Collective action and the creation of social capital in Indian villages
ABSTRACT
This paper examines the creation of social capital within self help groups that operate in many Indian
villages. Self help groups are formed primarily as microfinance and poverty alleviation interventions.
While the focus of most studies is on the economic result derived from microfinance interventions,
this paper highlights the wider benefits that result from the growth of social capital. This has social
implications for self help group members, their families, and the wider communities in which they
live. The paper observes that social capital has a predominately positive influence on the actions of
self help group members as they work for both collective and individual improvements in their
community. The paper concludes that there are significant benefits and long term implications which
flow into communities from collective actions resulting from the growth of social capital within self
help groups. The paper is a ‘work in progress’ and does not seek to provide all the answers to this
issue. Feedback relating to these practical experiences is welcomed by the author.
Key words: India, microfinance, poverty, social capital, self-help
1. Introduction
The formation of groups for people to undertake collective action for the reduction of poverty has
captured the focus of policy makers and donors in developing countries in recent years (Asian
Development Bank (ADB) 2002; Banks 1997; Consultative Group to Assist the Poor (CGAP) 2010;
Khan 2009; Marr 2006; UNDP 1991; World Bank 2009). In particular the implementation of
microfinance programs has been promoted because of the role of groups of women in their
perceived positive impact on poverty alleviation for both individuals and groups within communities
(Anderson et al 2002; CGAP 2010; Janssens 2010; Sanyal 2009; Swain and Varghese 2009; Swain and
Van Sanh 2008). It is claimed that group formation has facilitated significant empowerment of
women through access to credit, and through their interaction with each other in this process
(Anderson et al. 2002; Folgheraiter et al. 2009; Ito 2003; Khan 2009; Marr 2006; Swain and Wallentin
2009). The positive economic contributions to households and communities that these poverty
alleviation programs have achieved through collective action have been widely promoted (ADB
2002; CGAP 2010; Khan 2009; Marr 2006; World Bank 2009).
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In many cases, however, the wider benefits (and costs) of the use of social capital in the form of
trust, bonding and reciprocity are overlooked (Banks 1997; Upton 2008). Further, the exclusionary
potential and negative consequences (or “dark side”) of group formation is also overlooked (Banks
1997; Upton 2008). Accordingly, the purpose of this paper is to examine the important influence
that social capital exerts within self help groups that operate to reduce poverty in Indian villages.
The aim of this paper is to demonstrate that social capital has a positive role to play within
communities, through its nurturing and growth and subsequent use, to benefit the community
through activities initiated by the self help groups. Whilst self help groups are formed primarily to
provide a mechanism to access credit and provide a regime for savings for the poor, they invariably
serve other useful purposes. These purposes include the potential development and expansion of
social capital notions of trust, bonding and networks which possibly provide the foundation for
positive collective action by the group on a range of other issues of interest to the community. Most
of these issues are related to poverty. By reviewing current literature and its application to practical
operational processes that govern the formation and functioning of self help groups, this paper
examines the close relationship between social capital and the benefits that flow from group
membership. This paper results from my current PhD research into the potential exclusion of the
poorest women from microfinance programs in India, combined with observations over a 16 year
period of facilitation of donor support for poverty alleviation interventions including microfinance
programs.
2. Poverty
Commonly, poverty is associated with a lack of income through limited job opportunities, poor or no
education and lack of services or facilities in remote localities. Other causes include a long list of
features which on their own become hurdles for individuals and families, but when combined have a
tendency to drag people into a downward spiral of misery (Kapoor and Ojha 2006). Rural households
face a broad range of risks and crises: natural, life cycle related, health related, economic, social,
political and environmental, and issues related to poor infrastructure provision due to remoteness
(Moodie 2008). This risk profile of the poor coupled with vulnerability to discrimination, corruption,
marginalisation, gender bias, social stratification (such as caste in India), and landlessness, means
that the poor face daily exposure to poverty and a daily challenge to survive (Dreze and Sen 2002;
Moodie 2008).
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The World Bank’s definition of poverty has included widows, households headed by women, and
households with disabled adult male members and has been useful in identifying further groups who
are exposed or vulnerable to poverty. Rahman and Razzaque (2000) assert that any definition needs
to be considered multi-dimensionally and should include indicators of income, occupation, housing
and household dependency. Others (Sen and Begum 1998) highlight additional characteristics: land,
housing and occupation as well as region and ethnicity as being worthy of consideration, depending
on the circumstances. Dreze and Sen (2002:36) add that “poverty is...ultimately a matter of
capability deprivation”.
