Extended Essay
THE EFFICACY OF SELF-HELP GROUPS—A CASE STUDY
Research Question
To what extent has the formation of self-help groups (SHGs) affected the
women's socio-economic development in Surendranagar Village, Red bank,
Jalpaiguri, West Bengal, India?
Subject: Economics
Word count: 4000
Candidate Number: JJH533
1
Table of Contents
INTRODUCTION................................................................................................................................. 3
HYPOTHESES ..................................................................................................................................... 5
METHODOLOGY ............................................................................................................................... 6
LITERATURE REVIEW .................................................................................................................... 7
ECONOMIC AND SOCIAL IMPACT OF WOMEN EMPOWERMENT ....................................... 8
FACTORS LEADING TO WOMEN'S SOCIO-ECONOMIC DEVELOPMENT ............................ 8
MICROCREDIT AND SELF-HELP GROUPS ............................................................................... 10
ANALYSIS AND EVALUATION..................................................................................................... 12
ANALYSING THE CHANGE IN INCOME AFTER JOINING SHGs .......................................... 13
IMPLICATIONS OF INCREASES IN INCOME—ANALYZED BY A LORENZ CURVE .... 17
IMPLICATION OF RISING INCOME—CHANGES IN CONSUMPTION PATTERNS......... 20
ANALYSIS AND EVALUATION OF EFFECTIVENESS OF THE SHG IN BENEFITING ITS
MEMBERS FINANCIALLY BY USING ENGEL LAW ........................................................... 22
ANALYSIS OF QUALITATIVE DATA USING WLOSI (Women's Level of Satisfaction Index) 27
CONCLUSION ................................................................................................................................... 33
RECOMMENDATIONS .................................................................................................................... 34
BIBLIOGRAPHY ............................................................................................................................... 35
APPENDICES ..................................................................................................................................... 36
2
INTRODUCTION
Economists have always discussed whether collective efforts are more effective than individual
efforts in correcting socio-economic problems in developing economies like India. To gain
insight into this issue, this essay delves into the field of development economics related to the
government-promoted inter-dependence programs, banking, and microcredit offered to the
needy living in rural India.
The case study investigated is an attempt to study the impact on women's socio-economic
empowerment in Surendranagar Village, Jalpaiguri, West Bengal, India, after they became
members of Self-Help Groups (SHGs1) 'Deepavali' and 'Divyan.'
The village of Surendranagar presents a dichotomy of rich culture juxtaposed with
geographical constraints that bar residents of decent and feasible means of transport and
communication. However, the women of the village are especially deprived socially and
1
Self Help Groups (SHGs) are groups of 15-20 rural women, initiated by the SHG movement in India and the
Indian Government to promote an interdependent, participatory approach to combat the patriarchal
oppression by improving the socioeconomic wellbeing of women.
3
financially under patriarchal oppression. In effect, for the last six years, SHGs "Deepavali"
and "Divyan" have aimed to alter their prospects. In 2014, "Woman Shakti, an NGO working
in Surendranagar village for several years, along with financial aid and skill-development
programs from the govt. and NABARD2 encouraged training and collateral-free-loans. These
organizations encourage rural women to form SHGs to promote interdependence and
empowerment by encouraging female members to create cash pools to contribute every month
from which needy members can loan money.
MAP OF RED BANK, JALPAIGURI, WEST BENGAL3
2
National bank for Agricultural and Rural Development—a government-owned development-bank promoting
rural development via participative, financial, and non-financial interventions
3
https://www.google.co.in/maps/place/Red+Bank+Tea+Garden+D,+West+Bengal/@26.8568312,88.9950416,1
3.54z/data=!4m8!1m2!2m1!1sRed+Bank+Tea+Garden+Dhupguri+Jalpaiguri+West+Bengal!3m4!1s0x39e3ebf2
99a91f23:0x288c31b32f010170!8m2!3d26.8730636!4d89.0394363?hl=en
4
HYPOTHESES
NULL HYPOTHESIS:
Self-Help Group "Deepavali" and "Divyan" have been ineffective in improving the socioeconomic condition of women in Surendranagar Village, Red Bank, Jalpaiguri, West Bengal,
India
ALTERNATIVE HYPOTHESIS:
Self-Help Group "Deepavali" and "Divyan" have been effective in improving the socioeconomic condition of women in Surendranagar Village, Red Bank, Jalpaiguri, West Bengal,
India
5
METHODOLOGY
6
LITERATURE REVIEW
Social empowerment refers to developing a sense of autonomy and changing beliefs that
exclude the impoverished from active participation in society (Combaz and Mcloughlin). In a
socially empowered society, everyone can make decisions about their lives and have equal
opportunities. Women are pillars of society—while women's economic empowerment includes
their ability to participate in economic systems. They are considered responsible for families'
financial and social wellbeing, especially in rural areas (Rajiv Gandhi Charitable Trust).
