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CONTENTS Particulars Foreword Credit List Acknowledgement Abbreviations Basic Data Sheet Executive Summary Main Report Chapter I Chapter II Chapter III Chapter IV Chapter V Chapter VI Chapter VII Chapter VIII Chapter IX Chapter X Chapter XI Appendix Appendix I Appendix II Appendix III Appendix IV Appendix V Appendix VI Introduction Micro finance through SHGs in Andhra Pradesh Approach to the Study Group Dynamics & Bank Linkage Pattern Amongh Sample SHGs Profile of SHG Members Enterprise Mix & Process of Graduation of SHG Members to Microenterprises Cost of Investments & Economics of Microenterprises Income & Employment Generation by Microenterprises promoted By SHG Members Role of SHPIs in Promotion of Microenterprises Sustainability Aspects of Microenterprises Summary & Conclusion 1 4 11 15 24 29 41 47 51 59 67 Page No.

i-vi

SHG-Bank Linkage Programme - A Review Status of SHGs in Andhra Pradesh-2005-2006 Status of SBLP in Andhra Pradesh 2005-2006 Best practices followed by SHGs in launching MEs Microenterprises by Village Organisations Coomunity Based Organisations in AP-Roles and Functions

76 80 81 82 83 89

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FOREWORD
Micro-finance has been recognised world over as one of the potent development paradigms for alleviating poverty. With special emphasis on social as well as economic empowerment of the poorest, especially women, micro finance initiative through Self Help Groups (SHGs) launched by NABARD during early 90s, has been recognized as the largest micro finance programme in the world. Experience of financing through SHGs conveys the message that the key to success lies in the evolution and participation of community based organisations at the grassroot level. Peoples participation in credit delivery and recovery and outreach of the formal credit institutions to borrowers through group approach, i.e., SHGs, have become vehicles for the success in purveying credit to the rural poor. A few impact assessment studies on SHG Bank Linkage Programme conducted by NABARD reported many positive results, in so far as transformation in the living standards of the SHG members and income levels are concerned ranging from ownership of assets, increase in savings and borrowings, income-generating activities and in creation of entrepreneurship, etc. Therefore, the impact and success of SBLP has to be seen from wider perspective of graduation of SHG members to microenterprises with focussed attention of this programme on the economic empowerment of SHG members. I am happy that in the context of the above backdrop, a study was mounted by my Regional Office focussing on the issue of promotion of IGAs and MEs in Andhra Pradesh, which is the front-runner in SHG movement in the country. The study was launched in three districts, i.e., Chitoor, Nizamabad and Warangal covering 57 SHGs and 310 SHG members selected from across the agencies like Commercial banks, RRBs and Cooperatives as also from various NGOs. The study covered specific aspects like, group dynamics within SHGs, changes in pattern of enterprise mix among the SHG members, process of graduation of SHG members to microenterprises, economic viability of mEs, their impact on income/employment generation as also assessing the factors affecting long-term sustainability of these mEs in terms of linkage support training/capacity building exercises, etc. The study has come out with very enlightening observations about the progress and success of the linkage programme in graduation of the members from a consumption behaviour to a level of establishing a wide range of micro-enterprises such as dairy enterprises, pickle shop, flour mill, hotel, bakery etc. While the study report would throw light on the details of the observations on various aspects, it is heartening to note that the SHG members not only expanded their own household occupation but also diversified to complete new occupations with different levels of asset creation.The corresponding increase in average loan amount by enterprising members has been as high as 193 per cent as compared to the loan amount availed by members who lagged behind in taking up any IGAs/MEs. Employment generated by ME households increased by 81 per cent as against households not taking up any MEs, clearly establishing the positive impact the programme made on the lives of the rural poor. I am sure that the findings of the study will be found useful to the micro finance practitioners, experts, banks, rural development institutions and academicians, concerned with the process of the policy planning, strategising and implementation for the growth of micro-enterprises through group approach. National Bank for Agriculture and Rural Development A.P Regional Office, Hyderabad 11 July 2006 V. Ramakrishna Rao Chief General Manager

CREDIT LIST Overall Direction Department of Economic Analysis & Research, NABARD Head Office, Mumbai Shri. V. Ramakrishna Rao, CGM, Andhra Pradesh Regional Office Guidance Dr. V. Tagat, Chief General Manager Shri R. Amalorpavanathan, General Manager Shri. S. K. Bhatnagar, Deputy General Manager Field Study Shri K.C. Badatya, Assistant General Manager Shri B. B. Wadavi, Manager Ms. Ananthi S. Assistant Manager Analysis of Data and Report Writing Shri K. C. Badatya, Assistant General Manager

ACKNOWLEDGEMENTS The study team gratefully acknowledge the encouragement and support provided by Shri V. Ramakrishna Rao, Chief General Manager in undertaking this study. We also express our sincere gratitude to Dr. V. Tagat, Chief General Manager and Shri S. K. Bhatnagar, Deputy General Manager for their able guidance in launching field study and preparing the report. Review and suggestions offered on the draft report by Shri R. Amalorpavanthan, General Manager is also gratefully acknowledged. We also gratefully acknowledge the suggestions received from the participants while presenting the report in the RO. The guidance received from Sri S.K. Mishra & Sri Saral Das, AGMs while drafting the report. the brilliant cooperation and help offered by DRDA, NGOs, Commercial Banks, RRBs, and Nizamabad DCCB for the smooth conduct of field-work for collection of primary data and also for the much needed bank-data provided to us. the help and cooperation rendered by Shri G. Nagabhushanam, AGM (DD), Warangal District, Shri A. Jayaram Sharma, AGM (DD), Chittoor District and Shri S. Satyam, AGM (DD), Nizamabad District all the sample SHG members who cooperated with the study.

The views expressed in the study report are of the authors alone.

Authors

Abbreviations
ACCs Artisan Credit Cards APDPIP Andhra Pradesh District Poverty Initiatives Project APMACS Act Andhra Pradesh Mahila Abhibrudhi Cooperative Society Act. APRPRP Andhra Pradesh Rural Poverty Reduction Project BASIX Bharatiya Samrudhi Investments & Consulting Services CARG Compound Annual Growth Rate CASHE Credit Savings for Household Enterprises CBCs Cross-bred Cows CBIMF Capacity Building Institute for Micro Finance CBOs Community Based Organisations CCs Community Coordinators CIF Community Investment Fund CMGs Credit Management Groups CoIs Cost of Investments CRI Critical Rating Index CV Coefficient of Variations DWCD Department of Women and Child Development Department of Economic Analysis Research DFID Department for International Development DHAN Development of Human Action DRDA District Rural Development Agency DWCD Department of Women and Child Development DWCRA Development of Women & Children in Rural Areas FAMEs Farmsector Microenterprises FAMIGAs Family Managed Income Generating Activities FOMEs Family Owned Microenterprises FWWB Friends of Women's World Banking GEMINI Growth & Equity through Microenterprise Investment & Institutions GMBs Graded Murrah Buffaloes GoI Government of India IDB Inter-Industrial Development Bank IGAs Income Generating Activities IGWDP Indo-German Watershed Development Programme IKP Indira Kranthi Patham IRDP Integrated Rural Development Programme IRVs Individual Rural Volunteers LMSSS Lodi Multipurpose Social Service Society MACS Mutually Aided Cooperative Societies MARI Modern Architects of Rural India MASS Mitra Association of Social Services MBKs Mandal Book Keepers mCID micro Credit Innovation Department MEs Microenterprises MFIs Micro Finance Institutions mFPs micro-Finance Programmes MSs Mandal Samakhyas MYRADA Mysore Resettlement and Development Agency NABARD National Bank for Agricultural & Rural Development NDDB National Dairy Development Board NGOs Non-Government Organisations NTFPs Non Timber Forest Products

DEAR

OECD Organisation for Economic Cooperation & Development PSS Pragati Seva Samithi PWCS Primary Weavers' Cooperative Society RFA Revolving Fund Assistance RAFADResearch and Application For Alternative Financing For Development RASS Rastriya Seva Samithi RBI Reserve Bank of India REDPs Rural Entrepreneurship Development Programmes R&D Fund Research and Development Fund SAMEs Stand Alone Microenterprises SAPAP South Asia Poverty Alleviation Programme SB A/C Savings Bank Account SBLM SHG Bank Linkage Model SBLP SHG Bank Linkage Programme SERP Self Employment for Rural Poor SEMIGAs Self Managed Income Generating Activities SGSY Swarna Jayanti Gram Swarazgar Yojana SHARE Society for Helping Awakening of Rural Poor through Education SHGs Self Help Groups SHPIs Self Help Promoting Institutions SPMS Sri Padmavathi Mahilabhyudaya Sangham STEP Support to Training and Employment Programme TRYSEM Training for Rural Youth for Self Employment TTDCs Training & Technology Development Centres UNDP United Nations Development Programme UNICEF United Nations International Children's Emergency Fund

Basic Data Sheet (Sample Characteristics)

Field Level Survey Period Group Characteristics Number of SHGs Studied Range of Age of the SHGs Studied Size of SHGs Average group size Stratification of SHGs-Age wise Range of Savings by SHGs Average savings by the Groups Average funds with a SHGs (loans plus) Average loan size (cumulative) of SHGs SHGs received training Member characteristics No. of SHG Members Interviewed No. of SHG Members Availed Bank Loan Change in Mean Annual Savings (pre-post) Change in Mean Annual Borrowings Average Loan availed (cum. of all linkages) Age-wise % of members having IGAs & MEs Age-wise3 yrs. old membs. 4-6 yrs. old membs. 7 yrs. & above membs. Average amount of loan availed (Cum.Rs.) Returns on capital investment (Net icome generated per Re.1/- of capital investment Change in Mean Incremental Income(pre-post) Age-wise Average Emp. Days Generated Intensity of labour emp. (persondays/ Rs.100/- of capital investment) Interest Ratesbanks to SHGs VOs to SHGs SHGs to membs Internal lending of own funds Repayment rate from SHGs to banks from SHG members to SHGs January February 2006 56 3 years to 10 years 09 to 16 13.3 3 Yrs (9), 4-6 (33) 7 Yrs. (14) Rs.30 to Rs.100 Rs.36,350 Rs.2,73,917 Rs.1,91,980 55% (orientation), 20% (IGAs) 310 308 184% 60% Rs.16,583 3 yrs. (Rs.12,466), 4-6 (Rs.15060) & 7 yrs.(.24,322) IGAs MEs Non IGAs 42% 28% 30% 40% 13% 47% 42% 28% 30% 43% 34% 23% 8,210 17,171 24,089 Highest for catering services (0.42), lowest for crane machine (0.12) 87% 3 yrs. (25%), 4-6 (97%), 7 yrs.(162%) ME hh.(596), IGA hh. (448), Non-IGA/ME hh (329), Overall (458) Highest for photo frame making (13.3), lowest for crane machine (1.3) 8.0% to 11.0% 12.0% 12.0% to 24.0% 24.0% 94.2% 96.9%

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11

Executive Summary

OThe present study has been conducted in Andhra Pradesh covering three districts, i.e., Chitoor, Nizamabad OThe sample frame constituted 56 SHGs, 310 SHG members selected from across the agencies like, commercial banks, RRBs and cooperatives as also from various NGOs like, PSS, LMSCS, MARI in Warangal, MASS and CORE in Chittoor and GRAM in Nizamabad district. O The number of members in the sample SHGs varied from a minimum of 9 to a maximum of 16. The mean size of a group was worked out to 12.4. OThe sample SHGs saved from a lowest of Rs. 30/- to a high of Rs.100/- per member per month. Majority OThe average savings per SHG was worked out to Rs. 36,350. The average savings for SHGs of seven years
of SHGs (70%) saved Rs.50/- per member per month. About 48 per cent of SHGs reported increase in savings rate over time. and Warangal, with the objectives of studying the impact of group dynamics within SHGs and changes in pattern of enterprise mix among the SHG members, assessing the process of graduation of SHG members, both in economic and social spheres.

OAbout 71 per cent of SHGs had received 3-4 bank linkages. Average loan size (cumulative) for the groups was worked out to Rs.1,91,980 of which 70 per cent was for income generating purpose and the remaining 30 per cent was for consumption and other social function and contingency purposes. OAsset base increased for about 65.8 per cent of the sample households. While about 24.2 per cent sample OMore than 7 year old group members had graduated from an amount of Rs.1,986 in the first linkage to a
households reported no change in their asset holding pattern, about 10 per cent reported decrease in their asset size. The decrease in asset size was as a result of selling out of milch animal/drought, etc. high of Rs.35,000 in the sixth linkage. Similarly, three year old SHG members graduated from Rs.1,373 in the first linkage to Rs.10,229 in the third linkage. More than seven year old group members availed a cumulative average loan amount of Rs.24,332, an increase by 95 per cent over the cumulative loan amount availed by 3 year old group members.

and above was worked out to Rs.45,387 as compared to Rs.37,789 for 4-6 year old SHGs and Rs.17,016 for three year old SHGs.

OWith increased linkages, a variety of enterprises were initiated/upgraded by members such as tailoring OOut of a total of 310 members, while 42 per cent had initiated/supported different IGAs, about 28.4 per
units, hotels, kirana shops, fancy/stationery shops, flour mills, etc. Member households whose primary occupation was agriculture the before SHG situation were able to either support the enterprise through purchase of inputs or diversify their enterprise to dairy animals like, cow, buffaloes and goats/sheep rearing. cent members had graduated to microenterprises with asset creation. About 29.7 per cent had not initiated any IGAs/MEs and had utilized money solely for different consumption purposes.

OAverage loan amount availed by members with MEs, IGAs, and non-IGAs (NIGAs) were worked out to OThe net income varied from 7,820 for dairy enterprise (CBCs of 2 animal unit) to 48,729 for bakery unit. In terms of percentage ratio of sales to operating cost, that indicates current viability, ranged from 119.4 per cent (crane machine unit) to 178.1 (musical instruments). OThe ratio of sales to total cost indicating profitability of enterprises ranged from 108.1 per cent (floor
milling) to 151.5 per cent (musical instruments). The net income per Re.1/- of investment ranged from 0.12 for crane machine unit to 0.42 for catering services unit. Rs. 24,089, Rs.17,171, and Rs. 8,210, respectively. Average loan availed by members with MEs was higher by 193 per cent compared to the loan amount availed by members with Non IGAs.

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OIncome generated by ME households increased by 70.5 per cent in comparison to non-IGA households. OMean net income generated by households having two/three occupations was much higher than income
households. For ME households, 78.9 per cent of total employment days were generated from the ME while rest 21.1 per cent was generated from other household enterprises. For ME households, 41.2 per cent of total household income were generated from the ME while rest 58.8 per cent was generated from other household enterprises.

OEmployment generated by ME households increased by 81 per cent in comparison to Non-IGA

generated by households having only one occupation. Households having four occupations had generated net income higher by 128 per cent compared to one occupation household.

OIn terms of intensity of labour employment (person days of employment generated per Rs.100/- of capital OThe constraints towards viability and sustainability of the rural microenterprises, inter-alia, include lack of OThe repayment performance of the sample SHGs to banks was 94.2 per cent of the cumulative demand for
all the SHGs. The repayment performance of SHG members to SHG worked out to 96.9 per cent. forward/backward linkages, infrastructure facilities, inadequate marketing arrangements, improper and inappropriate supply support mechanism for raw materials, obsolete technological support, etc. Side by side, there were inadequate support services in terms of capacity building/skill based training input to the microenterprises owners.

investment) reported that labour intensity was very high for photo frame making unit (13.3) followed by bangles selling (8.8), saloons (6.6), small hotels (6.2), catering services (5.7), chicken selling (5.6), etc.

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Chapter I Introduction
GOD appears before the POOR through works and wages -Rabindranatha Tagore Micro-Finance has been recognised and accepted as one of the new development paradigms for alleviating poverty through social and economic empowerment of the poor, with special emphasis on empowering women. Experiences of different anti-poverty and other welfare programmes within as well as outside the country as also by the International Organisations have shown that the key to success lies in the evolution and participation of community based organisations at the grassroots level. Peoples participation in credit delivery and recovery and linking of formal credit institutions to borrowers through group approach have been recognised as a supplementary mechanism for providing credit support to the rural poor. 1.2 NABARD, as a pioneer in conceptualising and implementing the concept of group approach, initiated Self Help Group-Bank Linkage programme (SBLP) since 1992. Studies by NABARD during 20001 and 20022 reported many positive results on the impact of participation of rural poor in the SHGs. There have been perceptible and wholesome changes in the living standards of the SHG members in terms of ownership of assets increase in savings and borrowing capacity, income-generating activities (IGAs) and in income levels. 1.3 However, as SHG bank linkage programme shifts its focus from social to economic empowerment through microfinance intervention once group dynamics within SHGs get stabilized, SBLP has to be evaluated in a wider perspective. Launching different economic activities in the form of IGAs and microenterprises (MEs) through microfinance becomes the crucial issue in the success of SBL Programme. 1.4 Microfinance, by definition, refers to the entire range of financial services rendered to the poor and including skill upgradation, entrepreneurial development that would enable them to overcome poverty. Various SHPIs and NGOs have been recognised as an entity in the microfinance concept especially in providing credit plus services. NGOs, which were initially confined to the social aspects of development, were enlarged to help the poor and weaker sections of the rural society in their economic pursuits. In Andhra Pradesh, many NGOs acting as SHPIs, who had promoted and nurtured SHGs, have been permitted to open Mutually Aided Cooperative Societies (MACS) and take care of all financial pursuits of their own SHGs and also imbibe SHG members to promote different IGAs/MEs. 1.5 Microenterprise development through microfinance is considered a mechanism for poverty reduction based on its capacity to generate employment and raise earnings. Therefore, microfinance and Microenterprise always go hand in hand. Several literatures on microenterprise sector carry two views on MEs, each one with different policy implications. The first one considers workers in the ME sector as either underemployed or surplus labor. These workers cannot find a job in the formal sector due to their low skills and general unemployability (underemployment view). The second view focuses on the fact that some workers choose this sector for its flexibility and earnings opportunities (microentrepreneur view)3. While the existence of high levels of poverty in the sector is strongly suggested by the first view, poverty is not necessarily a permanent microenterprise condition according to the second view, which possesses the view that microenterprise development can be an effective mechanism for poverty reduction through market-driven, productive
1Puhazhendhi, V, Satyasai, K.J.S, (2000), Microfinance for People-An Impact Assessment, DEAR, NABARD, HO, Mumbai. 2Puhazhendhi, V, Badatya, K. C., (2002), Self Help Group-Bank Linkage Programm in India-An Impact Assessment, mCID, NABARD, HO, Mumbai.

Orlando, Maria Beatriz, Pollack, Molly (2000), Microenterprises and Poverty Evidences from Latin America, InterAmerican Development Bank (IDB), Sustainable Development Department, Microenterprise Unit, Washington DC.

14

activities. Policies oriented towards supporting and promoting microenterprises, therefore, have three major fronts, i.e., microfinance, changes in the regulatory framework, and business development services. Other policy interventions that have a positive impact on microenterprise development such as the development provisions for both forward and backward linkages, capacity building exercises for unskilled entrepreneurs, etc. 1.6 Microenterprises should be supported because they fulfill many priorities of development economics. They favour the development of the private sector, the promotion of women and the implementation of community development by private initiative; and they reduce poverty and contribute to a fairer income distribution, (OECD, 1993)4. They also increase employment as small and microenterprises are usually more labour intensive. For an estimate in five countries in Latin America shows that in Bolivia 55 per cent of the labour force belongs to the informal sector; Chile has some 4, 50,000 microenterprises; Colombia counts more than 15,00,000 urban microenterprises; In Ecuador, 8,50,000 workers are employed in the informal sector, and finally, in Peru, 42 per cent of the population belongs to the informal sector (RAFAD 1993)5. 1.7 However, problem lies in that there is no universal definition of the microenterprise so far. A tentative definition is that microenterprises are generally more labour than capital intensive and have high relative production costs (because raw materials are purchased in small quantities). They lack technical experience in production, accounting, administration and stock control (due to low levels of qualification). Most of the time, they are unregistered (or partially registered) and family-based6. 1.8 Microfinance for microenterprises is important as banks in all cases may not come forward to issue small loans. Most microenterprises start their existence without any institutional help. The entrepreneur usually obtains the small amount of finance from his own savings or from his family. In order to improve the business, these microenterprises borrow additional capital from lending institutions (Levitsky, 1990) 7. However, the banking system causes "imperfections in financial markets that constrain small borrowers access to credit" (Webster, 1991)8. The reasons are (Waterfield 1993)9: (i) banks are biased in favour of lending to large enterprises, (ii) lending to small and microenterprises is considered to be risky, (iii) the administrative costs of lending to small enterprises are high and can sometimes reduce the profitability of such loans to (almost) zero, (iv) small and microenterprises are often unable to give precise information about themselves, (v) small and microenterprises can rarely provide securities or collaterals for their loans. When formal financial markets cannot fulfill the needs of small and microenterprises, informal markets will do so, but usually at usurious rates, which jeopardize the survival of small businesses (Human Development Report, 1993, p. 44)10 1.9 In such circumstances, it is expected that SBL Programme initiated by NABARD as a microfinance initiative through group mode would be able to reach the unreached women folk and would graduate women folk venturing into microenterprises. Since NABARD is going to complete almost one and a half decade of the launching of SHG-Bank Linkage Programme, there appears the need for assessing as to how the SHG and SHG members graduate themselves to the stage of initiating different IGAs/MEs as also how the members run the enterprises keeping in view viability and sustainability of such enterprises. Accordingly, a study was conducted in Andhra Pradesh covering three districts with the focus on the issue of promotion of IGAs and MEs by SHGs.

4OECD,
5RAFAD,

(1991),

(1993), Alternative Financing for Micro-enterprises and Producers in the Andean Region - results of a colloquium in Guito, ed. SOS Faim / RAFAD, (94 pp.) 6Labie, Par Marc, Credits to Small Business and Microenterprises, taken from website, http.//www. globenet.org/horizon-local/ 7Levitsky, J., Prasad, R. N., (1990), Credit Guarantee Schemes for Small & Medium Enterprises, World Bank Technical Paper 58 (Industry & Finance Series), Washington, 8Webster L, (1991), World Bank Lending for Small & Medium Enterprises, Fifteen Years of Experiences, World Bank Discussion Paper 113, Washington, 9Waterfield Ch., (1993), Designing for Financial Viability of Microenterprise Programs, GEMINI (Growth and Wquity through Microenterprise Investment and Institutions), A.I.D.,USA. 10 United Nations, Human Development Report (French version), Oxford University Press (Economica).