Poverty impacts on 3.25 billion (Pritchett 2006) or nearly 50% of the world’s population who live
below the US$2 per day measure used by the World Bank (World Bank 2002). Consideration of
broader definitions of poverty, however, suggests that this number could be even higher. The largest
concentration of the poor is in South and East Asia, with 70% of the world’s poor living in the Asian
region. Over 900 million of these poor live in rural areas (Asian Development Bank 2010).
The poor however identify that they depend largely on social relationships more than on material
assets (Spicker 2007). These include relations with authorities and community organisations, gender
relationships, and the ability (but often unfulfilled desire) to participate in civil society. Thus poverty
is not simply a lack of material resources (Spicker 2007).
2.1 Poverty in India
Poverty remains widespread throughout India. It is no coincidence that poverty in India tends to
cluster among social groups (such as low caste and female headed households), that are the
traditional targets of stigma, segregation, corruption and discrimination (Bhide and Mehta 2004;
Bonu et al. 2009; Dreze and Sen 2002; Gang et al. 2008; Mitra 2008;).
For the first time ever, the majority of the world’s population live in cities (World Bank 1999).
However, the majority of the world’s poor live in rural areas including rural areas of India. According
to Government of India data (2001), 72% of the 1 billion plus population of India live in 600,000 rural
villages with agriculture being the most important sector of the Indian economy from the
perspective of poverty alleviation and employment generation.
Poverty in India is, however, largely associated with being landless. The World Bank (1997) estimates
that, although 37% of the rural population is landless, this group accounted for 49% of the poor
population. Overall data for the country, whilst based on aggregated household data, reveals that
women are disproportionately affected by poverty. According to the most recent data, poverty
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stands at 28.3% in rural areas and 25.7% in urban areas (GOI 2010). Women have less access to land,
poorer health, lower average education attainment levels, and higher dependency ratios. Poor
households tend to have a higher proportion of adult females and a lower proportion of adult males.
Gender disparity and discrimination are dominant features of rural society in India (Lahiri-Dutt and
Samanta 2006).
The stark reality is that significant numbers of women in rural villages face a daily challenge of
survival and certainly a feminisation of responsibility (Chant 2007; Wienclaw 2009). The increased
responsibility faced by women especially in the rural villages of India has been studied and reflected
upon extensively in the last decade (Goetz 2001; Narayan et al. 2000; Sen 2000).These increased
responsibilities include the collection of firewood, care for children including feeding, educating and
disciplining, maintaining the house, collection of water, care for aged relatives, tending to any crops,
cooking for the adult male(s), washing and clothes maintenance, managing the small household
budget, maintaining the health of the family, and finding paid work (if there is any) in her spare time.
There is also extensive research that supports the notion that women have, over time been become
increasingly vulnerable, and often with that vulnerability, comes the eventual slide into a spiral of
poverty (Spicker 2007). Tribal people in India suffer further disadvantage and deprivation (UnnithanKumar 1997) and women in these circumstances are particularly vulnerable to corruption and abuse
(Dreze and Sen 2002; Gaiha and Kulkarni 2002). Exposure to vulnerability in the Indian context can
vary from a single set-back to the family (eg in the form of a death for instance), to a series of issues
related to health, health-related expenses, high interest costs on personal debt, and social and
customary expenses such as dowry (Krishna 2003).
The Government of India (GOI) has included women as a target group in programs designed to
provide better access to training and resources (PC 2001). With the increased involvement and
engagement of women, the focus for many women in developing countries has turned towards the
basic need of access to credit (Chant 2007; Dalgic 2007). Women have felt that there was a two-fold
need – to access funds for consumption needs and to also access funds for other income generating
activities in order to meet their growing burden of responsibilities (Chant 2007; Dalgic 2007). Access
to funds in this manner reduces the need for women to consider a range of other options, such as
the sale of girl children (Natarajan 1997; Srinivasan 2006) or borrowing from loan sharks or moneylenders at high rates of interest (Joshi 2006). Accordingly, the endorsement by the World Bank of
programs containing high levels of microfinance and targeting women in developing countries
resulted in significant donor uptake and implementation and was replicated by central government
programs offered by the Government of India (Dalgic 2007; Joshi 2006; Rankin 2002; Sanyal 2009).
