Dialogue  January-March, 2011, Volume 12 No. 3

Rural Poverty, SHGs and Micro Credit

Toki  Blah

The universal image of India, from times immemorial till today has generally been portrayed by a single prominent character– The Rural Poor. In Independent India, this is the character on whose name elections have been won or lost. Promises, pledges, vows backed by plans, strategies and shockingly huge budgets have been made in the last 60 years with the sole intention of wiping out poverty from the face of free India. Poverty however refused to neither cooperate nor give up the ghost and continues to haunt the land and its people. Is the problem really insurmountable?  Are the Indian Poor absolutely beyond redemption? In our state of Meghalaya in particular and in North East India in general, despite Govt efforts to the contrary, the incidence of rural poverty continues to grow instead of decrease. This writeup as such  is an attempt to  spare  a little time  in seeking  solutions to  this  phenomenon that is the root cause of so many of our current  social ailments.

The first problem in such an endeavour is to define Poverty.  Social scientists have very conveniently labelled Poverty as a relative term. It means that the criteria for defining poverty can alter, and what one community, for example the Americans may consider as poverty, may elsewhere be seen as affluence. Understandably, such a dichotomy is politically unacceptable and politicians being the practical people they are, especially in India, have come up with a yardstick to measure poverty. It is known in development parlance as Below the Poverty Line (BPL). It is the economic baseline on per capita income that the administration and the development planners use to measure those who are to be targeted as poor and where the direction for any anti-poverty intervention is to focus. Such interventions are aimed at raising   BPLs to an Above Poverty Line (APL) status. So far so good! Trouble however usually arises since APL levels have a notorious tendency to dip sharply downwards once anti-Poverty measures of the Govt are withdrawn. Everyone then reverts back to square one from where they initially started in the first place. Unsustainability has therefore been the trade mark of Poverty alleviation measures so far. It is the contention of this write-up that the attempt to define poverty strictly by an economic yardstick  based on Per Capita Income , though Economically correct is strategically flawed for anti Poverty interventions! To me  the definition of the Poor are those  members of  society who are  either deprived or are unable to access, for  various reasons,  resources that are capable of improving their  quality of life.  

Inaccessibility to resources such as land, money, basic education, basic health, food, housing, clothing, drinking water and other basic ammenities, make people poor. The BPL yardstick simply acknowledges the existence of such categories of people.  Poverty as such is an effect arising from a cause. It is a symptom of a deeper malady, not the malady itself. I clearly remember one of our honourable Ministers giving an inspiring speech on Poverty alleviation. “Poverty”, he claimed, “will vanish the day we stop giving free fishes and instead teach the poor how to fish” Thunderous applause for such gems of wisdom. One would however humbly like to add that aside from teaching them how to fish it is equally important to ensure that the Poor also gain access to resources that hold fish.  Herein lays the irony of our efforts to eradicate poverty. Pinpointing effects is so populist; so appealing; so politically irresistible. Tackling causes is usually such a drab, dreary and thankless job. The problem is not with the poor but with our own inability to realize that mere sermonizing is not good enough; metaphorically speaking, for the poor, we also need to make certain that after teaching them how to fish, no one obstructs them on their way to the river where the fishes are. Teaching them to fish is useless if age old obstacles and barriers (economic, social, cultural, and political) continue to remain. These obstacles inhibit the poor from reaching the water where the fishes are. The point I wish to emphasise is that when we speak of Livelihood promotion at the grassroot level and especially for the poor, noble intentions often flounder because of our inability to approach and perceive problems from the perspective of the poor.

As pointed out above, accessibility to resources is often the qualifying difference   between Poverty and decent living. Credit, one of the most crucial resources, continues to remain beyond the reach of the poor, especially the rural poor. Poverty pre-assumes the inability to save. Hence the phrase “Hand to Mouth” which immediately brings in a mental picture of a life style that is totally devoid of reserves.  It is this dearth of reserves that makes the poor so vulnerable and helpless. As a matter of fact, the Credit requirements of the poor, especially the rural poor, are such small, marginal requirements that they have invariably been tagged as Micro. Unfortunately for the poor, whose cash reserves are generally zero, even such meagre amounts may at times mean the difference between life and death, since credit then no longer remains an option but a dire necessity. For example, due to non-payment of wages a poor family may urgently need Rs 150 to buy food, as there is no rice left in the house. Immediate accessibility to a meagre Rs 150, determines whether the family eats or goes to bed without food! Or a family member, and it is usually the children, require immediate medical treatment that is available only in a far away  State Civil Hospital and Rs 2000 is needed for the same. Immediate accessibility to the required amount will determine whether the child lives or dies. One can go on with numerous other examples, but the pertinent question is how do the poor cope with such emergencies? There are two traditional ways on how the poor deal with such exigencies of life. One, the Money lender with his exorbitant rates of interest. Whatever is available is hocked and in the process the poor enter a debt trap and spend the rest of their wretched lives repaying the loan! Or else the adversity is borne with impassive stolidity and nature is allowed to take its own impartial course of action. These are issues that formal banking procedures have been unable to tackle. The very nature and composition of Banks prevent them from doing anything else. The consumable credit needs of the poor on the other hand are urgent, small, direct and pressing, totally at odds and intolerant of formal processing. The poor thus have urgent need to be linked to a third alternate credit source that is informal, effective, quick and responsive to such urgent consumption needs. In short, the requirement is for a credit source that the poor can own, manage and control on their own terms!