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Chapter II Microfinance through SHGs in Andhra Pradesh

This Chapter deals with the evolution and present status of the SHG movement in the State of Andhra Pradesh. While the first sub section elaborates the evolution of the SHG, the second sub section covers the progress of SBL Programme in the State. The measures taken by the Government of Andhra Pradesh and NABARD are detailed in the last section. I. SHGs in Andhra Pradesh- Evolution i. Development of Women and Children in Rural Areas 2.1 The evolution of group concept goes back to 1982-83 with the implementation of the Development of Women and Children in Rural Areas (DWCRA) as a sub component of the Integrated Rural Development Programmme (IRDP) by Government of India with the support of the State Governments and UNICEF. The objective of DWCRA programme was to empower the rural women living below the poverty line by way of organising them into groups to create sustainable income generating activitites through self employment. Women living in neighborhoods with similar socio economic background were formed into groups of 25 members each to take up an economic activity suited to their skills and resources. In Andhra Pradesh, the programme was initially implemented in Adilabad, Kadapa and Srikakulam Districts and thereafter was extended in a phased manner to other districts. By 1994-95, all the districts were covered under the programme. Government of Andhra Pradesh, took up re-modeling of DWCRA groups in the State into SHG with the help of NABARD in November 1996.

ii. Womens Groups under the Total Literacy Campaign

2.2 In early 1990s, women were organized into Mahila Mandalis as part of Total Literacy Campaign. These women groups spearheaded the anti-liquor movement in Nellore District. The savings movement of Save a Rupee a Day started thereafter by these Mahila Mandalis which later led to Podupu Lakshmi (Podupu means savings and Lakshmi is the goddess of wealth) movement. Women came together and formed themselves groups of 10 to 30 with regular meeting and a common agenda. The District Administration provided the Podupu Laxmi movement with the initial support and acted as facilitators. Volunteers, animators, trainers and instructors in the Total Literacy Campaign acted as Podupulaxmi organizers. Several districts followed suit and promoted thrift groups with different names such as Anantalakshmi (Anantpur district), Gramalakshmi (Chittoor), Maalakshmi (Mahabubnagar), Mahila Shakti (East Godavari), Podupujyothi (Rangareddy), Swayam Shakti Sangaham (Srikakulam) etc. These groups after they reached a level of maturity, were converted into DWCRA groups. iii. South Asia Poverty Alleviation Programme 2.3 The South Asia Poverty Alleviation Programme (SAPAP) was implemented during 1995-2000 by the UNDP in 20 mandals of three drought prone districts, viz, Kurnool, Mahbubnagar and Anantpur. The objective of the programme was to combat rural poverty through social mobilization and active participation of beneficiaries in grass roots development. It relied on a three-pronged strategy, i.e., social mobilization of the poor, skill development and capital formation. The poor were organized at three levels: hamlet/sub-hamlet level through small homogenous SHGs, village level through village level organizations and the Mandal level through the Mahila Mandal Samakhyas. Development programmes like literacy, preventive health care, girl child education, elimination of child labour etc. were dovetailed to the SHG concept under the programme.

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iv. Indira Kranti Patham Project 2.4 The SHG movement took a firm root in the state with the implementation of World Bank assisted poverty reduction project, Indira Kranti Patham11 (IKP), a scaled up versions of the SAPAP model with more focus on livelihood component. The project aims to build strong institutions of the rural poor and enhance their livelihood opportunities so that the vulnerability of poor is reduced. IKP consists of two projects, viz, Andhra Pradesh District Poverty Initiatives Project (APDPIP) and Andhra Pradesh Rural Poverty Reduction Project (APRPRP) and is implemented in 864 mandals out of a total 1127 mandals in the State. The project has a total outlay of Rs.21,400 million with 56 per cent of the project outlay meant to support the sub projects of the poor through Community Investment Fund (CIF). Government of Andhra Pradesh has decided to cover the entire state under the IKP Programme from the financial year 2006-07 by dovetailing the funds from State Government and Government of India. Society for Elimination of Rural Poverty (SERP), an autonomous body registered under the Societies Registration (Telangana) Act, has been established for management of IKP, which is implemented by SERP through DRDAs at the district level. A large complement of staff consisting of Community Coordinators, Assistant Project Managers, District Project Managers have been appointed for managing the project. v. Present Status of SHG Movement in the State 2.5 Andhra Pradesh has a prominent place in SHG movement with 6,26,472 SHGs covering 78,65,847 rural women. Nearly 28 per cent of the members of the SHGs belong to Scheduled Caste category and 11 per cent belong to the Scheduled Tribe category (Table 2.1). In terms of coverage, 20 per cent of women in the State are members of the SHGs. Majority of the groups in the State have been formed through the IKP project and the DRDA. As at end March 2006, the SHGs have built a corpus of Rs.26,197 million including thrift amount of Rs.12,255 million. Table 2.1: Highlights of SHG movement in Andhra Pradesh as on 31 March 06 Particulars Number Total Number of SHGs in Andhra Pradesh 6,26,472 Total members covered under SHGs 78,65,874 Average number of members per SHG 13 Percentage of SC members 28 Percentage of ST members 11 Total savings of the SHGs (Rs. in million) 12,255 Average savings per SHG (Rs.) 19,561 Total Corpus of the SHGs* (Rs. in million) 26,197 Average amount of corpus per SHG (Rs.) 41,816
Note : Corpus includes savings of the group, interest earned by the SHGs on internal lending, revolving fund assistance provided by the State government, penalties collected etc. Source : Department of Rural Development, Government of Andhra Pradesh

vii. Evolution of SHG federations 2.6 In Andhra Pradesh, the networking of SHGs into SHG federations started under the UNDP sponsored SAPAP implemented in three districts during 1995-2000. With the promulgation of Andhra Pradesh Mutually Aided Cooperative Societies (APMACS) Act, 199512, several NGOs experimented in formation of SHG
11The

12

project was earlier known as Velugu, meaning Light. The name was changed to Indira Kranti Patham in the year 2005.

The APMACS Act envisages to promote voluntary formation of cooperative societies as accountable, competitive, self reliant business enterprises based on thrift, self help and mutual aid and own managed and controlled by the members for their economic and soical betterment. The Act prohibits society from raising share capital from the state government. The Working Group constituted by Andhra Pradesh Government for evolving guidelines for financing of SHG federations had expressed that the tenor of the above act is friendly to the SHG federations and closely matches the requirements of SHG federations. The Working Group, therefore, recommended that SHG federations could get incorporated as MACS and suggested model bye laws for village level and mandal

17

federations as MAC societies. The UNDP model of SHG federations is adopted by the IKP Project and SHGs are networked into a three tier federation structures viz, Village Organisations (VO) at the village level, Mandal Samakhyas (MS) at the mandal level as federation of VOs and Zilla Samakhyas (ZS) at district level as a federation of MS to ensure continued services and take up larger and complex interventions for SHG members. Under the IKP project, 27,957 VOs covering 2,90,381 SHGs have been formed and are being registered under the APMACS Act. Around 50 per cent of the SHGs have been covered under the VOs. About 735 Mandal Samakhyas and 14 Zilla Samakhyas have been formed and are being registered under the same Act. II. SHG- Bank Linkage Programme i. Status of SBL Programme in AP 2.7 The beginning for linking of banks with SHGs in the State was made with the launching of SBL programme in the country by NABARD in 1992. During the initial periods, NABARD supported NGOs for formation, nurturing and credit linkage of SHGs. The SBL programme gathered momentum after RBI made the programme a part of normal lending activity of the banks under priority sector from April 1996. Andhra Pradesh has always become the front runner in the SBL Programme with forming about 4.92 lakh SHGs out of a total of 16.18 lakh SHGs provided with bank loan upto 31 March 2005, constituting 30 per cent of the total SHGs in the country. The percentage of credit linked SHGs was higher at 85 per cent in Andhra Pradesh as compared to 63 per cent in the country (Table 2.2). Table 2.2 : SBLP in Andhra Pradesh vis-a-vis All India - Cumu. as on 31 March 2005 Particulars Total number of SHGs SHGs linked with bank credit (Cumulative) Percentage of SHGs credit linked Bank loan (Cumu. in Rs. In million) Refinance by NABARD (Cumu. Rs. In million) Average loan per SHG - New SHGs Repeat loan to existing SHGs % of women SHGs All India 2586257 1618456 62.58 68985 30920 32012 49114 90 Andhra Pradesh 579748 492927 85.02 27461 13875 26637 47547 99

2.8 Between 1997-98 and 2005-06 the linkage of SHGs with the formal banking system has grown at a compound annual growth rate (CAGR) of 116.46 per cent. The families assisted and the bank loan grew at a CAGR of 103.51 per cent and 143.24 per cent, respectively. The average loan/SHG and average loan/family grew by 12.37 per cent and 50.41 per cent, respectively. The average loan per family is higher as the average number of members in SHGs has come down to 13 (Table 2.3). Table 2.3: Growth indicators of SBL Programme in AP Particulars / Year 1997-98 2005-2006 SHGs linked (no) 1322 294341 Families assisted (no.) 26440 3822000 Bank loan (Rs.in million) 31.75 15994.20 Refinance assistance (Rs.In million) 31.64 4759.70 Average loan per SHG (Rs.) 24016 54339 Average loan per family (Rs.) 240 4179 Participating banks 40 75

No. 1 2 3 4 5 6 7

CAGR (%) 116.46 103.51 143.24 104.67 12.37 50.41 9.40

level SHG federations. Even while membership is extended to individuals as per the requirements of the act, voting and ownership rights were conferred on SHG basis.

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iii. Participation by Banks 2.9 Commercial banks and RRBs are the major players in the SBL programme in the State. During the period 1997-98 to 2005-2006, the share of commercial banks in the SBL programme increased from 55 to 65 per cent in terms of number of SHGs and 63 to 67 per cent in terms of bank loan disbursed to SHGs. Whereas the share of RRBs came down during the period both in terms of number of SHGs (from 45% to 32%) and bank loan (37% to 31%), the cooperatives increased their share to 3 per cent in terms of number of SHGs and 2 per cent in terms of bank loan (Table 2.4). Table 2.4: Performance of Banks in SBL Programme
(Rs. million)

Banks 1997 98 1173 972 0 2145

CBs RRBs Coops Total

Cumu. no. SHGs % 2005Share 06 55 382422 45 190120 0 14696 100 587238

% Share 65 32 3 100

CAGR (%) 128 112 --0

199798 35 21 0 56

Cumu. Bank loan % 2005 Share -06 63 29350 37 13424 0 681 100 43455

% Share 67 31 2 100

CAGR (%) 161 151 --0

2.10 By end March 2006, 3917 branches of 48 Commercial Banks, 16 RRBs and 11 DCCBs were participating in the linkage programme. On an average, a bank branch in Andhra Pradesh had around 149 SHG accounts. The per group finance extended by the Commercial Banks increased from Rs.27,226 during 199798 to Rs.57,800 during 2005-06 showing a CAGR of 11 per cent. During the same period, the per group finance of RRBs increased from Rs.20,487 to Rs.48,800 showing a CAGR of 13 per cent (Table 2.5). Table 2.5 : Per Group bank loan in Andhra Pradesh Period Commercial Banks RRBs Coop Banks 1997-98 27,226 20,487 0 2005-06 57800 48800 37400 CAGR 11.35 13.20 ---iv. Financing of SHG federations Overall 24,020 54300 12.36

2.11 With the increasing number of SHGs, the banks are finding difficulty in monitoring large number of SHG accounts. In Andhra Pradesh, on an average a bank branch has around 150 SHG account. Working Group constituted by Government of Andhra Pradesh under the convenorship of NABARD has evolved Guidelines for financing of SHG federations. The financing of federations of SHGs, however, has taken place only on a small scale in the State so far. Some of the NGO-mFIs are borrowing funds from private sector banks such as ICICI, HDFC etc. to finance SHG members through the federation (MAC society) formed by them. During 2006-07, the IKP Project has targeted Rs.700 crore for bank linkage of 3,900 VOs. III. Government Support for the SHG Movement i. Revolving Fund Assistance 2.12 For ensuring financial viability of the SHGs, the state government has been providing Rs.25,000 as Revolving Fund Assistance (RFA) to the SHGs consisting of Rs.10,000 as subsidy and Rs.15,000 as loan. All the groups which have completed six months of thrift and are having proper group dynamism are eligible to get revolving fund assistance. ii. Waiving of Stamp Duty

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2.13 Andhra Pradesh has waived stamp duty in full on all loan documents to be executed by SHGs under the SBL programme in favour of banks and other financial institutions for obtaining loans. 13 iii. Pavala Vaddi Scheme14 2.14 The Pavala Vaddi Scheme as one interest subsidy scheme started during 2004-05 with an objective of providing subsidy on the interest on loans taken by the SHGs. IV. Initiatives of NABARD in Andhra Pradesh 2.15 NABARD has created a favorable policy climate for the healthy growth of the micro finance in the country. The following initiatives were taken by NABARD in Andhra Pradesh.

OCritical Rating Index(CRI) for rating SHGs has been designed by NABARD and it has been accepted by the State Government for use of banks, DRDA and other partners. OAppraisal Format developed by NABARD for use by bank branches, has been operationalised by many banks in the state. OMicro Credit Plan for SHGs suggested by NABARD, forms basis for credit assessment by banks for
financing SHGs. Loan Monitoring formats devised by NABARD for review and monitoring of SHG portfolio at branch and controlling office level have been adopted by the Banks in the State.

OStandard Accounting Package (SAP) for SHGs has been evolved with NABARDs initiative and the same is being operationalised in the State. OSmart Card Project is being implemented through five branches of Andhra Pradesh Grameena Vikas OCapacity building of stakeholders : From District Collectors to the Village level workers, Project
Bank in Srikakulam and Visakhapatnam districts with the objective of capturing the SHG transactions at the group meetings and updating the records at the bank through the use of computers. Directors to the members of Self Help Groups and master book keepers, CEOs of the Banks to the managers and clerical staff of the banks have been provided training for propagation of SHG concept in the State. As at the end of March 2006, around 85000 people were trained by NABARD.

OEnhancing Ground Level Credit flow to the SHGs: Refinance support is provided to the banks at

concessional interest rates to enable them to enhance ground level credit to the Self Help Groups. The banks are provided 100% refinance against the loans extended by them to the SHGs. NABARD also provides 100% of the bank loan as refinance to the advances extended the banks to the micro finance institutions for meeting requirements of the rural poor towards consumption and production purposes. NABARD has cumulatively provided refinance assistance of Rs.18635 million under the SHG-Bank linkage programme to the banks in Andhra Pradesh.

13 14

G.O.Ms.No.398 dated 3 July 2002 The salient features of the scheme are that (i) all the groups that have availed loan from banks under SBL programme after 01 July 2004 are eligible for interest subsidy, (ii) groups should repay the loans as per the schedule negotiated with the banks, (iii) if the group is in default of interest/principal for more than three months, the group becomes ineligible under the scheme, (iv) Government to reimburse the interest burden of the groups over and above 3 per cent per annum charged by the banks. The subsidy amount will be directly credited to the savings bank account of the eligible groups.

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Chapter III Approach to the Study

This chapter presents the objective, sample design and methodology for the present study. I. Objectives 3.1 The study has been conducted with the following objectives: To study the impact of group dynamics within SHGs and changes in pattern of enterprise mix among the SHG members. To assess the process of graduation of SHG members, both in economic and social spheres and examine the impact of the same on undertaking microenterprises. To study the economic viability of microenterprises promoted by SHG members as also to examine impact of microenterprises on generating income/employment among SHG members. To assess the role of SHPIs, as also various CBOs, like Village Organisations, Mandal Samakshyas in promoting microenterprises. To assess the sustainability of microenterprises in terms of linkage support like, availability of raw materials, marketing, technology as also examining skill upgradation, training/capacity building exercise and suggest future strategies for strengthening/promoting microenterprises through SHGs.

II. Methodology and Sample Design 3.2 The impact studies generally follow three types of approaches viz., (i) comparing before and after situations (i.e., pre-post technique), (ii) comparing with and without situations (i.e., control sampling technique) and (iii) studying the longitudinal samples (i.e. panel data). However, for this study first two approaches have been followed simultaneously depending on their suitability to assess different issues and parameters. Not only pre-post technique was followed to assess the impact of SBLP particularly on savings and borrowing, impact on income and employment, but the control technique (the term comparison would be best fit in this case as control sample was taken out from within the main population) was also considered to assess the graduation process, group dynamics and economic viability and also impact on income and employment generation. In addition to these techniques, the study also used impressions/ judgements as also views and sayings of SHG members to assess and study certain issues pertaining to the study. Selection of Districts 3.3 Multistage sampling method was adopted for the study. At the first stage districts were identified from three regions, i.e., Telengana, Rayalseema and Tribal belts of Telengana region based on certain parameters as mentioned below. District having the highest cumulative number of SHGs as at end March 2005. As DRDA is the nodal agency and all SHGs have come into its umbrella, districts where livelihood projects for poor under IKP (erstwhile Velugu) was in operation. Districts where good numbers of NGOs acted as facilitators and had motivated SHGs towards taking up of IGAs.

21

Districts where all banking agencies, i.e., RRBs, CBs and DCCBs dominated in credit linking and motivating SHGs towards taking up of IGAs/MEs.

3.4 Considering all these parameters, three districts were selected for the study, viz, Chitoor from Rayalseema region, Warangal from Telengana region and Nizamabad from the tribal belt of Telengana. Selection of SHGs 3.5 At the second stage, SHGs were selected in consultation with DDMs, LDMs, Bankers, NGOs and DRDA on the first day of the field visit. A total of 56 SHGs were selected from all the three districts based on the following parameters. SHGs which were three or more years old and were well established in savings and credit operations were selected assuming that the benefits from the SHG bank linkage programme are more or less stabilised.. SHGs which had undergone good credit operations with bank linkage and had completed two cycles of bank linkage were identified. SHGs which were formed by at least three different SHPIs i.e., NGOs, RRBs, DCCBs, etc. were taken into account for selection. Defunct groups/SHGs credit linked under SGSY was not considered for the study.

Selection of SHG Members 3.6 At the third stage, SHG members were selected from each of the selected SHGs randomly. A total of 310 SHG members spanning over 56 SHGs became the final sample frame (Table 3.1). Table 3.1: Sample Frame for the Study Selected Districts Sample SHGs Percentage SHG Members Percentage identified interviewed Chittoor 23 41.1 146 47.1 Nizamabad 18 32.1 76 24.5 Warangal 15 26.8 88 28.4 Total 56 100.0 310 100.0 3.7 In order to assess graduation process to microenterprises and other impacts, the sample SHGs were poststratified into three categories in terms of age of SHGs, i.e., (i) up to 3 years, (ii) 4 to 6 years and (iii) 7 years and above (Table 3.2). Table 3.2: Stratification of the Sample according to Age of SHGs No. of Sample SHGs Percentage No. of Sample SHG Members 9 16.1 70 33 58.9 178 14 25.0 62 56 100.0 310

SHG Age (Years) Up to 3 4 to 6 years 7 & above Total

Percentage 22.6 57.4 20.0 100.0

3.8 The sample has also been post-stratified in terms of credit linkage with different banking agencies, ie., CBs, RRBs and Cooperatives, as also in terms of major SHPIs, i.e., DRDA and NGOs. While 57 per cent of sample SHGs were credit linked by RRBs, about 20 per cent and 23 per cent were credit linked by commercial banks and cooperatives, respectively. Similarly, DRDA had formed 67.9 per cent of SHGs, about 32.1 per cent of SHGs were formed by different NGOs (Table 3.3). However, such classifications have not been utilized for

22

analysis in the report as all SHGs had come under the umbrella of DRDA through its role in forming CBOs, like VOs, MSs, etc. Table 3.3: Agency wise and SHPI wise Stratification of the Sample SHGs Credit Linkage by Total SHPIs Coops. RRBs Com. Banks DRDAs NGOs 0.0 55.6 44.4 (9)100.0 71.4 28.6 18.2 57.6 24.2 (33)100.0 66.7 33.3 35.7 57.1 7.1 (14)100.0 66.7 33.3 19.6 57.1 23.2 (56)100.0 67.9 32.1

Category Up to 3 4-6 years 7 & above Total

Total (9)100.0 (33)100.0 (14)100.0 (56)100.0

III. Data Collection: 3.9 The study was based on primary data collected through structured questionnaire as well as secondary data. Four sets of schedules were used for collecting primary data from the field. While two sets were used to collect information from SHGs and SHG members, two more sets were utilised to collect information from bank branches and SHPIs like DRDA and NGOs. The following parameters were broadly studied to assess the micro-enterprises promoted by SHG members. A. Changes in Process of Graduation to the stage of taking up of IGAs/MEs

'Changes in SHG functions, 'Changes in group dynamics 'Changes in pattern of credit linkage and its utilization by SHG members, 'Changes in income 'Changes in productive assets 'Changes in dependence on informal credit market
B. Impact on Standard of Living

'Impact on household income and employment 'Economic viability of microenterprises 'Impact on assets-durable & non-durable 'Impact on socio-economic setting, 'Changes in skill improvement through training, etc.
C. Development Linkage Issues

'Capacity building support and training for skill upgradation 'Interventions by NGOs, Government through DRDA/technological support 'Access to raw material 'Marketing support
3.10 Information was also collected through discussions with other district level functionaries, like, officials of bank branches, official/s of VOs/MSs, officials of DRDA, official functionaries handling IKP, LDMs/DDMs in the districts. IV. Data Analysis SHG members who had created one or other kinds of productive assets through bank linkage by investing in their own enterprise or supporting family venture (husband or son) was considered as having microenterprises.

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The process of graduation of SHGs/members to the stage of IGAs/MEs was studied through changes in the group dynamics, credit linkage patterns, socio-economic conditions, etc. Different statistical tools, in addition to tabular analysis, ratio analysis, etc. were utilised to study the viability of microenterprises. All SHG members were post-stratified into three categories as (i) Members having MEs (with asset creation), (ii) Members having only IGAs (no asset creation) and (iii) Members who had not taken up any economic activities (Non IGAs) and studied accordingly (Table 3.4). Non IGA members were considered as control or comparison group. Table 3.4: Stratification of SHG Members in terms of IGAs/MEs
(Rs.)

No. 1. 2. 3.

Categories SHG Members without IGAs (Control Group) SHG Members with IGAs SHG Members with MEs Total

Total Members 92 130 88 310

Share (%) 29.7 41.9 28.4 100.0

Details of capacity building, skill upgradation process undertaken by different agencies were assessed. Role of SHPIs, development linkages in terms of availability of raw materials, marketing, technology, etc. were assessed. Role of VOs/MSs as SHG federations in promoting MEs were also studied. Generation of income and employment was studied in terms of pre-post technique, as also in terms of control or comparison sample. SHG members who have not ventured into/not able to graduate to IGAs/mEs were analysed. All the information/data pertaining to financial transactions like, all the costs and benefits were valued at the reference year prices, i.e., at 2004-05.

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Chapter IV Group Dynamics and Bank Linkage Patterns Among Sample SHGs

The Chapter presents various aspects relating to group dynamics. The first sub section elaborates various aspects relating to structure, conduct of meetings, account keeping, leadership qualities, savings, loaning operations, etc. The second sub section details the linkage patterns of SHGs to bank loans. I. Group Dynamics Among SHGs i. Structure 4.2 The number of members in the sample SHGs varied from 09 to 16 with an average group size of 12.4 members (Table 4.1). The three year old groups were having an average of 12.2 members, compared to 13 and 12 members for older groups of 4-6 year and 7 years and above respectively. The frequency distribution of sample SHGs showed that 41 per cent of the sample groups had 09-10 members. Sustainability of these groups may be affected in future if one or two members leave the group for certain reasons like migration, death or internal conflict. Category Up to 3 4-6 years 7 & above Overall Table 4.1: Mean Size and Frequency Distribution of Sample SHGs No. of Size of SHGs (No. of Members) Frequency SHGs Distribution Total Minimum Maximum Mean 14 167 9 14 12.2 09-10 41.1 33 410 9 16 13.0 11-13 16.1 9 110 10 15 11.9 14-16 42.8 56 687 9 16 12.4 --100.0

4.3 Majority of SHGs were formed on the basis of homogeneity in the standard of living (52%) followed by the proximity of stay (26%) and activity (13%). Activity-based SHGs (12.5%) were mostly engaged in their traditional activities like weaving, pottery and knife sharpening, etc. (Table 4.2) Table 4.2: Criteria for SHG Formation- SHG Age-wise
(percentages)

Basis Activity Homogeneity Proximity of Stay Community/Caste Total ii. Conduct of Meetings Up to 3 1.2 38.5 27.0 33.3 (9) 100.0

SHG Age (years) 4-6 years 16.7 56.4 20.8 6.1 (33) 100.0

Overall 7 & above 28.4 24.2 47.4 0.0 (14) 100.0 (7) 12.5 (29) 51.8 (15) 26.8 (5) 8.9 (56) 100.0

Figures in the parentheses indicate the number of SHGs.