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This also sent a strong message to communities about the need for women’s empowerment (Dalgic
2007).
Since women-headed households are known to be among the poorest of the poor and in need of
access to credit, poverty alleviation interventions that focus on this group would seem to be of
significant economic and social benefit. The transition to microfinance interventions has, according
to Swain and Wallentin (2009), had the explicit goal of empowering women. The underlying
premises are different, in that some argue women are amongst the poorest of the poor and the
most vulnerable of the under-privileged. Others argue that, by investing in and developing women’s
capabilities, they are empowered to make choices. This is an important achievement in itself, and so
contributes to economic growth and development (Borooah 2005; Garikipati 2008; Osmani 2007;
Swain and Wallentin 2009).
Another pertinent and, for India, significant variable for consideration is the issue of caste. Women,
especially those in the Scheduled Castes or Scheduled Tribes (SC or STs), are subjected to high levels
of deprivation and limitations simply due to their social status (Borooah 2005). The burden of social
stigma, economic backwardness and vulnerability borne by people belonging to India’s “untouchable
castes”, (indicating that no physical contact, including the acceptance of food or water is permitted
due to their ritually polluted or unclean nature), is provided for in the Constitution of India. Special
provisions (articles 341 and 342) include a list of castes and tribes entitled to special benefits from
the Government. Untouchable castes are now referred to as Scheduled Castes and Scheduled Tribes.
According to Borooah (2005), 16% of India’s population are Scheduled Castes, whilst 8% are
Scheduled Tribes. This represents about 260 million people. Most of the Scheduled Tribes occupy
hilly and unproductive pockets of land, and are vulnerable to the seasons and limitations of remote
markets (Unnithan-Kumar 1997).
The additional vulnerability that is faced by these castes and tribes focuses on the emerging
differences in gender ratios within the population, and within their populations more specifically.
Female infanticide is now likely to occur in remote rural villages where the population is less
educated and more vulnerable because of lack of close health facilities, health advice, and more
preparedness to take risks. Accordingly, female infanticide has been listed as a feature of poverty,
and the Tamil Nadu State Government has implemented programs on this issue, targeting education
for people living below the poverty line (Srinivasan 2006).
Studies reveal that there are connections between the issue of female infanticide and the
implementation of microfinance programs, as access to credit for women, especially those who are
5
below the poverty line, enables them to make choices regarding education, health and other life
issues (Srinivasan 2006). Self help group membership and the involvement of poor women in
discussions that include the prevention of female infanticide is a means of expanding the role of
social capital and its impact in communities.
3. Social Capital
In this paper it is assumed that social interactions matter. Those interactions can, in various
measure, create social networks, foster trust, generate values, maintain norms, culture and
traditions, and influence economic and social outcomes (Rankin 2002; Sanyal 2008; Woolcock 1998).
Social capital is important because of its status within communities and, unlike human and physical
capital, social capital lies as a latent (embedded) resource waiting to be mobilised and utilised,
growing and developing with use (Flora 1998; Morris et al. 2006; Narayan 2002). The concept of
social capital has been subjected to close scrutiny by sociologists and economists over recent
decades. Social capital has been demonstrated in the main to be a valuable community asset which
in most situations is not able to be taken from the community. Indeed, social capital has such strong
community attributes that it tends to appreciate in value over time because of the deepening of
trust, strength of bonding, and growth of reciprocal arrangements (Dasgupta 2005; Joshi 2006;
Ostrom 1999).
More recent scholarship has reflected upon the popularity of social capital theory by examining the
concepts of trust, bonding, linkage and integration under an umbrella of social inclusion (Woolcock
1998). Each of these concepts in turn are defined as group loyalty or honesty, strength of
association, extra-community networks, and intra-community ties which provide the basis for
advances (development) in well-being within a community (Flora 1998). The concept of social capital
is central to a social inclusion agenda as it is understood as a way of building empowerment, wellbeing, and community development toward an improved civil society (Skinner et al. 2008). However,
it is insightful to note that “social capital relies on social inclusion: it cannot develop if people are
unwilling (or unable) to participate” (Shortall 2008:541). The notions of social inclusion, trust,
bonding and reciprocity are particularly important due to the nature of self help group formation
and operation in an Indian village. Social capital, conceptualised as trust, bonding and reciprocity has
become the bankable collateral that has enabled increased access to financial services.
