Self Help Groups

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March 09, 2024

Why in news?

In India, women self-help groups have been a source of empowerment, fostering economic independence, social stature and community resilience.

How SHGs evolved in India?

  • A Self-Help Group is an informal association of individuals who come together to improve their living conditions.
  • It is a self-governed and peer-controlled group comprising people with similar socio-economic backgrounds and a shared desire to achieve a common purpose.

As per National Rural Livelihood Mission (NRLM) data, there are around 9 million SHGs with nearly 100 million women members, averaging 14 SHGs per village.

  • Primary purpose- To pool financial resources for joint economic activities and provide reasonable-interest loans to members for starting small businesses.
  • Historical origin- The concept of SHGs began in the 1970s, notably with the formation of the Self-Employed Women’s Association (SEWA) in Gujarat.
  • Linkage to banks- In 1992, SHGs were linked to banks for small loans, leading to the SHG Bank Linkage Project (SHG-BLP) for setting up livelihood opportunities.
  • Swarna Jayanti Gram Swarojgar Yojana- It was launched in 1999 to recognize the potential of SHGs in promoting self-employment in rural areas.
  • NRLM- In 2011,SHGs were integrated into the National Rural Livelihoods Mission (NRLM), becoming core implementers of the government's objective to ensure livelihood opportunities for the poor.
  • Community Investment Fund- It was launched in 2014 that provided SHGs with up to Rs 50,000 per year for designing and implementing local livelihood programs.
  • Formal village groups- The integration into NRLM and the creation of the Community Investment Fund marked a transformation of SHGs from informal alliances to formal village groups.

What is the significance of SHGs?

  • Functional capacity enhancement- It improves the functional capacity of poor and marginalized individuals by providing them with skill development, employment generation and increased income opportunities.
  • Conflict resolution- SHGs acts as forums for collective leadership and mutual dialogue fosters a sense of community cohesion and shared responsibility.
  • Credit access- They play a pivotal role in providing collateral free loans to their members, the interest rates on these loans are market driven ensuring fairness and sustainability in financial transactions.
  • Microfinance prowess- SHGs are recognized as the world's largest microfinance project, with millions of groups availing substantial loans.
  • Risk mitigation- The SHGs serve as a collective guarantee system providing assurance for members seeking loans from organized sources.
  • Financial inclusion- It facilitate the inclusion of marginalized individuals into the formal banking system that enables the poor to save money in banks promoting financial literacy and inclusion.
  • Economic empowerment- The members can utilize the loans obtained through SHGs to start micro-enterprises.
  • Poverty alleviation- SHGs contribute to the overall goal of poverty alleviation by focusing on employment generation, income enhancement and financial inclusion.
  • Women empowerment- Women can utilize their skills and talents to start businesses and become financially self-reliant.

How the SHGs has shaped India over years?

  • Credit discipline- It is highlighted by a repayment rate of more than 96% contrasting with challenges faced by India’s commercial banks often dealing with massive non-performing loans.
  • Growth- As per Economic Survey 2022-23, SHGs have shown impressive growth rates, with a compound annual growth rate (CAGR) of 10.8% in credit linkages and 5.7% in credit disbursement per SHG over the last ten years.
  • Government support- The government's active pursuit of SHGs is evident in their inclusion in policies and programs, reflecting a recognition of their organizational effectiveness at the grassroots level.
  • Diversified roles- The SHGs manage local community kitchens, running health services, overseeing slum redevelopment initiatives, and managing agri-nutri gardens.
  • Poltical will- SHGs have become a significant influence in politics, with political parties incorporating them into women-focused manifestos.
  • National significance- Prime Minister Narendra Modi has emphasized their role in transforming from "Self-Help Groups" to "Nation Help Groups," showcasing their national significance.
  • Financial commitment from States- State governments, especially in Uttar Pradesh, Madhya Pradesh, Bihar, Rajasthan, Tamil Nadu, Kerala, and Odisha, have provided substantial budgetary support, totalling Rs 5 lakh crore, directly to SHGs.
  • Vote bank- SHGs have become a vehicle for seeking votes from women, reflecting their increasing participation in elections.

Kudumbashree Mission

  • Launch year- 1999
  • Launched by-Kerala
  • About- It is a government sponsored mission aimed at empowering women, primarily through credit activities in Kerala’s rural areas.
  • Support- Union government and NABARD.
  • Significance- Kudumbashree has proven its resilience, particularly during times of crisis from the devastating Kerala floods of 2018 to the unprecedented challenges posed by the covid-19 pandemic, women affiliated with the mission have emerged as pillars of support for their communities.
  • From an initiative to empower women the mission has become lifeline of the State.



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