Self Help Group in Rural Maharashtra

A Study of the Viability of the Economic Activities

Undertaken in Kedgaon Village, Pune District

By: Dr. Amita Dharmadhikary-Yadwadkar

- Self Help Groups, Small Co-Operatives, Mostly Credit Co-Operatives. - First Used In Bangladesh By Mohammed Yunus In The Grameen Bank, - Proved Successful In Ensuring Repayment of Loans To Poor People And Meeting Their Varied And Frequent Credit Needs.

- These Small Co-Operatives Now Become A Popular Instrument World Over, In Developing Countries For Poverty Alleviation

India Too Is Making Use of These Small Co-Operatives To Meet Their Priority Sector Obligations.

SHGs Have Increased In Their Outreach Substantially And Are Doing Well At Savings, And Credit.

Currently One Million SHGs In India

- SHGs Have Ensured Good Loan Repayment (90%) From Priority Sector Lending

- Beneficiaries/Stakeholders Are Benefited As Revealed By Many Studies- Both In Terms of Monetary As Well As Non-Monetary Benefits. - Indian Government Wants To Expand The Outreach of These Co-Operatives. The 2004 Budget Says That About 5.8 Lakh SHGs Have To Be Added. - Also Wants These Co-Operatives To Graduate From Mere Credit Co-Operatives To Being Micro-Enterprises

-(Economic Times, 9th July, 2004)

- SHGs Still Not Successful In Pursuing Economic Activities The Success Rate Dwindles.

- Problem Remains of Finding Economic Activities For All These Co-Operatives Which Will Cover The Cost of Borrowing And Increase The Surplus For Their Stakeholders.

- This Paper Is Focused On The Government Scheme, The Swarnajayanti Gram Swarojgar Yojana (SGSY), Which Is Based On The Concept of SHG - We Look At Its Structure, Implementation Mechanism And Finally Its Actual Functioning.

Structure of The Scheme:

- In SGSY Scheme SHGs Are Formed With The NGO As The Catalyst And Start Saving.

- This Is Known As The Revolving Fund Stage (RF).The Monthly Contribution Ranges Between Rs 50 To Rs 100 Per Person.

- After The RF, It Is Eligible For Loan From Scheduled Commercial Bank At A Minimum Ratio of 1:1. At 9.5 To 10 % Rate of Interest.

Structure of The Scheme:

- Loan Amount Is To Be Distributed Amongst The Members As Per The Discretion of The SHG, For An Income Generating Activity.

- Monthly Repayment Installments, Decided At Monthly Meetings Range Between Rs. 300 To Rs. 500.

- Normally, Loan of Rs 2.5 Lakhs (2,50,000) Is Given To Each SHG. of This, Rs 1 Lakh Is Subsidy.

Table 1 Profile of Households In Daund Block

Type of Households Number Percentage of Total

Total Rural Households

37,157 100

Rural BPL Households 13,350 36

SC Households 2898 22

ST Households 216 2

Table 2. Self Help Groups (Small Co-operatives) And Their Stage In Daund Block

Number of SHGs

Percent to Total

Total SHG Formed 281 100

Revolving Fund Stage (RF)

69 25

SHGs extended Credit for Income Generating

Activities (IGA)- Credit

35 12

-Loans From SHG In RF Stage: 99 % of The Loans Taken By SHG Members At RF Stage Are Consumption Purpose Loans Like House Repairs, Sickness Or For Educational Expenditure

- Loans From Bank For Income Generating Activity (IGA) Only Some Women Are Clear As To Why They Want The Loan.

- They Select Activity Which They Are Familiar, Either They Are Already Engaged In It Or They Would Like To Take It Up Having Seen Some People From The Village Taking It Up.

- Traditional Vs Non-Traditional ActivityIt Was Seen That Seventy Percent of The IGA Are The Traditional Activities of Dairy And Goat Keeping.

Non-Traditional Income Generating Activities Being Undertaken Are Pottery, Tailoring, Retailing, Minor Irrigation And The Like.

Profile of Kedgaon Village.

Type of Households Number Percentage of Total

Total Rural Households 37,157 100

Rural BPL Households 13,350 36

SC Households 2898 22

ST Households 216 2

Source: Study by BOM.

Kedgaon Village - Kedgaon Is A Relatively Better Developed Village Of Daund As It Is Near Railway Line.

