India’s Village Women Glide the Development Landscape

BRICS, 27 Mar 2017

Moin Qazi – TRANSCEND Media Service

“Feminism has never been about getting a job for one woman. It’s about making life more fair for women everywhere. It’s not about a piece of the existing pie; there are too many of us for that. It’s about baking a new pie.”
― Gloria Steinem

27 Mar 2017 – Gender inequality is not only a pressing moral and social issue but also a critical economic challenge. India has a larger relative economic value at stake from advancing gender equality than any of the ten regions analyzed in a McKinsey Global Institute report, The Power of Parity: How Advancing Women’s Equality Can add $12 Trillion To Global Growth. The report says that if all countries were to match the momentum toward gender parity of the fastest-improving countries in their region, $12 trillion a year could be added to global GDP. Further, India could add $700 billion of additional GDP in 2025, boosting the country’s annual GDP growth by 1.4 percentage points

In the new development discourse   women have come to be recognized as key participants in efforts to alleviate poverty and achieve social transformation.  Effecting comprehensive change from a woman’s point of view calls for a transformation of gender relations, not merely superficial attention to “women’s needs”.   Research suggests that by serving a girl at the vulnerable crossroads of adolescence, development programs can have the greatest impact not only on that girl, but can empower her to be a catalyst for change in her family and community. By ignoring them we have lost the opportunity to impact a generation. However, once that window of adolescence closes, we have opened the doors for another broken generation .One must remember that it is easier to build a healthy generation than repair a broken one.

In India the most popular model for empowering village women through financial access and provision of other services is the self help group mechanism. It is in practice for more than two decades and has   transformed the lives of millions of women, several of whom now occupy important positions in village administration.

A typical Indian self help group consists of 10-20 poor women from similar socio-economic backgrounds. In these groups women save money together, gradually increasing the pot of money available to the group. Once there’s enough, the group can start lending portions of the money back to individual group members – at interest. The self help group also offers its members housing loans and provides them with useful items at cost price. These include seedlings and seeds for the vegetable garden, alum to purify drinking water, iodized salt to combat goiter. Periodically, workshops are held at which couselling is provided by experts on    sanitation, small families, children’s education and fighting social evils such as dowry.

In the blitzkrieg of the new microfinance movement, these self help groups have been overshadowed. It is a case of the stars being obscured by the moon. But the beauty of the night skies is never   complete without the constellation of the twinkling stars.

Despite early success, the growth   of self help groups had slowed in the last few years.  The microfinance scene in the nineties was dominated entirely by these SHGs. And they became key a key armour for banks in draining the swamps of poverty before microfinance institutions (MFIs),fueled b international funding led by impact investors  started swarming and courting them and made them their darlings  for  a purely business  goal. They introduced    a new idea of   do-goodism and a touchy feely morality to smokescreen a mega business of making profits off the poor. THE MFIs selectively plucked the most honeyed self help groups to pad their portfolios and profits. These groups have actually blossomed through the efforts of public banks, government and the not for profits, and sadly no one is talking about it. Moreover , MFIs have hybridized the group mode to reduce the investment of time and manpower that was entailed in nurturing them .Their  groups are now just credit groups ,called joint liability groups with no place for savings ,capacity building and governance .

This was the point when the original character of these self help institutions got destroyed. .It is sad that microfinance institutions used   this precious social capital built by community volunteers for a   narrow    commercial agenda. The focus shifted from thrift to credit .it became   an irresistible tale of chasing money .Barring some socially conscious players like SEWA and BASIX, most of these institutions lapped on the Bottom of Pyramid bandwagon .Herein lays the nemesis of the great microfinance crisis of Andhra Pradesh and the obituary of the original philosophy of self help groups.

However, the original concept of self help groups is being stoked up from the embers and the NRLM is a powerful programme for repositioning self help groups   as core to India’s approach to women empowerment and poverty alleviation. Unlike in the new microfinance paradigm, where credit is the sole function of self help groups, the emphasis of self help groups in its pure avatar is on savings, loans come later. Savings are integral to poor households’ risk management strategies; they constitute the first line of defense to help poor households cope with the external shocks, emergencies, and life-cycle events to which they are so vulnerable.

