Embed Size (px)
Citation preview
1
Spread of Self Help Group (SHG) movement in Haryana (An Indian State):
Review of developments and way forward1
Abstract
The SHGs have proved to be very successful instrument of economic development,
women empowerment and social change in the southern states of India over the
last two and half decades. The SHG movement has connected millions of poor
people, especially women, to the financial and banking services and more
importantly created healthy financial habits like savings, inter-lending, loaning
besides unleashing entrepreneurial talent and livelihood activities. However, the
states in the Northern part of India, especially Haryana, seem to have remained
largely untouched with this movement. This paper shows that relatively lower
poverty in the state cannot be the main reason for the poor take-off of this
movement. Analyzing the survey results conducted in four select districts of
Haryana, the paper throws light on unique socio-economic dynamics prevailing in
the state which mostly restricts the SHG movement in the state. Based on the
survey findings, it is concluded that the SHG movement in the state is trapped in
vicious circle of traditional societal structure, poor execution of SHG programmes
by different agencies and lack of alternative economic enterprises and activities in
rural economy for disadvantaged group. These conditions lead to creating an
1 This paper has been written by Shri Naveen Kumar, Assistant Adviser while working in Chandigarh
Regional Office, Department of Economic and Policy Research (DEPR), Reserve Bank of India. Shri
Yogesh Jindal who was working as an Executive Intern in DEPR, Chandigarh Regional Office provided
enabling support during conduct of the primary survey. The author is grateful to all the SHG members
and other stakeholders whom he met during the primary survey and conduct of the study. The views
expressed in the paper are those of the authors and not of the institution to which they belong.
2
acute problem of non-scalability and spread of few successful SHGs across state.
Building on the accumulated experience and consultation with SHG members and
survey findings, the paper suggest way forward for the SHG movement in the state.
JEL Classification: I 138, G 21
Key words: poverty, micro finance institutions
3
Spread of Self Help Group (SHG) movement in Haryana (An Indian State):
Review of developments and way forward
I. Introduction
The progress of SHGs in last two decades has been remarkable, thus, becoming an
inseparable part of the developmental infrastructure, embodying massive social capital of
social mobilization and empowerment of women. With the rapid spread of SHGs over
time, the innovations associated with them have also flourished. Essentially, Self Help
Groups (SHGs), everywhere, act as tiny savings and loan cooperatives providing
economic means to poor people to engage in productive activities and inculcation of
saving habits. The success of SHGs has attracted widespread attention of policy makers
for attaining multiple objectives like poverty reduction, women empowerment, social
upliftment, financial inclusion, entrepreneurial development, reducing inequality, etc.
The SHG movement in India took shape in the 1980s as several NGOs experimented with
social mobilization and organization of the rural poor into groups for self-help. But, the
biggest thrust to the SHG movement in India was provided by National Bank for
Agriculture and Rural Development (NABARD) SHG-Bank Linkage Programme (SBLP)
under the aegis of Swarnajayanti Gram Swarojgar Yojana (SGSY) - a centrally
Sponsored Programme in 1990s . This programme over time has become the largest
programme in the world providing financial services to the poor people. The reason for
the success of this programme was the role of SHGs in financial inclusion/
mainstreaming of poor families as well as a development model with wider application.
It is interesting to look back at the SBLP in 1992-93 when only 255 SHGs were financed.
The major breakthrough happened in 2001 when this number crossed one lakh figure
showing scalability of the novel idea. It had recorded explosive average annual growth of
155 per cent till then (Chart 1). By then, the policy makers across board had recognized
the importance of SHGs as channel of development and emancipation from poverty.
4
0200400600800
100012001400
Th
ou
san
d
Year
Chart 1: Phase of growth of Bank financed SHG sector in India
No of SHGs financed by Banks
A. Low base but explosive
average annual growth of 155%
B. Mature stage growing at average annual
growth of 41 %
C. Stagnation/decline
Unfortunately, the success of this programme has been regionally skewed. In North India,
the SHG movement has failed to take-off. Haryana remained almost untouched with the
impact of mainstream microfinance movement. However, given the positive externalities
of SHG movement in emancipation of women and poor from the clutches of poverty and
bring empowerment, it becomes imperative to establish the movement in Haryana in the
right earnest. This would call for a probe into the reasons which have led to the failure of
the SHG movement in Haryana and also learn from few success SHGs. The present paper
attempts to analyze the ground realities through evidence collected during interactions
with SHG members and other stakeholders in a holistic manner.
5
Section II: Objective and Structure of the Study
Objective: The objective is to find reasons for the failure of the SHG movement in
Haryana through primary survey and confront the myth that lower poverty is the main
reason for failure of SHG movement in Haryana. In light of experience gained over years
of operation of SHGs in Haryana, the paper also suggest a way forward.
Structure: After brief Introduction and delineating study objective the paper is structured
into following sections. Methodology adopted for conduct of the study is discussed in
Section III. In the Section IV relevant literature is discussed. The Section V discusses
reason for failure of SHG movement in the State. Section VI discusses SHG movement
in Haryana through various programmes. In the Section VII Survey results are discussed.
Overall Assessment of SHG movement in Haryana is presented in Section VIII. Section
IX gives policy recommendations and way forward. Section X gives the conclusion.