To move a step towards an ideal society with self-sustaining members, it is vital to tackle
gender-based problems' roots and eradicate them for future generations. By promoting selfhelp groups' formation, the government aims to improve women's acceptance of India's
respected & economically stable citizens.
In rural India, it is common practice that girls are married-off and are disallowed any economic
or educational access for independence. After marriage, women are vulnerable to domestic
violence—an issue that requires changing society's mindset. Hence, in a society in which
women—48.1% of the population (Central Intelligence Agency)—are deprived and oppressed
due to cultural beliefs, it is impossible to prosper without fixing these ingrained issues.
7
ECONOMIC AND SOCIAL IMPACT OF WOMEN EMPOWERMENT
Central government schemes like "Beti Bachao Beti Padhao" ("save the daughter, educate the
daughter") are supply-side reforms aimed to resolve the problem from its foundation—
deprivation—leading to the creation of human capital. The increased factors of production in
the form of a wider labor force allow easy circulation of money and higher productivity,
increasing government-revenue used to develop the nation via social-equity agendas and
infrastructure & education-investments.
FACTORS LEADING TO WOMEN'S SOCIO-ECONOMIC
DEVELOPMENT-
Education and healthcare are human necessities—everyone should be entitled to get basic
elementary education and have access to decent health. The right to education and health (1948)
(United Nations) affirms the individual right to a standard of living adequate for individuals
and their families' wellbeing. Moreover, access to credit is also an essential factor that plays a
role in women's socio-economic (Khan and Bibi) empowerment. Banking services incentivize
women to save; the greater the savings, the more funds available for them that they may use to
lead an independent life. More importantly, access to microcredit and collateral-free loans—
like those provided to SHGs in India—help women in impoverished conditions to support
themselves by starting their cottage industries.
However, the Indian government promotes a collective-interdependence-scheme following the
ideology that "group-formation for women development is a powerful tool in weakening the
8
inside and outside dichotomy" (Lynn). SHGs of 14-20 rural-women follow the system of a
collective-monetary pool to raise collective funds from which the participants can withdraw
money to sustain themselves. A large portion of SHGs are linked with Bandhan Bank ltd &
Union Bank of India, which provides them access to collateral-free loans and training (Y.C.
Nanda). But a failure often occurs when banks prefer SHGs affiliated for an extended period,
as revealed by the interview with the SHG-head. Some new SHGs miss out on repayment,
making banks hesitant to furnishing loans. Moreover, lethargy and red-tapism mean several
loans by SHG are either rejected or delayed, which hampers their operations' efficiency.
The socio-economic development of women is impossible until women are recognized as
responsible adults responsible for their decisions. Rural women having financial support and
owning assets improves the allocation of resources while strengthening their socio-economic
position as control over the physical, intellectual, and financial resources indicates a higher
degree of freedom and respect in society as they now have a say in decision making.
Furthermore, women's literacy rates, another target of the "Beti Bachao Beti Padhao" scheme
does not only entail the ability to read and write, but also the aim to improve skills and gain
confidence to communicate well in society which enables women to face different social
challenges (Government of India).
All the aforementioned factors are aimed to ultimately fight the social conventions that rule
against women and reduce the wage-gap while doing so. The gender-wage-gap is an indicator
of income-distribution based on gender Men in India earn an average of Rs.242.49 daily, which
is Rs.46.19 more than that earned by women (Monster India; IIM-Ahmedabad).
