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Self Help Groups: Problems and solutions
Formation of Self Help Groups is a path breaking initiative that can transform the lives of million of poor Indians. However, the government should concentrate of regulating the formation process to ensure better financial viability within the group
IN OUR country, usually the poor people in time of their emergency run to the door of the landlords and money lenders to fulfill their credit needs and this comes usually at a very high interest. In India, it is too difficult to find a financial institution to meet such requirements.

To meet the emergency need the Self Help Groups (SHG) evolved. Members of the SHGs started savings as the prime work and this savings of the members opened the way for different income generating activities. In no time SHGs flourished in the development sector as a major tool for bringing economic development of the poor people particularly among the women folk.

The government as well as non government sectors and most recently, the corporate sectors involved themselves in SHG. It’s a fact that in few part of the country this has brought tremendous result but in most of the states the real situation is quite disappointing.

The SHG model emerged in the 1980s and 1990s. With the tremendous support from the Government of India, state governments, NABARD, the banking sector and NGOs, the movement spread like anything. Even such a situation arise that the Indian Government Budget presentation has emphasised on SHG bank linkage each year as in many cases it gave the ruling party a political mileage.

As per the report of NABARD, by the end of March 2006 there were 3.37 million SHGs in India covering 40.95 million poor households (roughly 200 million people or 20 per cent of total population and 80 per cent of total poor population). As of March 2007, 2.92 million SHGs had received bank loans of Rs 180, 410 million. But can we say it has really changed the fate of the poor women?

The failure of SHG movement points out to a number of causes. We Indians are good followers and we blindly follow lots of thing. Sixty years have gone but our planners have not yet realised the fact that we are having a diverse culture all over and one thing accepted in any part, among a particular community may not be accepted in the other part or among the other community.

As a matter of practice we have to organise the SHGs of the women folk only and all over the country irrespective of caste, tribe, community and religion. And we are doing the same. We never take into account, which gender among different community is the working force and who can be entrepreneur and decision makers.

Among the different tribes, while the women folk mostly contribute in the family income, among the other general caste this thing is mainly taken care by the males. If we are trying to develop the poor then it must not count the female only. Poverty is similar to all and it creates similar problem for all. Poverty has no caste, gender, community and over all religion.

Looking to the fast spread of SHGs now ICDS, bankers, NGOs, MFI and corporate, all are organising SHGs. Banks are making linkages looking to the savings and ICDS is also promoting several other activities. Now it has been a general feature of most of the tribal Orissa that in many of the villages one can not find a single woman who is not in SHG whether she understands anything or not.

As most of the time the major part of the government and non government fund are channelised for the tribal development here, emphasise has not been given to different aspects of SHGs in respect to tribal culture. The socio-economic structure in tribal communities is markedly different from that of the non-tribal or advanced groups of people.

They have a very simple technology, which fits well with their ecological surroundings and conservative outlook. Moreover their economy can be said to be of subsistence type. They practice different types of occupations to sustain themselves and live on ’marginal economy’.

And the last important point to be emphasised is that a tribe is usually considered an economically independent group of people having their own specific economy and thus having economic status. Most of them do not think for tomorrow as they live in today. So saving is not at all a part of their life. But as a matter of fact, SHG has started with the concept of savings only.

So in the initial stage of formation of SHG, the real problem arises in regularising the savings. Six month regular savings opens the gate for fund linkage and in most of the cases it has been marked that after getting the linkage the members stop savings and the repayment of loan becomes a question. So in case of the communities having such cultural background, the planners must think about the minimum savings period before going for linkage.

Another question rising up here is do we ensure the following few things before assisting or attaching fund with the SHGs?

  • Effective functioning of office bearers;
  • Differentiating between consumers credit and production credit;
  • Setting viable norms for interest rates, repayment, schedules, gestation period, book keeping, writing bad debts;
  • Ensuring repayment and continuity; and
  • Assisting the members in getting access the formal credit institutions.

In most of the cases the answer is no, as the literacy level of the members of SHGs are beyond the read, write and understand level. I can say more than 70 per cent SHGs formed by tribal women in Orissa are having same situation.

Thus, it is quite necessary to train them effectively before making any linkage. In many programmes this aspect of SHG is quite ignored by the planners and if it is at all planned quite ill implemented by the implementers.

Most of the bankers make linkages with the ICDS promoted SHGs without giving any second thought whether the fund will be utilised in proper manner or not. I think one must go for linkage when the members can understand and express themselves.

If they actually can then I would like to say please go ahead with SHGs as it can really bring dramatic result in the field of economic development of the poor. And if they can’t then please wait and ensure the above things and then link them with fund.

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Dr.Mrs.Sushma joiya
Integrated Congress of Women Entrepreneurs observed that the Self Help Groups can be brought in line with the other socio-economically developed ladies, if and only if, 50 or more groups are clubbed one one Industrial Development Project. Such as take the case of termeric.Let us involve few Self Help Groups in the activity of farming the termeric and when the crop is ready these Self Help Groups again be told to dig and wash the termeric and put it inot dryer for drying and when it is dried, The Self Help Groups be engaged in mass griding for making termeric powder.This bulk powder should again be utilised fgor packing on the same village. Packets for 100Gms, 250Gms, 500Gms are made for marketing through a chain of MSME show rooms where the unemployed youth coud be engaged to market this termeric powder.Now comes the role of government to provide infrastructure first implements for agriculture/farming then providing drier/ then providing grinder for bulk grinding, then packaging unit for packing then transport for marketing but all the things simultaneously are not done by the Government. This is the main reason that Self Help Groups are not gaining economic upliftment.Money should not be given direct to SHG but it should be invested in the project and the profit should be shared by the memberrts of the Self Help Groups.In case some one is interested to avail full guidance from Integrated Congress of Women Entrepreneurs, we are available at
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