The creation and preservation of trust within groups is crucial for the growth of social capital. Trust,
according to Khan et al. (2007), creates social cohesion and gives meaning to and sustains a network
of people. Dasgupta (2005:9) states that “trust is the key to co-operation” with Fukuyama (1995:16)
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claiming that “Trust acts like a lubricant that makes any group or organisation run more effectively”.
Trust increases performance by enhancing commitment and fosters a closer bonding between
individuals in the group or association. Social interactions that develop as a result of growing trust
and hence growing social capital manifest as a relational dimension in personal relationships such as
respect and trustworthiness (Dasgupta 2005; Morris et al. 2006; Woolcock 1998). Within the context
of this paper, the growth of trust between members of a self help group is helpful in creating
potential partnerships and a willingness to work together in activities for the common good of
village members.
4. History of self help groups in India
Since the early 1950s the Government of India has provided a series of Five Year Plans for its budget
and growth initiatives. The advancement of women’s needs and interests was first incorporated into
national policy in the fifth Five Year Plan for 1974-78 (TNCDW 2000). Subsequent five year plans and
government enquiries into the effectiveness of women’s programs have endorsed the objective to
achieve empowerment of women through self help groups. Thus this period marked the beginning
of a process of empowering women and building capacity of delivery organisations (PC 2007, 2009;
RBI 2005). The 10th Plan (1999 – 2004) committed the GOI “to encourage (the) SHG mode to act as
the agent of social change, development, and empowerment of women” (PC 2002:239).
Self help groups are formed when women come together in groups of 10 to 20 people, and pledge
their loyalty and support to each other through various means (Dasgupta 2005; Joshi 2006; Khan et
al. 2007). Self help groups are small homogenous groups of mainly women who meet regularly
(often weekly) and who collect equal contributions weekly from each member (Rs 10-30 on average
– US$0.20 – US$0.55). Through the weekly meeting regime, the election of office bearers, joint
community work activities, and sharing of concerns and issues, group members develop team spirit,
bond together and learn to trust each other over time.
The securing of access to loan monies from either the sponsoring NGO or a local commercial bank
(through introduction by the NGO) creates a common purpose (obligation) for which the women
then work either in a group small business or in separate business initiatives requiring repayment of
a joint loan. The interaction of banks with the poor through the SHG- bank linkage program began in
1999 by the RBI (Bansal 2003). Training is provided in simple account keeping and pooled savings
and a formal bank account is opened in the group’s name. Group meetings decide on the use of
pooled savings and access loans from the bank. This often saves individual members from serious
debt traps and begins their empowerment through decision-making, account and savings
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management, and community involvement (Bansal 2003; Fowler 1997). Garikipati (2008) suggests
that by March 2007, 2.5 million SHGs covering 40 million households were in operation throughout
India. This was growing at 90% per year with repayment rates of more than 95%. More recent data
from Swain and Wallentin (2009) claims that microfinance programs had reached 121.5 million
people, through 41,082 bank branches and 4,323 NGOs.
Self help groups are formed primarily to foster savings among the poor and provide access to credit
for members. SHGs largely depend on non-government organisations (NGOs), banks and MFIs for
loans. The funds saved by SHGs provide collateral and hence access to loans from the formal finance
sector (Satish 2001). These loans are used for individual needs such as health, education, water
supply, sanitation blocks, house construction or small business creation (Satish 2001). SHGs have
been promoted by NGOs, governments, and banking institutions in order to both mobilise the self
help groups savings component and expand their lending potential. Self help groups have been
successful in alleviating poverty by allowing poor people to protect, diversify and increase their
sources of income, an essential path out of poverty (UNFPA 2002). Loans, savings and insurance
schemes help to smooth out income fluctuations and maintain consumption levels during lean
seasonal periods (Littlefield et al. 2003). An important consideration for SHG members is the
formation process which is discussed in the next section.
4.1
Formation and operation of Indian SHGs – The practical process
A self help group in India is formed when 10-20 women come together for a common purpose,
including the saving of money and seeking loans to undertake development interventions primarily
focussed on poverty alleviation. The formation of SHGs in most cases is facilitated by a development
agency (Garikipati 2008; Kannabiran 2005; Khan 2009; Tesoriero 2005). When the group has come
together, it is common for a facilitator to provide training in the ways that the group could operate.
