ACKNOWLEDGEMENT
At the outset, I deem it as a special privilege to express my deep sense of gratitude to the Director, UGC, New Delhi and the Regional Head, Dr. N.
Gopukumar, the Deputy Secretary and the other personnel, UGC Regional
Office, Bangalore for presenting me an excellent opportunity to carry out the
Project with adequate funding.
I sincerely place on record my deep sense of gratitude to Prof.
Krishnappa. M,. Prof. Rajanna K and Prof. Mohammed Ali, the Principal –in charge, Government. First Grade College, Soraba, Shivamogga district I can never ever forget the constant support and cooperation provided by my
Research Supervisor, Prof. Jayarama Bhat, DoS in Economics, Kuvempu
University, Shankaraghatta. I wholeheartedly applause the efforts of my young colleagues-Mr. Vignesha. T.K., Mr. Shankar both from the department of
Commerce and Management, Mr. Prakasha. R. department of Economics,
Mr.Raghavendra and Vasantha Kumar both from the department of Sociology,
GFGC, Soraba for their invaluable help. Also, I appreciate the co operation of mycolleagues- Prof. RaveendraBhat,, Basavarajappa.K.H.,and friends Dr.
Laxmisha, A.S., Assistant Professor, L.B.&S.B.S.College, Sagar, Dr. K.
PrabhakarRao, Nagaraj E. and my brother Prof. Thimmappa, A.S. Associate
Professor, L.B.& S.B.S. College, Sagar and the other colleagues in the department. Special mention of Mr. Nadeem Nawaz, the superintendent and
Santhoshkumar, the Librarian of my college is worthy here. My special thanks are due to the other colleagues- teaching and non teaching, Government First
Grade College, Soraba where I am serving now.
I am deeply indebted to all the members of SHGs and bankers in
Shivamogga district, who responded positively when I went for field investigation. I am equally thankful to all the Librarians of different
Institutionswho provided me worthy information
i I would profusely thank my bonafide student Miss. Prathibha R.H.,
Vasavi DTP Centre, Sagara, who neatly did the DTP work.
Finally, I would certainly fail in my duty if I do not remember my wife
Mrs. Jayalaxmi. A.S. and my son Chi. Akshaya. A. S. who encouraged me through out
Place : Sorab DR. SHYAMASUNDAR
ii TABLE OF CONTENTS
Chapter Page No. Acknowledgement i-ii Summary of Chapter Contents iv-ix
List of Tables x-xii
List of Graphs xiii
1 Introduction 1-8
2 Review of Literature 9-32
3 Micro Finance and Self Help Groups- Some Basics 33-56
4 Contour of Rural Development and Poverty Alleviation 57-77
5 Profile of the Study Area 78-107
6 Interpretation of the Primary Data 108-139
7 Summary and Conclusion 140-146
Bibliography 147-149
Interview Schedule For Primary Investigation 150-154
iii Summary of Chapter Contents
Chapter -1 INTRODUCTION 1-8
1.1 Background
1.2 Research Problem
1.3 Objectives and Scope of the Study
1.4 Hypotheses of the Study
1.5 Methodology
(a) Study Area
(b) Sources of Data
(c) Sampling Design
(d) Data Analysis
1.6 Contemporary Relevance of the Study
1.7 Chapter Scheme
Chapter-2 REVIEW OF LITERATURE 9-32
(A) Studies made in India
2.1 Studies on SHG- Bank Linkage
2.2 Microfinance and Its Operation
2.3 Studies on Poverty Alleviation and Employment Generation
2.4 Studies on Women Empowerment
2.5 Studies on Other Issues
(B) Studies made Abroad
2.6 Studies on Microfinance and Its Operation
2.7 Microfinance Literature on Poverty Alleviation and Employment Generation
2.8 Studies on Women Empowerment
iv Chapter-3 MICRO FINANCE AND SELF HELP GROUPS- SOME BASICS 33-56
3.1 Micro Finance- Conceptual framework
3.2 Objectives of Micro Finance Institutions
3.3 Role of Banks in Micro Credit
3.4 Role of NGO s in Micro –Credit Sector
3.5 Micro Finance –Role of NABARD
3.6 Concept of Self Help Groups (SHG’s)
3.7 Some Definitions
3.8 Necessity and Nature of SHGs
3.9 Functioning Pattern
3.10 Objectives & Functions of SHGs
3.11 SHGs Model
(i) SHG-Bank Linkages (SBL-Model)
(ii) MFI Model
3.12 MFI-Bank Linkage Programme
3.13 Role of SHGs in Poverty Alleviation through Micro Financ
3.14 Growth of SHG’s in India and Karnataka
3.15 Performance of Participating Agencies in Karnataka
3.16 Superiority of SHGs over Macro Credit Institutions
Chapter-4 CANTOUR OF RURAL DEVELOPMENT AND POVERTY ALLEVIATION 57-77
4.1 Rural Development- Conceptual framework
4.2 Rural Development- Meaning and Definitions
4.3 Rural Development Programmes
4.4 Poverty Alleviation
4.5 Poverty- A Conceptual Frame work
v 4.6 Concept of Poverty
(A) Absolute Poverty
(B ) Relative Poverty
4.7 History of Poverty Estimation in India
(A) Pre independence Poverty
(B) Post independence Poverty Estimates
4.8 Trends in Poverty
4.9 Why Poverty
4.10 Major Poverty Alleviation Programmes
4.11 Poverty Eradication
Chapter-5 PROFILE OF THE STUDY AREA 78-107
PART-I
(A) Profile of Shivamogga District
5.1 Location and Boundary
5.2 Origin of the name "Shimoga"
5.3 Historical Background
5.4 Administration
5.5 Human Resources
(a) Population Characteristics
(b) Literacy Rate
5.6. Occupational Pattern
5.7 Income Distribution
5.8 Cropping Pattern
5.9 (a) Climate and Rainfall
(b) Soil Structure
5.10 Education
vi 5.11 Health
5.12 Industrial Development
(a) Large and Medium Scale Industries
(b) Small Scale Industries
5.13 Power Resources
5.14 Irrigation Projects
5.15 Forest Resources
5.16 Mineral Resources
5.17 Tourism
5.18. Transport Scenario in the District
(a) Railways
(b) Roadways
5.19 Others
PART –II
(B) Profile of SHGs
1 Growth of SHGs
2 Composition of the Group
3 Rationale behind Forming SHG
4 Group’s Size and Number of Women Members
5 Frequency of Periodic Savings and Members’ Borrowing
Chapter- 6 INTERPRETATION OF THE PRIMARY DATA 108-139
Part - A
6.1(a) Views of SHG Members I Personal Profile of the Group Members 1. Age and Marital Status of Group Members. 2. Education Level of the Group Members 3. Category- wise Distribution of Members.
vii 4. Family Backgrounds of the Group Members 5. Motivating Factors for Joining the Group II. Group Profile
6 .2 Composition of the Group
6. 3 Rationale behind Forming SHG
6 4 Nature of Groups’ Activities
6.5 Group’s Monthly Income:
6.6 Size of the Group and Social Status of the Group
6.7 Amount and Frequency of Periodic Saving
6.8 Frequency of Monthly Meeting
6.9 Members’ Attendance in the Meetings
6.10 Level of Group Members’ Participation
6.11 Members’ Awareness about Rules and Norms
6.12 Nature of Accounts
6.13 Size and Amount of Members’ Borrowing
6.14 Purpose of Borrowings
6.15 The extent of utilization of loan
6.16 Members’ View about the Rate of Interest
6.17 Criteria of Lending by Groups to Members
6.18 Rate of Interest on Groups’ Lending
6.19 Groups’ Monthly Deposits in the Banks
6.20 Members’ Views on the Rate of Interest on Deposits
6.21 Members’ Awareness about Financial Services
6.22 Members Views on Vital Issues
6.23 Positives of forming SHGs
viii Part-B
(B) Views of Bankers
6.24 SHGs-Bank linkage
6.25 No Frill Account
6.26 Bank Lending
6.27 Criteria of Lending
6.28 Loan Repayment
Chapter-7 SUMMARY AND CONCLUSION 140-146
7.1 Major Findings of the Study
I Findings pertaining to the views of the members of SHGs
II Findings relating to the views of the Bankers
7.2 Measures for Improvement
7.3 Areas for Further Research
7.4 Conclusion
BIBLIOGRAPHY 147-149
INTERVEIW SCHEDULE 150-154
ix LIST OF TABLES
Table No. & Name Page No.
3.1 SHG-Bank Linkage in India (2000-01 to 2011-12) 44
3.2 Progress Under MFI-Bank Linkage Programme in India (Amount in Rs Crores ) 47 3.3 Loans to MFIs by Banks and other Agencies in India. 48
3.4 Growth of SHGs in India (2000-01 to 2011-12) 50
3.5 Growth of SHGs in Karnataka (2000-01 to 2011-12)* 51
3.6 Performance of Participating Agencies in Bank Linkage in 53 Karnataka 2000-01 to 2011-2012
4.1 Minimum calorie consumption and per capita consumption expenditure (1973-74) 66
4. 2 Percentage of Population below Poverty line (2004-05) 68
4. 3 National Poverty lines for 2004-05, 2009-10 and 2011-12 (in Rs per capita per month) 68
4. 4 Trends in the Incidence of Poverty In India
4. 5 State-wise Poverty Estimates (% below poverty line) (2004-05, 2011-12) 71
5. 1 Geographical Area of the District –Taluk wise 79
5.2 Comparative Population Characteristics of the District (1981-2011 ) 84
5.3 District Population (Taluk wise) (From1951-2011) (in Lakhs) 85
5.4 Literacy Rates In Shimoga District (Taluk wise & Gender wise) 86 (In Per Cent)
5.5 Occupational Distribution of Population in Shimoga District vis-à-vis Karnataka State (1991 census) 87
5.6 Categories of workers in Shimoga District vis-a-vis Karnataka State (2001 & 2011) census 88
5.7 Sectoral Composition of Income in Shimoga District (in Rs. lakhs) 90
5.8 Areas under Food Crops (Cereals) in Shimoga District, (In hectares) 92
x 5.9 Production of Crops in Shimoga District (1998-99 &2012-13) (in Lakh ones) 93
5.10 Education Level and Enrolment of Students 94
5.11 Technical Education and Students Enrolment in Shimoga district, 1998-99 and 2014-15 94
5.12 SSI Units in Shimoga District 2000-01-2014-15 96
5.13 Growth of SHGs in Shimoga District vis-a vis Karnataka State over the years 101
5.14 Stree Shakti SHGs in the District -Taluk wise 2014-2015 102
5.15 Savings and Loans Availed by SHGs in Shivamogga District. (2012-2015) 105
6.1 Sample Details :Self Help Group Members and Bankers interviewed in the District- 2016 108
6.2 Age and Marital Status of Members. 110
6.3 Education- wise Distribution of the Members. 112
6.4 Category wise Distribution of Members 113
6.5 Family Background- wise Distribution of Members 113
6.6 Motivating Factors for the formation of Group 115
6.7 Nature of Composition of the Group 116
6.8 Rationale behind forming the Group 117
6.9 Nature of Group Activities 118
6.10 Groups’ Monthly Income (In Rs) 119
6.11 Size of SHG and the Social Status of Group Members. 120
6.12 Range& Amount of Periodic Savings 121
6.13 Frequency of Monthly Meetings 122
6.14 Members Attendance in the Monthly Meetings 123
6.15 Level of Group Members’ Participation 124
6.16 Members’ Awareness about Rules & Norms 124
6.17 Nature of Accounts 125
xi 6.18 Size of Members’ Borrowing 126
6.19 Members’ Purpose of Borrowing 126
6.20 Extent of Utilization of Loans 127
6.21 Members’ View on Interest 128
6.22 Criteria of Group Lending 128
6.23 Rate of Interest on Group Lending to Members 129
6.24 Groups’ Monthly deposits in the Banks 130
6.25 Members’ Views on Interest rate on Deposits 131
6.26 Members’ Awareness on Financial Services 131
6.27 Members Views on vital Issues 133
6.28 Positives of Forming SHGs 133
6.29 SHG –Bank Linkage 134
6.30 Particulars of No Frill Account 135
6.31 Bank Lending Details 136
6.32 Criteria of Lending by banks 137
6.33 Loan Repayment by SHGS 138
xii
LIST OF GRAPHS
Page No
6.1 Sampling Details 109
6.2 Member’ Age & Marital Status 111
6.3 Members’ Distribution (Family background-wise) 114
6.4 Motivating Factors for Group Formation 115
6.5 Group Activities 118
6.6 Size of SHG & the Social Status of the Group Members 121
6.7 Members’ Awareness on Financial Services 132
xiii Chapter-1
Introduction
1.1 Background
Every policy should focus on empowering people particularly poorer of the poor so as to enable them lead a life without poverty and hunger. Otherwise, poverty leads to a downward cycle of malnutrition, Illiteracy and poor health pushing into further poverty and hunger. The inability to get the basic needs- food, clothing and shelter as a consequence of low income, lack of productive assets partial use of human resource owing to insufficient access to education and health and no access to break out poverty due to weak economic and social status are the important aspects of poverty 1
The seriousness of the problem can be inferred from the following information
• More than 8 million people die every year. • One out of six people live in extreme poverty defined as living on less than $ 1 a day. • More than 800 people go hungry each day. • Every year, over 6 million children die from malnutrition before their fifth birthday • Over 11 million children die from preventable diseases like malaria, diarrhea, and pneumonia. • Every 36 seconds another person dies of starvation and large majority are children under the age of five. • Over 100 million primary school age children can not go to school. Such is the malady of poverty! This certainly necessitates urgent need for innovative measure to ensure a strategic approach to empower the poor people to eke out their livelihood but also improve their social status. Otherwise, it creates crisis shading the economy of a nation and engulf hiatus between the haves and have-nots.
1
In short, the need of the hour is to fight out and eradicate poverty so as to ensure decent and comfortable living. This can be realized by achieving rural development.
Rural development implies both economic betterment of the people and greater social transformation. The problem of rural development in India is found to be multidimensional and complex and its crux is abject poverty. Poverty is a condition of life characterized by the economic, social and sex conflicts. 2 The problem of poverty in India is not merely economic. It is a symptomatic of a deeper socio-economic and political crisis 3There are 5.6 lakhs villages in India. Indian economy is characterized by income of rural areas 4 It is imperative that rural development is to be achieved so as to break the vicious circle of poverty in rural areas.
The development paradigm has witnessed a shift in its focus from growth, increase in GDP and Per Capita Income to non economic factors like social justice, poverty alleviation, redistribution of income, equality and women empowerment, rural development and sustainable development 5 .
Micro finance through Self Help Groups (SHGs) is an innovative approach for the financial inclusion of the rural poor. Credit has been an element in linking factor market and commodity markets. Credit helps the rural poor in the acquisition of income generating assets and create self employment opportunities thereby alleviating rural poverty 6 SHGs provide an innovative system of financial intermediation to provide micro financial assistance to the rural poor. Access to and control over land, technologies, labor, raw materials and markets.(ILO) 7 Micro finance scene is dominated by SHG- Bank linkage programme aimed at a cost effective mechanism for providing financial services to the rural poor 8
Providing financial services to the poor and underprivileged section of the society has been given top priority on the agenda of many anti poverty programme initiated by the Government of India ever since independence. This involves formal financial institutions. In spite of the best efforts of these financial institutions in reaching the deprived sections of the society living in rural areas, still, a large chunk rural under privileged poor failed to get their due share from the institutional finance 9
2
Even by early 1990s, the share of informal financial institutions (informal sector) was quite high at 39.6 per cent of the total credit as per the data provided by the RBI.It was in this backdrop, the need fro alternative financial innovation that should penetrate into rural hinterland and provide formal financial services without any hurdles was strongly felt .It was in such an environment micro finance emerged as a strong and suitable innovation that fills the existing gaps in the present financial system and thereby contributes rural development 10
Micro finance today is a buzzword in the financial sector of every nation after United Nations launched the International Year of Micro Finance 2005 . Micro finance, the development buzzword of the 90s meant to cure the ills of poverty. It got further impetus when MohammdYunus, the Founder of Grammeen Bank and a pioneer of micro credit for women was awarded Nobel Prize for peace in 2006. With this, concepts such as self-reliance, self-sufficiency and self-help gained momentum. As a matter of fact, micro finance is not a new financial innovation in India. Indian formal and informal financial institutions have been practicing this concept, of course, with different names from a long period of time.
(A) Micro Finance and Micro Credit
The terms ‘micro finance’ and ‘micro credit’ are often used interchangeably. It is expedient to highlight the difference between the two. Micro finance has become one of the most debated and documented but still much confused buzzwords. In its simplest way, it refers to ‘banking for poor’ 11 Micro finance is a functional part of financial institution that is adapted to the needs and realities of those who do not have access to conventional systems. Pooling of funds, risk management mainly through insurance, transfer of economic resources by lending funds and in some cases, provides a payment system are some of the functions of micro finance. . Micro credit is that part of micro finance that deals with the transfer of economic resources to the poor through the lending of funds borrowed on the financial markets or received from donars. 12 Micro credit is only a component of micro finance programme
3
(B) Poverty Alleviation Poverty is one of the most serious problems that the civil societies are facing today and surely is a curse on humanity. Hence the poverty eradication indeed a challenging task. Poverty, being a social phenomenon in which a section of the society is unable to fulfill even its bare necessities of life is a threat to the well being of the people. Poverty in India is multi dimensional and the poverty ratio varies between the rural and urban India. The existence of poverty in India is not only due to low income and unequal distribution of income but also due to broad social reasons. High incidence of poverty found across the regions in India reflects that the benefits of economic development have not trickled down to the lower strata of the society India can not shine if poverty is not alleviated, people are not empowered and a comfortable living is not ensured. Achieving economic development lies in reducing the percentage of people living below the poverty line. Alleviating poverty is sure to empower the people. India has realized that poverty anywhere is a threat to prosperity everywhere. Hence the governments in India- Central and State have been undertaking anti poverty measures. Over the years, the percentage of people living below the poverty line has conspicuously declined. Thanks to the amazing efforts of the government!. However, the government alone can not eradicate poverty. There is dire need for a change in the mindset of the people too. (C) Concept of Rural Development Rural development is a simple concept which is more complex to define. Rural development is a multi-dimensional concept, which involves all kinds of development in rural areas through collective governmental and voluntary agencies’ efforts in our country, where the majority of the population dwells in villages; national development becomes almost synonymous with rural development. India cannot shine without the shining of rural India. After independence a number of development programmes were started to change the scenario in the rural areas. The government has initiated, sustained and refined many rural development programmes under different five year plans. Whopping funds expended, yet alleviation of poverty has remained a distant dream. Rural poverty is inextricably linked with low rural productivity and unemployment, including under-employment. There is a basic issue of providing livelihood security, basic amenities to the rural population. Infrastructural gaps require 4 to be filled and connectivity with urban areas requires to be strengthened. Therefore the core of rural development strategy is to provide both self and wage employment, water supply, proper sanitary and health care measures and education.
1.2 Research Problem The present study intends to look analytically into nature and current issues of micro finance in Shimoga district of Karnataka State. The study attempts to suggest certain practical remedial measures for the better working of micro finance in this region of the State. The rationale behind choosing Shimoga District for taking up a research study of the nature of above is the growing significance of micro finance in the empowerment of the poor in Karnataka in general and Shimoga district in particular.
1.3 Objectives of the Study The major objective of the study is to analyze the role of micro finance and Self Help Groups in rural development and poverty alleviation in Shimoga district. The specific objectives are:
• To present a historical background of Micro Finance in India • To look into the concept of Micro Finance and its evolution over the years • To describe the role of SHGs and banking in Micro Finance • To suggest certain remedial measures for improving the position of Micro Finance in the region • To propose further areas of research pertaining to Micro Finance in the study area
1.4 Hypotheses of the Study
In order to achieve the above objectives, the study sets the following tentative hypotheses
• Provision of Micro Finance substantially contributes to the reduction of poverty and promotion of rural development in Shimoga district
5
• SHGs activities in the district are dominated more by mobilizing savings than by other factors • The members of the Self Help Group in the district have a tendency to borrow more for domestic purpose than for other purposes • The rate of interest on borrowings by SHGs in the district is fair and reasonable • Loan Repayment by SHGs in the district is not satisfactory
1.5 Methodology A. Area of Study : The geographical location of the proposed study is Shimoga district which consists of seven taluks including both Malnad and Semi –malnad regions. The former includes taluks like Hosanagar, Sagar, Sorab and Thirthahalli while the latter embraces taluks –Bhadravathi, Shikaripura and Shivamogga
B. Sources of Data: The study, for its analysis, depends on both primary and secondary data. The primary data are gathered through administering Interview Schedule to a random of target groups. The information is collected through Personal Interview Method. The secondary data are gathered from booklets, brochures, Annual Reports of NABARD and other publication of Government of Karnataka and Government of India. The materials are collected through Bureau of Economics, District Administration and through web links
C. Sampling Design: The present study has adopted Simple Random Sampling Techniques in primary investigation with the help of well structured interview schedules. Primary investigation is done in all the taluks of the district-Bhadravathi, Hosanagar, Shikaripur, Sagar, Shivamogga, Sorab and Thirthahalli. The representative samples are drawn from all the taluks with different socio-economic backgrounds, educational status and age groups.
D. Data Analysis: In order to make the inferences and to verify the hypotheses set, the data gathered through primary investigation are analyzed with the help of simple statistical tools like averages and percentages
6
1.6 Contemporary Relevance of the Study Micro finance has become a powerful tool to fight out poverty and has been instrumental in promoting rural development. Micro finance is said to have brought about macro changes particularly in rural areas. Under the circumstance, a study in the region revealing the growth and role of Micro Finance becomes needy and acquires greater relevance and significance
1.7 Chapter Plan
Chapter -1 Introduction
Chapter-2 Review of Literature
Chapter-3Micro Finance and Self Help Groups- Some Basics
Chapter-4 Contour of Rural Development and Poverty Alleviation
Chapter-5 Profile of the Study Area
Chapter-6 Interpretation of the Primary Data
Chapter-7Summary and Conclusion
Bibliography
Interview Schedule for Primary Investigation
Notes
1. See Ramesh Babuet.al.‘Micro Finance : An Approach for Poverty Alleviation’ in Southern Economist, Vol 49 (10) Bangalore p23
2. Vaikunte .L.D. et.al ‘Women Empowerment: Role of SHGs and NGOs in Southern Economist Vol 49 (16) Bangalore, p34
3. Ibid., p 34
4. Ibid., p34
5. SeeVenkatesh Murthy. S and Dinish. G.M.’ Self help Groups and Empowerment of Women’ in Southern Economist, vol 49(08) p35
7
6. Chavan.V.M. andMukund. M.M.’ Micro Finance and Financial Inclusion of Poor through Self Help Group Bank Linkage’ Southern Economist vol49(14) p8
7. Ibid., p 8
8. Ibid., p 8
9. See Dinesh.B.Raghuwanshi, ‘Micro Finance: Present Scenario and Emerging Challenges’ Southern Economist Vol 49 (1) p 15
10. Ibid., p 15
11. Chavan.V.M. and Mukund. M.M.‘Micro Finance and Financial Inclusion of the Poor through Self Help Group Bank Linkage’ Op.cit.p8
12. Dinesh.B.Raghuwanshi,’ Micro Finance: Present Scenario and Emerging Challenges’ Op.cit.p15
8
Chapter-2
Review of Literature
Having dealt with the mandatory formal things in the previous chapter, our attention now may be diverted to review the literature in the field aiming at building a strong theoretical frame work for the study. An exhaustive review of literature is carried out here.
Several studies in the country and abroad have been undertaken on micro finance and rural development. However, most of them have concentrated on issue- based things. For the benefit of convenience and better comprehension, studies made in the country and abroad are made separate Also the studies on different issues of micro finance and rural development are separately presented here.
(A) Studies made in India
2.1 Studies on SHG- Bank Linkage According to Saghir Ahmed (2013) SHG-Bank Linkage program has emerged as the biggest micro finance program in India enabling about 70 million poor households to gain access to micro finance facilities from the formal banking system
Amerender Reddy & Dharam Pal Malik (2011 ) in their Papers tried to examine the SBLP among the geographies and poor and suggested ways to overcome regional and class differences in reach.
PSR Murthy (2011 ) is of the firm view that SHGs should be facilitated to assess their strength against indicators that they would like to set for themselves. Policy implications and programme attributes are to be framed to achieve better results in reducing poverty and empowering women.
Pankaj Kumar & Ramesh Golcut (2009) examine the outreach of SHG- Bank Linkage program (SBLP) in the backdrop of growing banking and socio- economic divide between regions in India. Although the aftermath of nationalization of commercial banks which was a ‘defining event’ has witnessed a remarkable spread
9 of the banking system to the unbanked and under banked rural areas, the dependence on informal sources of credit has not decreased in rural areas.
Swain (2007 ) studied the impact of SHG bank linkage programmes on poverty, vulnerability and social development of the programme participants. For this purpose, the data was collected in two periods (July 2000 and end of 2003) from five states Orissa, Andhra Pradesh, Tamil Nadu, Uttar Pradesh and Maharashtra. Focus group discussion and interview methods were used. The comparison between the SHG participants and the control group showed drastic differences. The level of mobility, confidence, exposure and communication skill was better for the SHG participants . When compared to the control group, the data also showed a greater involvement of SHG participants in decision-making regarding family planning, children’s marriage, buying and selling of property and sending their daughters to school etc .
2.2 Microfinance and Its Operation
Sheokand (2000 ) discussed the evolution of Indian banking and its failure to provide credit facilities to poor people. . It was observed that Regional Rural Banks’ security-oriented individual banking system was replaced by the delivery of credit to focused groups. According to him the government sponsored programmes had occupied much of the economic space but did not achieve the objective of alleviating poverty. Self Help Group- Bank Linkage Programme had been proved very successful for the socio economic empowerment of hard core poor, providing financial services to them and preparing them to take up economic activities for poverty alleviation .
Gurumoorthy (2000) explained the Self Help Group (SHG) as a viable alternative to achieve the objectives of rural development and to get community participation in all rural development programmes. It was an organized set up to provide micro-credit to the rural women on the strength of the group savings without insisting on any collateral security for the purpose of encouraging them to enter into entrepreneurial activities and for making them enterprising women.
10
Fisher and Sriram (2002) explained that the financial sector developed in India by the end of 1980s was largely supply and target driven. The government sponsored poverty alleviation schemes experienced poor recovery rates with mis- utilization of subsidy and lack of observation of repayment ethics. The repayment rate under the Integrated Rural Development Programme (IRDP) remained less than one- third and the programme created about 40 million bank defaulters. In 1989, with the first official loan waiver, credit discipline was thrown to the wind. This created cynicism amongst bankers about the credit worthiness of poor people .
Gaiha et al . (2001) in a study concluded that larger sections among the poor were not covered in the two major anti-poverty programmes (Rural Public Works and IRDP) in India and the impact of these programmes was limited due to their gross mistargeting and selection of non-poor as participants.
Singh (2003) had explained the failure of government initiated anti-poverty programmes and the success of microfinance programme as an effective poverty alleviation strategy in India. According to him the government-implemented rural development programmes failed because these were centrally invented (lacking participation of local level institutions), politically motivated, had leakages, misappropriation and heavy administrative expenses. More than 250 million people in India remained poor, even after 50 years of independence. Failures of these institutional initiatives and learning from the success of the Grameen Bank in Bangladesh had given way to the development of microfinance programme in India in 1992. Many NGOs who were following SHG promotion approach such as Mysore Resettlement and Development Authority (MYRADA) in Karnataka, Society for Helping and Awakening Rural Poor through Education (SHARE) in Andhra Pradesh, Rural Development Organisation (RDO) in Manipur, People’s Right and Environment Movement (PREM) in Orissa and Andhra Pradesh, Youth Charitable Organisation (YCO) in Andhra Pradesh, Acil Navsarjan Rural Development Foundation (ANaRDe) in Gujarat, ADITHI in Bihar Professional Assistance for Development Action (PRADAN) and Rural Development Society for Vocational Training (RUDSOVAT) in Rajasthan came forward in this sector. These NGOs were proving very successful in
11 reducing poverty level of its clients and generating additional employment opportunities.
Basu and Srivastava (2005 ) in their Rural Finance Access Survey-2003 conducted jointly by World Bank and National Council of Applied Economic Research, India, highlighted the inadequacies in rural access to formal finance and the exploitative terms of informal finance, which provided a strong need for innovative microfinance approaches. The survey took a sample of 6000 rural households from two Indian states-Andhra Pradesh and Uttar Pradesh. The study indicated that rural banks serve primarily the needs of the richer rural borrowers and the rural poor faced severe difficulties in accessing savings and credit from the formal sector.
Sangwan (2008) empirically ascertained the determinants of financial inclusion and studied the relevance of Self Help Groups (SHGs) in achieving financial inclusion. For the purpose of the study, the cross-section data of 42 Regions from different states and UTs of India was used. The coverage under financial inclusion was assessed in terms of percentage of adults having credit and saving bank accounts. In order to find out the determinants of financial inclusion a multiple regression technique was applied. The empirical evidence of impact of bank branch density, level of income, literacy and SHG membership on financial inclusion was estimated with this technique. It suggested that SHGs could play significant role in achieving the financial inclusion especially for women and low-income families.