4.4 Conduct of regular meetings of group members is one of the important indicators of group dynamics of SHGs. Meetings are mainly utilized for undertaking financial transactions, i.e., both collection of savings and disbursement of loans. Meeting on monthly basis was observed to be the common phenomena followed by almost all SHGs. In case of about 12 per cent of SHGs, conduct of meetings was observed to be irregular. These groups did not meet regularly nor did they follow group norms which is important for their sustainability. Major reasons for irregularity in meetings were - migration of leader to a different locality during lean season, preoccupation of members in household chores, difficulty in adhering to fixed time and date schedule. A few groups were observed to be collecting savings, recoveries and disbursing loans in an

25

informal manner. The percentage of groups with irregular meetings was dominant in 3 year old groups (44%) as compared to 4-6 years and more than 7 years old groups (Table 5.3). As regards to the fixity of day and time, about 75 per cent of groups were adhereing to the fixed date and time. Remaining groups though had a fixed date and time for holding meetings, were observed to holding the meetings as per the convenience of the members. 4.5 For about 68 per cent of the groups, leader and Sanghamitra,15 community coordinator, animator, book keepers of SHGs organized the meetings. The NGO animator organized meetings in case of 23 per cent of groups. SHG members organized meeting in case of about 9 per cent of groups (Table 4.3). Table 4.3: Organiser of SHG Meetings
(percentage es)

Organiser Leader of the SHG Sanghamitra, Animator of DRDA NGO animator Members without outside assistance Total
Figures in the parentheses indicate total number of SHGs.

Age of groups (Years) Up to 3 4-6 years 33.3 27.3 44.4 39.4 11.1 24.2 11.1 9.1 (9) 100.0 (33) 100.0

Total 7 & above 50.0 14.3 28.6 7.1 (14) 100.0 (19) 33.9 (19 )33.9 (13) 23.2 (5) 9.0 (56) 100.0

4.6 Compulsory attendance of members in the meetings is one of the positive features of the smooth functioning of the group. It is one of the indicators that ensure the active participation of members in the working of the group in a democratic manner. The level of attendance was more than 90 per cent in case of about 86 per cent of SHGs and it was less than 70 per cent in case of about 5 per cent of SHGs. About 80 per cent of SHGs have the clause to impose fine (Rs.10) for late attendance or absence in the meetings. This served more as a deterrent clause and was not implemented in practice in most of the cases. The attendance of members was also higher for seven years and above SHGs (90%) as compared to three years old groups (81%) implying a well developed group dynamics among older SHGs. iii. Leadership 4.7 In 90 per cent of SHGs, the leaders were not rotated or changed since the groups were formed. In about 10 per cent of SHGs, leaders were changed due to death/migration of previous leaders, etc. Only two SHGs reported that they had been following the practice of rotation of leadership as per democratic norms. Low leadership rotation is an area of concern, which may lead to major information asymmetry and causation of moral hazards. Information received from SHG leaders revealed that in 90 per cent cases, the responsibilities were not shared among group members. The members, however, had expressed confidence in their leaders and did not desire for change of leadership. A few branch managers insisted on change of leadership at the time of providing bank linkage, which has been working well. The DRDA staff (IKP project authorities) and NGOs also indicated that their message for rotation of leadership was not being heeded to by the SHGs. Some SHG leaders reported that other members are not coming forward to take up leadership responsibilities. The leaders, however, encouraged consensual decision making without imposing their decisions on the group. However, most groups followed the two most important practices such as making savings and loan payments at the SHG meetings and writing of the books at the end of the meeting. iv. Book Keeping 4.8 The quality of record keeping and account maintenance is one of the positive indicators of group dynamics. It also determines the inherent strength of SHGs for future sustainability. For about 38 per cent of the SHGs, the leader/second leader maintained records without outside assistance. The percentage was higher
15

Sanghamitras are the animators of DRDA taking care of SHGs.

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for older SHGs (57%) as compared to newer groups (11%) which implied that as SHGs get older, leaders get expertise on book keeping. In some groups, leaders of other groups helped in maintenance of books. Sanghamitras/ VBKs maintained accounts and records for about 34 per cent of the SHGs. SHGs maintained 34 types of records (minutes book, loan book and debit book (ledger) and bio data book, etc.) along with bank and member passbooks, cash book etc. to undertake savings and loan transactions. About 64 per cent of SHGs used ledger system to maintain their accounts. Higher percentage of older SHGs used ledger system compared to only 44 per cent of SHGs of 3 year old groups (Table 4.4). The Standard Accounting Package (SAP) evolved by NABARD was maintained by only 20 per cent of the SHGs in the study districts. Table 4.4: Qualities of Record-Keeping and Account Maintenance
(percentages)

Indicators Leader/second leader maintain records Records are maintained with assistance of i. NGO animator ii. Sanghamitras/Village Book Keepers iii. Members from other group Total Uses ledger system to maintain its accounts v. Collection of Savings

Age of Groups (in Years) Up to 3 4-6 years 7 & above 11.1 36.4 57.1 22.2 55.6 11.1 100.0 44.4 18.2 33.3 12.1 100.0 60.6 7.1 21.4 14.3 100.0 71.4

Overall 37.5 16.1 33.9 12.5 100.0 64.3

4.9 The amount of savings per member varied across the groups depending on their capacity to save and age of SHG. The sample SHGs saved from a lowest of Rs.30 to a high of Rs.100 per member per month. Majority of SHGs (70%) saved Rs.50 per member per month (Table 4.5). About 48 per cent of SHGs reported increase in savings rate over a period of time. The percent of SHGs with increased savings rate over time was more among older groups (57%) as compared to 3-year-old groups (44%). Majority of SHGs (79%) belonging to the group of 7 year and above old were saving Rs.50 per head per month, as compared to 4-6 year old SHGs (64%).

27

Table 4.5: Range & Pattern of Savings by SHGs

(percentages)

Savings (Rs./p.m) 30 50 100 Total SHGs reported increase in savings rate (%)
Figures in the parentheses indicate number of SHGs

Age of groups (Years) Up to 3 4-6 years 7 & above 22.2 33.3 21.4 77.8 0.0 (9)100.0 (4) 44.4 63.6 3.1 33 (100.0) (15)45.5 78.6 0.0 14 (100.0) (8)57.1

Total (16) 28.6 (39) 69.6 (1) 1.8 56 (100.0) (27) 48.2

vi. Mobilisation of Resources 4.10 SHGs mobilized resources from different sources, i.e., through savings, bank loans, interest received from internal lending and saving account in the bank. SHGs had also received RFA and had also other receipts in the form of collection of fines and penalties for non-attendance in meetings and default in paying monthly savings and principal repayments. The average savings per sample SHG has been worked out to Rs. 36,350 (Table 4.6). It was observed that there was a direct relationship between the age of SHGs and volume of savings by them. The bank loan constituted the major share of the resources with SHGs (69%) followed by interest received on loan and other receipts (14%), savings by the groups (13%) and RFA (3.7%). Similar trend was observed among SHGs of different age groups. The percentage share of savings to the bank loan worked out to only 19 per cent indicating dependence of the SHGs on the external funding for lending operations. The share is higher for older groups indicating their gradual self-reliance. The Table also presents the change in different components of the resources mobilized by older SHGs compared to newer SHGs. Table 4.6: Mobilisation of Resources by Sample SHGs
(Rs.)

Purpose 1 Savings Revolving Fund** Bank loan Interest/Others* Total Ratio of Savings to Bank Loan

SHG Age (Years) Up to 3 4-6 yrs. 7 & above 2 3 4 17016 37789 45387 (9.1) (14.5) (12.6) 12589 9811 10014 (6.8) (3.7) (2.8) 145389 173409 257143 (78.1) (66.4) (71.3) 11157 40144 47881 (6.0) (15.4) (13.3) 186150 261153 360425 (100.0) (100.0) (100.0) 11.7 21.8 17.7

Overall 5 36350 (13.3) 10308 (3.7) 189839 (69.3) 37419 (13.7) 273917 (100.0) 19.1 3 over 2 6 122.1 -22.1 19.3 259.8 40.3 ---

% change in 4 over 2 7 166.7 -20.5 76.9 329.2 93.6 ---

4 over 3 8 20.1 2.1 48.3 19.3 38.0 ---

*Inclusive of interest earned on internal lending, bank saving account, fines and other penalties, etc. **Inclusive of grant received from CIF by three SHGs amounting to Rs.1.03 lakh Note: Figures in the parentheses are percentages to total.

vii. Income Generating Activities/Microenterprises by SHGs 4.11 The study revealed that SHGs provided loans to members for initiating various IGAs, consumption purposes, settlement of old debt taken from money lenders and contingency purposes such as health related expenditure and other social functions like, marriage ceremonies and funeral, etc. Majority of SHGs reported loans for education purposes as well. Purchase of inputs for agriculture, petty trade, tiffin centres, kirana shops, cloth business, vegetable vending, etc. dominated the purposes for which production loans were availed by

28

members. About 66 per cent of SHGs reported that half of their members had taken up one or other IGAs from out of SHG loan (Table 4.7). None of the SHGs had taken up economic activity as a group. About 1/5th of members of about 50 per cent of SHGs had graduated to the level of setting up of their MEs or helped the family microenterprise in creating one or other kind of income generating assets. Majority of old SHGs (71%) had upscaled to the level of MEs as compared to three years old SHGs (33%)16. Table 4.7: SHGs with IGA/MEs - SHG Age-wise
(percentages)

No 1. 2.

Indicators of Group Quality SHGs with half of members taking up different IGA (%) SHGs with 1/5th members upscaled or graduated to the level of MEs (%) Up to 3 44.4 (4) 33.3 (3)

Age of Groups (in Years) 4-6 years 7 & above 63.6 85.7 (12) (21) 45.5 71.4 (10) (15)

Overall 66.1 (37) 50.0 (28)

Note: Figures in the parentheses are number of SHGs.

viii. Social Empowerment 4.12 The sample SHGs reported several instances of their changed social lives after joining SHG. About 75 per cent of the SHGs reported that they experienced increased self-confidence, greater role in decision-making and co-operation among group members (Table 4.8). Age-wise older groups (87% for SHGs of 7 years and above and 69 per cent for SHGs of 4-6 years old) experienced higher degree of self-confidence, decisionmaking and co-operation as compared to recently formed groups (53% for SHGs of 3 years old). About 82 per cent of sample SHGs reported increased literacy and education. Improved understanding among family members and improved health and sanitation was reported by 71 per cent and 54 per cent of the sample SHGs (Table 6). About 83 per cent SHGs reported easy access to credit. In the pre-SHG situation, all the members were borrowing from money lenders at an annual interest rate of 36-60 per cent. After joining the groups, they availed easy credit at a lower interest rate of 12-24 per cent per annum. About 71 per cent of SHGs reported that they were not relying on money lenders for their credit needs. Table 4.8: Changed Lives Post-SHG Participating in the SHG
(percentage)

Particulars Improved self-confidence, decision-making Increased literacy and education Improved understanding Improved sanitation Improved & easy access to credit Increased importance of economic activities, Decreased dependence on Money Lenders II. Bank Linkage Patterns Among SHGs

Age of Groups (in Yrs.) Up to 3 4-6 yrs. 7 &above 53.0 68.5 86.8 61.0 90.7 94.0 59.0 71.0 83.8 49.0 47.3 64.6 72.0 87.5 89.9 60.0 73.3 90.4 42.0 79.3 91.8

Overall 69.4 81.9 71.3 53.6 83.1 74.6 71.1

4.13 In practice, the first credit linkage extended by the banks to the SHGs, largely, is based on the satisfactory group performance during the first six months. Among the sample groups, 23.2 per cent of SHGs were credit linked between six to eight months from their formation. About 30.4 per cent and 46.4 per cent of SHGs were credit linked during 9-12 months and more than 12 months of their formation. Age-wise, while about 66.7 per cent of the three years old SHGs were credit linked during first six months to eight months of their formation, all seven years and above SHGs were credit linked after one or two years of their formation (Table 4.9). Lack of awareness among bankers, NGOs and lack of satisfactory group dynamics among SHG members were the hurdles in linking older SHGs in the early years of SHG bank linkage programme. New
16

A detailed discussion on SHGs members who had taken up different kinds of IGAs/MEs has been analysed in Chapters 6, 7, 8 in the report.

29

SHGs are credit linked very fast due to capacity building exercise among bankers and other SHPIs. The study also observed that most new SHGs opened their SB accounts on the same day or within a week/month. Agency-wise, 81.8 per cent of the SHGs under Cooperatives were credit linked after two years of their formation. Table 4.9: Time gap between opening of Savings Accounts & Bank Linkage-Age wise
(percentages)

Age-wise/Time Gap Up to 3 4-6 years 7 & above Total Agency-wise Cooperatives RRBs Comm. Banks Total

6-8 Months 66.7 21.2 0.0 (13)23.2 0.0 28.1 30.8 (13)23.2

9 -12 Months 33.3 42.4 0.0 (17)30.4 18.2 34.4 30.8 (17)30.4

> 12 Months 0.0 36.4 100.0 (26)46.4 81.8 37.5 38.4 (26)46.4

Total (9)100.0 (33)100.0 (14)100.0 (56)100.0 (11)100.0 (32)100.0 (13)100.0 (56)100.0

Figures in the parentheses indicate number of SHGs

4.14 Even though, all 56 sample SHGs had availed two bank linkages, the distributional pattern of first two bank linkage revealed that about 64.3 per cent of SHGs had availed less than average amount (Rs.65,268). Age-wise, while, about 77.8 per cent of SHGs under three years old group had received less than the average amount (Rs.79,833), about 57.1 per cent of older SHGs had received more than the average amount (Rs.76,571). Three years old SHGs had received maximum amount per group, as compared to 4-6 years old SHGs (Rs.56,500) and seven and above years SHGs (Table 4.10). Table 4.10: Distributional Pattern of First and Second Bank Linkage Amount
(Rs.)

Age of Groups/ Time Gap Up to 3 4-6 years 7 & above Total

Total Loan 718500 1864500 1072000 3655000

Loan/ Group 79833 56500 76571 65268

Groups (%) receiving <average loan 77.8 (7) 69.7 (23) 42.9 (6) 64.3 (36)

Groups (%) receiving >average loan 22.2 (2) 30.3 (10) 57.1 (8) 35.7 (20)

Figures in the parentheses indicate number of SHGs

4.15 NABARD has devised the Credit Rating Index (CRI) under the SBL programme to facilitate the identification of groups for credit linkage. The CRI of the group was prepared by the Community Coordinator of DRDA while submitting the loan application of the SHG to the bank. In some cases it was observed that the rating was done very casually in as much as the SHGs were awarded 99% marks. The branch managers followed savings to loan ratio of 1:4 while sanctioning loans. In a few cases, the branch managers had their own perception while assessing the credit quantum and no linkage with the corpus appeared to be followed. It was also observed in some cases that in case of IGAs and MEs, the requirements and the viability of the activity are taken into consideration without recourse to the savings to credit ratio. 4.16 It was reported in all cases that the first loan accounts were invariably foreclosed to avail subsequent bigger loan. The analysis of bank linkage pattern revealed that 71.4 per cent of SHGs had received 3-4 bank linkages (Table 4.11). Age-wise, seven years and above group had received maximum per cent (78.6%) of 3-4 bank linkages as compared to three years old SHGs (55.6%). Average number of bank linkages availed by SHGs ranged from a minimum of three (three years old SHGs) to six (seven years and above).

30

Table 4.11: Linkage Pattern among Sample SHGs-Age-wise

(percentage)

SHGs Credit Linked Minimum 2 linkages 3 to 4 linkages 5 to 6 linkages Total Average No. of Linkages

Up to 3 44.4 55.6 0.0 (9)100.0 3

Age of Groups (in Years) 4-6 years 7 & above 12.1 0.0 72.7 78.6 15.2 21.4 (33)100.0 (14)100.0 4 5

Overall (8)14.3 (40)71.4 (8)14.3 (56)100.0 3

Figures in the parentheses indicate number of SHGs

4.17 The fist and second linkage were availed by all 56 sample SHGs, However, after second bank linkage, percentage of sample SHGs receiving repeat bank linkages gradually declined to 83.9 per cent (3rd linkage), 32.1 percent (4th linkage), 14.3 per cent (5th linkage) and 5.4 per cent (6th linkage) during the subsequent linkages. However, the range of linkages (minimum and maximum amount linked) increased from a minimum of Rs.5,000-Rs.50,000 in the 1st linkage to Rs.80,000-Rs.2,95,000 in the 6th linkage (Table 4.12). Table 4.12: Average Loan Amount in each Bank Linkage Received by SHG No. of Linkages 1 linkage 2 linkages 3 linkages 4 linkages 5 linkages 6 linkages No. of Groups Credit Linked 56 (100.0) 56(100.0) 47(83.9) 18(32.1) 8(14.3) 3(5.4) Range of Linkage Amount (Rs.) 5000-50000 15000-150000 25000-277500 40000-430000 50000-275000 80000-295000 Average Linkage Amount per Group (Rs.) 18277 46991 98319 87222 75625 151667 % Change ---157.1 109.2 -11.3 -13.3 100.6

*Figures in parentheses indicate number of SHGs credit linked

4.18 The Table also shows that the average amount linked per group increased from a low of Rs.18,277 (1st linkage) to a high of Rs.1,51,667 (6th linkage). The highest percent increase in average amount linked was observed in the 2nd linkage amount (157%) which explained the high level of upscaling of SHGs for taking up of IGAs/MEs and also reflects their entrepreneurial aptitude. Many of the members have been running low key manufacturing/retailing/processing outlets details of which have been discussed elsewhere in the report.

31

Chapter V Profile of SHG Members

The chapter to follow addresses the socio-economic profiles of the sample SHG households. In section one, the distribution of households according to level of economic activity, level of literacy, family size, age profile, etc are presented categorized on the basis of age of SHGs. As the SHG-Bank Linkage Programme basically catered to the poor and weaker sections of the society, how far the programme succeeded in terms of its targeting such segments of population has also been attempted in section two. Section three elaborates the asset structure of SHG member households before after joining SHGs. 1. Socio-Economic Profile Economic Activity 5.1 Farm activity constituted the major share accounting for 28 per cent of the sample households. About 22.3 per cent of the sample households relied exclusively on agricultural labour. This was followed by mixed activity (18.7%) and non-farm activity (15.9%). Off farm activity17 and other activity were observed in 10.6 per cent and 4.5 per cent of the sample households, respectively (Table 5.1). Age-wise, the share of farm, nonfirm and mixed activities were relatively more among SHG members pertaining the groups of seven years and above (75.5%) compared to members belonging to 4-6 years old groups (69.5%) and three years old groups (54.1%). The share of agricultural labourers was high for members belonging to three years old SHGs (23.2%), which implies that newer SHG members were yet to be upscaled to the level of taking up different IGAs/MEs. Table 5.1: Distribution of Households according to activities
(percentages)

Level of Literacy Farm Activity Non-Farm Activity Off-farm Activity Mixed Activity Agriculture Laborer Others* Total Level of Literacy Up to 3 29.8 14.8 18.4 9.5 23.2 4.3 100.0

SHG Age (years) 4-6 years 34.2 18.8 10.3 16.5 16.8 3.4 100.0

Overall 7 & above 18.0 21.1 10.9 36.4 4.5 9.1 100.0 28.1 15.9 10.6 18.7 22.3 4.5 100.0

*Others refer to SHG members like anganwadi workers, teachers, village book keepers, NGO animators, etc.

5.2 An analysis of the educational status of the sample households revealed that about 17.4 per cent of them were illiterate. About 31.6 per cent of the sample households could only sign (Table 5.2). The members studied up to primary and secondary levels were reported at 28.4 per cent and 22.6 per cent, respectively. The members without any formal education or illiterate were observed to be relatively less among members belonging to SHGs of seven years above (12.9%) than in three years old groups (16.1%). This was so because with the group becoming old, members learn among themselves alphabets. The literacy campaign the efforts of NGOs made many SHG members learn alphabets. Joining SHGs also made them realize the importance of education.

17

The off farm activity are those activities that are allied to agriculture like, dairy, sheep/goat/pig rearing, pisciculture, sericulture, etc.

32

Table 5.2: Distribution of Households according to Level of Literacy

(percentages)

Level of Literacy Illiterate Can Sign Primary Secondary Total Family size

SHG Age (years) Up to 3 4-6 years 16.1 19.7 38.7 32.0 25.8 24.7 19.4 23.6 100.0 100.0

Overall 7 & above 12.9 24.3 41.4 21.4 100.0 17.4 31.6 28.4 22.6 100.0

5.3 Nearly 73 per cent of the sample households had family size ranging between 4-6 members and 13 per cent reported a family size of more than 6 members (Table 5.3). Sample households reporting large sized (>6 members) families constituted 10.7 per cent for SHGs of 4-6 years old SHGs as compared to 17.7 per cent for three years old SHGs reflecting awareness creation on family planning and small family norm among older SHGs. Table 5.3: Distribution of Households according to Family Size
(percentages)

Size of the Family Upto 3 4-6 7-9 10 & Above Total Age of Members Up to 3 11.3 71.0 14.5 3.2 100.0

SHG Age (years) 4-6 years 15.2 74.2 7.3 3.4 100.0

Overall 7 & above 12.9 71.4 14.3 1.4 100.0 13.9 72.9 10.3 2.9 100.0

5.4 The largest proportion of the sample SHG members (51.3%) was in the age group of 26-35 years followed by the members in the age group of 36-55 years (33.5%) and 18-25 years (11.6%). A similar distribution pattern was observed across the ages of SHGs. The proportion of members according to age of SHGs in the age between 26-35 was 35.5 per cent for 3-years-old SHGs, 52.2 per cent for 4-6 years old SHGs and 68.6 per cent for SHG of 7 years and above, respectively (Table 5.4). An interesting observation is that the proportion of SHG members in the age group of 55 and above was reported only at 3.5 per cent, which shows that with advancing age, old people tend to leave the SHGs. The field study also revealed decline in membership of a few SHGs due to old age who could not save regularly.

