Microfinance Horizon

Author(s): Lakshmi Ramachandar & Pertti J. Pelto

Abstract:

From this study it is evident that SHGs have benefitted women, their family, and the communities in which they live in more than one way.

One unusual feature of the Bellary sanghas is that the majority of the groups are “mixed membership” in terms of caste/ community identities, including several that have both Hindu and Muslim women.

This pattern contrasts with the findings of a large, multi-state study,4 which found that two thirds of the sample of SHGs were single caste groups.

Inter-caste, inter-community relations, particularly in the more active, successful groups, improved relations and understanding across some cultural barriers. In almost all cases the members of SHGs knew each other before, but the new interdependencies created by the group structures led to greater communication and understanding. In addition, the successes among the majority of sanghas have led to increased respect and recognition from other people in their village.

The increased access to money, ability to buy consumer goods, release from the dependence on daily wage labour, and improved housing have all had positive effects on the women’s lives.

In addition, the widened range of contacts during training, and learning how to interact with the bank officials and other people in the Bellary urban environment have contributed to women’s empowerment. The number of women who reported “less dependence on husband,” and also clear reduction in physical violence from husbands, is striking evidence of improved empowerment and better life conditions.

While income generating activities, and other dispositions from loans have mostly been carried out by individual women, with occasional “partnerships” among two or three neighbours, the other community activities documented show that several of the sanghas are exploring empowerment as group action. In the comprehensive study reported by Wilson4 it was note that the self-help groups are increasingly called on for more general community work.

The study found that 30 percent of SHGs in the sample have been involved in community action. These involved: improving community services (43% of the total actions, including water supply, education, health care, veterinary care, village road), trying to stop alcohol sale and consumption (31%), contributing finance and labour for new infrastructure (12%), protecting natural resources and acts of charity (to non-members). These were all actions by SHG women which represented some degree of agency by women, in terms of decision-making and enhancing women’s contribution to the community in a way that goes beyond traditional gender roles.

This paper is a “work in progress” and is expected to continue to gain better understanding concerning the overall impact of the SHGs on the lives of the women, their families, and their communities. A major focus for the next phase will be on food production activities.

The increased worldwide concerns about high food prices, shortages of rice and other staple grains, and the drastic shortage of fertilizers now reported in India – all contribute to the importance of local food producing activities. The data cited in this paper shows that the largest single category of investments is in food production activities. Many women bought or leased land for cultivation; others have bought dairy farm animals. Several women also mentioned investments in water pump for irrigating dry lands.

Another main focus in the continued study of the SHGs is on “networking” for sharing information, skills and other resources. Sustainability of the groups, and expansion of the programme into additional communities depend on increased levels of networking activities, utilizing resources within the groups themselves. Dissemination of “best practices” and “most profitable” income generating strategies is an important aspect of such networking. Evidently some of the small “petty shops” failed because they did not have the goods that are attractive or needed by local customers. Some of the successful shop owners could share their experiences with others less prosperous or “would be” shop owners as well as for other income generating options.

The central importance of further training and enhancement in farming activities was eloquently expressed by one of the informants:

“We were born and raised in an agricultural community and belong to the farmer class (raitaru). As wage labourers we have toiled hard from dawn to dusk for low wages. If we could get a small helping hand for improving our own land [food production] it would be a great help for us. Our life is in the field.”

Poverty alleviation has been a concern since many years of governments around the globe. Economists, politicians, journalists and other policy makers are continuously involved in this debate. The Government of India has several schemes including the National Rural Employment Guarantee Act (NREGA) and education schemes “education for all” (Sarva Shiksha Abhiyan), as well as programmes for irrigation, rural electrification and expanded rural credit. However, Aiyar5 has argued that the most powerful tool for reducing rural poverty is through improved connectivity. Quoting the International Food Policy Research Institute (IFPRI) shows that the largest return in the number of persons raised out of poverty per money invested is from road building.

People living above the poverty line have serious credit and cash flow problems. For example, in economically marginal areas of Maharashtra, it is estimated that only ten percent of credit transactions are with banks.6 Authorities in the state of Maharashtra have become increasingly alarmed by the high number of suicides among debt-stricken farmers, including in the “sugar belt”. One analyst commented that “with the co-operative movement going downhill farmers are increasingly depending on private money-lenders.”7

The “chit fund” system where a group of persons pay Rs.500 per month and the money is auctioned has some basic similarities with SHGs. In rural areas the group formation can be practically the same as a “self-help group” – small group of people who know each other, and who are relatively homogenous in socio-economic terms, and with a leader everyone trusts.

The concept of paying a fixed amount of money per month is also the same. But the “chit fund group” does not normally engage in giving loans; does not have any connection with an NGO or bank; and is self-liquidating after few months, depending on the number of participants. It can operate to the benefit of some poor people, who thus force themselves to save for several months, and are then able to receive a lumpsum amount of money. These “savings and credit schemes” can easily lead to further indebtedness, particularly among farmers already in debt to money lenders. There is evidence that some of the increasing numbers of suicides among farmers in the Vidharbha area (eastern Maharashtra state) involve combinations of indebtedness to money lenders, in addition to gambling in chit funds. Interest rates for loans from money lenders are five per cent per month.6

Self-help groups have penetrated in various sections of society including sex workers in Kolkata and several locations in Maharashtra.

In a paper on learning from failures in microfinance: what unsuccessful cases tell us about how group-based programmes work, Michael Woolcock8 commented on the biases in many studies of SHGs. He does not doubt the value of microfinance schemes in general, but feels that there are many problems that need to be addressed, and it is important to learn more about why some groups fail.

In this study, a balance between description of successful SHGs and details about the less successful, including some groups that have ceased functioning has been attempted. This information will be useful to NGO leaders and others involved in further development of SHGs in Bellary district as well as in other locations.

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