A REVIEW ON SOCIO ECONOMIC IMPACT OF SELF HELP GROUPS ON RURAL PEOPLE IN JABALPUR DISTRICT (M.P.)
1Chandan Kumar Prajapati, Research Scholar
2Dr. Amit Kumar Gupta
Department of Management, R.D.V.V. Jabalpur, (M.P.)
Abstract:- The SHG is a reflection of the changing trend with respect to the role of women in recent times. In the past, programmes for development of women, especially rural women, were mostly welfare and relief related with women being primarily beneficiaries rather than participants in these programmes. But nowadays women are viewed as active participants in the development process rather than merely the beneficiaries. This implies that properly motivated women can choose to be involved in decision-making in their own development and that of the community to which they belong.
1. INTRODUCTION
The characteristics of an underdeveloped country or an underdeveloped area are low per capita income, low level of living, economic and social inequalities, insufficient capital, agrarian economy, unemployment, underemployment and disguised unemployment, underdeveloped natural resources, overpopulated economy, economic backwardness, poor quality of human capital and a number of non-economic requirements equally responsible for economic growth e.g.
attitude to work, socio-cultural political and psychological requirements etc.1
They are responsible for creating vicious circles of poverty and backwardness, both on supply and demand side. Vicious circle implies a circular constellation of forces tending to act and react upon one another in such a
way as to keep a poor
country/region/area in a state of poverty.
For example, a poor person may not have enough to eat; being underfed, his health may be weak, his working capacity is low, which means his remuneration is low and so on. Thus poverty is a self-perpetuating phenomenon. Breaking of these vicious circles and putting the economy on the road leading to development is really a very serious problem.2
2. LITERATURE REVIEW 2.1 Introduction
This chapter compiles the literature reviewed pertaining to the field of study.
Initial review of the literature primarily
1 Adams, D. W., and Pischke, J. D., ―Microenterprise credit programmes: Deja vu‖, World Development, 1992.
2 Adalarasu Balraj, Functioning and Marketing Strategies of Women Self- Help Group, LAP Lambert Academic Publishing, 2012.
focused on understanding the concept of microfinance, its evolution and its acceptance, applicability, impact and potential as a tool of financial inclusion and poverty alleviation in the global context. Post this, the literature review centered on studies relating to finance in India with focus on Self-Help Groups. The literature consists of both theoretical and empirical studies published in leading journals along with books and reports by government and recognized national and international agencies and institutions.
Sarania (2015) analyses that women empowerment is significant for the development and growth of every country in the world. Empowerment can be achieved with help of SHGs or micro credit and evidence across the country also suggests the same. The main aim of this study is to examine the effect of SHGs on the empowerment of women in terms of economic condition in Assam.
Findings suggest that SHGs members have started activities which generate income for them when they join the SHGs in Assam.
The result proved that after joining the SHGs there is a significant change in indicators of economic empowerment, in terms of savings, income and employment. When it compared to the pre SHGs joining with post SHGs joining, it is found that that most of the respondent‟s amount of savings income and employment days. It can be concluded from this study that SHGs are playing a significant effect in the empowerment of women in the study rural area.
Henriques and Gaonkar (2011) from their study, it can be revealed that micro credit (poor) clients availed micro
Vol. 02, Issue 12, December 2017 Available Online: www.ajeee.co.in/index.php/AJEEE credit for the activities or productive
reasons that generated income for them as compared to micro credit (non-poor) clients, for income generating activities.
2.2 Concepts
Otero defines Microfinance as “the provision of financial services to low- income poor and very poor self-employed people”. These financial services as per Ledger wood generally include savings and credit but can also include other financial services such as insurance and payment services. According to Schreiner and Colombet microfinance for SHG is
“the attempt to improve access to small deposits and small loans for poor households neglected by banks.”
Therefore, microfinance involves the provision of loans, savings, remittance and insurance services to socially and economically disadvantaged poor people living in both urban and rural settings, who are unable to obtain such services from the formal financial sector.
The terms microcredit and microfinance are often used interchangeably, therefore it is important to highlight the difference between them.
Sinha3 states “microcredit refers to small loans, whereas microfinance is appropriate where NGOs and MFIs supplement the loans with other financial services (savings, insurance, etc.)”. In effect microcredit is a component of microfinance as it involves providing credit to the poor, but microfinance also involves additional non-credit financial services such as savings, insurance, pensions and payment services4.
The Asian Development Bank defines microfinance as “the provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance to the poor and low income households and their micro enterprises‟‟5
According to Dokulilova6 the poor, having no or very little income, cannot
3 Sinha, S., ―Microcredit: Introduction and Review‖, IDS Bulletin, vol. 29, no. 4, pp. 1-9, 1998.
4 OikoCredit, ‗Small loans great change: building a future with microfinance‘, In: International Microfinance Symposium, Bonn, 2005.
