Since they started in the 1980s and 90s, SHGs have made a big difference in making sure everyone has access to financial resources in India. There are more than 85.77 million Self Help Groups in India, according to NABARD. These groups help more than 10 million people in rural areas. There was a big help from NABARD’s SHG-Bank linkage programme. It helped poor women get collateral-free loans from the mainstream banking system at normal rates.
Over time, SHGs have gone from being lenders for nonproductive purposes to helping people start small businesses. Examples include Café Kudumbashree, which is run by women at Kudumbashree units in Kerala and is a branded eatery that is run by the women.
Reasons
- Lack of knowledge and orientation among SHG members about how to make a living that is both safe and profitable.
- Primitive and social rules keep women from joining SHGs, which limits their economic options.
- Sustainability and how well the SHGs run have been the subject of a lot of debate.
- There is no security in the SHGs because they work together on a level of trust and confidence. In the SHGs, the money that they have is not safe or secure.
- Only a small number of the Self-Help Groups are able to move up from microfinance to small business.
Strategy to make Self Help Group movement successful in India
- Instead, the focus should be on the hard facts of a market.
- SHG members should keep going to capacity building programmes and workshops to learn more about being an entrepreneur.
- Creating a functional relationship with the SRLMs (State Rural Livelihood Missions) so that the SRLMs’ strengths of mobilisation, last-mile presence, and skills can be used to help rural businesses grow.
- Young business management professionals, experienced civil servants on deputation, successful micro and small business owners, and so on, could all be involved in the development of microenterprises, as well.
- The government should only pay for the costs of starting up a business. Entrepreneurs should be able to make their own money in the long run to pay for things like operating costs through profit and other market-based mechanisms.
- Giving money and advice based on the stage of the business and how big it is. The tendency to group all small businesses into a single category of “subsistence-oriented” businesses should be reduced to allow for specialised support for those who need it to grow.
So, a policy framework and implementation mechanism that includes capacity-building programmes, vocational training, technical and financial support, infusion of skills, easier access to credit, especially start-up capital, as well as facilitating market potential can do a lot to turn SHGs into businesses that can make money.