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General Studies-2; Topic: Development processes and the development industry- the
role of NGOs, SHGs, various groups and associations, donors, charities, institutional
and other stakeholders.

Self-Help Groups (SHGs)

Introduction
• The Economic Survey 2022-2023 has a special mention of India’s little-known but high-impact
banking operation: the women-led self-help groups (SHG) disbursing billions of rupees every year.
• SHGs have had a positive effect on women economically, socially and politically, empowering
them through handling money, financial decision-making, improved social networks and livelihood
diversification.

SHGs in India
• India boasts of some 12 million SHGs, of which 88 per cent are all-women-member ones.
• These groups usually consist of 20-25 members, mostly residents of villages.
• SHG success stories include Kudumbashree in Kerala, Jeevika in Bihar, Mahila Arthik Vikas
Mahamandal in Maharashtra and recently, Looms of Ladakh.
• SHGs played a key role during COVID-19 pandemic. SHGs led from the front in producing masks,
sanitisers and protective gear.

SHG Bank Linkage Project

• In 1992, these groups were linked to banks for disbursal of small loans — called SHG Bank Linkage
Project, SHG-BLP — for taking up livelihood options, like livestock rearing or setting up a tailoring
unit.
• It has become the world’s largest microfinance project.
• By 2022, these groups operate a financing operation that is regarded as the world’s largest
microfinance project.

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• According to data cited in the Economic Survey 2022-2023, SHG-BLP covers 142 million families with
saving deposits of Rs 47,240 crore.
• The number of SHGs credit linked has grown at a CAGR of 10.8 per cent during the last ten years
(FY13 to FY22), while credit disbursement per SHG has grown at a CAGR of 5.7 per cent during the
same period.
• For the loans under SHG-BLP, there are hardly any loans turning into bad ones.
• SHGs’ bank repayment is more than 96 per cent, underscores their credit discipline and reliability.

Government Support
• States have been declaring special economic packages for SHGs as part of overall livelihood
development programmes.
• Under the National Rural Livelihood Mission (NRLM), the government has set a target of increasing
each SHG’s income to Rs 1 lakh by 2024.
• To do so, microfinance linked to livelihood development is the key strategy.
• In 2021, the government, under its COVID-19 pandemic stimulus package, increased SHGs’ limit for
collateral-free loans to Rs 20 lakh from Rs 10 lakh.

Measuring Work
• There is a need to broaden the horizon of measuring work, which constitutes the whole universe
of productive activities alongside employment.
• According to the latest International Labour Organization (ILO) standards, limiting productive work
to labour force participation is narrow and only measures work as a market product.
• It does not include the value of women’s unpaid domestic work, which can be seen as expenditure-
saving work such as collecting firewood, cooking, tutoring children, etc.

Way Forward
• Women SHGs must be made the centre of rural development as they have already been
demonstrated as an effective local community institution.
• More than 75 per cent of rural female workers are employed in the agricultural sector.
• This implies a need to upskill and create employment for women in agriculture-related sectors
such as food processing.
• Here, the self-help groups (SHGs) can play a crucial role in shaping rural women’s potential in
financial inclusion, livelihood diversification, and skill development.
• These groups must be further strengthened with access to loans and markets for their produce.

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