Guest post by Neha Thakkar on role of microfinancing in women empowerment and rural development based on her real life experience in Bordi, a village in Maharashtra.
“The greatest revolution in a country is the one that affects the status and living conditions of its women.”
~ Pandit Jawaharlal Nehru, Discovery of Indian, Page 160
Year – 2007
We arrived at Dahanu to find Malti Tai (sister in Marathi) waiting for us at the station along with a few other ladies armed with flowers to greet us. We were a group of four people welcomed by around twenty odd ladies to take us to the base camp located at Bordi – a small town situated near the Gujarat-Maharashtra border. This was our third visit to the place.
Bordi looked exactly the same as it did when we had visited for the first time. Our destination was Malti Tai’s hut. Wait, it was no longer a hut. It had proper walls, sans any paint on it. The size of her house was that of a hut, but it looked like a pakka-makaan (a well-built structure). We were really happy for her, our bit had paid off.
There are so many women like Malti Tai who may be dreaming of such a house. To them, size of the structure doesn’t matter; all they need is a shelter that stands during the monsoon and does not burn their skin in summers. But how many women see this dream coming true? Few years earlier, my answer would have been – one in a million. But now it has changed completely. Let me take you back in time when our journey actually started toward this once-upon-a-time hut.
Year – 2005
My law college arranged annual camps each year for a rural area visit. The usual destinations are places around Gujarat-Maharashtra border, situated within Maharashtra. Reason being simple – Charity begins at home. In my first year of college, I was assigned a project on women empowerment and the best means that could be provided to them to achieve that goal. Our Indian women living in rural areas are not aware about their simple and basic human rights. In fact most of us are not aware about all the basic rights available to us, as the citizens of India. Human Rights are those basic standards without which human beings cannot live in dignity. Human rights are indivisible, interdependent, inalienable, irrevocable natural rights which are held by all persons equally and universally with both men and women having equal access to these rights.
“Women have been given certain priorities under various Indian laws and provisions.”
The introductory lecture about my project matter started with this statement. Prior to this, I had heard about women empowerment and a few provisions drafted in the law books for women; but this project made me hunt in those law books about these provisions.
Convention on Elimination of All Forms of Discrimination Against Women, 1979 focuses on the protection of women at the workplace. Article 11 of the Convention states that, “State parties shall take all appropriate measures to eliminate discrimination against women in the field of employment in order to ensure, on a basis of equality of men and women, the same rights in particular; a] the right to work as an inalienable right of all human beings”. India has ratified this convention in the year 1993. India formulated the concept of human rights during the year 1946. The Constitution of India directs that the International Charter should be interpreted in the same manner as an Act of the Parliament (Article 367 Indian Constitution). The Government declared the year 2001 as the year of women’s empowerment.
The Indian Constitution in its preamble has the goal of securing to all its citizens justice, social, economic and political and equality of status and opportunity. The preamble to the constitution sets out the aim and aspirations of the people of India which have been translated into various provisions of the Constitution. The Indian Constitution seeks to protect the interest of women through fundamental rights as well as directive principles of State policy. Our Constitution has various provisions for removing all kinds of disparities and discrimination against women. The Constitution aims at the creation of new legal norms, social philosophy and economic values which are to take effect by striking synthesis and fundamental adjustment between individual rights and social interest to achieve the desired community goals.
Thus there is a constitutional obligation upon the Constitution to see that while interpreting any proviso of law, the goals enunciated in Part IV are kept in view (Dr. Jaiswal, Directive Principles , Jurisprudence and Socio –Economic Justice in India, APH Publishing Corporation ,New Delhi,1996, Page 6). The Central and the State Governments have enacted many women specific and women related legislations to protect the interest of women. However, the number of dowry deaths reported in 2004 was 7026, in 2005 was 6787, and in 2006 was 7618 (According to data compiled by National Crime Records Bureau,as quoted in Times Nation, March 11, 2008 Page 13). These statistics do not reveal the suffering of women as cases registered under the Dowry Prohibition Act are not included in the above data. The main reason of crimes against women is their lack of financial independence. Gender inequalities are a major factor impeding progress towards the Millennium Development Goals. United Nations Development Program (UNDP) seeks to promote various approaches to reduce human poverty by emphasizing equality, human rights and women’s empowerment.
