Subject: Social Justice

The emergence of microfinance as a potent tool for poverty alleviation has transformed rural India's economic landscape. With an outstanding portfolio of ₹3,73,918 crore and 7.7 crore unique borrowers as of September 2024, microfinance through Self Help Groups (SHGs) has become a catalyst for rural development and women's empowerment.

Role of SHGs in Asset Creation

• Financial Inclusion: SHGs facilitate access to formal banking services through NABARD's SHG-Bank Linkage Programme, enabling collateral-free loans for rural poor.

• Productive Asset Building: Under National Rural Livelihoods Mission (NRLM), SHGs help members acquire income-generating assets like livestock, equipment, and raw materials.

• Enterprise Development: Through Pradhan Mantri Mudra Yojana (PMMY), SHGs support micro-enterprises, fostering entrepreneurship among rural women.

Income Security Enhancement

• Sustainable Livelihoods: Success stories like Tamil Nadu's weaving initiatives demonstrate how SHGs create stable income sources through skill development.

• Risk Mitigation: Group savings and inter-lending provide financial safety nets during emergencies.

• Market Linkages: SHGs facilitate collective marketing and better price realization for members' products.

Women's Empowerment Impact

• Economic Independence: Recent studies (2023-2025) show significant improvement in women's income and financial decision-making capabilities.

• Social Transformation: Success stories like Ilaben Bhat's leadership in Ahmedabad showcase enhanced social status and community participation.

• Skill Enhancement: Training in various sectors like dairy farming in Rajasthan and handicrafts helps women acquire marketable skills.

Challenges and Way Forward

• Digital Integration: Leveraging technology for better financial management and market access.

• Capacity Building: Strengthening leadership and business management skills among SHG members.

• Value Chain Development: Creating end-to-end support systems for sustainable enterprise growth.

The success of SHGs in India, evidenced by ₹53,572 crore loans disbursed in Aspirational Districts (2023-24), demonstrates their effectiveness as a poverty vaccine. Through financial inclusion, asset creation, and women's empowerment, SHGs are transforming rural India, making them instrumental in achieving the goals of SDG 1 (No Poverty) and SDG 5 (Gender Equality).