Revitalizing The Indian Rural Economy Through Women’s Self-Help Groups

I. Introduction

The power of the Indian economy is currently associated with images of towering corporate skyscrapers in Mumbai or luxury housing developments emerging across the landscape of Delhi NCR. The truth, however, is that rural activities continue to drive India’s economic growth and therein lies the foundation of India’s current economic strength. According to the 2011 Census, nearly 70% of India’s economic activities lie within rural areas. These activities span diverse sectors and include agriculture, poultry, manufacturing, and handicrafts.

The Indian government has realized the importance of the rural economic activities and has developed initiatives to boost and support it. This paper discusses strategies for revitalizing the Indian rural economy through women’s self-help groups. The first section in this paper analyses the current state of the Indian economy and some of the innovations that have contributed to fostering it including women’s Self-help Groups (SHGs). The second section focuses on rural artisans organized into women’s self-help groups to produce sustainable products from banana fiber. I analyze the impact of this initiative on fostering the economic empowerment and livelihoods of rural artisan women, thereby boosting the growth of the Indian rural economy. Finally, I argue that the central government’s policies should promote rural economic activities undertaken by women’s SHGs with the goal of revitalizing and supporting the growth of the Indian economy.

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II. Innovations in the Indian Rural Economy

Images of malnutritional children and parched fields dominate Indian media, painting India’s rural villages as backward and stagnant. These challenges indeed exist in some parts of rural India, but the sector is nevertheless experiencing steady growth through rural economic activities. According to the Indian Ministry of Finance, India’s overall GDP in 2020 comprised of the rural economy by nearly half, indicating that there is significant potential for growth and innovation in this sector. This indicates the potential of the Indian rural economy, and the urgent need for nurturing it.

Currently, agriculture is the primary driver of this growth. But due to certain structural changes in the economy, there has been a decline in the agriculture sector’s share in the GVA from 18.5% in 2011-12 to 17.4% in 2014-15 at current prices (Indian Census 2011). This decline is inevitable in the rapidly changing economic context of India and potentially opens new market opportunities for other sectors. Yet, data from the 2011 Census indicates that 54.6% of the Indian population are currently still engaged in agriculture and allied activities.  

In this scenario, it is now possible for India’s non-farm rural economy, comprised in large part by artisans, to play a significant role. Diversification of their products could constitute a significant component of the rural economy’s share in the GVA. For this, the microfinance initiative referred to as Self-Help Groups (SHGs) which allows underprivileged citizens to access basic financial services can be a useful innovation.

According to NABARD (2018), SHGs comprise of small groups of individuals with a similar socio-economic background who form a collective to raise and manage financial resources. Inspired by the ‘Grameen Bank’ in Bangladesh, SHGs emerged in India after the success of Mohammad Younus’ microfinance initiative in 1976. Over the past few decades, SHGs have become an important innovation in India particularly for furthering the livelihoods of rural women, most of whom continue to face many socio-economic challenges in becoming part of the labor force (Mazumdar 1979). This paper analyzes the role that SHGs can play in providing livelihood opportunities for rural women artisans.

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III. Rural Indian Women and SHGs

In this paper, I analyze Indian women who are aged above 18 years and below 60 years and their economic participation within the rural sector to analyze how they can contribute to India’s economic growth by revitalizing its rural economy. Data indicates that women currently lag far behind in economic empowerment with a decline in female labor force participation from 34.1% in 1999-2000 to 27.2% in 2011-2012 (Sher 2014).

NABARD developed the strategy of promoting SHGs to allow the banking system to transcend the confines of its existing savings and credit delivery mechanism. The latter was not cost-effective for banks or accessible for underprivileged citizens. This meant that more women are participating in SHGs, which significantly raises their economic capabilities. This benefit becomes more pronounced with longer periods of participation of women with SHGs.

Unlike other measurements that only focus on the increase in income or household decision-making, the capability indicators of the research conducted by Brody et al (2016) measure several aspects of life quality, including risk of future assault and discrimination, freedom of expression and family support. The human development resulting from training, regular meetings, financial education, health programs, and civic participation bring the benefits of SHGs beyond microfinance (Brody et al 2016).

The effectiveness of microfinance becomes fully beneficial for deprived sections of society when their capacity to sustain the initiative independent of government interventions are enhanced, along with their access to financial capital. This principle was germane to NABARD’s initiative, which started the Self-Help Group Bank Linkage Programme (SHG BLP) in 1992 to provide forms of financial capital to excluded citizens. This platform introduced significant economic change for rural women since it encompasses innovative solutions that push the boundaries beyond microfinance to resolve development challenges like financial literacy.

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IV. Case Study: Women’s Economic Empowerment Through Sustainable Banana Fiber Products

The Kishkinda Trust (TKT) Banana Fibre Cottage Industry is in Anegundi village near Hampi district in the state of Karnataka, India. It is a succinct illustration of the term women’s empowerment through SHGs. From 1998, this initiative developed local livelihood opportunities for women’s SHGs by utilizing raw materials of banana fiber obtained locally to create sustainable crafts. The unit has grown to support the livelihoods of around 150 women as of November 2022, many of whom are second generation of weavers and artisans. It recently established Hari Dharti Rural Development Society to facilitate the transition of these production units to being owned and managed by the artisans.

