One of the better-known NGOs in India and an early champion and innovator of the self-help group, or SHG, model in India, Pradan (acronym for Professional Assistance for Development Action) aims to reduce poverty by organising rural communities into groups to promote economic activities and mobilising finance for the same. Most of its work centres round rural activities built on forests, natural resources, livestock and micro enterprise. Their mission being to impact livelihoods to enable rural communities, the strategy is to organise through SHGs around a specific and suitable livelihood activity and gradually build on it bottom-up to evolve into a long-term and self-sustaining venture that can be a cooperative or similar institution with market linkages. Pradan seeks to play a transitory role as a facilitator of change, with the participating women being the primary architects.
Co-founded by Deep Joshi and Vijay Mahajan in 1983, in Pradan’s model social mobilisation is the basic building block – and the underlying philosophy is that in rural development people with the right capabilities are more important than material resources. Pradan believes that real and long-lasting change in the conditions of the rural poor can only come through them taking ownership and working together to create sustainable livelihoods. Pradan aims to be the enabler here by providing technical and organisational skills and linkages to formal institutions including government agencies and financial institutions. It seeks to “stop at the market”, that is, hand over full ownership over to autonomous entities owned by the programme participants once they become commercially sustainable. The modus operandi primarily beings SHGs, Pradan has worked with 28,000 SHGs across 7 states in India’s heartland stretching from Rajasthan to Orissa, reaching out to nearly 3 lakh families and mobilising savings of over Rs 1 billion.
Self-help groups – a brief primer
A quick online search will tell you that in India specifically, a self-help group is a village-based financial intermediary committee usually composed of 10–20 local women and, in some cases, men. Initially members make small regular, compulsory savings contributions; gradually, funds can be lent back to the members or to others in the village for any purpose. Typically, SHGs are formed with the assistance of self-help promotion institutions that may include NGOs, government agencies, banks, cooperatives and microfinance institutions (MFI). These institutions also provide training, monitoring and other services such as establishing bookkeeping skills and basic math. In India, many of these groups eventually borrow from banks. The SHG–Bank Linkage Programme launched by NABARD in 1992 is the biggest testament to this unique characteristic of Indian SHGs.
As per NABARD estimates, there are over 7 million SHGs in India with around 4.4 million having access to bank funding. As of 31 March 2014, non-performing assets (NPAs) against loans to SHGs was at 6.83%, marginally lower than the 7.085% in 2013.
Pradan and SHGs
Spearheading the SHG movement in India, Pradan’s synonymity with it also stems from the fact that aside from setting up SHGs in all its project areas, it has also identified problems afflicting the overall SHG model and pioneered solutions such as bookkeeping through the computer munshi system. Other times it has been known to adapt existing technologies, such as its efforts to scale down technologies developed by the government for mushroom and raw silk production and make these accessible to small-scale farmers. Most of its work centres on the primary sector covering agriculture, horticulture, animal husbandry and allied activities.
In an interaction with CauseBecause, Pradan says that its promoted SHGs are mostly self-sustainable within six to nine months of formation. It does not get involved in day-to-day operations of the SHGs but works with them on larger issues that are identified by the community. The SHGs are supported by their supra institutions like the clusters and the federations for functions related to savings, credit and audit as well as other fiduciary functions. While Pradan’s SHGs do not engage in microfinance activities—unlike many of its peers, it works to mobilise funds from banks for the more mature groups. Its two-pronged approach is to persuade banks and financing companies to lend to its participants on favourable terms, and then, from the bottom up, to ensure that the SHGs become reliable partners for these banks through financial rigour and independent functioning. However, despite its efforts spanning the last couple of decades, bank linkages is still a challenge as only 15 per cent of its SHGs obtained active loans by the end of the 2013–14 FY.
While there has been sustained focus from the government on SHGs in the form of several ambitious schemes and regulatory mandates, Pradan’s vision and organisational prowess mean that its outreach is often comparable to that of a regional rural bank. Since its objective is to work with disadvantaged groups, more often than not it works in remote areas in states like Jharkhand, and frequently targets groups belonging to SC/ST and people with little or no landholdings. According to Pradan, 73 per cent of the families it works with belong to these groups, with agriculture being the primary source of livelihood.