5 Asian Development Bank, Microfinance Development Strategy 2000: sector performance and client welfare, pp. 1-2.
6 Dokulilova L., Janda K., Zetek P., ―Sustainability of microfinance institutions in financial crisis‖, MPRA paper No.17696, Charles University in Prague, 2009.
offer any collateral as required by banks, have no credit history, banks are too far away to verify and observe their behaviour (there is little information) and the loans are generally far too small compared to the cost of transaction.
2.3 Evolutions of Research
The genesis of micro finance can be traced to the early 1700s with the Irish loan fund system where micro-credit was provided to the rural poor without any requirement of collateral. This was followed by the emergence of larger and more formal savings and credit institutions in the 1800s in Europe, known as People's Banks, Credit Unions, and Savings and Credit Co-operatives. In the early 1900s, different versions of the European model sprung up in Latin America. In the 1950s, the European model gradually evolved into the microfinance institutions in operation today.
The terms Microcredit and microfinance first came to be used prominently in the 1970s, according to Robinson7 and Otero8. In fact the modern use of the expression microfinancing began in the 1970s when organizations, such as Grameen Bank of Bangladesh with the microfinance pioneer Mohammad Yunus, were starting and shaping the modern industry of microfinancing. Prior to that, from the1950s through to the 1970s, the provision of financial services by donors or governments was mainly in the form of subsidised rural credit programmes, which often resulted in high loan defaults, high loses and an inability to reach poor rural households9.
2.4 Microfinance in the Global Context with Relate Shg
Former World Bank President James Wolfensohn said “Microfinance fits squarely into the Bank's overall strategy.
As you know, the Bank's mission is to reduce poverty and improve living standards by promoting sustainable
7 Robinson Marguerite S., ―The Microfinance Revolution:
Sustainable Finance for the Poor‖, published by IBRD/World Bank, Open Society Institute, New York, 2001.
8 Otero, M., ―Bringing Development Back into Microfinance‖, Journal of Microfinance, vol. 1, no. 1, pp. 1-12, 1999.
9 Robinson Marguerite S., ―The Microfinance Revolution:
Sustainable Finance for the Poor‖, published by IBRD/World Bank, Open Society Institute, New York, 2001.
growth and investment in people through loans, technical assistance, and policy guidance. Microfinance contributes directly to this objective”10. The emphasis on microfinance is reflected in microfinance being a key feature in Poverty Reduction Strategy Papers (PRSPs). A 2005 IMF review of 56 PRSPs indicates microfinance as key component in 44 PRSPs11.
In 2005 the UN Secretary General Kofi Annan said it was a critical anti- poverty tool, emancipating women and empowering the poor and their communities. Muhammad Yunus‟s most famous claim was that thanks to micro credit the next generation will only find poverty in museums. It is claimed that the microfinance paradigm helps poor people take advantage of economic opportunities, expand their income, smoothen their consumption requirement, reduce vulnerability and also empowers them12,13.
3. MICROFINANCE IN INDIA WITH FOCUS ON SELF-HELP GROUPS
This section is divided into two parts. The first part covers the evolution of microfinance in India followed by a year- wise review of empirical and contemporary works with focus on Self- help group studies in the second part.
3.1 Genesis in India
According to the Reserve Bank of India (RBI), Microfinance is an economic development tool whose objective is to assist the poor to work their way out of poverty. It covers a range of services which include, in addition to the provision of credit, many other services such as savings, insurance, money transfers, counselling, etc.14
The origin of Microfinance in India lies in the early 1970s when the “Self
10 Countdown (2005), The Newsletter of the Microcredit Summit Campaign, Washington, DC, vol. 1, Issue 4, May/June, 1998.
11 IMF, ‗Microfinance: A View from the Fund‘, IMF, Washington DC, 2005.
12 ADB, Annual Report, Special Theme: The Changing face of the microfinance industry, Manila, 2004.
13 Littleield, E., Morduch, J. and Hashemi, S., ―Is Microfinance an Effective Strategy to Reach the Millennium Development Goals‖, CGAP, Focus Note 24, 2003.
14 Reserve Bank of India, ―Report of the Sub-Committee of the Central Board of Directors of Reserve Bank of India to Study Issues and Concerns in the MFI Sector‖, RBI, pp. 46, January, 2011.