There are currently three units of banana fiber production including a rope-making unit, a craft unit for the domestic market and an export unit working in liaison with a Finnish market linkage partner. The banana fibre craft workshop empowers local women and helps to recycle natural resources in a sustainable fashion.

The raw material is made by making banana leaves soft by soaking them in water, so that they can be separated into two layers. Thin strips are cut from these leaves, which are twisted to form strings. These strings are hand-woven into handicrafts including bags, baskets, mats, hats, ornamental boxes, paper, clothes, bedding, ropes, and picture frames. The handicrafts created by the women are sold in the Kishkinda Trust’s Hoova Cafe and Craft Shop, and the money earned is ploughed back into the trust. The products are made available online as well.

Shama Pawar, founder and Director of The Kishkinda Trust states that everything produced by the SHG is sustainable and revenue from the products is used solely to finance the livelihoods of the women involved. The women involved in this initiative state that they feel empowered as they can contribute to their household finances and manage their family’s finances easily.

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V. Recommendations

Some notable schemes have been implemented by the central government to support the economic empowerment of rural women, which include the Pradhan Mantri Mahila Shakti Kendra (MSK) scheme. It was introduced by the Indian Ministry of Women and Child Development in 2018 under the wider umbrella scheme of the Pradhan Mantri Mahila Shashaktikaran Yojana (PMMSY) with the objective of providing a platform for the empowerment of rural women through training, awareness generation and capacity building. According to the Indian Ministry of Commerce and Industry (2022), another notable example is the Mahila Coir Yojana (MCY), which will empower women through skill development, training and entrepreneurship of rural women artisans in coir products.

However, more government interventions are required for the sustainable development of non-farm sector policy. Creating long-term, financially viable employment opportunities for rural women in India needs to be an ongoing process and a huge budgetary priority for the Indian central government. Indian policymakers can draw inspiration from policy innovations from other countries, particularly in relation to national innovation schemes for promoting small and medium size rural enterprises.

Among many factors, China’s economic growth has been attributed to its labor-intensive township and village enterprises (TVEs) which provide employment to many skilled citizens who are in rural areas of the country. These are generally unusual alliances between entrepreneurs and local government officials, the latter acting in the capacity of "owners" of TVE enterprises (Liang 2006). The government’s main role in this model is in the provision of necessary infrastructure and other support services.

It's important to note that skilled artisans located in rural areas cannot make much of their products without efficient marketing links between their village and access to larger national and international markets (Hakhroo 2020). The government should create strategic alliances and partnerships of this nature to promote the financial viability and sustainability of rural artisans, including women. Utilizing the current penetration of digital technology in rural areas to successfully market products arising from rural economic activities should be considered an important component of this strategy.

The non-farm rural sector is increasingly playing an important role in the development of rural areas of India. Specifically, as agriculture’s contribution to the economy is declining, the non-farm sector will need to become more and more a major provider of employment and income to many people in rural areas. The Indian government has recognized this development, and there is discussion now of promoting rural economic activities through concrete policy interventions.

However, specifically in relation to promoting the economic empowerment of rural women, social empowerment must also be identified as a complex but significant goal to work towards. For women, social equality including equality of opportunity, equality of recognition and equality of status are guaranteed by the Indian constitution currently (Singh and Kumar 2012). But obstacles for women in achieving these persist in rural India due to regressive attitudes, perceptions and value systems.

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VI. Conclusion

For women, being able to access employment through labor force participation is a necessary element of economic empowerment (ILO 2019). However, women in India continue to face many insurmountable obstacles that disproportionately affect their ability to attain financial independence. These challenges include access to employment, choice of work, working conditions, employment security, wage parity, discrimination, and balancing the competing burdens of work and family responsibilities (Sher 2014). The government should ensure that women are one of the first sections of the Indian population that is provided livelihood opportunities within emerging sectors like the rural economy so that they can benefit from new labor market opportunities and empower themselves economically.

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VII. References

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• Brody, C., de Hoop, T., Vojtkova, M., Warnock, R., Dunbar, M., Murthy, P., & Dworkin, S. L. (2016) “Can self-help group programs improve women’s empowerment? A systematic review”. Journal of Development Effectiveness, 9 (1), 15–40. doi: 10.1080/19439342.2016.1206607.

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• Ministry of Micro, Small and Medium Enterprises. “Skill Upgradation and Mahila Coir Yojana”. (2017). Government of India: New Delhi.

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• National Bank for Agriculture and Rural Development (NABARD). Master Circular on Self Help Group - Bank Linkage Programme. Ref. No. NB.MCID.HO./1402 /MCID-1 Pol.K. (Master Circulars)/ 2018-19 Circular No./ 230 / MCID - 05 / 2018. Retrieved from https://www.nabard.org/circularpage.aspx?cid=504&id=2882.

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• Verick, Sher. (2014). “Women’s Labour Force Participation in India: Why is it so Low?” International Labour Organization (ILO): New Delhi. Retrieved from https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---sro-new_delhi/documents/genericdocument/wcms_342357.pdf