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Day 28 – Q 1.What role can self help groups (SHGs) play in rural development? Examine.

1. What role can self help groups (SHGs) play in rural development? Examine. 

ग्रामीण विकास में स्वयं सहायता समूह (SHG) क्या भूमिका निभा सकते हैं? जांच करें।


A self-help group (SHG) is a voluntary association of men or women in similar economic conditions. The members of the group make small savings until they have enough capital in the group to start their own lending process. 


Role of SHG in rural development:

  • Credit availability– Bank credits are not easily accessible to individual poor, but by forming a SHG, there are make better prospects for bank credits. (often without collateral). Under the SHG-Bank linkage programme, many SHGs have become institutions of micro-credit.
  • Entrepreneurship– Opportunities for self-employment through setting of micro-enterprise.
  • Skill development– Skill development program undertaken by SHGs improves employability of members involved.
  • Rural poverty– SHGs have become a vehicle to lift people from below poverty line, generate awareness about welfare and developmental schemes of government, monitor its implementation etc. 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%.
  • Improved living standards– As a result of increased jobs there is rise in income which enhances access to food, health services and overall rise in living standards.
  • Women empowerment– By providing employment opportunities, financial and social security SHGs help improve the status of women and creating awareness regarding their rights and responsibilities, as pointed by the 2nd ARC report.
  • Literacy rates– with more women participation and their enhanced status address issues such as nutrition poverty and low literacy rate.
  • Social capital– The SHGs provide a forum in which people can meet on a regular basis and discus various issues or concerns that the members face in their day-to-day life which acts as the basic source of social capital generation.

Successful examples:

  • Kudumbashree in Kerala has helped in providing skill training and poverty eradication of women.
  • They act as pressure groups for policy framing as seen in legislation- making for prohibition in Bihar which was the result of pressure from several women SHGs in Bihar.
  • Tamil Nadu used SHGs to d inculcate sanitation habits among the community people under Swachh Bharat Abhiyan. 
  • Haryana government used SHGs for increasing sex ratio and making beti bachao beti
  • SHGs like SEWA, Lizzat papad promotes entreprenurial culture among women.
  • Andhra Pradesh Government programme of poverty alleviation by successful integration of women by SHG formation.


SHGs have been instrumental in bringing about structural changes in the rural society and its economy. Given the multi-faceted role played by SHG in rural development, Government needs to further support SHG by handholding nascent SHGs and bringing them at par with the rest of the sections.

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