According to the Ministry of Rural Development (MoRD), Rs. 11 lakh crore bank credits have been accessed by Northeastern region (NER) self help groups (SHG) under Deendayal Antyodaya Yojana - National Rural Livelihoods Mission (DAY-NRLM) from the FY 2020-21 while around Rs 73 lakh crore bank credits have been accessed by SHGs in the rest of India.
Also Read: Opinion | Challenges To India’s ‘Act East Policy’
In the recent fund allocation by MoRD, Northeastern states were allocated around Rs. 32 lakh crore (approximately) under the National Rural Livelihood Mission (NRLM). While DAY-NRLM aims to reach out to 10 crore women from rural poor households by the financial year 2023-24, as of 31st January 2024, 9.98 crore women have been mobilised into 90.39 lakh SHGs.
The origin of SHGs in India can be traced back to 1970 with the formation of SEWA. The banking linkage programme in 1993 constitutionally framed the very functioning of the SHGs with banks to act as the key to the poverty alleviation of the poor. However, in 1999, the Government of India introduced Swarn Jayanti Gram Swarozgar Yojna (SJSY) to encourage self-employment in various rural areas and also develop structured and skilled SHGs.
Since then, the presence of SHGs in the nation has been growing haphazardly. The MoRD is aiming to implement DAY-NRLM and Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), in which SHGs are involved, to address the uneven condition of such unorganised growth of the SHGs and their poor performance. This created more functional and organisational constraints rather than fulfilling the objective of the peer groups in the improvement of the financial conditions of the members. However, the school-meal programme organised by the SHGs to attract rural children for better quality education have contributed not only to the educational development in rural areas but also to the nutrition of the beneficiaries.
Moreover, the mentioned rural development schemes (DAY-NRLM and MGNREGA) are an appreciable policy approach by the MoRD. In addition, various regulatory policies have also been framed such as the Pradhan Mantri Adarsh Gram Yojna, Rashtriya Gram Swaraj Abhiyan, and policies under the Ministry of Rural Development for the proper regulation and functioning of the SHGs. Despite being such an important tool in poverty alleviation, various academic papers and NABARD publications have been showing that SHGs have been performing poorly in the NER of India.
Though the Y.H. Malegam Committee did lead to various constructional policy revolutions in the functioning of the banking institution, such as the Microfinance Institutions (MFIs) for proper regulation functioning and also to address the vast marginalised community. However, the SHGs have been targeted for bias in the selection of borrowers to access loans from financial institutions. Some of these issues have raised concern about the corruption structure of the functioning of the group.
Some stylized facts of SHGs Role:
· SHGs' role in employment and income generation:
It plays an important role in building a community through its collective goals and financial assistance to the marginalized class and the women for various business opportunities or to uplift businesses. Therefore, encouraging (self) employment and income generation.
· SHGs as a catalyst in financial inclusion:
Since due to the inability of the regulations or procedural complexity of institutional banks or financial institutions in the rural areas, there has been an inadequate outreach of the financial institutions and the poor network community due to infrastructural constraints or the drawback for sustainability of banks (documented in various studies) has led to the exclusion of the population of Rural India and the Tribal regions from the financial services and facilities. Therefore, creating a vacuum for predatory informal credit lenders to prey upon the marginalized section of the state.
Though the presence of SHGs in society has contributed a lot to the development in the past decades, it has also encouraged the development of social integrity in Indian society, especially amongst women who are being targeted by various social discriminations. Moreover, various reports documented that in the initial stage of the financial assistance from SHGs helped the borrowers and its members to improve their standard of living by encouraging education, health, and nutritious dietary needs of the consumer. SHGs have not only been a key instrument in rural poverty alleviation but also have been a tool in the empowerment of women by boosting their confidence in various decision-making affairs at both the household and community level.
However, despite the initial success of SHGs, there exist various loopholes (such as; corruption, predatory, bias) in the very functioning of the SHGs. As it has been reported in some studies, the members are not from the poorest families. Moreover, various SHGs charge high-interest rates to borrowers, thus burdening the already burdened marginalized section. The lack of qualified and skilled personnel running the SHGs has paced the downfall of the groups in many rural regions in India.
Self-Help Groups (SHGs) in North East India: Commentary View:
In order to address the holistic empowerment of the standard of living, healthcare, and education, various programmes and campaigns have been carried out in the NER of India. To name a few is the Himalayan Self-Help Group (2015) and the far-flung hamlet of Bordumsa under the theme “Self-sufficiency and Independence” in Arunachal Pradesh. Moreover, the demographic constraints have been raised in various existing literatures and reports, in the lack of outreach of the SHGs in North East India. Therefore, a more infrastructural approach has been suggested by policymakers to combat the lack of outreach in the region. However, various reports and documents explicitly state poor savings-amount linkage with banks in North East India. Thus, from a policy suggestion view, a regulatory body (to increase the outreach of SHGs) and formation of an independent body to look at the regulation and functioning of SHGs in rural and tribal regions should be framed and also promote bank linkages with SHGs.
(The writer is a columnist and independent researcher in Economics, with a special focus on financial institutions, labour market, and political economy.All views and opinions are his own.)