6
Section III: Methodology
The paper has relied on conducting primary survey and interview methodology to gain
insight into the working of SHGs in Haryana, their reason for the failure, lessons from
successful ones and their views on ways to make the movement a success in future. For
this purpose, two districts each representing relatively both success and failure of SHGs
in Haryana, in terms of SHGs per population of district were chosen. Attempt was made
to visit different types of SHGs from diverse institutional support background like
National Rural Livelihoods Mission (NRLM), Swarnajayanti Gram Swarojgar Yojana
(SGSY), NABARD, etc. Altogether, author compiled response to questionnaire from 80
SHG members representing 29 SHGs from nineteen villages, with size ranging from 800
populations to ten thousand populations. The four districts surveyed were Ambala,
Faridabad, Mewat and Sonipat, with 20 SHGs members from each of them being
interviewed. Comments were also solicited from them regarding wide range of issues
ranging to rural economy, constraints to growth of SHGs and steps required for success
of SHG movement in Haryana. The survey was conducted during 2014-15.
7
Section IV: Literature Survey
There is vast literature existing conferring the virtues of Microfinance and the various
feasible models of operation and delivery. The literature also discusses the impacts of a
variety of microfinance interventions in different countries. Among different theories,
some follow the traditional narrative of modeling credit that enables entrepreneurship,
investment and growth. Ahlin and Jiang (2008) modeled Micro-credit as a pure
improvement in the credit market that opens up self-employment options to some agents
who otherwise could only work for wages or subsist. Recently, Greaney, Kaboski and
Leemput (2013) examined a cost-reducing innovation to the delivery of “Self-Help
Group” microfinance services and showed that membership fees could actually improve
performance without sacrificing membership, simply by mitigating an adverse selection
problem.
In this regard, comment “Many successful organizations working with the poorest of the
poor to try to get them to put aside some money as savings, no matter how little, before
giving them loans. Some of our self-help groups (SHGs) work on this principle (Rajan
2014)” summarizes the basic mechanics of SHGs in India. Not only does the savings
habit, once inculcated, allow the customer to handle the burden of repayment better, it
may also lead to better credit allocation. With the power of information technology,
perhaps the analysis of the savings and payment patterns of a client can indicate which
one of them is ready to use credit well. The groups in effect act as financial
intermediaries or ‘mini banks’ with the members both as owners and users (Ajay tankha,
2012).
Further, in the recent World Bank policy research paper titled ‘Localising Development:
Does Participation Work?’, Mansuri and Rao (2013) describes the virtues of
microfinance programme being that it mobilize groups of individuals to collectively
enforce the repayment schedule of every member, in an attempt to resolve coordination
8
problems and asymmetries in information on the creditworthiness of individuals, which
prevent banks and other large credit suppliers from servicing such communities.
Given, the fast growth of SHGs in recent time, the literature has taken cognizance with
many papers focusing specifically on SHGs. Self-help groups have also been mobilized
to help expand livelihood opportunities more generally—by providing training in
handicrafts and agricultural techniques, for example, and assisting in small-scale
entrepreneurial and other activities. The group provides peer education, technical and
moral support, using the power of networks to diffuse information and knowledge.
Unlike similar experiments in other developing countries, the SHG-BLP laid emphasis on
regular savings by the members with the savings corpus being used to lend among them-
selves and as needs arise, later by linking the groups with banks for availing credit
(NABARD, 2013).
The SHG movement in rural Haryana is at early stages and taking many shapes as
different agencies promote micro-finance with a variety of approaches and strategies
(Batra, 2012). At present there is no adequate and complete database on SHGs in the
State as the information is scattered around with different departments and institution.
Among all micro-finance programmes, SGSY is leading with highest numbers of SHGs
and loan amount and also it has special focus on BPL families. The results of the micro-
finance programme of Mewat Development Agency are also very encouraging. There are
smaller numbers of community-based organizations in the state and small NGOs are in
the field but with certain limitations. Given the positive impact of micro-finance on
women, as claimed worldwide, certain innovative practices should be adopted to
streamline the SHG movement in the state.
9
Section V: Does lower poverty explains the failure of SHG movement in Haryana?
The strongest argument put forward to explain the failure of SHG movement in Haryana
has been that lower incidence of poverty in the state does not necessitates any
requirement of SHGs in the state. It is argued that there is no need for SHGs in Haryana
as people are already well off. Thus, there is no scope for SHGs to grow in the state as
the developmental need of the most people have been taken care-off. However, when a
national comparison is made (Table 1) in terms of incidence of poverty, it is seen that
some of the states having lower incidence of poverty than Haryana have considerably
better penetration of SHGs. It is observed that the least poor state (among major states) is
having highest penetration of SHGs followed by states like AP and TN. Exceptions to
the trend are Northern states of Haryana, Punjab and J&K having low poverty co-existing
with low penetration of SHGs. It appears strange that while the southern states witnessed
poverty reduction along with strong SHG movement, similar phenomenon in Haryana,
Punjab and J&K is absent.
Table 1: SHGs penetration and Poverty
Poverty (%) 2011-12
No of SHGs per Lakh person
(March 2013)
Kerala 7.1 1740.2
Himachal Pradesh 8.1 775.6
Sikkim 8.2 578.0
Punjab 8.3 126.4
Andhra Pradesh 9.2 1684.1
Jammu & Kashmir 10.4 46.2
Haryana 11.2 168.0
Uttarakhand 11.3 399.7
Tamil Nadu 11.3 1210.0
10
Meghalaya 11.9 322.7
Tripura 14.1 284.1
Rajasthan 14.7 338.1
West Bengal 20.0 762.0
Sources: Calculated by author from Planning Commission and Nabard)
Haryana was languishing with high poverty in 1970-1990s. Thus, poverty was acute in
Haryana during the period when the SHGs were making inroads in southern part of
country. It is only in recent times that the poverty in Haryana has responded to rise in
income though with lagged impact (Chart 2). During 2004-05 the percentage of poverty
was as high as 24.1 in state while that for All India was 37.1 per cent. Subsequently,
consistent growth in per capita income since 1998-99 has turned around the poverty
scenario. The lagged impact of the growth has been phenomenal in the state. According
to latest estimates of planning commission, Haryana poverty line is half than All India.