Studies have shown that the onus of meeting consumption needs is frequently the responsibility of the woman of the house and thus these small, but urgent consumption credit needs of rural households invariably become gender related issues. The need to save for that rainy day  has always been a characteristic associated with  women and  it is this  gender trait that  produced one of the greatest breakthroughs in tackling Rural Poverty, especially in relation to  accessibility of the poor to immediate and informal credit  through an empowering  technology that  is now known as the  Self Help Group (SHG) movement. The SHG movement especially that of women, has effectively demonstrated the potential to transform Rural Development and the Rural Economy as a whole. The basics of the SHG movement revolve round a group’s ability to save, lend and repay among members and as such are fundamentally simple. The dynamics of these actions however and the impact they create are anything but simple! The first impact has been on the status of women within the community. For the first time , be it in Meghalaya  or in any rural setup in India, the woman of the household has access to credit that she owns and controls and most important it is a source that  can bring succour when all else has failed. Man retains his role as a breadwinner but women are slowly being recognised and emerging as capable household crisis managers.  Secondly, the SHG movement also depends on frequent and regular interaction between members. SHG meetings therefore are occasions where women of equal status (affinity) meet, discuss, interface, network and exchange ideas. SHG meetings are generally dominated by agendas that address sterner aspects of life such as rules for members, disciplinary action against defaulters, wife beatings, drunken husbands, market prices of agricultural products and all other matters that affect the wellbeing of the members and their community. In essence it is an occasion for women to freely express and churn ideas and thoughts that might have lain suppressed for decades! A process oriented action towards gender empowerment is thus initiated. A human resource that awaits an opportunity for proper expression is thus born.

The writer considers it a privilege to have been associated with the setting up and running of SHGs in 6 remote and underdeveloped districts of the NE, during his tenure as Programme Coordinator and Development Strategist of the NERCOMP / IFAD project for NE India. A micro credit programme for up-land women was initiated through the SHG concept and the beneficiaries took to it like ducks to water. With absolutely no financial assistance from any quarter except for NGO facilitation, poor rural women, inhabiting some of the most remote and backward mountain areas in the world picked up the gauntlet and went ahead with a programme that was to change their lives forever. Regular savings of 50 paise to one rupee per member per meeting was enforced by members themselves. These poor women evolved a slogan to prop up their spirits when the going got tough and it goes as “Income minus Savings = Expenditure”. Absolute drivel to any economist but it made perfect sense to those struggling women as they contributed their one rupee to the SHG kitty. In two years time even the poorest groups averaged at about 3000 to 3500 rupees per group and it was their own money, saved, circulated and repaid by each individual member. I still remember the pride with which my officers reported this fact at a Project Board Meeting only to be chastised by a senior NEC official for wasting time on such small insignificant savings. I couldn’t resist highlighting this point as it illustrates the utter insensitivity that “armchair planning advisers” often display towards efforts of the poor. Fortunately the Project ignored this officer’s babu mentality and left him to his file pushing while the SHGs were encouraged to push ahead with their agenda of their own development. Project SHGs are now linked to banks: many units have taken up both economic and social enterprises. One is amazed to come across a crèche in rural Meghalaya- a social enterprise by a Project SHG; many have come together to form cluster associations; some such associations have taken up the task of filling up critical developmental gaps such as rural health and market linkages; some have taken up income generating activities and in a district in Manipur are seriously considering establishing their own bank. The moral of the story is if we sincerely try to understand the poor; give them a fighting chance on their own terms – chances are they will not disappoint you. The following true story illustrates the sometimes amazing lessons that the simple and poor rural folks can teach.