2.3. Studies on Poverty Alleviation and Employment Generation
Mahajan (2005) says that the role of government, formal financial institutions, Non Government Organizations(NGOs) and people participation play important role in success of micro finance as a medium of poverty alleviation
Puhazhendhi and Satyasai (2000 ) in their study commissioned by NABARD covered 560 sample households from 223 SHGs spread over 11 states across India. For assessing the impact of the programme, a comparison of pre- and post-SHG situation was made. With a view to quantify the empowerment of SHG members, economic and social empowerment index was computed for each household by using
12 the scoring technique. The findings of this study showed 33 per cent rise in average annual income from pre- to post-SHG situation. Forty per cent of this incremental income was generated by non-farm sector activities. . The share of families living below the poverty line was reduced by 20 per cent in post-SHG situation. The social empowerment of sample SHG members in terms of self-confidence, involvement in decision-making, better communication, etc. improved in a significant way.
Manimekalai and Rajeswari (2001) studied the socio-economic background of self-help group women in rural micro-enterprises in Tamil Nadu and examined the factors which had motivated the women to become SHG members and eventually as entrepreneurs. The researchers analysed the nature of economic activities and the performance in terms of growth indicators such as investment turnover, employment, sources of finance, product marketing and other related aspects and identified the problems faced by SHG women in running the enterprises. The study found that women SHGs earned the highest profit from agriculture, followed by trade related activities and catering services. A majority of sample units did not market their products outside the districts but sold these directly to the customers. The income of the SHG women almost doubled after taking up micro-enterprises. Majority of the respondents faced serious problems like non-availability of raw materials, lack of infrastructure facilities including marketing, lack of support from family members in running the enterprises etc.
Todd (2001) studied the impact of SHARE Microfinance Ltd. on its clients in Andhra Pradesh, India. The study compared 125 SHARE clients to 104 new clients who had yet to receive any exposure to the programme. All the SHARE clients had participated in the programme for at least three years. Todd created a poverty index composed of four elements: sources of income, productive assets, housing quality, and household dependency burden (the number of household members divided by the number of income earners). This index score helped Todd to document the extent to which clients had moved out of poverty. The results of the study showed that 76.8 per cent of the total clients had experienced a reduction in poverty including 38.4 per cent that shifted from very poor to moderate poor category and 17.6 per cent that had left
13 poverty entirely. As compared to the incoming clients, mature clients were more likely to send their children to school and spend money for health purposes.
Chen and Donald (2001) in their study compared the impact on the clients who borrowed for self-employment and the clients who only saved with Self- Employed Women Association (SEWA) Bank without borrowing to the non-clients of Ahmedabad and Gujarat states of India where SEWA was based. The study was conducted in two rounds, i.e. in the years 1997 and 1999. It was observed that repeated borrowing was especially important, compared to one time borrowing. These findings indicated that microfinance was quite effective.
Singh (2001 ) conducted a study on the socio-economic impact of microfinance programme in Uttar Pradesh. In order to study the impact, rural areas of Kanpur district were selected on account of highest number of credit linked SHGs as compared to other districts in the state. For the purpose of the study, out of 11 SHGs linked with RRB, one group in Beridayria village was selected. It was found that in pre-SHG situation most of the members were dependent on income from labour but in the post-SHG situation their main source of income was dairy. The survey showed that simple and quick credit delivery with lower interest rates in SHGs replaced the money-lenders. During pre-SHG some of the loans were taken for consumption purpose but in the post-SHG situation the loans were mainly taken for income generating purposes. The study showed that the average value of assets increased by 46 per cent and the annual income per household increased by 28 per cent in post- SHG periods. The most interesting feature of SHGs was compulsory savings even by cutting the necessary expenditures. Recovery rate was quite high which ranged from 95 to 100 per cent. The study also revealed that the commercial banks were not prompt in linking SHGs for loans.
Mishra et al. (2001) studied the impact of rural SHGs on generation of income and employment among the beneficiaries, identified the major constraints and problems faced by the groups, and suggested measures for overcoming these problems in Faizabad district of eastern Uttar Pradesh. . The results of the survey showed that SHGs have helped to increase the income of the participants by 10 to 15 per cent. The
14 major problems that the members faced were lack of training, credit and marketing facilities, entrepreneurship and high interest rate. It was suggested to involve Commercial Banks, RRBs and Primary agricultural co-operative societies to provide liberal credit at cheaper interest rate to the poor through SHGs.
Dahiya et al. (2001) in their research paper made a socio-economic analysis of the working of SHGs in Solan district of Himachal Pradesh. The data was collected from 54 SHG participants drawn from six SHGs from two development blocks of the district. The study revealed that members were mainly involved in small business and service/profession like bangle selling, tailoring, marginal farming etc. The interest rate charged on internal lending ranged from 24 to 60 per cent and the bank interest rate was 12.5 per cent. The recovery performance both for internal and bank loans was 100 per cent. The study found that there was a considerable increase in annual income in post- SHG period. This increase was very high for the newly formed groups as compared to the older groups. The overall increase in annual income was 94.3 per cent in post-linkage period. The social impact was deep in empowering women folk, educational development of children and emancipation from social evils like drunkenness by male household members.
Gaonkar (2001) studied the impact of SHGs on women in Goa. For this purpose, the data was collected from 5 women SHGs situated in Bardez and Bicholimtalukas in Goa. The study revealed that SHGs made a lasting impact on the lives of the poor and their quality of life was improved in terms of increase in income, savings, consumption expenditure, self-confidence, productive use of free time, getting opportunity to improve hidden talents and getting more importance in the family. It was found that individual loans were mostly utilised for productive purposes and the repayment of these loans was 100 per cent. The study concluded that the SHG movement could significantly contribute towards the reduction of poverty and unemployment in the rural sector of the economy.
Mishra and Hossain (2001) in their study assessed the impact on mahila- mandal (a rural SHG in Orissa) in terms of empowerment of rural women and employment generation through programme participation. The group was working
15 under the development agency for the poor and tribal awakening, a leading NGO of Kalahandi district. The impact was assessed, comparing the pre-1996 and post-SHG situation (2001) of the programme participants. The study found that till the year 2001, 26.67 per cent of the families started non-farm activities, 40 per cent adopted small family norms, 45 per cent consumed food with vegetables, 58 per cent had food security to manage the lean season and all the member families have become literate.
Nedumaran et al. (2001) conducted an empirical study on the impacts of SHGs the districts of Erode and Tiruchirapalli in Tamil Nade One hundred and fifty members from 30 SHGs promoted by two NGOs – MYRADA and LEAD were surveyed. . The study showed that the average amount of group loans availed was positively associated with the group age. The annual net family income of the members in post-SHG situation increased by 23 per cent over the pre-SHG situation. The study also indicated a considerable improvement in the social conditions of SHG participants after joining the group activities. The researchers also recommended the promotion of SHGs in rural areas, training to members and involvement of local NGOs in building SHGs for the overall improvement of the households.
Raghavendra (2001) evaluated the contribution made by microfinance programme initiated by Sahyadri Grameen Bank in Thyagarthi village in Shimoga district of Karnataka. The income generating economic activities and women’s empowerment in rural areas was studied.
The analyses revealed a significant change among the group members in diversifying income generating economic activities. The members were of the view that they do not borrow from moneylenders anymore. It was found that the members of SHGs formed by forward community had created their own capital base. They were involved in diversifying farm-based activities into market-based activities. For the other two groups, resource constraint was found to be a detrimental factor to expand economic activities. The case study concluded that there was a great potential for implementing various programmes for the rural poor through SHGs.
Puhazhendhi and Badatya (2002) in a study commissioned by NABARD surveyed 115 SHG members from 60 SHGs in eastern India. They concluded that 16 institutional credit had deepened and widened among the rural poor, while there had been substantial reduction of loans from money-lenders and other informal sources.
Littlefield et al. (2003 ) in their paper reviewed that microfinance programme was very helpful in attaining the millennium development goals through mobilising various resources to reduce poverty and hunger, eliminate HIV/AIDS and infectious diseases, empower women, educate all children and lower child mortality. This paper presented the findings of various microfinance studies and had proved that availability of financial services for poor households had a strong impact on the achievement of the millennium development goals. The poor used financial services not only for business investment in their micro-enterprises but also to invest in health and education to manage household emergencies and to meet other wide variety of cash needs that they encountered. A large number of microfinance institutions had proved that they were profitably reaching the bottom poor people by applying various innovative products and methodologies. The availability of financial services had proven to be a critical factor in reducing poverty and its effects, resulting in positive impacts on nutrition, education, health, gender equity and the environment.
Kabeer and Noponen (2005 ) in their paper set out the findings of a socioeconomic impact study of PRADAN’s microfinance programme carried out in Jharkhand, one of the poorest states in India. The study was carried out in Godda, Dumka and Banka districts of Jharkhand . The findings of the study showed that as far as basic needs were concerned, the members had reported a more favourable overall food situation in terms of adequacy and diversity of diet as compared to non-members. They had better access to clean drinking water, improved housing with more rooms and doors. Members were sending greater number of children to school along with greater gender equity. Members were engaged in own cultivation and livestock rearing and less dependent on unskilled wage labour activities. Members had higher levels of savings and lower incidence of indebtedness to high interest of money40 lenders as compared to non-members. As regards women’s skills, knowledge and agency, members had acquired more practical skills and demonstrated greater awareness of government programme for the welfare of poor. Overall, the study showed that
17 members were in a better position than non-members and the process of women empowerment had been initiated through the microfinance programme.
Misra (2006) in his paper discussed the factors and theoretical position associated with evolution of microfinance and then assessed the socio-economic impact of SHG bank linkage programme of microfinance in India It was found that all the group members were saving regularly at fixed intervals and dependence on money-lenders was eliminated for 2/3 of the clients. . Loan repayment rate was also very high.
Yamuna (2007 ) studied the changes in the role and status of SHG participants in Solamadevi village of Coimbatore district. . The results of the study showed that all the participants who received bank loans under this scheme started their own businesses. There was an increase in the income level, savings, value of assets and household durables after joining the SHGs. It was also found that SHGs had developed women’s relationships with government department and banking institutions. They had been equipped with leadership skills through various human resource training programmes and interaction with other SHGs. Women had got lot of courage and self confidence to speak for their rights after becoming SHG members.
Sarangi (2007 ) evaluated the impact of microfinance programme on rural poor households in some backward regions of Madhya Pradesh in India. . The researcher examined three most popular group based microfinance programmes, i.e. government supported SGSY programme, NABARD’s SHG bank linkage programme, and World Bank promoted Swashakti programme . It was found that the income of households reporting self-employment in off-farm activities was much higher for the participant households than their counterparts. Intervention of PRADAN in promoting poultry, mushroom cultivation and sericulture among the participant households had helped diversifying their economic portfolio. Indicators of consumption items including clothing and footwear seemed to obtain high average values for the participant households than non-participants. It was also found that location factors contribute to the creation of opportunities for diversifying the economic portfolio and employment choices.
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Borbora and Mahanta (2008) in their case study of Rashtriya Grameen Vikas Nidhi’s (RGVN) credit and saving programme (CSP) in Assam examined the role of credit in generation of employment opportunities for the poor. They also assessed the role of SHGs in promoting the saving habits among the poor and the contribution of the programme in social and economic empowerment of the poor in general and of women in particular. The analysis of survey data revealed that 80 per cent of the members in the selected SHGs were from poor families. The members of the groups were engaged in gainful economic activities. It was found that the programme had succeeded in inculcating the habit of saving among the members . It also helped them to free themselves from the clutches of non-formal sources of credit. Forty-three per cent of the sample beneficiaries expanded their income generating activities. So the CSP in Assam was found to be successful.
2.4 Studies on Women Empowerment Suguna (2006) conducted a study on empowerment of rural women through self help groups –An indepth Study of Self Help Groups in Chittooor district of Andra Pradesh .
MYRADA (2002) studied the impact of SHGs on the empowerment status of women members in southern India. The objective of the study was to establish whether and to what extent the membership in SHGs had an impact on the social status and empowerment of the women members of such groups. The results of the study showed that in the new groups 47 per cent of the members were earning, whereas in the old groups 66 per cent members were either the chief wage earners or other earning members of their families. Average share of earning SHG members in their family income was higher in old groups, i.e., 40 per cent as compared to 26 per cent in young SHGs. While testing the confidence level of respondents, members in old groups reported a positive influence on confidence level in dealing with other people and institutions. It was concluded that members of old groups were more confident, more aware regarding their health and hygiene, more technically skilled, financially more secure, more in control of their lives and in a stronger position vis-à- vis their family members as compared to young group members. Hence, it was
19 concluded that if responses from the new groups were taken as benchmark, the process of empowerment seemed to have started in old groups.
Malhotra (2003 ) described some basic and conceptual issues regarding women empowerment and had given a comprehensive framework of domains of women empowerment. She included two essential elements in women empowerment, i.e. process and agency. Women empowerment was a process of progression from one stage to other and the agency element defined that women themselves must be significant actors in the process of change that was being measured. In order to measure empowerment empirically she had given a framework of economic, socio- cultural, interpersonal, legal, political and psychological dimensions of women empowerment at household and community level.
Gaonkar’s (2004) research paper aimed at evaluating the role of SHGs in the empowerment of women. Primary data was collected from the state of Goa, India. Comparison using before and after SHG technique was made. The study concluded that the microfinance programme had made a lasting impact on the lives of women particularly in rural areas of Goa. There was an increase in income, savings and consumption expenditures. With the increase in self-confidence, the social horizon of the members had widened. It was also found that with improvements in socio- economic opportunities for women and their ability to take collective action, there had been a significant decline in gender based problems such as domestic violence, dowry, polygamy etc. Interestingly, the members were motivating other women to form SHGs so that they can also reap programme benefits. SHGs had created better understanding between the members of different religious groups.
Tracey et al. (2006 ) in their study examined the personal and economic empowerment of rural Indian women through self-help group participation. Data was collected from 100 rural women from the Udaipur district of the state of Rajasthan in India. The study also found that women’s employment meant longer hours of work to meet strict time frames, which resulted in less time for household and family duties. Negative appraisals of pressure, challenge, excessive work loads and stress was indicated. The results showed that the immediate effects of participating in self-help
20 groups for women included an increase in economic strength and an enhanced level of psychological well-being.
Sahu and Das (2007 ) studied the performance of SHGs in promoting women empowerment in Gajapati district of Orissa state in India. It was found that even after obtaining group loans most of the members were involved in collection and marketing of minor forest products. The loans were mainly utilized for consumption, health, festivals and for repayment of previous loans. Just 11.56 per cent of the loans were utilised for investment purposes
According to the Study by Economic Development Association, Gurgaon, Hariyana , (2006) micro finance has helped to uplift the poor and empower the women who have no access to credit.
2.5 Studies on Other Issues
Pangannavar (2010) reviews the incidence of poverty and efforts made through rural development programmes to overcome the problems of poverty since the incidence of poverty is more acute in rural India. Government has been making efforts to alleviate poverty through various programmes.
Venkatappa and Shivaiah (2011) reports that rural development implies both the economic betterment of people and greater social transformation in order to provide the rural people with better prospects for economic development.
Chitra Ramachandra (2008) in her Study of SHGs in Madurai district of Tamil Nadu observed that most of the women in micro enterprises wanted to reduce poverty and to share their family responsibilities.
Usha (2010) made a study of Women SHGs in Srikakulam and Godavari districts of Andra Pradesh observed that the recovery of loans was found encouraging. She also found that majority of the members were about the family planning.
Sarumathi and Moha (2011) in their study observed that the micro finance is a type of banking service that is provided to unemployed or low income individual
21 groups who would otherwise have no other means of gaining financial services. The study showed that the micro finance and SHGs are effective in reducing poverty , empowering women and creating awareness which finally results in sustainable development of the nation.
Dhillion (2010) observed that the banks perceive poor rural women as highly risky group with limited liability to pay back their loans. The loan demanded by poor people is small in size and not sufficient to cover transaction costs
Shrikant.R.(2013) in his study revealed that access to financial inclusion attempts to lift the resource poor from poverty through coordinated action amongst the banks, the government and other related institutions in order to facilitate access to bank accounts and other related services.
Sheshadri.A.B revealed to ensure financial inclusion can bring in to balanced growth fold the needy and weaker sections. Also he observed that the government has the aesthetic responsibility to put system in place for reaching the bottom pyramid.
(B) Studies made Abroad
Rutherford (2000)and Armendáriz & Morduch (2005) explained the difference between microfinance and micro-credit. Micro-credit referred specifically to small loans given to the poor people but microfinance was a broader term embraced efforts to collect savings from low-income households, provide consumption loans and insurance along with micro-credit.
2.6 Studies on Microfinance and Its Operation
Harper (2002) studied the differences, outreach and sustainability of the SHG banking system and Grameen banking system of providing microfinance. SHG bank linkage and Grameen banking systems dominated the microfinance markets in India and Bangladesh respectively. . It was also found that SHGs were probably less likely to include poor people than Grameen Bank groups but neither system reached the
22 poorest. It was also found that SHG members were free to manage the group financial affairs so they were more empowered but at the same time more vulnerable. Grameen groups were much better protected against internal and external threats. Their members were less vulnerable but also less empowered.
Yunus (2006 ) in a study explained the differences between Grameen Bank and conventional banks. He explained that the Grameen Bank methodology was almost the reverse of the conventional banking methodology. Conventional banking was based on the principle that the more you have, the more you get. As a result, more than half of the population of the world was deprived of financial services of the conventional banks as conventional banking was based on collateral, focused on men, located in urban centers and owned by rich with the objective of profit maximisation. On the contrary, the Grameen Bank started with the belief that credit should be accepted as a human right, where one who did not possess anything get the highest priority in getting a loan. Grameen Bank methodology was not based on the material possession but on the potential of a person. Grameen Bank, which was owned by women, had the objective of bringing financial services to the very poor, particularly women to help them fight poverty, stay profitable and financially sound. .
Sarkar (2008 ) in his paper discussed the new model of microfinance in Bangladesh and expressed the need of some institutional reforms in the microfinance development strategy of India. The Grameen Bank had introduced a more flexible credit system named as Grameen-II. The Grameen Bank had also introduced a pension fund for its borrowers with a minimum contribution for each borrower towards a pension deposit scheme. Further, the Grameen Bank had introduced loan insurance for its borrowers to pay off a member’s debt in the event of her/his death. In this way, Grameen-II introduced a range of attractive new savings and loan products for its borrowers, which the SHG bank linkage model of India was lacking.
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2.7 Microfinance Literature on Poverty Alleviation and Employment Generation
Hossain (1988) conducted a study regarding impact assessment of Grameen Bank’s microfinance programme in Bangladesh. The study took a comparison between the Grameen Bank members and eligible non-participants in Grameen Bank situated villages. It was found that participation in Grameen Bank’s microfinance programme had a positive impact on various economic activities of members and helped in alleviating poverty.
Pitt and Khandker (1998) had studied the impact of microfinance on poverty in Bangladesh. Data was collected through a survey in 1991-92 containing 1798 households (1538 participants and 260 non-participants) in three Bangladeshi programmes, i.e. microfinance programmes of the Grameen Bank, Bangladesh Rural Advancement Committee (BRAC) and of Bangladesh Rural Development Board (BRDB). For findingthe impact borrowers were compared to the people in non- programme villages. Results showed that for every Taka (currency of Bangladesh) lent to a female member, the consumption increased by 18 Taka and for men this figure was 11 Taka. Further, thestudy showed that the poverty rate of BRAC members fell by around 15 per cent for moderate poor and 25 per cent for ultra poor. Similar results were found for the other two programmes. This rate of poverty reduction appeared to decline with the duration of membership and with cumulative loan size. Thus, the reduction of level of poverty was variable and declined with the passage of time.
Morduch (1998) in his study investigated a cross-section data of nearly 1800 households in Bangladesh served by microfinance programmes of the Grameen Bank, BRAC and BRDB in 1991-92. The sample also included a control group of households in areas not served by any microfinance programme. There was strong evidence available that micro-credit contributed to reducing household vulnerability. Participant households had substantially and significantly lower variation in consumption and labour supply across seasons relative to the control groups. The study showed that consumption variability was 47 per cent lower for eligible Grameen
24 households, 54 per cent lower for eligible BRAC households and 51 per cent lower for eligible BRDB households as compared to a control group.
Khandker et al. (1998 ) reported substitutions from wage employment to self- employment in the survey of 29 districts (than as) in Bangladesh undertaken for the World Bank and the Bangladesh Institute of Development Studies (BIDS). They concluded that microfinance as delivered by Grameen Bank, BRAC and Rural Development-12 (RD-12) accelerated the shift from wage employment in the informal rural sector to self-employment among the poor participants. But they added that absence of technological development had slowed down the overall increase in production and employment.
International Labour Organisation (ILO) (1998) in its different projects concluded that microfinance had successfully increased micro-enterprises and self- employment of the clients. An ILO survey of 46 Microfinance Institutions (MFIs) in 24 different countries showed that 74 per cent of MFIs had “the self-employed” as clients, leaving it open whether these had some wage labourers or not, 17 per cent had primarily self-employed in their clientele and just 4 (9 per cent) had only a minority of self-employed amongst their clients.
Coleman (1999) studied the impact of microfinance lending of village banking programme in Thailand. His Study showed no evidence that programme had an impact on any asset or income variable. There was no evidence of increase in the productive activity as the access to bank loans increase. The author cautioned against extrapolating these results to other countries since Thailand was rather a developing country. One of the reasons of weak poverty impact was that there was a tendency for wealthier households to self-select into village banks and then relative small size of loans might be used for consumption purpose.
World Bank (1999) survey conducted for the mid-term review of the poverty alleviation and microfinance project among 675 micro-credit borrowers in Bangladesh showed that there had been positive change in the economic and social status of the surveyed borrowers. The survey showed that the improvements had been mainly achieved due to the increased level of self-employment of women participants. 25
Dunn and Arbuckle (2001 ) studied the impact of micro-credit on the Mibanco clients in Peru The impact was measured using cross-sectional data collected in two parts, once in 1997 and again in 1999. The study demonstrated a very significant positive impact on its clients in terms of income and employment generation. It was found that the participation in the programme led to nine additional days of employment per month.
Develtere and Huybrechts (2002) in their paper focused on the economic and social impact of the activities of microfinance institutions on the clients of Grameen Bank and BRAC in Bangladesh. The author overviewed different studies conducted in Bangladesh by different researchers. The study revealed that Grameen Bank and BRAC had succeeded in reducing their members’ vulnerability by controlling consumption and income variability and had prevented them from falling further into poverty. However, there was no consensus on whether the two institutions reduced poverty as per se. Most of the poorest (bottom poor) people in Bangladesh had not been able to take part in a micro-credit programme due to various client related and programme related barriers. While assessing the social impact of the programme it was found that the programme had a positive effect on women participants with regard to women’s status, their involvement in family decisions, expanding knowledge and awareness, and the improved situation for their children. It was also found that the microfinance programme not only affected its members but also the non- members in programme villages and surrounding villages through a positive spill over in different spheres of social and economic life in the form of increased awareness, better practices of health, sanitation, family planning, reduced rate of interest and increased wages.
Khandker (2003) measured the impact of microfinance institutions on the poor people using the panel data of two time periods of 1991-92 and 1998-99 in Bangladesh. He found diminishing return over time to the borrowings. A typical borrower would experience the greatest impact from earlier loans and the relative improvements would level off over time. He had also proved that microfinance reduced poverty among non-participants as well through spill over effects in which non-participants benefit from increase in the level of economic activity.
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Chowdhury et al. (2005 ) examined empirically the impact of micro-credit on poverty in Bangladesh. The focus was on both objective and subjective poverty and particular attention was paid to the length of time, the programme participants had access to micro-credit A household-level survey was carried on 954 micro-credit recipients from Grameen Bank, the Bangladesh Rural Advancement Committee (BRAC) and the Association of Social Advancement. The main finding of the study was that micro-credit was associated with both lowering objective and subjective poverty. It was found that for the entire sample, objective and subjective poverty rates were 54.6 and 60.2 per cent respectively. There was also a clear poverty differential between ‘new’ and ‘old’ group members. The objective poverty rate for new members was 65.3 per cent compared with 50.2 per cent for old members. Likewise the subjective poverty rate for new members was 90.2 per cent compared with 47.9 per cent for old members. The analysis carried out in the research paper showed that even after eight years of programme experience, the estimated objective and subjective poverty rates were still high, i.e., about 45 per cent and suggested that micro credit organisations should reconsider and adapt their micro-credit technologies to improve the long-run poverty reduction capacity of micro-credit programme.
Montgomery (2005) empirically examined the impact of Khushhali Bank’s microfinance lending programme on the welfare of poor households in Pakistan. The programme was assessed using the technique of prospective clients (who had not yet accessed loans) as the comparison group. The primary data was collected from 2881rural and urban households in Pakistan. The empirical results showed that the participation in Khushhali Bank’s microfinance programme had positive impact on both economic and social indicators of welfare as well as income generating activities, especially for the poorest participants in the programme. The programme enabled poorest of its borrowers to increase expenditure on their children’s education and health.
Yunus (2005) in his study explained Grameen Bank’s new microfinance programme, exclusively targeted for beggars in Bangladesh. The ‘struggling members (beggars) programme’ was a new initiative taken by Grameen Bank in late 2003 to help the people in the lowest rung of poverty which was also reinforcing the bank’s
27 campaign that credit should be accepted as a human right. The goal of the programme was not only to economically empower but also to boost the morale and dignity of the beggars. The struggling members were not required to form any group or attend weekly meetings. In this programme, 31.11 million Taka loans were provided to 47,454 struggling members without charging any interest, up to July 2005. Out of this collateral free loan, 15.40 million Taka had been repaid and 786 members had already quit begging.
Hietalahti and Linden (2006) studied the socio-economic impact of micro- credit on women’s welfare in northeastern South Africa using a qualitative semi- structured interviewing method. The study focuses particularly on the benefits, disadvantages and challenges obtained from the Small Enterprise Foundation’s (SEF) Micro Credit Programme (MCP) and the T˘shomisano Credit Programme (TCP). . Impact of micro-credits and a comparison of two programmes were analysed on a household level. The results revealed that a number of poor women had been released from deepest poverty through the opportunities provided by SEF. The MCP clients, who tend to have a better starting point, seemed to be more educated, able to diversify and improve their businesses as well as being more capable of protecting themselves against vulnerability than the poorer TCP clients
Hoque (2008) examined the relationship between households’ involvement in BRAC’s micro-credit programmes and the households’ capacity to deal with economic hardships. It was hypothesized that the BRAC’s credit programmes contributed to increase the participating households’ abilities to cope with economic hardships. This hypothesis was tested by comparing 108 BRAC and similar number of non-BRAC households, the latter being defined as those who did not receive loans from BRAC or any other institutional sources The survey results showed that 54.6 per cent of the BRAC households and 43.5 per cent among the non-BRAC households faced economic hardships. The major crises that were reported by respondents were sickness of householders, crop loss, damage of houses or businesses, losses due to natural disaster and the death of householder. With regard to the capacity of households to cope with crises, the study found that non-BRAC households had less capacity to cope with crises from their current income and earnings than the BRAC
28 households. More BRAC than non-BRAC households borrowed money in crisis. Asset selling was another coping strategy but in this survey more non-BRAC than BRAC households resorted to asset selling–a negative coping mechanism. It was found that 7.1 per cent of the BRAC households used their own savings to cope with crises compared with 4.3 per cent of the non-BRAC households. This could be because the savings of non-BRAC households were also less than those of BRAC households. This meant that lacking savings, non-BRAC households resorted to asset selling. The results of this study showed that BRAC households were more able to obtain loans during times of crisis than non-BRAC households. Twice as many BRAC households borrowed money during crisis times than non-BRAC households (20 per cent compared to 10.1 per cent respectively).
2.8 Studies on Women Empowerment
Hashemi et al. (1996) explained that the microfinance programme in Bangladesh had led to empowerment of women. They had used a measure of length of programme participation among Grameen Bank and BRAC (Bangladesh Rural Advancement Committee) clients to show that each year of membership increased the likelihood of a female client being empowered by 16 per cent. Results showed that Grameen Bank members were seven and a half times more empowered as compared to the comparison group. Even women who did not participate in the programme were more than twice as likely to be empowered simply by virtue of living inGrameen villages. Thus, a positive spill over from microfinance was affecting the norms in communities.
Yunus and Jolis (1998) in their work highlighted that the exclusion of poor women from land rights had been contributory to their marginal position. Grameen Bank in Bangladesh provided housing loans to members with 3 loan cycles and with title deeds to the land on which the house was built. As most group members were women, one of the results was that women had title deeds transferred to them often from their husbands to obtain these loans. This had also reduced the incidence of divorce since the women, as the owners of their own houses, could not be easily evicted.
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According to World Relief Rwanda (1999) URWEGO (one of the premier microfinance institutions in the region of East Africa) found that the greatest impact of microfinance programme on empowerment had been on self-esteem, with 69 per cent of clients reported increased self-esteem and self-confidence. Fifty-four per cent of URWEGO clients reported an increase in their level of knowledge about issues that affect themselves and their families, and 38 per cent of clients reported an increase in business knowledge. Through in-depth interviews with 13 clients in another study URWEGO found that 54 per cent of the clients experienced an increase in their ability to control or influence business decisions, 38 per cent experienced an increase in decision making in their families, 38 per cent in their communities, and 54 per cent in their churches.
Ashe and Parrott (2001) conducted a study on the women empowerment programme in Nepal and showed that 89,000 out of 1,30,000 or 68 per cent of women in the programme experienced an increase in their decision-making roles in the areas of family planning, marriage of children, buying and selling property and sending their daughters to school. These all areas of decision-making were traditionally dominated by men
Banu et al. (2001) conceptualized empowerment as the capacity of women to reduce their socio-economic vulnerability and their dependency on their husbands or other male counterparts. They investigated the changes that had taken place in the lives of women who participated in Bangladesh Rural Advancement Committee’s (BRAC)rural development programme. The primary data was collected through case studies and household surveys. It had been found that BRAC was able to bring substantial changes in the lives of its programme participants both at individual and family level. Women participants were involved in economic activities, generating income and some of them had started nontraditional economic activities and were engaged in more than one earning activity throughout the year. It was also found that longer the time a woman spent in BRAC, there were more employment opportunities and greater scope for ownership of large assets. The economic dependence of women on their husbands was reduced. . It was found that empowerment was continuous
30 process of change that was greatly influenced by the length of time a woman had been involved in BRAC.