For instance, it is common for the following list of activities to be facilitated by the NGO, MFI or
government department representative to ensure a growing and vibrant self help group. These steps
may include all or some of the activities listed in Table 1.
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Table 1.
Visit by social worker or facilitator to the village
Interested people are invited to come to meeting
Group formed from interested people - if they satisfy the criteria of the NGO/MFI
Rules are discussed and agreed by the members
Books of account, meeting minutes, attendance, loan, and savings records are
established
Elections are held for President/Treasurer/Secretary (these people may require
training)
Plans are made by members to save a set amount each week or fortnight
Meetings times are set and agreed
Plans for small income generating projects (IGPs) are discussed and agreed
Training in small business operation and IGPs may be given
Loan plans and obligations are discussed and decided
Plans for representation to Federation level set by the group
Community engagement activities might be discussed and agreed.
(Table formulated from observations of author)
Prior to seeking a loan from the local commercial bank, it is normal practise for the self help group
members to take small loans from their own accumulated fund at an agreed interest rate. Each
member continues to contribute the agreed weekly or fortnightly amount, often Rs 10 per week, to
this fund which is deposited for safe-keeping at a local commercial bank branch who pay interest on
that deposit. This process serves to be instructive for SHG members, most of who have never been
inside a bank building let alone held part-ownership of an account there. Existing NGO and MFI
organisational structures and networks are used to link SHGs with the available rural financial
institutions. This has been referred to as the SHG-Bank Linkage program and has been regarded as a
successful innovation for the rural poor (Bansal 2003; Garikipati 2008; Puhazhendi and Satyassi
2000; World Bank 2003).
It is worth noting that a significant number of bank managers have discretionary funds available and
in return for opening an self help group bank account many donate, through negotiation, a sewing
machine or other useful item to the group members for use by the group. In this way, the bank
cements its relationship with both the self help group and the NGO in the knowledge that the
facilitator from the NGO or MFI may introduce other new account holders to the bank.
Having established their six months saving and participation record, with the assistance of the
promoting agency, it is routine practise for self help groups who have at least 50 percent of
members from scheduled caste or scheduled tribes to obtain a interest free grant of Rs.10,000
through the government programs established to encourage schedule caste and schedule tribe
9
participation and reduce exclusion and poverty. Funding is derived from government sanctioned
programs (Garikipati 2008; Ghate 2007). The role of the promoting NGO or MFI is not only to
facilitate the formation of the SHG, but to ensure its long term viability (Chari-Wagh 2009;
Copestake 2007; Garikipati 2008; Khan 2009).
In order to achieve these objectives, training, which improves the intellectual or human capital, is
provided by most NGOs and MFIs for self help group members. Such training is normal in the areas
of small business operation, profit and loss, buying and selling, bargaining, saving, and other subjects
like sourcing products, group purchasing, marketing, and loan repayment with interest (Stavrakakis
et al. 2008; Swain and Varghese 2009; Swain and Wallentin 2009). A typical SHG formation and
operation process, derived from author observation, is depicted in figure 1 below.
Figure 1 A Typical SHG Facilitation Process
MFI/NGO
facilitates SHG
formation
SHG Members
establish 6 month
savings routine at
weekly meetings
MFI/NGO introduces
SHG to Bank after
savings routine
established and bank
account opened in
name of SHG
SHG seeks loan
from Bank using
savings as
collateral
Regular savings by
SHG members
continue
SHG members use
bank loan - make
loans to members
SHG members
continue to make
regular savings and
repayment of loans
using SHG Bank
account
Bank loan is
repaid by
combined
savings and
earnings of SHG
members
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The relevance of this operational framework lies in the recognition that self help group initiatives are
crucial for promoting the capabilities of the poor. Self help group members are able to create and
seize new opportunities, and to collectively (or individually) invest their financial, human and social
capital. They also allow members to participate in grassroots and local governance. Socially, self
help groups nurture social capital and enhance the bargaining powers and self esteem of members
(Ibrahim 2006). These capabilities provide members with the freedom to choose better health,
political participation, literacy, small business involvement, closer community ties and enhanced self
respect (Schischka et al. 2008; Sen 1993, 1999, 2000).
5.
