[Solved] ‘The emergence of Self Help Groups(SHGs) in contemporary times points to the slow but steady withdrawal of the state from developmental activities’. Examine the role of the SHGs in developmental activities and the measures taken by the Government of India to promote the SHGs ( UPSC GS-2 Mains 2017)
Self-Help Groups are informal associations of people who choose to come together to find ways to improve their living conditions. There are around 8 million SHG out of which 80% are women SHG.
Role of SHG in developmental activities-
• SHG acts as saving, credit and insurance institution.It increases the credit worthiness of poor by extending microfinance to them.
• They help the poor to transform economically as well as socially. The govt is using them to implement various education, sanitation programs etc.
• They help the women to focus on productive expenditure, bringing financial discipline and increase efficiency.
• It enables the govt to focus in its programs etc. while minimizing its administrative and other costs.
• Increases the financial inclusion in the nation.
Measures taken by govt to promote SHG are:
• SHG- Bank linkage program is the major initiative by NABARD and RBI for making SHG viable.
• SIDBI, HUDCO and Rashtriya Mahila Kosh set by govt also provide credit to SHGs.
• Swarna Jayanti Gram Swarojgar Yojana aims to eradicate poverty by providing income generating assets to rural people via SHG.
• The government provides training to the members regarding book keeping, basic literacy etc.
• Their skills are groomed in reading, writing, livelihood options etc. by the govt.
Role of SHGs in Development Activities
- SHGs ensure financial inclusion of the poor and marginalized by operating as a mechanism for delivery of micro-finance services to them.
- By encouraging and providing opportunities for self-employment, SHGs play a critical role in poverty alleviation.
- SHGs build social capital among the poor, especially women and marginalized sections like SCs and STs. Most of the beneficiaries of government schemes have been women from weaker and marginalized communities.
- Participating households spend more on education than non-client households.
- Better income levels due to participation in SHGs have led to improvement on health indicators.
Measures taken by Government to promote SHGs:
- As part of the National Rural Livelihood Mission (NRLM) or Ajeevika, government facilitates women-led self-help groups (SHGs) by giving them bank loans at easy interest rates. This interest subvention provision has been further extended to more districts.
- The government has promoted the Self-Help Group (SHG)-Bank Linkage Programme to be implemented by commercial banks, regional rural banks and cooperative banks for providing micro-finance to SHGs.
- NABARD promotes SHGs by providing grant support for training, capacity building, skill upgradation, exposure visits etc.
- Scheme for promotion and financing of Women Self Help Groups (WSHG) is being implemented by NABARD across backward and Left Wing Extremism (LWE) affected districts.
- A fund called “Women SHGs Development Fund” with a corpus of Rs.500 crore to empower women led SHGs has been set-up. It is to be operated by NABARD.
- Rashtriya MahilaKosh provides loans to intermediary organizations which further lend it to SHGs.
- Given the important role SHGs play in development activities, the government should continue to act as a facilitator and promoter by providing a supportive environment for SHGs to operate vibrantly.
- Economically poor people gain support as part of a group.
- It has empowered poor people, especially the women group, in rural areas.
- It has reduced the influence of informal lenders in rural areas.
- It helps the borrowers to overcome the problem of lack of collateral and the women can address their problems to find solutions.
- It promotes gender equality.
- It ensures social justice by becoming the voice of the needy people and improving the efficiency of various government schemes.
- It can prevent diseases by providing better nutrition, housing, and health to women and children.
- The government should introduce SHGs to the credit deficient areas in India.
- Nationwide extension of SHGs focusing the financially weaker section of urban people.
- Setting up a regulatory body for smooth functioning.
- Setting up collaboration with NABARD for an innovative approach to promotion.
- Considering the points and taking special care of the issues faced by the SHGs, the overall objective of the organization will definitely be achieved.
Role of SHG in rural development:
- Credit availability– Bank credits are not easily accessible to individual poor, but by forming a SHG, there are make better prospects for bank credits. (often without collateral). Under the SHG-Bank linkage programme, many SHGs have become institutions of micro-credit.
- Entrepreneurship– Opportunities for self-employment through setting of micro-enterprise.
- Skill development– Skill development program undertaken by SHGs improves employability of members involved.
- Rural poverty– SHGs have become a vehicle to lift people from below poverty line, generate awareness about welfare and developmental schemes of government, monitor its implementation etc. Positive correlation between SHGs and poverty can be inferred from the fact that southern states with high number of SHGs (71%) have average poverty rate at 9% as against nation’s average of 21%.
- Improved living standards– As a result of increased jobs there is rise in income which enhances access to food, health services and overall rise in living standards.
- Women empowerment– By providing employment opportunities, financial and social security SHGs help improve the status of women and creating awareness regarding their rights and responsibilities, as pointed by the 2nd ARC report.
- Literacy rates– with more women participation and their enhanced status address issues such as nutrition poverty and low literacy rate.
- Social capital– The SHGs provide a forum in which people can meet on a regular basis and discus various issues or concerns that the members face in their day-to-day life which acts as the basic source of social capital generation.
- Kudumbashree in Kerala has helped in providing skill training and poverty eradication of women.
- They act as pressure groups for policy framing as seen in legislation- making for prohibition in Bihar which was the result of pressure from several women SHGs in Bihar.
- Tamil Nadu used SHGs to d inculcate sanitation habits among the community people under Swachh Bharat Abhiyan.
- Haryana government used SHGs for increasing sex ratio and making beti bachao beti SHGs like SEWA, Lizzat papad promotes entreprenurial culture among women.
- Andhra Pradesh Government programme of poverty alleviation by successful integration of women by SHG formation.
SHGs have been instrumental in bringing about structural changes in the rural society and its economy. Given the multi-faceted role played by SHG in rural development, Government needs to further support SHG by handholding nascent SHGs and bringing them at par with the rest of the sections.
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