The classical Indian version of microfinance is far more empowering –it is not just lending money.  The members in the group receive skills and business training, peer mentoring, technical support, on-site follow up and on-going access to   basic inputs in preparing a business plan which provides a basic roadmap for the borrowers to reach   economic goals. t. Group activities allow the women to understand and practice various techniques for running the business collectively. This prepares them for individual entrepreneurship .In a way the self help group is a basic entrepreneurial school. Women need privacy, security and control over their financial lives, – Depending on the family dynamic, it would be hard to know how much a husband may be influencing or forcing a wife to sign off on something she doesn’t agree with.

The international MFI model is a different ballgame altogether. Here the sponsor is a profit-oriented venture capitalist, who sees the rural credit market as a powerful business opportunity. The MFI apparently brings great professionalism, innovation and technology to its enterprise of venturing to provide loans that banks do not.   MFIs form no groups engaged in governance functions. Even when they operate through non profits, MFIs are primarily concerned with lending and recovering what they lend to cohorts of people, at rates of interest far higher than what banks charge.  Basically the international model is consumerist in approach and is rooted in philosophy of Pralhad which argues that there is enormous wealth at the bottom of the pyramid.

The self help groups have their origin in the Self Help Affinity Groups facilitated by the Mysore Resettlement and Development Agency (MYRADA) that were adapted by the National Bank of Agricultural and Rural Development (NABARD) for lending by commercial banks. The adapted version, which underwent modifications to suit the needs of formal financial laws, started in 1992 as a pilot project and was soon upgraded to a regular banking programme .

The common characteristics   are: self-selected and unrelated members, small size, regular attendance at meetings, regular savings by members, peer pressure to enforce repayment of loans and simple and transparent procedures.

A typical Indian self help group consists of 10-20 poor women from similar socio-economic backgrounds who pool their savings into a fund from which they can borrow money to buy medicine, start a business, purchase animals, pay school fees, buy clothing, buy food during the lean season, invest in agriculture .They meet once a month and discuss issues of mutual importance thereby enriching each other. Contrary to what many believe,   the poor are not too poor to save, that there is enough savings potential within a group   people to meet the basic needs within a small community, and that small sums can make a big difference. Once the basic structure of the savings group model is introduced to a rural community by an outside agency—usually a local nonprofit—the groups do virtually everything, including training more groups.

What’s most significant about these groups is that they are designed to be wholly managed by villagers themselves .The groups do most of the work—selecting members, electing officers, deciding on their bylaws, creating their own loan fund, deciding who will receive a loan, and making sure loans are repaid. The phenomenon of “regular meetings” is an important enabling force which gives the woman courage to “lean in”, in multiple household and community settings.

Once groups have mastered the mechanics of savings and lending, they begin to ask, “What’s next?” With a reserve of savings and the knowledge that they can easily access small loans to meet an immediate need, they gradually come to believe tomorrow can be different from today. The disciplined hard work of saving every week and running a group makes them efficient money managers.

When they have a fair amount of capital, the group starts making small loans to its members. The women cross guarantee each other’s debts. Astonishingly few default. By transferring tasks normally done by well-paid bankers to poor people, the cost of administration comes down drastically. Although the value for members is not just in finance, credit remains an important element.  You can’t change social dynamics without women’s involvement in the economy. .

The group is linked to a public bank which supervises it and oversees its money management. .  Over time the bank begins to lend to the group as a unit, without collateral, relying on self-monitoring and peer pressure within the group.

The groups grow in size,   they save and invest more, and they launch their own initiatives—training groups for their children, buying grain when the price is low to better survive the lean season, and launching collective enterprises as they reach out to other NGO and development programs. With their economic clout, management skills, and group solidarity, they aspire to more.

Together the women create a critical mass and change the perception of what women can do. It is an amoeba model — and each group has the DNA within itself to self-replicate.

The self help groups are seen as entry point for many other social activities- school committees to watershed councils .As they mature, the groups   spark and spearhead meaningful and enduring changes by addressing community issues such as the abuse of women the dowry system, alcohol, educational quality, inadequate infrastructure, etc.