Employed Women‟s Association” (SEWA) of the state of Gujarat formed an urban cooperative bank, called the Shri Mahila Sewa Sahakari Bank. The main objective of SEWA bank was to provide banking services to the poor women employed in the unorganised sector in the city of Ahmedabad, Gujarat. The microfinance sector went on to develop in the 1980s with the concept of Self-Help Groups, informal bodies that would provide their clients with much-needed savings and credit services.
The first official effort was undertaken by NABARD (National Bank for Agriculture and Rural Development) during 1986-87 when it partially financed MYRADA‟s (The Mysore Resettlement and Development Agency) project on “Savings and Credit Management of SHGs15. From humble beginnings, the sector has grown significantly since then to become a multi-billion dollar industry, with significant financial resources being devoted to microfinance by bodies, such as, the Small Industries Development Bank of India and the National Bank for Agriculture and Rural Development.
3.2 Shg Studies
This section covers a review of the Self- help group studies pertaining to Madhya Prasesh and its districts. Out of the above, six studies are on impact of SHGs on women empowerment, three in different district (Deepti Umashankar, P.
Alam and Mohd. Nizam), one each in Kaithal (M Goel and Virander Goyal), Rewari-Hisar district (Preeti Sharma and Shashi Kant Verma) and Karnal district (Manju Panwar and Jitendra Kumar).
Two studies, one each in Yamuna Nagar district (Rathore and Garg) and Narnaul Block in Mahendergarh (Bajrang) district are on financial inclusion through SHGs. One study is on Analysis of Trends, Patterns and Schemes of SHGs (V Batra). One study is on Assessment of economic development by SHGs (Surender) and one study in Gurgaon district is on the Dimensions of Group Dynamics Effectiveness of SHGs of Rural women (Vashisht, Khanna, Arora and
15 Satish P., ―Mainstreaming of Indian Microfinance‖, Economic and Political Weekly, vol. 40, no. 17, pp. 1731-1739, 23-29 April, 2005.
Vol. 02, Issue 12, December 2017 Available Online: www.ajeee.co.in/index.php/AJEEE Yadav). The following table 2.1 shows the number of studies in each research area.
Table 1: Number of studies research area wise in Madhya Pradesh No. of studies Research Area
6 Impact of SHGs on women empowerment 2 Financial Inclusion through SHGs
1 Analysis of Trends, Patterns and Schemes of SHGs 1 Assessment of economic development by SHGs in
Jabalpur
1 Dimensions of Group Dynamics Effectiveness of SHGs of Rural women
3.3 Research Gaps
After reviewing the literature, the following research gaps were identified:
1. It was observed that most of the literature on microfinance in India revolves around the four southern states of Madhya Pradesh, Andhra Pradesh, Kerala, Karnataka and Tamil Nadu (where governments
and non-governmental
organisations are taking lead in the spread area of microfinance), followed by Odisha, and Maharashtra.
2. Very few studies have been conducted in the northern region, especially in Madhya Prasesh and the focus of these studies is mainly on impact of Self Help Groups on the women empowerment aspect.
3. Also, there is hardly any work related with the identification of factors or causes responsible for desired results not getting manifested in terms of income and employment level in poor and rural areas of Madhya Prasesh like Jabalpur district.
4. Studies on the role of microfinance for microenterprise development for women in the Indian context are also relatively less and moreover not conducted for a backward area like Jabalpur.
Hence there is a case for conducting a qualitative as well as an empirical study for an area for correlating microfinance with economic development through the self-help group model.
3.4 Concluding Observations
The present chapter has reviewed the literature pertaining to microfinance and self-help groups with a view to study the
current state of research. The available literature shows that microfinance through the Self-help group model encompasses a wide range of fields such as poverty alleviation, financial inclusion, women empowerment, microenterprise creation and economic development.
More importantly, the literature exhibits that the impact of microfinance works differently from one context to other and the impact is contingent upon a number of factors and variables such as enterprise development, attitudes to debt, financial literacy, financial service providers etc. These factors become more significant and hence, deserve special attention and warrant empirical examination in the context of a backward district like Jabalpur.
It is imperative to acknowledge here the contribution made by the previous researchers in setting the groundwork for the current research initiative, to expand the body of knowledge further. This study is an effort to measure the impact of microfinance and women self-help groups in the development process of Jabalpur district in Madhya Prasesh.
4. CONCLUSION
The research was very helpful for enhancing the real state of the rural people. The involvements in the SHGs have brought about economic and social changes among the members in the study area. A large number of the members have reported that their family status have increased by becoming a member of the SHGs. The income level of the SHG members has raised and this has uplifted their social status in their area and in the society. Since SHGs, help women to achieve economic empowerment and this policy measures will contribute a lot to
the nation.
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