9
Moreover, investigation over economic-empowerment will also give some impression of
social-empowerment as increased income and improved living standards indicate socialempowerment.
MICROCREDIT AND SELF-HELP GROUPS
Commercial and often government banks are scarce in rural areas and often prioritize upper
and middle-class borrowers, overlooking poverty-stricken borrowers. Consequently, people
who cannot afford collaterals face a cyclic effect of the banks not lending them money, which
disallows the poor to gain wealth. Microfinance is a banking service in which credit is provided
to the unemployed and low-income earners and groups that aim to improve their socioeconomic conditions.
The use of SHG to bring long-term socio-economic change is supported by nudge theory,
which argues that legislation and enforced changes such as laws against domestic violence and
discrimination act as sticks that people fear, but this ignores the history, heuristic friction, and
current mindsets of people and hence only work when enforced effectively (Thaler and
Sunstein). However, nudge changes, such as allowing women to form self-sustaining groups
and providing them with training and financial freedom, nudges the society to think a particular
way; it changes perception and strives to change social structure in the long run. However,
SHG alone cannot result in comprehensive improvement in living standards for rural
womenfolk as patriarchy is deep-rooted in Indian society and goes beyond just women's
financial needs and denies them basic rights such as religious, political, or social independence
10
(Greaney, Kaboski and Leemput). The government has its task cut-out to improve the living
standards of women sustainably.
4
4
TOTAL SHG BRANCHES & FUNDS UNDER MANAGEMENT
https://www.nabard.org/content.aspx?id=477
11
ANALYSIS AND EVALUATION
Using Surendranagar village's 'Deepavali' and 'Divyan' as a case study to support my essay, I
will investigate both social changes ( in, domestic violence, respect, freedom, education) and
economic changes (in income, wealth, access to amenities and microcredit) that have affected
women's lives after joining the SHGs.
In Surendranagar village, SHGs are provided career and finance-management training and
microfinance by NABARD and Union Bank of India. Before the doubling of the maximum
collateral-free loan-limit (India TV Business Desk), SHGs received ten lakhs in the form of a
collateral-free loans.
The impact of loans, training and collective participation allow many SHG members to initiate
and expand their cottage industries and agricultural activities, and some to experience degrees
of social empowerment.
The analysis of the impact of these factors leads us to the question central to my investigation—
"To what extent has the formation of self-help groups (SHGs) affected women's socio-economic
development in Surendranagar Village, Red bank, Jalpaiguri, West Bengal, India?"
12
ANALYSING THE CHANGE IN INCOME AFTER JOINING SHGs
Figure 2- Based on primary data
Figure 3- Based on primary data
13
Analyzing changes in income levels pre-and-post-SHG from the primary survey data reveals a
significant increase in income; the estimated mean average of women's monthly income
increased by approximately 43%. The rise in income increased the level of consumption and
reduced the level of unemployment in Surendranagar, which led to the village's development.
Although, it was learned from the head of SHG that the duration of time that women stay a
member of SHG plays a vital role in determining the level of overall wellness gained by them.
Females being a part of the SHG for more than two years at a stretch benefit the most as they
have some amount of money saved in their account by now. Thus, they are better off than their
counterparts who stay a member of SHGs for shorter durations.
Moreover, it was revealed that the households with high male-female ratios render challenges
for SHGs to pull the women out of financial and social crutches as patriarchy's challenge
becomes exponential.
Higher incomes allow sections of the population suffering from absolute poverty to afford basic
needs such as food and shelter. In contrast, some relatively low-income families could fulfill
nothing but their physiological needs, can now afford an upgrade in living standards (McLeod).
Hence, to gain insight into the effect of SHGs on the lives of their members by collecting data
indicative of a rise in living standards—this includes both economic factors such as goods they
can afford, and better access basic amenities along with social factors such as a change in
attitude towards domestic violence & their participation in decision making roles in families.
