In the light of several government initiatives and policies to create opportunities for Self Help Groups (SHGs), discuss the challenges that still persist.

The Self help groups refer to collective formed with the explicit purpose of enterprise through joint ownership and joint contribution.

Importance of self help groups:

  • Empower women. E.g. Amul, Lijjat papad, etc.
  • Promote microfinance (through gramin Banks).
  • Promote entrepreneurship as a single individual may lack initiative/ knowledge.
  • Aids in rural development (town of Anand in Gujarat).
  • Foster Communal harmony and solidarity through coordination.

Government initiatives:

  • Right to form associations is a fundamental right under article 19.
  • State shall seek to promote corporations under Directive Principles of State Policy (article 42 (B)).
  • Private sector lending for self help group by RBI.
  • Subvention and Collateral free credit provision under the MUDRA scheme.
  • Schemes for development like formalization of FPOs.

Existing challenges:

  • Finite risk of moral hazard.
  • Bringing together new self help groups during covid-19.
  • Lapses in scheme implementation, like bureaucratic red tapism, banks not passing on rate cut by RBI.
  • Challenges from big corporations entering rural market.
  • Ineffective skill development and services to upgrade vocational knowledge.
  • Patriarchal and conservative mindset precludes coming together of women/ people from different castes.

The Gramin Banks have shown the power of self help groups to transform the nation and we must overcome intermittent challenges to ensure sustained rural development.


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