SHG and Assam

THE ROLE OF SELF-HELP GROUPS (SHGs) IN ERADICATING RURAL POVERTY IN ASSAM – PROBLEMS AND PROSPECTS

A Self-Help Group (SHG) is a group of about twenty people from a homogeneous class, who come together for addressing their common problems. The concept of SHG was introduced in India by NABARD in 1992, inspired by its success in Bangladesh. Today it is the largest rural development programme, going on with the active cooperation of NABARD, DRDAs and NEDFi.

The guru of micro-credit in Bangladesh Professor Yunus Mohammed is of the view that the poor need opportunity, not charity. With this ideology, the people forming an SHG are encouraged to make voluntary savings on a regular basis. They use these pooled resources to make small interest bearing loans to their members. The process helps them develop the essentials of financial intermediation, which gradually builds financial discipline in all of them. They also learn to handle resources of a size that is much beyond individual capacities. Once the group shows mature financial behaviour, banks are encouraged to give loans to SHGs.

NABARD emphasizes growth of strong and efficient SHGs internal loans to its members for productive purposes, irrespective of APL (above poverty line) or BPL (below poverty line) families. DRDA, under its Swarnajayanti Gram Swarojgar Yojana (SGSY) emphasizes on the growth of SHGs among BPL families for fulfilling the objective of poverty alleviation. NEDFi, under its micro-finance scheme, lends a minimum of Rs. 20000 and a maximum of Rs. 4 lakhs to an SHG with good record for on-lending to the needy for taking up productive activities. Prime lending rate and administrative charges are decided by NEDFi.

SHG movement’s success in South India:

The SHG movement in southern states of India has been successful to a great degree in uplifting the socio-economic conditions of the down-trodden, which can also be achieved in Assam provided adequate encouragement is provided. The Andhra Pradesh Government had taken up the theme of women’s empowerment (through SHGs) as one of the strategies to tackle poverty. All villages in the state have atleast one SHG and 75% of the villages have 15-20 groups in each. Nearly 60% of the women took up activities like vegetable and flower cultivation, food crops, pulses and oil seeds cultivation on leased land. Small business activities, handicrafts and handloom products making etc are also taken up by 25% of the poor women force. The SHG movement in Andhra Pradesh has helped significantly in reducing rural poverty to 11% by 1999-2000. Of late, the movement has started to show similar signs in Karnataka and Tamil Nadu.

Poverty Estimates in Assam:

The Planning Commission’s latest estimate shows that the incidence of poverty is very high in Assam, particularly in rural areas. Poverty estimates for Assam 1999-2000, on the basis of consumption expenditure data collected by NSSO (55th round), indicate that 40.04% of rural poor (overall – 36.09%) was living under the poverty line. The corresponding national figures were 27.09% and 26.10% respectively. In absolute terms, nearly 10 million people constituting 3.63% of the poor Indians were living in Assam. Open unemployment in Assam accounted for 2 millions, of which nearly 70% were educated unemployed youths. Another 3 millions of the total work force were disguised unemployed, primarily engaged in the agricultural sector.

Providing employment to such a huge army of unemployed is a large task for the government, moreso now with the job-contractionist policy all around. Traditional agriculture cannot offer any gainful employment. Options left are in the modernization of the agricultural sector and exploiting the huge untapped self-employment opportunities in the non-farm and services sector (transport, health, education etc.)

Modernisation of agricultural sector and creating employment avenues for the poor in the non-farm sector requires huge amount of capital investment. The different development schemes (till switch-over from IRDP to SGSY towards the end of 1999) did a precious little for the people who really needs outside help to break the vicious circle of poverty. The solution surely lies in fostering SHGs among the disadvantaged people and involving NGOs (through a systematic institutional encouragement to them) in guidance and support services (finance management, enterprise development, packaging and pricing of products) to the SHGs.

SHG and Assam:

SHG movement has unfortunately started very late in Assam. Since the beginning of the present millennium, a sizeable number of SHGs have started to crop up in almost every district of Assam. Of the total 66125 SHGs in the state in mid-2003, Sonitpur and Kamrup districts had 15000 and 7000 respectively. But only 4000 SHGs have accessed institutional credit till March 2003. Banks are still apprehensive of loan recovery. NGOs with professional skills are not coming up in this state.

The task of eradicating poverty from Assam warrants active cooperation from different development agencies – government, NABARD, banks, cooperatives, NGOs and other change agents. At present, the 66125 SHGs roughly cover 1 million people in the state. The need is to cover at least 14 million poor and nearly poor population. The credit needs of the poor are very small. What they need most are guidance and support. Group savings can meet only the members’ recurring demand for small loans for consumption and other contingent needs. For gainful employment, they need outside support in the form of investment and production credit, among others.


Problems:

The funds available to the SHGs are very negligible. Most of the SHGs find it difficult to maintain their accounts properly. Formal training in this respect will be of immense help.

Products of SHGs lack market exposure. Their market is limited within nearby areas.

Some people form SHGs in order to satisfy vested interests, distributing the revolving fund of Rs 10000 among themselves.

The rule fixed for SHGs under SGSY is that debtors of some banks are to be excluded from membership of SHGs. One of the purposes of SHGs is to make it possible for rural people to get easy loans. So this rule is itself a hindrance on the path of fulfilling the very purpose of rural development.

Prospects:

SHG is still a new concept in rural Assam. Widespread poverty and unemployment can be treated through these SHGs. SHG programme has lightened the burden of life for the average member of a SHG in many ways. There have been perceptible and wholesome changes in the living standards of the SHG members in terms of ownership of assets, increase in savings and borrowing capacity, income generating activities and in income levels.

Almost all members developed saving habit in the post SHG period as against 28.57% of households earlier. Moreover, SHGs bring people closer to the banking system by helping in getting loans easily and frequently.

Self-confidence of the SHG members has improved, helping them to confront social evils and problem situations. Most of the SHGs are involved in developmental works like literary programme, forestation, repairing of rural roads, providing medical facilities etc.

Thus, thr SHGs could be a very effective mode to mitigate rural poverty in Assam. These can act as a tool for women empowerment. The above-cited problems of paucity of funds, managerial inefficiency, lack of accounting knowledge, indifferent attitude of the bankers can be solved by active involvement of NGOs with necessary expertise. The NGOs can contribute significantly to the welfare of the SHG members by helping their part time occupation (piggery, rearing goat, chick, dairy farming, weaving, small business, mushroom and ginger cultivation etc) take a permanent shape.

IIT, Universities and Colleges can also play an important role in this regard. Even panchayats and religious institutions besides NGOs can come forward to act as financial and non-financial intermediaries between banks and SHGs.

In order to encourage people to take initiative in forming SHGs, DRDA Jorhat has introduced a scheme of rewarding people taking initiative in forming SHGs. This can be followed in the other districts as well.

To conclude, there is no denying the fact that SHG movement can add a new dimension to the fight against poverty and underdevelopment in rural Assam. What is needed is the speeding up of the process of people’s orientation in the development strategy and fight against poverty through guidance and support services to the SHGs from professional NGOs, VOs, PRIs, cooperatives and such other change agents.