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In a typical Indian village today, one is certain to find groups of women talking about finance. They can be seen sitting under a tree, in an abandoned school building, or in the front yard of a village resident’s dilapidated home, holding thick notebooks. “I am a member of an SHG”—self-help group—most women residents of villages proudly introduce themselves. In a male-dominated society, where women play significant but never-recognised roles, this self-identification as members of SHG is a badge of honour and an assertion of a new identity of power.
India has some 0.65 million villages, as per Census 2011. In comparison, there are 9 million SHGs with nearly 100 million women members, shows Deendayal Antyodaya Yojna-National Rural Livelihoods Mission (DAY-NRLM) data, released in December 2023. This comes to, on average, 14 SHGs per village, with every eighth Indian woman being an SHG member. An SHG is usually a community group of 10-12 women from similar socio-economic background. They form these alliances to pool their financial resources for taking up joint economic activities, or to lend money at a reasonable interest rate to members for starting small businesses. At the core of this group is the collectivisation of resources to enable financial stability and self-employment for women. A cursory evaluation of DAY-NRLM data shows that each SHG helps eight to 10 women start businesses.
The concept of SHGs started in the 1970s in a few rural pockets, the most notable among them being the formation of the Self-Employed Women’s Association (SEWA) in Gujarat. In 1992, these groups were linked to banks for the disbursal of small loans—named SHG Bank Linkage Project or SHG-BLP—for setting up livelihood opportunities, like livestock rearing or a tailoring unit. While such groups continued to thrive, in 1999, the Union government decided to use them to promote self-employment in rural areas by introducing the flagship rural development programme—Swarn Jayanti Gram Swarojgar Yojana. This programme gave birth to thousands of such groups that received government patronage and support in running their operations.
In 2011, the government made SHGs the core implementers of its objective of ensuring livelihood opportunities for the country’s poor under NRLM. With this, their status leapfrogged from that of a voluntary alliance to the executor of India’s key development agenda. In 2014, the government created a special fund—Community Investment Fund—that provides SHGs with up to Rs 50,000 a year to decide and design local livelihood programmes. This completed their transformation: from an informal alliance to a formal village group for undertaking development works to one that has a dedicated fund for implementing livelihood programmes.
| This article was originally published as part of Down To Earth’s special issue dated 1-15 March, 2024. Download the full story for free |
Today, these groups are regarded as the world’s largest microfinance project. As of February 2023, some 8.9 million SHGs have availed loans of Rs 2.54 lakh crore, shows DAY-NRLM data. In 2023-24 (till February 2024), these groups dispersed loans amounting to Rs 1.7 lakh crore. According to Economic Survey 2022-23, “The number of SHGs credit linked has grown at a CAGR [compound annual growth rate] of 10.8 per cent during the last ten years (FY13 to FY22), while credit disbursement per SHG has grown at a CAGR of 5.7 per cent during the same period.”
It is often said that India’s commercial banks have healthy balance sheets. This is mostly due to the massive waiving off of non-performing loans. But the loans under SHG-BLP rarely turn bad or require a waiver. “Notably, SHGs’ bank re-payment is more than 96 per cent, underscoring their credit discipline and reliability,” said the Economic Survey 2022-23.
The way governments are pursuing SHGs in their policies and programmes is quite amazing because India never had such an organised association of women to work at the village level, touching nearly all households. This makes the delivery of development programmes easy. More than this, SHGs have been roped in to implement schemes and programmes across the country, such as managing local community kitchens, running health services and overseeing slum redevelopment initiatives. According to government data, some 3 million women members of SHGs are currently managing 2.1 million agri-nutri gardens. A perusal of state policies shows that some 170 types of work have been assigned to these groups, while for many other activities—such as bank correspondents, local veterinary assistants and electricity connection supervisors—preference has been given to hiring SHG members. In 2022, Prime Minister Narendra Modi, while addressing a mega gathering of SHG members in Madhya Pradesh, said, “Over a period of time, ‘Self Help Groups’ turn into ‘Nation Help Groups’.” In the same meeting, he also promised that every rural household in the country would have one member in the local SHG.
SHGs have become a vehicle to seek votes from women, who are increasingly voting more than men in recent years. Political parties are releasing women manifestos, where SHGs emerge as the key points of delivering development. A review of state governments’ support to SHGs, specifically in 2018-2023, by Down To Earth, shows that 10 states—including Uttar Pradesh, Madhya Pradesh, Bihar, Rajasthan, Tamil Nadu, Kerala and Odisha—declared budgetary support to the tune of Rs 5 lakh crore directly to SHGs. These are the states that have, or are setting up, separate departments to organise and direct development works to these groups.
SHGs have lived up to the expectations. There are outstanding examples of how women groups have managed and sus-tained development works that seemed impossible to deliver. These are not stories just to be celebrated on International Women’s Day; these are stories of India’s women who have successfully taken charge of the country’s development.