Mains Marathon 2024

Approach Define microfinancing and Self-Help Groups (SHGs) Discuss the role of SHGs in breaking the vicious cycle of gender inequality, poverty, and malnutrition Highlight potential challenges faced by women in SHGs. Suggest measures to address these challenges. Conclude Suitably

Introduction

Microfinancing refers to the provision of financial services to low-income individuals or groups who typically lack access to traditional banking. SHGs are community-based organizations that consist of women who come together to save money, access microloans, and support each other in various economic activities.

Body

Microfinancing, particularly through Self-Help Groups (SHGs), plays a crucial role in empowering women and addressing the interconnected issues of gender inequality, poverty, and malnutrition.

• Breaking the Cycle of Gender Inequality
  • Empowerment through Financial Independence: Microfinancing enables women to access credit, allowing them to start small businesses and generate income. This financial independence is a critical step in breaking the cycle of gender inequality.
    • Kudumbashree is a notable poverty alleviation program in Kerala that has empowered women through SHGs. The program has successfully enabled women to start various income-generating activities, such as catering services, handicrafts, and micro-enterprises
  • Building Confidence and Skills: Participation in SHGs also enhances women’s confidence and decision-making abilities. As they engage in group discussions and financial planning, they develop leadership skills that extend beyond their economic activities.
    • The Maharashtra Sakhi Mandal program provides training in financial literacy and business management, empowering women to lead a successful cooperative that produces handmade crafts, demonstrating the impact of such training on leadership and entrepreneurship.
• Addressing Poverty
  • Income Generation : Microfinancing through SHGs directly contributes to income generation, helping families move out of poverty. According to studies, households led by women who participate in SHGs often experience a significant increase in income levels.
    • Female SHG member incomes have tripled during FY19-FY24, with urban members seeing a 4.6 times increase.
  • Access to Resources: SHGs also facilitate access to essential resources, including healthcare and education. With increased income, families can afford better healthcare services and send their children to school, further breaking the cycle of poverty.
    • The Saraswati SHG in Madhya Pradesh, supported by NABARD, transformed from a small savings group into a successful pickling business. Today, they produce various pickles, significantly expanding their market reach and improving the livelihoods of all members
• Combating Malnutrition
  • Improved Nutritional Choices :.Women are more likely to prioritize the health and nutrition of their families, leading to improved dietary practices. Initiatives like kitchen gardens promoted by SHGs provide fresh produce, enhancing food security and nutritional intake.
    • SHGs in Tamil Nadu promote kitchen gardens among members, providing fresh vegetables for families and significantly enhancing food security and nutritional intake.
  • Health Awareness and Services: SHGs serve as platforms for health awareness, educating women about nutrition, sanitation, and healthcare services.
    • The Self-Employed Women’s Association (SEWA) in Gujarat conducts workshops and community outreach programs, teaching women about the importance of proper nutrition and hygiene. This initiative has led to better health outcomes, significantly reducing malnutrition rates among children in the areas served by SEWA.

The Challenges and Limitations Faced by the SHGs:

• Sustainability of SHG Initiatives Beyond Initial Support: The long-term viability of SHGs depends on continued external support and effective internal management which requires strong leadership, community support, and the ability to generate sufficient revenue to cover operational costs.
• Issues of Dependency and Overreliance on External Aid: SHGs face significant challenges due to their dependency on external aid, which can hinder their self-sustainability and long-term viability, especially in disaster-affected areas.
• Intersectional Challenges: SHGs often encounter caste, class, and regional challenges, impacting their effectiveness and inclusivity, with marginalized groups typically receiving fewer benefits.
• Lack of Technology: Many SHGs use rudimentary or no technology in their operations.

Most SHGs operate at the local level, primarily engaged in agricultural activities. SHGs in rural areas should be introduced to non-agricultural businesses and provided with state-of-the-art machinery

• Lack of Market Access: Goods produced by SHGs often lack access to larger marketplaces.SHGs are typically located in rural and remote areas with poor connectivity via roads or railways and limited access to electricity.

Measures to address these challenges :

• Leveraging Technology for Scale and Efficiency: Technology can greatly enhance SHGs by improving efficiency and scalability, with digital platforms aiding in record-keeping, financial transactions, and communication, as seen in initiatives like NABARD's E-Shakti project.
• Strengthening Linkages with Formal Financial Institutions: Linking SHGs with formal financial institutions through programs like The Self-Help Group (SHG) Bank Linkage Program (SBLP) enhances their sustainability, reduces reliance on informal lenders, and promotes financial inclusion.
• Integrating Environmental Sustainability into SHG Activities: SHGs' integration of environmental sustainability enhances resilience and promotes broader sustainable development goals.
• Awareness For Inclusivity: Encourage SHGs to adopt an inclusive approach, considering members' socio-economic backgrounds, for equitable participation and benefit-sharing, addressing discrimination concerns.

Conclusion

Empowering women through SHGs not only fosters individual growth but also contributes to the broader socio-economic development of communities, highlighting the need for continued support and investment in such programs. As it is rightly stated,"Women are the key to social and economic development. When they succeed, whole families and communities succeed."