The self help groups are the biggest generators of social capital in rural India .Best practitioners in communities become community professionals (CPs) and catalysts for mobilization, health, literacy financial management, agriculture, leadership livestock, and more. The vast majority of women leaders in Panchayat Raj Institutions have come from self help groups and most successful sarpanches have had their grooming in these collectives. It is not that women are purer than men or immune to the pull of greed.  .But there is almost a certainty that women will channel money into solving more fundamental issues.    .

According to a Harvard Business Review study, women in emerging markets reinvest 90% of their earning into “human resources”— their families’ education, health and nutrition — compared to only 30 to 40% of   earnings by men

But loans of microfinance institutions to women from these groups have come in for lot of flak. Some borrowers squander money or start businesses that fail. There’s need for strong discipline. Loans can be malignant. Some businesses are too risky. And the temptation is always present to spend the loan on white goods. And the stark truism is that most loans to these women from MFIs are pipelined to their husbands.

Yet done right, microfinance can make a significant difference to the lives of impoverished women, particularly when used as a cover against sudden emergencies and for smoothening consumption.

There are still millions of self help groups wedded to the original mission and creed. Through them, women are transforming their own lives and that of their communities. The sisterhood is so close knit and persuasive and sorority so intense that women have begun to think of themselves in a different way.

Beginning in the benign area of health, the women slowly gained confidence and moved on to other social areas. They began asking for change from the bus conductor, Introducing new farming practices, saving enough money to engage banks and acquire simple irrigation equipment like water tanks, agitating for an improved road (and getting it), mapping the village land and rethinking what’s planted to produce year-round yields and income, demanding the presence of the school teacher, negotiating with local officials for providing services to which they were entitled.

Like termites they   had furrowed the male-dominated power-grid in villages and   were heading up the whole patriarchal foundation. Where once participation of women in public meetings was an anathema in rural society, it has now become a ritual. These self help groups have become powerful economic locomotives and have enabled women find new confidence, agency, and purpose.

“When women have the support of other women, and when they have income of their own,”   say Ela  Bhatt,   founder of  Self Employed Women’s Association (SEWA), ,which  represents 1.2 million women working in India’s informal sector , “they are able to fight their own battles in their own way.”

Bhatt speaks of a quiet yet persistent strength particular to women: “Once a woman knows what she wants,” Bhatt says, “she’s not afraid to take risks. If we cannot break through, we just find a way around.”

Empowerment has many dimensions–social, economic, cultural, political and personal. When every part is treasured, the good unleashed is greatest .This is the unique philosophy of every self help group. A membership of a self help group has transformed women in ways that it has made men alter their perception of women. Men may fret that they lose when women win, but history tells us that when women advance, humanity advances. .This lesson is best embodied in the words of Nirmala, a self help group member for well over two decades and the current sarpanch of Wanoja in Central India, which she keeps repeating whenever I visit her: “My father always believed that it would have been far better if I were born a son. But today he   realizes how lucky he is to have me as a daughter.”

For poor women, it is a journey towards the second Freedom or the real Freedom, as Mahatma Gandhi said when he talked of the unfinished agenda at the time of independence.


Centuries ago, a king, while travelling through his domain came across people living in dark caves. He was horrified at the gloom and ordered every family to be given lamps and oil to fuel them. Fifty years later, he visited the area again and found the caves in darkness.  The lamps had been forgotten or were broken. The oil had run out. The king ordered more oil, new lamps. But when he returned to the area the following year the caves were dark once more. The king summoned his minister, a wise old man, and asked for an explanation. ‘Ah,’ said the minister, ‘You gave the lamps to the men. You should have given them to the women.’

The king followed his minister’s advice and the lamps have kept burning ever since!


Moin Qazi, PhD Economics, PhD English, is the author of the bestselling book, Village Diary of a Heretic Banker. He has worked in the development finance sector for almost four decades in India and can be reached at


This article originally appeared on Transcend Media Service (TMS) on 27 Mar 2017.

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