14
TABLE 1, Based on primary data
15
TABLE 2, Based on primary data
16
IMPLICATIONS OF INCREASES IN INCOME: ANALYZED BY LORENZ CURVE
Figure 4- Based on primary data [Calculations attached in appendix]
17
Lorenz curves show the degree of income-inequality in a population (Tragakes)—
Surendranagar village's curve reveals a large income-gap, relative to the sample, in the village
with the poorest 20% of people earning merely 2.5% of the cumulative income. However, an
inward shift in the Lorenz curve closer to the diagonal after joining their SHG shows the help
afforded to the most impoverished strata in bridging the gap between the income groups to a
certain extent.
Most of the poorest 50-60% of the sample did not have stable sources of income in their odd
jobs; joining the SHG provided them with resources and skills to start cottage industries and
farming, while relatively higher income-segment of the population could only improve and
build on their existing farms and cottage industries. Consequently, there is a variation in the
proportion of the Lorenz curve's leftwards shift in Surendranagar village after the women
participate in SHGs. The lowest 70% of the village's cumulative population were financially
better off by a relatively higher proportion, leading to a leftwards shift by a greater proportion
of the Lorenz curve compared to the top 30% of the sample
5
5
https://www.rrh.org.au/journal/article/457
18
Data shows that the income distribution of Surendranagar village drastically improved after
the introduction of SHG—the poorest% earned a larger proportion of the village's total income
than earlier. The Gini coefficient—a statistical measure of income-distribution—decreased
from 0.301 to 0.219 [calculations in appendix] after the members joined the SHG.
While self-employment and increments in the social climate diminish absolute poverty, there
lies a trade-off for some members. The time spent on farmers' daily labor has increased
significantly as they follow the proper techniques taught by the govt and NABARD. Though it
increases the SHG members' income, it comes with a cost of time and rigor.
19
IMPLICATION OF RISING INCOME: CHANGES IN CONSUMPTION PATTERNS
-
TABLE 3, BASED ON PRIMARY DATA
20
The table shows the difference in expenditure of 20 current SHG members' families from
Surendranagar before and after joining the SHGs. The maximum change in the expenditure
was for power, fuel, and electricity—closely followed by education and entertainment.
Power and fuel consumption data are vital in India, where most of the population is engaged in
the informal sector. It is difficult to understand the level of employment and living standards
of people. The increased expenditure on gadgets, power, fuel, and electricity indicates a rise in
the usage, upgradation/purchase of technology and appliances such as refrigerators, televisions
as supported by table 2. Moreover, the 92.3% rise in housing expenditure indicates better living
conditions and perhaps a more spacious home than before. Entertainment, having a relatively
elastic PED (non-necessity commodity) is an indicator of higher level of development and
living standard; hence the 166.7% change is more significant than the number itself.
More importantly, the interview revealed that though education is free for primary classes
(grade 1-5), the students must purchase 5-7 books due to government schools' low quality of
education.
Contrastingly, some SHG members showed smaller increases in education-expenditure and
higher spending on food, clothing, and non-essential goods. Albeit unintuitive, this trend is
seen in specific households with daughters, as the societal dogma works against the girl child's
education. In contrast, in families with sons, education accounted for most of the incomeexpenditure after it increased.
21
ANALYSIS AND EVALUATION OF EFFECTIVENESS OF THE SHG IN
BENEFITING ITS MEMBERS FINANCIALLY BY USING ENGEL LAW :
The observations give evidence that though the absolute expenditure on food and clothing
increased, the proportion of income spent on clothing and food has declined. In contrast, the
spending on sanitation, health, and entertainment has increased. The relationship between
income and consumption can be explained via 'Engel Law'. The Engel curve shows the
relationship between income and quantity of commodities demanded (Chai and Moneta) when
other influences such as price of goods and consumer preferences are assumed to be constant;
hence, helping analyze the consumption pattern of SHG members.