However, it is felt that the state has missed an opportunity of more inclusive,
participative and inclusive growth with SHGs missing from the mainstream development
discourse in Haryana. All this has relevance for Haryana as the marginalized section of
society can be extended developmental benefits through SHGs in sustainable and
participative manner. In-fact, the SHGs can play a very pivotal role in elimination of
poverty in Haryana in coming years.
11
Scatter graph of SHG per lakh persons and poverty ratio (Chart 3), shows a relationship
between SHG penetration and poverty reduction. The equation in the chart shows
negative coefficient of dependent variable that is SHG penetration. Thus, higher SHG
penetration according to the relationship would coexist with lower poverty level. The
enhanced penetration of SHGs facilitates percolation of benefits of development and also
leads to process of inclusive and participative growth. In Haryana the reduction of
residual poverty (i.e. left out poor people from mainstream growth process) would
require a dominant role of SHG institution as it is very difficult to reduce last deciles of
poverty only through economic development.
y = 0.2827x
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
19
83
-84
19
84
-85
19
85
-86
19
86
-87
19
87
-88
19
88
-89
19
89
-90
19
90
-91
19
91
-92
19
92
-93
19
93
-94
19
94
-95
19
95
-96
19
96
-97
19
97
-98
19
98
-99
19
99
-00
20
00
-01
20
01
-02
20
02
-03
20
03
-04
20
04
-05
20
05
-06
20
06
-07
20
07
-08
20
08
-09
20
09
-10
20
10
-11
20
11
-12
SGD
P G
row
th %
Chart 2: Lagged impact of rise in per capita income in Haryana on Poverty
A. Rise in Poverty by 3.7 % AAGR 3.4
B. Decline in Poverty by 0.95 % AAGR 4.3
C. Deciline in Poverty by 4.0 % AAGR 7.7
D. Impact of lagged of Growth with poverty declining by 8.94 %
12
WB
Uta
UP
TN
Raj
Punjab
OdiMP
Mah
Ker
Kar
Jha
JKHP
Har
Guj
Cht
BihAs
AP
y = -0.0053x + 23.445
0
5
10
15
20
25
30
35
40
45
0 500 1000 1500 2000
Po
ve
rt R
ati
o (
%)
20
11
-12
SHG penetration per lakh (2011)
Chart 3: Relationship between povert and SHGs penetration (major states)
Linear (Series1)
13
Section VI: SHG movement in Haryana
In Haryana, Self Help Groups has been promoted under different programme/projects by
various departments and agencies (Figure 1). The Women and Child Development
Department has promoted SHGs under the Programme for Advancement of Gender
Equity (PAGE) and Swayamsiddha. Women’s Awareness & Management Academy
(WAMA) has promoted the Swashakti project while the Forest Department has been
promoting SHGs under the Haryana Community Forest Project (HCFP) and Integrated
Natural Resource Management and Poverty Reduction. Banks are promoting SHGs under
NABARD’s SHGs-Bank linkage Programme; District Rural Development Agencies
(DRDA) is promoting SHGs under Swarnjayanti Gram Swarozgar Yojana (now NRLM)
and Mewat Development Agency (MDA) is promoting SHGs under the International
Fund for Agricultural Development (IFAD) programme in Mewat district. Besides
government departments, agencies and banks, some international, national and regional
NGOs are also involved in this work. The Ministry of Rural Development, GOI has
launched the National Rural Livelihood Mission (NRLM) as a flagship rural development
program. The objective of this Mission is to eliminate rural poverty through innovative
social mobilization, financial and economic inclusion strategies. The NRLM
implementation framework draws on the lessons from successful implementation of rural
livelihoods project in Andhra Pradesh, Bihar and Kerala.
The Government of Haryana has set up an autonomous society i.e. Haryana State Rural
Livelihood Society (HSRLM), under the aegis of Rural Development Department,
registered under the Societies Registration Act,1860 This Society is responsible for
implementing mission across the state. Though, the paper has focused on bank linked
SHGs, the importance and contribution of other channels of SHG movement on
development and empowerment of poor people cannot be ignored.
It may be noted that most dominant mode of SHGs in state has been through SGSY. The
NABARD has not been successful in galvanizing the movement in the desired manner.
14
Figure 1: SHG movement in Haryana
Source: Adapted from Vikas Batra (2012).
SHG
Movement
in Haryana
IWEDP-
July
1994
PAGE-
2003 SWAYAMS
IDDHA- 2001
SWA-
SHAKTI
Project
Project
Conversion
of Mahila
Mandals into SHGs
HARYANA COMMUNITY
FORESTRY PROJECT (HCFP)-
1999
MICRO-CREDIT
scheme of HWDC-
2008
NABARD/
SBLP
SGSY/ NRLM
Integrated Natural
Resource Management and Poverty Reduction-
2004
Mainstream SHGs
based Programme
State Level Initiatives and
Programmes based on
SHGs
15
Section VII: Analysis of survey results:
a. Benefits/Success of SHG movement in Haryana: Some evidence from survey
1. Favorable demographic attributes: It is found in the survey that approximately
90 per cent of the members were literate, though, mostly at primary level. Majority of
the members of SHGs were women (89 per cent). Most of the SHGs members were in
their thirties. Thus, it is revealed that the women members were mostly literate, could
understand the working of SHG’s operations and were relatively younger. This gives the
SHG movement in Haryana the required vigor, strength and hope for success in future,
provided the observed lacunas are appropriately addressed.
2. Role of office bearer: The office bearers and members were consulted based on
their experience with SHGs (Chart 4). During the interaction, it was noticed that the
office bearers, especially, presidents of the SHGs were playing the role of leaders against
the norms of conservative society.