Table 3. Self Help Groups (BPL) in Kedgaon,

Name of SHG No. of Members Stage of SHG

Savitri bai 13 IGA

Rani Laxmi Bai 11 IGA

Kranti 11 IGA chosen not begun

Nageshwar 12 RF

Nav Nirman 13 RF

Swami Samarth 11 RF

Nivedita 11 RF

Vaishnavi 12 RF

Jijamata 11 RF

Joint Economic Activity:

- Generally It Is Expected That The SHG Take Up Any Economic Activity Jointly, As A Group. - But Women Are Clearly Against This As It May Lead To Disputes.

-Women Are Ready To Come Together For Savings And Credit From Revolving Fund But Economic Activity Is Carried Out Individually.

Joint Economic Activity:

- They Prefer An Activity Which Involves A Minimal of Training.

-In Kedgaon We Found That The Main Activities Taken Up Were Dairy, Goat Keeping And Some Non-Traditional Activities Like Pottery, Running Small Shops, Tailoring Etc.

Study of Two SHGs :

Savitribai and Rani Laxmibai Groups

Savitribai Group 1 Members Are – Literate, A Little Better off Having Some Assets, Land Or Existing Business.

They Are Successful In Their Endeavors.

Table No. 4 - Members of Savitri bai and their Activities

Sr. No Name Activity

1. Yogita Computer

2. Aruna Dairy

3. Sandhya Gaikwad Goat Keeping

4. Sunita Goat Keeping

5. Savita Goat Keeping

6. Malana Goat Keeping

7. Aasha Goat Keeping

8. Shama Sharma Grocery Shop

9. Yashodhara Khumbhar Pottery

10. Pramita Pottery

11. Nirmala Gaikwad Tailoring

12. Suman Belgar Tailoring

13. Meena Tailoring

Table No. 5 Members Of Rani Laxmibai Group

Sr. No Name Activity

1. Sheila Khumbhar Pottery

2. Alka Shinde Pottery

3. Baby Khumbhar Pottery

4. Puspha Kumbhar Pottery

5. Shobha Godale Labourer No IGA

6. Vidya Gorgal Goat Keeping

7. Kanta Bai Gorgal Goat Keeping

8. Shusha Bai Gorgal Goat Keeping

9. Punari Gorgal Dairy

10. Nanda Masaly Dairy

11. Kanchan Mashey Bangle Selling

The Monetary Gains Due To The Formation of The SHG And The Bank Loan Were Acknowledged By All. However They Were Reluctant To Put A Figure To Their Gain.

With The Scheme, Even At The RF Stage The Members Benefited By Being Able To Access Loans At A Lower Rate of 2% As Against 5 To 6 % They Were Paying Earlier To Procure Funds From Other Informal Sources.

Monetary And Non-Monetary Gains:

Monetary And Non-Monetary Gains: There Have Been Non-Monetary Benefits As Well

For The Group. Yashoda’s Husband Was A Drunkard And Did No Work And Harassed Her. They Also Gave A Lot of Mental Support To Yashoda

Initially Many Women Had Health Problems And Were Underweight. But of Late This Has Declined. According To Him This Was Because The Women Had Gained Confidence And Felt Empowered Within Their Own Families To Face Family Problems Without It Affecting Their Health.

Rani Laxmibai Group2 Members Are Not So Literate, All Are Landless Labourers Earning Rs. 30 A Day.

Table No. 6 Members of Rani Laxmibai And Their Activities

Sr. No Name Activity

1. Sheila Khumbhar Pottery

2. Alka Shinde Pottery

3. Baby Khumbhar Pottery

4. Puspha Kumbhar Pottery

5. Shobha Godale Labourer No IGA

6. Vidya Gorgal Goat Keeping

7. Kanta Bai Gorgal Goat Keeping

8. Shusha Bai Gorgal Goat Keeping

9. Punari Gorgal Dairy

10. Nanda Masaly Dairy

11. Kanchan Mashey Bangle Selling

Result In Expansion of Business And Surplus

One Member Used The Loan Due To Smoothen Working Capital Need And To Buy An Electric Machine Resulting In Increased Business.

Another Member Had The Dairy Business But After The Loan She Was Able To Buy A Good Quality Hybrid Variety of Cow Which Increased Her Milk Sales.

Prior To Taking This Loan, Members Earned Rs. 30 Per Day As Labourers. Now They Earns Much More.

Again, We Note That The Women Are Either Unable Or Unwilling To Quantify The Increase In Income.