22
ASSUMPTIONS TAKEN WHILE DERIVING THE ENGEL CURVE
Price of the non-essential (Gadgets, entertainment) and essential
commodities (food, housing, clothing, sanitation, and health) remain
constant
The consumption expenditure on 2 goods equals the income,
assuming no savings
The increase in expenditure between the Pre-&Post-SHG Incomes is
linear
23
ENGEL CURES FOR DIFFERENT COMMODITIES DERIVED USING INCOME DATA
BEFORE AND AFTER JOINING THE SHG
INCOME (MEAN AVERAGE
OF THE MONTHLY INCOME
OF A FAMILY (IN INR)
EC (ENTERTAINMENT+
GADGETS)
14250 (POST-SHG)
EC (EDUCATION)
EC (POWER &
ELECTRICITY)
11250 (PRE-SHG)
350
600
800 850
1800
2500
MONTHLY
EXPENDITURE (IN INR)
Figure 5- Based on primary data (Appendix-6)
INCOME (MEAN
AVERAGE OF
THE MONTHLY
INCOME OF A
FAMILY (IN INR)
EC (NECESSITIES)
14250
(POST
-SHG)
11250 (PRE-SHG)
9950
Figure 6- Based on primary data (Appendix-6)
24
16650
MONTHLY
EXPENDITURE ON
NECESSITIES (IN INR)
The Engel Curve is the locus of all points representing the quantity of goods demanded at
various income levels. It helps understand the changes in consumption expenditure due to
changes in income, classifying goods as normal or inferior.
The curve's positive gradient shows that it is a normal good, and the increasing slope of the
curve indicates that it is a necessity, As shown by the data in Table 3, figures 5&6, the percent
increase in consumption of non-essential goods and services is greater than that of essential
goods. Moreover, Increased consumption of necessities indicates that they still aim to fulfill
their physiological needs better, and even though relative poverty has declined, absolute
poverty is still prevalent. However, there lie some peculiar nuances—particular to the data
gathered from the SHG members—that are worth exploring.
Nevertheless, there are some limitations to the curves derived, having data for only the preand post-SHG income levels restricted the plotting to a straight line instead of a curve that
could be determined using detailed data. However, the YED (appendix 6) and the straight line
derived using elementary algebra fulfills the analytical needs.
As seen in appendix 6, all of the goods have a YED>1 which indicates that, on average, there
is a higher need for all goods to fulfill the SHG member’s satisfaction level; this is indicative
of their relative and absolute poverty. Though unfulfilled, it seems clear that they find Food,
Housing, Sanitation, and Health to be physiological needs as they have the lowest YED (2.78).
Moreover, as the YED (5.36) for Entertainment + Gadgets is lower than education; this is a
result of unfulfilled-need for education vis-à-vis entertainment and gadgets perhaps due to
25
steeper prices-increases when buying books and attending school, while technology only
requires upgradation. The high YED (7.97) of power, similarly, is a combination of using
alternatives such as fuel and also that electricity is provided at a discounted rate at low-income
levels.
This analysis is supported by the trend of both SHGs, 'Deepavali' and 'Divyan' in improving
the economic and financial condition of women and their families and hence their living
standards; though, the living standards can only wholly be determined after analyzing the social
factors that affect the empowerment of women in the area and hence the development of the
area itself.
26
ANALYSIS OF QUALITATIVE DATA USING WLOSI (Women's Level
of Satisfaction Index)
In dearth of methods/time/resources to quantitatively analyze qualitative data for large samples,
it is difficult to accurately answer the question, "To what extent has the formation of self-help
groups (SHGs) affected women's socio-economic development in Surendranagar Village, Red
bank, Jalpaiguri, West Bengal, India?". To achieve a holistic analysis, it is imperative to
contextualize the domains of empowerment, and observe the behavioral patterns and social
conditions in the village.
The factors affecting development are split into four broad domains:
1. ECONOMIC EMPOWERMENT
2. SOCIAL EMPOWERMENT
3. POLITICAL EMPOWERMENT
4. PSYCHOLOGICAL IMPACT
27
WOMEN’S LEVEL OF SATISFACTION INDEX
TASK BURDEN
TABLE 4, SELF-MADE, USING PRIMARY DATA
28
6

12 sub indices
FORMULA USED TO CALCULATE WEIGHTED VALUE OF INDEX:
(average rating of level of satisfaction out of 10)  (average level of importance weighting)
12  66.5
As discussed in the essay, apart from economic factors, social factors also play an integral role
in women's socio-economic empowerment and rural areas' development. To analyze the impact
of SHG on the development of women and Surendranagar village, it is crucial to quantify
qualitative responses received during primary research using an index (Kemppanien).