55.6
7.4
14.8
22.2
Chart 4: Office bearer
President
Secretary
Treasurer
Member
16
3. Significance of Inter-lending-borrowing within group: Almost sixty per cent of
the SHGs were charging 2 per cent interest rate per month (PM) on inter-borrowing while
the rest forty per cent were charging only one per cent interest rate PM. What is
reassuring is the fact that more than eighty per cent of the members were able to repay
the SHGs loans regularly. However, only one third of the members found the loan to be
sufficient to their requirements. In the survey it is found that the money lenders are
charging exorbitant interest charges ranging from 3 per cent to 5 per cent per month
(Chart 5). Few respondents have reported even much higher interest in case of urgent
need of funds.
The above finding is interesting and also matches with the finding of report of Committee
on Comprehensive Financial Services for Small Businesses and Low Income
Households, RBI (Nachiket Mor committee) for India (Table 2). There may be many
alternatives to credit in urban segment, but in the rural markets moneylenders are
dominating charging exorbitant rates. In fact, the spread to risk free rate of the money
lenders is as high as 55.75 per cent which is 55 times higher than home loan borrower
and seven times higher than what SHG borrower pays.
0
10
20
30
40
50
1
2
3
3%
4%
5%
23.8
42.9
33.3
Per
cen
t
Chart 5: Interest rate charged by Moneylenders
17
Table 2: Comparison of Alternative loan markets
Customer Class Expected Loss Rate*
Interest Rate (per annum)
Adjusted Interest Rate net of expected loss
Spread to Risk Free Rate**
Personal Loan Borrower 5.80% 18.00% 12.20% 3.35%
SHG Borrower 7.08% 24.00% 16.92% 8.07%
JLG Borrower 0.40% 26.00% 25.60% 16.75%
Money Lender Borrower 0.40% 65.00% 64.60% 55.75%
Home Loan Borrower 0.43% 10.30% 9.87% 1.02%
Note:* Observed default rate, ** Return on 365 day T-Bills, as on December 16, 2013 is 8.85%. Source: Committee on Comprehensive Financial Services for Small Businesses and Low Income Households, RBI.
The operations of SHGs provide competition in the rural credit market, but in a very
limited manner, benefitting mainly SHG members (Figure 2). It is seen that the open
credit market settles at very high interest rate of 5 per cent per month in rural economy of
Haryana. This is mainly on account of financial exclusion i.e. inadequate operation of
banks branches, lack of collaterals, lack of comptetion in rural credit market, financial
ignorance and inadequate and improper legislation related to money lending.
Credit
Figure 2: Working of Informal and SHG credit system
10-12 SHG members
are served
2%
5%
by
mon
elen
ders
SHG-Inter-
lending
Informal credit
market
Interest
Rate
18
The survey reveals that Sixty per cent of the villages of the SHG members were
financially excluded. Only eight per cent of the villages had ATM facility. Almost 64 per
cent of banks linked loan of SHG members were from Public Sector Banks and rest from
Regional Rural Banks. In the survey it was found that the members of SHG are now
predominantly relying on their own group in case of urgent need of funds (Chart 6).
1. The functioning of SHGs has many benefits. Mainly, it gives freedom to members from
clutches of money lenders (Figure 3). The components of working of SHG process have
all encompassing impact on poverty reduction. The saving habit generates capital for
future economic activities which provides income and thus freedom from poverty. This
also leads to freedom from moneylenders who otherwise charge exorbitant interest rate
subjecting the members into a vicious circle of debt, interest, repayment and poverty. The
process of formation of SHGs bring women open in society and emancipates them from
traditional bondages. The common economic activities, regular meetings, democratic
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
Money Lender
Others
Relative
Bank
SHG
3.3
3.3
13.3
16.7
63.3
Chart 6: Preferenece choice during urgent need for fund
19
decision of inter borrowings and exposure to banking services creates a virtuous cycle of
women empowerment, freedom from money-lenders and ultimately removal of poverty.
Financial inclusion of excluded segments through SHG has potential of deepening reach
of monetary policy signals more effectively to hitherto untouched segments and will get
further mainstreamed in due course.
Stages
Wom
en Empowerm
ent
Freedom from
money-lenders
Constraints
Patriarch
Society Inadequate Loaning
from banks
Attitude of bank
employees Lack of Financial
Awareness
Working/benefits of SHGs
Inculcation of saving habit
Inter-lending among SHGs
Access to banking services
Regular meeting with democratic
participation
Lack of Economic opportunities
Removal of Poverty
Figure 3: Working of SHGs in Haryana: Benefits and Constraints
In Haryana, the SHG movement, in a very limited manner, has created many positive
externalities in terms of women empowerment, freedom from money lenders, opening
entrepreneurship avenues to enterprising women, impacting poverty, financial awareness,
more access to banking facilities, awareness about democratic institution, group
bargaining power, increased self confidence and dignity of SHG members, social change,
etc. The success in terms of number of groups may be dismal but generation of right sprit
20
of successful partnership by few successful SHGs have generated the confidence that
with appropriate support structure and right incentive the movement can be scaled up
further.
b. Reasons for failure of the SHG movement: Some reflections on survey results
1. One of the indicators of the fact that the SHG movement is in the nascent stage of
development is reflected by the finding of the survey that the average age of SHGs were
around three years only, though, the sample was quite varied with SHGs ranging from
newly formed to as old as ten years.
2. During the interactions with various stakeholders of the SHG movement, among the
common reasons lack of social cohesion and individualistic tendencies were the main
factors leading to the failure of the movement. Utilization of loan was mostly for dairying
activities and debt repayment (Chart 7). Twenty per cent of the SHGs have used the
inter-borrowing facilities for repayment shows that there is not much awareness about the
Bank’s schemes of Debt swap scheme.