Cheston and Kuhn (2002) studied when, how and why women were empowered. An in-depth research of Sinapi Aba Trust (SAT) located in Ghana was also undertaken. The study showed strong evidence that MFIs contributed to women empowerment. One consistent finding was increased self-confidence and self-esteem. Another finding was increased participation of women in decision-making. Women participants had also experienced improved status and gender relations in their houses. At SAT it was found that financial contribution of women helped them earn greater respect from their husbands and children.
Parveen and Leonhäuser (2004) in their paper investigated the nature and extent of empowerment of rural women, factors influencing it and further outlined a strategic framework, role of SHGs, education, training and gender awareness for enhancing empowerment. For the purpose of study, qualitative and quantitative methods were integrated and primary data was collected from 156 respondents from three villages of Mymensingh district of Bangladesh during January to April 2003 by applying stratified random sampling. The regression analysis concluded that education, training and exposure to information media had the potential to increase women’s empowerment. Therefore, effective initiatives undertaken by the concerned government and non-government agencies in improving women’s education, skill acquisition training and access to information could enhance women's empowerment in order to achieve gender equality and development at all levels in the rural society of Bangladesh.
Sharma (2007) examined the impact of participation in microfinance programme on women’s autonomy and gender relations within the household. His study in Nepal revealed that comparison of pre- and post-SHG participation showed that programme led to women’s greater participation in household decision-making, greater access to economic resources, wider social networks and freedom of mobility. Female credit had increased spousal communication about family planning and parenting concerns.
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After having made an wide range of review of literature in the field, we can now proceed to the discussion about the meaning and definition, role of banks, role of NGOs and NABARD, objectives of micro finance institutions, Concept of Self Help Groups (SHGs), and other related issues pertaining to SHGs in the ensuing chapter.
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Chpter-3
Micro Finance and Self-Help Groups- Some Basics
Following the exhaustive review of literature in the previous chapter, it is appropriate to turn our attention to know the meaning and definitions of micro finance, self-help groups, role of micro finance in poverty alleviation, etc. in the present chapter.
3.1 Micro Finance- Conceptual framework
In the most simplistic way, micro finance can be termed as “banking for the poor”. Suggested by the name, most transactions under ‘microfinance ‘involve small amount of money. But the connotation of the term has a much wider meaning 1
Micro finance(MF) has been defined by the task force on micro finance as provision of thrift, credit and other financial services and products of various small amount to the poor in rural, semi urban or urban areas for enabling them to raise their income level and improve living standards 2
International Labor Organization(ILO)3 has defined micro finance is an economic development approach that involves providing financial services through institutions to low income clients
According to the Norwegian Committee ( 2006) 4 micro finance can help people to break out poverty which in turn is seen as an important prerequisites to establish long lasting peace
NABARD and RBI define micro finance as “the provision of thrift, credit and other financial services and products of very small amounts to the poor enabling them to raise their income levels and improve living standards”(NABARD-2000, RBI- 1999)
The national credit fund for women or the Rastriya Mahila Kosh (RMK) defines “micro finance is a set of services comprising the activities such as: (1) Micro Credit i.e. small loan and particularly given for income generating activities, also for 33 consumption and contingency needs and (2) Micro-savings i.e. thrift/ from borrowers own resources 5
3.2 Objectives of Micro Finance Institutions
Selecting a target market depend on the micro service provider and the perceived demand for financial services. In any country, there are underserved enterprises and households, ranging from the ultra-poor who may not be economically active, to small growing enterprises that provide employment in their communities. This range or continuum constitutes the demand size for micro finance services. Often, the supply side does not offer a corresponding continuum services. Microfinance institutions need to supply services that fill the gaps and integrate the underserved group into the market. The goal of microfinance institutions as development organisation is to service the financial needs of served and underserved market as a means of meeting development objectives. These development objectives generally include one or more of the following;
• To reduce poverty • To empower women or other disadvantaged population groups • To create employment • To help existing business grow or diversify their activities • To encourage the development of a new business.
• In World Bank study of lending for SMEs projects, three objectives were most frequently cited, these include;
• To create employment, and income opportunities through the creation and expansion of micro enterprises. • To increase the productivity and income of vulnerable groups, especially women and the poor. • To reduce rural families dependence on drought prone crops through diversification of their income generating active (Yaron, Benjamin and Piperk, 1997)
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MF also known as micro credit refers to the service of providing small amount of money by financial institutions to poor. These financial services may include savings, credit, instance, leasing money transfer, equity transactions etc. provided to customers to meet their normal financial needs. The transaction value is small and customers are poor.
Micro finance institutions consist of refinance institutions, on government organizations (NGOs) and self help groups (SHGs) in rural, semi urban or urban areas, encourage thrift habit to enable them to raise their income levels and thereby increasing their living standards
3.3 Role of Banks in Micro Credit
There is another potentially hopeful development. The involvement of traditional commercial banks in micro credit is growing rapidly around the world. In several developing countries large state banks and private banks have started to provide micro credit services 6In India, NABARD recently initiated a programme to involve private banks in micro finance. According to recent studies, the growth of micro credit in India is led by a number of commercial banks such as ICICI, HSBC and ABNAMRO, together with private venture capitalists (Lakshman 2006,Iyer 2006)
3.4 Role of NGO s in Micro –Credit Sector
The first phase of micro credit was for income generating activities to small farmers like credit for cattle, setting up grocery shops etc. Today with strong community based structure, it is possible to give credit to groups from such social infrastructure projects, which are not income generating. The NGOs across the country have asked the states and other institutions engaged with self help groups to make available the data related to achievement in poverty alleviation, employment and literacy. Such data should be disaggregated by caste and class categories to enable a realistic assessment. The groups were of the opinion that there was no data on the number of SHGs in the country, their deposits and the loans disbursed to them or even the impact of these have had in empowering women since there were seven million
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SHGs including those constituted by the government under its various self employment schemes
3.5 Micro –Finance –Role of NABARD
Indian public policy for finance right from1950s till date reflects the patterns observed worldwide. Increasing access to credit for the poor has always remained at the core of Indian planning to fight against poverty. The rationale behind expanding outreach of financial services particularly credit was that the welfare cost of exclusion of the rural poor from the banking sector was very high. Late 1960s has been euphemistically referred to as ‘social banking ‘phase. It saw the nationalization of existing private commercial banks, massive expansion of branch net work in rural areas, mandatory directed credit to priority sectors, subsidized rates of interest and creation of a new set of rural banks at the district level and Apex Banks at the national level. These measures resulted in impressive gains in rural outreach and volume of credit. 7 However, these gains were not without costs. Government interventions through directed credit, State owned Rural Financial Institutions (RFIs) and subsidized interest rates increased the tolerance for loan default, loan waivers, and tax appraisal and monitoring of loans. This was the situation at the start of 1990
The emergence of micro credit in India has to be seen in this backdrop for a better appraisal of current paradigm. Successful micro finance interventions across the world and in parts of India by NGOs provided further impetus. IN this backdrop, NABARD’s search for alternative models of reaching the rural poor brought the existence of informal groups of poor to the fore. It was realized that the poor tended to come together in a variety of informal ways for pooling their savings and dispensing small and unsecured loans at varying costs to group members on the basis of need. This concept of self-help was discovered by social development NGOs (23) in 1980s. Realizing the only constraining factor in unleashing the potential of these groups was meagerness of their financial resources, NABARD designed the concept of linking these groups with banks to overcome the financial constraint. The programme has come a long way since 1992 passing through stages of pilot(1992- 1995), mainstreaming (1995-1998) and expansion phase (1998 onwards) and emerged
36 as the world’s biggest micro finance progrmme in terms of outreach, covering 1.6 million groups as on March 2005. It occupies a preeminent position in the sector accounting for nearly 80 per cent market share in India.
Under the programme, popularly known as SHG – Bank Linkage programme there are broadly three models of credit linkage of SHGs with banks. However, the underlying design feature in all remains the same. i.e. identification, formation and nurturing of groups either by NGOs or other development agencies or banks, handholding and initial period of inculcating habit of thrift followed by collateral free credit from bank in proportion to the groups savings. In accordance with the flexible approach, the decision to borrow , internal lending and rate of interest are left at the discretion of group members. Its design is built on combing the “collective wisdom of the poor, the organizational capabilities of the social intermediary and the financial strength of the banks”
NABARD has set up the Micro –Finance Development Fund (MFDG) with initial contribution of Rs.100 crores which be shared by various institutions infusing RBI. The Fund is being utilized for sealing up various poverty alleviation programmme with special form on capacity build up under Self-Help Group Bank Linkage (SHGBLP) supported by various banks and NGO groups
Three method would be followed in priority micro –finance such as sources of future which comprises of (i) collection saving (ii) internal lending (iii) sources fund which consists of (a) Revolving Fund (b) SGH-Bank Linkage and (c) Community Investment Fund
As Mahatma Gandhi said” al long as you derive inner help and comfort from anything, keep it” The philosophical popular saying connotes that the service to man is as service to God. Therefore the Government and related financial institutions may elevate the economic conditions of the rural populations, may be identified as the poor living below the poverty in the country. Thus the government of India might provide an ample financial assistance and credit which facilitates to raise not only the levels of income by creating an additional employment opportunities to the illiterate rural mass as well as unemployed rural youth.
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Thus the impact of poverty alleviation programme are being implemented by the government in the rural areas would certainly be engineering to ameliorate their socio-economic conditions and improving the standard of living of the rural people above poverty line and advise them to utilize these programmes indulging the rural talented masses in to the main stream of rural productivity and production levels in urn aggrandize the national prosperity
NABARD is also providing grants on a selective basis to NGOs, primarily for promoting and nurturing SHGs. NABARD has provided financial and other types of support for training of bank staff, NGOs and government agencies engaged in the field of micro finance.
Two broad approaches characterize the micro finance sector in India- Self Help Groups (SHGs)-bank linkage(SBL) and micro finance institutions (MFIs) 8 The former dates from the NABARD initiated pilot of 500 SHGs in 1992.NABARD had a key role to play in initiating and nurturing India’s unique SBL programme. It has largely responsible for the RNI including Linkage Baningas a main stream activity of banks under “ priority sector” lending in 1996 9 Beginning as pilot in 1992 with 500 SHGs by March 2006 over 22 lakh SHGs had been provided with bank loans. The banks are well on the way to achieving the target set down NABARD to finance a third of India’s rural population through SHGs by 2007 Micro credit and SHGs is only one of the inputs enabling conditions that is required for empowerment and poverty alleviation
3.6 Concept of Self Help Groups (SHG’s) In recent years Self Help Groups have been emerging as a major strategy for the promotion of informal credit to the rural poor. In 1992 RBI-NABARD have launched a ‘pilot project’ and issued necessary guidelines to the banking system for lending to the SHG’s. After careful thought and study both by the RBI and NABARD, assisting the SHG’s became ‘normal lending programme’ under priority sector and service area approach in 1996.
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“SHG is a homogenous group of rural poor voluntarily formed to save whatever amount they can, out of their earnings and mutually agree to contribute to the common fund of the group to be lent to the members for meeting their productive and emergent credit needs”.
Laxmi R. Kulshrestha defined SHG’s as “A Self Help Group is a voluntary group formed to attain some common goals; most of its members have similar social identity, heritage, caste or traditional occupations and come together for a common cause and manage resources for the benefit of the group members”.
These Groups are called as ‘solidarity group’ as they provide monetary and also moral support to individual members in times of difficulties. The SHG’s can be composed of either male or female members.
3.7 Some Definitions
The SHG is a small economically homogeneous and affinity group of rural people generally not exceeding 20 members voluntarily coming together to save small amounts regularly to mutually agree to contribute to a common fund, to have collective decision making to solve conflicts through collective leadership and mutual discussions and to provide collateral free loans at terms decided by the group at market driven rates 10 D.Kumar and A Shanuga Sundarm have defined SHG as “a self governed, peer controlled informal group of people with similar socio-economic background and having a desire to collectively perform common purpose” 11
3.8 Necessity and Nature of SHGs
In recent years, there has been a phenomenal expansion of formal credit system in the country but dependence of the poor on the informal, finance still persists. Formal sector financing institutions are characterized by absence of linkages between infrastructure, skills and market, big transition/costs both for lenders and borrowers while financing micro enterprises and their credit programme and fail to promote saving habits among poor, an impediment in repayment ethics. As Manabsen observes (2000) the culture of subsidy does not foster credit discipline
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Self-Helf-Groups are usually informal groups of a locality or area, whose members have a common perception of needs and importance towards collective action. These homogenous groups consisting normally 10 to 20 members promote savings among members and use the resources mobilized to meet their needs.
SHG’s function truly by adopting democratic principles. All the members must participate actively in decision making process and functioning of SHG’s. Though these groups are formal, cohesion should be through regular meetings, selection of leaders, regular contribution to group savings, borrowings and repaying into the pooled group fund. SHG’s could be another meaningful credit outlet, particularly in rural areas. These groups are formed to attain certain collective goals.
3.9 Functioning Pattern
• SHGs generate a common fund for which each member contributes his saving on a regular basis • The group conducts regular meetings once in a week. The meeting involves collection of savings by members and lends to needy members for production and consumption purposes • Small amounts of loans carrying low interest rates are provided to members for short period • The meeting decides borrowers by consensus • Loan procedure is simple and flexible • SHGs borrow from banks or voluntary agencies to cater to the requisites of members • NGOs may help the SHG in procuring raw materials and marketing of the produce
3.10 Objectives& Functions of SHGs
The SHGs comprise of very poor people who do not have access to formal financial institutions. They act as platform for the members to provide mutual space and support. It also enables the members to learn cooperate and work in a group environment. The SHGs provide savings mechanism, which suits the needs of the
40 members. It also provides a cost effective delivery mechanism for small credit of its members. The SHGs significantly contribute to the empowerment of poor women.
SHG benefits its members by way of mobilization of savings and credit facilities and pursuit of group enterprise activities. The group based approach not only enables the poor to accumulate capital by of small savings but also helps them to get access to formal credit facilities. These groups by way of joint liability enable the poor to overcome the problem of collateral security and thus free them from the clutches of money lenders. The joint liability not only improves group member’s accessibility to credit, but also creates mechanisms like peer monitoring leading to better loan recoveries. Besides, some of the basic characteristics of SHGs like small size of membership and homogeneity of composition, bring about cohesiveness and effective participation of members in the functioning of the group in general. SHGs created on the above lines of functioning have been able to reach the poor effectively. Especially women and help them obtain easy access to facilities like savings and credit and empower them (National Bank1995)
The SHGs provide a platform to systematically reach out women and organize them.It helps involve them and incorporate their views in planning and implementation of micro finance and livelihood proammes. This gives them increased access to economic resources of their families. As the SHGs mature the women also start establishing linkages with a number of external institutions helping widen their horizons.
The functions of SHGs in brief may be stated in the following fashion
• To provide gainful employment and to involve the productive activities and thus alleviate poverty
• To reduce the gap between the rich and the poor.
• To emphasize the participation of the local committees, especially from the poorest section of the village
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• To save the poor people from the exploitation of the money lenders and middlemen
• To involve women in decision making and to promote leadership qualities among them enabling to influence the outside world.
3.11 SHGs Model
The banks can make use of different models developed by NABARD for providing micro credit through SHGs. Banks can also design several innovating products best suited to the borrower’s in the specific locations to meet different kinds of credit needs. In respect of investment credit for farm development, area based projects as well as Hi –tech projects. Bank products should have very realistic and most reasonable repayment periods.
Microfinance services in India are provided mainly by two different models viz., SHG-bank linkage model and MFI-bank model. Out of these two models, SHG- bank linkage model has emerged as the more dominant model due to its adoption by formal financial institutions namely, Commercial Banks, Regional Rural Banks and Cooperative Banks. The MFI-bank model is also gaining importance due to its massive supports by various private sector and foreign funding agencies. The present study deals with SHG-Bank linkage model.
(i) SHG-Bank Linkages (SBL-Model)
The SBL approach involves the formation of SHGs(mainly of women) These women regularly save money that is placed in a local (generally public sector) bank account. According to many studies, the creation of a safe avenue for saving on which interest is earned is an attractive feature of SHGs. The SHG has a set of bye-laws devised and agreed by the members themselves, which include rules for monthly saving, lending procedures, periodicity and timings of meetings, penalties for default etc. Accounts and records are maintained meticulously. The SHG itself functions like a bank. After a certain period(six months to a year) of disciplined functioning, it becomes entitled to a loan from the bank where it has account. A number of studies document the positive impact of SHGs on indicator such as average value of assets per
42 household, average net income per household, employment and borrowing for income generation activities. It is argued that SHGs help inculcating banking habits.
The problem with the SBL model is that it is largely a government ‘pushed’ model and has , therefore suffered from all the infirmities any bureaucratic programme, run in a mindless target driven sort of way. All manners of government officials including anganawadi and forest guards, have been asked to form SHGs. Hence the impressive figures of the fast growth of SBL model hide a lot of poor quality work. This has destroyed the credibility of SBL model in the eyes of key stakeholders including potential women members and also bankers.
The other side of the problem is the attitude of bankers towards SHGs because of bad experiences of poorly run SHGs but also owing to the bureaucratic insensitivity that characterizes banking in India (both public and private).Bankers fail to recognize the enormous self interest banks have the success of the SBL model that there can perhaps be no better path to financial sustainability, which also helps banks fulfill social responsibility, other lending to SHGs. Banks can avoid huge information costs of lending to the poor.
The real power of SBL model lies in the enormous economies of scale that are created by the power of SHGs federations( each of 150-200 members), for example in bulk purchase of inputs and marketing of output. Besides providing larger loans for housing and health facilities, a variety of insurance services are also made available. 12
There is some critique of SHGs charging high rate of interest to their members but it is counter argued that SHGs( unlike MFIs) are members run mini banks. What they charge is also what they earn. The money remains with them. Of course there is a need for interest rate caps in micro finance but it is useful to members that the money earned on interest by an SHG accrues to itself.
NABARD has accomplished its commitment to provide banking services to one third of rural poor through one million SHG’s. Cumulatively, bank loans aggregating more then Rs.3,904crore were disbursed to SHG’s with refinance support
43 of Rs.2123 crore from NABARD, upto March 2004Data with respect to SHG-Bank linkage are given in Table 3.1
Table 3.1 SHG_-Bank Linkage in India (2000-01 to 2011-12)
Average Bank No. of Average Loans No. of Loan Families Loans Year Per SHGs (Rs (in Per SHGs Lakhs) Lakhs) Families
(i) (ii) (iii) (iv) (v) (vi) 2000-01 1,49,050 28,789 25.33 19.315 1,136 2001-02 1,97,653 54,554 33.60 27,601 1,624 2002-03 2,55,882 1.02,231 37.54 26,985 1,799 2003-04 3,61,731 1,85,550 45.86 36,180 2,412 2004-05 5,18,173 2,96,180 77.74 42,971 2,864 2005-06 4,82,598 3,09,613, 72.39 64,155 4,277 2006-07 11,05,749 6,57,039 154.80 59,420 3,961 2007-08 12,27,770 8.,84,926 171.88 72,076 5,148 2008-09 16,09,586 12,25,351 225.34 76,108 5,436 2009-10 15,87,000 14,45,330 222.18 91,073 6,505 2010-11 11,96,000 14,54,773 167.44 1,21,636 8,688 2011-12 17,60,346 16,63,477 191.53 94,497 8,685 Percentage change over 10.81 5.67 6.56 3.89 7.5 2000-01 Note: The percentage change is computed.
Source: NABARD-Micro Finance in India 2001-02 to 2011-12
The data presented in Table 3.4 reveal that the number of SHGs registered an increase of 10.81 per cent in 2011-12 over 2000-01.Similarly the bank loan witnessed an increase of 5.6 per cent during the same period. It can also be observed from the figures that the average loan per SHGs did increase from Rs.19,315 in 2000-01 to Rs.1,21,639 upto 2010-11 but during 2011-12 it showed a decline. It also follows that the average loan per family recorded an increase with a percentage change of 7.5
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(ii) MFI Model
The newly emerging MFI model is a different ball game altogether. Here the sponsor is a profit oriented venture capitalist, who sees the rural credit market as fresh business opportunities. The MFI apparently brings great professionalism, innovations and technology to its enterprise. It also ventures to provide loans that banks do not. But MFIs form no groups that are engaged in governance functions of SHGs. Even when they operate through NGOs. MFIs are primarily concerned with lending and recovering (mostly every weeks) what they lend to cohorts of people at times at very high rates of interests.
The recent suicide episodes in Andhra Pradesh are a grim reminder of the possible extreme consequences of MFIs lending. Since profits are overwhelming considerations for an MFI, there is enormous pressure to lend at all costs, and concomitantly, to recover. Added to this is the requirement of MFIs of a security deposit as cash collateral. Also high rate of interest is inevitable because of high transaction costs and a relatively low scale of operations. Another dubious practice of many MFIs is that they charge borrowers interest on the entire remaining period as well even if they were to return the loan early. This could become a killing penalty with long remaining periods. There is also lack of transparency especially in ‘start up’ MFIs about such practice. In addition, borrowers’ illiteracy leads to explosive situation which in a vulnerable situation was bound to explode. Finally the really poor do tend to be implicitly or deliberately excluded as they are unable to bear the pressure of recovery.
People are reported to have borrowed from money lenders in order to repay MFIs. Other borrowers have ‘absconded’, migrated or at times tragically committed suicides. This is linked to abusive collective practices that MFIs sometimes resort to ‘abusive’ is well defined technical terms with strict usage in the literature. It includes (i) adjusting over dues against the security deposits (ii) holding the weekly meeting in front of the defaulter’s house( iii) MFIs staff sitting in front of the defaulters’ house. (iv) Offensive language used by group leaders or staff (v) putting up a loan overdue notice in front of a defaulters’ house. Also mentioned are the instances of recovery of
45 large individuals loans by enchasing signed blank cheques, legal action, to enforce blank promissory notes, physical force used by group leader. There is huge pressure on all the members because of joint liability. No one gets another loan until all repayments are made.
A major demand of MFIs is that they should be allowed to raise interest rates in an unfettered manner. The enactment of anti usury laws is said to have led to a reduction in supply of credit and rise in interest rates. There was a massive expansion in the supply of credit to the poor in the social banking era. And this was at lower rate of interest. It is only in the reform era that the supply of institutional credit has contracted and the usurious money lender has made a comeback.
3.12 MFI-Bank Linkage Programme
MFIs act as an important conduit for extending financial services to the micro sector in the country by raising resources from Banks and other institutions. MFIs could be NGO-MFIs, Co operative- MFIs, and NBFC- MFIs
In addition to their internal resources, these MFIs seek and obtain bulk loans from banks or other financial institutions for providing micro credit. Although most of them entered the micro finance sector only after the SHG –Bank Linkage programme was entrenched, the turn over of these institutions grew at a much larger scale. Hence the performance of these MFIs promotes the rural development and thereby helps to alleviate poverty. Hence carries vital importance. Data pertaining to the progress under the MFI-Bank Linkage programme are provide in Table 3.2
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Table 3.2Progress Under MFI-Bank Linkage Programme in India (Amount in Rs Crores )
2008-09 2009-10 2010-11 2011-12 Particculars No.of No.of No.of No.of Amount Amount Amount Amount MFIs MFIs MFIs MFIs (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) Loans disbursed 581 3732 779 10729 471 8448 465 5205 by banks to (12.2% ) ( 89.4% ) ( 34% ) ( 187.4%) (-39.5%) ( 21.3%) ( -1.3% ) (-38.39 ) MFIs Loans 5009 outstandin g 1915 1639 13956 2315 13731 1960 11450 (82.2) (72.7%) (-13.4) (178.6%) (39.5%) (-2.0%) (-15.3%) (-16.6% against MFIs Fresh Loans as % 74.5 76.9 61.5 45.5 of loan outstanding Source: NABARD-Micro Finance in India 2011-12 p14
It can be observed from the figures given in Table 3.3 that banks and other financial institutions are found losing their confidence in lending to MFIs is evident from the fact that fresh lending to MFIs by banks declined over 38 per cent in 2011-12 as compared to the previous year. Similarly, the number of MFIs getting the loans from banks also dropped significantly from 12.2 per cent in 2008-09 to 1.3 per cent in 2011-12. Dismal trend indeed! There has been a marginal decline of 1.3 per cent in the number of MFIs availing fresh loans from banks in 2011-12 even though the loans outstanding against MFIs in the same period has declined by almost 17 per cent .If the same trend continues, this sector is likely to face serious resource crunch and would affect its outreach plans in the ensuing days. Discouraging indeed!
The position of MFIs availing loans from other institutions besides from banks is really interesting. Hence a look at it. Data with respect to agency wise details of loans extended to MFIs are furnished in Table 3.4
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Table 3.3 Loans to MFIs by Banks and other Agencies in India.
Loans Loans Disbursed to Outstanding MFIs Financing against MFIs Period Agencies Amount No.of Amount No.of (Crores MFIs (CroresRs) MFIs of Rs) (i) (ii) (iii) (iv) (v) (vi) 2008-09 522 3719 1762 4978 All Commercial 2009-10 645 8039 1407 10095 Banks 2010-11 460 7601 2153 10647 2011-12 336 4951 1684 9811 Regional Rural 2008-09 59 13.40 153 31.20 Banks 2009-10 46 24.14 103 52.22 2010-11 09 4.16 23 42.01 2011-12 113 13.28 128 37.51 Co-operative 2008-09 NA NA NA NA Banks 2009-10 00 00 03 0.01 2010-11 NA NA NA NA 2011-12 04 1.61 19 4.75 SIDBI 2008-09 NA NA NA NA 2009-10 88 2666 146 3808 2010-11 02 844 139 3042 2011-12 12 239 129 1597 Total by All 2008-09 581 3732 1915 5009 Agencies 2009-10 779 10728 1659 13956 2010-11 471 8449 2315 13731 2011-12 405 5205 160 11450 Source: NABARD-Micro Finance in India 2011-12 p15
The figures given in Table 3.4 reflect that both the loans disbursed to MFIs and loans outstanding by commercial banks increased in 2011-12 compared to 2008- 09.Similarly, it can also be observed that RRB’ share in loans disbursed to MFIs has dropped during the same period even though the loan outstanding against MFIs has increased during the same period. Also, the loans disbursed to and outstanding against MFIs by all agencies have increased in 2011-12 compared to those in 2008-09. A commendable feature indeed!
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3.13 Role of SHGs in Poverty Alleviation through Micro Finance
The SHGs play a vital role in the upliftment of the rural poor by providing loans at a reasonable interest rate. This helps the rural poor to improve employment and economic support. SHGs in most of the villages have been successful in breaking the stranglehold of money lenders. SHGs bank linkage progrmme has been advantageous not only to the members of SHGs but also to the banks. The advantages to the banks are the lower transaction cost by providing joan to the groups for internal lending. There is no recovery problems for banks in loans given to SHGs i.e. near zero non performing assets. The SHGs will help economic independence of the rural people and economic development of our country. The SHGs produce the products according to the local demands. By pursuing productive activities the group enhances its income, repays the loan amount to the banks, and spend it on basic health , education etc. so as to drive out of the poverty trap!
3.14 Growth of SHG’sin India and Karnataka SHG’s have been popular in countries like Bangladesh, Indonesia, Malaysia, Korea and Phillipines for a long time. Particularly in Bangladesh these SHG’s are doing well and attained the objectives for which they have started. In our country also with in a span of 10 to 12 years they have produced good results.
The SHG-Bank Linkage Programme, initially launched by NABARD with 500 SHGs on a Pilot Project basis in 1992. At the inception stage, there were only 255 SHGs in India. 8 During the last 12 years this number has crossed a mark of one Million. The growth of SHGs in India over the years is pretty good. The number of SHGs increased to 2122 in 1994-95 and 14317 in 1997-98. There is tremendous increase in number of SHGs during 1999 and 2002. This number drastically raised to 1,14,775 in 1999-2000, 1,97, 653 in 2001-2002. Data pertaining to the growth of SHGs are presented in Table3.4
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Table 3.4 Growth of SHGs in India (2000-01 to 2011-12) Year No. of SHGs (i) (ii) 2000-01 1,49,050 2001-02 1,97,653 2002-03 2,55,882 2003-04 3,61,731 2004-05 5,18,173 2005-06 4,82,598 2006-07 11,05,749 2007-08 12,27,770 2008-09 16,09,586 2009-10 15,87,000 2010-11 11,96,000 2011-12 17,60,346 Percentage change 10.81 over 2000-01 Note : No Stands for Number Source: NABARD-Micro Finance in India 2001-02 to 2011-12 It follows from the data furnished in Table3.4 that the number of SHGs formed in India have increased from1.49 lakhs in 2000-01 to 17.60 lakhs in 2011-12 implying that the number of SHGs in India has increased by almost 11 times. The growth of SHGs in India has been attempted along three lines • NABARD- Bank –SHG (NGO as facilitator) • NABARD-NGO –SHG( NGO as a financial intermediary) • NABARD-Bank –SHG ( NGO is not involved)
The working of all the above specified models reveals that the model where NGO is acting as a facilitator continues to be the most premier one. In the field of micro finance, NGOs are pace setters in bridging the gap between the banks and the un reached micro entrepreneur who finds it hard to have access to formal banking system.
The Government of Karnataka through its Women and Child Development Department (WCDD) continued its mission of empowering rural poor women in the state through its Shree Shakthi programme. The Swashakthi programme, which is implemented in select districts of the state through Karnataka State Women Development Corporation, played its role in strengthening the women groups 50 promoted under the programme. SHG-Bank Linkage concept has been in operation in all the 27 districts of the state.
