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Weakness and gaps in SGSY

Swarnajayanti gram swarojgar yojna was launched by the central government in 1999 as a
holistic programme covering all aspects of self employment. The objective of SGSY was to
bring the assisted poor families above the poverty line in three years, by providing them
income generating assets through the mix of bank credit and government subsidy. The
programme was later replaced by NRLM. The major flaw of this program was its supply
driven approach.
The SHG formation PAN India was very uneven. The southern part of the country had 39 %
share in SHG formation for only 11 % poor, whereas, northern and eastern parts have only 33
% of SHGs for 63 % of the rural population. Inter state disparity in flow of credit was also
present in this program. The attrition rate is also very high. The number of SHGs passing
from level 1 to a microenterprise level is very low.Merely 23% of shgs finally enter into
micro enterprise level. The reasons behind high attrition rate is inadequate availability of
funds, low level of education, lower credit availability etc.
The programme has many issues regarding availability of credit. The target group needs
capital for the existing as well as new business. Due to lack of access to financial services
because of their remote location the poor fails to get the capital requirement. Apart from that
the existing financial services in these areas lack human resources to provide efficient
services to the poor. In demand side the major need of this program was capacity building
and increase of the credit absorption capacity of the poor. Lack of trainers, limited capacity of
existing institutions and lack of umbrella organization for implementations were also the
major reasons behind lack of capacity building.
The target group of this program was highly vulnerable due to lack of economic and social
status. In spite of that no risk coverage was provided for the beneficiaries. Apart from that no
grievance Redressal mechanism was present. There was a complete lack of transparency and
accountability in the program which makes the poor more vulnerable toward slipping into
poverty again. Also DRDA lacked professional to implement the programs which lead to
weak delivery mechanism. A major requirement of successful RDI is convergence with other
program which was absent in SGSY. Overall, the program failed to capture the need of
extremely disadvantaged social groups.
The major drawback of SGSY was its supply driven approach. There is a need to change in
this approach. Apart from that to address the credit issue in rural areas the coverage of
financial institutions should be increased. This will lead to increased credit absorption and
availability of credit for the poor. The formation of cooperatives could also be helpful to
market the products made by SHGs. This will help in attaining the objective of SGSY. Also,
there is need of training and development program for SHGs for speedier gradation to
microenterprise level. The proper monitoring of activities related to credit availability and
others is also needed.