21
The patriarchal nature of society is quite rigid and dominant in Haryana which is
significantly impacting the social behavior of women members, thus, creating limits to
the percolation and spread of SHG movement. Also, it need to be noted that women
members have the tendencies to be divided on the caste lines, thus making the group
dynamics prone to local political factors. There has been no progressive political
movement in Haryana which has taken the cause of SHGs. Almost everywhere it was
observed that people would prefer for individual enterprise rather than any group activity
as the non-cooperating psyche is well ingrained in their mind.
3. The role of social status in success of few SHGs: It is noticed that some of the women
SHGs belonging to middle/higher caste were able to organize economic ventures
successfully. One reason was that they are non-SGSY groups formed on the basis of
efficiency and not subsidy. However, they were not supported by their spouses at any
47.4
21.1
10.5 10.5
5.3 5.3
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Dairy Debt repayment Shops Consumption need
House construction
Other economi activity
Chart 7: Utilisation of loan
22
stage. This process of SHG running and common activities has led to women
empowerment. One case in particular can be recalled from village Baktua in Ambala
District. The Baktua Mahila Samiti is linked to forest department of Haryana. The group
is engaged in business of producing and selling bio-fertilizers. The group is doing this
job profitably apart from also engaging in making traditional handicraft items. They
want to scale up but is not supported by linked bank branch. The members counted
synergy and exchange of experience as most valuable strength in the group. The
constraints counted were marketing, raw material, non-display and lower margins. This
was the position of a relatively success story of an SHG belonging to better off section of
society. The main outcome of SHG was women empowerment, economic freedom and
social mobility. On the other hand, it is observed that most of the SHGs formed under
SGSY have failed (formed by SC population). All the SHG formed by DRDA pertains to
SGSY (Chart 8). Even gram sevikas are also active in forming SHGs under SGSY.
Women belonging to low social class in the state are generally very poor and lack assets.
However, the biggest asset that they lack is self confidence. This is required for
28.6
10.7
53.6
7.1
0.0
10.0
20.0
30.0
40.0
50.0
60.0
NGO Gram Savika DRDA Others
Chart 8: Agency wise formation of SHG
23
transcending the institutional and generational barriers. The society bias against women
restricts their movement. A SHG activity primarily tries to break these barriers. But
women generally ends up as failure as a lack of handholding and poor societal attitude.
4. Almost 78 per cent of the members belong to Below Poverty Level (BPL) status. Almost
85 per cent of SHGs were general in nature and only 15 per cent were doing common
economic activities. Among surveyed SHGs only 48 per cent were found to be active i.e.
holding timely meeting, accepting savings and providing credit, rests were either dormant
or disbanded (Chart 9). The majority of SHGs were opened without specific objective of
undertaking group economic activities.
48.1
33.3
18.5
Chart 9 : Current status of SHGs
Active
Dormant
Disbandened
24
5. The survey reveals that only five percent of SHGs have received formal training related
to accounts, while 63 per cent of SHGs had received some kind of training for different
economic activities. The average days of training imparted was seven days. It is felt that
the training which is being imparted is inadequate, insufficient and not useful in most of
the cases. Another important requirement for the success of SHGs are frequent meetings
of the group. During the survey, it was found that almost sixty per cent of SHGs were
meeting at some intervals with fixed dates (Chart 10).
6. Saving mobilization: The survey reveals that Most of the SHGs members had started
with Rs 100 as saving amount per month and still continues with the same. However, as
seen in earlier section, per capita income in Haryana has increased rapidly and the state is
relatively prosperous. During our discussion with SHG members, we found that they
were continuing with the Rs 100 mobilization due to ignorance of the fact that they do
not require any permission to increase this amount. At all places they were explained the
benefits of higher mobilization of savings such as increased loans from banks, greater
availability of saving corpus for inter-lending and more importantly for taking higher
level of common economic activities. Almost all agreed that it can be increased easily by
3.6 10.7
39.3
42.9
3.6
Chart 10: Frequency of meeting
Weekly
Fortnightly
Monthly
Not meeting
No fixed frequency
25
50 per cent immediately and by 100 per cent in the next meeting itself. Many members
showed interest to raise the saving fund by even five times.
7. Problems with Banks: According to the survey results, delay in processing and
indifference shown by bankers were told as top two problems with banking sector (Chart
11). The SHG movement is not getting requisite support from the banking system. The
bankers are reluctant to even open accounts of SHG members. During the survey many
SHG members complained that even after meeting all the eligibility criteria, the bankers
were reluctant to open their saving bank account. When bankers opinion was sought,
many indicated the SHG members to be low valued customers, hardly bringing any
profitable business to them. The problem was widespread and the poorest of poor were
the main victims of banker’s apathy. The negative attitude of the bankers was
exemplified in one of the visit to bank branch in Mewat district. Even in the presence of
Lead District Manager (LDM) and the author, the manager ridiculed the whole policy of
financial inclusion and futility of opening bank accounts of poor SHG members. This is
reflective of the resistance that is being encountered at ground level by SHG movement.
This kind of attitude is both contagious and anemic for the success of SHG movement in
the state. While some bankers vocally express themselves, other’s act is reflected in their
non-committal attitude. At the next level, many instances were cited by SHG members
wherein the members were denied loans for years even after becoming eligible. It appears
that there is lack of effective redressal mechanism available for SHG members in case of
denial of banking services in rural part of the state. The role of bankers in nurturing the
SHGs was not found positive, except some RRB branches which were actively involved
with SHG members.
26
8. How much time can SHG members devote to economic activities? This question has
thrown interesting response. Either members are very much inclined to work even for
higher hours or would be confined to work for just four hours per day (Chart 12).