However, as the issue at hand is mostly to do with human emotions, it is imperative to consider
essential factors and subjects used in qualitative research to understand the possible causal
pathways underlying the observed impact. Much of this detail is lost while quantifying
qualitative information using criteria.
WLOSI was created using an 'opinion weighting' technique (Smith, Gordon and Kelley). The
interviewees were asked to rate the importance of different factors from the four major
domains. The average responses for these importance levels were multiplied by the average
29
rating and then divided by the maximum rating of all factors to get the average weighted
WLOSI.
As determined by table 4, a difference in women's social living standards can be inferred by
the average weighted WLOSI. Non-members have an average weighted WLOSI of 0.326,
while SHG-members in the village have a higher level of satisfaction- indicated by the 1.92
times greater WLOSI of 0.625.
TABLE 5, SELF-MADE, USING PRIMARY DATA
30
As shown in table 5, the highest difference in the weighted index was in 'Psychological
Impact' domain, which indicates a high degree of freedom and confidence and lower
vulnerability to the patriarchal society due to increased interdependence with each other and
economic empowerment that allows members to be more independent as compared to nonmembers. Following the descending order, 'Economic Empowerment' domain too indicated
a vast difference (of 0.353 in the WLOSI), which depicts the member's higher satisfaction with
access to microcredit- both from Union Bank of India via the bank-linkage program and the
SHG-pool in which they monthly contribute- as compared to non-members. SHG-members
hence benefit from having contact with markets outside the Surendranagar village, thereby
increasing their efficiency.
Further analysis of minute difference in the satisfaction with current task burden of nonmembers and SHG-members is due to the inherent flaws of an oppressive patriarchy in which,
following the norm, women are put under a "triple threat burden" of reproductive, productive,
and community management roles in society, this is only minutely affected by the SHG as
structural shifts in society and mindsets takes time (Khan and Bibi).
In 'Social Empowerment', differences in social knowledge and skill levels between members
and non-members are due to NABARD's Union Bank's training and financial awareness
schemes. They teach SHG members with which they can start cottage-industries or improve
their agriculture-related skills. Lastly, the lowest difference (of a mere 0.161) between the SHG
and non-SHG members is in 'Political Empowerment' domain; though there is difference
between rating for factors including domestic violence, decision making, and freedom to
31
choose how to spend their earnings, the difference between SHG members and non-members
is not as drastic as the other domains.
The main reason for the lower gap in 'Political Empowerment' is that it requires a change in
the male community's mindsets and the members' family, which is a gradual process. The SHGmovement hence acts as a supply side policy to not only financially empower women but also
change society's attitude towards them; the idea of change in attitude being a gradual process
is supported by the fact that members who were a part of the SHG for more than 5 years
reported a lower level of dissatisfaction with domestic violence as compared to newer
members.
NULL HYPOTHESIS REJECTED -
After a comprehensive analysis on several checkpoints, the null hypothesis can be completely
rejected that The SHG "Deepavali" and "Divyan" have been ineffective in developing the
socio-economic condition of women in Surendranagar Village, Red Bank, Jalpaiguri, West
Bengal, India as there has been a consistent change in the social and economic upliftment of
rural women due to the SHGs prevailing in the area. However, the alternate hypothesis's
acceptance is dependent mainly on the number of years the population has been a part of the
SHGs and the SHGs' context.
32
CONCLUSION
A detailed analysis from the relevant primary and secondary data clearly shows that after
women's entry into the Self-Help Groups, the overall standard of living increased substantially
and comprehensively. It can further be asserted that there was an overall upliftment of women's
satisfaction level and general living conditions for the long run.
The research data depicts that women in 'Deepavali' and 'Divyan' SHGs performed better in all
living standard indices than non-members in Surendranagar Village, Red Bank, Jalpaiguri,
West Bengal. This is confirmed by a detailed study of primary data that suggests an
improvement in; overall expenditure and income levels of SHG members and a higher level of
satisfaction depicted by comparison of WLOSI indices of SHG members non-members in the
village. This makes the Self-Help Group effective in elevating the women's general socioeconomic standards in rural West-Bengal. An enhancement of self-confidence &
independence, and knowledge apart from the improvement in the freedom of movement and
task-burden correspond to the social upliftment complemented by the financial gain shown by
increased total expenditure. This reflects on the comprehensive socio-economic development
brought in by the SHGs in Surendranagar.
