Self Help Groups: What should be next for women-led entrepreneurship in rural India?


  1. The last few years have seen interest among policymakers in women-led rural entrepreneurship
  2. Much of it has sought to leverage the experience gathered from the estimated 46 million rural poor women mobilized through the Self Help Group (SHG) architecture
  3. These organizations, since their start in the 1990s, have been an effective vehicle, especially in providing financial intermediation solutions for unbanked rural women

SHGs in India:

  • India has, moreover, witnessed state-led promotion of SHGs through a three-tiered architecture of community institutions at group, village and cluster levels.
  • These have been via both Central schemes – the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission, for instance – and state government initiatives such Kudumbashree in Kerala and Jeevika in Bihar. There are today dedicated autonomous organisations – so-called State Rural Livelihoods Missions or SRLMs – which, even while bureaucrat-led, nurture SHG initiatives with the support of development sector professionals and last-mile community cadre.
  • As the membership in SHGs has grown, there have also been attempts at thrusting new functions – including using them as a delivery channel for government projects, be it toilet construction (Swachh Bharat) or avenue tree plantations (the Haritha Haram scheme of Telangana).

A shift in the attitudes:

  • All this, in a way, reflects a shift in the attitudes of the political class towards the SHG movement – from initial scepticism/suspicion of a potentially powerful parallel community structure, to a celebrated silver bullet for welfare delivery and women’s empowerment.
  • But it would be naïve to say that these organisations have survived purely because of being co-opted by the politico-bureaucrat apparatus. Longevity of two decades is itself a good indicator of their resilience and, perhaps, adaptability for a national scale development initiative.
  • The current policy intent is seemingly to reinvent the SHG movement with an economic development focus, emphasising on women’s entrepreneurship as an engine of growth in rural India.
  • That, by itself, is not new, though. Notable examples of economic development initiatives through SHGs include the Café Kudumbashree chain of women-owned and operated canteens in Kerala and a maize producer company run by women in Bihar.
  • Yet, the shift in focus from community development to the hard metrics of a market also presents policy challenges of a different kind.

Changes required in the SHG movement

  1. At present, the SRLMs are the primary institution responsible for promoting entrepreneurship by SHGs
  2. But these were vehicles built for social mobilization
  3. This calls for a new institution having a deep functional relationship with the SLRMs, to leverage the latter’s strengths of mobilization and last-mile presence
  4. Such a state-level institution could even be a not-for-profit company registered under Section 8 of the Companies Act, 2012
  5. The internal management team of the proposed institution should be a combination of young business management professionals and experienced government line department staff on deputation
  6. Government financial support to the new promoting institution should be restricted to initial start-up costs, thus putting the onus on it to be lean in structure and generate own revenues to cover operating costs

Financial inclusion and economic development

  1. These are two different functions, even if the target group is the same poor rural women
  2. Social cohesion has been the binding factor for SHGs and vital to their success in financial intermediation
  3. Economic development is a function where collectivization can work only if the business itself favors sharing of resources
  4. States should adopt a pyramidal strategy for financial and technical assistance, based on the stage and size of enterprises

Way forward

  1. The expansion in the SHG movement’s scope, from social mobilization and financial inclusion objectives to economic development, is an organic step in the livelihoods chain
  2. The business of entrepreneurship promotion is not the same as livelihoods promotion and realising that is key to achieving the twin goals of rural growth and promotion of women’s entrepreneurship

Source: Indian Express

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