33

Table 5.4: Distribution of SHG Members according to Age

(percentages)

Age (in Years) 18-25 26-35 36-55 55 & Above Total 2. Programme Targeting Social Group Up to 3 14.5 35.5 41.9 8.1 100.0

SHG Age (years) 4-6 years 15.2 52.2 31.5 1.1 100.0

Overall 7 & above 0.0 68.6 31.4 0.0 100.0 11.6 51.3 33.5 3.5 100.0

5.5 SBL programme envisaged for targeting, socially and economically weaker sections, particularly SCs/STs and Backward Classes (BCs). The proportion of members belonging to SCs/STs/BCs accounted for 77.4 per cent (Table 5.5). The coverage of the weaker sections in the groups of different ages revealed that over the years there was an increasing tendency towards covering more and more of weaker sections in the programme. The targeting of weaker sections in older groups of 7 years and above was 71.4 per cent whereas it had increased to 78.7 per cent in the 4-6 years old groups. Table 5.5: Distribution of Households according to Social Group
(percentages)

Social Group SCs/STs Backward Classes Other Castes Total Land Holding Status

Age of groups (Years) Up to 3 4-6 years 6.5 11.8 74.1 66.9 19.4 21.3 100.0 100.0

Overall 7 & above 15.7 55.7 28.6 100.0 10.6 66.8 22.6 100.0

5.6 The SBL programme also targets marginal farmers and landless in the rural segment of population. The landless/labourers constituted the major share of 54.2 per cent followed by marginal farmers (35.2%) and small farmers (9%). The proportion of landless/labourers was higher for 7 year old SHGs (62.9%) compared to 4-6 years (50%) and 3 years old SHGs (54.8%), which relflected that in the initial stages, more thrust was put to cover mostly agricultural labourers under SBL Programme (Table 5.6). Table 5.6: Distribution of households according to Main Occupation
(percentages)

Category Marginal Farmers (upto 2.5 acres) Small Farmers (2.5-5.0 acres Other Farmers (>5.0 acres) Agricultural Labourers Total 3. Asset Structure Asset Holding Pattern

Age of groups (Years) Up to 3 4-6 years 33.9 36.5 8.1 10.7 3.2 2.8 54.8 50.0 100.0 100.0

Overall 7 & above 31.4 5.7 0.0 62.9 100.0 35.2 9.0 1.6 54.2 100.0

5.7 The SBL programme had increased the productive assets of households like, milch cattle, work animals various consumer durables such as television, cycle, etc. maintained by a household. The asset structure

34

increased for about 65.8 per cent of the sample households. While about 24.2 per cent sample households reported no change in their asset holding pattern, about 10 per cent reported decrease in their asset size (Table 5.7). The decrease in asset size was due to selling out of milch/work animal due to fodder problem/death or selling out of land to meet health expenses/marriage, etc. The proportion of households reporting increased asset size showed positive correlation with the age of the SHGs. Table 5.7: Changes in the value of Assets of SHG members
(percentages)

Direction of Change Decreased Increased No Change Total Change in Value of Assets

Age of groups (Years) Up to 3 4-6 years 6.5 13.5 51.6 64.0 41.9 22.5 100.0 100.0

Overall 7 & above 4.3 82.9 12.9 100.0 10.0 65.8 24.2 100.0

5.8 An average household possessed movable assets, like, milch/work animals, consumer durables, like, TV, cycle, radio, etc. worth Rs.6,276 in the reference year (Table 5.8). There was an average increase of 37.5 per cent in the value of assets of member households belonging to 7 years and above group over the member households belonging to 3 years old groups. Item-wise, the milch cattle particularly dairy animals reported highest increase (41.2%) in asset value followed by consumer durables (29.3%) and work animals (5.4%). SHG members in large scale, particularly in Chittoor and Nizamabad districts had gone for purchasing milch animals due to the efforts by DRDA. Table 5.8: Change in Value of Movable Assets possessed by SHG Members
(Rs.)

Types of Asset (1) Milch Cattle/Poultry Work Animal Consumer Durables Overall Asset Distribution Pattern

Age of groups (Years) Up to 3 4-6 years 7 & above (2) (3) (4) 10598 12596 14964 4256 4331 4485 3908 4085 5052 6254 7004 8567

overall (5) 12719 4655 4530 6276

Change of Change of 4 3 over 2 over 2 (6) (7) 18.9 41.2 1.8 5.4 4.5 29.3 12.0 37.0

5.9 The frequency distribution of the sample households according to the value of assets between pre-and post-SHG situations revealed that there was shift in the pattern of holding of assets. About 12.9 per cent of the households were having movable assets of Rs.5,000 to 10,000 during pre-SHG period, whereas about 34.2 per cent had assets matching in the same value in post-SHG period (Table 5.9). Value of Movable Assets (Rs.) Up to 2500 2500-5000 5000-10000 10000-15000 >15000 Total Table 5.9: Distribution of SHG Members according to Value of Assets Households (%) Value of Immovable Households (%) Assets (Rs.) Before After Before After 46.8 25.2 Up to 20000 40.0 29.4 24.8 13.2 20000-30000 26.8 22.3 12.9 34.2 30000-50000 21.0 34.5 8.4 14.5 50000-70000 7.7 10.3 7.1 12.9 >70000 4.5 3.5 100.0 100.0 Total 100.0 100.0

35

5.10 Similarly, the proportion of households having movable assets up to Rs.2,500 declined in the post-SHG period (25.2%) compared to pre-SHG situation (46.8%). About 20 per cent of the households were having immovable assets of Rs.30,000 to 50,000 during pre-SHG period, whereas about 27 per cent had assets matching in value in post-SHG period.

36

Chapter VI Enterprise-Mix & Process of Graduation of SHG Members to Microenterprises

The chapter to follow assesses the process of graduation of SHG members, both in economic and social spheres and examines the impact of the same on undertaking different IGAs and MEs. It also elaborates how members diversify their occupation/enterprise pattern as the SHG progresses in credit linkages. I. Graduation Process of SHG Members i. Adherence to Group Norms and Rules 6.2 After the group is formed and takes its shape, members endeavor to strictly follow the norms and rules as framed by SHPIs. Members try to absorb and get attuned to the system through its leader. The study revealed that the leader ensures that

OGroup meetings are held regularly on a fixed date and time every month. OAll financial transactions-lending, borrowing, return of installments, etc. done only at the meetings in the presence of all members. OAll records are maintained regularly in the presence of the group members. Leader ensures that all
members bring passbooks, savings, loan installments and interest amounts to the meeting to facilitate further transactions.

OMembers not attending meetings, contributing monthly savings and repaying at least interest installments of loans are fined. OAll decisions-financial/non-financial are taken by consensus and group responsibility is ensured. OLeader ensures that individuals problems are also discussed and the course of action is determined. Group
members give all possible support as required in the situation. 6.3 The SHPI staff focused on streamlining such systems and all group members accorded importance to these rules as a means of ensuring transparency. Sample SHG members viewed that these rules acted as important factors and enabled them to have greater control and ownership over their groups. As regards to the selection of the leader, SHGs followed pure democratic priciples. SHGs selected their leader through voice vote or consensus. Active members who can interact with all outsiders, SHG members, bankers, SHPI staff and who can give their time and capability were selected as leaders. A member with personal integrity, honesty, and literacy along with management skills was given due weightage to become the leader. 6.4 As the SHGs were formed, the philosophy of savings was emphasized upon the SHG members. The SBL programme distinctly differs from other Micro Finance programmes across the world mainly in terms of its greater emphasis on savings. The basic philosophy of saving first and credit next is assumed to be one of the strength of the programme. From among the sample SHGs (56), 90 per cent of the SHGs opened SB A/C with the banks within a month. ii. Graduation in the First Year of Operation 6.5 The views of members in their graduation process in the first year of their operation have been presented in the Table 6.1. Once the SB account is opened and saving process started, gradually group members (69%) developed group ethics/coherence, group dynamics in the first four months of operation. In the next phase, bankers/SHPI staff/NGO animators started imparting training (27%) on social empowerment, solving social problems, which further build up group coherence among them. After six months of their operation, during 7-8

37

months, process of linkage with banks (48%) for credit linkage started. For others, it took more than eight months for reasons like, insufficient savings balance, no progress in group cohesiveness, inadequate follow up by NGOs/SHPI staff, etc. Once the credit linkage (first) is over, members started owning the group in a more coherent way. Members quenched their thirst for credit by availing bank credit and also fulfilled their consumption needs both from internal loaning and bank loan, which process (4 months) further strengthens their control and ownership (45%) of the group as their own money was at stake. Then members started showing concerns on social/womens issues, development issues, etc (44%). Once the group started nearing 12 months of existence, propensity for repeat bank loan aggravateed and members started thinking to assist husband/son in their existing ventures (28%). The process was a continuous one. Table 6.1: Process of Graduation experienced by SHGs Members in 12 Months Period
(percent of SHGs)

No 1 2 3 4 5 6 7 8

Activity 1 Group formation and opening of Saving Account Development of group ethics/ coherence, group dynamics Training on socio empowerment, solving social problems First credit linkage with Banks Fulfilling consumption needs from bank loan/internal saving Development of greater control and ownership of their groups. Concerns on social/womens issues, development issues Thinking process on assisting family ventures economically 67 69 2 3 4

Period - Months 5 6 7 8 9

10

11

12

27 48 51 45 44 28

iii. Access to Financial Resources - Raising Financial Resources through Savings 6.6 Participation in SBL programme created an environment for women to access financial resources to cater to needs of families in times of crisis and for consumption needs such as household requirements, health care, books and school fees etc. The resources used for internal lending mostly came from SHG savings and RFA. The savings pattern not only increased the self-reliance in the credit needs of the group members, but also helped in efficient deployment of credit among the members as their own money was at stake. The analysis of savings by members before and after SHG situation revealed that the mean annual savings per household increased by 184 per cent (Table 6.2). The incremental saving was higher for older groups (490%) as 7 years and above groups were basically DWCRA groups consisting of poor marginal and landless labourers whose savings were very less before joining SHG. Table 6.2: Mean Annual Incremental Savings by SHG Members-SHG Age wise
(Rs.)

Category Up to 3 3-4 years 7 & above Overall

Before SHG 1013 639 411 688

After SHG 1476 1965 2423 1955

Incremental Savings 463 1326 2012 1267

Percentage 45.7 207.5 489.5 184.2

6.7 The analysis of mean annual savings by SHG members, age-wise revealed that saving by members of 3 year old SHGs had increased by 75.6 per cent as against savings by 7 years and above old SHGs. Increased saving correspond to the age of the groups was the expected trend since over the years the members recognize

38

the need of savings and had the tendency to increase the rate. Savings by members also increased in banks (58.1%) and other modes like chit funds, insurance, etc. (35.2%). Higher mean annual savings by older SHG members in banks and other agencies indicated the positive impact of the programme as a resource mobilization due to increased standard of living. Overall, the mean annual savings by older SHG members as compared to 3 years old group members increased to Rs.2,423 from Rs.1,476, a rise of 64.2 per cent (Table 6.3). Table 6.3: Mean Annual Savings by SHG Members-SHG Age wise/Agency-wise
(Rs.)

Category of Savings (1) Self/SHG Bank Others Total Access to Credit

Up to 3 (2) 820 420 236 1476

3-4 years (3) 1110 578 277 1965

7 & above (4) 1440 664 319 2423

Overall (5) 1123 554 277 1955

Change of (3) over (2) (6) 35.4 37.6 17.4 33.1

Change of (4) over (2) ( 7) 75.6 58.1 35.2 64.2

6.8 Easy access to credit mainly from institutional sources is one of the major objectives of SBL programme and thus it aims at credit widening (expanding the clientele base) and credit deepening (enhancing quantum of loan per borrowers). Access to credit also resulted in improvement in families economic condition and also reduced indebtedness to moneylenders. Women reported a greater level of independence in economic decisions, like purchase of household assets, other household requirements and management of productive assets. Asset base of member households increased through easy access to credit In addition to bank linkage, internal lending was regular in about 60 per cent of groups. SB account balance in the sample groups varied from a meager Rs.800 to as high as Rs.22,000. A few groups had also kept their saving amount as fixed deposit (FD) instead of utilizing the same for internal loaning with which they were loosing interest money as interest rate on internal loaning is much higher than what they get under FD, or keeping money idle in SB account. The reasons for low internal lending viewed by members were, Poor group dynamics. Group decision not to touch the own savings as higher level of savings in bank account would ensure bigger bank credit to them. Branch managers discourage/refuse to allow such withdrawal from SB account before credit linkage. 6.9 An analysis of borrowings by members before and after SHG revealed that the mean annual borrowings per household increased by 60.3 per cent (Table 6.4). The incremental borrowings was higher for older groups (72.7%) as majority of members had graduated to the level of initiating IGAs/MEs thus increasing the necessity loan for asset creation/working capital purposes. Table 6.4: Mean Annual Incremental Borrowings by SHG Members- SHG Age wise
(Rs.)

Category Up to 3 4-6 years 7 & above Overall

Before SHG 8202 5599 4445 6082

After SHG 14685 15048 16282 15338

% Change 44.1 62.8 72.7 60.3

6.10 The analysis of agency-wise mean annual borrowing by SHG members revealed that borrowings by members of older SHGs had increased by 95 per cent compared to borrowings by 3 years old SHGs (Table 6.5). Increased borrowings correspond to the age of the groups was the expected trend since over the years the members get repeated bank linkages corresponding to their need for venturing into different IGAs/asset

39

creation or assisting family ventures. However, borrowings by members from banks marginally declined (6.3%) as many older SHGs households had been diverting their linkage amount towards crop loan thus correspondingly reducing their crop loan intake from banks. Table 6.5: Mean Annual Borrowings by SHG Members-SHG Age wise Up to 3 3-4 years 7 & above Overall Change of (3) over (2) (2) (3) (4) (5) (6) 7950 8155 7450 7852 2.6 2580 873 725 1393 -66.2 4155 6020 8107 6094 44.9 358 2385 645 1129 566.2 14685 15048 16282 15338 2.5

Category of Savings (1) Banks ML/FR* SHGs MACS/VO Total

Change of (4) over (2) ( 7) -6.3 -71.9 95.1 80.2 10.9

*Money Landers/Friends & Relatives, Chit Funds, Commission Agents, etc.

6.11 The study revealed that about 38 members (12.3%) had accessed loans from Mutually Aided Cooperative Societies (MACS) floated by different NGOs to pay for education of children, particularly paying donations, tuition fees, etc. and also initiating new MEs. In order to venture into economic activities about 8 per cent of members had accessed fund support from VOs/MSs which were directly given to SHG members through the group. Multiple financing to the same member by different agencies has been observed. Bankers viewed that such a trend may pose a problem of repayment as many members may not be able to absorb large-scale multiple financing. 6.12 After Banks and SHGs, moneylenders were still the major source of borrowing for 3 years old SHG members. However, because of repeated linkage to older SHGs as also loan arrangement from MACS/VOs, dependence on moneylenders by older SHG members had significantly declined (66.2% by 4-6 years old SHG members and 71.9% by 7 years & above SHG members). In the process, there is reduction in dependence of members for loans from moneylender from about 48 per cent before SHGs (149 members) to the level of 26 per cent after SHG (79 members). Thus, there was an elimination of about 50 per cent of the loans of moneylenders as a result of this programme. With SHG, credit widening was also achieved. About 42 per cent of the members who were non-borrowers before joining got the benefits of banking at their doorstep. Only 2 members (0.6%) had not borrowed after joining SHG (Table 6.6). After joining the SHG, members level of borrowings also improved as there was a perceptible increase (25.8%) in the members availing loans up to Rs.10,000. Table 6.6: Distribution of SHG Members according to Level of Borrowings Loan Range (Rs.) Households (%) Before SHG After SHG Difference Nil Borrowing 41.9 0.6 -41.3 Up to 1000 16.5 12.4 -4.2 1000-5000 19.4 27.7 8.4 5000-10000 14.8 40.6 25.8 10000-20000 4.8 9.0 4.2 20000 & Above 2.6 9.7 7.1 Total 100.0 100.0 --iv. Graduation Processes through Bank Linkages 6.13 All SHG members had graduated from a lower amount of bank loan in the first bank linkage to higher and higher amounts of loans in the subsequent linkages. In majority of the groups, loans were equally distributed and out of 310 members, a total of 308 members had availed the benefits of bank linkage, thus distributing the credit benefits to one and all. However, it was also observed that a few women, particularly

40

first or second leader tend to take more loans than the others, which was decided in the meetings on consensus18. It was also observed that the demand for loans from certain class of members was relatively low, which indicated that

OThese members were either poor and not able to absorb larger doses of credit, particularly on account of lack of foresight to scale up to new ventures. OCertain members, particularly, agricultural labourers, landless poor who were engaged in bidi making, leaf
plate making, toddy tapping, etc. whose initial asset base was poor were not able to shift to a new venture with additional loan. in savings and inclined to run the group to pass out their time. However, they played a leading role in building unity and coherence in the group.

OCertain members were better off and did not show any demand for higher loan. They were more interested
6.14 As repeat loans were availed by members, majority of loans had been given for productive activities, although initially most loans were taken for consumption needs. More than 7-year-old group members had graduated from an amount of Rs.1,986 (first linkage) to a high of Rs.35,000 (sixth linkage). Similarly, threeyear-old SHG members graduated from Rs.1,373 in the first linkage to Rs.10,229 in the third linkage (Table 6.7). Table 6.7: Average Loan Received by SHG Members in each Bank Linkage
(Rs.)

No. of Linkage First Second Third Fourth Fifth Sixth

Up to 3 Membs. Average with Loan Amount 61 1373 58 5709 35 10229 -------------

4-6 years 7 and above Membs. Average Membs. Average with Loan Amount with Loan Amount 175 1154 65 1986 173 3085 68 4854 150 6467 49 14829 66 8331 22 6205 40 8030 16 11975 14 7429 4 35000

Overall Membs. Average with Loan Amount 301 1375 299 3996 234 8746 88 7824 56 9160 18 13556

6.15 More than 7-year-old group members availed a cumulative average loan amount of Rs.24,332, an increase by 95 per cent over the cumulative loan amount availed by 3-year-old group members and 61.5 per cent over the cumulative loan amount availed by 4-6-year-old group members (Table 6.8). Group members viewed that they had control over the income from these resources. More than 50 per cent of members reported their work status as cultivators or agricultural labour households. In Nekonda and Thorur mandals of Warangal district, there were members in NFS activities such as Kirana (grocery) shops, bangles shops, tailoring, lathe works, etc. Thus it is inferred that the SHGs provided a forum for economic upliftment of women of small and marginal farmer and labourer households. Table 6.8: Loan Availed by SHG Members (Cumulative of all the linkages) -Age wise Age of Total Memb. with Total Loan Average Loan Percent Change Membership Members Bank Loan (Rs. In lakh)** Amount (Rs.)** Up to 3 4-6 years 7 & above Overall 62 178 70 310 62 178 68 308 7.73 26.81 16.54 51.07 12466 15060 24322 16583 --20.8 61.5 95.1*

*Percentage change of 7 years & above SHG Members over 3 years old SHG Members ** Cumulative of all the linkages availed by SHG members in each age group.
18 when the next linkage takes place, one or two other members takes the advantage of availing a little higher dose of credit. This way these members acted as the initiators of IGAs/MEs and imbibe others to follow suit.

41

v. Access to Public Resources 6.16 With SHGs, members got opportunities for gaining and sharing new learning and information. Members learned about management, accounts and money transaction. This created a sense of self-reliance and ownership of their resources in contrast to the earlier situation where they even did not dreamt of visiting banks. With the opening of the SB account, they started establishing direct contact with the banks and had gained mobility to attend meetings at VO and MS level. Through VOs/MSs, members were sent on training at the organization level and even traveled to distant places on exposure visits. Women were able to access information on a range of issues such as government schemes, i.e., Rural Employment Guarantee Scheme, panchayat raj procedures, Grama Shabha, ration system, etc. vi. Changes in the Family Dynamics - Gender Roles and Lifestyles 6.17 The study observed that changing family attitudes towards women mobility and education of children as a major impact of the SBL programme through greater access to resources. Family members perceived changes in women in their growing economic strength as they support to take more economic decisions within the household, exercise choices in the nature of work they perform and in the reallocation of tasks among family members. Members felt that they were given greater respect within the home. Many girl children got more opportunities to attend school. The members themselves viewed the improvements in their status and expressed aspirations for new roles in socio political fields. Women leaders were also keen to address issues of violence and alcohol consumption in public forums. The study also observed that men supported their wives economically only in the initial phases in contribution towards saving. Thereafter women managed their own group functions. 6.18 Group members reported changes in their dress and food habits. Awareness on nutrition values changed their food habits. Many members had repaired their houses/ constructed a semi-pucca house in place of a kutcha one. The income of members was seen used towards school-books/paying school fees/for children. Women expressed changes in their perception about themselves as members of the SHGs. The opportunity to participate in the meetings of the SHGs gave an exposure to different ideas and perspectives and enabled members to develop opinion. They felt that they received greater support from their families and more respect as individuals. As regards to changes in family dynamics, in relationships with their husbands, most women reported an enhanced role in decision-making. II. Diversification Process to IGAs/MEs 6.19 An analysis of utilization of bank credit by members, linkage-wise, revealed that in the first bank linkage, out of 301 members availing credit, 79 per cent utilized the loan for consumption purposes, which gradually declined to 9 per cent by fifth linkage. Similarly, while in the first linkage, only 2.7 per cent of members created one or other productive assets, in the sixth linkage 29.6 per cent created assets for productive purposes (Table 6.9). With repeated linkages, utilization of loan for input purchase, IGA, asset creation increased from the level of 7.0 per cent, 3.3 per cent and 2.7 per cent in the first linkage to 17.6 per cent, 41.2 per cent and 29.4 per cent, respectively in the sixth linkage. A common practice, however, was that while internal loans out of SHG savings were utilized mostly for consumption and other emergency household needs, bank loans were utilized for initiating IGAs, creating assets for micro enterprises, increasing stocks of enterprises or, assisting family ventures, etc. Among the investments in productive assets (microenterprises), dairy animals, kirana shops, tailoring, jute bag making, hotels, fancy /stationery shops, flourmills, etc. topped the list (discussed in detail in the next Chapter).

42

Table 6.9: Linkage-wise Utilisation of Loan Amount by SHG Members

(percentages)

No. of Linkages 1st 2nd 3rd 4th 5th 6th

Consmn./ Health/Edn 79.0 58.9 41.9 24.2 8.9 0.0

Family Venture 8.0 13.0 6.8 6.9 17.9 11.8

Input purchase 7.0 10.4 15.8 21.8 21.4 17.6

Own IGA 3.3 10.7 20.5 20.7 32.2 41.2

Asset Creation 2.7 7.0 15.0 26.4 19.6 29.4

Total (301) 100.0 (299) 100.0 (234) 100.0 (88) 100.0 (56) 100.0 (18) 100.0

Figures in the parenthesis indicate number of members availed loan out of each bank linkage

6.20 With increased linkages, group members upgraded their own primary occupation or completely diversified to a new occupation. Households whose primary occupation was agriculture before SHG situation were able to either support the enterprise through purchase of inputs or diversified their enterprise to dairy animals like, cow, buffaloes and goats/sheep rearing. With repeated linkages, such members were able to purchase more animals to increase their earnings. Similarly, members whose household occupation was tailoring during pre-SHG situation, were able to graduate/diversify to embroidery in the first shift and to cloth shops in the second. Households having kirana (grocery) shops earlier, were able to add new enterprises like, bangles shop/stationery/STD booth, etc. with repeated linkages (Table 6.10). Such trends indicated that members preferred such enterprises where they were comfortable, invest less, devote time to look after the family responsibilities, could manage the enterprise with not much managerial skills, training, etc. Table 6.10: Gradual Shift/Diversification of SHG Households from Primary Enterprises to IGAs/MEs No. Household Primary Occupation 1st Shift 2nd Shift 3rd Shift 4th Shift Tamarind Tree Vegetable Mid-day Meal Petty Shop/ Leasing/Dairy Vending Cooking Small Hotel Agri. Labourer/Bidi/ 1 Jute Bag Making Leaf Plate Makers Knives Selling Cycle/Bottle Brush Making 2 Agriculture Dairy/Sheep 3 Cloth shop Readymade garments Shoe Selling 4 Kirana shop Bangles Shop, Stationery STD Booth 5 Tailoring Embroidery Cloth Shop 6 Tea Stall Snacks Making Tailoring Embroidery Cloth shop 7 Housewives Kirana Shop Fancy Shop/ Pickles Making Hotel 6.21 The process of diversification from household occupation to subsidiary/secondary occupation was observed to be very frequent and more in number in case of agricultural labourers. Agriculture labour households saw graduation from tamarind tree leasing to vegetable vending, mid day meal cooking and further to petty shop/small hotel. Lack of skill, poor resource base, landlessness, etc. worked as deterrent for such households to venture into enterprises with asset creation. Households with traditional skill based occupations like, pottery, weaving, carpentry, barbers, knives making, floor milling, etc. (traditional occupations) had not diversified to any new occupation. However, they utilized the loan amount in expanding the enterprise through purchase of raw materials, increasing the stock, etc. Women used their time in a little larger scale in such enterprises by engaging themselves in fringe activities. Women labourers moved to neighboring villages selling products such as bangles, vegetables etc, Improvement in management practices, increase in time spent on enterprise were also reported. With more linkages, SHG members added new occupations to their primary enterprises. Age-wise, older SHG members had gradually added more number of occupations to their

43

household as compared to new SHG members (Table 6.11). For newer SHG members more members had only single occupations (66% for 3 year old member households and 52.8% for 4-6 year old member households) Table 6.11: Categorizing SHG Households with number of Occupations Age wise
(percentages)

Age/Occupations Up to 3 4-6 years 7 Years & above total

One 66.1 52.8 37.1 (161) 51.9

Two 25.8 38.8 41.4 (114) 36.8

Three 8.1 6.2 17.1 (28) 9.0

Four 0.0 2.2 4.3 (7) 2.3

Overall (62)100.0 (178)100.0 (70)100.0 (310)100.0

Figures in the parentheses indicate number of SHG Members.