Discussion
5.1
Impact of social capital
The number of microfinance programs has proliferated in the last two decades for various reasons in
India. These include the restructuring of nationalised banking systems and the creation of new
institutions with a focus on delivering credit especially to the rural poor (Beard 2007; Dalgic 2007;
Khan et al. 2007). Rural women, in India in particular, have become the target group for many NGOs
and credit agencies, rather than males who typically head households and who access credit through
other avenues. In this way, poor but closely knit communities of women have been able to
collectively access financial and intellectual capital as a means of progressing out of poverty.
However, it is within the self help group model and associated processes where women pledge their
loyalty to other group members in lieu of providing material assets that commercial banks normally
require as collateral. Social capital, conceptualised as trust, bonding and reciprocity has therefore
become the bankable collateral that has enabled increased access to financial services. Social capital
has also generated empowerment through bridging and networking opportunities in the community
using systems or rules and penalties which in most cases are devised by the women’s groups
themselves to counter non-compliance (Lahiri-Dutt et al. 2006; Mayoux 1995; Morduch 2000; Rankin
2002; World Bank 2001).
There is significant agreement that social capital plays a useful role in enabling collective action
initiatives (like SHGs) to operate (Ibrahim 2006; Shortall 2008). Social capital nurtures trust and
reciprocity, helps group members to reach collective decisions, permits information sharing, and
provides social protection. It also enhances the bargaining power of individual members of the
group, in addition to enhancing their new individual and collective rights (Ibrahim 2006; Putman
2000). Sen’s capability approach when applied to human development gives recognition to both the
valuable capabilities that people already possess and to those new capabilities that they acquire
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through membership of groups or associations. Notions of social capital both complement current
capabilities and nurture potential new capabilities within the group (Schischka et al. 2008). The
impact of microfinance loans on the poverty of self help group members is conditional upon the
extent of individuals’ capabilities, and the input or existence of social capital attributes within the
group (Dalgic 2007; Sanyal 2009). The rural poor have lower levels of capabilities which results from
caste, lower education, poorer health, less exposure to social opportunities, and less security.
Therefore it may be less attractive to invite them to become members of the self help group in their
village (Dreze and Sen 2002; Ghosh 1998; Spicker 2007) thus denying them opportunity to
participate.
Bonding between women is important within the context of self help groups because most self help
groups in rural India are comprised solely of women. There are a small number of men’s
cooperatives or groups in operation, although since men generally have access to more funding and
are more likely to be landholders or business operators, they often have access to commercial
sources of credit (Fisher and Sriram 2002). Women, however, have formed the vast majority of self
help groups in India. These women contribute to the collective good of the group (Burt 2000) and to
the community through the spirit of bonding, mutual support and community interest that develops
within the group (Anderson et al. 2002). Whilst the self help group was created initially to respond
to the economic needs of individuals, the training provided by NGOs builds human (intellectual)
capital. Additionally, the trust and bonding that grows through the close and often confidential
exchanges and meetings between members cultivates and nurtures social capital. Women therefore
experience empowerment that enhances their self esteem and sense of dignity.
Trust and bonding generate an expectation of both a giving and receiving environment within groups
in any community (Anderson et al. 2002). Simmel (1908) uses the concept of “reciprocity
transactions” to describe the obligations that emerge through personalised networks of exchange.
These might include, for instance, favours between neighbours (Simmel 1908; Woolcock 1998),
where some form of mutual self-interest is maintained, in addition to a commitment to reciprocate
and return the favour (Rankin 2002). By making regular weekly contributions of equal amounts to a
joint account, members of a self help group contribute to repaying the loan commitments of the
group and thus gain access to additional loan monies for their own use much earlier than they would
if they acted independently (Anderson et al. 2001; Joshi 2006; Lahiri-Dutt et al. 2006; Woolcock
2001).
Numerous Indian studies report that positive benefits are perceived to have been gained by
members of SHGs from their participation with others both for themselves, their group, and for their
12
community (Garikipat 2008; Ibrahim 2006; PC 2007, 2009; Khan 2009; RBI 2005; Remenyi 2000;
Srinivasan 2009; Tesoriero 2005). In addition, it is noted that negative impacts result from the
exercise of social capital in groups. These impacts include potential exclusion of outsiders, excess
claims on group members and restrictions on freedoms of individuals within the group. However,
personal benefits include a strengthened empowerment to participate in elections and other public
arenas, growing assertiveness in household life, training in small business, enhanced literacy and
numeracy, personal savings habits, reduced debt and increased confidence among other benefits
(Holvoet 2005; Hulme and Mosley 1996; Khan 2009; Khandker 1998; Morduch and Haley 2002;
Mosley and Rock 2004; Tesoriero 2005; Zaman 2004).
