Self-Help Group

[UPSC Notes]
What is a Self-Help Group?
A self-help group is an informal group of individuals who are interested in improving
their lives by walking together and finding ways to improve their living conditions on an
informal basis. The term SHG refers to a group of pear-controlled self-governed
information users with a similar socioeconomic background and are committed to jointly
producing a common goal.

• Various problems like poverty, lack of skill, lack of formal credits, and illiteracy
still prevail in some villages. Hence collective efforts are needed to solve these
problems, which cannot be handled individually.
• The self-help group can therefore play a vital role in bringing change to
marginalized and poor people.
• To alleviate poverty and promote self-employment, the SHGs rely on the concept
of self-help.

History of Self-Help Group

The Self Employed Women's Association was founded in 1972, leading to the
emergence of self-help groups in India.
• Previously there was a small effort at self-organization, such as the textile labor
association in Ahmedabad creating its women's wing in 1954 so that women from
male workers' families could learn skills such as sewing, knitting, weaving, etc.
• The SEWA, a Self-Employed Women's Association, was founded by Ela Bhatt to
enhance the income of self-employed ladies who were potters, hawkers,
weavers, and others who worked in any unorganized sector.
• As part of the self-help group Bank linkage project, which became the largest
microfinance project in the world in 1992, NABARD founded the SHG bank
linkage project.
• Savings bank accounts in bank work allowed for SHGs by NABARD and the
Reserve Bank of India from 1993 onwards.
• It evolved into the National Rural livelihoods mission in 2011 after the
Government of India introduced the Swarna Jayanti Gram Swarojgar Yojana to
promote self-employment in rural areas.

Stages and Types of SHGs in India

There are many types of self-help groups working in India. All of these self-help groups
usually go through the three stages of evolution, which are-
• Group Formation
• Funding collection
• Boosting income generation for the group by developing the skills required.

To promote the agencies, many self-help groups are formed with the help of self-help
only. There are many types of self-help promoting agencies like-
• Self-help group federations
• Self-help group entrepreneurs
• Poverty management programs
• Non Government agencies
• Government
• State and commercial banks
• Microfinance institutions

Functions of SHG
The primary function of SHGs is to help the poor and marginalized section of society by
providing them with employment and income-generating activities.
• In a group of people, there can be a leader who can resolve conflicts by making
sensible and mutual decisions.
• To the people who need the free loan, SHG provides them with the required loan
on collateral with the terms and conditions decided by the group at the market
rates.
• These groups are collectively liable for loans made by members from reputable
lenders. The poor section of society collects their savings, deposits them in the
bank, and receives loans with the minimum interest rate to start their micro unit
enterprises.
• So it can also be considered that the SHGs have emerged recently as the most
reliable mechanism to deliver Microfinance services to poor people.

Need for SHG in India

SHGs are equally helpful to the needy people as the NGOs and government schemes
are-
• One of the leading and essential reasons for the need for SHGs is that they help
to alleviate poverty by providing financial services.
• The trend of SHGs is drastically increasing in the village areas as these
communities' networks are increasingly recognized as an important element of
credit linkage in rural areas.
• Apart from providing financial assistance to people, they also help some specific
sections of society, like women where they empower the women financially and
strengthen them to raise as a society.
 • SHGs promote the culture of self-employment, which has many positive
externalities like better education, better health facilities, proper family planning,
etc.

Benefits of SHG
• The malpractices like dowry alcoholism are addressed through Cooperative
efforts by SHGs.
• Instilling leadership skills among women through SHGs empowers them.
Electoral participation and Gram Sabha participation are higher among
empowered women.
• SHGs are a multiplier of social and economic advancements, improving women's
self-esteem and status in society. These benefits have been documented in this
country and many other countries.
• SHGs are a Social Justice vehicle because their participation ensures Social
justice to the majority of beneficiaries of government schemes, including the
vehicle and marginalized communities.
• Banks lend to SHGs because of priority sector lending standards and return
assurances. Access to credit has improved, and non-institutional sources of
credit have been reduced due to NABARD's SHG bank linkage program.
• Social audits enable government schemes to be made more efficient and
corruption-free.
• In addition, it assists with the setting up of micro Enterprises like grocery shops,
tool repair shops, tailor shops, etc.
• Participating households spent more on education, health, and food than those
who did not participate.
• SHGs have contributed to improving maternal health, child mortality, and
nutrition, particularly for women and children by providing them with financial
inclusions.
• By promoting and motivating savings, the SHG also assists members in
accessing formal banking services.

