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Day 21 – Q.2. How far can the SHG model help in eradicating poverty? Examine in the light Indian’s socio-economic context.

2. How far can the SHG model help in eradicating poverty? Examine in the light Indian’s socio-economic context. 

गरीबी उन्मूलन में एसएचजी मॉडल कितनी दूर तक मदद कर सकता है?  भारतीय सामाजिक-आर्थिक संदर्भ में जांच करें।


Self Help Groups (SHGs) are small groups of poor people who face similar problems. They help each other, to solve their problems. SHGs promote small savings among their members. The savings are kept with the bank. This is the common fund in the name of the SHG. The SHG gives small loans to its members from its common fund.

NABARD estimates that there are 2.2 million SHGs in India, representing 33 million members. Examples: Rupjyoti SHG, Lijjat papad.


Poverty is a condition where people’s basic needs for food, clothing, and shelter are not being met. Reducing poverty is of utmost importance and towards this direction SHGs are employed as a developmental tool to alleviate poverty.

Prevailing Socio-economic context:

  • Women: lower access to productive resources; lower employment opportunities; poor health indicators.
  • Poor social indicators like problem of hunger and malnutrition, IMR &MMR.
  • Non-inclusion of people into financial system.
  • Unemployment issue and the need to create jobs.
  • Need for growth that is inclusive like in Rural areas, including women in economy.

Under such circumstances SHGs are said to reduce poverty in the following way

  • With Financial inclusion credit facility to poor is increased. It also saves them from moneylenders.
  • Opportunities for self-employment through setting of micro-enterprise.
  • Skill development program undertaken by SHGs improves employability of members involved.
  • As a result of increased jobs there is rise in income which enhances access to food, health services and overall rise in living standards.
  • And with more women participation and their enhanced status address issues such as nutrition poverty and low literacy rate.

Positive correlation between SHGs and poverty can be inferred from the fact that southern states with high number of SHGs (71%) have average poverty rate at 9% as against nation’s average of 21%.

SHGs today face issues like

  • Ignorance of Members.
  • Inadequate Training Facilities in the specific areas of product selection, quality of products, production techniques, managerial ability, packing, other technical knowledge ate are not adequate to compete with that of strong units.
  • Problems of Marketing.
  • Lack of Stability and Unity Especially among women SHGs.
  • Exploitation by Strong Members.
  • Weak Financial Management, poor record keeping.


Given their significance steps should be taken to address above concerns with effective implementation of programs like Deen Dayal Antyodaya Yojana. As poverty results from various socio-economic and cultural factors there should be simultaneous focus to ensure access to health, education and opportunities to achieve SDG1.

Best answer: NKY

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