The benefits of group membership include increased cooperation between the women, an ability to
perform an advocacy role, reduced discrimination in the Indian village, and being able to go out from
the home and village including to the bank. Their enhanced confidence and recognised legitimacy in
the community also provides members with a higher level of respect and acceptance enabling them
to address the Panchayat Council, District Collector and influence children to go to school (CGAP
2010; Tesoriero 2005). Groups provide support for individual members who suffer abuse, ill-health,
drunkenness by husband, and other marital discomforts (Goetz and Sen Gupta 1996; Sanyal 2009;
Swain and Wallentin 2009). Indeed throughout India special self help groups have been established
for members who are HIV+ in order that they might provide a higher level of care and support, and
be able to share their deteriorating ill-health in sympathy and heightened understanding of the
challenges that each member faces. In addition to this peer support, the joint group participation,
especially in income generating projects, provides opportunity for women to learn new skills, whilst
developing cooperation, trust, respect, and deriving an increased income (Janssens 2010; Morduch
1999; Swain and Wallentin 2009).
Apart from these individual benefits, community benefits flow from the formation of self help
groups through the joint empowerment of women as a collective. The participation of self help
group members in both designing and implementing community social action programs is one of the
most significant outcomes from the formation of the group (Chari-Wagh 2009; Moodie 2008; Sanyal
2009; Sinha 2009; Tesoriero 2005). The reduced trading hours of hotels and resistance to police
extortion in Orissa, annulling underage marriages (Sanyal 2009), and acquiring public goods such as
electricity connections and water supply (Janssens 2010, Sanyal 2009) are examples of some
successful collective actions. Often community needs and community action are topics that occupy
much of the self help group meeting time and subsequent energy (Moodie 2008; Sanyal 2009; Sinha
2009). These observations are reinforced by the findings in a study in Tamil Nadu State in southern
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India by Tesoriero (2005). He found that 56 percent of self help group members were involved in
community social action programmes. He also found that the enhanced empowerment felt by
members enabled them to make significant transformations within their community, ultimately with
the support of men and elected representatives. Self help group members normally give close
attention to issues that might have detrimental impact on the broader community indicating that
the strength of their bonding, trust in each other, peer association and the empowered voice that
they feel will provide them with a platform to challenge the status quo (Ibrahim 2006; Janssens
2010; Sanyal 2009).
Members are also more aware of the problems or issues being faced in their community since they
bring a diverse range of experiences, exposures, and appreciation of these needs to the discussion
held in their weekly meetings. Collective action and re-action progresses the interests of women and
the households they represent in respect of these concerns and issues, as citizens and as individual
contributors. This results in a more inclusive environment throughout the community (Janssens
2010).
Social capital is enhanced through people employing both functionings and capabilities in Self help
groups within a framework of trust and inclusion, resulting in closer bonding and reciprocal
arrangements that bring benefits to all members (Ibrahim 2006). As an example, women who have
developed trust in each other and bonded together, having pledged their support for each other,
have many conversations on a variety of topics relevant to the well-being of the community in which
they live and work. These topics commonly include HIV/Aids, tuberculosis and malaria prevention,
child immunisation, water needs, women’s health, child and wife abuse, drunkenness, child labour,
selling of children, female infanticide, housing needs, and other community development issues.
Often these issues are of vital interest to the total community not only the self help group. Some of
these issues are also very sensitive culturally. Many of the issues would not normally be discussed in
groups but for the existence of trust and bonding created as part of the self help group process.
Women of like mind and shared interest, who have bonded together, provide an avenue for these
issues to be discussed. Solutions for the community are considered and acted upon in a collective
manner. As a direct result of this process their social capital is enhanced and built upon for future
investment and reinvestment throughout the community (Anderson et al. 2001; Ito 2003; Woolcock
2001).
Whilst poor communities have limited financial, physical and human capital, engagement in
collective action by the poor provides opportunity for them to enhance their capabilities. For
14
example, the self help group is valuable in promoting income generation, resource sharing, and
creating trust, restoring dignity and self-esteem among the group, whilst also encouraging members
to participate in local decision-making (Sen 2004; Thorpe et al. 2005). Collective action also
promotes formulation of values and beliefs, which are the outcome of the social context in which
the individuals live (Ibrahim 2006). The ability to engage in a collective action, such as a SHG, is itself
a capability (Stewart 2005; Sen 2000).