Making it work
The benefits of an SHG are well-documented – namely active community participation, savings habits, capacity building, ownership, cost benefits and improvement of socio-economic status. The emphasis on group ownership, joint decision making, efficient controls and protocols have led to the belief that SHGs empower women and enable them to be active participants in local governance and community issues. The underlying assumption is that with economic freedom comes an increased sense of self-worth and the freedom to generate choices, all of which help them take direct control of their lives.
Many SHGs in India are externally funded by banks or by organisations (such as an NGO like Pradan), who facilitate the borrowing process. Government-imposed “priority sector” quota rules have ensured that commercial banks, most of which are state-owned, have to lend money to these SHGs. This is in stark contrast to other countries where most SHG programmes are savings-based.
The clamour to form SHGs has led to various schemes to encourage participation. Although incentives such as subsidised gas or electricity can be used to promote SHGs, it has been observed that for long-term success it is more important to stress on the right practices and skills and intra-group solidarity.
|It should be noted that not all institutions that promote SHGs are necessarily focused on financial success. For some, the social goals related to empowerment and knowledge and skills building are more important. For NGOs, a lot of this is ultimately tied to donors and their core philosophy.|
At the same time, the pressure is on for this model to be demonstrated as financially sustainable, especially with the huge amount of funds that have gone into it in the past many years. For SHGs to be profitable, the programmes need to be managed well, including high income from the loan portfolios and low operating expense. However, it should be noted that not all institutions that promote SHGs are necessarily focused on financial success. For some, the social goals related to empowerment and knowledge and skills building are more important. For NGOs, a lot of this is ultimately tied to donors and their core philosophy.
As a 2007 CGAP report stated, even though many SHGs are unsustainable, it’s not all bad news possibly because even one successful programme is more important than several bad ones. The same report has stipulated two conditions for an SHG’s long-term sustainability: first, the programme must provide groups with an ongoing set of essential support services; and second, the programme must collect enough revenue to cover the cost of providing these continuing services. NGOs like Pradan are ideally suited to deliver the former requirement.
Pradan’s structure and strategy
Structurally, Pradan has evolved from a project mde to a decentralized and modular one, comprising of development support teams (DSTs) of 5 to 10 professionals working in small geographic areas. These teams are supported by community service providers (CSPs) who are recruited, paid for and accountable to community institutions, and community resource persons who are hired and paid for by PRADAN for the initial phases in new areas. CSPs are trained by Pradan and they help in the actual implementation of projects.
The teams follow an “area saturation” approach, which emphasises reaching of a substantial share of poor people within their designated area, rather than being limited to covering families that can take up specific sectoral activities. Project activities begin with formation of SHGs and focuses on developing location-specific solutions while ensuring that organisational goals and strategies are integrated. An internal learning system serves as an impact assessment and planning system for community programmes.
Pradan’s programmes can broadly be classified into
- SHG-led community building
- Forging sustainable livelihoods by harnessing natural resources
- Advancing financial inclusion
- Women empowerment
- Collaboration with other organisations – currently they have 70 partner NGOs across various operational areas
Pradan has over 400 personnel – 20 per cent of them are women – to facilitate these programmes and drive change. Crucially, Pradan believes that bypassing the state or established systems such as the market is not a sustainable strategy and, hence, often collaborates with these institutions. It is also of the firm belief that viable commercial links are essential to long-term sustainability.
Pradan believes that bypassing the state or established systems such as the market is not a sustainable strategy and, hence, often collaborates with these institutions. It is also of the firm belief that viable commercial links are essential to long-term sustainability.