After the first stage of basic research, I came to the conclusion that the problem of discrimination against women can definitely be solved by the way of empowerment. They must be aware of the rights available to them and must be able to have an independent life whereby they are not dependant on someone or do not have to take beating from their husbands which is the most common scenario in the rural areas. My further research gave me an altogether new connection between Women Empowerment and Microfinance.
Microfinance is a new and dynamic approach which has aided in global poverty eradication and empowerment of women by making them financially self-reliant. Professor Yunus, Managing Director of Grameen Bank, promoted it in 1974 in Jobra, a village in Chittagong of Bangladesh, and it has spread all over the world. It is a program that extends small loans and other financial and business services to very poor people for self-employment projects that generate income, thereby enabling them to take care of themselves and their families.
A group of ten students and three professors was shortlisted to visit Bordi – a small town for the purpose of our project. Our aim was to guide a group of 12 women who had agreed to start something on their own. Most of these women had more or less a similar background. Their husbands were unemployed and addicted to alcohol. The wives had no other option but to work as domestic help or in factories located in other towns at very low wages. Their children never got proper education as they could not afford to pay the fees.
When we reached Bordi, we were introduced to those twelve ladies. Now, the biggest disadvantage of having a group of uneducated village ladies is that they have very limited talents. They are too poor to even afford to learn to stitch on a sewing machine. It was a big struggle for us to look for an appropriate profession for these ladies. After giving the whole issue a lot of thought, the best option for the ladies was to start a tiffin service. There were plenty of Government schools around, where children from poor families studied. The Government had decided to provide them free food; and to supply free food, the ladies didn’t have to be educated.
Now there was a surprise waiting for us. We were supposed to teach those ladies how to cook – yes, we were supposed to teach them that. Cooking didn’t involve preparing fancy meals; it simply involved making khichdi or pulao for children as per the standards set by the Government. We were provided with the proper recipes and measurements for the ingredients; we just had to read that out to the ladies for them to remember.
We did not even realize how our weekend passed away staying with them, teaching them and even learning a tip or two from them. It was now time to return to Mumbai and prepare a small project on what we did on our visit to Bordi.
Now, there is one small hitch in case of these visits. Even though you are aware of the real purpose and motive behind these visits, there are many more stages involved to achieve the goal. At the time of our visit, more than 70% of the work was done by our professors and a few human rights activists. The very first step towards women empowerment was to convince these women and form a small group of 10-20 people.
The Government, with the help of institutions like National Bank for Agriculture and Rural Development (NABARD) started Self Help Group (SHG) Bank linkage programme. Based on the concept of “self-help,” small groups of women have been formed into groups of ten to twenty and operate a savings-first business model whereby the member’s savings are used to fund loans. The rise of SHGs and more formal SHG Federations coupled now with SHG Bank Linkage have made this a dominant form of microfinance in addition to microfinance institutions (MFI). The significant policy announcements from the Government of India and the Reserve Bank of India have supported growth of micro finance sector in India. Today, it is estimated that there are at least 2 million SHGs in India.
Year – 2006
Time flies. When you are studying in a law college you have so many topics to research on and you often tend to lose track of the previous project. Similar thing happened to me too. Not that I had forgotten about Bordi, but I did not get time to research further on the topic on which I was supposed to give a presentation the following year in front of the teaching faculty and students. My final exam eligibility depended on that project. But with many other researches under my belt already, my next visit was not due for another 7-8 months. I kept neglecting that project. But now it was here again. We got the dates for our next visit.