It is also interesting to know the growth of SHGs in Karnataka. The State being a pioneer in SHG-Bank Linkage Programme, continues to maintain its leading status in promotion and credit linkage of SHGs Data with respect to the growth of SHGs in Karnataka over the years are given in Table 3.5, Table 3.5 Growth of SHGs in Karnataka (2000-01 to 2011-12)* Year No.of SHGs (i) (ii) 2000-01 8,759 2001-02 14,386 2002-03 22,646 2003-04 41,688 2004-05 50,573 2005-06 61,730 2006-07 54,610 2007-08 97,435 2008-09 60,319 2009-10 57,839 2010-11 49,759 2011-12 55,391 Total 5,75,165 Percentage Change over 64.66 2000-01 *Note : The growth of SHGs in Shivamogga district over the years is presented in Part -II of Chapter-5 Source: NABARD-Micro Finance in India 2001-02 to 2011-12
The figures presented in Table 3.5 reveal that there has been an increasing trend in the growth of SHGs in Karnataka upto 2007-08. The number had dipped in 2008-09. Again after 2008-09 the number showed an upward trend upto 2009-10. However, it is obvious that the number of SHGs in 2011-12 has increased by 67 per cent over 2000-01
3.15 Performance of Participating Agencies in Karnataka As well known the participating agencies in the provision of micro finance consists of three agents- commercial banks, district co operative banks and regional rural banks
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( A ) Commercial Banks
The SHG-Bank Linkage Programme became part and parcel of business for the 22 public sector banks and 03 private sector banks. Canara Bank had credit-linked the highest number of SHG’s-5054 during 2003-04, followed by Vijaya Bank-4678, Syndicate Bank – 1397 and SBI-1290.
All 13 RRBs in the state participated in the SHG-Bank Linkage programme. The achievements of RRBs as a percentage to the total registered an impressive increase in terms of SHFs linked, bank loan disbursed and refinance availed from NABARD. Out of the total 103,886 SHGs 38,631 SHGs are linked by RRBs, which is 37.19 percent of the total. The share of refinance availed from NABARD by the RRB’s is 57.64 percent of the total.
(B) Co-Operatives (DCC Banks) All the 21 district Credit Co-Operative Banks in the State have involved in the SHG-Bank Linkage programme. By the end of 31.3.2004, 29,323 SHG’s linked with Co-Operative Banks and provided loan to the tune of Rs.73.74 crores by availing refinance of Rs.53.44 crores from NABARD .
(C) Regional Rural Banks (RRBs) RRBs also constitute an important sponsoring agency for the provision of micro finance. It is well known that each district has its own RRBs which play a paramount significant role
The performance of the participating agencies in Karnataka state in the provision of micro finance is really worth observing. Data pertaining to the performance of participating agencies in terms of SHG –Bank linkage are presented in Table 3.6
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Table 3.6 Performance of Participating Agencies in Bank Linkage in Karnataka 2000-01 to 2011-2012 Commercial Co –operative RRBs TOTAL Banks Banks Bank Bank Years Bank Bank No of No.of No.of Loans No.of Loans Loans(Rs Loans(Rs SHGs SHGs SHGs (Rs SHGs (Rs Lakhs) Lakhs) Lakhs) Lakhs) (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) 2000-01 6,395 1,452 8334 1,648 3,890 577 18,619 3.676.50 2001-02 14,425 2,426 13,279 3.022 9,328 1,952 37,032 7,400 2002-03 20,987 4,540 23,473 6,048 17,718 3,973 62,178 14,561 2003-04 35,912 10,227 38,631 10,947 29,323 7,347 1,03,866 28,521 2004-05 54,814 20,210 62,732 21,973 45,652 12,991 1,63,198 55,175 2005-06 78,520 36,421 83,383 38,413 63,025 24,6001 2,24,928 99,435 2006-07 1,39,341 89,926 99,931 55,719 78,364 39,429 3,17,636 1,85,074 2007-08 1,98,262 1,34,572 1,17,038 82,388 96,616 64,560 4,11,916 2,81,520 2008-09 2,23,853 2,01,564 1,36,690 1,13,339 1,11,692 87,320 4,72,235 4,02,223 2009-10 2,56,796 2,63,095 1,49,097 1,47,114 1,24,317 1,15,512 5,30,210 5,25,751 2010-11 2,80,236 3,29,086 1,62,624 1,84,855 1,37,109 1,56,513 5,79,969 6,70,454 2011-12 3,08,560 4,12,108 1,79,993 2,31,496 1,54,280 1,96,062 6,42,833 8,39,667 % 48.00 49.08 28.00 27.57 24.00 23.75 100 100 Share Source: NABARD-Micro Finance in Karnataka 2001-02 to 2011-12 It is evident from the data presented in Table 3.6 that the commercial banks did play a major role in SHG Bank Linkage model in the State of Karnataka with a percentage share of 48 in the total number of SHGs formed in the State and 49 in the total amount of loan disbursed during 2000-01 and 2011-12. The share of RRBs Banks during the period stood at 28 per cent and 27.50 respectively while the percentage share of Cooperatives stood at 24 and 23.75 for the period.
The SHG model has become popular in development progreammes especially for micro credit and is an effective tool for poverty reduction. They are perceived as powerful carriers for promotion of micro enterprises and thereby for poverty alleviation . They have been playing an important role in giving the rural poor economic independence.
3.16 Superiority of SHGs over Macro Credit Institutions
They are superior to cooperatives because poor people themselves start social ties to avail credit and also to develop themselves socially and morally. Insistency on
53 productive use of credit ensures that loan is self liquidating and poor people get relief from debt burden. Thanks to group supervision, there is no scope for misutilization of loan. In case of default, members as a whole will assume responsibility for loan recovery. The dark spot in the body of cooperatives is dominance of politicians in the society. SHGs are non political. Indispensability of active participation of each and every member in SHGs renders the members enthusiastic, alert and energetic. The membership of person gets suspended automatically if he or she remains absent in the group meetings for three consecutive meetings as reasoned by M.S. Kallur and A. Birdar (2000)
The focus of SHG lies on saving and development of common funds augurs for promoting development of the village. Resources of common funds can be used during crisis period like shock absorber.
They come together for the purpose of solving their common problems through self help and mutual help. The SHG promote small savings among its members. The savings are deposited in a common fund with a bank to meet member’s emergency needs and to provide collateral free loans decided by the group. This common fund is in the name of the SHG. Usually the number of members in one SHG does not exceed twenty. The groups are kept informal to minimize their association with the bureaucracy and corruption, unnecessary administrative expenditure and profit constraints. The size of twenty is devised as any group larger than that would need to be registered under the Indian legal system and that brings a whole range of regulatory constraints.
They have been recognized as an alternative mechanism to meet the credit needs of poor through thrift. SHG encourages saving habit among the members. The basic principle of SHGs are group approach, mutual trust organization of small and manageable groups group cohesiveness , sprit of thrift, demand based lending, collateral free, women friendly loan, peer group pressure in repayment, skill training, capacity building and empowerment.
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After a group is formed, it starts collecting a fixed amount from each member for about six months. During this period, the groups are expected to open a savings account with a financial institution which would like to extend credit. After accumulating a reasonable amount of resources, the group starts lending to its members. As the group members develop the experience of handling resources, understand the value of credit and the importance of repayment. And accountability to the group, it can approach the financial institution for term loans. The group becomes jointly liable to the bank for repayment and it is expected to assume responsibility in monitoring the members. This join liability provides incentives or compels the group to undertake the burden of selection, monitoring and enforcement that would otherwise fall on the lender.
The SHGs with the help of Micro credit have effectively promoted freedom and justice through solidarity at the grassroot level. The economic projects undertaken by these SHGs cover a wide range of income generation activities such as goat rearing, a milk dairy cooperative of village women, shops and small business, farming and vegetable cultivation, vermin culture, bio gas and jewelry making . These activities have had a positive impact on rural poor. The benefits are merely economic, they have also helped the rural poor masses develop leadership qualities and acquire greater self confidence and self respect.
Having discussed micro finance and self help groups and the related issues, our attention, now be diverted to the discussion about the contour of rural development and poverty alleviation in the ensuing chapter.
Notes
1. See Khandelwal. Anil.K.(2007) Micro Finance Development Strategy for India’ Economic and Political Weekly,31 March, p1127)
2. ibid., p 1127
3. Ibid.., p1127)
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4. Norwegian Nobel Committee (2006) , The Noble Peace Prize 2006 , press release, Oslo, October, http// nobel prize. Org/nobel prize/peace/llurates /2006/press.html.
5. Prasant Sarangi, (2006)”Micro Finance, Empowerment of Women Self Help Groups, in S.N. Tripahy (ed.) Women and Rural Development.
6. It is interesting to note that i) In Pakistan , a number of private commercial banks have moved into microfinance. Similarly in Malaysia, Nepal and Thailand, there are programmes stimulating commercial banks to become involved in micro credit
7. It is appropriate to mention here that between 1961 and 2001 the average population per bank branch fell tenfold from 140 thousand to 14000 and the share of institutional agencies in rural credit increased from 7.3% to 66 % between 1991 and 2002
8. It is needless to write here that SBL is the larger model and is unique to India where as MFIS is internationally more established and is the one that appears to be the increasingly favoured route
9. It is appropriate to mention here that NABARD’s work with its partner NGOs (Myrada, Pradan and Dhan) also led to the government according ‘ national priority’ to the programme in the union Budget of 1999
10. Dr.K.Revati, (2007) Micro Finance: A Tool for Poverty Alleviation, Facts for You, June, 2007
11. Role of Women Self Help Groups in Rural Poverty Alleviation with special Reference to Nankal District of Tamil Nadu in, K.K.Bagche (ed.) Employment and Poverty Alleviation Programme in India, Abhijeet Publication,2007
12. A study of four SHGs federations (including India’s oldest one) shows that federations make SHGs financially viable for reducing transaction and promotional costs as also default rates, provide them economies of scale create value added services and build local capital. It has also shown how doing business with the SHGs federations can help public sector bank branches in remote rural areas become viable entities. 56
Chapter-4
Contour of Rural Development and Poverty Alleviation
Following the discussion about the micro finance and self-help groups and the related aspects in the preceding chapter, the present chapter is devoted to focus on the concept of rural development, rural development programmes, poverty, poverty estimation and its history, poverty alleviation programme etc.
4.1 Rural Development- Conceptual framework
Rural development is a simple concept which is more complex to define. Rural development is a multi-dimensional concept, which involves all kinds of development in rural areas through collective governmental and voluntary agencies’ efforts in our country, where the majority of the population dwells in villages; national development becomes almost synonymous with rural development. India cannot shine without the shining of rural India. After independence a number of development programmes were started to change the scenario in the rural areas. Government has initiated, sustained and refined many rural development programmes under different five year plans. Whopping funds expended, yet alleviation of poverty has remained a distant dream. Rural poverty is inextricably linked with low rural productivity and unemployment, including under-employment. There is a basic issue of providing livelihood security, basic amenities to the rural population. Infrastructural gaps require to be filled and connectivity with urban areas require to be strengthened. Therefore the core of rural development strategy is to provide both self and wage employment, water supply, proper sanitary and health care measures and education.
4.2 Rural Development- Meaning and Definitions
The concept of Rural Development is comprehensive and multidimensional in nature. It covers besides agriculture development a comprehensive set of activities pertaining to all aspects of rural economy. It includes development of agriculture and
57 allied activities, village and cottage industries, infrastructure, health, education, etc. Rural development denotes overall development of rural areas with a view to improving the quality of life of rural people.
“Rural Development is the means to the process of improving basic needs, increasing productivity and employment opportunities and developing potentials of rural resources through integration of spatial functional and temporal aspects”. 1
Rural Development occupies significant place in our economic planning. Rural development is a strategy designed to improve the economic and social life of the rural people. The ultimate objective is improving quality of life of rural poor.
Rural Development is an attempt to improve the living conditions of rural people through implementation of various rural development schemes. The objectives of Rural Development are multi-dimensional. It aims at increased employment, higher productivity, higher income as well as ensuring minimum acceptable levels of food, clothing, shelter, education and health.
The Concept of Rural Development was proclaimed by the World Bank as “Rural Development is a strategy designed to improve the economic and social life of a specific group of people – the rural poor. Rural development involves extending the benefits of development to the poorest among those who seek livelihood in the rural areas. The group includes small-scale farmers, tenants and the landless”.
The Concept of Rural Development has received the attention and was initiated by F.L. Brayne before Independence when he was Deputy Commissioner of Gurgaon District. It later come to be called ‘Rural Reconstruction’. It was pursued in a big way after independence when community Development Programme was launched in Oct 1952.
Michael P. Todaro remarked about rural development as “In India rural 2 development is not only an economic problem but also a more social problem”.
Singh P.K. opined the problem of rural development continues to be an enigma for social scientists and policy makers. The time has come for the rural areas to be
58 approached in a realistic and pragmatic manner, lest they rise to the revolt and protest against the tyrannies of the traditional and urban oligarchies”.
The process of rural development is badly affected by the political incapability prevalent presently in the country. In the absence of capable leadership and lack of strong political will are overshadowing the economic and social interests of the country.
4.3 Rural Development Programmes Several rural development programmes have been launched to improve the living conditions of the rural poor. These rural development programmes were started with an objective of accelerating economic growth with rural participation and equal distribution of its gains. As a result living standards of rural people can be uplifted.
For the first time it was Mahatma Gandhi stressed the need of rural development. He firmly believed that, India’s development is with rural development .
In spite of launching many number of rural development programmes and spending crores of rupees, the overall picture of rural India continues to be grim. Rural development is the biggest challenge before the planners and policy makers of India. Poverty, illiteracy, unemployment, malnutrition, lack of infrastructure facilities, etc, are the rural problems which remain unsolved.
Ansari M.R. and Others 3 opined that “Several programmes were launched for social economic upliftment of the rural poor, and to tackle the basic problems of poverty, unemployment and underemployment, income inequalities and regional disparities in development. These have not only remained un-resolved but also have further worsened.
To quote from the World Bank sector policy paper on Rural Development : “A national programme of rural development should include a mix of activities including projects to raise agricultural output, create new employment, improve health and education, expand communication and improve housing.”
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After Independence rural development occupied a high level of priority. A brief description of the rural development programmes launched are presented and discussed in ensuing pages.
1. Community Development Programme (1952)
It was launched on 2 nd October 1952 as a programme of aided Self-help planned and implemented by the villagers themselves, government offering only technical guidance and financial assistance. The programme aims at bringing about an integrated development of rural India covering the social, cultural and economic aspects of community life.
2. Applied Nutrition Programmes (1962) It was sponsored by the Indian Government in collaboration with Food and Agricultural Organization (FAO) and World Health Organization (WHO). It was launched with a view to improve the Nutritional States of the people specially children and women in rural areas.
3. SF/DA and MFAL (Hill Area Development Programme (HADP) This programme was launched during the 4 th plan, it is operating in hilly areas with the objective of raising the living standard of local population. Area development plan are prepared for the integrated development of the hill area.
4. Drought Prone Area Programme (DPAP) (1970) During the 4 th plan period this programme was launched to insulate human and animal population as well as crops from the adverse climatic conditions in the affected areas. The farmers have encouraged to take up subsidiary occupation like animal husbandry, poultry, sheep rearing, sericulture and horticulture.
5. Integrated Rural Development Programme (IRDP) (1979) This programme has been conceived as an anti-poverty programme. The main object of this programme is reducing the poverty through generating employment and income. IRDP aims at providing assets to poor households so as to enable them to cross the poverty line with the help of income generated from such assets.
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6. Twenty Point Economic programme (1982) Prime Minister’s Twenty Point Economic Programme was launched on 14 th January 1982. The programme includes twenty items which helps rural development and reduces poverty.
7.Poverty Alleviation and Employment Generation Programme Under these programmes, both wage employment and self employment are provided to the people below poverty line. Under this programme-SGSRY (Swarn Jayanthi Gram Seva Rozgar Yojan), TRYSEM (Training of rural Youth for Self- Employment), DWCRA (Development of Women and Children in Rural Areas), EAS ( Employment Assurance Scheme), MWS (Million Wells Scheme), PMRY (Prime Minister’s RozgarYozana) etc, were launched.
8. Social Security Schemes (1995) A Multi-Dimensional National Social Assistance programmes were launched on 15 th August 1995. These progremmes has been designed to ensure social security to the deprived and suffering people. Under this National Old Age pension Scheme. National Maternity Benefit Scheme, Rural Group Life Insurance Scheme, etc, were introduced.
The basic aim of all Rural Development Programmes is to improve the social and economic conditions of the rural mass and make them free form poverty and unemployment. Rural people are benefited to some extent from these programmes. But the overall picture is that rural development programmes have failed to achieve their objective in total. Political, Administrative and Technical factors, Illiteracy barriers, etc., are contributing for this. Dietmar Rothermund 4 rightly observed, “Employment Generating programmes cannot eradicate poverty except in a temporary fashion. They provide only temporary purchasing power”.
The Eight Plan document has identified the following defects in the implementation of Rural Development programmes ; 1. Wrong Selection of Beneficiaries. 2. Lack of Commitment on the Part of Agencies.
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3. Inadequate Delivery Systems.
4.4 Poverty Alleviation Poverty is one of the most serious problems that the civil societies are facing today and surely is a curse on humanity. Hence the poverty eradication indeed a challenging task. Poverty being a social phenomenon in which a section of the society is unable to fulfill even its bare necessities of life is a threat to the well being of the people. Poverty in India is multi dimensional and the poverty ratio varies between the rural and urban India. The existence of poverty in India is not only due to low income and unequal distribution of income but also due to broad social reasons. High incidence of poverty found across the regions in India reflects that the benefits of economic development have not trickled down to the lower strata of the society India can not shine if poverty is not alleviated, people are not empowered and a comfortable living is not ensured. Achieving economic development lies in reducing the percentage of people living below the poverty line. Alleviating poverty is sure to empower the people . India has realized that poverty anywhere is a threat to prosperity everywhere. Hence the governments in India- Central and State have been undertaking anti poverty measures. Over the years, the percentage of people living below the poverty line has conspicuously declined. Thanks to the amazing efforts of the government. However, the government alone can not eradicate poverty. There is dire need for a change in the mindset of the people too.
4.5 Poverty- A Conceptual Frame work Everybody does admit that poverty eradication is one of the greatest challenges of our times .Both the market and the State are said to have failed to safeguard the interest of the poor people in the true sense. Poverty is a great curse on humanity and is no disgrace. In recent years, many civil societies such as non government organanizations (NGOs),Self Help Groups(SHGs), voluntary organizations (VOs) have emerged as an important links between the poor people and the formal system. Achieving economic development lies in reducing the percentage of people living below the poverty line. Alleviating poverty is sure to empower the people implying that as long as poverty is eradicated, people can not be empowered. India has realized
62 that poverty anywhere is a threat to prosperity everywhere. India can not shine if poverty is not alleviated, people are not empowered and a comfortable living is not ensured.. The inability to get the basic needs- food, clothing and shelter as a consequence of low income, lack of productive assets partial use of human resource owing to insufficient access to education and health and no access to break out poverty due to weak economic and social status are the important aspects of poverty 5.
The abject poverty certainly necessitates every need for innovative measure to ensure a strategic approach both to empower the poor people to eke out their livelihood and improve their social status. In spite of the best efforts of these financial institutions, in reaching the deprived sections of the society living in rural areas, still, a large chunk rural under privileged poor failed to get their due share from the institutional finance 6 Jawaharlal Nehru has aptly said that “over 80 per cent of our people live in our villages. India is poor because the villages of our country are poor. India will be rich if villages can be made rich. Therefore, the basic problem of years ago the Zamindari and Jagirdari systems in various parts of India were abolished because the villages could not progress under a semi-feudal system of landownership” 7 With the efforts of the Government of India to initiate various poverty alleviation progrramme conspicuous difference is seen in the magnitude of poverty.
Poverty is a great curse on humanity. Poverty has many faces, changing from place to place and across time and has been described in many ways Poverty is generally concerned with acute and unacceptable multi-dimensional deprivation. The term ‘Poverty’ may be defined as the inability on the part of a person to secure at least basic necessaries of life such as food, shelter, clothing, health, education, etc.
According to the World Bank 8, “Poverty is pronounced deprivation in well- being” where well-being could be measured by an individual’s possession of income, health, nutrition, education, assets, housing and certain rights in a society such as freedom of speech.
Poverty has been defined in terms of income or consumption. Thus, it is “the inability to attain a minimum standard of living” 9 The minimum standard of living 63 defines the income poverty line and all persons whose income is less than this poverty line, fall in the category of poor.
Sexana and Sexana explained the term poverty in these words. “Poverty is the most critical problem confronting India today. That fact that nearly 300 million people are below the poverty line make a mockery of the post-independence achievements and broad-casts it throughout the length and breadth of the country” 10
The Nobel laureate, Amartya Sen opines poverty is lack of opportunities, powerlessness and vulnerability, lack of command over commodities in general or a specific type of consumption deemed essential to constitute a reasonable standard of living in a society, or lack of ‘ability’ to function in a society. it is a deprivation of essential assets and opportunities to which every human being is entitled. it is also associated with insufficient outcomes with respect to health, nutrition and literacy, to deficient social relations, to insecurity and to low self-confidence and powerlessness.
4.6 Concepts of Poverty
Poverty may be absolute or relative poverty. This needs to be distinguished properly
(A) Absolute Poverty
Absolute poverty basically indicates deprivation of some sort resulting in hunger and starvation. A person is said to be absolutely poor if he or she can not live at minimum subsistence with low income or consumption expenditure. In other words, people are said to be in absolute poverty if they do not possess sufficient earnings to ensure minimum necessities which are measured in terms of minimum nutritional requirements.
(B) Relative Poverty
This concept reflects the inequalities of income. The people of low income are relatively poor vis-a vis the people with high income. Here poverty is viewed in terms of inequality between the poorest group and the rest of the community. 11
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4.7 History of Poverty Estimation in India It is really interesting to go through the history of poverty estimation In India. The study of poverty estimation is divided into pre independence and post- independence periods. A brief description of the same is carried out here.
(A) Pre independence Poverty Estimates
One of the earliest estimations of poverty was done by Dadabhai Naoroji in his Magnum Opus ‘Poverty and the Un-British Rule in India’. Accordingly a poverty line ranging from Rs. 16 to Rs. 35 per capita per year, based on 1867-68 prices. His view of poverty line was based on the cost of a subsistence diet embracing rice or flour, dhal, mutton, vegetables, ghee, vegetable oil and salt.
The National Planning Committee (NPC) in 1938 estimated a poverty line ranging from Rs. 15 to Rs. 20 per capita per month. Like the earlier method, the NPC also formulated its poverty line based on ‘a minimum standard of living perspective in which nutritional requirements are implicit’. In 1944, the authors of the ‘Bombay Plan’ (Thakurdas et al 1944) suggested a poverty line of Rs. 75 per capita per year.
(B) Post independence Poverty Estimates
In 1962, the Planning Commission constituted a Working Group to estimate poverty nationally, and it formulated separate poverty lines for rural and urban areas – of Rs 20 and Rs 25 per capita per year respectively.
V.M. Dandekar and N. Rath made the first systematic assessment of poverty in India in 1971, based on National Sample Survey (NSS) data from 1960-61. They argued that the poverty line must be derived from the expenditure that was adequate to provide 2250 calories per day in both rural and urban areas
Alagh Committee (1979): In 1979, a task force chaired by YK Alagh, constructed a poverty line for rural and urban areas on the basis of nutritional requirements. The data pertaining to the nutritional requirements and related
65 consumption expenditure based on 1973-74 price levels recommended by the 1979 Planning Commission task force on poverty estimation are provided in Table 1 which is self explanatory.
Table 4.1: Minimum calorie consumption and per capita consumption expenditure (1973-74)
Minimum consumption Area Calories expenditure (Rs per capita per month) (i) (ii) (iii) Rural 2400 49.1 Urban 2100 56.7 Source: Report of the Expert Group on Estimation of Proportion and Number of Poor, 1993, Perspective Planning Division, Planning Commission
Lakdawala Committee (1993): In 1993, an expert group constituted to review methodology for poverty estimation, chaired by DT Lakdawala, made the following suggestions:
• Consumption expenditure should be calculated based on calorie consumption as earlier
• State specific poverty lines should be constructed and these should be updated using the Consumer Price Index of Industrial Workers (CPI-IW) in urban areas and Consumer Price Index of Agricultural Labour (CPI-AL) in rural areas and
• Discontinuation of ‘scaling’ of poverty estimates based on National Accounts Statistics. This assumes that the basket of goods and services used to calculate CPI-IW and CPI-AL reflect the consumption patterns of the poor.
Tendulkar Committee (2009): In 2005, another expert group review methodology for poverty estimation, chaired by Suresh Tendulkar, was constituted to address the following three shortcomings of the previous methods
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Consumption patterns were linked to the 1973-74 poverty line baskets (PLBs) of goods and services, whereas there were significant changes in the consumption patterns of the poor since that time, which were not reflected in the poverty estimates
There were issues with the adjustment of prices for inflation, both spatially (across regions) and temporally (across time) and
Earlier poverty lines assumed that health and education would be provided by the State and formulated poverty lines accordingly.
The Committee recommended four major changes:
A shift away from calorie consumption based poverty estimation;
A uniform poverty line basket (PLB) across rural and urban India;
A change in the price adjustment procedure to correct spatial and temporal issues with price adjustment; and
Incorporation of private expenditure on health and education while estimating poverty. The Committee recommended using Mixed Reference Period (MRP) based estimates, as opposed to Uniform Reference Period (URP) based estimates that were used in earlier methods for estimating poverty It based its calculations on the consumption of the following items: cereal, pulses, milk, edible oil, non-vegetarian items, vegetables, fresh fruits, dry fruits, sugar, salt & spices, other food, intoxicants, fuel, clothing, footwear, education, medical (non-institutional and institutional), entertainment, personal & toilet goods, other goods, other services and durables. Data for comparative calculation of poverty estimation are provided in the ensuing Table.
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Table4. 2: Percentage of Population below Poverty line (2004-05) Committee Rural Urban Total
(i) (ii) (iii) (iv) Lakdawala Committee 28.3 25.7 27.5
Tendulkar Committee 41.8 27.5 37.2 Source: Report of the Expert Group on Estimation of Proportion and Number of Poor, 1993, Perspective Planning Division, Planning Commission; Report of the Expert Group to Review the Methodology for Estimation of Poverty, 2009, Planning Commission
Interpretation: The figures presented in Table 2 outline the manner in which the percentage of population below the poverty line changed after the application of the Tendulkar Committee’s methodology. It follows that according to Lakdawala committee the percentage of population below the poverty line stood at 27.5 in 2004- 05 while the respective figure as per the Tendulkar committee was 37.2
The Committee also recommended a new method of updating poverty lines, adjusting for changes in prices and patterns of consumption, using the consumption basket of people close to the poverty line. Thus, the estimates released in 2009-10 and 2011-12 use this method instead of using indices derived from the CPI-AL for rural areas and CPI-IW for urban areas as was done earlier. The poverty lines computed using the Tendulkar Committee methodology for the years 2004-05, 2009-10 and 2011-12 are presented in Table 3
Table4. 3 National Poverty lines for 2004-05, 2009-10 and 2011-12 (in Rs per capita per month)
Year Rural Urban (i) (ii) (iii) 2004-05 446.7 578.8 2009-10 672.8 859.6 2011-12 816.0 1000.0
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Source: Report of the Expert Group to Review the Methodology for Estimation of Poverty (2009) Planning Commission; Poverty Estimates 2009-10 and Poverty Estimates 2011-12, Planning Commission
Interpretation: According to the data presented in Table 3 the All India poverty line was Rs 446.68 per capita per month in rural areas and Rs 578.80 per capita per month in urban areas in 2004-05. The respective figures stood at Rs816 and Rs1000.00 in 2011-12
Rangarajan Committee: In 2012, the Planning Commission constituted a new expert panel on poverty estimation, chaired by C Rangarajan with the following key objectives
To provide an alternate method to estimate poverty levels and examine whether poverty lines should be fixed solely in terms of a consumption basket or if other criteria are also relevant To examine divergence between the consumption estimates based on the NSSO methodology and those emerging from the National Accounts aggregates; To review international poverty estimation methods and indicate whether based on these, a particular method for empirical poverty estimation can be developed in India, and To recommend how these estimates of poverty can be linked to eligibility and entitlements under the various schemes of the Government of India. The Committee is expected to submit its report by 2014.
4.8 Trends in Poverty
Poverty being multidimensional covers not only income and expenditure but also health, education, vulnerability, risk and marginalization. and exclusion of the poor from the main stream of the society. Income or consumption levels are the most commonly used way to measure poverty. A person is considered poor if his or her income or consumption level falls below some minimum level necessary to meet basic
69 needs. This minimum level is called the poverty line. The poverty line is estimated separately for rural and urban population.
