Self Help Groups (SHG) – Meaning, Importance, Objectives | SHG UPSC

What is 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 users with a similar socioeconomic background and who 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 groups 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.

Government Schemes for Self Help Groups in India

Self Help Groups (SHG) are provided with easy credit & financial assistance & have contributed to the upliftment of women to a great extent. A major role is played by the Government in providing necessary assistance to these SHGs. Several important schemes have been launched by the Government in order to promote Self Help Groups.

• National Rural Livelihood Mission (NRLM): Launched in 2011 by the Ministry of Rural Development.
• Deendayal Antyodaya Yojana (DAY): This scheme was launched in 2015 and involves 8.5 mn Self-help Groups.
• Swarn Jayanti Gram Swarojgaar Yojana (SGSY): It encourages the formation of more SHGs & self-employment among the rural population.
• The government also promises a MUDRA loan amounting to up to Rs 1 lakh to one woman from every Self Help Group.

History of Self Help Groups

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 labour 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.

Types of Self Help Groups in India

There are many types of self help groups working in India. All of these SHGs 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-

• SHG federations
• Self-help group entrepreneurs
• Poverty management programs
• Non Government agencies
• Government
• State and commercial banks
• Microfinance institutions

Functions of Self Help Groups (SHG)

The primary function of Self Help Groups 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 Self Help Groups have emerged recently as the most reliable mechanism to deliver Microfinance services to poor people.

Objectives of Self Help Groups

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 Self Help Groups 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.

Importance of Self Help Groups

The malpractices like dowry alcoholism are addressed through Cooperative efforts by Self Help Groups. The following points illustrate the importance of SHG in our society:

• Instilling leadership skills among women through SHGs empowers them. Electoral participation and Gram Sabha participation are higher among empowered women.
• Self Help Groups 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 for the majority of beneficiaries of government schemes, including the weak and marginalized communities.
• Banks lend to Self Help Groups 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 Self Help Group also assists members in accessing formal banking services.

Opportunities for SHG

For UPSC aspirants, it is crucial to learn the opportunities for Self Help Groups in India which are stated below:

• There is a strong correlation between SHGs and the alleviation of rural poverty.
• Self Help Groups 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 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 initiatives. Additionally, women leaders of Self Help Groups are often selected to represent the panchayat in Panchayati Raj Institutions or candidates for Panchayat Pradhan positions.

Weakness of Self Help Group

Some of the weaknesses 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 Self Help Groups.
• 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. The other major challenges to Self Help Groups in India are as follows:

• 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 Self Help Groups can sustain their operations and deliver 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 Self Help Groups that can sustain and raise their standards from microfinance to micro-entrepreneurship.

List of 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

SHG UPSC

Self Help Groups have played a vital role in supporting and encouraging women who wish to stand on their feet & start a business. The Government has also supported the SHGs by introducing good schemes & has been providing financial assistance. It is therefore an important topic for the candidates preparing for the UPSC exam. Questions can be expected from the topic of Self Help Groups which can be easy to score with. It will thus be beneficial for UPSC candidates to study this topic well.

Way Forward:

• In addition to facilitating and promoting self help group movements, the government should create an environment that supports its growth and development.
• Madhya Pradesh, Rajasthan, and the 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 light of rapid urbanization and the financial exclusion of many people, 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.

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