Generally, entrepreneurship is missing among the SHG members. Most of them would
prefer to work under some body for fixed remuneration.
57.1
21.0
12.3 9.5
0.0 0.0
10.0
20.0
30.0
40.0
50.0
60.0
Delay Indifference Loan problem Subsidy disbursement
Corruption
Chart 11: Common problem with Banks
27
9. SHG and Financial Awareness: No members were having ATM/Credit Card/Debit
card/Kisan card /GCC card. Fifty six per cent of the member showed willingness for
ATM cards. Only 46 per cent of the interviewed women could be categorized as
financially aware because of their restricted exposure and knowledge.
c. Summary of Survey results:
The survey reveals the multifarious reasons which explains the failure of SHG movement
in Haryana viz., lack of social cooperation, individualistic tendencies, concentration on
dairying at the cost of group activity, patriarchal nature of society, discrimination of
women reflected in adverse sex ratio, caste differences, faulty implementation of
programmes, lack of appropriate trainings, stagnant saving mobilization, non-cooperation
of banks, lack of financial knowledge, inadequate grievance redressal forums, lack of
entrepreneurial experience, lack of political initiative, etc., which have led to failure of
SHG movement in Haryana. On the positive side, the future of the movement looks
0
5
10
15
20
25
30
35
40
45
50
4 Hrs
6 Hrs
8 Hrs
10 Hrs
32.4
2.7
2.7
45.9 P
er
cen
t
Chart 12: Choice of working hours
28
bright as revealed from the favourable demographic indicators of SHG members. The
most significant impact of the extant SHGs has been the women empowerment, freedom
from money lenders and impact on poverty, though at limited scale.
29
Section VIII: Overall Assessment of SHG movement in Haryana
1. During the interactions with members of SHGs in four different districts, it was felt that
sensitive support structure in the state was missing. Even the active SHGs were not able
to get the required information and support services to scale up their activities. The
continuous nurturing support that a poor SHG member needs was mostly missing.
2. One of the factors responsible for the failure of SHG movement in Haryana was the ad-
hoc approach adopted by various agencies involved viz., NGOs, State Government,
banks, NABARD, etc. There was absence of backward/forward linkages and of
ownership as the Self Help Groups were left to fend for themselves once formed. There
were hardly any economic activities undertaken, most of the SHGs were not provided
bank loans, few could get meager amount. Even few of the successful SHGs faced
problems in marketing the produce. There was lack of guidance/help from any quarters.
The entire movement has suffered due to the bureaucratic approach of achieving targets
without any tangible, worthwhile outcome and the poor remain at the mercy of
moneylenders for financial need. Respective agencies need to assume the complete
ownership of the SHGs in their area of operation and address the problems listed above.
3. The progress of SHGs, especially in SGSY was being measured in terms of number of
group formed, number of people covered and amount of credit disbursed- not in terms of
income accruing from various activities. There was specific pressure put on the
administration to achieve group targets within a limited time frame. Over the years, the
emphasis on achievements of quantitative targets has resulted in wrong selection of the
projects, poor quality group formation without real assessment of entrepreneurial
potential, under-financing and instances of willful defaulting.
4. NABARD seems to have failed in giving the required push and direction to SHG
movement in state.
30
5. There was no trend of SHGs coming together and forming federation at village or block
level.
6. The programme-implementing agencies in the state especially, District Rural
Development Agency (DRDA) and Integrated Child Development Services (ICDS) were
facing problems in effective implementation due to being overburdened with other
responsibilities and inadequate manpower. These agencies also faced problems such as
lack of staff trained on income generation, financial literacy and other social issues.
7. Lack of handholding support has led to failure of some SHGs and sustenance of vicious
circle of poverty. An external dedicated, sensitive support structure was missing in most
of the cases with the members relying on mutual support. However, expanding capacities
and skills requires initial handholding at-least in formative stage.
31
Section IX: Policy Recommendations and Way Forward
It should be recognized that poor have innate capabilities and a strong desire to come out
of poverty for any meaningful intervention. They are entrepreneurial, an essential coping
mechanism to survive under conditions of poverty. The challenge is to unleash their
capabilities to generate meaningful livelihoods and enable them to come out of poverty.
The experience gained during the conduct of the survey has been used to suggest a way
out for SHG movement in Haryana. The primary building blocks of these
recommendations have been SHG member’s suggestions A cross section of the
stakeholders in SHG movement have also shared their experiences. It may be noted that
Haryanvi’s are very hard working people who just need right environment to show their
entrepreneurial potential. The SHG movement can channelize their latent energies. The
implementation of the following recommendation will provide a new direction to the
SHG movement in the state.
1. It would not be out of context to look into following aspects of shortcomings of NRLM
which is also being implemented in Haryana: (1) The NRLM design perhaps looks at the
rural economy as one whereas in reality, many segments exist within rural low income
people as well as across the broader rural economy spectrum. Therefore, it would become
crucial to ensure that a range of bundled services (as envisaged) are provided in
accordance with the needs of the different segments. (2) The whole concept of NRLM,
which is SHG focused, should in reality be driven by critical sub-sectors, associated
value chains and related livelihoods including MSMEs. In other words, it should use
these as focal points and address the practical challenges emanating from a detailed
analysis of the concerned sub-sectors/value chains/livelihoods to address the vulnerability
and risks faced by rural producers. (3) The strategy of NRLM is too broad and sweeping.
Rather than attempting to do a whole lot of things across the board, it may be better if the
NRLM learns from its past avataar's such as the Integrated Rural Development
Programme (IRDP) or Shahari Jan Sahabhagi Yojana (SJSY) previous mistakes and
32
focuses on areas that could impact livelihoods of large number of rural livelihoods so as
to generate quick wins for the program as well as get the initial thrust and momentum –
so critical for medium and long term success.