5.2
Conclusions and implications
I have argued in this paper through a review of social capital and its application and role in the
formation and growth of Indian self help groups, that the contribution of women to their
communities is enlarged through their group participation and enhanced empowerment. One of the
significant implications that flow from this is that women now enjoy a higher degree of respect and
credibility in their own communities. This has resulted from the growth of trust and bonding through
self help group facilitation and has seen an increased confidence in participation by women in the
affairs of the community. For example this is reflected in the new interest and involvement of
women in the previously male domains of civic budgets and panchayat elections. An enhanced level
of social capital in the community is demonstrated by women who take control of their lives,
becoming conscious of their own situation and position, setting their own agendas, gaining skills,
building self confidence, solving problems and developing self reliance. The regular group meetings
held in the villages focus on topics relevant to social issues concerning them and the community.
Another positive result of the growth of trust and bonding within the self help group can be seen in
the achievement of group members and their families who have escaped from the clutches of
moneylenders who charge exorbitant rate of interest. Women have realized the seriousness of high
cost of credit. The concept of bank credit is well accepted by self help group members and this
acceptance has had a positive influence on male members of many villages. Additionally, because
women now have access to loans many help their husbands to start new businesses or improve
already existing businesses. The savings influence of the group has also spread to adolescents who
have commenced savings groups. These optimistic results provide opportunity to reflect on possible
policy enhancements and modifications with a possible focus on younger participants.
The benefits and examples of social capital working through the collective action of women in self
help groups given in this paper provide opportunity for reflection on the potential implications for
current and future policy and practice. Questions arise regarding the possibility that women and
men may not share equally in the growth and use of social capital in a community. In addition to this
15
question, and in the same context, is the question “Do women and men undertake collective action
for the same purpose?” or are there other motives that motivate the participation? (Sanyal 2009). It
seems from the self help group example, that social capital may be gender-specific. Men’s groups
formed in rural areas of India, whilst satisfying the material (economic) test of a successful collective,
do not as yet provide sufficient evidence of community involvement and engagement by comparison
with women’s groups (Sanyal 2009). Janssen’s (2010) findings in her study of 2000 household’s
participation show that assistance and cooperation is most common among the lower castes and
Muslim population. This finding emphasises the importance of bonding social capital for the most
disadvantaged groups (Narayan 2002).
Another implication for policy makers, community leaders and program facilitators centres on the
willingness to participate in a collective response. People seem willing to participate. They merely
need an invitation to become involved or engaged (Janssens 2010). Ibrahim (2006) established that
self help is a means whereby poor communities are able to widen their collective freedoms and be
able to utilise their collective agency to achieve sustainable improvements in their communal and
individual well-being (Ibrahim 2006). Policy makers who focus on inclusive and participatory
programs are likely to garner public support and enable more efficient implementation of programs.
Lending to women benefits their household, assists them to diversify their income sources and also
improves their ability to cope with sudden shocks such as bereavement in the family (Garikipati
2008). It is at these times that expectations of family and friends for hospitality can cause undue
financial pressure on the family and a severe overspend can result with additional funds being
borrowed at short notice from the informal finance sector. Preparing potential self help group
members for handling household shocks should be a consideration factored into training regimes of
facilitators and lenders. This will also provide lenders with a higher level of surety regarding loan
repayment levels in the knowledge that women are prepared for the inevitable family economic
shock. Additional studies are needed in order to shed more light on the questions raised above so
that development and community initiatives might generate more positive responses than negative
limitations.
Author details
Gordon Knowles is currently the Associate Director for Campus Services at the Queensland
University of Technology (QUT), Brisbane, Australia. He previously held the position of Overseas
Development Consultant for the Salvation Army in Australia for 16 years. He coordinated poverty
alleviation programs including microfinance start-ups, and community development consultations in
over 30 developing countries. He also undertook funding negotiations with NGOs and government
agencies for those programs. He is also currently a PhD candidate at QUT. Because he has an interest
16
in community engagement and local solutions to poverty reduction, his current research interest lies
in the potential exclusion of the poorest of the poor women from participation in microfinance
programs in Tamil Nadu, India. His contact details are gordon.knowles@qut.edu.au.
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