Such trips are bonding times with professors. They are a bit casual with you as they are outside the “classroom and college” environment. They kept visiting Bordi throughout the year due to some or the other work. They briefed us about the progress so far. We were happy to know that the loan had been arranged for and the contract was signed too. Their very first contract was a municipality school in Bordi. They provided food for primary school children for now, as they were on the probation period. At the end of the academic year, the school management will decide whether to continue to render their services. The group was now called “Shakti”.
Our agenda for this trip was to determine the success of SHG for women empowerment. SHGs have faced various hurdles in the past due to the shortcomings they have. The major points of concern that we found out in a general scenario were:
- Regional Imbalances
- Quality of SHGs
- Capacity building of various partners in programme
- Provision of micro-insurance to the SHG members
These shortcomings have been worked upon from time to time. The implementation of solutions may take time due to the vast population. But the Government has even planned for the future strategy for SHGs. The strategy is:
- Massive capacity building efforts by other stakeholders. e.g. Banks, NGOs, Govt. Dev. Dept.
- Banks to own the SHG’s linked with them as their client and nurture them to keep them in good health
- Training the SHG members to maintain their books of account themselves
- Federating the SHG’s sustainability
- Graduation of SHG members to Entrepreneurship
- Skill development training to improve work efficiency and develop quality product,
- Ultimate aim is to make her an independent and self-dependent entrepreneur
“Shakti” was the very first SHG in Bordi, thus for them, the journey toward getting work was not so difficult. Our second visit there was the most memorable due to various reasons. The ladies were provided with the school kitchen to prepare the meals for children. They were quite hygienic and that’s saying something knowing the kind of environment they live in. They always maintained cleanliness, discipline, and punctuality. Needless to say, they were good at their jobs. We met with the faculty and they were very happy with the food and services “Shakti” was providing. Malti Tai, one of the ladies was the group leader who represented “Shakti” in front of the bank, the school and any other institution relevant to their work. She came to us with an unexpected query. They were paying the loan which was interest free and spending money on the food ingredients, but they didn’t know how to maintain proper books of accounts. This concern was communicated by one of our professors to the principal of that school. One of the teaching faculties agreed to help out “Shakti” in this regards.
On the second day of our visit, Malti Tai and other ladies took us to their homes. They lived in a poor condition. Malti Tai’s condition was a bit better and her hut did not have cracked walls and roof. She had only one daughter, who was studying in the same municipality school where Malti Tai’s group supplied food. But rest of the houses brought tears to our eyes. Half of them did not even have proper doors. Almost all the ladies had 3-4 children, not enough money to feed them twice a day, no good clothes. You could even see the sky through the roofs. They thanked us profusely for giving them opportunity to do something for their family. Even though I did not play any role in getting things done for them, it felt nice to see initiative coming together and dreams coming true for many. I was overwhelmed when they hugged and thanked me, considering the fact that I was one of those who played a very small part in the programme. This made me realize that no contribution is small. If we wish, we can do something, we can make a difference. If everyone thinks the same way, we will have a new India tomorrow. Our next generation will have a better and more peaceful life.
We left Bordi, this time with a heavy heart and a smile on our face. There was a sense of satisfaction in all of us, which we could not express in words. Our Journey back to Mumbai was a pleasant one.
Year – 2007
Malti Tai’s pakka makan is the result of their hard work and determination. Rest of the ladies have a decent life too. Though for them, it is difficult to reach the pakka makan stage so soon they are happy and content with their lives. They call themselves independent working women. They are proud to be the bread winners of their families. They pay off loan amount regularly now. The second contract talks are going on with another Government school which is the affiliation of the present Municipality school management.
Coming back to Mumbai from Bordi for the third time was the happiest journey for us. I was no longer running away from making a project and give presentation. Upon reaching here, first thing I did was to prepare my project. It went really well. Maybe the reason was that I gave it straight from my heart. My conclusion about the whole experience was that Microfinance Is the key. It helps a lot in women empowerment. There are many equally important aspects too, but Microfinance plays a major role here.