The planning commission defined the poverty line on the basis of the recommended nutritional requirements of 2400 calories per person per day for rural areas and 2100 calories for urban areas
It is worthwhile to look into the trends in poverty since such an attempt helps in a better comprehending the concept of poverty. The data pertaining to the trends are presented in Table 4
Table4.4 Trends in the Incidence of Poverty In India Rural Urban TOTAL Year No.of No.of % of % of No.of Poor (In Poor (In Poor (In % of Poor Poor Poor Million) Million) Million) (i) (ii) (iii) (iv) (v) (vi) (vii) 1993-94 50.1 327.7 31.8 74.9 45.3 403.0 2004-05 41.8 325.8 25.7 81.4 37.2 407.2 2009-10 33.8 278.2 20.9 76.5 29.8 354.7 2011-12 25.7 216.7 13.7 53.1 21.9 269.8 Note: The estimates are based on MRP of distribution of monthly per capita consumption expenditure of NSS Source: (i) Economic Survey of Karnataka 2013-14 P161 (ii) Planning Commission Government of India, Press Information Bureau, 2013 p3 Interpretation: According to the figures presented in the Table 4, the percentage of persons below the Poverty Line in 2011-12 is 25.7 per cent in rural areas, 13.7 per cent in urban areas and 21.9 per cent for the country as a whole. The respective ratios for the rural and urban areas stood at 41.8 per cent. and 25.7 per cent and 37.2 per cent for the country as a whole in 2004-05. It was 50.1% in rural areas, 31.8% in urban areas and 45.3 per cent for the country as a whole in 1993-94. In 2011-12, India had 270 million persons below the Tendulkar Poverty Line as compared to 407 million in 2004-05, signifying a reduction of 137 million persons over the seven year period.Data pertaining to state-wise poverty estimates for 2004-05 and 2011-12 are presented in the ensuing Table 4.5
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Table 4. 5 : State-wise Poverty Estimates (% below poverty line) (2004-05, 2011-12)
State 2004-05 2011-12 Decrease
(i) (ii) (iii) (iv) Andhra Pradesh 29.9 9.2 20.7 Arunachal Pradesh 31.1 34.7 -3.6 Assam 34.4 32.00 2.4 Bihar 54.4 33.7 20.7 Chhattisgarh 49.4 39.9 9.5 Delhi 13.1 9.9 3.2 Goa 25.0 5.10 19.9 Gujarat 31.8 16.6 15.2 Haryana 24.1 11.2 12.9 Himachal Pradesh 22.9 8.10 14.8 Jammu and Kashmir 13.2 10.4 2.8 Jharkhand 45.3 37.00 8.3 Karnataka 33.4 20.9 12.5 Kerala 19.7 7.10 12.6 Madhya Pradesh 48.6 31.7 16.9 Maharashtra 38.1 17.4 20.7 Manipur 38 36.9 1.1 Meghalaya 16.1 11.9 4.2 Mizoram 15.3 20.4 -5.1 Nagaland 9.00 18.9 -9.9 Odisha 57.2 32.6 24.6 Puducherry 14.1 9.70 4.4 Punjab 20.9 8.30 12.6 Rajasthan 34.4 14.7 19.7 Sikkim 31.1 8.20 22.9 Tamil Nadu 28.9 11.3 17.6 Tripura 40.6 14.10 26.5 Uttar Pradesh 40.9 29.4 11.5 Uttarakhand 32.7 11.30 21.4 West Bengal 34.3 20.00 14.3 All Inda 37.2 21.9 15.3
Note: A negative sign before the number in column four( decrease) indicates increase in percentage of population below the poverty line
Source: Review of Expert Group To Review the Methodology for Estimation of Poverty (2009) Planning Commission, Government of India, Press Note on Poverty Estimates, 2011-12(2013) Planning Commission, Government of India.
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Interpretation: It does follow from the data given in Table 5 that there are wide inter-state disparities in the percentage of poor below the poverty line and the rate at which poverty levels are declining even though there is a decrease in poverty for almost all States. It is not difficult to comprehend that the percentage of poverty has declined from 37.2 in 2004-05 to 21.9 in 2011-12 marking a decline of 15.3 per cent. It is interesting to note that the percentage of poverty in Karnataka in 2011-12 is found to be less than the All India percentage. It is obvious that the percentage of population below the poverty line has increased in 2011-12 compared to 2004-05 in few States, for example States like Arunachal Pradesh, Mizoram, Nagaland
4.9 Why Poverty The problem of poverty is not only a current issue in our country, but it has its roots deep. History reveals the fact, poverty of the worst kind was seen during the Mughal age, Vijayanagar Empire, British Rule also.
Poverty is not due to a single cause. So many factors are responsible for this. Dandekar and Rath have argued that unviable and unprofitable farms with little capacity for capital accumulation have been responsible for rural poverty in India. In other words, the poverty in India is mainly caused by a myriad of factors such as high population growth, sluggish economic growth, chronic unemployment, natural calamities, unequal distribution of wealth and rampant corruption. The ever increasing population is the most important cause of many ills of Indian society
The galloping population in India is again attributed to various factors such as religious attitude, early marriages, preference for male child, joint family system, illiteracy and to some extent the agricultural economy.. The growth of population has a direct impact on the standards of living of the people. There is a relationship between poverty and age structure of the society. The older we are, the more difficult it is to obtain employment.
Poverty is also related with the size of family. Many large families (having more children than small ones) are poor. This is even more true if the head of the
72 family happens to be a female. The larger the family, the lower the per capita income and the standard of living. Poverty and large families are found going hand in hand.
In addition to the general demographic factors like age structure, family size, educational level etc., the casteism, communalism, fatalism, regionalism, discrimination, prejudices also affect poverty indirectly by impending the employment opportunities.
4.10 Major Poverty Alleviation Programmes
Poverty is a multi-dimensional phenomenon. No single cause is responsible for poverty and hence it can not be eradicated with a single measure. Eradication of poverty is one of the principal objectives of Indian Development Strategy. The government has relied mainly on three approaches for reduction of poverty. The first entails pursuit of higher economic growth which will improve the levels of living of all groups of people in the society including the poor, the second involves direct anti- poverty programmes and the third has stressed high priority to government expenditure on social sectors. A brief mention of some of the poverty alleviation measures launched by the Central Government is carried out here.
• Five-Year Plans
The planning in India is construed to be a panacea for all kinds of evils. The First Five-Year Plan was launched in April 195 with economic and social objectives. Ever since the first plan, eleven plans have been formulated and implemented. The planning in India aimed at raising the living standards of people and to open out to them opportunities for a richer and more varied life. The social objectives are to reduce inequalities of income and wealth on the one hand and the welfare of the community on the other.
• Policy of Nationalization In order to achieve the ‘socialistic pattern of society the government adopted the policy of nationalization as one of the objectives of economic policy. Accordingly,
73 many banks have been nationalized. Following this policy, the coal mines were also nationalized in 1972. Later on, this policy was adopted in many other fields also.
• 20-Point Economic Programme In consonance with her slogan of GaribiHatao (1971) Mr. Indira Gandhi, the then Prime Minister, launched an ambitious 20-point programme of development. Integrated Rural Development Programme (IRDP) features in the programme: It was a programme of poverty alleviation launched in March 1976. Its main objective was to enable selected families to cross the poverty line.
• Antyodaya Yojana This programme was initially launched by the then Government of Rajasthan on 2nd October 1977 and later on the governments of Uttar Pradesh and Himachal Pradesh also followed this model of development in 1980. The main plank of this programme is to develop the poorest of the poor. Antyodaya means development (udaya) of the people who is at the bottom level (ant) of the ladder.
• National Rural Employment Programme (NREP) This programme was launched in April 1977 to create additional employment opportunities in rural areas. This programme has now been merged into Jawahar Rozgar Yojana.
• Training Rural Youth for Self-Employment (TRYSEM) It is a scheme started in August 1979 to provide technical skills to the rural youth living below poverty line, in the age group of 18-25, to enable them seek employment in fields of agriculture, industry, services and business activities.
• Rural Landless Employment Guarantee Programme (RLEGP) This scheme was aimed to provide supplemental employment to the poor on public works. This programme too has now been merged along with NREP into the JRY.
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• Jawahar Rozgar Yojana (JRY) This programme was launched in April 1980. This is an amalgamation of two previous employment schemes—NREP and RLEGP. According to this programme, at least one member of each poor family would be provided with employment for 50 to 100 days in a year at a workplace near to his/her residence. About 30 per cent of the jobs under this scheme are reserved for women.
• Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) The scheme was started in 2006 (February). It was first applied on an experimental basis only in 100 most backward districts. Subsequently in September 2007 it was extended to whole of India. The main objective of the scheme is to provide wage employment to rural people
The immediate past UPA government had proposed many changes in this scheme. Unfortunately like all other government schemes, it is also found to be full of corruption and weaknesses as revealed by the report of Comptroller and Auditor General of India. Of late the UPA government tried to enact a Food Security Act, as a major step in alleviating poverty.
After the discussion about the micro finance and its important issues, and self help groups and other related issues in the present chapter, we may now turn our attention to presentation of the study area being Shivamogga district and the profile of Self Help Groups in the forthcoming chapter.
4.11 Poverty Eradication Poverty is a multi-dimensional phenomenon. No single cause is responsible for poverty and hence it can’t be eradicated with a single measure. Eradication of poverty is one of the principle objective of Indian Development Strategy. Royal Commission in its report on Agriculture stated that “If interial of the centuries is to be overcome it is essential that all the resources at the disposal of the state should be brought to bear on the problem of rural uplift which require steps to be taken to remove illiteracy, poverty, ignorance, dirt, disease and general apathy and
75 sustained efforts should be made by all those departments whose activities touch the lives and surroundings of the rural population” .12 After independence so many anti-poverty programme’s are initiated by the Govt. They are IRDP, TRYSEM, JRY, DWCRA, SGSY, Employment Guarantee Scheme, SJSRY, etc. Even though millions of Rupees spent by the govt. on these programmes to eradicate the poverty, the result is not upto the mark. M.N. Subramanian rightly said “Poverty alleviation programmes can only be a short term strategy. In long run elimination of poverty has to come from the growth process itself. Areas having high employment potential should be targeted for higher economic growth through long term investment. Poverty can be effectively eradicated only when the poor start contributing to the growth process through their active involvement”. 13 Eradication of poverty can be ultimately be achieved by economic development which can provide productive employment to the poor. We must speed up economic growth and reduce inequalities to eradicate the poverty. A few days before Pandit Nehru died, he was asked what he considered his greatest failure as Prime Minister. He replied, “Failure of reform the administration. And this is responsible for the continued poverty of India”. 14
Notes 1. See Gopallal Jain(2002) Management of Rural Development and Resources, Mangaldeep Publications, Jaipur p2
2. See Mihael. P.Todaro(1977) Economics of World Devel0pment,London Oxford Press,p 249 quoted by P.K.Singh Five Decades of Rural Development in India-Task Ahead, Southern Economist,1 May 2005 pp9-16
3. Ansarii..M.R.,,et.al.Rural Development Programmes Kurukshetra Vol 47 (1) pp 34-37
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4. Rothermund.D.,Liberlizing India –Progress and Problems ,South Asia Institut,1996 p 82 quoted by P.K.Singh ,Five Decades of Rural Development in India-Task Ahead, Southern Economist. pp 9-16
5. See Ramesh Babuet.al. Micro Finance : An Approach for Poverty Alleviation’ in Southern Economist, Vol 49 (10) Bangalore p 23
6. Dinesh. B. Raghuwanshi,’ Micro Finance : Present Scenario and Emerging Challenges’ Southern Economist Vol 49 (1) p 15
7. Gopal Jain, Management of Rural Development and Resources”, Op.Cit. p 11.
8. World Bank, World Development Report (1990). Orford University Press Newyork, p-27.
9. Ibid.,p27
10. See Sexana R. and Sexana A., “Poverty-Eradication-Programmes- Critical Study”, Southern Economist, March 1991, p13.
11. It is appropriate to mention here that relative poverty can not be eradicated without transfers from the rich to the poor. At same time, the relatively poor may be living above the minimum subsistence level.
12. Report of the Royal Commission on Agriculture, 1928, P-17.
13. M.N. Sivasubramanian, “Poverty Alleviation programme” Yojana, Nov 1999, Pp 37-41
14. Jain L.C., “How Nazir Saab Fought His Majesty’s Collector”, Yozana, Aug 2005, P-20.
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Chapter-5
Profile of the Study area
The present chapter is devoted to a brief presentation of the profile of Shivamogga district as a prelude to the Interpretation of the Primary Data in the next chapter. For the sake of better comprehension, this chapter is divided into two parts-I and II The former presents the profile of the Study Area being Shivamogga district and the latter briefly presents the profile of the Self Help groups which are the real mechanisms for the provision of micro finance notonly in the district but also everywhere.
PART-I
(A) Profile of Shivamogga District
Shivamogga presents a true picture of Nature’s bounty landscape dotted with waterfalls, swaying palms and lush paddy fields which make for picturesque locales. It is the rice bowl of the State. The rivers Tungabhandra, Sharavathi, Varada and Kumadvathi inundate the luxuriant greens of the regions. The district was ruled by the great Indian dynasties. The Sahyadri ranges, part of the Western Ghats, feed the rivers round the year, and inundate the fertile alluvial soil, making it the bread basket of Karnataka. The Sharavathi Hyde Project and Varahi Project provide a substantial portion of the State’s power.
5.1 Location and Boundary Shimoga district is situated roughly in the mid-south western part of the State and southern transitional agro-climatic zone of Karnataka State. The district currently consists of seven taluks- Bhadravathi, Hosanagar, Sagar, Shikaripur, Shimoga, Sorab and Thirthahalli .1The western part of the district possesses mountainous terrain while the eastern part consists of Malnad and Semi-malnad areas.
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The Malnad belt includes Hosanagar, Sagar, Sorab and Thirthahallitaluks. 2 TheMalnad belt taluks are characterized by thick forests and mountainous terrain receiving heavy rainfall. Bhadravathi, Shimoga and Shikaripurtaluks possess natural characteristics of both Malnadand Semi-malnad areas. The district is lying between the latitudinal parallels of 13 °-27 ‛ north and 140 °-39 ‛ north and longitudinal parallels of 74 °-39 ‛ east and 76 °- 40 ‛ east. The district possesses the enchanting mountain ranges of ‘Sahyadri’ with Kodachadri , being the highest mountain range. 3 The district is bounded by Uttara Kannada district on the northwest, Davangere district on the north-east, Chikmagalur district on the south, Udupi district on the west and Haveri district in the north. Shimoga district with an area of 8465 square kilometers occupies 4. 41 per cent of the total geographical area of Karnataka State. 4 Data pertaining to the geographical area of the district are presented in Table No. 5.1
Table 5.1 Geographical Area of the District –Taluk wise Area (in Sq. SL.No. TALUK Kms). (01) (02) (03) 1 Bhadravati 690 2 Hosanagar 1423 3 Sagar 1940 4 Shikaripura 909 5 Shimoga 1108 6 Sorab 1148 7 Thrithahalli 1247 District Total 8465
Source: Shivamogga Zilleya Anki Amshagala Nota-2014-15, District Statistical Office, Shivamogga 5.2 Origin of thename "Shimoga"
According to a legend, the place had the Ashram of the famous Sage, ‘Durvasa’, noted for his short temper The name is written and pronounced in Kannada as ‘Shivamogga’, the anglicized form of which is ‘Shimoga’ which, thus carries an interesting legendary history behind
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There are legends about how the name Shivamogga has evolved. According to one, the name Shivamogga is related to the Hindu God Shiva. Shiva-Mukha (Face of Shiva), Shivana-Moogu (Nose of Shiva) or Shivana-Mogge (Flowers to be offered to Shiva) can be the origins of the name "Shivamogga".
Another legend indicates that the name Shimoga is derived from the word Sihi- Moge which means sweet pot . According to this legend, Shimoga once had the ashram of the sage Durvasa. He used to boil sweet herbs in an earthen pot. Some cowherds, found this pot and after tasting the sweet beverage named this place Sihi-Moge.
5.3 Historical Background
The Shimoga region formed a part of the Mauryanempire. The district came into the control of Satavahanas. The Satakarni inscription has been found in the Shikaripur taluk. After the fall of the Shatavahanaempire around 200 CE, the area came under the control of the Kadambas of Banavasi around 345 CE. The Kadambas were the earliest kingdom to give administrative status to the Kannada language. Later the Kadambas became feudatories of the Badami Chalukyas around 540 CE.
In the 8th century Rashtrakutas ruled this district. The KalyaniChalukyas overthrew the Rashtrakutas, and the district came into their rule. Balligavi was a prominent city during their rule. In the 12th century, with the weakening of the Kalyani Chalukyas, he Hoysalas annexed this area. After the fall of the Hoysalas, the entire region came under the Vijayanagar Empire. When the Vijayanagar empire was defeated in 1565 in the battle of Tallikota, the KeladiNayakas who were originally feudatory of the Vijayanagar empire took control, declared sovereignty, and ruled as an independent kingdom for about two centuries. In 1763 the district came into the rule of the Kingdom of Mysore and remained a part of it till India acquired independence from the British.
There are Seven taluks: Bhadravathi, Hosanagara, Sagara, Shimoga, Shikaripura, Soraba and Thirthahalli .
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Bhadravathi is an industrial town and taluk in the Shimoga District of Karnataka state, India. It is situated at a distance of about 255 kilometers (158 mi) from the state capital Bangalore and at about 20 kilometers (12 miles) from the district headquarters, Shivamogga. The town is spread over an area of 690 square kilometres and has a population of 3.39 lakhs as per the census held in 2011.
Bhadravathi derives its name from the Bhadra River which flows through the city. It was earlier known as Benkipura (or Venkipura), and earlier BenkiPattana which in English means city of fire . Iron ore from the hill station of Kemmannugundi and water from the Bhadra River helped the establishment of an iron mill in 1918 and a paper mill in 1936. Hoysalas ruled the city. The Goddess "Halldhammadevi & Antargattamadevi" guardthe city from past time. The sacred temples was still present in the city.
Hosanagara is a panchayat town in Shimoga district in the Indian State of Karnataka. It is nested in Western Ghats of India. The taluk is located at 13°55 ′N75°04 ′E13.92°N 75.07°E. It has an average elevation of 585 metres (1919 feet). As per the 2011 census, the taluk has a geographical area of 1423 sq.kilometers and 1.18 lakhs of population
Sagara is a city in the Indian State of Karnataka. Located in the Western Ghats range, it is known for its proximity to Jog Falls and to the historical places of Ikkeri and Keladi. Varadamoola, the origin of the river Varada, is near Sagara. Honnavar is the nearest seaport, nearly 80 km away. Sagara is one of the main taluk heads in Karnataka and an important city in the district. Sagara is one of the fastest growing cities in Karnataka. It isthe biggest city in Malnadarea. The world famous Jog Falls ís in Sagar taluk.
Sagar derives its name from Sadashiva Sagara , which is a lakeSadashivaNayaka, ruler of Keladi dynasty built a lake in between Keladi and Ikkeri. It is a sub divisional headquarters headed by a Sub Divisional Magistrate. Sagar is located at14°10 ′N75°02 ′E14.17°N 75.03°E It has an average elevation of 580 metres (1902 ft). As per the 2011 census, the taluk has a population of 2.06 lakhs with a geographical area of 1940 sq.kilo meters. 81
The economy of Sagar is mainly driven by Areca nut or Beetle nut, rice (paddy), spice and forest products trade. Beetle nut is the major cash crop grown in the area. Along with beetle nut, spices like Pepper, Clove, Cinnamon, Nutmeg, and cocoa are also grown. The economy of the city is highly volatile and is dependent on the variation in the pricing of these agriculture products. Sagar APMC is one of the main markets for Arecanut in Karnataka
Shimoga (known locally as Shivamogga ) is a city in Shimoga District in the central part of the state of Karnataka, India. It lies on the banks of the Tunga River and is the administrative headquarters of the district. The population of Shimoga is 5.07 lakhs as per 2011 census. On 1 November 2006, the government of Karnataka announced the renaming of Shimoga to "Shivamogga", along with nine other cities in the state
Shikaripura is a town in Shimoga district in the Indian state of Karnataka. As of 2001 India census, Shikaripura had a population of 2.38 lakhs according to 2011 census
Sorab anglicized version of Soraba is a panchayat town in the Indian State of Karnataka.Soraba derives its name from its earlier name Surabhipura meaning Town of Surabhi. Surabhi was the holy cow which used to milk on a stone statue of the god Sri Ranganatha . A temple is built on the same place where the holy cow used to milk and it is now Soraba's famous Sri Ranganatha temple . Story says that the temple was built by a local Gowda(Landlord) from Halesoraba on the bay of river Dandavathi.Sorab is located at 14°23 ′N75°06 ′E14.38°N 75.1°E. It has an average elevation of 580 metres (1902) feet
Thirthahalli is a panchayat town located in the Shimoga District of the State of Karnataka, India. It lies on the bank of the river Tunga and is also the headquarters of the Thirthahalli Taluk of Shimoga district. According to the 2011 census, the taluk has a population of 1.42 lakhs with a geographical area of 1254 sq.kms.
Another legend set in the time of Ramayana, indicates that Maricha, a relative of the Lanka king Ravana came disguised as a golden deer to enchant Sita, the wife of
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Rama. When Sita asked Rama to get her the deer, Rama followed the deer and killed it. This incident is supposed to have happened near a place called Mrugavadhe in Thirthahalli Taluk. Mrugavadhe means Killing of an animal in the local Sanskrit language.
Thirthahalli has a rich archaeological history with Neolithic sites uncovered in Kundadri Hills near Agumbe and portholed burial chambers found at Arehalli near Thirthahalli. belief that a dip in the river Tunga here will cure one of all sins. It is located at 13°42 ′N 75°14 ′E13.7°N 75.23°E. It has an average elevation of 591 metres (1938 feet). it is located in the midst of dense forests of the Western Ghats
5.4 Administration
From the point of administration, the district is divided into two sub-divisions- Shimoga and Sagar. The former comprises of Shimoga, Bhadravathi and Thirthahalli taluks while the latter consists of Sagar, Hosanagar, Shikaripur and Sorabtaluks. Along with seven taluks, there are 37 nada offices, 339 village accountantcircles,09 towns,355 post offices 116 telephone exchanges 32 police stations 38 hoblis, 1443inhabited and 87 uninhabited villages. 5 Under the ZillaPanchayat Act introduced in 1993, there were 271GramaPanchayats in 2014-15 The developmental administration of the district was under the ZillaParishad that came into effect from 1st April 1987 and now, it is called ‘ZillaPanchayat’. There are now, three Town Municipalities at Sagar, Shikaripur and Thirthahalli and two Nagar Sabhas (City Municipality Corporation), at Bhadravathi, and Shimoga. The administrative overheads are met at different levels by the budgetary receipts derived from various sources and the special allocation of the Governments, State and Central.
5.5 Human Resources
The rate of economic development is largely governed by the supply of human resources, especially the skilled man power. It is the human resource that shapes and controls the material resources in the process of economic development. Material resources, howsoever rich and abundant may be, do not ensure economic development, unless backed up by an appropriate dose of manpower for effective utilization. A brief picture of human resource base in the study area is given below. 83
(a) Population Characteristics
The population of the district has increased from 12.61lakhs in 1981 to 17.52 lakhs as per 2011 census. According to the 2011 census, male and female population constituted 8.77 lakhs and 8.75 lakhs respectively. Similarly, the urban and rural population of the district as per the 2011 census, constituting 35.55 per cent and 64.44 per cent stood at 6.23 lakhs and 11.29 lakhs respectively. Data pertaining to the comparative population characteristics of the district over a period are given in Table 5.2.
Table;5.2 Comparative Population Characteristics of the District (1981-2011)
Density of Population Total Population
1981 1991 2001 2011 1991 2001 2011 1981 1991 2001 2011
(01) (02) (03) (04) (05) (07) (08) (09) (10) (11) (12) (13)
Bhadravathi 418 471 491 493 950 970 1001 2.28 3.24 3.38 3.39
Hosanagar 71 72 81 83 1009 1002 1021 1.01 1.02 1.15 1.18
Sagar 83 91 104 106 981 990 1017 1.60 1.77 2.00 2.06
Shikaripur 169 208 235 262 955 972 977 1.53 1.88 2.13 2.38
Shimoga 264 303 402 456 937 961 987 2.93 3.65 4.45 5.07
Sorab 122 141 162 175 958 967 986 1.40 1.62 1.84 2.0
Thirthahalli 100 105 115 113 1036 1024 1032 1..24 1.31 1.43 1.42
District Total 167 172 194 207 964 977 998 12.61 14.52 16.39 17.52
Source: i) Shimogga Zilleya Anki amshagal Nota,1991,Distinct Statistical Office, Shivamoggapp19-22
ii) Shimogga Zilleya Anki amshagal Nota-2000-01 Opcit pp4-5 iii) Shimogga Zilleya Anki amshagal Nota-2012-13 Opcit p12 & 16
The density of the population of the district has increased from 157 (persons per square kilometer) in 1981 to 193 persons in 2001. It is interesting to note that the density of the population of the district is less by 30 per cent than the State average, the latter being 275. Bhadravathi taluk, which has 471 persons per square kilometer in
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1991 has the highest density of 491 persons in 2001 and Hosanagar taluk which has the density of 72 persons in 1991, has the lowest density of 81 persons as per the 2001 census.
The district as a whole has a fair sex ratio. The district had 964 females per 1000 males in 1991. According to the 2001census 977 females per 1000 males are available in district. As per the 2011 census,998 females per 1000 male are available Within the district, Thirthahalli taluk has 1034 females (more than the district average) while Hosanagar taluk has 1021 females per 1000 males (more than the district average). Table 5.3 provides data with respect to the district population during the last seven decades starting from 1951
Table 5.3 District Population (Taluk wise) (From1951-2011) (in Lakhs)
Percentage Taluks 1951 1961 1971 1981 1991 2001 2011 increase over 1951 (01) (02) (03) (04) (05) (06) (07) (08) (09) Bhadravathi 0.80 1.31 2.03 2.88 3.24 3.38 3.39 323.75 Hosanagar 0.37 0.59 0.79 1.01 1.02 1.15 1.18 218.91 Sagar 0.71 1.55 1.33 1.60 1.77 2.00 2.06 190.14 Shikaripur 0.64 1.01 1.30 1.53 1.88 2.13 2.38 271.87 Shimoga 0.96 1.35 2.08 2.92 3.65 4.45 5.07 428.12 Sorab 0.65 0.92 1.19 1.40 1.62 1.84 2.0 225.00 Thirthahalli 0.60 0.87 0.92 1.24 1.31 1.43 1.42 136.66 District Total 4.73 7.60 9.64 12.56 14.49 16.38 17.52 270.40 Note: The figures given in column 8 are computed
Source : (i) Shivamogga Zilleya Anki Amashagal Nota, 2001-02 Op.cit.p36
(ii) Shivamogga Zilleya Anki Amashagal Nota, 2012-13 Op.cit. p12
It follows from the figures given in the above Table that the population of the district has started growing right from 1950s. It can also be observed that the population of Shimoga taluk alone has increased by over 363 per cent in 2001 over 1951, although the population of all the taluks in the district has been growing considerably. The average increase of the population of the district, as a whole, is
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computed to be 246 per cent which, by any standard, is both alarming and threatening !
(b). Literacy Rate
Literacy, being a qualitative aspect of population is a significant factor for promoting economic development of a country in general. Therefore, literacy rate for males and females and also for rural and urban areas deserves special reckoning. Data pertaining to the literacy rate in the district are presented in Table 5.4
Table 5.4 Literacy Rates In Shivamogga District (Taluk wise & Gender wise) (In Per Cent)
Total Number of
1991 Census 2001 Census 2011 Census literates Taluks Fema Femal (In Males Total Males Females Total Males Total les es Lakhs)
(01) (02) (03) (04) (05) (06) (07) (08) (08) (10) (11)
Bhadravathi 72.34 54.39 63.61 81.29 66.36 73.93 85.19 73.90 79.53 2.45
Hosanagar 72.73 51.48 62.01 81.82 64.57 73.35 86.46 73.45 79.87 0.85
Sagar 76.97 55.90 66.55 86.28 69.60 77.97 87.64 74.54 81.01 1.50
Shikaripur 65.97 44.99 55.73 77.92 61.01 69.59 81.97 69.44 75.77 1.59
Shimoga 74.78 59.57 67.44 83.17 71.57 77.49 87.24 78.88 83.08 3.77
Sorab 71.26 47.68 59.73 80.65 61.28 77.11 85.63 71.62 78.67 1.40
Thirthahalli 77.88 60.73 69.10 85.63 71.14 78.27 88.80 77.54 83.06 1.08
District Total 73.13 53.63 63.45 82.32 67.24 74.86 86.07 74.84 80.49 12.63
Source: (i) Shivamogga Zilleya Anki Amashagal Nota, 2001-02 Op.cit.p36
(ii) Shivamogga Zilleya Anki Amashagal Nota, 2012-13 Op.cit. p18& 19
It follows from the figures given in Table 4.3 that the literacy rate which was 53.74 per cent for males and 35 per cent for females in 1981 increased to 73.13 per cent for males and 53.53per cent for females in 1991. 82.32 per cent and 67.24 per cent are the respective figures according to the 2001 census. Thus the over all literacy
86 rate of the district increased from 44 per cent in 1981 to 74.86 per cent in 2001. It is significant to note that the literacy rate of the district, as recorded in the 2001census, is higher than that of the State average being 67.04 per cent. 6 Again, the literacy rate in the district for males and females, recorded as per the 2001census is 82.32 per cent and 67.24 per cent respectively as against the State literacy rate of 76.29 per cent for males and 57.45 per cent for females .7 According to the 2001 census, the total number of literates found in the district comes to 10.73 lakhs constituting 65.46 per cent of the total population of the district. Thirthahalli taluk has the highest literacy rate (78.27 per cent) while Shikaripur taluk has the lowest literacy rate (69.59 per cent).
5.6.Occupational Pattern
Occupation is closely related to the production structure. Changes in the latter are usually followed by the occupational distribution of population. A balanced distribution of population in the occupational structure is desirable for achieving rapid economic development. According to Collin Clark, there is a close relationship between the economic development of a country and the occupational structure of the population. Data pertaining to the occupational distribution of the population in the district vis-a-vis Karnataka State are given in Table 5.5.
