Incomes of female self-help group members tripled during FY19-FY24, says SBI economist

The rural female Labour Force Participation rate has risen from 21.7 percent in 2017-18 (July-June) to 34.6 percent in 2022-23.

Incomes of female members of India's self-help groups (SHGs) has more than tripled in the last five years, according to an analysis by Soumya Kanti Ghosh, State Bank of India's Group Chief Economic Adviser.

Writing in a report on March 11, Ghosh said that the Covid pandemic had created opportunities for SHGs to "exponentially" increase their activities. Taking 2018-19 as the base year, Ghosh found that the income credited in female SHG members' bank accounts is set to increase from Rs 100 to Rs 307 as per the data available for the first nine months of 2023-24.

The biggest income increase was seen in female SHG members in urban areas, who this year are set to earn Rs 462 if their income in 2018-19 is assumed to be Rs 100. And while rural SHG members have seen a smaller increase in their incomes, Ghosh noted that "65 percent of rural SHG members have moved into Upper Quantiles (in) FY24 when compared to FY19".

When these members are considered by age, the biggest income jump – 4.7 times – has been for those younger than 27 years.

"The jump in Rural Female LFPR is significantly correlated with the rise in Female SHG members' income…a 11 percent jump associated with 2.25 times jump in income in only 4 years," Ghosh added.

Also Read: What's driving the rise in participation of women in the workforce?

LFPR is the Labour Force Participation Rate. As per latest data from the Statistics Ministry's Periodic Labour Force Survey, the rural female LFPR rising from 21.7 percent in 2017-18 (July-June) to 34.6 percent in 2022-23.

Source: SBI Research

"Data shows southern states where the SHG movement first started alone do not have Lakhpati Didis. Females of Uttarakhand, Punjab, Gujarat, Odisha, Bihar too are benefiting from SHGs. SHG is now a mass movement… By FY27, most states in India will have Lakhpati Didis," Ghosh added.

The government's 'Lakhpati Didi' programme looks to boost economic empowerment and financial independence among women in rural areas. A Lakhpati Didi is an SHG member who earns an annual household income of at least Rs 1 lakh.

Also Read: The Rs 20,000 crore women's schemes bonanza behind BJP's Madhya Pradesh win

According to Ghosh, rural incomes post 2013-14 are more equal than before and that looking at real income growth before and after 2013-14 is a "misleading narrative".

"The distribution of wages during FY05-FY14 followed a non-normal distribution indicating prevalence of more extreme values further away from the mean thus accentuating wage inequality. The distribution of wages during FY15-FY23 clearly follows a normal distribution indicating cluster of values closeted around the mean reinforcing wage equality," Ghosh said.

Interestingly, the study also found that SHG members seem to favour transacting digitally, with expenditure via ATMs nearly constant from 2018-19 to 2022-23. Moreover, nearly 73 percent of rural SHG point-of-sale transactions are in metro regions, while 30.5 percent of rural ATM transactions are in urban and metro regions.

"Income from SHG gives the members purchasing power to spend in not just their own district but also in other districts of their own as well as other states. Distance travelled by SHG members can be to the nearest district to as far as within state from 20 km to 2,000 km," Ghosh added.