Role of Microfinance in Women Empowerment
Microfinance is a powerful tool to assist the stumbling economies to recover and strengthen, thereby making the lives of millions of poor people more self-respecting and dignified. Microcredit has made women more productive by providing them opportunity to be self –dependent in terms of their finance, helping them earn, making them aware of their rights and making them independent which in turn has empowered them. Women are now included into socio-economic activities of the country, they are contributing to family income and are a part of decision-making process in the family and they are able to exercise more control over their reproductive rights.
Microfinance helps in integrating the financial needs of poor people into a country’s mainstream financial system. It has been acknowledged that the development of a healthy national financial system is an important goal and catalyst for the broader goal of national economic development, which microfinance serves very well. Microfinance helps the poor, including women in not just obtaining loans but also inculcating in them habits of savings, investing in insurance policies and money transfer services. It helps them to raise income, be self-dependent, build up assets and have a better life and better standard of living.
A majority of microfinance programmes target women with a goal to empower them. Keeping up with the objective of financial viability, an increasing number of micro finance institutions prefer women members as they believe that they are better and more reliable borrowers. Shri Mahila Griha Udyog Lijjat Papad or Lijjat is an organization that has acted as a catalyst in empowering poor urban women across India during the last four decades. Starting as a small group of seven women in 1959, today Lijjat has more than 40,000 members in 62 branches across 17 Indian states. Only women can become members of Lijjat.
Rural India represents a vast opportunity with its largely unmet demand for financial services. ICICI Bank seeks to tap the significant rural commercial opportunity as well as create a social impact on the rural poor. The primary function of RMAG is to provide financial solutions to the vast rural hinterland. The group is thus responsible for all of ICICI Bank’s rural, micro-banking and agri-business initiatives.
Micro Banking: – The Business focuses on establishing a healthy and profitable lending exchange through relationships with select MFIs( Microfinance institutions), and invests in building deeper and concurrent monitoring and control mechanisms to enable healthy growth of the industry. The Group is responsible for managing Commercial Banking opportunities with MFIs. The group also manages the Business Correspondent Network to enable ICICI Bank’s resolve towards financial inclusion.
Probably the most potential solution to ending poverty and enabling people to work their way into a sustainable, improved situation is called microcredit Microfinance. It has proved to be immensely valuable. It has become clear that poor need access to money to send their children to school, to buy medicines; they need financial services to reduce their vulnerability. As a result, worldwide, MFIs have started developing and delivering a range of financial products. This reflects Millennium Development Goals (MDGs) – poverty reduction, education, health and empowerment. International year of Microcredit 2005:
Gender inequality is a major factor affecting progress towards Millennium Development Goals. In our country also, micro finance can be a tool for making women self-reliant. These women can provide their children, including girls, with education which in turn can empower them, thereby setting a new trend of independent women, enjoying their full potential. One of the powerful approaches to woman empowerment is the movement of SHGs, which can transform woman from being alive to live with dignity. The empowerment of women and improvement of their status and economic role needs to be integrated into economic development programmes, as the development of any country is inseparably linked with the status and development of women.
Yes, I did make a difference. A very small deed for the women and a major one for myself.
Microfinance in India edited by k.g. karmarkar (2008) article SHG BANK LINKAGE Programme: progress and prospects by Sukhbir Singh
The article by Vighneswara Swamy p.m. an evaluation of transaction costs in SHG BANK LINKAGE Models,” Bank Quest The Journal of Indian Institute of Banking and Finance April – June 2007
CS Reddy, APMAS CEO, Sandeep Manak, APMAS Intern, Mahila Abhivruddhi (October 2005) Self-Help Groups: A Keystone of Microfinance in India- Women empowerment & social security.