Empowering Through Self-Help: The Journey and Challenges of India's SHG Movement

India’s Self-Help Group (SHG) movement has emerged as the world’s largest and most successful network of community-based organizations (CBOs). It is predominantly a women’s movement, and as of 31st January 2024, about 9.98 crore women from households have been mobilized into 90.39 lakh Self-Help Groups (SHGs).

SHGs are groups of 10–20 women that meet regularly to deposit money into a group-held account, from which loans can be requested in times of need. These groups are typically formed by women who live near one another and are ethnically and economically homogenous (Baland et al., 2011; Sharma, 2001). Once they reach maturity, they are linked with bank accounts and lines of credit.

Women have been particularly targeted, not only due to their secondary status relative to men in society but also because women’s SHGs have proven to be more empowering and generate various forms of capital.

The purview of self-help groups has now expanded beyond agriculture to include health and nutritional awareness, generating demand for various government programs, ensuring transparency in the implementation of government schemes, and tackling social issues such as dowry, domestic violence, and gender- and caste-based discrimination (Desai & Joshi, 2013).

Despite the positive outcomes, self-help groups in India are not free from the challenges that typically affect such developmental initiatives. The sustainability of SHGs is threatened by poor record-keeping of transactions, the absence of mechanisms to enforce mandatory repayments, and the inability of some members to repay overdue amounts due to their impoverished conditions (Sinha, 2005). Banks also display a lax role in sanctioning loans, providing insurance facilities, and selecting inappropriate ways of investment, thus working against the objectives of these groups (Das, 2016).

As the saying goes, merely throwing money at problems is not sufficient. SHG members must also receive training. Lack of or insufficient capacity-building (skill development) measures prevent SHG members from taking up appropriate entrepreneurial activities (Mohanty, 2013). They often lack marketing skills, which results in heavy financial losses. New SHPIs, such as post offices, gram panchayats, and farmers’ clubs, could also be strengthened to act as intermediaries in facilitating these linkages (Mohanty, 2013).

The issues plaguing women also creep into the workings of SHGs. It has been observed that married women exercise little or no control over their loans. Control is transferred to male members of the family, who use the loans and take responsibility for repayment. Montgomery et al. (1996) reported that only 9 per cent of women primarily manage their loan funds, whereas 87 per cent of loanees jointly manage the funds with other family members (husband, son, parents, or in-laws), which can be seen as male dominance in disguise.

To effectively navigate these challenges and achieve the best outcomes, several actions are necessary. While government programs like the NRLM provide support, more focus is needed on improving the skills of SHG members, providing them with better access to technology, and enhancing their financial knowledge. By encouraging formal registration and building trust within groups, their savings can be secured, leading to long-term sustainability. Additionally, breaking down social barriers and promoting gender equality will be crucial to fully harness the potential of SHGs as drivers of rural entrepreneurship and economic growth.

Author - Reesha Mishra

Team TSLL