A Unique Feature of This Group Was That None of The Members Had Any Agricultural Land And Were Illiterate.

Despite This Group Works Democratically. For Many Women This Is Even A Sort of Recreation.

Most Salient Feature of This Group’s Functioning And Proof of Its Success In Increasing The Surplus of The Members That We Witnessed Was The Demonstration Effect That It Had On Male Unemployed Youth In The Vicinity

But The Men Too Did Not Want To Undertake Any Enterprise Jointly.

Result In Expansion of Business And Surplus

Conclusions And Policy Implications:

A).Dairy And Goat Keeping Taken Up By 50% Members, Pottery By Another 25 % And Remaining 25 % of The Cases Were Assorted Non-Traditional Activities.

B). It Is Seen That The Women Pursing The Traditional Activities Have Better Economic Surplus And Success Than The Others.

C) Many A Times It Was The Men Who Were Carrying Out The Economic Activity But Availing The Loans Through Their Wives.

Conclusions And Policy Implications:

D).We Found That The Choice of The Economic Activity Was Being Made By The Women Themselves, And Not At The Behest of The NGO Or The Bank officials.

So, Unlike In DWCRA Or IRDP, The Choice of The Economic Activity Came From The Beneficiary And This In No Small Measure Is Contributing To Their Success

Conclusions And Policy Implications:

E).Members Were Quite Emphatic Against Undertaking Joint Economic Activities. They Were Ready To Forgo The Loan And The Subsidy But Were Not Willing To Take Up Any Joint Activity.

The Secretary of One SHG At The Stage of Activity Selection Did Propose Starting A Brick Kiln As A Joint Economic Activity For The Group..

Conclusions And Policy Implications:

F) Some Drawbacks Noticed Were: Many Times Economic Activity Is Not The Desired

Goal of The Members; They Join In To Avail The Subsidy And Credit To Meet Other Household Needs.

Two Cases Were Seen Where The Children Were School Dropouts And Were Now Pursuing The Economic Activity Started By Their Mothers. It Is Debatable Whether This Is A Desirable Effect Or Not.

Conclusions And Policy Implications:

I) The Present Study Indicated That This Channel Is Successful In Helping Members In Their Individual Economic Pursuits. Their Turnover Was Increased With The Help of The Credit.

We Were Unable To Quantify The Increase In Surplus Experienced By The Beneficiaries. But There Was Enough Evidence That It Did Increase The Surplus. The Demonstration Effect And Members Borrowing From The RF And Later From The Bank And Repaying The Loans In Time Is Testimony To The Success of The Economic Enterprises.

Conclusions And Policy Implications:

The Problem Is That For A Small Village Like Kedgaon Can It Absorb All 9 BPL Groups Pursuing Similar Economic Activities?

Nine BPL Groups In Kedgaon Implies Around 90-100 Members. So Many Individual Economic Activities, Become Too Many To Be Sustained In One Village.

More Groups Than Credit Available Is The New Problem.

Conclusions And Policy Implications: Incomes Can Be Increased Much More If The Loan Is Used

For A Joint Activity Rather Than An Individual Activity. Even Better, 2-3 Groups Can Pool In Their Funds And Start

A Real Micro-Enterprise Where The Members Find Employment For E.G A Papad Or Pickle Making Enterprise Or Small Garment Manufacturing Factories.

The Hurdle To This Seems The Reluctance of The Women To Undertake Joint Economic Activities. This Psychological Hurdle May Be Have To Be Crossed With The Help of Outside Intervention.

Conclusions And Policy Implications: In Villages Where A Few SHGs Have Become

Experienced Players Or Even The APL Groups, Can Be Brought Together By The NGO To Start An Enterprise.

of Late, A New Development In This Area Is That The Private Sector Is Tapping These Small Women Co-Operatives To Meet Its Own Needs. The Project Shakti In India By Hindustan Lever Limited A Private Sector Company,

Each Woman Earns Rs. 800 Per Month, Selling Over Rs. 10,000 Worth of HLL Products.

Thus Women Can Be Roped In The Retailing Business.

Conclusions And Policy Implications:

Another Idea Is That These SHGs Should Be Allotted The PDS Ration Shops To Maintain.

But To Increase Incomes of The Stakeholders Substantially, These SHGs Once Well Established And Trained In Running An SHG Can Come Together To Start A Real Micro-Enterprise.