2. There is a need for micro-level planning to identify key livelihood activities. In order to
identify appropriate livelihood opportunities, a Task Force should be set up at the local
level by including all concerned, NGOs and the private sector. Village potential mapping
with a sub-sectoral analysis would play a substantial role in the development of income
generation activities. In order to have a knowledge base about the availability of
resources, panchayat-level surveys can also be conducted under the auspices of local
authorities. To make them operational, the cluster-based local development approaches
should be adopted.
3. All the procedures involving any government agency/banks/financial institutions with
SHGs should be simplified to extent possible and made hassle free.There is need to adopt
state specific approach for formation, grooming, nurturing, training and skill
development and handholding support system and infrastructure as the state has unique
socio-economic conditions. Blindly following the successful models of other states or
countries is not expected to give the desired results.
4. Initiating SHGs into economic activities: One of the major failures of the current SHGs
has been their inability to engage the group into common economic activities. It is felt
that some professional bodies may be engaged in initiating the SHGs into economic
activities by guiding SHGs appropriately from production to marketing and finally to
repayment of loans.
5. SHG federations: Although, the NRLM also talks about need for SHG federation, it is
felt that the scope of federation should be vast to cater the need of non-NRLM groups
also. The federation should not discriminate between SHGs and should include all types
of SHGs.
33
6. Marketing Solution: One of the common problems being faced by the SHGs is the
marketing of product to right segment at right price. Mostly, the intermediaries are
involved in final sale of product. The major chunk of the profit is pocketed by the
intermediaries. Thus, even though the product may be commanding high price in market,
lack of marketing avenues leads to lower realization of prices and lower profits and also
unsold inventories. Most of these products don’t have market in village itself and are
mostly tailored for urban market.
It is suggested that State level federation should brand the product of all SHGs under
common state brand name ensuring uniformity and quality of product across all SHGs.
Branding all the products through common hologram under common umbrella would
lead to credibility and acceptability of SHG products in the market. It is also suggested
that state level federation should launch Business to Consumer web site by tying up with
payment gateway. The state government can provide sale counter to SHG federation at
all tourist places in the state. The government can also provide space in shopping malls to
SHG federation at subsidized rates. The spaces in shopping malls are perfect place for
promoting SHG products. The federations at various levels can coordinate to operate the
sale counters under guidance of the Apex federation. The state level federation can even
hire marketing professional to cement tie up in the market and also building supply chain
integration with retailers and malls.
7. SHG leaders as Business correspondent: It is suggested that leaders from SHGs having
good track record in various steps in formation, nurturing and maturity of SHGs should
be preferred as Business correspondents in their villages. The proven leadership qualities
of the SHG leaders can be of great help in facilitating BC business across all section of
villagers.
8. Visits to successful SHGs: In order to encourage learning and sharing of experience
among SHGs, the visits of not so successful SHGs should be organized to relatively
34
successful SHG across state. This would facilitate practical learning and realistic
assessment of opportunities existing at the ground level. It will also help in spread of
positive impact of ‘demonstration impact’ of successful SHGs.
9. Identification of resource people and networking: During the visit to the different
SHGs, it became evident that many SHG members have acquired important skills and
experience required for successful operation of SHG. These members should be given
specialized assignment of guiding startup SHGs in nurturing and scaling up. Federation
should prepare a data base of such resource people and facilitate proper networking
across SHGs.
10. Agro-processing and SHGs: During the survey, it was observed that few SHGs were
involved in agro-processing though non-professional manner and at very local level. The
agro-processing industry has vast scope in the state given the fact that it has ready-made
market as thirty per cent of state fall in NCR region and have adequate supply of raw
material. The labour cost of SHG members is quite cheaper as compared to those
prevailing in the market. Thus, it is a win-win proposition for SHGs. However, major
breakthrough can be achieved only if right technological solution of packaging and
marketing is available at the door step of SHG members. In this regard, it is suggested
that the federation should take help of professionals in guiding the prospective and
existing entrepreneurs among SHGs.
11. Dairying in Haryana and SHGs: After agriculture, animal husbandry is an important
sector to supplement the income of rural masses in the State. It has been observed during
the survey that almost half of the loans taken by SHG members have been utilized for
dairying activities. However, no common dairy farm of any SHG group was observed
during the survey. This fact should compel policy makers to reprioritize and make
appropriate strategy according to unique socio-cultural ethos of the state. There is
pressing need for Milk federation in the states. The dairying activities supplements
35
income and some time is the only available employment opportunity. However, mostly
the dairying activities of the SHG members are done on unscientific and traditional
manner leading unproductive practices and waste of potential. It is suggested that
specialized SHGs should be formed taking dairying activities as common group
activities. There should be more incentives in terms of compulsory training in relevant
institute for learning scientific dairying and more loan amount from banks for such
activities. They should all be part of milk federation and also SHG federation for better
synergy.
12. Banking services to SHGs: The bankers need to be sensitized about the importance of
SHGs for overall development of society and role of banks in achievement of this
objective. They should also be sensitized about the good track record in terms of payment
of loan dues by SHGs and loaning to SHGs as good business decision. It was found in the
survey that SHG members were interested in ATM services. It was also desired by some
that cheque books should be issued to them. Therefore, the bankers should educate the
SHG members about operation of debit cards, cheques and encourage them to opt for the
same. In the long run ATM reach in rural areas will lead to reduction in cost for banks
provided most of the villagers have practices of using debit cards.