6.22 SHG members initiating different economic activities were grouped into three categories as (i) members having IGAs, (ii) members having MEs (with asset creation) and (iii) members without any economic activities, i.e., Non-IGAs/MEs. While 41.9 per cent had initiated/supported different IGAs i.e., both self managed IGAs (SEMIGAs) and Family Managed IGAs (FAMIGAs). About 28.4 per cent members had ventured into MEs with asset creation. These MEs were both Stand Alone Micro enterprises (SAMEs) and Family Owned Micro enterprises (FOMEs). A total of 92 members (29.7%) had not initiated any IGAs/MEs and had utilized money solely for different consumption purposes (Table 6.12)19. Average loan amount availed by members with MEs, IGAs, and non-IGAs (NIGAs) were worked out to Rs.24,089, Rs.17,171 and Rs.8,210, respectively. Average loan availed by members with MEs was higher by 193 per cent compared to the loan availed by Non IGAs members. Similarly, members with IGAs availed 109 per cent more loan compared with Non-IGA members. Even though linkage amounts were distributed equally among SHG members, certain members particularly, leader/second leader/one or two other members availed higher loan amount to initiate enterprises/IGAs which is reflected in the higher loan amount for the categories of IGAS/MEs as compared to Non-IGA categories. An analysis of age-wise membership in SHGs showed that while 12.9 per cent of members of 3-year-old SHGs had graduated to MEs, 31.5 per cent of 4-6 year old groups and 34.3 per cent of 7 year old groups had graduated to MEs status. Through the intervention of DRDA, microenterprises had been initiated in the study districts in the form of procurement of red gram, maize, etc (Appendix V). Table 6.12: Grouping of SHG Members Economic Activities and Average Loan Availed
(Rs.)

No. 1. 2. 3.

Categories Non IGAs IGAs MEs Total

Total Members 92 130 88 310

Share (%) 29.7 41.9 28.4 100.0

Avg. loan amount (Rs.) 8210 17171 24089 16476

III. Determinants of Loan Utilisation by SHG Members 6.23 The study observed that there was high degree of correlation between empowerment and purpose for which loans are used. More socially/ economically empowered members were coming forward to

Reasons for the same were that (i) these members were the poorest of the poor. Their capacity to absorb credit is very low and they lack of foresight to venture into new IGAs/MEs. (ii) Most of such members are agricultural labourers, landless poor who were engaged in their traditional occupations like, bidi making, leaf plate making, toddy tapping, etc. and their initial asset base was poor for which they were not able to diversify to a new IGA/MEs with loan from SHGs. (iii) the entrepreneurial faculty of such members are very poor and they lack education, expertise in diversifying to a completely new occupation. (iv) certain members mostly rely on earning income from wage employment and they lack confidence in diversifying to a completely new self employment venture.

19

44

initiate/support enterprises. An analysis based on correlation matrix of certain variables like, net income earned, savings deposit, loan amount, age and literacy level to examine the determinants of loan utilization by SHG showed that savings deposit and loan amount have significant correlation with the net income earned. Both are also found to be statistically significant (Table 6.13). Table 6.13: Correlation Matrix of Variables Determining Loan Utilisation Variables Net Income Saving Loan Amount Age of Earned Deposit Member Net Income Earned 1.000 0.221** 0.344** 0.018 Saving Deposit 0.221** 1.000 0.411** 0.032 Loan Amount 0.344** 0.411** 1.000 -0.014 Age of Member 0.018 0.032 -0.014 1.000 Literacy Level -0.011 -0.056* 0.074 -0.234**
**Correlation significant at the 0.01 levels. * Correlation significant at 0.05 levels

Literacy Level -0.011 -0.056* 0.074 -0.234** 1.000

6.24 The analysis also revealed that the savings deposit determines the borrowing capacity, which consequently led to increase in income and employment levels. Contrary to the general perception, age and level of literacy had very weak correlation with the net income of the SHG members. As far as the literacy level was concerned, the correlation was found to be rather negative, which might be due to the fact that the most of the members belonged to the age group of below 35-45 years and had studied mostly up to the primary level.

45

Chapter VII Cost of Investments and Economics of Microenterprises

The present chapter analyses the economics of investments incurred on microenterprises. SHG members who had set up MEs had no records available with them on capital investments, working capital requirements, production, sales, costs and profits, etc. Members were operating such ME units on a very limited scale of operation with limited raw material stock. In such situations, for calculating economics of MEs, all parameters like, gross income, cost of production-both variable and fixed, volume of sales, net profit/income were computed on per day/week/month basis which later on were annualized depending on the number of working days per annum. Memory bias of the member was also visible while answering various quarries on MEs. 7.2 A total of 88 members had set up MEs with creation of assets (Table 7.1). Dairy units (33%) constituted the major share followed by kirana shops (14.8%), tailoring units (12.5%), flour mills (6.8%), jute bag making (5.7%), snacks and pickles making (3.4%), etc. Table 7.1: Various Microenterprises and IGAs promoted/assisted by SHG Members Microenterprises Membs. Per cent IG Activities * Membs. 6 1. Floor Mills 6.8 Cloth Shop 10 11 2. Tailoring 12.5 Small Hotels 10 13 3. Kirana Shop 14.8 Kirana Shops 3 3 4. Small Hotels 3.4 Bangles Selling 2 5 5. Jute Bag Making 5.7 Cycle/Bottle Brush Making 6 18 6. Dairy Animals (CBCs) 20.5 Fish/Egg Selling 3 11 7.Dairy Animals (GMBs) 12.5 Embroidery 3 5 8. Sheep Rearing 5.7 Knives Selling 16 3 9. Snacks/Pickles Making 3.4 Mid-Day Meal Cooking 4 2 10. Knives Making 2.3 Tailoring 10 2 11. Bangles Shops 2.3 Vegetable Selling 5 1 12. Bakery Unit 1.1 Weaving 14 1 13. Chicken Selling 1.1 Pottery 3 1 14. Saloon 1.1 Shoe Selling 2 1 15.Photoframe Making 1.1 Input Purchase for Crops 16 1 16.Motor Cycle Rep. 1.1 Carpentry 3 1 17.Musical Instruments 1.1 Tamarind Tree leasing 3 1 18.Lathe Works 1.1 Flower Selling 2 1 19.Catering Services 1.1 Dairy Animals (Fodder) 15 1 20. Crane Machine 1.1 -----88 Total 100.0 Total 130
*Mainly for working capital requirements of the activities

Per cent 7.7 7.7 2.3 1.5 4.6 2.3 2.3 12.3 3.1 7.7 3.8 10.8 2.3 1.5 12.3 2.3 2.3 1.5 11.5 --100.0

I. Sources of Investments 7.3 The sample flourmill units (6) operated on job order basis. Capital investment on motor, huller, etc. was worked out to Rs.26,667 per sample. About 70 per cent of the cost of investment was availed from SHG loan and 12.5 per cent, 6.3 per cent were taken from MACS and money lenders at 15.5 per cent and 36 per cent rate of interest. They had utilized their own money to the extent of 11.2 per cent. As these units were basically undertaking job works, their working capital was limited to making payments for electricity, lubricants, repair

46

and maintenance, rent, etc. and worked out to Rs.4, 357. The tailoring units mostly received local stitching orders and made garments like frocks, skirts, ladies garments, etc. Some units used to carry out alteration/repair of old garments on payment. Two units were receiving orders in bulk for stitching dresses from businessman. The capital investment was in the form of sewing machines, interlocking machines, cutting tables, scissors, etc. The sample units had one to two sewing machines and interlocking machines depending on the scale of operations. None of the sample borrowers incurred any expenditure on worksheds as the units were run in the residential premises. Their capital investment was worked out to Rs.12,255, of which 81 per cent was availed from SHG and rest their own and from money lenders (Table 7.2). Table 7.2: Cost of Investment (CoI) and Sources of Funds Membs. CoI Sources of Funds (%) (Rs./Unit) SHG Own ML/FR* 1 Flour Mills 6 26667 70.0 11.2 6.3 2 Tailoring 11 12255 81.0 10.4 8.6 3 Kirana Shop 13 13454 56.5 7.5 36.0 4 Small Hotels 3 7667 100.0 0.0 0.0 5 Jute Bag Making 5 5000 100.0 0.0 0.0 6 Dairy Animals (CBCs) 18 10159 79.8 0.0 17.0 7 Dairy Animals (GMBs) 11 12571 94.0 0.0 3.1 8 Sheep Rearing 5 11800 83.1 0.0 0.0 9 Snacks/Pickles Making 3 19800 60.6 14.1 0.0 10 Knives Making 2 57000 61.4 17.5 21.1 11 Bangles Shops 2 5000 100.0 0.0 0.0 12 Bakery/Bread Making 1 87500 38.9 0.0 61.1 13 Chicken Selling 1 5000 100.0 0.0 0.0 14 Saloon 1 8483 76.4 23.6 0.0 15 Photoframe Making 1 1500 100.0 0.0 0.0 16 Motor Cycle Rep. 1 20000 90.0 10.0 0.0 17 Musical Instruments 1 14000 100.0 0.0 0.0 18 Lathe Works 1 30000 33.3 0.0 66.7 19 Catering Services 1 7000 100.0 0.0 0.0 20 Crane Machine 1 35000 14.3 57.1 28.6 Average 88 19493 77.0 7.6 12.4 No. Microenterprises
*ML/FR-Money Landers/Friends and Relatives **Availed Rs.50,000 from MACS and 25,500from SHG to utilize as working capital

MACS 12.5 0.0 0.0 0.0 0.0 3.2 2.8 16.9 25.3 0.0 0.0 0.0 0.0 0.0 0.0** 0.0 0.0 0.0 0.0 0.0 3.0

7.4 The kirana/petty shop units comprising a total of 13 samples were run on a very small scale, invested in containers of both aluminum or tin and wood, bottle containers, wodden wall units, weighing tools, etc., which worked out to Rs.13,454 per unit. These units invested about 56.5 per cent of capital investment from SHG loan and 36 per cent from friends/relatives/money lenders. Members in certain occasions utilized SHG loans as working capital (Rs.14,026) to replenish the stock. 7.5 Dairy animals were widely taken by the SHG members in Chittoor and Nizamabad districts. Preferences for dairy enterprises over other MEs in the study area was due to the continuous drought for the past few years making agriculture un-remunerative. The DRDA also promoted the activity on a large scale in the study districts. Of the total sample, 28 members had dairy enterprise comprising Cross Bred Cows (CBCs) in Chittoor and Graded Murrah Buffaloes (GMBs) in Nizamabad and Warangal districts. The average cost of cows and buffaloes were worked out to Rs.10,159 and Rs.12,571 per animal, respectively. The loan from SHG was the major source for buying dairy animals. Similarly, one member each was engaged in bakery, lathe works, photoframe making, etc. The lathe works unit was engaged in repairing agricultural implements during agricultural seasons. The memberson got training was running the unit. This unit mostly required working

47

capital to purchase iron rods of various sizes, iron sheets, electricity charges, lubricants, etc which was out to Rs.10,301. The member had availed about 66.7 per cent of loan from outside to initiate the enterprise.

Returns on Investment
7.6 The returns on investment for the ME units has been analysed on the basis of factors such as costs of inputs, price of output/services, gross income and net income, etc. All estimates of costs and benefits have been annualized with valuation at the reference year prices (2004-05).

The gross income has been worked out in terms of sale proceeds of output/services rendered. Except two to three units, i.e., bakery and knives making units, all other units were operating on per day/job work basis, gross income was worked out on per day basis which was later annualized on the basis of total number of working days in a year. The cost of production was defined in terms of variable cost/operating cost and fixed variable cost of the unit. The operating cost consisted of raw materials/ other inputs used, wages to workers (only for four units, i.e., bakery, one kirana shop, knives making, photo frame making) overhead expenses, rent, electricity, etc. The fixed cost consisted of interest on investment (as charged by SHGs) and depreciation (as per written down depreciation method). Annual operating cost was worked out on the basis of total number of working days in a year. Considering the heterogeneity of investments and variations in scales of operations and investment in assets, the net income has been worked out per Re.1/- of investment for meaningful comparison across activities covered under the study. Economics of ME units was also assessed with ratios. The ratios like, sales to operating cost, to total cost and net income to sales, etc have been worked.

7.7 For a flour milling unit, the total cost was reported at Rs.49,133. The total income and net income worked out to Rs.59,700 and Rs.10,567 respectively. The annual net income per Re. 1/- of investment worked out to Rs.0.13. The net income varied from Rs.7,820 for dairy enterprise (CBCs of 2 animal unit) to 48,729 for bakery unit. In terms of percentage ratio of sales to operating cost indicating current viability, ranged from 119.4 per cent (crane machine unit) to 178.1 (musical instruments). The ratio of sales to total cost indicating profitability of enterprises ranged from 108.1 per cent (floor milling) to 151.5 per cent (musical instruments). The net incomes as per cent to sales ranged from 16.2 for the crane machine unit to 43.8 for the musical instrument unit. The net income per Re.1/- of investment ranged from 0.12 for crane machine unit to 0.42 for catering services unit (Table 7.3). Table 8.3: Investment and Returns from ME Units
(Rs./Unit)

No. Microenterprises 1 2 3 4 5 6 7 9 10 11
20

Floor Mills Tailoring Kirana Shop Small Hotels Jute Bag Making Dairy Animals (CBCs) Dairy Animals (GMBs) Snacks/Pickles Making Knives Making Bangles Shops

Total Cost20 49133 33828 71919 88066 27132 25205 25466 71120 91266 32350

Prod. Value 59700 43575 92381 110333 38415 33025 34950 101600 127516 42000

Net Income 10567 9747 20462 22267 11283 7820 9484 30480 36250 9650

Sales/ OC 121.5 128.8 128.5 125.3 141.6 131.0 137.2 142.9 139.7 129.8

NI/ Sales 17.7 22.4 22.1 20.2 29.4 23.7 27.1 30.0 28.4 23.0

Sales/ TC 108.5 119.3 123.4 122.9 136.1 140.8 133.4 134.6 122.8 125.6

NI/Re.of Invt. 0.13 0.20 0.23 0.23 0.34 0.21 0.23 0.32 0.23 0.25

Total cost is the combination of variable cost and fixed cost of which variable cost consisted of labour cost, material cost, interest cost on working capital, etc. and fixed cost consisted of interest on block capital and depreciation cost.

48

12 13 14 15 16 17 18 19 20

Bakery/Bread Making Chicken Selling Saloon Photoframe Making Motor Cycle Rep. Musical Instruments Lathe Works Catering Services Crane Machine

102996 41555 28250 111525 23800 17550 17450 25600 75400

151725 56000 40500 135525 38250 31250 28250 40000 90000

48729 14445 12250 24000 14450 13700 10800 14400 14600

147.3 134.8 143.4 121.5 160.7 178.1 161.9 156.3 119.4

32.1 25.8 30.2 17.7 37.8 43.8 38.2 36.0 16.2

124.1 131.3 134.5 121.2 135.6 151.5 117.5 147.4 108.3

0.23 0.30 0.32 0.21 0.30 0.40 0.20 0.42 0.12

7.8 The annual net income realized per Re.1/- of investment varied depending upon the scale of operation. Relatively low net returns in other activities do suggest that there are imperfections in provision of linkages regarding procuring raw materials, training and identification of marketing outlet and entrepreneurial abilities. It has to be kept in mind that the returns on investment would have been better had the drought not affected the study districts during the previous two years.

49

Chapter VIII Income and Employment Generation by MEs Promoted by SHG Members
The chapter to follow analyses the income and employment generated by SHG members who have promoted MEs/IGAs. I. Income Generation (i) Before and After SHG Situation 8.2 The SBL programme with better access to credit brought in its wake, increased income to the SHG member households. The average net income before-SHG and after-SHG situations worked out to Rs.16,224 and Rs.30,339, respectively (Table 8.1). The incremental net income was worked out to Rs.14,115, an increase by 87 per cent. The age of SHGs also had a positive impact on the incremental net income. The average incremental net income increased from Rs.4,800 in respect of SHG households of 3 years (25%) to Rs.22,389 for SHG households of 7 years and above (162%). Table 8.1: Mean Incremental Income by SHG Members-Age wise
(Rs.)

Category Up to 3 4-6 years 7 Years & above Overall

Before SHG 19310 15582 13780 16224

After SHG 24110 30738 36169 30339

Incremental Income 4800 15156 22389 14115

% Increase 25 97 162 87

(ii) ME/IGA households vis--vis Non-ME/IGA household 8.3 The income generated by ME households increased by 22 per cent in comparison to IGA households and by 70.5 per cent in comparison to Non-IGA households (Table 8.2). For ME households, 41.2 per cent of household income were generated from the ME while rest 58.8 per cent was generated from other household enterprises. For IGA households, the same was 39.8 per cent and 60.2 per cent, respectively. This was the result of use of more and more credit towards MEs. Table 8.2: Mean Net Income Generated by SHG Households Enterprise Category-wise
(Rs.)

No Enterprise Category 1. 2. 3. 4. 5. 6. ME Households IGA households Non-IGA/ME Households Overall % (+) or (-) of (1) over (2) % (+) or (-) of (1) over (3)

Net Income generated from MEs/IGAs Other HHAs* 17652 (41.2) 20193 (58.8) 12321(39.8) 18652 (60.2) --22198 (100.0) 14987 (49.4) 20348 (50.6) (+) 43.3 (+)8.3 --(-)9.0

Total Net Income of Household 37845 (100.0) 30973 (100.0) 22198 (100.0) 35335 (100.0) (+)22.2 (+)70.5

*HHAs-Household Activities. Figures in the parentheses indicate percentages

(iii) Single Occupation Households vis--vis Multiple Occupation Household 8.4 With more linkages, SHG members not only expanded their primary occupation but also added more number of subsidiary occupations. Age-wise, older SHG Members had added more number of occupations to their households. This resulted in accrual of more net income to those households. Mean net income generated by households having two/three occupations was much higher than income generated by households having

50

only one occupation. Households having four occupations had generated net income higher by 128 per cent compared to household having one occupation (Table 8.3). Table 8.3: Mean Net Income Generated by SHG Households with Multiple Occupations No Occupation No. of Members Mean Net Income Generated (Rs.) % Change 1. One Occupation 161(51.9) 19251 ---(Comparison Group) 2. Two Occupations 114 (36.8) 23047 19.7 3. Three Occupations 35168 52.6 28 (9.0) 4. Four Occupations 7 (2.3) 43889 24.8 5. Overall 310 (100.0) 30339 128.0*
Figures in the parentheses indicate percentages *Percent change of four occupations category over one occupation category

II. Employment Generation (i) Person days Generated in terms of Enterprise Category 8.5 SBL programme resulted in easy and timely availability of credit which enhanced opportunities for undertaking different economic activities. This further led to increased income and employment. A comparison of incremental employment (in person days) generated by ME households, IGA households and Non-IGA households revealed that employment generated by ME households increased by 33 per cent in comparison to IGA households and by 81 per cent in comparison to Non-IGA households (Table 8.4). For ME households, 78.9 per cent of total employment days were generated from the ME while rest 21.1 per cent was generated from other household enterprises. For IGA households, the same was 45.1 per cent and 54.9 per cent, respectively. Table 8.4 : Average Employment Days generated - Enterprise Category-wise No Enterprise Category Person Days Generated from Total Person Days Generated from Household MEs/IGAs Other HHAs* 1. ME Households 596 (100.0) 470 (78.9) 126 (21.1) 2. IGA households 448 (100.0) 202 (45.1) 246 (54.9) 3. Non-IGA/ME Households 00 329 (100.0) 329 (100.0) (Comparison Group) 4. Overall 224 (58.9) 234 (41.1) 458 (100.0) 5. % Change of (1) over (2) (+)33.0 (+)132.7 (-)48.8 6. % change of (1) over (3) (+)81.2 --(-)61.7
*HHAs-Other Household Activities Figures in the parentheses indicate percentages

(ii) Employment Generation by Different ME Units 8.6 The quantum of employment generated by the ME units was dependent upon the nature of work undertaken and the demand thereof. Some of the ME units such as knives making, bakery unit, photo frame making, etc. required 3-4 workers, while other ME units required only one or two workers only. Even the number of workers employed in the same unit varied depending upon the scale of operations. On an average, per unit number of workers employed in ME units worked out to 1.9 with a maximum of four workers employed in bakery unit (Table 8.5). No. Micro enterprises Table 8.5: Employment Generation by ME Units Membs. Workers/ CoI P Days/ worker unit P Days/ Unit Emp./Rs.100 of Cap. Invt.

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1 Floor Mills 2 Tailoring 3 Kirana Shop 4 Small Hotels 5 Jute Bag Making 6 Dairy Animals (CBCs) 7 Dairy Animals (GMBs) 8 Snacks/Pickles Making 9 Knives Making 10 Bangles Shops 11 Bakery/Bread Making 12 Chicken Selling 13 Saloon 14 Photo frame Making 15 Motor Cycle Rep. 16 Musical Instruments 17 Lathe Works 18 Catering Services 19 Crane Machine

6 11 13 3 5 18 11 3 2 2 1 1 1 1 1 1 1 1 1 88

2 1 2 2 1 1 1 2 3 2 4 1 2 2 1 2 2 2 3 1.9

26667 12255 13454 7667 5000 10159 12571 19800 57000 5000 87500 5000 8483 1500 20000 14000 30000 7000 35000 19898

205 287 203 236 250 320 340 254 300 220 300 280 278 250 290 255 205 200 150 254

410 287 406 472 250 320 340 508 900 440 1200 280 556 500 290 510 410 400 450 470

1.5 2.3 3.0 6.2 5.0 3.1 2.7 2.6 1.6 8.8* 1.4 5.6 6.6 33.3* 1.5 3.6 1.4 5.7 1.3 2.4

* more labour intensive, required more working capital rather than capital investment.

8.7 Per unit per annum person days was worked out on the basis of total number of working days in a year. Person days generated per unit ranged from a low of 250 days (jute bag making) to a high of 1200 (bakery unit). Computation of employment in terms of intensity of labour (person days of employment generated per Rs.100/- of capital investment) reported that labour intensity was very high for photo frame making unit (33.3) as the unit required very less of capital investment and more of working capital to run the enterprise. It was followed by bangles selling (8.8), saloons (6.6), small hotels (6.2), catering services (5.7), chicken selling (5.6), etc. Lowest labour intensity was reported by crane machine unit (1.3), followed by lathe works (1.4), floor mills (1.5), etc.

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Chapter IX Role of SHPIs in Promotion of Microenterprises

The chapter gives an account of the role of SHPIs in formation of SHGs. It also presents the role of SHPIs in promoting different IGAs/MEs by SHG members in the state of Andhra Pradesh in terms of product promotion, marketing, capacity building, etc. 9.1 The SHPIs are agencies which help the poor to organize themselves into groups, help them in their organizational, managerial and financial matters and in upgrading their skills and in some cases, in countering pressures from vested interests. There have been a wide variety of SHPIs in the SHG movement in the country ranging from government agencies to the NGOs, Farmers Clubs, banks and Individual Rural Volunteers (IRVs). In the State of Andhra Pradesh, the SHG movement has been mainly driven by the government agencies. About 96 per cent of the SHGs formed in the state are by the DRDA, IKP and other government agencies (Table 9.1). Table 9.1: SHPIs in Andhra Pradesh vis--vis All-India Number of SHGs promoted by India Andhra Pradesh No. % to total No. % to total Government Agencies 1312390 50.74 557105 96.09 Banks 140120 5.42 2381 0.43 NGOs 1118817 43.26 20148 3.48 Farmer Clubs 14019 0.54 114 0.0 Individual Rural Volunteer 911 0.04 --Total 2586257 100 579748 100
Source: Progress of SHG-Bank Linkage in India, 2004-2005, NABARD.