One can surmise that any radical change or disruption promoted by them is limited to the lives of the people that they work with and within the boundaries of the accepted societal norms. Pragmatism over revolution, as some might say. The obvious question to be asked then is: since patriarchal institutions call the shots in almost every sphere in rural areas, does such an approach have the ability to truly transform a woman’s life?
| Parallel views on SHGs
With SHGs being quickly hailed as the next big thing in the war on poverty, it wasn’t surprising that critiques followed soon after. Several concerns have been raised on the Indian SHG model. Some of the common ones revolve around SHG financial services not being fully matched to members’ needs, late repayment by group members which may suggest that SHG loan terms do not match members’ needs, and the possibility of members not using SHGs as savings vehicles. Indian SHGs mobilise modest amounts of members’ savings mainly through compulsory deposits, and often not because they want to save but only because the deposits are required to get a loan.
In their 2006 paper Empowering Women – A Critique of the Blueprint for Self-help Groups in India, Tanya Jakimow and Patrick Kilby have critiqued the Indian SHG programmes for not realising the potential to empower women – which they claim is due to top-down approaches in implementation. Lack of innovation and flexibility in designing suitable approaches is said to be a major issue, primarily due to the fact that donors insist on tried-and-tested methods. This, in turn, often leads to NGOs and similar organisations getting restricted to standard results in the race for increased funding. In other words, outcomes that have no positive financial impact are routinely discarded even if their long-term benefit to the community may be significant – for example, programmes that target women empowerment without linking it exclusively to their financial contribution. This can be deduced from the fact that SHG programmes typically tend to limit women to certain predefined activities as stipulated by their community so as to avoid antagonising the men, thereby side-stepping the possibility to act as true change agents. Participation doesn’t mean real empowerment.
A 2012 study by ENABLE on the performance of SHGs lends some credence to these criticisms. Most of the SHGs covered in that report emphasised the financial aspects at the cost of social and livelihood benefits. High dependence on external credit and dissatisfaction with the loan size and terms were also identified as major issues. On the brighter side, the study found a positive impact on empowering women, many of whom said that they had equal access to the family income and an increased say in household decision-making.
However, the same study has found that among the poor, the relatively better-off women have a higher participation rate. Special efforts are required to mobilise the poorest and not many external agencies are able or willing to provide that. At times, some SHG norms may even prevent their engagement. The groups are also homogeneous by social category, marital status and household economic activity.
The good news for NGOs like Pradan is that they tend to have lower dropout rates than government-sponsored groups, possibly due to the fact that the scale of their operations tends to be less dispersed and they bring enhanced focus with better management capabilities.
Partnerships and donors
Initially, PRADAN worked with other NGOs but soon it took up its own direct-action projects in central and eastern India to promote livelihoods by creating or strengthening microenterprises and SHGs. Aside from being a key participant of the SHG–Bank Linkage Programme, Pradan has also played a significant role in large-scale initiatives such as Integrated Rural Development Programme (IRDP), Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Swarnjayanti Gram Swarozgar Yojana (SGSY) and National Rural Livelihoods Mission (NRLM). In 2013, Pradan signed an MoU to work with the ministry of rural development for NRLM, which was to be implemented, amongst others, in the Naxal-affected districts of Chhattisgarh, Bihar, Jharkhand and Odisha. Last year, Pradan signed on to partner with the union drinking water and sanitation department and Gates Foundation for the implementation of a five-year power project of potable water and sanitation in Maoist-hit Gumla district in Jharkhand.
As mentioned earlier, Pradan frequently partners with other organisations, which is extremely useful in areas where it may not have a large presence or a competitive advantage. Collaborations are not limited to NGOs. Pradan has tied up with the private sector and technology and research institutions too. A few examples are South Orissa Development Initiative (SODI) for watershed development and agricultural activities in which Pradan has participated with about 10 NGOs (but is not the project holder), the MP government-sponsored Tejaswini project promoting women’s empowerment, and the Bundelkhand Initiative for land development of marginal communities sponsored by Sir Dorabji Tata Trust (SDTT).