It should be mandated that bankers should take part in SHG meeting once every quarter
at least in the respective village under their jurisdiction. This would develop close
contacts of bank officials with SHG members and help in professionalizing the operation
of SHGs, appraisal of credit history, better liaison, dissemination of new bank loan
scheme and government programme, two way dialogue, grievance redressal, financial
literacy, accounts checkup, guidance, etc.
13. Adequate flow of Credit to SHGs: After interacting with the SHGs members it is felt
that the credit need of these poor women mostly remain unaddressed as the loan that is
offered does not take care of even essential demands. Those who have ventured in
36
economic activities could not break up due to lower scale of operations. For scalability
additional and more credit was required which was denied at the required time. It was
also found that the even the mandated credit under various programmes was not being
provided to them. Until and unless it is ensured that each and every SHGs would be
provided adequate credit both serving their individual demand and also demand of group
for economic activities, the success of SHGs in the states cannot be achieved.
14. Role of NGO: It has been observed that at many places the NGOs have played pivotal
role in formation and nurturing of SHGs. Generally SHGs and NGOs are in symbiotic
relationship. The NGOs should be adequately compensated for their consultancy services
and should be encouraged to bring entrepreneurship closer to SHG groups by placing
right incentives and enabling right connection and support structure. At some places it
was found that the NGO itself was playing the role of entrepreneur providing work to the
groups. In these types of cases there should be no discrimination in providing the
incentives and NGOs should be properly rewarded. However, bigger incentives should be
on passing on the entrepreneurial knowledge to SHG groups in long run. For imparting
training the capacity of NGOs should be properly utilized
15. Capacity Building: It is very important to have strong institutions at the community
level. To achieve this objective a structured learning and capacity building system should
exist in the state. The government with the active involvement of SHG federation should
tie up with relevant institutions like Industrial Training Institute, Rural Self Employment
Training Institutes (RSETI), etc, to impart knowledge, training and experience on
technological and financial know how for project planning, execution, appraisal,
marketing, etc for village and small scale industries. The SIDBI should open small
incubators for SHG member startups at district level. The certification should make SHG
members eligible for higher and faster loans.
37
16. Promise of Mobile Banking: It was found in the survey that the SHG members were
using mobile phones. Given the high growth of apps for smart phones and their declining
cost and also some acquaintances with them in rural part of the country in recent years, a
customized app may be developed for the use of all SHG members. This can bring
cheaper solution to many problems and integration of mobile banking and other solution
to communication and accounting and also work as seamless integration of knowledge,
technology, networking of traditional socio-economic landscape and skills. An innovative
use in future can lead to leveraging of SHG skills.
38
Section X: Conclusion
The SHG movement has connected millions of poor women to the banking services and
more importantly created healthy financial habits like savings, inter-lending, loaning and
poverty reduction. However, the states in the Northern part of India, especially Haryana,
seem to have remained untouched with this movement. The paper breaks the myth that
reason for the failure of SHG movement in Haryana is because of lower poverty and
recognizes the positive impact of per capita income which is a proxy of economic growth
on reduction in poverty.
The paper reveals the multifarious reasons which explains the failure of SHG movement
in Haryana viz., lack of social cooperation, individualistic tendencies, concentration on
dairying at the cost of group activity, patriarchal nature of society, discrimination of
women reflected in adverse sex ratio, caste differences, faulty implementation of
programmes, lack of appropriate trainings, stagnant saving mobilization, non-cooperation
of banks, lack of financial knowledge, inadequate grievance redressal forums, lack of
entrepreneurial experience, lack of political initiative, etc., which have led to failure of
SHG movement in Haryana.
In Haryana, the success in terms of number of groups may be dismal but generation of
right sprit of successful partnership by few successful SHGs have generated the
confidence that with appropriate support structure and right incentive the movement can
be scaled up further. Building on the experience gained over years and also suggestions
of stake holders including SHG members, a way forward is suggested emphasizing on the
role of sensitive support structure capable of handholding in critical stages, need for
capacity building, timely and adequate flow of credit and sensitizing banking staff to
specific need of SHGs, specialized agency for livelihood projects, innovative marketing
solutions, inter-learning from successful SHGs, etc. In the end it may be concluded that
the SHG movement has not acquired a scale where its tangible benefits could be
39
showcased. However, there is pressing need for successful movement in the state to
benefit the marginalized section of the state and bring more inclusive growth. The lessons
learn so far should be the starting point for bringing innovation in the designs and
implementation of existing and prospective SHG specific programme.
40
References
1. Ajay tankha (2012), “Banking on Self-help Groups Twenty Years On”, Sage
Publications.Annual Report (2013), Ministry of Rural Development, Government of
India.
2. Ahlin, Christian and Neville Jiang (2005), “Can Micro-credit bring development?”,
Working Paper No. 05-W19, Department of Economics, Vanderbilt University, Nshville,
July.
3. Annual Report (2013), Ministry of Rural Development, Government of India.
4. Greaney, Brian, Joseph P. Kaboski and Eva Van Leemput (2013), “Can Self-Help
Groups Really Be Self-Help?”, Working Paper Series, Research Division, Federal
Reserve Bank of St. Louis, April.
5. Financial Inclusion: Technology, Institutions and Policies (Keynote address delivered by
Dr. Raghuram Rajan, Governor, Reserve Bank of India, at the NASSCOM India
Leadership Forum in Mumbai on February 12, 2014)
6. Mansuri, Ghazala and Vijayendra Rao (2013), “Localizing development: Does
participation work?”, A World Bank Policy Research Report, The World Bank,
Washington.
7. Status of microfinance in India- 2012-13, NABARD (2013).
8. Vikas Batra (2012), “Self help group movement in rural Haryana: An analysis of trends,
patterns and schemes”, School of Management Science Varanasi, Vol. VIII, No. 2,
December.
