efficacy of SHGs in delivering their objectives.
Role of SHGs in Women Empowerment
SHGs act as incubators of female resilience and entrepreneurship, especially in rural sectors. They help alter the social construct of gender in villages and enable women to develop independent income sources. Despite possessing skills, the lack of capital and social norms often restrain women from decision-making roles or setting up independent businesses. However, through SHGs, women have started working in various sectors, paving the way for a more equitable society.
The Way Forward
Even in the present era of liberalization, privatization, and globalization, women still face discrimination and deprivation of rights. SHGs, however, play a critical role in advancing the economic and social status of women, particularly in rural areas. Implementing government programs through these groups can enhance efficiency and transparency, bringing society closer to Mahatma Gandhi’s vision of ‘self-governance’.
