‘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 IAS Mains 2017 General Studies Paper – 2)
Self-Help Groups (SHGs) are informal associations of people who choose to come together to find ways to improve their living conditions. Such groups work as a collective guarantee system for members who propose to borrow from organized sources. The poor collect their savings and save it in banks. In return they receive easy access to loans with a small rate of interest to start their micro unit enterprise.
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.
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