The poorest women in the village have been mainly the beneficiaries who have gained the
most from SHG in terms of socio-economic welfare since the primary aim of SHG was to
provide relatively decent-paying jobs to the people who live in poverty and lack access to jobs
of any kind. Women workers are frowned upon in the village and are often not given the fair
share of the hard work they put in the few work opportunities available to them.
33
While this proves the existence of significant impact of the SHGs on women's socio-economic
development, there still exists a disparity between the increments with factors such as rates of
domestic violence, decision making roles in the family & freedom to use their earnings as per
their discretion has improved vis-à-vis other domains' factors. As these factors are indirectly
affected by the formation of SHGs and require a change in rural societies' attitude and structure,
such changes are a gradual process that requires rising more awareness to underline the
importance of women in the working population.
RECOMMENDATIONS
It is recommended that the SHGs continue expanding their base in more such rural areas of the
country & the government shall allocate funds as loans on an as-and-when-needed basis.
Moreover, there shall be a transparent audit of all the SHGs' financials so that the efficiency in
terms of resource allocation can be assessed. A further area of study that could have been
analyzed is comparing the performance of a few SHGs across the country.
34
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Chai, Andreas and Alessio Moneta. "Retrospectives, Engel Curves." Journal of Economic
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Government of India. Beti Bachao Beti Padhao. 2015. 13 January 2020.
Greaney, Brian, Joseph P. Kaboski and Eva Van Leemput. "Can Self Help Groups Really Be 'Self
Help'?" International Finance Discussion Papers 1155. 2015.
India TV Business Desk. "Collateral-free loans for self help women groups doubled to 20 lakh:
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Kemppanien, Teemu. "Wellbeing in socio-political context." Studies in social security and health.
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Khan, Abdul Rashid and Zainab Bibi. "WOMEN'S SOCIO-ECONOMIC EMPOWERMENT
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Lynn, Bennet. "Women, poverty, and productivity in India." 1992.
McLeod, Saul. "Maslow's Hierarchy of Needs." SimplyPsychology (2020). Online Article.
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Rajiv Gandhi Charitable Trust. "Inspiring Young Women to Become." (2020). Website.
Smith, Professor George Davey, et al. "Inequalities in health In India: The Methodological
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Thaler, Righard H. and Cass R. Sunstein. Nudge, Improvinf Decisions abouut Health, Wealth and
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APPENDICES
36
37
38
39
40
APPENDIX 2
INTERVIEW WITH THE HEAD OF SHG (Translated and Interpreted)
Q How does the SHG manage to gather funds?
Ans: Our SHG is linked with banks such as Bandhan Bank ltd & Union Bank of India which
provide us collateral free loans. These funds are then rotated amongst the members.
Q. Are the funds always used effectively?
Ans: As we all share the same goal to mutually benefit one another, we all try our best to
only borrow as we need, or to expand our businesses and busing farming equipment. As we
sometimes have an excess in our pool, we have enabled a loan with 10% interest of upto 5000
rupees for any external borrowers not part of our SHG
Q. What is the main aim that the SHG wants to achieve?
Ans: Through central government schemes such as "Beti Bachao Beti Padhao", our aim is to
to resolve the problem from its base, which will improve the living standards of the women in
rural areas. Through the SHGs the Government aims to improve the acceptance of women as
valuable & economically stable citizens of India.
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Q. How do you summarise the functioning of SHGs?
Ans: SHG are groups of 14-20 women, primarily from rural parts of India, follow the system
of a collective monetary pool to raise collective funds from which the participants can
withdraw money to support themselves as they need.it is an essential service for the upliftment
of the women.
Q. How do you assess the functioning of commercial banks in rural areas of the country
& how does the microfinance institutions support such banks?