I. State as an SHPI Role of DRDA & IKP 9.2 The IKP Project and the DRDA are the major SHPIs in the State of Andhra Pradesh (See Chapter I for the details of the project). The Project is managed by the SERP, an autonomous Society registered under the societies act along with DRDA. The SERP combines the authority and accountability of the government and operational flexibility of an NGO. The institutional model under the project has focussed on formation and strengthening of SHGs for addressing the rural poverty. The major role played by the State Government is given in the following paragraphs. i. Formation and Strengthening of SHGs 9.3 The IKP has so far promoted 1,85,446 new SHGs and strengthened 2,86,414 old SHGs covering a total of 45.35 lakh poor household. The project staff facilitates linkage of SHGs with the banks under the SBL Programme of NABARD. They also help the banks in recovery of loans. ii. Evolving Federation Structure for sustainability of SHGs 9.4 In order to sustain the large number of SHGs formed in the State, Government of Andhra Pradesh has promoted federations of SHGs at the village level (VOs) and mandal level (MSs) under the IKP Project. A third tier, Zilla Samakhya, is also in the evolutionary process. The SHG federations are intended to take over the function of capacity building of existing SHGs, formation of new SHGs, audit, maintaining quality standards, resource support to SHGs etc. The federations are being registered under the APMACS Act, 1995. The details about these CBOs are presented in Appendix VI. iii. Capacity Building and Training

53

9.5 In order to meet the capacity building needs of the SHGs, VOs and MSs, as also Mandal Training Centres in 729 project mandals and 22 Training and Technology Development Centres (TTDCs) in all the district headquarters have been established. So far, 2,52,687 SHGs have received first level training whereas 1,52,894 SHGs have received the subsequent series of formal training including capacity building in health, gender and livelihood sectors. The articulate and resourceful women from SHGs are identified and are developed as Community Resource Persons, Community Activists, Livelihood activists, health activists etc. This cadre is utilized in organizing new SHGs, revival of dormant/ defunct SHGs, facilitation of regular SHG meetings, savings, trainings, identify/train book keepers, prepare micro credit plans and facilitate SHGs and VOs to adopt social agenda. 9.6 The study observed that out of a total of 56 sample SHGs, 75 per cent of SHGs received one or other sorts of training. About 25 per cent of SHGs had not received any sort of training. Age-wise, older SHGs (71%) received more training on IGAs as compared to recently formed SHGs (49% for SHGs of 4-6 years old and 27% of SHGs of three year old). About 81 per cent of SHGs reported that the training received by them is quite useful. Similarly, about 20 per cent of SHGs reported that training is very much useful for the day to day operations (Table 9.2). Table 9.2: Capacity Building through Training of Sample SHGs
(percentage)

Particulars on Training I. SHGs received training (ii) Training on SHG Orientation (iii) Training on Orientation & IGAs II.SHGs received no training Total (I+II) Effectiveness of Training Useful Very Useful Not Useful Total iv. Promotion of IGAs and Microenterprises Up to 3 66.0 48.0 27.0 34.0 100.0 57.8 32.4 9.8 100.0

SHG Age (years) 4-6 years 7 & above 80.3 100.0 31.3 28.6 49.0 71.4 20.7 0.0 100.0 100.0 89.0 9.0 2.0 100.0 62.6 35.4 2.0 100.0

Overall 75.0 55.0 20.0 25.0 100.0 71.9 21.8 6.3 100.0

9.7 Under the IKP project, assistance is provided out of Community Investment Fund (CIF) to the SHGs, VOs and MSs to support a wide range of activities such as agriculture, animal husbandry, non farm, commodity marketing and food security etc. Social development activities such as health, education, nutrition, creation of infrastructure such as drying platforms, procurement centers, weighing scales, etc. are also provided from CIF. The IGA component of CIF are provided to MSs as revolving fund and are treated as corpus of MS. Lending from MS to VO and VO to SHG carry interest rates with interest differential at each tier. The VOs are required to repay CIF amount to the MS in 100 equal monthly installments and the SHGs will repay to the VO in 50 equal monthly installments. The members will pay to the SHG in 20 monthly installments. This arrangement is expected to accumulate capital, re-lend to the members and to meet their cost of operation from interest margin. As per guidelines, 50 per cent of the funds under CIF are planned to be provided for agri-allied activities, around 25 per cent is for non-farm and 15 per cent for direct agriculture activities. CIF has played major role in improving the livelihoods of the poor. Major interventions through commodity marketing by communities - red gram procurement in Mahbubnagar and Ranga Reddy, soyabean procurement in Adilabad, NTFPs in tribal parts of the state, lac cultivation in Adilabad have been possible due to CIF. v. Market Promotion through DWCRA Bazars

54

9.8 DRDAs have built marketing infrastructure for marketing of the products produced by SHG women in major districts of the state. The study districts had the DWCRA bazaars. The shops built in the bazaars are only given to the SHG women on a reasonable rent. Some shops are also given jointly to two or three SHGs for marketing their products together. DRDAs also organize marketing melas in state/district head quarters to facilitate the marketing of the products of SHG women. The role of various SHPIs in facilitating SHG members in taking up IGAs/MEs in different ways shows that presence of DRDA is more in all spheres compared to NGOs and other SHPIs (Table 9.3). Table 9.3: Role in Promotion of IGAs/Microenterprises among SHG Members Role in Promotion of IGAs/Microenterprises among SHG Members Forming Capacity Tng. on Promoting Launched Product SHGs Building* IGAs/MEs IGAs MFI arms Marketing DRDA-IKP RRB Farmers Clubs NGOs PSS LMPSS MARI RASS GRAM DHAN Foundation SHPIs
* capacity building activities include training on SHG orientation, leadership qualities, financial management, book keeping, laws of MACS and federation, preparing Business Development Plans, MIS, etc.

II. RRBs as SHPI 9.9 NABARD has been encouraging RRBs to take up promotion and nurturing of SHGs and has been providing part financial assistance to them for the purpose since 1999. In Andhra Pradesh, Sri Venkateswara Grameena Bank, Chittoor, Sri Saraswathi Grameena Bank, Adilabad, Sri Rama Grameena Bank, Nizamabad and Sri Anantha Grameena Bank, Anantpur district have acted as SHPIs and promoted, nurutured and provided linkage to 2,196 SHGs. Though the groups were formed by RRB, after the advent of IKP all the groups have come under the umbrella of the IKP project and the SHGs are being taken care of by IKP-DRDA. III. Farmers Clubs as SHPIs 9.10 The Farmers Clubs had also functioned as promotional agencies in forming SHGs and facilitating linkage with the banks. Farmers Clubs have promoted a total of 114 SHGs in the state. However, their role is limited to formation of SHGs after which the SHGs come under the IKP-DRDA. IV. NGOs as SHPIs 9.11 NGOs have played a supporting role in formation, nurturing of SHGsgroups in the state. There are still a few regions in the State where NGOs are also involved in the strengthening of SHG movement in the state in addition to the DRDA-IKP. NGOs take care of SHGs through a network of village book keepers, field organizers, coordinators etc. SHG federations have been formed and have been registered as MAC societies. Some NGOs have also formed MFI arms for providing loans to SHG members by availing funds from public/private sector banks such as Indian Bank, IOB, ICICI, HDFC, ING Vysya, etc. The individual members of SHGs are provided loans in the range of Rs.5,000 to Rs.50,000 with the guarantee of the SHGs. The activities of major NGOs in the districts of Chittoor, Nizamabad and Warangal districts in the areas of micro finance are given in the following paragraphs.

55

i. Pragathi Seva Samiti 9.12 Pragathi Seva Samiti (PSS), is operating in six drought prone mandals comprising 129 villages in Warangal district. It has organised 2,700 SHGs covering 48,600 women. It has also facilitated in formation of 30 MACS in its operational area covering 21,200 SHG members. It has also established the Pragathi Micro Finance Institution in 2004 to provide micro finance to the MACS established by them. As claimed by PSS, more than 50 per cent of the loan from the MACS is being utilized for Microenterprises. PSS provides insurance services to the members by partnering with Healing Fields, Royal Sundharam, etc. In partnership with CARE for the CASHE program, PSS has strengthened the SHGs through regular capacity building activities, leadership qualities, financial management, book keeping, laws of MACS and federation, preparing Business Development Plans, MIS, etc. Training has been provided to women on IGAs such as tailoring, type writing, candle making, etc. ii. Lodi Multipurpose Social Service Society 9.13 Lodi Multipurpose Social Service Society (LMSSS) operates in 800 villages of 35 mandals of Warangal and Karimnagar districts. It has has formed 5,345 SHGs with a membership of 79,550. It has also formed 95 physically disabled groups with 570 members. The NGO has assisted 3,100 families to take up several IGAs/MEs such as jute bag making, STD booth, bangle shop, horticulture, vermin compost, neem seed collection, tamarind collection, milch animals, etc. About 40 members have been provided training on the banana fibre extraction with financial support from NABARD. It has facilitated in formation of 20 MACS and all the MACS have been federated at mandal level and Sri Mahila Paraspara Sahayaka Sangha has been formed covering 3,360 SHG members. iii. Modern Architects of Rural India 9.14 Modern Architects of Rural India (MARI), implementing the CASHE of CARE, has formed 1,366 SHGs consisting of 19,313 members covering 141 villages in Warangal District. It has facilitated in formation of 14 cluster level MACS of SHGs and registered them under the APMACS Act, 1995. An apex level MACS named Sanghatitha Mahila MACS Federation has been formed to provide financial services to the SHGs. The NGO has established the system of Village Book Keepers for writing the books of SHGs. It conducts training programmes for the SHG members, book keeping systems, training for the MACS leaders. MARI has also tied up with insurance companies like Royal Sundaram for providing insurance cover to its members. iv. Rashtriya Seva Samiti 9.15 Rashtriya Seva Samiti (RASS) in Chittoor district has its presence in over 2,000 villages in Andhra Pradesh, Orissa, Tamil Nadu and Delhi. RASS operates micro finance activities under the banner of RASS Mahila Pragati. RASS has promoted Sri Padmavathi Mahilabhydaya Sangham, a federation of women's SHGs in 1992. It has also established a Capacity Building Institute for Micro Finance in partnership with CARE-CASHE for providing training in SHG concepts and management, financial management, delinquency management etc. to the stakeholders under the micro finance programme. It also implements the Support to Training and Employment Programme (STEP) in collaboration with Department of Women and Child Development (DWCD), GoI to provide technical skill to members of SHGs in dairy activity and also to organize women into small activity groups for taking up production of dairy fodder, milk collection, marketing and veterinary services. v. GRAM 9.16 Gram, a registered development organization operating in Nizmabad and Adilabad districts of Andhra Pradesh, has promoted SHGs and has facilitated in formation of 15 mandal level MACS of SHGs in Nizamabad district and 5 in Adilabad district with a membership of 42,000 members. The 15 mandal level MACS in Nizamabad district have been federated at the district level and Indur MACS federation has been

56

formed covering 2,528 SHGs with a membership of 31,626.Indur MACS Federation is accessing financial support HDFC Bank, ABN Amro Bank, BASIX, FWWB etc. for on-lending to MACS and SHGs. For enhancement of livelihood opportunities to its SHG members, the Federation has promoted Intideepam dairy with an investment of Rs.5 lakh with the technical support from NDDB. vi. DHAN Foundation 9.17 Development of Humane Action (DHAN) Foundation was formed on 2 October 1997 as a trust under the Indian Trust Act with a mission of building institutions for development innovations and upscaling for impacting the livelihoods to enable poor communities. It has operational presence in four states of the country including 3 districts in Andhra Pradesh. It has promoted around 3,000 SHGs in Andhra Pradesh with 50,000 members. Under a collaborative project with DRDA, Chittoor, the foundation had taken up a project for reviving, rebuilding and strengthening of DWCRA groups in Kuppam and Gudipalli mandals of Chittoor district.

Chapter X Sustainability Aspects of Microenterprises

The sustainability of the microenterprises promoted by SHG members depends on the availability of forward and backward linkages, enabling infrastructure, adequate marketing arrangements, appropriate supply support mechanism for raw materials, updated technological support, etc. This chapter addresses all these issues faced by the MEs. I. Issues on Sustainability of Microenterprises a. Availability of Raw Materials 10.1 The study observed that the availability of raw material for the manufacturing/service oriented MEs initiated by SHG members was not satisfactory. The SHG engaged in weaving Pochampally silk sarees in Warangal district faced problems in getting raw materials as the Primary Weavers Cooperative Society (PWCS) functioning in the village was defunct for the last many years. On credit side, husbands of the SHG members were issued with Artisan Credit Cards (ACCs) with cash credit limit of Rs.20,000. The lathe work unit was facing problems in supply of power. The supply of electricity to villages had been restricted to only seven hours, which hampered its operation during peak seasons. As it was repairing mostly agricultural implements, it gets about 70 per cent of work during the agricultural peak seasons. Knives making units in Chittoor district were getting iron sheets and other raw materials from Bangalore and Chennai. They were depending on local sawmills to get woods, which is also not in proper supply. These units along with the floor mill units were facing problems in supply of electricity due to power cuts and load shedding. Members engaged in jute bag making in Chittoor were getting raw materials from Vijaywada. They had been issued with sewing machines from DRDA. But, there was no arrangement from DRDA in procuring raw materials for these units. Members were of the opinion that they would be able to get higher returns from the activity, if the raw material, particularly jute fibres, is arranged by DRDA with a tie up arrangement for marketing as well. 10.2 The members engaged in tailoring activity did not report any difficulty in procuring raw material and were getting cloths for dress materials from mandal/district headquarters. Other raw material such as buttons, threads, canvas, etc., was available in the nearby towns within a distance of 5-50 kms. Dairy animal units reported shortage of fodder. As many districts in Rayalseema and Telengana regions in Andhra Pradesh had been reeling under drought for the last so many years, dairy animals provided succor to them in terms of continuous flow of income to the family. Government agencies and DRDA had also been genuinely promoting dairy to relieve the farmers from the clutches of drought. Cycle/bottle brush making units required raw

57

materials like, sisal fibre wire, colour and tin for tying and pressing the fibre. There were no any institutional arrangements to supply such raw materials to these members. b. Marketing Arrangements 10.3 No institutional arrangements for marketing of product were available in the case of members of the SHG engaged in weaving of Pochampally silk sarees, as the PWCS was not functioning in the village. Although the master weaver was visiting the village and procuring sarees, they were getting less margin from the master weaver. The knives making units were utilizing the services of other SHG members in the village to market their product. Those SHG members were marketing knives moving from village to village and city to city to market knives. They even move to adjoining states of Karnataka and Tamil Nadu. However, they were facing the harassment at check posts at the State border. Officials demand bribes from Rs.500 to Rs.1,000 to go to other States for marketing. Members should have been issued with ACCs which they can use at the check posts. The jute bag maki)ng units were supplying final product to private traders in Tirumala who were asking for a lower priceand made big margins out of it. Similar was the case with members engaged in cycle and bottlebrush making. Local private traders were buying these products at a lower price and made big margins. The saloons /bangles shops were opened in large numbers resulting in stiff competition in villages. c. Technology Upgradation vis--vis Scale of Operation, Price Spread & Quality 10.4 Field observations pointed to the need for technology upgradation. The members engaged in cycle and bottle brush making had not invested anything, except in pliers and a small drilling machine. They were making brushes in traditional ways that was time consuming and not cost effective. One Knife making unit had invested in wood cutting machine, polishing machine bench grinder, etc. However, another unit had not invested in wood cutting machine due to paucity of funds, which she was managing through manual operation. Obsolete technology was the outcome of the limited scale of operation of such units. These units were running with a very low scale with limited fund, limited raw materials as also with limited marketing opportunities. Many members were interested to expand their units provided raw material/marketing supports/pricing of product is taken care of by district administration or DRDA through institutional arrangements. As regards price margin, these SHG members were also getting very less price margin as compared to the margin available to the traders (Table 11.1). Table 11.1 : Profit Margin per Unit Margin to SHG Cost Price Margin Jute bag making 12.50 16.50 4.00 Knives Making 4.72 5.72. 1.00 Photo frame making 13.25 14.00 0.75 Embroidery 550 750 200 Khadi Weaving 750 1000 250 Name of Units
(Rs./Product Unit)

No 1 2 3 5 6

Margin to Trader Cost Price Margin 16.50 25.00 8.50 5.72 10.00 4.28 14.00 16.00 2.00 750 1000 250 1000 1500 500

*per kg. of final product

d. Infrastructure Facilities 10.9 Availability of good infrastructure like better communication facilities with markets and adequate availability and nearness to all public utilities gives enough scope for sustainability of SHGs as also microenterprises. For about 47 per cent of the SHGs, the market was 5 or more kms. away from the village. Similarly, for about 42 per cent of the SHGs, banks were 5 or more kms. away from the village. Only 60 per cent of the SHGs reported that they had access to public utilities like good roads, water supply, medical and other public infrastructure facilities (Table 11.8).

58

Table 11.8: Interaction of the Group in the Village

(percentages)

Particulars Distance to market 5 or more kilometers Distance to Banks 5 or more kilometers SHGs with access to public utilities II. Issues on Sustainability of SHGs a. Stability of SHGs

Overall 46.7 41.7 60.0

10.5 The sustainability of SHGs depends to a large extent on the role played by different stake holders like, banks, SHPIs, NGOs, Government, etc. However, as SBL programme shifts its focus from social to economic empowerment through microfinance intervention, concerns of sustainability of SHGs have to be evaluated in a wider perspective. In the second stage, sustainability of various economic activities through microfinance becomes the crucial issue in the success of SBL Programme. The inherent strength of an SHG rests on the stability of its members over a period of time. The mean size of members for sample SHGs was 13.3 earlier as compared to 12.4 at present Accordingly, the mean reduction in size of an SHG was worked out to 3.4 (Table 11.2). Age-wise, older SHGs in the category of seven years and above were more stable compared to the three year old SHGs. Therefore, new SHGs may face a threat of stability. The SHG members reported several reasons for leaving the group. Reasons varied from conflict among members to marriage, migration, old age, death, etc. Category Up to 3 4-6 years 7 & above Overall Table 11.2 Stability of Members in the Group- SHG Age-wise No. of Mean Members Mean No. Mean No. SHGs Quit Joined Past Present 9 12.7 12.2 0.6 0.2 33 14.1 13 1.3 0.2 14 13.1 11.9 1.6 1.7 56 13.3 12.4 1.2 0.7 Mean reduction in Size 3.6 7.3 -0.7 3.4

b. Repayment Performanceof SHGs 10.3 Sustainability shows its strength in repayment performance of SHGs to banks and members to SHGs. The repayment performance of the sample SHGs to banks showed that the overall recovery performance was 94.2 per cent of the cumulative demand for all the sample borrowers. Age-wise, there was no wide variation in the repayment performance of SHGs (Table 11.4). The repayment performance of older SHGs was better compared to new SHGs because of developed group dynamics and graduation to IGA/ME status. The repayment performance of SHG members to SHG had also a similar trend. Older SHGs members (97.5% for seven year old SHG members) had better repayment ethics compared to new SHG members (93.5% three year old SHG members). This trend was for bank credit availed by SHG members. At aggregate level, it was 96.9 per cent (Table 11.5). As regards internal loans, sufficient data was not available because of which it was not possible to compute repayment. All SHGs were sticking to the norm that bank loans including interest should be repaid in time and regarding internal loans interest was to be paid in time and principal may be paid at a later date depending on their convenience. Therefore, in the monthly meetings, members first collect interest on internal loans and defaulters on interest payment were being fined. Table 11.4: Repayment Performance of Sample SHGs -Age wise
(Rs.in lakh)

Age of SHGs Up to 3 4-6 years 7 & above Demand 1.24 12.54 13.77

Repayment Performance of Sample SHGs to Banks Collection Balance (%) Recovery 1.14 0.10 91.9 11.96 0.58 95.4 12.86 0.91 93.4

59

Overall Up to 3 4-6 years 7 & above Overall

27.54 25.95 1.59 Repayment Performance of Sample SHG Members to SHGs 0.65 0.61 0.04 5.68 5.50 0.18 5.74 5.59 0.15 12.07 11.70 0.37

94.2 93.5 96.8 97.5 96.9

c. Financial Management Practices - Interest Rates and Repayment Periods 10.7 SHGs learnt financial management as they managed their own savings and credit operations, distributed bank loan and internal funds among members depending on their requirement. They decided the interest rates to be charged on bank loans as also internal loans. With the introduction of Pavalvaddi scheme of State Government, majority of the SHGs have started charging the same rate of interest to their members as charged by the bank. Loans provided out of internal funds are provided at 18 per cent to 24 per cent per annum (Table 11.7). 10.8 Even though banks fixed a repayment period of 36 months, 95 per cent of SHGs had closed their loan accounts within 24 months. However, collection of interest on loans out of internal funds was meticulously followed and defaulters were fined. Principal amount was being repaid at their own convenience. All these practices of managing their own fund gave sustenance to the SHGs as also to the self managed economic ventures launched by SHG members. Table 11.7: Interest Rates and Repayment Period
(per cent)

Agency CBs RRBs Coops.

To SHGs 8 to 11 10 to 11 12 to 12.75

Loans Bank Loan MACs Loan Internal Funds

To membs. Agency To NGO-MFI To MACs MAC to SHG 12 to 24 Banks 9 to 11 18 to 24 24 18 to 24 NGO-MFI ---` 12to 15.5 14 to 18 18 to 24 --------Repayment Period on Loans Issued to SHGs (in Months) Repayment period Normally Repay 36 12 to 24 20 20 10-12. Interest in due time, Principal leisurely

III. Strategies to Promote Micro enterprises among SHG Members 10.9 The following strategies need to be adopted to promote MEs among SHG Members 1. From the study it was apparent that microfinance is necessary for benefits of poor but is not the sufficient condition for micro enterprise promotion. Instances of members giving away the loans to their husbands and perpetual dependence on group/bank loan for consumption purposes indicated that other inputs like livelihood opportunities, business and production training, etc. need to be inculcated among the SHG members. The entrepreneurial faculty needs to be enhanced through training at the individual member level. 2. The cluster approach need to be adopted to give a boost to certain activities like, cycle fibre making, photo frame making, jute bags making, etc. in and around Tirupati and Chittoor towns. Tourists have been flocking to Tirupati to take darsan of Lord Balaji. So, a cluster on photoframe making may be thought off, after making a quick study on other linkages available in around.