Opportunities for SHG

• There is a strong correlation between SHGs and the alleviation of rural poverty.
• SHGs provide women with economic empowerment and the confidence to
participate in household and community decision-making.
• The underutilised and unutilized resources of the community can be effectively
mobilized through various SHGs initiatives.
• Successful SHG members and directors can serve as resources for various
initiatives to promote community development in the area.
• SHG members can develop leadership skills by actively participating in different
SHG initiatives. Additionally, women SHG leaders are often selected to represent
the panchayat in Panchayati Raj Institutions or candidates for Panchayat
Pradhan positions.
Weakness of SHG
Some of the challenges of self-help group (SHG) are as follows:
• Even though poor people have been socially empowered, the economic gain has
not been sufficient to change their lives qualitatively.
• SHGs still use primitive skills, and most of their activities involve primary sector
enterprises.
• It is not uncommon for such activities to lead to little to no increases in the
income of group members because of low value-added for workers and
subsistence-level wages.
• It is difficult for rural groups to acquire new skills or uplevel their existing skills
due to a lack of resources and qualified mentors.
• Miss appropriation of funds and poor accounting practices is also a weakness of
SHGs.
• To achieve their goals, the SHGs depend heavily on sponsoring organizations
and government agencies. Sometimes the withdrawal of the support provided by
the government agencies can lead to the collapse of such groups.

Challenges to SHG
• The lack of knowledge and orientation among the SHG members prevents them
from choosing profitable and suitable livelihood options.
• Participation in SHGs is hindered by the patriarchal primitive thinking and social
obligations that leave women with limited opportunities for economic gain.
• As there are approximately 1.2 lakh Bank branches and over 6 lakh villages,
there is a shortage of rural banking facilities. Public sector banks and
microfinance institutions are also reluctant to provide financial help to the poor
due to the high costs associated with the services.
• It has been widely debated whether the SHGs can sustain their operations and
deliver the polity services or not.
• The SHGs work on the confidence of the members and having mutual trust
among each other.
• There are only a few numbers of SHGs that can sustain and raise their standards
from microfinance to micro-entrepreneurship.

Self-Help Groups in India

About 50 SHGs in India are situated in different corners of the country. Some of them
are mentioned below-
1. Amba Foundation
2. Ambe Mahila Mandal
3. ASRLM
4. Aastha welfare society
5. Baba Jaleswar SHG
6. Bhai Bhauni SHG
7. Chamunda Mahila Bachat Mandal
8. Chintan
 9. Chamoli SHG
10. Dehradun
11. Geeta Kurmi
12. GULM self-help group
13. Gram Chetna Kendra
14. Guru Kripa SHG
15. Himmotthan
16. Jai Ambe SHG
17. Kathiravan and Malar SHG
18. Kenduasuli SHG
19. Kudumbashree Kerala women's SHG
20. Laxmi Mahila SHGs

Way Forward
• In addition to facilitating and promoting the self-help group movements, the
government should create an environment that supports its growth and
development.
• Madhya Pradesh, Rajasthan, and northeast States should be included in the self-
help group movements.
• In these States, information technology-enabled communication and capacity-
building measures should be adopted in order to expand the financial
Infrastructure.
• In the light of rapid urbanization and the financial exclusion of many people the
self-help groups should be expanded to urban and pre-urban areas to increase
income generation capabilities.
• Government officials should treat poor and marginalized citizens as viable and
responsible customers and entrepreneurs.
• Every state should have an SHG monitoring cell.