Ans: Commercial banks are very scarce in rural areas like ours and they often prioritize upper
and middle-class borrowers, overlooking poverty-stricken borrowers. Even government banks
prefer borrowers who can offer collateral as security of borrowing, consequently, people who
do cannot afford collateral face a cyclic effect of the banks not lending them money, which in
turn disallows the poor to gain wealth. This is the reason that microfinance is an integral part
of rural India. Women like me rely greatly on the microfinance providers to fund my needs.
Q. How do you provide the microfinance to the needy?
Ans: In Surendranagar village, SHG are introduced to microfinance schemes by National Bank
for Agricultural and Rural Development (NABARD) and Union Bank of India. Until now,
before the doubling of the maximum collateral-free loan limit, SHG was receiving 10 lakhs in
the form of a collateral free loan. The loan has allowed many SHG members to initiate and
expand their businesses which were mostly small cottage industries and agricultural activities.
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Q. What factors have been important for the increase in living standards of the members
at SHG?
Ans: the duration of time that women stay a member of SHG plays a vital role in determining
the level of overall wellness gained by them. Females being a part of the SHG for more than 2
years at a stretch benefit the most as they have some amount of money saved in their account
by now. Thus, they are better off than their counterparts who stay a member of SHG for lesser
duration. Thus, the duration of time is the key aspect if sustainable improvement of living
standards is to be achieved.
Q. How do you assess the change in income of the members before and after joining SHG?
Ans: We, as instructed by the bank, do regular surveys and collect data.
Q. Is there any discrimination in the loans given by banks?
Ans: Though now our SHG does not face this problem, at the start, banks preferred giving
loans to older, established SHGs as it is difficult for new members to repay loans. Also, if there
are more than 15 members in an SHG, they get the loans first.
Q. What is the primary reason for women to leave SHGs?
Ans: Though SHGs are there for our empowerment, women who live in households where
there are proportionately more men than women, they are forced to exit the SHGs. Also, women
tend to leave our SHG when they get married or are pregnant.
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ANALYSING THE CHANGE IN INCOME AFTER JOINING THE SHG
Figure 2- Based on primary data
Figure 3- Based on primary data
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APPENDIX 4
Poverty trap in Surendranagar
Poverty trap arises when low incomes result in low (or zero) savings, permitting only low (or
zero) investments in physical, human, and natural capital, and therefore low productivity of
labour and of land. This give rise to low, if any, growth in income (sometimes growth may be
negative), and hence low incomes once again. A poverty cycle may occur in a family, a
community, a part of an economy, or in an economy as a
whole. An important feature of the poverty cycle is that poverty is transmitted through
generations.
7
7
https://triumphias.com/blog/what-is-poverty/
48
primary research through the interview with the 20 respondents of the SHG revealed that there
is a typical poverty cycle in Surendranagar which is not allowing the people to get out of
poverty from generations as there is extremely low level of income with many households
living in absolute poverty and thus doesn't have enough funds to be allocated toward physical
capital or human resources thus leaving a bleak future for future generations and voiding
them of a chance to be able to draw higher salary in future. Although the rural women break
away from the poverty trap at a point where enough funds, if at all are saved with them which
can be invested in the physical or human capital further so that the poverty trap does not
continue or gets passed down to the future generations.
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APPENDIX 5
(DATA USED TO DERIVE THE LORENZ CURVE)
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APPENDIX 6
DATA USED TO DRAW THE ENGEL CURVE
Goods and
Services
Monthly Expenditure
(INR)
YED
(%∆Expenditure÷%∆Income)
PRE-SHG
POST-SHG
Necessities
(Food, Housing,
Sanitation,
Health)
9950
16650
2.78
Entertainment
+ Gadgets
350
850
5.36
Power +
Electricity
800
250
7.97
Education
600
1800
7.5
Derivation of YED from Expenditure, taking price as a constant (k)
kD2 − kD1
k  ( D2 − D1 )
D2 − D1
100%
100%
100%
kD1
k  D1
D1
%Expenditure
%Demand
=
=
=
=
= YED
Y2 − Y1
Y2 − Y1
Y2 − Y1
%Income
%

Income
100%
100%
100%
Y1
Y1
Y1
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