60

3. Facilitation exercises like, exploring new markets, development of new designs, etc. would help SHG members a lot. NABARDs schemes for rural haat, REDPs, ARWIND, MAHIMA & DEWTA may be considered for strengthening microenterprises among SHG members. SHGs need to be facilitated in accessing information, market links and emerging technologies available around through SHPIs. Emphasis needs to be laid on developing not only business skills, but also providing backward and forward linkages. 4. ME development among SHG members cannot be taken as stand-alone MEs (SAMEs). Very few had come up with such MEs as women members were not tuned to take up the necessary element of such enterprises with them. They were not prepared to take up the whole burden of running an enterprises living aside their husbands, children behind. Therefore, instead of imbibing the culture of SAME among the members, they need to be trained to venture into IGAs at the initial stage and at a latter stage same may be up graded to an enterprise with asset creation and new business entity. 5. SHG members do IGAs to supplement their income with the intention of augmenting family income and not to sought out complete independence from the household enterprise. Many SHG members had, therefore, preferred the capacity building for their educated unemployed children instead of themselves. In such cases, SHG members need to be allowed to stick to IGAs and necessary support may be provided to the unemployed children to initiate MEs. 6. Village potential mapping with a sub sectoral analysis would play a substantial role in development of MEs. There were instances of SHG members shunning away the tailoring work and shifting to other traditional activities, Farmsector MEs (FAMEs) may be encouraged in villages as there is effective demand for such enterprises and adequate linkages are also available around. 7. CBOs should organise exposure visits for groups to new earning opportunities, organise visits to local markets and sharing of experiences with other members. CBOs should come up with a team of facilitators to work on enterprise/livelihoods, training a few selected SHGs on enterprise planning, studying selected economic activities with potential for scaling up, launching case studies of women and enterprise initiatives, preparing business/credit plans, etc. 8. Equal sharing of bank loans among SHG members is always emphasized. However, it was observed that a few members had a larger share of the bank loan in ordert to initiate MEs. This was the case with photoframe making, bakery, hotels, floor mill units. Therefore, members who are inclined to have a larger share to initiate MEs need to be encouraged through SHPIs with group concesus.

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Chapter XI Summary & Conclusions

The study was conducted in Andhra Pradesh covering three districts, i.e., Chittoor, Nizamabad and Warangal with the objectives of studying the impact of group dynamics within SHGs and changes in pattern of enterprise mix among the SHG members, assessing the process of graduation of SHG members, both in economic and social spheres, studying the economic viability of microenterprises promoted by SHG members as also examining impact of microenterprises on income/employment generation among SHG members. The study was covered 56 SHGs and 310 SHG members. The sample SHGs were selected from across the agencies like, commercial banks, RRBs and DCCBs as also from various NGOs like, PSS, LMSCS, MARI, MASS, CORE and GRAM. SHGs were also identified in consultation with DRDAs of all the three districts. The samples SHG and SHG members were post-stratified in terms of age of SHGs as also in terms of categories like SHG members with microenterprises, SHG members with IGAs (with no asset creation) and SHG members without any IGAs/MEs. Social group-wise, SCs/STs/backward classes accounted for 77.4 per cent. Agricultural landless labourers constituted the major share of 54.2 per cent of the sample followed by marginal farmers (35.2%) and small farmers (9%). I. Group Dynamics and Bank Linkage Patterns 11.2 The number of members in the sample SHGs varied from a minimum of 9 to a maximum of 16. The mean size of a group was worked out to 12.4. Homogeneity in the standard of living (52%) was the major criteria in forming the group followed by the criteria of proximity of stay (26%), activity (13%), etc. The sample SHGs visited conduct monthly meetings on a specified date, time and place. In case of about 12 per cent of SHGs, conduct of meetings was irregular. Majority of SHGs used ledger system to maintain their accounts. The SAP books were maintained by the SHGs promoted by IKP. The average savings per sample SHG has been worked out to Rs.36,350. There was a direct relationship between the age of SHGs and volume of savings. The average savings for SHGs of seven years and above was Rs.45,387 as compared to Rs.37,789 for 4-6 year old SHGs and Rs.17,016 for three year old SHGs. The bank loan constituted the major share of the resources with SHGs (69%) followed by interest received on loan and other receipts (14%), savings by the groups (13%) and RFA at 3.7 per cent. 11.3 About 23.2 per cent of SHGs were credit linked in six to eight months from their formation. The analysis of bank linkage pattern revealed that 71.4 per cent of SHGs had received 3-4 bank linkages. Age-wise, seven years old group had received maximum per cent (78.6%) of 3-4 bank linkages as compared to three years old SHGs (55.6%). Average number of bank linkages availed by SHGs ranged from a minimum of three (three years old SHGs) to five (seven years and above). The average loan size for the groups was Rs.1,91,980 of which 70 per cent was for IGAs and the remaining 30 per cent was for consumption and other contingency purposes. II. Enterprise-Mix and Process of Graduation of SHG Members to Microenterprises 11.4 Participation in SBL programme created an environment for women to access financial resources to cater to needs of families in times of crisis and for consumption needs such as household requirements, health care, books and school fees etc. The resources used for internal lending mostly comes from group savings and revolving grant assistance received by the SHG. The analysis of savings pattern by the sample members besides increasing their possibility of self-reliance in improving the credit needs of the group members, also helps in efficient deployment of credit among the members as their own money is at stake. An analysis of savings by members before and after SHG revealed that the mean annual savings per household increased by 184 per cent. The incremental saving was higher for older groups (490%). Similarly, borrowings by members in pre and post SHG situation revealed that the mean annual borrowings per household increased by 60.3 per

62

cent. The incremental borrowings was higher for older groups (72.7%) as majority of members had graduated to the level taking up IGAs/MEs thus necessitating loan for asset creation, working capital, etc. 11.5 All SHG members had graduated from a lower amount of bank loan in the first bank linkage to higher and higher amounts of loans in the subsequent linkages. Bank loans were equally distributed and out of 310 members, 308 members had availed bank loan, thus distributing the credit benefits to one all. More than seven year old group members had graduated from an amount of Rs.1,986 in the first linkage to a high of Rs.35,000 in the sixth linkage. Similarly, three year old SHG members graduated from Rs.1,373 in the first linkage to Rs.10,229 in the third linkage. More than seven year old group members availed a cumulative average loan amount of Rs.24,332, an increase by 95 per cent over the cumulative loan amount availed by three year old group members. In the first linkage, out of 301 members availing credit, 79 per cent utilized the loan for consumption purposes, which gradually declined to 9 per cent by fifth linkage, which was availed by 88 members. With repeated linkages, utilization of loan for input purchase, own IGA, asset creation increased from the level of 7.0 per cent, 3.3 per cent and 2.7 per cent in the first linkage to 17.6 per cent, 41.2 per cent and 29.4 per cent, respectively, in the sixth linkage. 11.6 With increased bank linkages, a variety of enterprises such as tailoring units, hotels, kirana shops, stationery shops, flour mills, etc. were set up/upgraded by members. SHG members preferred such enterprises where they felt comfortable, could invest less money and time. Further, with more linkages, SHG members not only expanded their own household occupation but also added another or diversified to complete new occupations. Older SHG members had gradually added more number of occupations to their household as compared to new SHG members. Out of 310 sample SHG members, while 28.4 per cent had ventured into microenterprises, 29.7 per cent had not initiated any IGAs/MEs and had utilized money solely for consumption purposes. Average loan amount availed by members with MEs was worked out to Rs. 24,089, higher by 193 per cent compared to the loan amount availed by members with Non IGAsMEs. III. Cost of Investments and Economics of MEs 11.7 A total of 88 members had come up with different microenterprises out of loan taken from SHGs. Dairy units (31.8%) constituted the major share followed by kirana shops (14.8%), tailoring units (12.5%), floor mills (6.8%), jute bag making (5.4%), snacks and pickles making (3.4%), etc. Total cost for different units varied from Rs.1,11, 525 for a photoframe making unit and Rs.1,02,996 for bakery unit to Rs.17,450 for lathe work unit. The gross income was worked out to Rs.1,35, 525, and 1,51, 725, and Rs.28, 250 for same units per unit/annum. The net income varied from 7,820 for dairy enterprise (CBCs of 2 animal unit) to 48,729 for bakery unit. In terms of percentage ratio of sales to operating cost indicating current viability ranged from 119.4 per cent (crane machine unit) to 178.1 (musical instruments). The ratio of sales to total cost indicating profitability of enterprises ranged from 108.1 per cent (floor milling) to 151.5 per cent (musical instruments). The net incomes as per cent to sales ranged from 16.2 for the crane machine unit to 43.8 for the musical instrument unit. The net income per Re.1 of investment ranged from 0.12 for crane machine unit to 0.42 for catering services unit. IV. Income and Employment Generation 11.8 The mean net income during pre-SHG and post-SHG situations worked out to Rs.16,224 and Rs.30339, respectively. The incremental net income was Rs.14,115, an increase by 87 per cent. The mean incremental net income was worked out to Rs.4,800 for SHGs of three years old and Rs.22,389 for SHGs of seven years and above. In terms of percentage, the increase was 25 per cent and 162 per cent for both the categories of SHG member households. Income generated by ME households increased by 22 per cent in comparison to IGA households and by 70.5 per cent in comparison to Non-IGA households. For ME households, 41.2 per cent of total household income were generated from the ME, while rest 58.8 per cent was generated from other household enterprises. Diversifying to a new ME/IGA with increased scale of operation had added to household income. Mean net income generated by households having three/four occupations was much higher (128%) compared to the income generated by households having only one occupation.

63

11.9 Employment generated by ME households increased by 33 per cent in comparison to IGA households and by 81 per cent in comparison to Non-IGA households. For ME households, 78.9 per cent of total employment days were generated from the ME while rest 21.1 per cent was generated from other household enterprises. This was the result of use of more and more credit towards MEs that led to increased employment in terms of person days. Diversifying to a new ME with increased scale of operation had also added to increase in employment. On an average, per unit number of workers employed in ME units was worked out to 1.9 with a maximum of four workers employed in bakery unit. Person days generated per unit/annum ranged from a low of 250 days (jute bag making) to a high of 1200 (bakery unit). Computation of intensity of labour (person days of employment generated per Rs.100 of capital investment) reported that labour intensity was high for photoframe making unit (33.3) followed by bangles selling (8.8), saloons (6.6), hotels (6.2), catering services (5.7), etc. V. Role of SHPIs in Promotion of MEs 11.10 DRDA is the major SHPI in the State. Though in the initial stages, banks (particularly RRBs and a few DCCBs) and NGOs had acted as SHPIs, after the lauch of the Velugu (presently IKP) by State Government, all the groups in the State had come under the umbrella of DRDA with the groups taken care of by various DRDA functionaries, i.e., Area Coordinators/Community Coordinators, MBKs, Community Activists etc. Even, under SGSY, no new groups are formed and old groups with two/three linkages are slated for financing under SGSY. The DRDA is focusing on capacity building of the SHG federations in the State. In order to meet the capacity building needs of the SHGs, VOs and MSs, as also Mandal Training Centres in 729 project mandals and 22 TTDCs have been established. Out of a total of 56 sample SHGs, 75 per cent of SHGs received one or other sorts of training. About 25 per cent of SHGs had not received any sort of training. 11.11 Under the IKP project, assistance is provided out of CIF to the SHGs, VOs and MSs to support a wide range of activities such as agriculture, animal husbandry, non farm, commodity marketing and food security etc. DRDAs have built marketing infrastructure for marketing of the products produced by SHG women in major districts of the state. The study districts had the DWCRA bazaars with shops given only to the SHG women on a reasonable rent. Some shops are also given jointly to two or three SHGs for marketing their products together. DRDAs also organize marketing melas in state/district head quarters to facilitate the marketing of the products of SHG women. VI. Development Linkages and Sustainability Aspects 11.12 The sustainability of the rural microenterprises depends on the availability of forward and backward linkages and enabling infrastructure. Further, the sustainability also depends on the role played by different stake holders like, banks, SHPIs, NGOs, Government, etc. The study observed that the availability of raw material for the manufacturing/service oriented MEs were not satisfactory. The weaving SHG faced problems in getting raw materials as also in marketing. The lathe work unit and the floor mill units was facing problems in supply of electricity due to load shedding. Marketing knives was a problem for knives making units as they were facing the harassment at checks posts at the State borders. Members should be issued with ACCs that they can use at the check posts. Field observations pointed to the need for technology upgradation. ME units were running with a very low scale with limited fund, limited raw materials as also with limited marketing opportunities. Availability of good infrastructure like better communication facilities, adequate availability and nearness to all public utilities gives enough sustainance to microenterprises. For about 47 per cent and 42 per cent of the SHGs, the market and banks were 5 or more kms. away from the village. Only 60 per cent of the SHGs had access to public utilities like good roads, water supply, medical and other public utilities. 11.13 The recovery performance was 94.2 per cent for all the SHGs. The repayment for older SHGs was better compared to newer SHGs because of developed group dynamics, graduation to IGA/ME by many members in case of older SHGs.The repayment performance of SHG members to SHG has also a similar trend

64

(96.9%). The banks were charging interest rates in the range of 8.5 per cent (commercial banks) to 11 per cent (DCCBs) to the advances to SHGs. The interest rates charged by the SHGs to the members ranged from 18 to 24 per cent. The interest rates for internal lending was 24 per cent. The interest rate charged by the VOs to the SHGs and SHGs to the members was 12 per cent. VII. Issues for Policy 1. There is a need for an effective MIS and build up of database at VO, MS and district level on SHGs and SHG members who have graduated to MEs. Acordingly, SHPIs and CBOs need to support the MEs in terms of product promotion, pricing, marketing, capacity building, etc. 2. Collaboration and coordination among banks, NGOs, government agencies, particularly DRDA need to be effective and efficient for a smooth graduation process of SHG members from a livelihood support system to a strong microenterprise system with new business entity. 3. From the study it was apparent that microfinance is necessary for benefits of poor but is not the sufficient condition for micro enterprise promotion. Instances of members giving away the loans to their husbands and perpetual dependence on group/bank loan for consumption purposes indicated that other inputs like livelihood opportunities, business and production training, etc. need to be inculcated among the SHG members. The entrepreneurial faculty needs to be enhanced through training at the individual member level. 4. The cluster approach need to be adopted to give a boost to certain activities like, cycle fibre making, photo frame making, jute bags making, etc. in and around Tirupati and Chittoor towns. Tourists have been flocking to Tirupati to take darsan of Lord Balaji. So, a cluster on photoframe making may be thought off, after making a quick study on other linkages available in around. 5. Facilitation exercises like, exploring new markets, development of new designs, etc. would help SHG members a lot. NABARDs schemes for rural haat, REDPs, ARWIND, MAHIMA & DEWTA may be considered for strengthening microenterprises among SHG members. SHGs need to be facilitated in accessing information, market links and emerging technologies available around through SHPIs. Emphasis needs to be laid on developing not only business skills, but also providing backward and forward linkages. 6. ME development among SHG members cannot be taken as stand-alone MEs (SAMEs). Very few had come up with such MEs as women members were not tuned to take up the necessary element of such enterprises with them. They were not prepared to take up the whole burden of running an enterprises living aside their husbands, children behind. Therefore, instead of imbibing the culture of SAME among the members, they need to be trained to venture into IGAs at the initial stage and at a latter stage same may be up graded to an enterprise with asset creation and new business entity. 7. SHG members do IGAs to supplement their income with the intention of augmenting family income and not to sought out complete independence from the household enterprise. Many SHG members had, therefore, preferred the capacity building for their educated unemployed children instead of themselves. In such cases, SHG members need to be allowed to stick to IGAs and necessary support may be provided to the unemployed children to initiate MEs. 8. Village potential mapping with a sub sectoral analysis would play a substantial role in development of MEs. There were instances of SHG members shunning away the tailoring work and shifting to other traditional activities, Farmsector MEs (FAMEs) may be encouraged in villages as there is effective demand for such enterprises and adequate linkages are also available around. 9. CBOs should organise exposure visits for groups to new earning opportunities, organise visits to local markets and sharing of experiences with other members. CBOs should come up with a team of facilitators to work on enterprise/livelihoods, training a few selected SHGs on enterprise planning, studying selected economic activities with potential for scaling up, launching case studies of women and enterprise initiatives, preparing business/credit plans, etc.

65

10. Equal sharing of both internal loans and bank loans among SHG members is always emphasized. However, it was observed that a few members had a larger share of the bank loan in ordert to initiate/assist different enterprises. This was the case with photoframe making, bakery, hotels, kirana store, floor mill units. Therefore, those members who are inclined to have a larger share to initiate new IGAs/MEs need to be encouraged through SHPIs with group concesus. 11. The study observed that there was multiple financing to certain SHG members from different sources like, loan through bank linkage, NGO-MFI loan through MACS, loan from VOs, etc. This led to overdose of financing and end use of credit could not be properly monitored, which finally led to default on the part of the member. Therefore, the credit limits for the member need to be assessed based on credit absorption and should be sourced adequately from a single source. The proposed activity need to be linked to the skills of the group member.

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Appendix I SHG-Bank Linkage Programme - A Review

SHG-Bank Linkage Programme - Evolution and Growth A major development in the rural sector in the beginning of 90s is the increased popularity of micro-Finance (mF) innovations as a viable tool for extending credit to the poor. Promotion of mF through the concept of SHGs started in 1987, when NABARD sanctioned grant assistance from R & D Fund to MYRADA for providing seed money to CMGs. The success of this experiment was complimented by launching a pilot project in 1992 for linking 500 SHGs with the banks to facilitate relationship banking. In February 1992, the project was made operational throughout the country with well defined guidelines. In 1996, RBI classified loans to SHGs as a mainstream activity of banks under their priority sector lending. The GoI bestowed national priority to the programme through its Union Budget in 1999. 2. NABARDs efforts at improving the access of credit through SHGs expanded into the largest mF Programme in the world, in terms of its outreach. The programme registered a significant growth both in terms of coverage and the outreach of credit to the poor. Beginning with a modest number of 255 SHGs during 1992-93, a cumulative total of 16,18,456 SHGs were linked with banks by March 2005. The cumulative disbursement of bank loans was Rs. 68,985 million and refinance assistance was of Rs. 30,859 million by March 2005. Over the eight years period (1997-05), the SHGs linked grew at a compound annual growth rate (CAGR) of 102.46 per cent. Families assisted grew by 73.15 per cent. The average loan per SHG and per family increased by 8.8 per cent (Table A.1). The role of NGOs in this context assumed greater significance as they played a catalytic role in preparing the members to participate in the group activities through changing their mindset. Training provided by the NGOs to the members further facilitated enlarging the scope of women in undertaking economic activities. The number of partner agencies in the programme showed phenomenal growth with participation of NGOs increased by more than 15 times over the five years period.. Table A1: Growth Indicators of SBLP Particulars/Year 1997-98 SHGs Linked (No.) 5,719 Families Assisted (No. in million) 0.24 Bank Loan (Rs. In million) 119 Refinance Assistance (Rs. million) 107 Average Loan/SHG (Rs.) 2081 Average Loan/Family (Rs.) 203 Participating Banks (No.) 150 Partner NGOs (No.) 291

No. 1. 2. 3. 4. 5. 6. 7. 8.

2004-05 797457 11 29942 9678 37547 2673 573 4323

CARG (%) 102.46 73.15 120.27 90.32 8.80 8.75 21.10 47.03

Source: Progress of SHG-Bank Linkage in India, various issues

Region-Wise Outreach 3. By end March 2005, the outreach of the programme was extended to all States, 572 districts, 24.3 million families through 4,323 participating NGOs and 573 banks. Southern region continued to lead the other regions since the beginning of the linkage programme. The share of the Southern region has, however, been coming down with the increasing share of other regions (Table A.2). In Southern region, Andhra Pradesh (52%) dominated the scene with the highest cumulative share. Likewise, Maharashtra (74%), in Western region, Uttar Pradesh (60%) in Central region and Orissa (46%) in Eastern region shared the highest percentage points with the linked SHGs in the region.

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Table A.2: Year-wise and Region-wise Cumulative Share of SHGs

(percentage)

Region Southern Eastern Central Northern Western N-Eastern Total

March 1997 63 13 12 4 7 <1 100

March 1998 62 13 11 3 10 <1 100

March 1999 65 10 11 3 10 <1 100

March 2000 67 9 13 2 8 <1 100

March 2001 73 8 9 3 6 <1 100

March 2002 71 9 10 3 6 <1 100

March 2003 64 13 11 5 6 1 100

March 2004 62 14 12 5 5 1 100

March 2005 58 17 12 5 6 2 100

Source: Progress of SHG-Bank Linkage in India, various issues

Participation of Banks 4. Commercial banks and RRBs were the major players in the SBL Programme. All the 27 public sector banks and 17 private sector banks participated in the linkage programme. Although, the cumulative number of SHGs financed by commercial banks increased from 8,704 during 1997-98 to 8,43,473 during 2004-05 growing at an annual compound rate of 92.20 per cent, their share has come down from 61 per cent to 52 per cent during the said period. Consequently, the cumulative share in bank loans disbursed came down to 65 per cent from 60 per cent. The share of RRBs both in number of SHGs financed and loan disbursed increased by 10 and 8 per cent during 1997-05. Co-operatives entered into the programme at a later stage and their financing to SHGs grew at an annual compound rate of 143 per cent during 1997-2005 (Table A.3). By end March 2005, the total participating banks were 573 comprising 47 Commercial Banks, 196 RRBs and 330 Cooperatives. Table A.3: Participatory Bank-wise Cumulative Growth in SBLP at All India Level No. of SHGs Bank Loan (Rs. Crore) 1997-98 2004-05 CARG (%) 1997-98 2004-05 CARG (%) 8704 843473 92.20 15.5 41590.19 208.89 5192 563846 95.36 7.8 20995.47 209.03 421 211137 143.08 0.5 6398.94 286.13 14317 1618456 96.48 23.8 68984.60 212.32

Banks CBs RRBs Coops Total

Source: Progress of SHG-Bank Linkage in India, various issues

5. Among commercial banks, during 2004-05, State Bank of India (SBI) leads with credit-linkage of the maximum number of SHGs (2,50,460) followed by Andhra Bank (1,01,468) and Indian Bank (65,828). Among the private sector banks, ICICI Bank (11,009) financed maximum SHGs followed by Vysya Bank (6,721). The total number of RRBs participating in the programme rose to 196 in 2005 as against only 79 in 1997. The number of partners in the cooperative sector increased to 330 in 2005 from only 12 in 1997. This has been possible on account of amendments in the Cooperative Societies Act by many states enabling SHGs to become members of PACS and avail loans.

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Appendix II Sr. No. 1 2 3 4 5 6 7 8 9 District Status of SHGs in Andhra Pradesh - 2005-2006 Total no. of Members Savings SHGs (Rs. in million) 26142 21464 34873 55283 40320 25032 33753 25036 17809 279712 32339 20734 30185 22219 105477 29981 17355 24026 24772 19814 32938 28137 31277 32983 241283 626,472 374868 313405 418434 729572 443520 333420 377905 351270 266595 3608989 449715 214849 349913 288847 1303324 449715 226933 288412 299246 275015 395589 365781 323040 329830 2953561 7865874 740.43 343.95 542.67 968.70 850.86 522.62 986.44 462.60 333.12 5751.39 577.25 558.32 321.68 514.12 1971.37 751.90 384.17 723.01 177.81 147.06 467.40 680.84 323.56 876.80 4532.55 12255.31 Corpus (Rs. in million) 921.31 470.27 811.51 3035.20 3884.10 1463.34 1345.66 771.60 516.80 13219.79 1350.68 818.92 860.84 1612.37 4642.81 979.80 1695.55 918.52 368.24 394.97 948.70 910.14 640.72 1478.50 8335.14 26197.74

Costal Andhra Srikakulam Vizianagaram Visakhapatnam East Godavari West Godavari Krishna Guntur Prakasam Nellore Sub Total (1) Rayalseema 1 Chittoor 2 Kadapa 3 Ananthapur 4 Kurnool Sub Total (2) Telangana 1 Mahaboobnagar 2 Ranga Reddy 3 Medak 4 Nizamabad 5 Adilabad 6 Karimnagar 7 Warangal 8 Khammam 9 Nalgonda Sub Total (3) Grand Total (1+2+3)

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Appendix III Status of SBL Programme in Andhra Pradesh as at end 2005-2006

(Rs.in million)

Sr. No.

