Abstract
The ‘official’ purpose of the SHG program in India is poverty alleviation through providing cheap credit to the rural poor. However, after the mid-1990s India entered a new developmental stage with accelerated growth of nonfarm sectors and a large-scale rural–urban migration started with substantial impact on increase in rural income, especially in Tamil Nadu. The chapter aims at clarifying the actual functions and meanings of the SHGs under such a rapidly changing rural scenario, based on a recent case study in a Tamil Nadu village. The major findings include; (1) The SHG program gave a certain apparent impact on poverty alleviation through lowering the interest rate imposed by village moneylenders and providing the poor with the subsidized bank loans, in spite of several limitations such as the small amount of loan disbursed from the banks, (2) The poor, however, was relatively reluctant to join in the program due to various socioeconomic reasons, and it was found that one of the major reasons was paradoxically the lack of labor by the poor (especially for the female-headed households) for keeping goats, since the program was strongly connected with goat rearing in the study area, (3) The SHG program was most suited to the ‘upper-middle’ and the ‘middle’ classes (out of the five classes) who were able to keep goats more easily with their family labor, which is mainly devoted to self-employed agriculture, and the SHG program functioned as one of the opportunities for them to save money, (4) The SHG program was largely ineffective in financing the rural households for higher education of children, which was the real route for the rural people in India to escape from poverty, because of the huge amount of expenditure necessary for higher education.
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Notes
- 1.
After the mid-1990s the overall economic growth rate in India jumped to 6–7 % per annum.
- 2.
Note that the Green Revolution benefitted not only landowners and owner-farmers but also rural households in general, including tenants and agricultural laborers, because various linkage effects of the Green Revolution worked, such as backward linkage, forward linkage, and most importantly the ‘final demand effect’ of the revolution.
- 3.
It should be noted that in Tamil Nadu as well, the Green Revolution in rice, diffused since the early 1980s until the late-1990s, raised rural income and thereby prepared for the successive nonagricultural development in the state (Fujita 2011).
- 4.
Tamil Nadu, Pondicherry, Andhra Pradesh, Kerala, Karnataka, Orissa, Maharashtra, Madhya Pradesh, Rajasthan, Jharkand, Bihar, and Assam.
- 5.
The population in 2001 was 44 thousand and 929 thousand, respectively.
- 6.
Puñcai is the land located outside the command area of tanks, part of which is irrigated by private wells.
- 7.
A method of classifying village households into economic classes by subjective judgment of a villager (or villagers) with good knowledge on the village matter (Gardin 1988).
- 8.
They stayed in Thirumangalam Town (5 persons), Madurai City (3), other major cities in Tamil Nadu (2), small rural towns or villages in Tamil Nadu (10), and other states of India (4).
- 9.
One of the major reasons why the workers in self-employed agriculture were relatively uneducated was that they were usually aged people.
- 10.
A primary-cum-middle school (up to 8th standard) was established in the village during the 1990s and almost all the children finished at least up to the middle school level by 2008 when we started survey.
- 11.
ITI is the government or private owned training organization that provides post-school technical training.
- 12.
The education cost was very high. The entrance fee and the annual tuition fee of the preschool, for instance, were Rs. 2,000 and Rs. 6,000, respectively.
- 13.
The Tamil Nadu reservation policy determines the minimum score for placement at state universities: 60 % for students of Forward Caste (FC), 55 % Backward Caste (BC), 50 % for Most Backward Caste (MBC), and ‘Pass’ (regardless of marks) for Scheduled Caste/Scheduled Tribe (SC/ST).
- 14.
PARD is a Madurai-based NGO for rural development. Micro-finance is one of their activities and they supported 263 SHGs. They have a training center for promoting women’s livelihood (Squido 2010).
- 15.
ASSEFA was established in 1969 by a disciple of Gandhi as an executive body of land distribution program for outcaste people (called the ‘Bhoodan Movement’). Since the 1980 s, it focused on saving group activities in rural areas (GDRC 2010). But it was restructured in 2000 and an institution called the Sarvadoya Mutual Benefit Trust (SMBT) became independent, and started to promote SHGs by getting financial assistance from the Small Industries Development Bank of India (SIDBI).
- 16.
TNCDW had a SHG program called Mahalir Thittam (TNCDW 2010).
- 17.
The IRDP was replaced by the Swarnajayanthi Gram Swarozgar Yojna (SGSY) in the late 1990s mainly because of the low repayment problem.
- 18.
Some villagers in the study village were also benefitted from IRDP since 1980, and dairy farms were promoted through the program (Fujita and Sato (2011)).
- 19.
Some SHG members showed the goats they had already reared.
- 20.
Another reason for the poor to prefer hired labor than goat rearing was their immediate cash needs.
- 21.
Interest was charged in case of borrowing for more than 2 weeks, so 2 weeks period of borrowing was most commonly observed. The term ‘kaimathu’ literally means ‘money returned by labour’ which had been widely observed between rich-patrons and poor-clients (especially poor women in the female-headed households) before. For instance, if a poor woman borrowed Rs. 600 from a patron (farmer) she repaid it by working 12 days (given the wage rate of Rs. 50). Repayment by labor was not only for agriculture but also for household works. However, by the time of our survey, such a practice between patrons and clients had almost disappeared.
- 22.
For instance, see Fujita (2000) on the case of Bangladesh.
- 23.
The terms were 1 year, 2 years, 3 years, and 5 years.
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Fujita, K., Sato, K. (2014). SHGs for Poverty Alleviation?: Insights from a Tamil Nadu Village Under Rapid Economic Development. In: Bhandari, A., Kundu, A. (eds) Microfinance, Risk-taking Behaviour and Rural Livelihood. Springer, New Delhi. https://doi.org/10.1007/978-81-322-1284-3_5
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