Table 5.5 Occupational Distribution of Population in Shimoga District vis- a-vis Karnataka State (1991 census) (in 000s) Sl. Shimoga Karnataka Sector No. District State (01) (02) (03) (04) 01. Cultivators 190.26 5915.63 02. Agricultural Labourers 179.87 4999.95 03. Live stocks and allied 12.53 616.73 Activities 04. Mining and Quarrying 2.47 116.36 05. Manufacturing in 9.26 322.15 household industries
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06. Manufacture ( other than 35.26 1528.97 household industries) 07. Construction workers 11.91 427.97 08. Trade and Commerce 43.99 1379.95 09. Transport and 12.58 454.96 Communication 10 Other Services 44.24 1529.40 Source : Karnataka At a Glance 2000-01 . Op. cit., pp 16-19.
It follows from the figures given in the above Table that majority of the population depends on primary sector for their livelihood while the people employed in the secondary sector constitute a small number. Similarly, the tertiary sector which includes transport and communication feeds a small number of people. It means that relatively large number of people in the district is engaged in the primary sector compared to people engaged in secondary and tertiary sectors. Data given in Table 5.6 are related to the categories of workers in the district vis-à-vis- the Karnataka State.
Table 5.6Categories of workers in Shimoga District vis-a-vis Karnataka State (2001 & 2011 census)
2001 Census 2011 Census Non Place Main Marginal Total Main Marginal Total Non worke Workers Workers Workers Workers workers Workers rs Workers (01) (02) (03) (04) (05) (06) (07) (08) (09) Shimoga 5,86,832 1,27,829 7,14,661 9,27,8 2,73,139 1,27,809 4,00,948 9,72,155 District 74 (68.12) (82.11) (17.89) (100.00) (31.88) (100) Karnataka 17,202116( 1594681( 18796797 26180 NA NA NA NA State 91.52) 8.48) (100.00) 403 Note : (i) The figures in the parenthesis indicating the percentage share to total are computed. (ii) NA stands for not available
Source : (i) Shivamogga Zilleya Anki Amashagal Nota, 2012-13 Op.cit (ii) Karnataka At a Glance 2000-01. Op. cit., p. 14.
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It follows from the figures presented in Table 5.6 that the percentage share of main workers in Shivamogga district has dropped from 82 as per the 2001 census to 68 as per the 2011 census. While the share of marginal workers in the district has increased substantially during the same period.
5.7 Income Distribution Having explained the occupational pattern in the district, let us now turn our attention to the income distribution of the district. The income of the district increased from Rs. 207428 at the current price in 1995-98 to Rs. 279093 at the current price of 1998-99, which constituted 3.27 per cent of the income of the state as against 4.58 per cent of the income in 1995-96. The district occupies 9 th place in the district wise income of the State. 8 Similarly, the per capita income of the district which was Rs. 10121 as against the State per capita income of Rs. 9384 at the current prices in 1995- 96 increased to Rs. 16892 at the current prices in 1998-99 as against the per capita income of the state being Rs. 16673. Thus, the district ranks 6 th in the district wise per capita income in the state. 9 The income of the district increased from Rs. 56540 at the constant prices in 1995-96 to Rs. 1,91,142 in 2001-02. The per capita income of the district during the same period increased from Rs. 2,759 to Rs. 11,569, constituting 7 th place in the per capita income of the other districts of the State. 10 Data pertaining to the sectoral distribution of the income of Shimoga district are given in Table 5.7.
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Table 5.7Sectoral Composition of Income in Shimoga District (in Rs. lakhs)
GDDP @ NDDP @ NDDP @ GDDP @ Constant current Constant Sector current prices prices in prices in Prices (2010=11) 2004-5 2010-11 (2004-5) (01) (02) (03) (04) (05) Agriculture and Animal Husbandry 224577 147641 2007964 136471
Forestry and Logging 64280 41387 63519 40887 Fisheries 8294 5561 7074 4312 Mines and Quarrying 162 101 130 53 Manufacturing 67615 51194 48804 35977 Construction 115501 76652 109554 71904 Electricity, Gas and Water 21051 13170 12081 6476 supply Railways 1510 1258 1059 913 Transport by other means 23071 14333 21162 12762 Storage 313 196 291 182 Communication 16414 26117 12949 23279 Trade, Hotels and 98935 66934 95903 64662 Restaurants Banking and Insurance 50110 49647 49386 49071 Real Estate, Ownership of dwelling and Business 115314 62408 106571 56453 Service Public Administration 71106 49065 59075 40809 Other Services 90529 55103 86148 51755 Total Income 1008597 689884 91476 619840 Per capita(GDDP) I (in 54848 37516 49745 33707 Rs.)
Note : GDDP stands for Gross District Domestic Production and NDDP stands for Net District Domestic Production
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Source : i. Shimoga Zilleya Anki Amshagala Nota, 2000-01, Op. cit., p. 49. ii. Shimoga Zilleya Anki Amshagala Nota, 2012-13, Op. cit., p. 11 iii. Economic and Social Indicators, Shimoga district, District Statistical Office, Shimoga, 1997-98, p. 6. It can be observed from the figures given in Table 4.6 that the income of the district (sector-wise) both at the current and constant prices has increased over the years. Total income of the district at the current price, for instance, which was Rs. 207428 in 1995-96 increased to Rs. 1008597 in 2012-13. Similarly, the per capita income of the district both at the constant and current prices increased from Rs. 10121 (in 1995-96) to Rs. 37516in 2012-13
5.8 Cropping Pattern Before turning our attention to crops and cropping pattern in the district, it is worthwhile to look into the climatic conditions and soil structure of the district in general, for, the cropping pattern is largely determined by them.
5.9 (a). Climate and Rainfall
The district has a moderate climate with temperature ranging from 23.2 ° Celsius to 37 ° Celsius. The mean daily temperature hovers around 15 °C, during the winter season. The temperature normally increases steadily in the beginning of February. Summer is followed by ‘pre-monsoon’ and monsoon, extending till the end of September. The Western Ghats of the district usually receive heavy rainfall. Augumbe 11 a south western zone of the district on the Western Ghats receives the highest rainfall. 12 The normal rainfall in the district averages around 1813. 13
(b) Soil Structure
The district possesses three types of soil, viz., laterite soil in the west, red sandy loam soil in the east and in the north western region and red loam in the central region. The soil of the district, by and large, is highly fertile, which makes the district basically an agriculture-dominant district.
Owing to the differences in the variety of soil and climatic conditions found in the district, the cropping pattern also differs intra-regionally. The crops of the district
91 can be broadly divided into food and commercial crops. Paddy, jowar, maize, ragi, cereals and pulses are the major food crops 14 while sugarcane, arecanut, coconut and cotton are the important commercial crops. The net area sown in the district stood at 216930 hectares in 2000-01, which constituted 25.58 per cent of the total geographical area of the district. Data pertaining to the areas under food crops (Cereals) in the district are presented in Table 4.8.
Table 5.8 Areas under Food Crops (Cereals) in Shimoga District, (In hectares) 1999-2000 2014-15 Taluk Total Areas Under Total Areas Under Cereals Cereals (01) (02) (03) Bhadravathi 25171 17817 Hosanagar 12753 11366 Sagar 16788 16242 Shikaripur 38995 41235 Shimoga 29663 31225 Sorab 32066 37033 Thirthahalli 17269 13568 District 172705 168586 Total * Source: 1. ShivamoggaJilleyaAnkiAmshagala Nota- 2000-01 , Op. cit., pp 9-10. 2. ShivamoggaJilleyaAnkiAmshagala Nota-2001-02 ,Op.cit., pp 9.
3. ShivamoggaJilleyaAnkiAmshagala Nota-2014-15,Op.cit., p30
It can be observed from the data given in Table 4.7 that the total areas under the cereals in the district have increased from 172705 hectares in 1999-2000 to 168486 hectares in 2014-15
It is important to note that the district is fairly rich in the horticultural resources too, Tomato, brinjal, beans, cabbage, cucumber and leaves are the vegetables largely grown in the district. The vegetables grown are more or less consumed by the localities. Total area under the cultivation of vegetables decreased from 684 hectares
92 in 1999-2000 to 213 hectares in 2014-15. Similarly, the area under fruit cultivation consisting of plantains, mangoes, jackfruits, pineapples, etc., decreased drastically from 7637 hectares in 2000-01 to 370 hectares in 2014-15. Besides, the flowers like Jasmine, Marigold, Chrysanthemium, etc., are also grown in the district. Data with respect to the production of major crops in the district during 1998-99& 2012-13 are given in Table 5.9.
Table 5.9 Production of Crops in Shimoga District (1998-99&2012-13)
(in Lakh onnes)
Crops 1998-99 2014-15 (01) (02) (03) Rice 3.83(10.49) 3.84
Ragi 1.25(0.72) 1.62
Jowar .373(0.22) ..573
Maize 3.21(1.92) 2.68
Wheat 0002(0.00091) 00
Minor millets 072(0.17) -
Total cereals and minor millets 43.21(4.67) 65.52
Note : The figures in the brackets indicating percentage to total are computed. Source : Shivamogga Jilleya Anki Amshagala Nota-2014-15,Op .cit., p35 It follows from the data given in Table 4.9 that Shimoga district is predominantly rice producer. In 2014-15, the district produced 3.84 lakh tonnes of rice. Similarly, the district produced other food crops such as ragi, jowar, maize, etc. Commercial crops like cotton, ground nut and sugarcane were also produced by the district.
5.10 Education Education undoubtedly helps to improve the quality of life of the people and thereby contributes to economic development of any country. Literacy rate and the number of educational institutions and enrolment of the students are the prime
93 indicators of development as far as the education is concerned. Data relating to the educational institutions providing primary, secondary, pre-university and general education to the people of the district are given in Table 5.10.
Table 5.10 Education Level and Enrolment of Students
2014-15 Level of Education No of Institutions Total Enrolment Primary And Secondary 2779 270636 Educational Institutions Pre-University Colleges 116 35432 University and General 24 23658 Education
Source: .Shivamogga Jilleya Anki Amshagala Nota- 2014 -15Op. cit., pp79-90 According to the data given in Table 4.10, the number of primary and secondary educational institutions increased from 2338 in 1998-99 to 2779 in 2014- 15, Similarly, the number of pre-university colleges increased from 52 in 1999 to 116 in 2014-15 along with the enrolment of students. The number of institutions imparting university and general education decreased from 30 in 1998-99 to 24 in 2014-15 Data relating to the particulars of technical education are presented in Table 5.11.
Table 5.11 Technical Education and Students Enrolment in Shimoga district, 1998-99 and 2014-15
Particulars 1998-99 2014-15 (01) (02) (03) Medical Colleges - 328 Enrolment in Polytechnic Colleges 1914 5370 Enrolment in Engineering Colleges 1323 3095 Enrolment in Dental Colleges 152 159 Libraries 101 300 Source: 1. Shivamogga Jilleya Anki Amshagala Nota - 2000-01 , Op.cit. 2. Shivamogga Jilleya Anki Amshagala Nota- 2014-15 , Op.cit.pp90-93
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It can be observed from the figures given in Table 4.11 that the enrolment of students in Polytechnic Engineering Colleges and Dental College in the district has increased in the year 2014-15 compared the year 1998-1999. The district has tenpolytechnic colleges with 5370 students, two Engineering colleges and one Dental Medical College each. 15 The number of Libraries found in the district has increased from 101 in 1998-99 to 300 in 2012-13
Besides, there are two Law Colleges functioning in the district. 16 Agriculture Science College started in 1996 is providing education. Moreover, there are 72 vocational Education Centres functioning in the district, related to Teacher’s Training, Village Artisan’s training and Music training etc., under the auspicious of National Literacy Mission, New Delhi. People’s Education Centres with the motto of enhancing the general knowledge of illiterate adults, are also working in the district.
Above all, in this context, the role played by an Institution providing higher education to the people in the district deserves special mention. Long-felt need of the people for higher education was met with the establishment of Kuvempu University (1987), the campus being situated at Shankaraghatta. 17
5.11 Health Health is as important as education in improving the quality of life of the people and thereby contributes to economic development The number of Primary Health Centres (PHCs) also increased from 60 with 400 beds in 2001-02 to 110 with 700 beds in 2014-15. 18 Also, 7 cumulative Health Centres with 210 beds were also found In this context, District
McGann Hospital situated at Shimoga Headquarter, rendering fabulous medical services to the people of the district deserves special mention. 19 Besides, there are 12 family planning centres functioning all over the district, with 352 sub-centres in 2012-13
5.12 Industrial Development The rate of industrial development can be taken as a criterion reflecting on the tempo of economic development of a country in general and of a region in particular.
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(a). Large 20 and Medium Scale Industries
It is found that the total number of industries found in the district increased from 170 in 2000-01 to 273 in 2014-15. Similarly, the total number of employees employed in all the industries put together decreased from 17458 in 2001-02 to 30,443 in 2014-15. Agood picture indeed ! The industries in the district are concentrated more in Shimoga taluk than in other taluks. The industries found in the district manufacture products like steel, pig iron, refractories, paper, news print, craft paper, cylinder, liners, sandalwood oil, etc.
(b). Small Scale Industries
Data with respect to small scale industries (SSIs) established in the district are given in Table 5.12.
Table 5.12 SSI Units in Shimoga District 2000-01-2014-15 2000-01 2014-15 SSI Units Total SSI Units Total Taluks established in number of established in number of the current Industries the current Industries year year (01) (02) (03) (04) (05) Bhadravathi 90 1868 244 3516 (4.81) (8.15) Hosanagar 36 689 42 1314 (5.20) (5.05) Sagar 75 1776 174 2410 (4.22) (7.21) Shikaripur 50 1161 126 2058 (4.30) (6.12) Shimoga 147 3051 383 5362 (4.81) (7,14) Sorab 35 774 100 1607 (4.52) (6.22) Thirthahalli 35 928 128 1607 (3.77) (7.96) District total 468 10247 1252 17488
Note : The figures in the bracket showing percentage to total are computed. Source: Shimoga Zilleya Anki Amshagala Nota, 2000-01 and 2014-15 , p. 58
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It can be observed from the data given in the above Table that the total number of SSIs established in the district increased from 10247 in 2000-01 to 17488 in 2014- 15. Bhadravathi, Sagar, Shikaripur and Shimoga taluks put together possess 76.77 per cent of the total industries found in the district in 2012-13 . The SSI units found in the district, together provided employment to 74507 people in 2014-15. 21
5.13 Power Resources Hydropower is a major input for the prosperity of industries, and agriculture and for improving the general living standard of the people. The district is not an exception to the power shortage being found in the State as a whole, in general. All types of industrial consumers are suffering from the inadequate power and low voltage problem. Tiny and small industries are hit hard more than others. Despite this pitfall, 1440 hamlets in the districts have been electrified in 2012-13. 22
There are three Hydro-electric Power Projects in the district. 23 All the three Power Stations are connected to State Electricity Grid for the distribution of power generated.
The power requirements of the district are met through the Receiving Stations and /or sub-stations set up at different places in the district. It is important to note that the electricity produced in the district constitutes 60 per cent of the total electricity generated in the State.
5.14 Irrigation Projects There are two Major Irrigation Reservoirs 24 found in Shimoga district. Besides, there are two Minor Irrigation projects-Anjanapur reservoir and Ambligola reservoir both of which are in Shikaripurtaluk of the district. All the reservoirs put together provide irrigational facilities to about 0.64 lakh hectares every year in the in the district. 25
5.15 Forest Resources Area under forest in the district stood at 2.77 lakh hectares constituting 32.66 per cent of the total geographical area of the district in 2012-13 26 Although all the taluks in the district possess the forest strip, Sagar, Thirthahalli, Shimoga and Shikaripur taluks dominate the total forest area, which together account for 71.12 per
97 cent of the total forest area. Sagar taluk accounts for 23.80 per cent while Thirthahalli, Shimoga and Shikaripur taluks account for 17.24 per cent, 15.49 per cent and 14.51 per cent respectively.
Forest of the district is of moist and dry deciduous type. Sandalwood, Teakwood, Rosewood, Soft-wood, Pulp, Match-box wood, Eucalyptus, etc., are some of the invaluable timbers available in the district.
5.16 Mineral Resources
The district is endowed with fairly rich minerals. Manganese ore deposits are located in the taluks of Thirthahalli, Bhadravathi and Shimoga. Besides, Quartz, Silica, Sand, Kyanite and Kauline etc., are the other mineral resources found in the district. However, commercial exploitation of these available resources is not properly undertaken, so far.
5.17 Tourism The district has several alternative spots of tourists’ interest. The world famous Jog Falls ,27 being one such spot of the district has added uniqueness to the district. Panaromic view of sun-setting at Augumbe, one of the important tourist centres of the district is fascinating indeed!
Bird’s Sanctuary at Gudavi in Sorabtaluk and at Mandagadde in Thirthahalli taluk has added new colours to the beauty of the district. ‘Lion Safar i’ at Tavarekoppa 28 deserves special mention. Moreover, a trip to Honnemaradu, about 22 kilometers away from Sagar gives a memorable experience to the tourists.
The district does carry historical and religious background and therefore is one of the tourist centres in the State. Aghoreshwara Temple at Ikkeri; 5 kilometers away from Sagar attracts large number of devotees. Keladi, Varadahalli and Varadamula (all in Sagartaluk) Chandragutti (in Sorabtaluk) and Belligavi (in Shikaripur taluk) are the other tourist centres of the district. The famous mountain - Kodachadri (in Hosanagar taluk) provides picturesque view and a trekking to the mountain gives an adventurous experience.
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Tourism in the district provides large scope for direct and indirect employment to a large number of people and therefore needs to be nurtured. If proper facilities are extended to these tourist centres, tourism industry will be a promising prospect. The tourists normally make their own transport arrangement to all these centres. However, there are many private buses plying to and from the places like Ikkeri, Keladi, Varadamula, Chandragutti and Belligavi. State owned buses are plying over Gudavi and Varadahalli.
5.18. Transport Scenario in the District
The district possesses the advantages of having both the railway and road transport a brief discussion of which is being carried out here.
(a). Railways
It is interesting to note the railway transport in the district is restricted only to the taluks of Bhadravathi, Hosanagar, Sagar and Shimoga. The railway network of the district consists of 119 .50 kilometers. There are 8 railway stations. Bhadravathi taluk has one station while Sagar taluk has three and Shimoga taluk is having four stations. 29
There is only one railway line passing through the district, viz ., Bngalore- Talaguppa-Jambugar line. The railway line between Shimoga and Bangalore has been recently converted into broad-gauge while, the line between Shimoga and Talaguppa- Jambugar is meter gauge and its conversion into broad-gauge is a long standing demand of the people of the district. The extension of this line up to Bhatkal or Honnavar in Uttara Kannada district links it up with the Konkan Railway which will provide direct market access to Mumbai. There is also an urgent need for direct railway link between Shimoga and Harihar to pave way for the accelerated development of trade, commerce and industries.
(b). Roadways Road transport is a chief means of transport in the district, which has road links with all the towns of the district. As on March 2002, the total road length of the district stood at 6653 kilometers of which 3962 kilometers, constituting 59.55 per cent of the
99 total road length were surfaced roads The district is having a Depot of Karnataka State Road Transport Corporation-KSRTC at Shimoga headquarter and Sagara.
5.19. Others
During 2014-15 the district had355 post offices, 254 bank branches and 15157 industrial units.. Besides, as on March 2002, the district had 184 commercial banks, 37 RRBs, 8 pcard banks 161 primary credit co-operatives and 117 telephone exchanges. Canara Bank happens to be the Lead Bank of the district. Moreover, there were7main and 13 Sub Regulated Markets functioning in the district.
Having presented the profile of the district we shall turn our attention towards the profile of SHGs in the district.
PART –II (B) Profile of SHGs.
Having presented the geographical and topographical features of Shivamogga district in Part I of this chapter, now a presentation of the profile of SHGs As it is well known, SHGs are the vehicles for carrying out the operation of micro finance . Micro finance or credit can not be operated effectively without the SHGs. In other words, SHGs are the mechanisms for the operation of micro credit and financial inclusion. An attempt is made here to present the profile of SHGs here.
1. Growth of SHGs : The number of SHGs formed influences the development and thereby reduces the poverty level. This is so because the micro finance which enhances the living standard of the people is outreached through the formation of SHGs. If the number of efficient SHGs increases it is healthy sign. Data pertaining to the growth of SHGs in Shivamogga district vis a vis Karnataka state over the years are presented in Table 5.13
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Table 5.13 Growth of SHGs ln Shivamogga District vis-a vis Karnataka State over the years
No.of SHGs No.of SHGs Years Shivamogga District Karnataka (i) (ii) (iii) 2000-01 868 8,759 2001-02 1,371 14,386 2002-03 738 22,646 2003-04 1,033 41,688 2004-05 929 50,573 2005-06 2,010 61,730 2006-07 4,532 54,610 2007-08 2,279 97,435 2008-09 1,413 60,319 2009-10 1,356 57,839 2010-11 1,167 49,759 2011-12 1,427 55,391 Total 19,123 5,75,165 Percentage 21.03 64.66 Increase over 2000 Note : The percentage increase is computed.
Source: NABARD-Micro Finance in India 2001-02 to 2011-12
The data presented in the Table 5.13 reveal that the number of SHGs formed in the district as well as in the State is found increasing. The number of SHGs increased from868 in 2000-01 to 19,123 in 2011-12 showing 21 per cent increase. Similarly ,the number of SHGs formed in the State did increase from 8759 in 2000-01 to 5,75,165 with 65 per cent increase. This reflects that the number of SHGs in the district is not increase as fast it in the State.
2. Composition of the Group: People belonging to homogeneous group or to heterogeneous group can form the SHGs. This would reflect the nature of SHG which is sure to reflect the diverse or uniform character. People belonging to the
101 homogeneous group are found forming the Group more than those belonging to the heterogeneous group
3. Rationale behind Forming SHG: SHG may be formed owing to vivid influences implying that there are many motivating factors to form Group. These factors may be in the form of desire to save money, labor sharing, improving the economic status These factors are considered by the people before forming the Group
4. Group’s Size and Number of Women Members: A SHG is a voluntary organization of individuals formed. to achieve certain objectives .However, SHG can not be formed by all those who want to come together. Certain norms are to be followed while forming the Group. According to the norms in vogue, the number of members in a SHG can not exceed 20. In other words, the maximum number of members in a SHG is 20 The SHGs formed in the district are dominated more by women members than by men members. This is reflected in the following Table 5.14
Table 5.14 Stree Shakti SHGs in the District -Taiuk wise 2014-2015 2012 2013 2015
Taluks No of Total No of Total No of Total StreeShakti No.ofWomen StreeShakti No.ofWomen StreeShakti No.ofWomen Sangha Members Sangha Members Sangha Members Bhadravathi 634 4617 634 8963 634 6555
Hosanagara 359 6261 359 6600 359 6002
Sagara 620 10878 620 9802 620 7386
Shikaripura 820 13740 820 13199 820 4605
Shivamogga 635 6105 635 6633 635 9618
Soraba 736 4559 736 9588 736 8960
Thirthahalli 525 8671 525 8423 525 5252
Total 4329 54831 4329 63208 4329 48378
Source: Shivamogga Jilleya Anki Amshagala Nota-2012-13 Op. cit, P195
Shivamogga Jilleya Anki Amshagala Nota-2014-15 Op. cit, p123
Data presented in Table 5.14 reveal that the number of women members is on the increase over years –from2012 to 2015 though the number of SHGs has not shown
102 any significant change. It can be observed from the figures that Shikaripura was found to be the taluk where the highest number of women members was found in 2013 while Shivamogga is the taluk with least number of women members in 2013. While in 2015,the highest number of women members is found in Shivamogga followed by Soraba,Thirthalli is found having least number of women members The number of women members has dropped in Bhadravathi, Hosanagar and Sagar, Shikaripura and Thirthallli in 2015
5. Frequency of Periodic Savings and Members’ Borrowing: Savings usually depend on the size of income and the level of consumption. Hence it can be promoted either by increasing income with no change in consumption or by cutting down conspicuous consumption there being no change in the level of income. The frequency of savings matters much in determining the soundness of a SHG. There are people who can save every day while there are people who save only once a week or month
Lending and borrowing are the vital activities of a SHG. In order to carry out their activities, the Group members borrow from public or private sector banks or cooperative banks.2(2. Members usually borrow to generate income and thereby improve their living standard. Of course, the borrowers have to pay the rate of interest Hence the amount borrowed must be meticulously utilized)Sometimes the Group may also lend to its members considering different factors and thereby promotes the building capacity of the members
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Table 5.15 Savings and Loans Availed by SHGs in Shivamogga District. (2012- 2015) 2012 2015
No.of No.of No. of Total Total Groups No. of Grou Total Total Savings Loans Groups Savings Taiuks Groups ps Loans from Accumulated from Open Accumul Open Availed Availe banks (Rs.lakhs) banks ated savings loans savings in d (Rs.lakhs) (Rs.lakhs) (Rs.lakhs) in banks banks loans
Bhadravathi 634 5.04 610 6.44 634 7.01 631 13.17
Hosanagara 359 2.37 309 6.25 359 4.02 345 15.00
Sagara 620 5.72 530 8.24 620 7.01 611 15.36
Shikaripura 820 7.92 780 5.18 820 10.01 635 23.14
Shivamogga 635 3.42 601 2.83 635 7.14 705 14.77
Soraba 736 4.34 700 1.53 736 4.01 736 15.55
Thirthahalli 525 2.33 525 8.42 525 5.25 525 12.25
Total 4329 31.15 3980 38.89 4329 46.31 4188 109.24
Source: Shivamogga Jilleya Anki Amshagala Nota-2012-13 Op. cit, p.196ShivamoggaJilleyaAnkiAmshagala Nota-2012-13 Op. cit, p.124
According to the figures given in Table 5.15,the total savings accumulated by SHGs formed in the district did increase to 46 per cent in 2015 from 31 per cent in 2012 Similarly the number of SHGs availed loans from banks increased from 39 in 2012 to 109 per cent which is staggering indeed!
Notes 1. Prior to the reorganization of the State of Karnataka in 1997, the district of Shimoga consisted of nine taluks. Both Honnali and Chennagiri taluks which were a part of Shimoga district earlier, now come under Davangere district.
2. The Malnad Area Development Board (MADB) has excluded Sorab taluk from its purview and included Shimoga taluk in its orbit. The term is pronounced as ‘Malenadu’ in Kannada.
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3. The Kodachadri Mountain is about 4441 feet above the sea level.
4. Shimoga district ranks 6 in the geographical area in the State of Karnataka as per 2001 census.
5. Shivamogga Zilleya Anki Amshagala Nota-2014-15, District Statistical Office, Shimoga District, Shimoga, pp1,-76
6. Karnataka at a Glance, 2000-01, Directorate of Economics and Statistics, Government of Karnataka, Bangalore, p. 70.
7. Ibid., p.70.
8. Shivamogga Jilleya Anki Amshagala Nota-2001-2002, Op. cit, p.52.
9. Ibid., p. 52.
10. Ibid., p.52.
11. Also popularly called Chirapunji of South India.
12. Normal rainfall in Agumbe is recorded at 7421.6mili meter (mm) while the actual rainfall was 7252.8 mm in 2001.
13. The actual rainfall in the district was 1254 mm during 2001 as against 1957 mm in 2000.
14. Since paddy is the major agricultural crop of the district, Shimoga is often nicknamed as the Paddy Granary of Karnataka State.
15 i. JawaharLal Nehru Institute of Technology, Shimoga.
ii. Sharavathi Dental College, Shimoga.
16. i. National Law College, Shimoga
ii. SagarGangothri Law College, Sagar.
17. i. The Campus of the University is 27 kilometres away from Shimoga Town. ii. The University has a jurisdiction over Shimoga, Chikmagalur, Chitradurga and Davangere districts, with a Post Graduate Centre at Davangere.
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18. i. Shivamogga Jilleya Anki Amshagala Nota-2000-01, Op.cit., p.23.
ii. Shivamogga Jilleya Anki Amshagala Nota-2014-15, Op. cit., p.23.
19 McGann Hospital started way back in 1880, was named after Dr. McGann who was the Senior Surgeon with the then Government of Mysore. See, Gazettier of India: Karnataka State-Shimoga district, Karnataka Gazettier Unit, Bangalore, 1975 p. 548.
20 i. Vishweshraiah Iron and Steel Industries (VISL), Bhadravathi and Mysore Paper mills, Bhadravathi, are the only two large scale industries functioning at present in the district.
ii. The other large scale industries-Tungabhadra Sugar Factory Shimoga and Sandalwood Oil Industries found in the district, have stopped working since many years.
21 Shivamogga Jilleya Anki Amshagala Nota-2014-15
22 Ibid., p.58
23. i. Sharavathi Power station, also named as A-B. Site (Anebayalu) having 10 generators is producing 4215.14 million units of electricity. ii. Mahatma Gandhi Power House (MGPH) with 8 generators is producing electricity of 114 605 million units.
iii Linganamakki Power Station with 2 generators is producing 176694 million units of electricity.
24. i. Bhadra Reservoir Project for the river Bhadra near Lakkavalli, about 30 kilometers away from Shimoga town is on Major Irrigation Reservoir of the District. ii. The other Major Irrigation Reservoir is Tunga Reservoir Project for the river Tunga near Gajanur. 25. Shivamogga Jilleya Anki Amshagala Nota-2001-02, Op. cit, p.52.
26. Ibid., p. 54.
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27 Jog Falls is about 110 kilometers away to the north from Shimoga town. The view of water plunging from a height of 960 feet is exceptionally delightful and sensational.