Putwaribi village located in North Cachar Hills was and still continues to remain one among thousands of such remote, cut-off and forgotten hamlets of North East India. The village is comprised of less that 50 households and its 200 odd residents can probably fit in at any given moment as genuine profiles of Below Poverty Level (BPL) categories. Land holdings are small and all the agricultural produce is oriented towards food security and nothing else. Its two hours on foot from the nearest paved road and four hours from the nearest Government Health Sub Centre. Nothing exciting really ever happens here and when asked, the most memorable happening that stuck in the memory of most villagers was the day the school house got struck by lightning. It happened years ago but they still talk about it. Yet in such a sleepy hollow, an event took place, that if allowed to grow and manifest itself in other forgotten hamlets and villages of India would probably ignite a revolution of sorts, the likes of which lies beyond the vision of our development planners and probably beyond our own imagination as well.

The village was taken up under NERCOMP sometimes during 2001 and from lessons learnt elsewhere, the project concentrated on building up womens SHGs within the village before any major community development work was undertaken. Two women SHGs were promoted and both within a short spell of six months had proved their viability in many ways. Firstly, both the groups started off with the main SHG activities which are regular weekly meetings for all members and regular savings by one and all at every meeting. Within six months each group had accumulated savings of more than Rs 1000 each and with matching contribution from the project had been able to extend small but regular consumption loans to members concerned. With the availability of easy credit within easy reach and because the money was their own, women were now able to contribute to their respective households with sums and in a manner which their men folk had never been able to do in the past. It brought in self confidence and self esteem in these simple village women, mainly because they were given the chance to manage and run their own financial affairs.

It was only when this began to happen that the Project started initiating the Natural Resource Management Group (NaRMG) for Putwaribi village. A NaRMG basically consists of two members from each household of the village one of whom was a woman and a NaRMG functions as the Village Development Forum where a participatory process in community developement takes place. As such a typical NaRMG would represent the whole adult village population neatly divided into equal number of men and women. To ensure active participation of women, 1/3 of the NaRMG executive council was made up of woman while it was mandatory that the treasurer of the NaRMG was a woman. The NaRMG was supposed to be the planning and implementing agency of the village on any development issue that concerned the entire community. NaRMGs were encouraged to identify their own development priorities and to plan, budget and implement such priorities. The Project often came up with 70 % to 85 % of scheme costs while the cost of labour and raw material was equity of the community. It was a typical grassroot planning from below, essentially to promote people’s ownership over development.

The same took place in Putwaribi and after a series of meetings the NaRMG finally zeroed in on a drinking water scheme that involved piped drinking water from a source about two km away from the village. Community contribution involved labour for weir construction and trench digging for laying of pipes. Every member of the NaRMG was given some work and responsibility but the most important of all, the purchase of TATA quality pipes was entrusted to the traditional Headman and his Assistant.  (For the ignorant, the Headman is usually the wisest and most trusted elder of the community). Money was drawn for the various expenditures under the scheme which included a large amount for the pipes. This money was handed over to the Headman and his Assistant with the instructions to proceed to the nearest town to procure and bring back the pipes.

So one morning the duo left for town to get the pipes. On the way temptation got the better of the duo and instead of the quality TATA pipes decided upon by the entire community, pipes of an inferior and cheaper quality were purchased. The balance was pocketed in the expectation that even if the difference in quality was noticed, none would have the audacity to raise the alarm over this act of corruption. Unfortunately for the thieves, they acted without taking into consideration the emergence and existence of an empowered and capacitated group of village women. They were the ones who raised the alarm and such was the uproar caused that a hasty general meeting of the NaRMG was called. The matter was discussed threadbare and the guilt of the pair established.

The NaRMG in its wisdom decided on the following course of action. The Headman and his Assistant, on pain of being excommunicated from the community were ordered to carry back the inferior pipes and bring back the real stuff, all at their own expense. They were also to be expelled as members of the NaRMG for three years and during the period their respective households were debarred any developmental benefits from the project.  The matter was to be brought in as an agenda item in the next meeting of the Traditional Council which will then decide on retaining the Headman or not. All in all it was a socially humiliating but not an economically crippling punishment for the guilty two.

This story when narrated to urban audiences usually evokes a response that the guilty pair should have been handed over to the police and the law allowed taking its own course. Such a view misses the entire moral of the story. Had an FIR been lodged with the police, most probably the Headman and his pal would have been arrested. The pipes would have been sized as evidence and the drinking water scheme would never have seen light of day. The issue that is usually missed is the Social Auditing that took place when common, ordinary and in this case mostly illiterate people raised a hue and cry over an attempted case of corruption and mal-governance by their elected representatives. They ensured that a developmental service that was rightfully theirs was restored to them. Imagine if ordinary people in the rest of the country could do the same. Corruption would be wiped out. We could well have a growth rate beyond 9%. India would become a super power within ten years time. If only we could spend some time and effort to empower our poor and to have a bit of faith in their ability.


Dialogue (A quarterly journal of Astha Bharati)

                                               Astha Bharati