The Budget’s focus on SHGs could increase rural female labour participation

Ganga Maiya Mahila Samuh, an SGH, meets in Sawaryadigar village of Maharashtra’s Nandurbar district

Anita Pawra (33) lives in Sawaryadigar village of Maharashtra’s Nandurbar district, a village of about 2,200 people. Nandurbar is among India’s 112 most under-developed districts. Little did Pawra know that one day she would be financially independent, the owner of a poultry business, and the elected head of a women's self-help group (SHG), all because she had joined such an organisation nine years earlier.

SHGs are informal associations of people who come together to find ways to improve their life. These self-governed, peer-controlled groups follow their own set of rules.

Pawra got to know of SHGs in 2014, when a mobilisation team from Umed, part of the Maharashtra State Rural Livelihood Support programme, visited Nandurbar.

Subsequently, she joined an SHG called Ganga Maiya Mahila Samuh. “Our village was poverty-stricken, one of the most backward. This was one year into my marriage, and I wanted to help out my husband who was a fisherman and barely earned Rs 4,000 a month,” said Pawra.

Her journey of self-reliance began with a minimal investment of Rs 10 every eight days or Rs 40 per month, per the rules of the SHG. A year later, she was able to take a loan of Rs 3,000 from the SHG to start her poultry business. “I bought 10 chickens at Rs 300 each, and both my husband and I got to work,” reminisces Pawra, who has studied up to class five and knows basic arithmetic.

Her low-investment business paid off handsomely, and today, her family earns over Rs 9,000 a month from it. She now has more than 150 chickens on her farm. “I have four children, who are all in school. I run my family of six via the money my business generates. I have been able to turn my kuccha house into a pucca house,” she says.

How does the budget help?

Women’s SHGs have had a statistically significant effect on women’s economic, social, and political empowerment. They have taught women to handle money, make financial decisions, improve their social networks, and diversify their asset ownership and source of livelihood, according to the 2023-2024 economic survey.

The share of women in the rural labour force has grown from 19.7 per cent in 2018-19 to 27.7 per cent in 2020-21, according to the survey. The Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY NRLM) has mobilised 8.7 crore women from poor and vulnerable communities into 81 lakh SHGs. The SHG model is prevalent across 28 states and six union territories.

Outlining the economic empowerment of women in the 2023-2024 budget, Finance Minister Nirmala Sitharaman announced that the government will help SHGs with raw materials to improve the design, quality, branding, and marketing of their products.

“Through supporting policies, they will be enabled to scale up their operations to serve the larger consumer markets,” Sitharaman said in her budget speech.

SHGs are provided with an initial support of Rs 10,000 to train members. On top of that, area level federations (ALF) receive Rs 50,000. These funds are made available to SHGs via cluster managers, who manage a number of SHGs. It is this fund that catalyses the women’s investment journeys.

This fund comes in the form of a loan from the government, generally at an interest rate of 2 percent. It becomes seed money for the SHGs and act as a revolving fund.

Even though no specific allocations have been made towards SHGs in this budget, the Indian government has set aside Rs 500 crore for the Deendayal Antyodaya Yojana.  The scheme combines the National Urban Livelihoods Mission (NULM) and the National Rural Livelihoods Mission (NRLM).  These SHGs also receive funds from state governments and are co-financed by the World Bank.

SHG Bank Linkage is world's largest microfinance project

Meanwhile, the SHG Bank Linkage Project (SHG-BLP) launched in 1992 has blossomed into the world’s largest microfinance project. Reflecting on their credit discipline and reliability, the economic survey points out that the repayment record of SHGs is more than 96 per cent.

“The SHG movement, now in its 30th year, has emerged as a powerful intervention to cover the small and marginalised sections,” the economic survey says. The SHG-BLP covers 14.2 crore families through 119 lakh SHGs with savings deposits of Rs 47,240.5 crore. The number of credit-linked SHGs has grown at a CAGR of 10.8 per cent over the last ten years (FY13 to FY22), while credit disbursement per SHG has grown at a CAGR of 5.7 per cent during the same period.

The government has said it will work towards enabling these groups to reach the next stage of economic empowerment through the formation of professionally managed large producer enterprises, or collectives, each having several thousand members.

In 1999, the union government introduced the Swarn Jayanti Gram Swarozgar Yojana (SGSY) to promote self-employment in rural areas through the formation and skilling of SHGs.

Aajeevika-NRLM was launched by the Ministry of Rural Development (MoRD), government of India, in June 2011, as a flagship programme aimed at poverty alleviation through social mobilisation, and promotion and strengthening of self-managed and financially sustainable community institutions of poor rural women.

What more is needed?

Securing bigger loans, creation of a supply chain, market accessibility, quality products, strengthening of the telecom, electricity and road infrastructure, along with speedy implementation of announcements are all crucial problems that remain to be addressed.

Nitesh Bhardwaj, Founder, Aadiwasi Janjagruti, an initiative of the Ulgulan for Social Change Foundation that works in Nandurbar district, says that products made by SHGs, be it eggs, chicken, clothing, or art works, find it difficult to access the larger market.

“Supply chain is a big issue. While the government took the first step towards encouraging women to get financially independent, it forgot to give them a market to operate in,” he says, adding, “this year’s budget proposal is a step in that direction, but the execution will have to be seen.”

Another problem that SHGs struggle with, is the quality of their products. “Some SHGs have done exceptional work and have been recognized and rewarded, but they are very small in number. Most groups still find it hard to make quality products. This needs more attention,” explains Bhardwaj.

He further adds that the lack of infrastructure poses challenges for women trying to expand their businesses. “Internet connectivity is still an issue, so even those who want to digitally market their products are unable to. These villages still do not have roads and electricity and work on solar power, which is rarely enough,” he says.

Rakesh Pawara, a cluster in-charge for Umed who oversees the work of 200 SHGs, says human capacity-building needs to be streamlined to improve the work and create a demand of the products being supplied by SHGs.

“The women do not know how to make business plans, generate ideas, and develop an entrepreneurial mindset. Most are illiterate. They do not understand demand and supply, customer retention, and digital marketing. These are all crucial tools for business growth and demand creation." Big business resisting the entry of SHGs in their markets, poses an additional obstacle.

Over the past few years, Pawra has taken three loans with the help of her SHG as her business has grown, but still has problems accessing a larger market.

“Market accessibility is a huge problem for us. While we sell our eggs in the village market itself, we have to travel several kilometres to Dhadgaon to reach a bigger market to sell the chicken (meat),” Pawra adds.

Securing bank loans is another task, says Pawra. “Many women in my group attempt to take bigger loans to grow their business, but since they do not own PAN cards, the banks reject them,” she explains.