28. Tavarekoppa being 10 kilometers away from Shimoga is on the way to Sagar from Shimoga town.
29. Railway stations found in the district are Shimoga Town, Shimoga-Bidire, Konagalli Hornalli, Navtoor, Kotegangoor, Kumsi, Bhadravathi, Mosaralli, Kenchanalu, Arasalu, Anandapuram, Sagar, Balegundi, Adderi, Kanle and Talaguppa Jambugar.
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Chapter-6
Interpretation of the Primary Data
Following the discussion about the Profile of Shimoga district in the previous Chapter, we, now, turn to the analysis of the Research Findings based on the primary investigation carried out personally in the district. This Chapter owes much to the interpretation of the primary data gathered in the field by administering a set of interview schedule personally. The chapter analyses the personal profile of SHG members, and Group profile in the study area.
For appropriate interpretation and better comprehension of the survey results, this Chapter is divided into two parts. Part-A deals with the analysis of the views of the members of Self Help Groups while the Part-B is devoted to the analysis of the views of the bankers
To begin with, it would be appropriate to give information about the sampling which is drawn from all the seven taluks of the district. The data were gathered during the months of March-April 2016 Sampling details are presented in Table 6.1 which is self explanatory.
Table 6.1 Sample Details :Self Help Group Members and Bankers/Sponsors interviewed in the District-2016
No. of No. of SHG Percentage to Percentage Taluks Bankers/ Members total to total Sponserers (i) (ii) (iii) (iv) (v) Bhadravathi 15 15 02 10 Hosanagar 15 15 02 10 Sagar 15 15 05 25 Shikaripur 15 15 02 10 Shimoga 10 10 02 10 Sorab 20 20 05 25 Thirthahalli 10 10 02 10 Total 100 100 20 100
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SHGs are very large in number where a complete census is seldom possible. Hence randomly, 100 members of SHG belonging to different categories were interviewed across the district with due weight age taluk wise. In all 20 Sponsoring Agency to which SHGs are linked also consulted However Sorab taluk from where the researcher is hailing is given a little more weight age in selecting the sample. The other taluks while selecting the samples were also given appropriate weight age. The survey of all categories was carried out, using well structured Interview Schedules, prepared individually. Moreover, in all 20 bankers being very important in the functioning of the SHG are also consulted with a view to understanding the monitoring difficulties in the functioning of the SHGs. This is done by eliciting their views using well structured Interview Schedule. Sampling details are depicted in Graph 6.1which is self explanatory.
Graph 6.1: Sampling Details
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Part – A 6.1(a) Views of SHG Members This part analyzes the views of the SHG members pertaining to motivating factors for forming the Group, nature of Group composition, rationale behind SHG, nature of activities, Groups’ monthly income, size and social status of members forming the Group, amount and frequency of periodical savings, frequency of monthly meeting and members’ attendance, members’ participation in the proceedings, nature of accounts of the Group, size, purpose and extent of utilization of loans, members’ views on interest rate on loans and on Group lending, Groups’ monthly deposits, members’ views on interest, members’ awareness about financial services, members views on vital issues and positives of forming SHGs besides the personal profile of the Group members. Based on this, some useful suggestions are offered in the ensuing chapter. The analysis begins with the personal profile of the Group members
I Personal Profile of the Group Members: It is believed that the socio-cultural an economic variable does play a paramount important role. Under this backdrop, an attempt is made here to study the personal profile of the Group members.
1. Age and Marital Status of Group Members. A Self Help Group (SHG) may be formed by like minded people of different age and marital status. Data pertaining to the age and marital status of the members in the study area are presented in Table 6.2
Table 6.2 Age and Marital Status of Members.
Age Married Percentage Unmarried Percentage (1) (2) (3) (4) (5) Below 20 00 00 01 01 21-30 14 14 00 00 31-40 41 41 00 00 41-50 24 24 00 00 51-60 15 15 00 00 Above 60 05 05 00 00 Total 99 99 01 01
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Source : Data gathered through Primary Investigation, May-June 2016.
Data presented in Table 6.2 reveal that 99 per cent of the members in all the age groups considered were found married while only one per cent of the members in the age group of below 20 was unmarried. Likewise, 41 per cent of SHG members in the age group of 31-40 years are found married while only 1 per cent of members in the age group of below 20 years are unmarried. It can also be observed that 24 per cent of members married are between the age group of 41-50 years. Similarly,15 per cent and 14 per cent of members married are found between the age group of 51-60 years and 21-30 years respectively while the members in any age group except in the age group below 20 are married signifying nothing.
Graph 6.2 : Members’ Age & Marital Status.
2. Education Level of the Group Members: It is fervently believed that the level of education is one of those factors that can decisively influence the choice of career one likes to take up. The management of the organization also depends on the level of education that entrepreneurs possess. Data pertaining to the education status of the entrepreneurs are presented in Table 6.3
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Table 6.3 Education- wise Distribution of the Members.
No. of Respondents Percentage Level of Education Total to total Male Female
(i) (ii) (iii) (iv) (v)
Illiterate 02 20 22 22
Lower Primary 02 18 20 20
Higher Primary 05 20 25 25
Secondary 00 20 20 20
PUC/Diploma/ ITI 02 06 08 08
Graduation 00 04 04 04
Post Graduation 00 01 01 01
Total 11 89 100 100
Source: Data gathered through Primary Investigation, May-June 2016.
It follows from the figures given in Table 6.3 that out of 100 members interviewed 89 members are female while 11 members are male. It can be observed that 25 per cent of the members including both men and women are found having higher primary education while 22 per cent of members are found illiterate. The share of members having lower and higher primary education is 20 per cent apiece. It is interesting to observe that the share of members with graduation and post graduation is found to be insignificant with 4 per cent and 1 per cent respectively
3. Category- wise Distribution of Members: The background of any community and its business carries its own significance. This has been observed by many scholars. Under the circumstance the study in to the community background of members forming SHG is found necessary. The Table 6.4 presents the details regarding the members’ category
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Table 6.4 Category wise Distribution of Members
No. of Respondents Percentage to Category total Male Female (i) (ii) (iii) (iv) SC 05 14 19 ST 00 11 11 OBC 06 40 46 Minority 00 05 05 General 00 19 19 Total 11 89 100 Source: Data gathered through Primary Investigation, May-June 2016. It is evident from the figures given in Table 6.4 that 46 per cent of members are from the backward community while the share of members belonging to SC and ST together is 30 per cent. It is important to note that the share of members belonging to the minority is negligible with 5 per cent while the share of members belonging to the general category is 19 per cent.
4. Family Backgrounds of the Group Members: The family occupation and ancestral occupational status are important for many of the activities.. In view of this, the family background of members forming SHGs is collected, presented and analyzed. The Table 6.4 depicts the distribution of Group members on the basis of their family background in the study area.
Table 6.5 Family Background- wise Distribution of Members
Percentage to Type of Background No. of Respondents total (i) (ii) (iii) Agriculture 21 21 Landless labour 25 25 Housewife 51 51 Business 01 01 Any other 02 02 Total 100 100
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Source: Data gathered through Primary Investigation, May-June 2016.
A mere glance in to the data in Table 6.4 reveals 51 per cent of the respondents is housewife while the share of respondents being landless labor is 25 per cent followed by agriculture with 21 per cent. It is interesting to note that share of the members forming SHG carrying business is quite negligible with 2 per cent.
Graph 6.3: Members Distribution (Family background-wise)
5 Motivating Factors for Joining the Group: It is significant to note that SHG may be formed by people out of many factors. In other words, in order to form SHG, there are several motivating factors such as government incentives, family members, friends and relatives, NGOs etc. Data pertaining to the motivating factors for members to form Group are presented here in Table 6.6
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Table 6.6 Motivating Factors for the formation of Group
No. of Percentage to Motivating Factors Respondents total (i) (ii) (iii) Govt. Incentives 16 16 Self 28 28 Family Members 26 26 Friends & Relatives 17 17 NGOs 06 06 Peer Group Members 07 07 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
The data in the Table given above reveal that 28 per cent of the members agree that the motivating factor to form the Group is the influence of their own self while 26 per cent of the members opine that the influence to form the Group comes from the family members.16 per cent of the members is of the view that the government incentive is the motivating factor behind the formation of SHG while the influence of peer group members and NGOs on the formation of the Group is found to be 7 per cent and 6 per cent respectively.
Graph 6.4 Motivating Factors for Group Formation
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II. Group Profile
An attempt is made here to focus on the Group profile in terms of composition of the Group, rationale behind forming the group, nature of activities, size of Group, social status of Group members, periodical savings, frequency of monthly meetings, members view on the rate of interest etc.
6.2 Composition of the Group: A Self Help Group (SHG) may be formed by people belonging to homogeneous group or to heterogeneous group This would reflect the nature of SHG. People engaged in one specific activity constitute homogeneous group. On the other hand, people engaged in different activities such as agriculture, industry, business etc form heterogeneous group. The nature of SHG is sure to reflect the diverse or uniform character. Data pertaining to the composition of the Group are presented in Table 6.7 Table 6.7 Nature of Composition of the Group
Percentage to Group Composition No. of Groups total
(i) (ii) (ii)
Homogeneous Group 74 74
Mixed Group 26 26
Total 100 100
Source: Data gathered through Primary Investigation, May-June 2016.
It follows from the data given in Table 6.7 that out of 100 SHGs personally interviewed in the District, 74 Groups are formed by homogeneous group of members while 26 Groups are formed by members of mixed group showing heterogeneity.
6.3 Rationale behind Forming SHG: It is agreeable that a SHG may be formed because of the influence of many factors. In other words, SHG may be formed owing to vivid influences implying that there are many motivating factors to form Group. These factors may be in the form of desire to save money, labor sharing, improving the economic status etc. Data relating to the rationale behind forming SHG are presented in Table 6.8
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Table 6.8 Rationale behind forming the Group No.of Reasons for Joining Group Percentage to total Respondents
(i) (ii) (iii)
To Save Money 12 12
To Get Loans 12 12
To Get Social Status 02 02
Labour Sharing 02 02
To Improve Economics Status 11 11
To Show Unity 00 00
All the Above 61 61
Total 100 100
Source: Data gathered through Primary Investigation, May-June 2016.
According to the figures presented in Table 6.8, majority of the members constituting 61 per cent opine that the Group is formed to achieve certain objectives such as saving money, getting loans and social status, labour sharing, improving economic status and showing unity while the share of members viewing that the Group is formed to save money and to get loans only is 12 per cent apiece. It can be observed that the share of members viewing that the Group is formed because of getting social status and labour sharing is negligible with 2 per cent apiece.
6.4 Nature of Groups’ Activities : A SHG is formed with an intent of achieving some goals. In order to achieve them, a SHG focuses its attention on taking up different activities. A SHG may be formed for mobilizing savings, giving loans, marketing and manufacturing goods, creating awareness etc. The figures given in Table 6.9 reflect the trend.
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Table 6.9 Nature of Group Activities
No. of Percentage Group Activities Respondents to total (i) (ii) (iii) Mobilizing Savings 38 38 Giving Loans 09 09 Labour Sharing 19 19 Manufacturing & Marketing of Goods 07 07 Creating Awareness 16 16 Any other 11 11 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
The figures presented in Table 6.9 reflect that the share of SHG formed for mobilizing savings 38 per cent while the share of SHGs formed for labour sharing is 19 per cent. Hence the hypothesis that SHGs activities in the district are dominated more by mobilizing savings than by other factors is proved It can be observed that the Group for creating awareness is found to be 16 per cent while the share of the Group for giving loan to the members is 9 per cent. The SHGs formed for manufacturing and marketing of goods is negligible with 7 per cent.
Graph 6.5 Group Activities
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6.5 Group’s Monthly Income: Generally it is agreed that income of an individual always determines the buying capacity or purchasing power. The higher the income, the greater would be the purchasing power. Similarly, the income of a SHG reflects its strength and financial soundness. It is needless to mention here that income depends on savings which in turn depends on income and consumption. People usually tend to earn income by carrying out different activities. Data pertaining to Group’s monthly income are furnished in Table 6.10
Table 6.10 Groups’ Monthly Income (In Rs) No.of Percentage to Range of Monthly Income (In Rs) Respondents total
(i) (ii) (iii) Less than 5000 48 48 More than 5001 -10000 46 46 More than 10,001-20,000 05 05 More than 20,001-30,000 01 01 More than 30,001-40,000 00 00 Above 40,000 00 00 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
It can be observed from the data presented in Table 6.10 that the SHGs with a monthly income of less than Rs 5000 is 48 per cent while the Group with a monthly income of more than Rs5000 but less than Rs10,000 is quite large with 46 per cent. It is easy to observe from the data that the SHGs with more than Rs10,000 but less than Rs 20,000 is only 5 per cent It is needless to mention that the Group with a monthly income of above Rs 40,000 is negligible with zero per cent. 6.6 Size of the Group and Social Status of the Group Members : A SHG is a voluntary organization of individuals formed. to achieve certain objectives .However, SHG can not be formed by all those who want to come together. Certain norms are to be followed while forming the Group. According to the norms in vogue, the number of members in a SHG can not exceed 20. In other words, the maximum number of members in a SHG is 20
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Table 6.11 Size of SHG and the Social Status of Group Members.
No.of Groups No.of Groups
Size of SHGs With more than 25 With less than 25 % Total % belonging to belonging to Weaker Weaker section section
(i) (ii) (iii) (iv)
Less than 10 Members 04 05 09
Group with 10 Members 20 11 31
Group with 15 Members 37 09 46
Group with 20 Members 11 03 14
Total 72 28 100
Source: Data gathered through Primary Investigation, May-June 2016.
A SHG may be formed by members with different social and economic backgrounds. Every society is divided into creamy layer and weaker section. The former is powerful and enjoys privilege of being socially and economically powerful while the latter can not afford to comfortable living and many a times is dominated by the former. Data pertaining to the size of Group and social status of the Group members are provided in Table 6.11
According to the data given in Table 6.11, the number of SHGs with 15 members is found to be 46 per cent while the share of the Group with 10 members is 31 per cent. It can be observed from the data that the SHG with a maximum of 20 members is only 14 per cent and those with less than 10 members is negligible with just 9 per cent.
It can also be observed from the figures given in the Table 6.11 that the SHGs with more than 25 per cent belonging to weaker section is found to be 72 per cent while the number of SHGs with less than 25 per cent belonging to weaker section is28 per cent.. It can also be observed here that the Group with the 15 members has the highest number of members belonging to weaker section with 37 per cent while the
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Group with less than 10 members has the lowest number of members belonging to weaker section with just 4 per cent.
Graph 6.6 - Size of SHG and the Social Status of Group Members.
40 37 35
30 No.of Groups With more than 25 25 % belonging to Weaker 20 section 20
15 11 11 No.of Groups With less than 25 9 10 % belonging to Weaker section 4 5 5 3 0 Less than 10 Group with Group with Group with Members 10 Members 15 Members 20 Members
6.7 Amount and Frequency of Periodic Savings: Savings usually depend on the size of income and the level of consumption. Hence it can be promoted either by increasing income with non change in consumption or by cutting down conspicuous consumption there being no change in the level of income. The frequency of savings matters much in determining the soundness of a SHG. There are people who can save every day while there are people who save only once a week or month Data on this are presented in Table 6.12 Table 6.12 Range& Amount of Periodic Savings
Range of Monthly Savings (in RS) Frequency of Percentage Total Meetings Less Above to total Rs 10 Rs 15 Rs 20 thanRs 5 Rs 20 (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Once in a week Nil 08 05 18 17 48 48 Once in fortnight Nil Nil Nil 01 02 03 03 Once in a month Nil Nil Nil 09 40 49 49 Bimonthly Nil Nil Nil Nil Nil 00 00 Total Nil 08 05 28 59 100 100 Percentage to Nil 08 05 28 59 100 total Source: Data gathered through Primary Investigation, May-June 2016.
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The data given in Table 6.12 reveal that the number of members saving once in a month is found to be 49 per cent while the members saving once in a week is also equally high with 48 per cent. It is needless to mention here that the Groups saving once in fortnight and two months are negligible with just 3 per cent and zero per cent respectively.
It also follows from the figures that the members saving above Rs 20 irrespective of the period is found to be 59 per cent while the members saving Rs 20 is 28 per cent. The members saving Rs 10 and Rs 15 are almost negligible with 8 per cent and 5 per cent respectively. It is needless to mention here that the members saving less than Rs 5 are found to be carrying no significance with zero per cent.
6.8 Frequency of Monthly Meetings: In any organization, holding periodical meeting proves to be crucial. Different issues may be discussed and policy decision may be taken in the meeting. Moreover, the frequency of meeting held by the Group which also matters differs from one organization to another. One SHG may hold meeting once or twice a month while others may meet four times a month. Table 6.13 Frequency of Monthly Meetings Frequency of Monthly No of SHGs Percentage to total Meetings
(i) (ii) (vi)
4 Meetings 31 31
2 Meetings 12 12
Once in a month 57 57
Bimonthly 00 00
Total 100 100
Source: Data gathered through Primary Investigation, May-June 2016.
It can be observed from the figures given in Table 6012 that the SHGs holding meetings once in a month is 57 per cent while the Groups holding 4 meetings in a month is 31 per cent. It is also apparent that 12 per cent of the Groups is found to hold
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2 meetings in a month. It is not important to mention that the Group holding meetings once in two months is negligible with zero per cent.
6.9 Members’ Attendance in the Meetings: Meetings become meaningful if and only if majority of the members in the Group participate. If there is no sufficient number of members being present in the meeting, no valid decision can be taken Data with respect to members’ attendance in the meetings are presented in Table6.14
Table 6.14 Members’ Attendance in the Monthly Meetings
Percentage to Members’ Attendance No.of Groups total
(i) (ii) (ii)
More than 90 % 68 68
Between 70 &90% 42 42
Less than 70% 00 00
Total 100 100
Source: Data gathered through Primary Investigation May-June 2016.
According to the data presented in Table6.14 ,68 per cent of the SHGs has the members attendance of more than 90 per cent while the share of SHGs with the members’ attendance in between 70-90 per cent is found to be 42 per cent. It is not worth mentioning that the number of SHGs with members’ attendance of less than 70 per cent is zero.
6.10 Level of Group Members’ Participation: The participation of the members and the manner of their participation in the Meeting is very significant.Many a times, members participate but do not take active participation in the proceedings of the meeting. Such a tendency is not desirable. An active participation of large number of member is always desirable. If large majority of members ranging above 90 per cent participate in the meeting, it is rated as high while members ranging less than 50 per cent take part is rated as low. Data pertaining to members participation are presented in Table 6.15
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Table 6.15 Level of Group Members’ Participation
Percentage to Level of Participation No.of Groups total (i) (ii) (ii) High 46 46 Medium 52 52 Low 02 02 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
The figures given in Table 6.15 indicate that 52 per cent of the members of SHGs opine that their participation level in the proceedings of the meetings is medium while 46 per cent of the members participation level is found to be high. The SHGs where the members’ participation level is low is just 2 per cent
6.11 Members’ Awareness about Rules and Norms: Every organization is governed by some rules and regulation for its operation and for the condition of activities. A SHG no exception indeed. A SHG is good and efficient or bad and inefficient depending on the members’ awareness or unawareness about the rules and norms. Data pertaining to members’ awareness are presented in Table 6.16
Table 6.16 Members’ Awareness about Rules & Norms
No. of Percentage to
Respondents total (i) (ii) (ii) All members are fully aware 52 52 Majority members are aware 45 45 Most of the members are aware 02 02 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
The figures presented in Table 6.16 reflect that 52 per cent of the respondents interviewed personally in the district are found viewing that all the members are fully aware of the rules and norms while the members constituting 45 per cent opine that majority members are aware of rules.
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6.12 Nature of Accounts: A SHG is expected to have linkage with public or private sector banks or cooperatives. In order to function efficiently, SHG tends to open Savings Bank (SB) an account or Recurring Deposit (RD) account or Fixed or Time Deposit (FD) account. The members of SHG can deposit their savings in any of 1 these accounts Data are given in Table 6.17
Table 6.17 Nature of Accounts
No.of Percentage to Type of Accounts Respondents total
(i) (ii) (ii)
S.B.Account 96 96
RD Account Nil Nil
FD Account Nil Nil
Any other 04 04
Total 100 100
Source: Data gathered through Primary Investigation, May-June 2016.
It follows from the data given in Table 6.17 that the number of SHGs having S.B. account is very high with 96 per cent while the share of the Groups with R.D. account and FD account is found insignificant with zero per cent
6.13 Size and Amount of Members’ Borrowing : Lending and borrowing are the vital activities of a SHG. In order to carry out their activities, the Group members borrow from public or private sector banks or cooperative banks.2Sometimes the
Group may also lend to its members considering different factors and thereby promotes the building capacity of the members. Data with respect to the amount of members’ borrowing are given in Table 6.18
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Table 6.18 Size of Members’ Borrowing
Percentage to Size & Amount of Borrowing No.of SHGs total (i) (ii) (ii) Less than Rs 10,000 27 27 Between Rs10,001-15,000 50 50 Between Rs15,001-25,000 12 12 Between Rs 25,001-35,00 02 02 Above Rs 35,000 09 09 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
The data presented in Table 6.18 reveal that 50 SHGs constituting 50 per cent are found borrowing the amount in between Rs 10,000-Rs15,001 while the share of SHGs borrowing less than Rs.10,000 is found to be 27.The SHGs borrowing between Rs 15,000-Rs25,001 is found to be 9 per cent while the SHGs borrowing above Rs.34,000 is found meager with 9 per cent. It is need less to mention that SHGs borrowing between Rs 25,000-Rs35,000 is found negligible with just 2 per cent.
6.14 Purpose of Borrowing: A SHG is formed to enhance members’ building capacity. Borrowing is one of its activities. As already pinpointed, members tend to borrow for meeting different purposes like domestic commitments, income generating activities, non-productive activities etc.3Data pertaining to purpose of borrowing are furnished in Table6.19 Table 6.19 Members’ Purpose of Borrowing
Percentage to Purpose No. of SHGs total (i) (ii) (ii) Domestic 56 56 Income Generating 40 40 Non productive 04 04 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
It follows from the figures furnished in Table 6.19 that 56 per cent of the SHGs is found borrowing for domestic purpose while the percentage share of Groups
126 borrowing for income generating activities is also gratifying with 40.Hence the hypothesis that the members of the Group in the district have a tendency to borrow more for domestic purpose than for other purpose is also proved here. It is needless to mention here that the Groups borrowing for non productive purpose is found negligible with just 4 per cent.
6.15 The Extent of Utilization of Loan : The extent of loan utiliiization is vital because it will determine the soundness of the members. If the loans borrowed are not utilized for the purpose for which loans are availed, members may not be able to repay the loan in time. If the extent of utilization of loan lies above 80 per cent , it is rated as verygood, if it lies between 75-80 per cent, it is good, if it lies between 50-75 per cent ,it is fair and if it lies between 25 per cent and 50 per cent, it is rated as poor. Data with respect to the extent of utilization of loans by members are presented in Table6.20
Table 6.20 Extent of Utilization of Loans
No of Percentage to Range Respondents. total (i) (ii) (ii) Between 25-50 % 21 21 Between 50-75% 28 28 Between 75-80 % 09 09 Above 80 % 42 42 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
It can be easily observed that 42 per cent of members of SHGs is found viewing that they utilize the loans above 80 per cent while 28 per cent of them utilize loans in between 50-75 per cent. The percentage share of SHGs utilizing loans between 25-50 per cent while the SHGs utilizing loans between 75-80 per cent is only 9 per cent.
6.16 Members’ View about the Rate of Interest: The rate of interest that has to be paid on the amount borrowed is a cost to members and the Group. Hence they want it to be as low as possible. Usually large amount would be borrowed if the rate of
127 interest is reasonable and fair. Members rate interest rate as reasonable, medium and high. Data are presented in Table6.21
Table 6.21 Members’ View on Interest
No. of Percentage to Members’ Views Respondents total (i) (ii) (ii) Fair/Reasonable 60 60 High 18 18 Medium 22 22 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016. The data presented in Table 6.21 show that 60 per cent of the members of SHGs is found opining the rate of interest charged on the borrowed loans is fair and reasonable while the percentage share of SHGs viewing that the rate of interest is medium is 22Hence the hypothesis that the rate of interest on borrowings by SHGs in the district is fair and reasonable is proved. It is important to observe that 22 per cent of members view that it is high.
6.17 Criteria of Lending by Groups to Members: It is important to note that a member of SHG can borrow from the bank to which the Group is linked. The sponsoring agency of SHG has its own criteria for lending to a Group. However, the Group (SHG) can also lend to its members for various purposes. The lending capacity of the Group reflects its strength. The Group takes into account various criteria such as member’s urgency, members’ repaying capacity, purpose of borrowing etc. before lending. Data pertaining to Groups’ lending are presented in Table 6.22 Table 6.22 Criteria of Group Lending
No.of Percentage Criteria Respondents to total (i) (ii) (ii) Members’ Urgency 22 22 Members’ Repaying Capacity 34 34 Purpose of Borrowing 23 23 Groups’ Accumulated Savings 21 21 Total 100 100
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Source: Data gathered through Primary Investigation, May-June 2016.
According to the figures furnished in Table 6.22 34 per cent of the respondents is found viewing that the Group lending is based on repayment capacity of the members while 23 per cent of them opining that it is based on purpose of borrowing. It is interesting to observe that 22 per cent is found viewing that it is based on members’ urgency while 21 per cent opine that it depends on Group’s accumulated savings.
6.18 Rate of Interest on Groups’ Lending: As already said, the members of the Group borrow not only from the banks but also from the Group. In other words, the Group can also lend to its members keeping in mind different criteria. The Group lends to its members and charges nominal rate of interest. Of course, the rate of interest charged by the Group on its lending to members is much lower than that charged by banks. Data are given in Table 6.23
Table 6.23 Rate of Interest on Group Lending to Members.
No. of Percentage to Rate of Interest Respondents total (i) (ii) (ii) 4 Per Cent 28 28 6 Per Cent 07 07 8 Per Cent 03 03 10 Per Cent 20 20 Above 10 Per Cent 42 42 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016. The data presented in Table 6.23 indicate that 42 per cent of the members of the Group is found viewing that the rate of interest charged on Group lending is above 10 per cent while the share of members viewing that it is 4 per cent is 28 per cent. The percentage share of members opining that it is 10 per cent is 20 while 7 per cent of members saying that it is 6 per cent. It is easy to observe that only 3 per cent of members viewing that it is 8 per cent
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6.19 Groups’ Monthly Deposits in the Banks: A SHG is usually formed to enhance the building capacity of its members. The strength of a Group is revealed by the saving capacity of the members and hence the accumulated savings of the Group. The Groups’ deposits arise out of the periodic and the regular contribution of the members. No Groups usually prefers to deposit the members’ periodic saving in the Banks .Obviously because they put them for rotation Data relating to Groups’ monthly deposits are given in Table 6.24
Table 6.24 Groups’ Monthly deposits in the Banks
Amount of Groups’ Monthly No of Percentage Deposits Respondents to total (i) (ii) (iii) Less than Rs.50 15 15 Between Rs.50 & Rs100 42 42 Above Rs 100 43 43 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016.
It follows from the data presented in Table 6.24 that 43 members constituting 43 per cent are found viewing that SHGs monthly deposits in the banks is above Rs.100 while 42 per cent of the members is found viewing that it is in between Rs 50 and Rs 100. It can be observed here that the percentage share of members opining that it is less than Rs 50 is only 15
6.20 Members’ Views on the Rate of Interest on Deposits: It is significant to note that SHG not only borrows but also deposits its members’ savings in the banks. Hence it earns interest on the savings. The rate of interest paid by banks on the deposits is definitely less than the interest charged on the amount borrowed. The members of the Group rate the interest as high, medium and fair or reasonable Data are presented in Table 6.25.
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Table 6.25 Members’ Views on Interest rate on Deposits
No. of Percentage Members’ Views Respondents to total (i) (ii) (ii) Low 53 12 Medium 12 53 High 07 07 Reasonable 28 28 Total 100 100 Source: Data gathered through Primary Investigation, May-June 2016. It is evident from the data furnished in Table 6.25 that as high as 53 per cent of the members is found viewing that the interest rate on deposits is low while 28 per cent of respondents is found viewing that it is reasonable. 12 per cent of respondents is found viewing that it is medium. It is needless to mention here that 7 per cent of respondents is found opining that it is high.
6.21 Members’ Awareness about Financial Services: As is well known, all SHGs are linked to banks. There are certain things about which the members may be or may not be familiar. For instance deposits and savings are the important activities of SHGs. Keeping deposits in a financial house requires the knowledge of pass book and cheque books. Similarly, borrowing and paying interest on the borrowed amount also carries significance. The former does depend on the rate of interest to be paid. The higher the rate of interest, the lower shall be the amount borrowed. Hence the latter denotes the cost of the borrowing process. In view of the advancement made in the banking sector, ATM and Debit card have become popular. These have made transactions much easier. The data with respect to the members’ awareness on financial services are furnished in Table 6.26
Table 6.26 Members’ Awareness on Financial Services No.of SHG Members Financial Services Percentage Not Percentage Familiar to toal Familiar to toal (i) (ii) (ii) Deposits & Savings 90 90 10 10 Pass Book & Cheque 80 80 20 20 Loans & Interest rates 64 64 36 36 ATM & Debit Cards 32 32 68 68
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Source: Data gathered through Primary Investigation, May-June2016.
According to the data furnished in Table 6.26 90 per cent of the members of SHGs is found familiar with deposits and savings while only 10 per cent of them is found unfamiliar with the services. Similarly, the percentage share of members familiar with the pass book and cheque books is 80 while 20 per cent of them is found unfamiliar. Likewise, 64 per cent of them is found familiar with loans and interest rate while 36 per cent of them is found unfamiliar. It is interesting to observe here that 68 per cent of members of SHGs is found unfamiliar with ATM and Debit cards implying that there is dire need to create awareness about the use of ATM and credit card amongst the members.