Perhaps more interesting are the corporate tie-ups that Pradan has embarked upon. As CSR becomes a government-mandated reality for companies, partnering with reputed NGOs has turned into a matter of necessity as well as efficiency. This is in line with Pradan’s overall strategy towards market institutions. A few years back, Venkateshwara Hatcheries (VH) – or Venky’s, as it is popularly known – worked with a small farmers’ cooperative in Jharkhand to set up a hatchery that bought hatchable eggs from Venky’s and sold chicks to poor people, who were then helped by Pradan to take up small-scale poultry. Pradan also frequently collaborates with international organisations such as World Bank and Asian Development Bank.
With its roots in Ford Foundation, the philanthropic body who has been a consistent donor since the beginning, Pradan has had other large funding partners in international bodies such as Gates Foundation, IKEA Foundation, various Tata Trusts, ICCO (which has backed Pradan since the late ‘80s) and UN Women, Indian and foreign financial services companies like ICICI, IDBI and RBS, Axis Bank Foundation, state and central government bodies, and research institutions such as Ambedkar University and Australian Centre for International Agricultural Research.
With the Indian state having identified SHG as a poverty-reduction vehicle, the number of government-promoted SHGs has steadily increased over the past decade. One obvious advantage that the state has is scale and reach. However, there seems to be less support for these programmes from the new central government, which sees it as a legacy of the erstwhile government. The current women and child development minister Maneka Gandhi stated last year in December that the idea of SHGs was humiliating to women and was ‘the best way to end up in bad debt.’
Plans are on to revamp the Rashtriya Mahila Kosh (RMK), the signature credit scheme of the previous Congress-led UPA government. RMK will be restructured into a bank that will focus on giving loans to individual women after providing them training in various fields. The ministry has already tied up with the ministry of small industries, which has allotted Rs 3,000 crore for it. The new approach will focus on training women in IT, organic farming, plumbing, mobile repair and operating machines, among others, with the exception of animal husbandry. They will also be taught to make investments, market their skills and products, and manage enterprises. Gandhi has gone on record stating that most loans given to SHGs under the scheme were for cattle, leading to bad debts.
There were also plans to merge the Bharatiya Mahila Bank started by the UPA government last year with the RMK, but that did not materialise. This move has been condemned by several activists and it is anybody’s guess what the future may hold for many of the government-sponsored SHG schemes.
The way ahead
While the SHG model has undoubtedly brought enormous benefits to a lot of people in the poorest parts of India, it is no magic potion to the overall issue of poverty. It is an excellent enabler and at its best, can serve as the start of a better and dignified life for its participants—a bit like a module in a lengthy training course. Pradan has symbolised this better than most organisations working in this particular area. This can be easily verified by its steadfast commitment to its vision and objectives, the resources dedicated to its efforts and its not infrequent evolutions. For example, over the past few years, Pradan has also initiated pilot projects on drinking water and sanitation, education, and nutrition primarily aimed at improving the lives of the women that it works with.
Further innovations on the current model are needed, though, with a greater emphasis on member-driven changes – they are, after all, its biggest stakeholders. Avijit Choudhury from Pradan neatly summarises this: ‘To sustain change, it has to be owned and driven by the people from within, and that requires their active engagement right from identification and articulation of the need for change to its implementation. External conditions also need to be worked upon to support change, as any change in behaviour of people requires change in their perception of themselves as well as of the environment around them together. Thus, the big innovation would be around how poor women in SHGs can extend themselves beyond their groups and make “inclusion” of the marginalised “their agenda”.’
However, there is a lot more that Pradan and similar NGOs can do on the issue of truly empowering their women participants and challenging established patriarchal norms. Like any entrenched institution, it cannot be broken down by pacification, but rather needs to be constantly questioned, confronted and changed from within. The pursuit of empowerment cannot be delinked from the boundaries that are designed to contain them.
Sanjana is CauseBecause features writer and is based in Mumbai and Sydney (she manages). A professional day-dreamer and an inspired writer, her CV includes degrees from St Stephen’s College, Delhi, and Indian Institute of Management (IIM), Bangalore; and a four-year stint at American Express, Delhi.