District

No.of SHGs provided bank loan during 20052006 15,781 6,664 15,897 26,099 19,168 16,585 16,102 11,731 10,062 138,089 17,137 10,491 11,962 13,142 52,732 8,243 7,568 13,893 8,739 7,602 8,968 14,334 16,338 17,835 103,520 294,341

Bank loan disbursed during 20052006 1050.00 356.93 1048.20 1645.37 1241.71 830.47 790.82 696.33 575.41 8235.24 1181.99 696.65 579.57 687.32 3145.53 448.98 597.13 728.04 449.65 322.58 300.78 525.98 618.00 622.34 4613.48 15994.25

Cumulative no. of credit linked SHGs upto 31 March 2006

Cumulative bank loan upto 31 March 2006

1 2 3 4 5 6 7 8 9

1 2 3 4

Costal Andhra Srikakulam Vizianagaram Visakhapatnam East Godavari West Godavari Krishna Guntur Prakasam Nellore Sub Total (1) Rayalseema Chittoor Kadapa Anantapur Kurnool Sub Total (2)

29362 19056 29319 67037 35158 27033 26311 20888 14613 268777 30814 16239 23349 24266 94668 27083 14149 27008 21244 19001 24894 31455 33625 25334 223793 587238

2965.39 1064.86 2252.79 5291.14 2840.42 2007.31 2286.39 1910.61 1273.08 21891.99 3117.76 1476.94 1528.18 1733.93 7856.81 1850.95 1325.54 1775.46 1236.00 1112.39 1269.39 1770.54 1683.65 1682.46 13706.38 43455.18

Telangana 1 Mahabubnagar 2 Ranga Reddy 3 Medak 4 Nizamabad 5 Adilabad 6 Karimnagar 7 Warangal 8 Khammam 9 Nalgonda Sub Total (3) Grand Total (1+2+3)

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Appendix IV Best practices followed by SHGs in launching Micro-enterprises

1. Allaho Akhbar Mahila Sangam, formed by IKP functionaries in March 2003 consists of 15 members At the time of formation of the group all the members were labourers in a local match factory and an Agarbathi manufacturing unit. The group availed bank loan twice. (Rs.15,000 and Rs 60,000). With the second loan, one group member started a Kitchen Knife Manufacturing unit with a cost of Rs 40,000. The knife sharpening and sale of the same is the traditional business of the members families, which was taken care of mainly by the male members. Now SHG members are engaged in sharpening the knives and the along with male members market the products. The income earned per day is Rs 100-150 per day. With the surplus income generated through this unit, the members are able to lead their life with better living condition. 2. Bismillah SHG was formed in March 2003 by Velugu functionaries with 15 members. Prior to group formation, all the members were labourers in a local match factory and an Agarbathi manufacturing unit. It was observed during the pre-sanction visit by the manager that some of the members were working as wage labourers in cycle flowers and bottle brush manufacturing unit. On the advice of the manager, the members started such enterprises independently for which a loan amounting to Rs 60,000 was provided in July 2004. Now members are earning an average income of Rs 150-175 per day. The male members of the families are also benefited by getting employment. 3. Om Shakthi SHG was formed in July 1999. The group consists of 15 members. First dose of bank finance of Rs 7,000 was given on 10 June 2000 and the second dose of Rs 20,000 on 10 September 2001. The loan was repaid promptly. Thereafter Rs 40,000 was disbursed to the group on 05 May 2003 for Jute bag making and vegetable business. The business improved as there was good number of orders from Tirumala. DRDA came forward to bear the interest burden of the loans. The group by its hard work has gained good reputation in the market. Further, the Government of India, Ministry of Rural development of DWACRA wing was impressed with the group. 4. Sri Varasiddi Vinayaka SHG was formed on 08 May 2000 with 15 members. All the members were agricultural laboureres, at the time of formation of the group. Since inception, there were four linkages of Rs 20,000, Rs 40,000, Rs 50,000 and Rs. 1,50,000. The group availed the fourth linkage of Rs 1.50 lakh for purchasing materials for Embroidery work. All the members of the group are attending to this work daily. Since the group is based in Kanipakkam, a temple town, there is a good demand for embroidery work in sarees. Adequate income is being generated from this activity and hence the standards of living of the members have improved. 5. Vinayaka SHG was formed in April 1996 with 10 members. Apart from the present loan of Rs. 2,00,000 availed in October 2003, the group had earlier availed bank loan thrice amounting to Rs 15,000, Rs 32,000 and Rs 40,000, respectively. The group has also received Rs 15,000 as revolving fund from DRDA for internal rotation. The group members have initiated STD booth, Tea stall, carpentry shop, dairy enterprise, small hotel, petty shop, cloth store, etc. Dilshad, who was a house wife prior to SHG, now maintains STD Booth and Tea Stall and income is Rs 5,000 per month. Sakunthalamma is earning income of Rs 4,000 per month from cloth shop. Pushpamma and Santhakumari are running a hotel and their monthly income is Rs 4,500 and Rs 4,000 each per month. In short, the standard of living of the members has improved substantially.

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Appendix V Microenterprises by Village Organisations I. Siri Super Market as a Microenterprise by a Village Organisation
Siri Gramikya Sangam is a federation of 16 SHGs formed by LMSSS. The NGO had taken the executive members of the Siri Gramaikya Sangam on an exposure visit to the Anantpur district. The members were impressed by a super market run by a VO. After their return, the matter was placed in their board meeting and all the members enthusiastically accepted the idea. Thus started the Siri Super Market in June 2005. The super market functioned from a rented premise in the village at a rent of Rs.250 per month. A management committee consisting of SHG members and executive members of the MACS was formed for looking after the operations of this enterprise. SHG members had to become members of the super market by payment of membership fee of Rs.10. Presently, 180 SHG members have become the members of the super market. The requirements of the SHG members are collected in advance and the materials are purchased in bulk from the wholesale market from Warangal. Due to this, the members were able to obtain their requirements at a lesser price than the market price. 2. It stocks about 94 items ranging from shampoo sachet to grains, sugar, oil, coconut, etc. The market is kept open for the members from 15-20 of every month. During festival seasons, it is kept open for more number of days. The Super market gets funds from the MACS at 18 per cent for stocking materials. It allows a credit of one month to the members for the items purchased by members. The assets and liabilities of the super market for the month ending December 2005 was reported at Rs.73,969. The super market has been able to earn a profit of Rs.4914 from its half-year operations. Presently, the VO plans to expand their membership base covering the needs of the entire village. II. Bulk Procurement Centers as Microenterprise by Village Organisations 3. The collective procurement and marketing of agriculture, horticulture and NTFP by establishing procurement centers under the aegis of VOs and MSs was being promoted under the IKP Project to eliminate the unfair trade practices and conferring remunerative prices to farmers as also generating profits for the CBOs to ensure their sustainability. Initially awareness was created among the CBOs to develop microenterprise for procurement and marketing of agriculture produce. Training was provided to the representatives of CBOs on the management of the procurement centers and various aspects of the commodity trading. Physical infrastructure and working capital were provided to the CBOs out of CIF. The project authorities provided market intelligence and prepared the directory of local and distant buyers. During the year 2004-05, the turnover of the VOs out of this operations was Rs.162.7 million. 4. The Priyadarshini Mahila Paraspara Sahayaka Sangam, Velpur in Nizamabad district had taken up Redgram procurement enterprise. The VO had been provided with a loan of Rs.0.2 million from CIF (@ 3%/p.a) for carrying out the operation. To start with, the members were provided a five day orientation training programme. The samples brought by the farmers were first tested for the moisture content and the foreign materials. The materials procured from the farmers were graded based on the quality and immediate payment was made to them. The VO had procured 266 quintals of redgram expected a price of Rs.1500/quintal which would give it a profit of Rs.50,000. The farmers were benefited by Rs.80-100/quintal due to savings on the transportation cost and middlemen commission.

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Appendix-VI Community Based Organisations-Role & Functions I. Village Organisations 9.6 Once the SHGs are consolidated to a reasonable level of maturity, this tier gets initiated. VOs are formed at the village level depending on the number of SHGs. In some cases where there are a large number of SHGs in a single village, more than one VO is formed. A VO has a general body comprising of all the group members and an Executive Committee comprising of 2 or 3 representatives from each member SHGs. The Executive Committee elects a President and Secretary. The major role of VO is to Act as a forum to voice the problems of the members in the village Provide a platform to share the experiences and concerns of member SHGs. Monitoring/strengthening of existing groups and promotion of new groups. Facilitate conflict resolution within and among member groups. Assess training needs and arrange capacity building inputs to member groups. Facilitate and monitor credit linkage with banks. Access bulk loans from banks / MFIs to provide higher order of loans to SHGs Prepare micro plans for the social and economic development of its members. Build linkages with the PRIs, line departments & other developmental departments. Develop para professionals from among the members in the areas of health, livestock, education, sanitation, marketing, social issues etc.

O O O O O O O O O O

9.7 Under the IKP project, 27,957 VOs have been formed covering 29,0381 SHGs out of which 5,313 have been registered as primary socieities under the APMACS Act. II.. Mandal Samakhya 9.8 A Mandal Samakhya is a federtion of SHGs at the the mandal level. The representation from VO in the MS varies from one to three members depending on the number of groups holding membership in VO. The Board of Directors elected by the General Body manages the MS. The size of the Board is generally between 11 to 15 members depending on the bye law provisions. About 735 MSs have been formed of which 211 have been registered under the APMACS Act. The major role of MS is to :

OProvide solidarity and exert peer pressure on VOs and SHGs within the mandal. OCapacity building of VOs. OStrengthening and streamlinking book keeping and audit system. OTake up various social development issues, marketing activities. OChannelise seed capial to the VOs. OMaintain linkages with the mandal level administration. OTo work towards improvement of health/education of rural women.

.III. Zilla Samakhya 9.9 In the evolutionary process of developing CBOs, Zilla Samakhyas are being formed. It is a federation of all the Mandal Samakhyas in a district. So far, 14 District Samakhyas have been formed out of which 1 has been registered under the APMACS Act, 1995.

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REPORTS PUBLISHED UNDER THE EVALUATION STUDY SERIES OF NABARD A. Reports Published by the Head Office of NABARD Series No. Title of Evaluation Report Year of Publication 1. Minor Irrigation Scheme-Construction of New Wells and Installation of Pumpsets thereon in Sholapur District of Maharashtra 1977 2. Minor Irrigation Scheme-Shaloow Tubewells, Karnal District, Haryana 1977 3. Bhadra Land Development Project for Reclamation & Development, Karnataka 1977 4. Land Development under Nagarjuna Sagar Project, Miryalguda Taluka, AP 1977 5. Dairy Development Scheme in Jagadhri Block of Ambala District, Haryana 1978 Dairy Development Scheme in Moga of Faridkot District, Punjab 1978 Poultry Development Scheme in Mulkanoor, Karimnagar, AP 1979 Mechanised Fishing Boats in South Kanara District, Karnataka 1979 Development of Acid Lime Gardens in Nellore District, AP 1981 Groundwater Irrigation in Kota District, Rajasthan 1982 Minor Irrigation in Bhojpur District, Bihar 1982 Development of Grape Cultivation in Bijapur District, Karnataka 1982 River Lift Irrigation Scheme in Pune District, Maharashtra 1982 Dairy Development Scheme in Western Uttar Pradesh 1982 River Lift Irrigation Scheme in Kolhapur District, Maharashtra 1982 Sheep Rearing in Nalgonda District, Andhra Pradesh 1982 Development of Coffee Plantation in Lower Palnis Area, Madurai District, TN 1983 Public Tubewells and River Lifts in Orissa 1984 Power Tillers in Hooghly District, West Bengal 1985 Commercial Poultry in Krishna District, Andhra Pradesh 1986 Dugwell Irrigation in Palghat District, Kerala 1986 Tractors in North Bihar 1986 Dairy Development Schemes in Darjeeling District, West Bengal 1987 Tractors Schemes in Varanasi, Ghazipur and Jaunpur Districts, Eastern UP 1987 Tractors and Power Tillers in Tamil Nadu 1987 Minor Irrigation in Muzaffarnagar District, Uttar Pradesh 1987 Dairy Development in Quilon District, Kerala 1987 Dugwell Irrigation in Dhenkanal District, Orissa 1988 Bamboo and Shallow Tubewells in Purnia District, Bihar 1988 Dugwell Irrigation Development in Nasik District, Maharashtra 1988 Calf Rearing in North Arcot, Salem and Coimbatore District, TN 1988 Minor Irrigation in Allahabad District, Uttar Pradesh 1988 Coconut Development in Quilon District, Kerala 1988 Minor Irrigation in Purulia District, West Bengal 1988 Sprinkler Irrigation in Semi-arid Areas of Rajasthan 1989 Dugwell Irrigation in Amravati District, Maharashtra 1989 Marine Fisheries in Coastal Gujarat and Maharashtra 1989 Shallow Tubewells under Massive National Programme in Haryana 1990 Financing of Apple Orchards in Hill Districts, Uttar Pradesh 1991 Work Animals & Animal Driven Carts in Meerut District,UP 1991 Inland Fishery in Krishna District, Andhra Pradesh 1991 Bio-gas Plants in Nainital and Rampur Districts, Uttar Pradesh 1991 Impact of Non-farm Sector Investments 1994 Lift Irrigation Schemes in Maharashtra 1995 Mendhwan Watershed Project under IGWDP - Maharashtra State 1999 Self Help Groups in Tamil Nadu 2000 Micro Finance for Rural People An Impact Evaluation Study 2000 Rural Non-farm Investments An Impact Study 2002

6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49.

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SHG - Bank Linkage Programme for Rural Poor in India-An impact Assessment 2002 50. Cold Storages under Capital Investment Subsidy Scheme An Impact Assessment 2003 51 Infrastructure for Agriculture & Rural Development An Impact Assessment of Investments in Rural Roads & Bridges under RIDF 2004 B. Reports Published by Regional Offices of NABARD Series No. Title of Evaluation Report Year of Publication Gujarat 1. Poultry Development Scheme in Gujarat Dairy Development Scheme in Mehsana District, Gujarat Lift Irrigation Scheme of Ukai Left Bank Main Canal Gujarat Financing of Tractors in Mehsana and Rajkot Districts, Gujarat Investments Financed under IRDP in Valsad District, Gujarat Market Yard in Jetpur, Rajkot District, Gujarat Marine Fisheries in Junagarh District Karnataka 1. Development of Grape Gardens in Bangalore & Kolar Districts 1989 Borewell Financing in Chitradurga and Kolar Districts, Karnataka 1990 Development of Coffee Gardens in Karnataka State 1992 Sericulture Development in Karnataka Farm Investments 1993 Lift Irrigation Schemes in Belgaum District, Karnataka 2000 Poultry (Broiler) Development in Bangalore (Rural) & Bangalore (Urban), Karnataka2001 Drip Irrigation Programme in Chitradurga District of Karnataka 2002 Dairy Development in Kolar and Shimoga Districts of Karnataka 2003 Sericulture in Kolar and Tumkur Districts of Karnataka 2003 Fuelwood Development Project in Karnataka 2003 Participatory Irrigation Management Institutions in Karnataka 2004 Gherkins-AEZ, Karnataka- A Commodity-Specific Study 2005 Madhya Pradesh 1. 2. 3. 4. 5. Dugwell and Shallow Tubewell Irrigation in Narsinghpur District, MP Tractor Financing in Raisen and Vidisha Districts, Madhya Pradesh Commercial Layer Poultry Development in Indore District, MP IRDP in Sagar District, Madhya Pradesh Rural Non-Farm Sector in Ujjain District Orissa 1. 2. 3. 4. 5. 6. 7. 8. Betelvine Gardens in Puri District, Orissa Tractors in Sambalpur District, Orissa Dairy Development Scheme in Cuttak and Ganjam Districts, Orissa Brackish Water Prawn Culture in Puri District, Orissa Minor Irrigation in Sambalpur District, Orissa Shallow Tubewells in Undivided Cuttak & Puri Districts Orissa District Rural Industries Project (DRIP) and PLI Training Programme Group Financing Under Farm Mechanisation in Orissa Punjab & Haryana 1. 2. 3. 4. 5. Poultry Farming in Punjab Dairy Development Schemes in Karnal and Rohtak Districts, Haryana Tractors in Haryana Grape Gardens in Hissar District, Haryana Inland Fisheries in Patiala and Bhatinda Districts, Punjab 1987 1987 1994 1998 2000 1989 1989 1992 1994 1997 2000 2002 2003 1988 1989 1992 1994 2005 2. 3. 4. 5. 6. 7. 8. 9. 10. 1988 1989 1991 1992 1994 2003 2003 2. 3. 4. 5. 6. 7.

11 12

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6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Viability of Tractors in Punjab Non-farm Sector in Ludhiana and Sangrur Districts of Punjab Water Conveyance System in Rewari & Mahendragarh Districts Cold Storages in Jalandhar, Ludhiana and Patiala Districts of Punjab Dairy Financing in Kurukshetra and Kaithal Districts of Haryana Self Help Groups in Karnal, Gurgaon and Bhiwani District of Haryana Poultry (Layers) in Sangrur and Gurdaspur Districts in Punjab Financing of Tubewells in Bhatinda, Hoshiarpur & Ropar Districts Agro and Food Processing units in Haryana Roads in Mukatsar District in Punjab Financing of Dairy (Buffaloes) in Patiala & Sangrur Districts Tractor Financing in Kaithal & Faridabad Districts Tamil Nadu

2001 2001 2001 2001 2002 2002 2003 2003 2003 2003 2004 2005

Poultry Development in Salem District, Tamil Nadu 1988 Dugwell Irrigation in Pudukkottai & North Arcot District, Tamil Nadu 1989 Tea Gardens in Nilgiris District, Tamil Nadu 1990 Minor Irrigation Investments under Massive Assistance Program in South Arcot, Tiruchirappalli Districts, Tamil Nadu 1991 Jasmine Investments in Salem and Madurai Districts, Tamil Nadu 1992 Mini Dairy Investments in Coimbatore & Periyar Districts, TN 1994 Marine Fisheries in Tamil Nadu 1998 Sericulture in Tamil Nadu 1999 IRDP in Tamil Nadu 2000 Modern Rice Mills in Tamil Nadu 2001 Coconut Development in Coimbatore District of Tamil Nadu 2002 Minor Irrigation Credit Programme in Ramnad and Trichy Districts 2002 District Rural Industries Project in Tirunelveli District 2003 Cold Storages in Tamil Nadu 2003 Combine Harvesters in Tiruvallur & Salem Districts 2005 Assam

1. 2. 3. 4.

Private Shallow Tubewells and Lift Points in Assam Inland Fishery in West Tripura District, Tripura IRDP in Nagaon District (Assam) Farm Mechanisation (Power Tillers) in Sibsagar District, Assam Andhra Pradesh

1989 1992 2000 2000

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Public Tubewells in Khammam District, Andhra Pradesh Development of Grape Gardens in Rangareddy District, AP Dugwell Irrigation in Chittoor District, Andhra Pradesh Mango Orchards in Krishna and Khammam Districts, AP On-Farm Development Works under Nagarjunasagar Project Command in Khammam and Krishna Districts, Andhra Pradesh Inland Fishery in West Gogdavari District, Andhra Pradesh Dairy Development in Krishna District, Andhra Pradesh Poultry Layer Investment, Andhra Pradesh Food (Mango) Processing in Visakhapatnam and Chittoor Districts Sheep Rearing in Mahbubnagar and West Godawari Districts An Ex-Post Evaluation Study on Sericulture Investments in AP Rural Non-Farm Sector in Andhra Pradesh Commodity-Specific Study-1-Grape Commodity-Specific Study-2 - Cotton

1988 1989 1989 1991 1995 1996 1999 2000 2001 2002 2002 2005 2004 2005

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Rajasthan 1 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Minor Irrigation Structures in Udaipur District, Rajasthan Tractors in Alwar District, Rajasthan Market Yard in Kekri Ajmer District, Rajasthan Borewell in Jodhpur District, Rajasthan IRDP in Alwar District, Rajasthan Poultry in Ajmer District, Rajasthan Sprinkler Irrigation Schemes in Barmer District, Rajasthan Dairy Scheme in Bharatpur District Water Management Schemes in Jaipur District Minor Irrigation Schemes in Bikaner District of Rajasthan Orange Cultivation Schemes in Jhalawar District of Rajasthan Jammu & Kashmir 1. 2. 1. 2. 3. 4. 5. 6. 7. 8. IRDP in Baramullah District , Jammu & Kashmir Tractors in Jammu District, Jammu & Kashmir West Bengal Inland Fisheries Scheme in Nadia District, West Bengal Betelvine Gardens in Midnapore District, West Bengal Bullocks and Bullock Carts in Malda District, West Bengal Poultry Farming (Broiler) in Medinipur District, West Bengal Minor Irrigation Schemes in Birbhum District, West Bengal Floriculture in Midnapore Districtof West Bengal Modern Rice Mills & Mustard Oil Ghani Mills in Bankura District. Special Component Plan & Tribal Sub-Plan An Impact Assessment Uttar Pradesh 1. 2. 3. 4. 5. 6. 7. 8. 1. 2. 3. 4. 5. 6. Minor Irrigation Scheme in Jhansi District, Uttar Pradesh Tractors in Western Uttar Pradesh Inland Fishery in Azamgarh and Deoria Districts, Uttar Pradesh NFS in Moradabad District, Uttar Pradesh Saghan Mini Dairy Project in Allahabad District, Uttar Pradesh Mushroom Cultivation in Dehradun District, Uttar Pradesh Grape in Muzaffarnagar District, Uttar Pradesh Minor Irrigation in Raebareli District, Uttar Pradesh Bihar Shallow Tubewells in Darbhanga, Madhubani & Samastipur Districts Deep Tubewells in Bihar Dairy Development Scheme in Begusarai and Singhbhum Districts Minor Irrigation Schemes in Samastipur District, Bihar IRDP in Ranchi District in Bihar Cold Storages in Bihar Maharashtra 1. 2. 3. 4. 5. 6. 7. Lift Irrigation Schemes in Ahmednagar District, Maharashtra Well Irrigation in Aurangabad District, Maharashtra Poultry Development in Pune District, Maharashtra Grape Gardens in Nasik District, Maharashtra Land Development in Command Area of Kukkadi Project IRDP in Yavatmal District Farm Mechanisation in Ahmednagar District of Maharashtra 1988 1991 1991 1993 1995 1998 1999 1988 1989 1989 1996 1997 2004 1988 1992 1994 1995 1997 1997 1998 1998 1987 1989 1991 1999 2000 2002 2003 2004 1992 1995 1988 1991 1991 1993 1995 1995 1997 1999 2001 2001 2002

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8. 9. 10.

Post Harvest Centres (Pre-Cooling, etc.) for export of Grapes Rice Mills in Maharashtra Cold Storages in Maharashtra Himachal Pradesh

2001 2002 2004

1. 2. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Dairy Development in Mandi District, Himachal Pradesh Apple Cultivation in Himachal Pradesh Kerala Betelvine Gardens in Trivandrum District, Kerala Broiler Poultry Development in Ernakulam District, Kerala Development of Rubber Plantation in Kattayam District, Kerala Fisheries Development in Kollam District, Kearla Farm Mechanisation in Palghat and Ernakulam Districts, Kerala Rural Non-Farm Sector in Malappuram & Kozhikode Districts, Kearla Sprinkler Irrigation in Kasargod District of Kerala Dairy Development in Kollam District of Kerala Minor Irrigation in Kasaragod and Kannur Districts of Kerala Rural Non-Farm Sector in Kollam & Alapuzza Districts SHGs in Wayanad District

1997 2004 1988 1990 1991 1992 1995 1998 2002 2002 2003 2004 2004

Copies of the study reports can be obtained from the Chief General Manager, Department of Economic Analysis and Research (DEAR), National Bank for Agriculture and Rural Development, C-24, G Block, Bandra-Kurla Complex, Bandra (East), Mumbai400 051.

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