Graph 6.7 Members Awareness on Financial Services
6.22 Members Views on Vital Issues :he members of the Group may express different opinions about the Group and its activities. Some members may feel that there are too much difficulties in procuring loans from the sponsoring agencies while others may not find any difficulties Similarly, the members may be gratified with the interest rate charged on the loans borrowed. Some members may be happy of being a member of the Group while others may not be. Those members who are gratified may honestly feel that there is dire need to promote SHGs. However, it must be borne in
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mind that the members differ in their views. The data pertaining to the members’ views are presented in Table 6.27 Table 6.27 Members Views on vital Issues
Members Views Issues Total Yes No (i) (ii) (iii) (iv) Difficulties in Procuring loans 11 89 100 Happiness about Interest rate 76 24 100 on loans Happiness about being a 100 00 100 member of the Group Need to Promote SHGs 100 00 100 Source: Data gathered through Primary Investigation, May-June2016. It can be observed from the data furnished in Table 6.27 that as high as 89 per cent of the members of SHGs is found viewing that they do not find any difficulties from procuring loans while an insignificant per cent of 11 is found viewing that there are difficulties in procuring loans.. 76 per cent of the members is found being happy about the interest rate on loans while 24 per cent of them is found being unhappy Similarly. cent per cent of the members is found happy being member of the Group and agree that there is need to promote SHGs 6.23 Positives of forming SHGs: The formation of SHG does produce several outcome Which may be positive or otherwise. The members forming the Group view the end result may differ. Data pertaining to the positives of forming SHGs are given in Table 6.28
Table 6.28 Positives of Forming SHGs
No.of Percentage End Result Respondents to total (i) (ii) (ii) Increase in Income 14 14 Increase in Standard of living 12 12 Increase in Social Status 02 02 Leadership Advantage 00 00 Unity is Strengthened 02 02 All the Above 70 70 Total 100 100 Source: Data gathered through Primary Investigation, May-June2016.
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The data given in Table 6.28 reveal that 70 per cent of respondents is found viewing that the formation of SHGs produces several positives such as increase in income, increase in standard of living, increase in social status, leadership advantage and unity is strengthened . Out of 100 respondents interviewed in the district, 14 of them constituting 14 per cent are found opining that the formation of SHGs lead to increase in income while 12 per cent is found opining that it leads to increase in standard of living. Similarly, 2 per cent is found viewing that it leads only to increase in social status while another 2 per cent of them viewing that it leads to strengthening unity. It is needless to mention that the percentage of members viewing that the formation of SHGs gives leadership advantage is insignificant with zero per cent. Part-B (B) Views of Bankers: This part analyzes the views of the sponsoring agencies with respect to the number of SHGs linked, number of banks with no frill account type of lending , criteria of lending and the rate of repayment of loans. Based on this , some formal conclusion is drawn in the ensuing chapter. 6.24 SHGs-Bank linkage: As it is well known SHGs usually are linked to some or other financial houses more particularly to banks. This type of linkage is a must for distributing micro finance to the stakeholders. There are banks where more number of SHGs is linked. On the other hand, there are banks where less number of SHGs usually less than 30 are linked. Data with respect to SHG Bank linkages are provided with in Table 6.29
Table 6.29 SHG –Bank Linkage No of SHGs linked No. of Respondents Percentage to total (i) (ii) (iii) Less than 30 08 40 More than 30 but less than 07 35 100 Above 100 05 25 Total 20 100 Source: Data gathered through Primary Investigation, May-June 2016.
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The figures given in Table6.29 reveal that the number of banks with less than 30 SHGs linked with them in the district is found to be 40 per cent while the number of banks with more than 30 but less than 100 SHGs linked is found to be 35 per cent. Obviously the number of banks with above 100 SHGs linked with them is found to be 25 per cent.
6.25 No Frill Account: This account aims at providing normal banking services to all citizens and hence is a basic banking account which emphasizes on the smallest deposits. Such account requires either nil or minimum balance . Such account is meant for low income groups. Charges applicable to such accounts are low and also the 4 service to such account is limited. Data with respect to the particulars of No Frill
Account with the banks in the district are furnished in Table 6.30
Table 6.30 Particulars of No Frill Account No. of Respondents No of SHGs linked Yes No (i) (ii) (iii) No Frill Account 06 14 (30) (70)
Total 06 14
Note : The figures given in the parenthesis denoting percentage are computed.
Source: Data gathered through Primary Investigation, May-June 2016.
According to the data presented in Table 6.30 the banks with no frill account is found to be 70 per cent while the percentage of banks with frill account is found to be just 30
6.26 Bank Lending: Lending by any institution or organization constitutes one of the sources of earning revenue. Hence it influences the profits that they earn. This is so because nothing is lent without charging the rate of interest. Usually the propensity to lend increases with the higher rate of interest. The banks may lend either to individuals
135 or the Group or the members of the Group. It must be kept in mind that safety is one of the most important considerations for banks Unless what is lent is not repaid by the borrowers, the banks are sure to lose .Generally, banks would like to lend more to the SHGs as a whole than to the members of SHGs. Table 6.31 presents the figures with respect to bank lending in the district.
Table 6.31 Bank Lending Details Type of Lending No.of Respondents Percentage to total (i) (ii) (iii) Only to SHGs 19 76 Only to Members of SHGs 02 08 Both to SHGs & Members 04 16 Total* 25 100 *Note: The total exceeds 20 obviously because of the multiple answers given by respondents.
Source: Data gathered through Primary Investigation, May-June2016.
It is quite evident from the data given in Table 6.31 that the number of banks lending only to SHGs is dominant with a high percentage of 76 while the number of banks lending to both SHGs and members is found to be 16 per cent. It is needless to mention here that the percentage of banks lending only to members of SHGs is quite meager (08 per cent)
6.27 Criteria of Lending: As already mentioned, lending is one of the major activities of banks and other financial institutions. However, they can not lend without any criteria. The borrowers’ repayment capacity is one such criterion besides purpose of borrowing, borrowers’ social status, savings made by the Group etc being considered before deciding to lend..Table6.32 provides information on criteria of lending by banks.
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Table 6.32 Criteria of Lending by Banks Criteria No. of Respondents Percentage to total (i) (ii) (iii) Savings made by the Group 20 34 Purpose of Borrowing 15 26 Members’ Repayment 16 28 Capacity Members’ Social Status 02 03 General Utility of the 05 09 Borrowing Total* 58 100 *Note :The total exceeds 20 obviously because of the multiple answers given by the respondents.
Source: Data gathered through Primary Investigation, May-June 2016.
It follows from the figures presented in Table6.32 that 51 of the respondents together constituting88 per cent are found opining that savings made by the Group members , repayment capacity and purpose of borrowing are the major considerations for bank lending while 07 respondents together constituting 12 per cent are found opining members’ social status and general utility of the borrowing matter in bank lending.
6.29 Loan Repayment: Loan repayment for the borrowers and loan recovery for the lenders constitute the most important objectives. It offers certain benefits to both of them. Loan repayment helps the borrowers more than one way-it enables them to raise fresh loans and it reduces the debt burden. Similarly, loan recovery for bankers strengthens their positions besides determining their profits5 Data pertaining to loan repayment are furnished in Table 6.33
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Table 6.33 Loan Repayment by SHGS Rate of Loan Repayment No.of Respondents Percentage to total
(i) (ii) (iii)
More than 25 % Nil nil
More than 50% 01 5
More than 75 % 06 35
100 % 13 65
Total* 20 100
*Note :The total exceeds 20 obviously because of the multiple answers given by respondents.
Source :Data gathered through Primary Investigation, May-June 2016.
The data presented in Table 6.33 indicate that the number of SHGs repaying the loans borrowed by 100 per cent is found to be 65 per cent while the SHGs with more than 75 per cent of loan repayment is 35 per cent .It obviously implies that most of the SHGs formed in the district are prompt in repaying the loans borrowed for various purposes. They are not found to be defaulters. This is really promising and commendable Hence the hypothesis that the loan repayment by SHGs in the District is not satisfactory is disproved.
The various issues of SHGs in Shivamogga district are analyzed in detail with the help of the views of the members of SHGs and the bankers (sponsoring agencies.) Based on the findings of the analysis and also on the observations of the Researcher, suggestions for improving the SHGs in the district, summary of the findings and the conclusion drawn are presented in the forthcoming chapter.
Notes
1 It is important to mention here that the rate of interest paid differs between these accounts. Usually higher rate of interest is paid on FD than those on SB or RD)
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2. Members usually borrow to generate income and thereby improve their living standard. Of course, the borrowers have to pay the rate of interest Hence the amount borrowed must be meticulously utilized)
3 It is needless to mention here that the repayment of loan becomes difficult and burdensome if members borrow for non-productive activities)
4 It is important to note that the no frill account can be opened with zero balance in anticipation of getting savings funds.Hence there is no minimum balance requirement in the account but no cheque book is issued and operation can be carried out by debit cards. The interest paid on such account is similar to that on savings bank account (being 4 per cent)
5 It is needless to mention here that usually banks charge higher rate of interest on loans they lend than what they pay on the deposits they receive. The difference between them constitutes the profits of banks
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Chapter-7 Summary and Conclusion
This chapter is devoted to the presentation of the major findings, summary and conclusion of the present study. Before drawing a formal conclusion at the end, a few areas, in the light of the study carried out, for further research in the field, are also suggested
7.1 Major Findings of the Study
The major findings of the present study, for a better comprehension are classified under two broad category
I Findings pertaining to the views of the members of SHGs
II Findings relating to the views of the Bankers
Before presenting the major findings of the study, it is worthwhile to make a brief reference to the issues discussed in the beginning of the study dealing with role of micro finance in poverty eradication and rural development .
Every economic policy should aim at empowering people especially poorer of the poor so as to enable them lead a life without poverty and hunger. Otherwise poverty leads to a downward cycle of malnutrition, illiteracy and poor health pushing into further poverty and hunger. This is truer in India than in other places. The inability to basic needs is an important aspect of poverty. The malady of poverty in India certainly warrants the need for innovative to ensure a strategic approach to empower the poor people in order to eke out their livelihood and improve their social status. Otherwise it creates a crisis shading the economy of a nation and engulf hiatus between the haves and have nots. The need of the hour, hence is to fight out and eradicate poverty and to promote rural development so as to ensure a comfortable and decent living for the poor. Micro finance proves to a vehicle for reaching the goals of reducing poverty and promoting rural development.
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The existence of poverty proves to be threat to the welfare of the people. The fruits of economic development that the country accomplishes can not trickle down unless the people are empowered. In order to ensure a decent and a comfortable living, the extent of poverty must be minimized. India can shine if and only if poverty is eradicated and the community is empowered. Poverty, if not eradicated engulfs itself and turns into vicious circle of poverty which certainly produces disastrous effects on the people. Hence the government of India has realized the significance of addressing poverty and poverty alleviation is found in it’s top priority and agenda. It is gratifying that the percentage of people below the poverty line is on a consistent decline over the years. Thanks to the pioneering efforts of the government! It is true that whatever that is achieved so far, is not enough. More meticulous, honest and concerted efforts are required. However, it should be kept in mind that poverty can no way be eradicated only by the endeavors of the government. There is dire need for a change in the attitude and mindset of the people too. The earlier it happens; the better it shall be both for the country in general and the people in particular. Then and only then India and the Indians too can shine better!.
Micro finance has thus provided a platform for the underprivileged people to improve their living standard and attain a level of social, cultural and economic empowerment. /Economic freedom is the edifice on which micro finance rests. If poor and needy people are provided access to financial assistance and financial services, it would enable them to come out of the chasm of poverty. Ultimatelly it empowers the underprivileged and brings them into the mainstream financial system and development process.
I Findings pertaining to the Views of the Members of SHGs
Motivating Factors for Joining the Group: The study found that the motivating factor for the members joining the Group emerged from their own self and family members. It is also found that the factors like government incentives, friends and relatives, NGOs and Peer Group members for joining the Group matters less to the members
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Composition of the Group: It is found in the study that the majority of the SHGs formed in the district is composed of homogeneous group
The Rationale Behind the Group : Majority of the members interviewed in the district agree that saving money, getting loans and social status, labor sharing, improving economic status, and showing unity are the rationale behind forming the Group
Nature of the Group Activities and Groups Monthly Income: The study found that the Group activities are centred around saving money . It is also found that the majority of the Groups formed in the district have monthly income of less than Rs.10,000 while the Groups having monthly of more than Rs10,000 are found to be meager
Size of the Group and Social Status of the Group Members : The Groups formed in the district having 15 members are more than others with 10 and 20 members The study found that majority of the Groups have members with more than 25 per cent belonging to the weaker section
The Amount and Frequency of Periodic Savings: The Study found that the majority of the members save above Rs 20 irrespective of once in week, two weeks and month. Also the majority of the members of the Group formed in the district is found saving more once in a month than once in a week or two weeks.
Frequency of Monthly Meetings and Members’ Attendance : It is found in the Study that the Groups holding meeting only once in a month are more . However, the Groups holding four meeting in a month are also large enough to be reckoned. Also, the study found that the majority of the members attend the meetings by more than 90 per cent.
Level of Group Members’ Participation and Awareness about Rules and Norms : It is evident from the study that majority of the Group members’ participation in the Meetings is only medium However, the share of the members’
142 participation level being high is also found to be quite big. Also, the majority of the members are found to be fully aware of the rules and norm
Size of Members’ Borrowing and Extent of Utilization: The study found that only small proportion of members of SHGs have a tendency to borrow above Rs 25,000 while the large number of members is found borrowing less than Rs 15,000 . It is found in the Study that majority of the members who borrow utilize the loans up to 80 per cent. Also quite a big share of members utilizing loans above 80 per cent is found to be true.
Purpose of Borrowing and Members’ View on rate of Interest: The Study shows that majority of the members borrow to meet domestic purpose. The share of members borrowing for unproductive purpose is quite negligible. Also, the majority of members are found viewing that the rate of interest on loans is fair and reasonable while the members viewing that the rate of interest on loans is high constitute a small share.
Groups’ Monthly Deposits in the Banks and the views on interest rate: The study found that majority of respondents are found viewing that their monthly deposits in the banks or financial houses is above Rs. 50. It is interesting to note that the Groups usually do not like to deposit anything in the banks obviously because the savings are put on rotation. It is also found that majority of respondents is found viewing that the rate of interest on deposits is low.
Members’ Awareness on Financial Services: It is important to mention here that the financial services are in the form of deposits and savings which require the knowledge of pass books and cheque books, loans and interest to be paid, the use of Automatic Teller Machine ( ATM) and debit cards. The study found that majority of the Group members is found familiar with the deposits and savings process. Likewise, majority of respondents is found being familiar both with the use of pass books and cheques and the loans and interest to be paid. It is interesting to mention here that the Study found that majority of the respondents are not familiar with the use of ATM and debit cards implying that there is dire need to create awareness about them amongst the members.
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Procuring Loans and the rate of Interest : The Study found that majority of the members of the Group agree that there are no difficulties in procuring loans . It implies the easy accessibility of loans to SHGs. Similarly, it is found the majority of members are happy with the rate of interest on loans.
Need to Promote SHGs : The Study found that there is dire need to promote SHGs in the district. It implies that poverty alleviation and rural development are not possible unless micro finance is made to cater more rigorously in the district. It must be kept in mind that micro finance is made available with the SHGs.
Members’ Gratification: The Study found that the members of SHGs interviewed in the district remain content with the Groups that they have formed. The members gratification reflects that the purpose for which SHGs are formed is served implying that the rate of poverty is reduced though not alleviated fully and thereby rural development is made possible.
Positives of Forming SHGs : It is found that majority of the respondents is happy with the end result of forming the Group. It is important to note here that many positives like increase in income and standard of living of the members, increase in social status, leadership advantages, etc. flow from the formation of SHGs .
II Findings relating to the views of the Bankers
No Frill Account: The Study found that the majority of the respondents opine that there are no frill accounts being found in the banks
Nature of Lending: It is found that the majority of the respondents agree that lending to given only SHGs and not to the members individually. As we know whatever is borrowed from the sponsoring agency like banks is allocated to the Group members by the Group
Criteria of Lending: It is evident from the Study that the majority of the respondents view that lending process to the Groups in the district is based on the savings made by the Groups. The higher the Groups savings , the higher would be the
144 availability of loans. Of course, the members’ repaying capacity can never ever be ignored!
Repayment of Loans : The Study found that the majority of the respondents opine that the rate of loan repayment by SHGs in the district is cent per cent. This is a commendable and appreciable tendency. If the loans are not repaid in time, severe effects follow.
The following hypotheses set for the Study except the last one are verified and found correct while the last one is found not correct.
SHGs activities in the district are dominated more by mobilizing savings than by other factors
The members of the Group in the district have a tendency to borrow more for domestic purpose than for other purposes
The rate of interest on borrowings by SHGs in the district is fair and reasonable
Loan repayment by SHGs in the district is not satisfactory
7.2 Suggestions for Improvement
Taking into account the views of the members of SHGs and the sponsoring agencies in the district and also based on his observations, Researcher has proposed certain pragmatic suggestions so as to make the micro finance operations more efficacious in the district
Need to educate the members of SHGs
Need to increase the awareness about the benefits that emerge from SHGs amongst the members
Need to provide micro finance only to income generating activities
Need to increase the role of commercial banks and the entry of other banks like ICICI.
Need to intensify the size of refinancing to SHGs by NABARD
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Need to minimize the uncertainty and simplify the documentation process in granting loans to SHGs
Need to treat SHGs as special category.
Need to overcome the problems of proper accounting and management of the SHGs
7.3 Areas for Further Research
As explained earlier, the present study is confined itself to an analysis of the role of micro finance in poverty alleviation and rural development in Shimoga district.
Another area for study that can be suggested here is related to the pertinent issues like women empowerment through SHGs and Financial Inclusion The Researcher firmly believes that a study on SHGs and Women Empowerment, role of banks in financial inclusion would be worth suggesting here.
7.4 Conclusion
The present Study is carried out with the broad objective of analyzing the role of Micro Finance in poverty alleviation and rural development in Shimoga District of Karnataka State. The Study attempted at evaluating the role of micro finance in poverty alleviation and rural development in the district, role of NGOs, NABARD and Self Help Groups , SHG –Bank Linkage in the provision of micro finance, and the views of the bankers on many pertinent issues of the micro finance and Self Help Groups in the district in detail.
Based on the findings of the Field Survey and also the on observations of the Researcher, a few pragmatic suggestions are offered. The suggestions, if implemented in bonafide faith,, would certainly be helpful in strengthening the micro finance and Self Help Groups in the State in general and in Shivamogga district in particular and thereby the tempo of the balanced regional growth can be accelerated further. Meticulous and concerted efforts are to be made by the government to enhance the tempo of the micro finance and thereby the poverty is sure to be reduced, if not, eradicated Come what may!
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Anita Banrjee and Rajkuar Sen(1999), Women and Economic Development (Ed) Deep and Deep Publication, New Delhi, Basu.K. & Jindal. K (2000) (Ed)Micro Finance: Emerging Challenges, Tata McGraw Hill, New Delhi Dhar.P.K (2006) Indian Economy, Kalyani Publishers, New Delhi. Desai, B.M. & Namboodiri N.V.((2001) Organization & Management of Rural Financial Sector, Text, Cases & Experiences Oxford & IBH Publishing Co. Pvt. Ltd. New Delhi. Dayandan.R. (2005) Sustainable Development: Opportunities and Challenges, Serials Publications, New Delhi. Gopallal Jain, “Management of Rural Development and Resources”, Mangaldeep Publication, Jaipur2002, Ghate.P.(2007)Indian Micro Finance: The Challenges of Rapid Growth, Sage Publications, New Delhi. Ganesamurthy.V.S. (2007) (Ed) Economic Empowerment of Women, Century Publications, New Delhi, Heggade. O.D (1997). Developing Women Entrepreneurship Mohti Publications, New Delhi. Heggade O.D. (2006) et.al. Empowering Women in India: March Towards Gender Equality (Ed) Arjun Publishing House, Mysore Jogle,V.B(2004) .Globalization, Growth and Poverty, Serials Publications, New Delhi Karmakar, K.G. (2008) Micro Finance in India. Sage Publications, New Delhi. Karmakar,K.G. (1999) Rural Credit and Self Help Groups : Micro Finance Needs and Concepts in India Sage Publications India Private Limited New Delhi Lalitha.N. Rural Women Empowerment and Development Banking, Kaniska Publishers, New Delhi
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Misra & Puri (2010) Indian Economy, Himalaya Publishing House, Mumbai. Mohanty Smrutirekha (2004) Institutional Finance and Rural Artizans : Progress Performance and Prospects, Anmol Publications, New Delhi Narasaini. N (1998).et.al. Role of Banking in Rural Development, Discovery Publishing House, New Delhi. Rais Ahmed (2009) (Ed.)Micro Finance and Women Empowerment Mittal Publications, New Delhi, Ramappa,B.T.,(2015) Micro Finance and Inclusive Growth(Ed.), Kalpaz Publications, New Delhi Rao .V.M.(2001) Empowering Rural Women through Dairy Cooperatives, Anmol Publications, New Delhi. Ruddar Datt & Sundharam (2009), Indian Economy, S. Chand & Co., New Delhi Somanath.V.S.,(2009), Micro Finance, redefining the future, Excel Books, New Delhi (B ) Articles (Journals)
Basu Priya A Financial for India’s Poor in Karmakar. KG. (Ed.) Micro Finance in India Sage Publications India Private Limited New Delhi pp19-32 Chavan.V.M. and Mukund. M.M.’ Micro Finance and Financial Inclusion of Poor through Self Help Group Bank Linkage’ Southern Economist vol49(14) p8 Dinesh. B.Raghuwanshi,’ Micro Finance : Present Scenario and Emerging Challenges’ Southern Economist Vol 49 (1) p 15 Gurumoorthy, T.R. (2000), “Self-Help Groups Empower Rural Women”, Kurukshetra, Vol. 48, No. 5, pp. 31-37. Raghavendra, T.S. (2001), “Performance Evaluation of Self Help Groups: A Case Study of Three Groups in Shimoga District”, Indian Journal of Agricultural Economics, Vol. 56, No. 3, pp. 466-67. Ramesh Babuet.al.’Micro Fina nce : An Approach for Poverty Alleviation’ in Southern Economist, Vol 49 (10) Bangalore P23 Rao V. Muralidhar MFIs in India: An Overview, in Karmakar.KG. (Ed.) Micro Finance inIndia Sage Publications India Private Limited New Delhi pp57-66 148
Shivaprasada.D.T. & Laxmisha. A.S. Micro Finance through SHGs- An Analysis, Southern Economist Vol 53 (11), Bangalore, pp45-19 Triathy, K.K Self Help Groups, A Catalist of Rural Development ,Kurrukshetra Vol 34 (3) pp 40-43 Vaikunte.L.D. et.al ‘Women Empowerment: Role of SHGs and NGOs in Southern Economist Vol 49 (16) Bangalore, p34 VenkateshMurthy.S and Dinish.G.M.’ Self help Groups and Empowerment of Women’ in Southern Economist, vol 49(08) p35 Yamuna, G. (2007), “Women Empowerment Through Self-help Groups in Solamadevi Village” in V. S. Ganesamurthy (ed.), India: Economic Empowerment of Women, New Century, New Delhi. James C Brau, Gary M Woller (2004/4/1) The Journal of Entrepreneurial FinanceVolume9( 1) p 1
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Annual Reports 2006 Department of Co-operation Government of Karnataka Bangalore Economic Survey- Various Issues, Ministry of Finance, Government of India (GOI), New Delhi Economic Survey – Various Issues, Government of Karnataka, Bangaluru NABARD- Status of Micro Finance in India, 2000 to 2011-12 NABARD SHGL ink age Programme Annual Report ,2004-05 Planning Commission Reports,2010-11,2011-12 Government of India, New Delhi Reports of the Ministry of Rural Development Government of India
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INTERVIEW SCHEDULE FOR SELF-HELP GROUP (SHG) MEMBERS
Topic : The Role of Micro Finance in Poverty Alleviation and Rural Development – A Study of Shimoga District
Researcher :
Dr.Shyamasundar, Ph.D. Government First Grade College, Associate Professor & Head SORABA-577429, Shivamogga District Department of Economics Email : [email protected]
PART-I PERSONAL PROFILE
1 Name of the Member : ………………………………………………………………
2 Name of your Group (SHG) :…………………………………………………………..
3 Affiliation of your SHG : With SKDRDP Kodachandri Myrada Navodaya Any other
3 Sex : Male Female
4. Marital Status : Married Unmarried 5. Education Level : Illiterate Lower Primary Higher Primary
Secondary PUC/ITI/ DIPLOMA Graduation Post Graduation
6. Category : SC ST OBC Minority General
7. Age (In years) : 18-20 21-30 31-40
41-50 51-60 61 & above 8. Background : From Agriculture From Landless Labor From Housewife From business Any other
9. Motivating factors : Government incentives Self Family members
for joining SHG Friends & relatives NGOs Peer Group members
PART-II GROUP PROFILE
10. What is the nature of your Group composition? Homogeneous Mixed Group
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11. Reasons for joining group:
To save the money To get loans To get social status
Labor sharing To improve economic status To show unity among poor
12. Activities of your Group : Mobilizing savings Giving loans Labor sharing Manufacturing and marketing of goods Creating awareness Any other
13. Level of your Group’s monthly income ? Rs 5,000 ? Rs 5000- 10.000 ? Rs 10,000-20,000 ? Rs 20,000-30.000 ? Rs 30,000- 40,000 14. What is the size of your Group? 10 members 15 members 20 members Less than 10 members
15. Social status of Group member More than 25 per cent belongs to weaker section Less than 25 per cent belongs to weaker section
16. Since of how many years have your formed the Group?
6 months-1 Year 1-3 yeas 4-7 years Above 7 years
17. What is your periodical savings ? Re. 5 Rs 10 Rs 15 Rs.20 Above Rs 20
18. What is the periodicity of your savings? Once in a Week Once in a Fortnight Once in a month bimonthly
19. Number of meetings per month?
4 meetings 2 meetings Once in a month Bimonthly
20. Attendance in the meetings
More than 90 per cent Between 70- 90 per cent Less than 70 per cent 21. Do you maintain minute book? Yes No
22. Participation of members in discussion during the meetings
Majority of members take part in discussion - High Some members take part - Medium Only few members take part - Low
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23. Awareness of the members regarding the norms, rules and regulations of the Group All the members are fully aware Majority of the members are aware Most of the members are not aware 24. Mode of decision making Democratic and independent Only few jointly take the decision
25. Who is your banker? Commercial bank Co operative bank Regional Rural Bank Any other (Pl specify )
26. Type of your account Only SB A/C RD A/C FD A/C
27. Do your Group members borrow loans?
Yes No
28. Amount of loans availed by members Less than Rs10,000 Rs.10,000-15,000 Rs 15,000-25,000
Rs25,000-35,000 Rs 35,000 & above
29. What is the purpose of borrowing? For Domestic purpose For income generating activities For non productive activities
30. Your opinion about interest charged on loans borrowed Fair / Reasonable High Medium 31. Do the members repay the loans in time? Yes No
If no, specify the reasons
32. What is the extent of utilization of loans?
Between 25 -50 per cent Between 50-75 per cent
75 – 80 per cent ? 80 per cent
33. Are you happy about the behaviors of the bankers/sponsors?
Yes No
34. Does your Group lend to your members? Yes No
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35. What is the criterion of lending?
Members’ Urgency Repayment capacity of the members
Purpose of borrowing Groups’ accumulated savings 36. Percentage of loans on savings More than 80 per cent Between 50 & 80 per cent Less than 50 per cent
37. Rate of interest on loans given to members of the Group
38. Amount of monthly deposits in the banks by the members Less than Rs50 Rs 50-100 Rs 100 & above
39. What is your opinion about interest paid on deposits by your banker? Low Medium High Reasonable
40. Awareness about banks financial services Deposits & savings Familiar Not Familiar Pass book & cheques Familiar Not Familiar Loans & interest rate Familiar Not familiar ATM Familiar Not Familiar
41. Do you find any difficulties in procuring loans? Yes No
42. Are you happy with the rate of interest charged on loans borrowed? Yes No
43. Are you satisfied being a member of the Group?
Yes No
44. Can you mention the positives of forming SHG? Increase in Income Increase in standard of living Increase in social status Leadership advantage Unity is strengthened All the above
45. Do you recon that there is a dire need to promote SHG? Yes No
46. Being a member of the Group, are you better off?
Yes No
47. Do you have any suggestions to offer?
……………………………………………………………………………………………. ……………………………………………………………………………………………. …………………………………………………………………………………………….
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INTERVIEW SCHEDULE FOR BANKERS Topic : The Role of Micro Finance in Poverty Alleviation and Rural Development – A Study of Shimoga District Researcher : Dr.Shyamasundar, Ph.D. Government First Grade College, Associate Professor & Head SORABA-577429, Shivamogga District Department of Economics Email : [email protected]
1. Name & address of the bank/sponsrer
2. Number of SHGs linked with you? 3. Do you have any ‘No frill account? If yes, what per cent? 4. Do you lend to SHGs or members of SHGs? Only to SHGs Only to Group member Both to the Group & members
5. For which kind of activities you lend?
6. What are the criteria of lending?
Amount of savings made by the Group Purpose of borrowing Repayment capacity of the SHGs Social status of the Group member General utility of the borrowing
7. What is the amount of lending?
8. Term or duration of loans you lend
9. What is the rate of interest you charge on loans lent?
10. The percentage of loan repayment by the SHGs
11. What is the percentage of interest you pay on the savings by the SHGs ?
12. Number of SHGs being default
13. Mention the major problems you encounter in lending to SHGs
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