Self-Help Groups (SHGs) are driving rural empowerment through financial inclusion, women’s leadership, and entry into non-traditional sectors like fuel retail, transport, and solar power as seen in Telangana’s Indira Mahila Shakti (IMS).

About Self-Help Groups (SHGs)

• Definition: Informal associations of 10–20 members, largely women, pooling savings and enabling access to formal credit.
  • It represents voluntary association of people, usually from similar socio-economic backgrounds.
• Scale: With over 90.9 lakh SHGs covering 10.05 crore women households (as on January 2025) under the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM), SHGs now form the largest community institution network in the world.
• Integration with Government Schemes:
  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA): SHG members involved as mates, social auditors, and project implementing agencies.
  • Other departments (Rural Development, Women & Child, Agriculture) also integrate SHGs for livelihood projects.

Evolution of SHGs in India

• 1970s: Emerged as thrift and credit collectives in southern states.
• 1992: NABARD launched SHG–Bank Linkage Programme (SHG-BLP), bringing SHGs into formal finance.
• 1999: Swarnjayanti Gram Swarozgar Yojana (SGSY) recognised SHGs as instruments of poverty reduction.
• 2011 Onwards: NRLM, now DAY-NRLM, expanded SHG scale with professional and financial support.
• Present: India has the largest SHG network in the world, covering nearly 1 in 3 rural households.

Objectives of SHGs

• Financial Inclusion: Mobilise savings and provide access to formal credit at low interest.
• Women Empowerment: Enhance decision-making, mobility, and social recognition.
• Poverty Alleviation: Promote income generation and reduce dependence on moneylenders.
• Livelihood Diversification: Support activities in handicrafts, agri-value chains, and services.
• Community Development: Improve health, education, and sanitation awareness.
• Inclusive Growth: Integrate SCs, STs, OBCs, and minorities into mainstream economic activity.

Significance & Impact of SHGs

• Financial Inclusion & Livelihood Security: Provide access to savings, credit, and banking services (₹5.5 lakh crore credit linkage); diversify livelihoods via micro-enterprises, agriculture, and services, reducing poverty.
• Social Development & Community Welfare: Act as vehicles for health, nutrition, sanitation, and education campaigns; improve collective bargaining power in governance and Gram Sabhas.
• Women’s Empowerment: Enhance decision-making, confidence, and leadership; break patriarchal barriers and improve community recognition.
• Sustainable & Inclusive Growth: Promote green enterprises like solar energy, eco-tourism, and agro-value chains; contribute to SDGs 1 (No Poverty), 5 (Gender Equality), and 8 (Decent Work & Growth).
• Collective Strength & Governance: Ensure accountability, transparency, and scalability through federated structures; strengthen participatory democracy and inclusive rural governance.
• Replication Potential: Successful models like Kudumbashree (Kerala) and IMS (Telangana) prove SHGs can manage large-scale enterprises, inspiring nationwide adoption.

Achievements of SHGs in India

• Credit Mobilisation: Over ₹6.9 lakh crore credit disbursed (FY 2024); Non-Performing Assets (NPAs) remain at below 2.3%, better than many corporate loans (NABARD 2024).
• Coverage: 8.7 crore rural households linked under DAY-NRLM.
• Women-Centric: >90% members are women, building confidence and leadership.
• State Models:
  • Kudumbashree (Kerala): 45 lakh members; runs micro-enterprises and Kudumbashree cafés.
  • JEEViKA (Bihar): 1 crore households; focus on agriculture value chains.
  • Indira Mahila Shakti (IMS, Telangana): Breaking barriers in petrol pumps, solar power, and buses.
• Social Impact: Studies (World Bank 2022) show SHG women spend more on children’s education, nutrition, and health than non-member households.

Challenges and Limitations of SHGs in India

• Regional Disparity: Strong presence in southern states, weaker in north and east.
  • NITI Aayog (2023) notes SHG-bank linkage is highly skewed, with Andhra Pradesh, Telangana, and Tamil Nadu accounting for 60% of SHG credit.
• Credit vs Capacity: Overemphasis on loans without skill development.
  • World Bank (2022) flagged that 40% of SHGs lack training in enterprise management.
• Loan Defaults: Risk of multiple borrowing and over-indebtedness.
  • Reserve Bank of India (2023) highlighted rising microfinance stress, especially in Assam and Bengal.
• Weak Federations: Lack managerial expertise to scale up.
  • Only 35% of SHGs have federations capable of managing enterprises (Ministry of Rural Development, 2022).
• Market Linkages Gaps: Many products remain confined to local markets.
  • SEWA 2022 study showed SHG products fetch 30–40% lower prices due to poor branding.
• Sustainability Issues: Many remain dependent on subsidies and grants.
  • CAG report (2022) flagged 20% of SHGs in UP and MP became inactive within 5 years.

Way Forward

• Capacity Building: SHGs must move beyond thrift and credit to become sustainable enterprises.
  • Focus should be on entrepreneurship training, digital literacy, financial bookkeeping, and marketing skills.
  • Example: The World Bank’s JEEViKA project in Bihar integrates training modules for dairy and agri-value chains, showing income gains of 30–40%.
• Market Integration: SHG products often fetch lower prices due to weak branding and limited reach.
  • Linking SHGs to e-commerce platforms like Government e-Marketplace (GeM), Open Network for Digital Commerce (ONDC), Amazon Saheli, and Flipkart Samarth can expand their customer base nationally.
  • Example: Kerala’s Kudumbashree café products are already sold via e-commerce portals, providing assured markets.
• Diversification: SHGs need to venture into non-traditional and high-value sectors such as renewable energy, logistics, health services, and agri-value chains.
  • Example: Telangana’s IMS model is entering solar power (1,000 MW target), while Kerala’s SHGs manage canteens and garment factories, proving women can excel in diverse sectors.
  • This reduces dependence on low-return activities like tailoring or petty shops.
• Policy Support: Expand interest subvention schemes (currently capped at 7% under DAY-NRLM) to make loans cheaper.
  • Provide low-cost loans, seed funding, and infrastructure grants for scaling SHG enterprises.
  • Example: NABARD’s SHG-Bank Linkage Programme shows that timely, low-interest credit reduces loan defaults and promotes sustainable ventures.
• Monitoring & Accountability: Use data-driven dashboards, AI-based monitoring tools, and mobile apps to track SHG performance, credit utilisation, and enterprise viability in real time.
  • Ensure social audits and regular reviews at district level for transparency.
  • Example: Andhra Pradesh’s SERP monitoring system already tracks SHG activities and has been praised by NITI Aayog for ensuring accountability.
• Replication of Best Practices: Models like Kudumbashree (Kerala) and Indira Mahila Shakti (Telangana) show that federated SHGs can handle large enterprises such as petrol pumps, solar plants, and transport fleets.
  • These success stories must be scaled up across lagging states like UP, MP, and Jharkhand, where SHGs remain underutilised.
  • Replication can be done through MoUs between states, exchange visits, and central incentives.

Conclusion

SHGs embody the constitutional vision of justice, equality, and dignity while directly advancing SDG 1 (No Poverty), SDG 5 (Gender Equality), and SDG 8 (Decent Work & Economic Growth). Strengthening them is not just a policy necessity but a moral imperative for building an inclusive and resilient Viksit Bharat by 2047.

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