Role and Rationale of Self-Help Group (SHG) Federations: A Critical Assessment

Abstract

The country is witnessing a widespread emergence of Self Help Group (SHG) federations. Ensuring sustainability of SHGs apart, the federations are being seen as instruments with potential for socio-economic empowerment of the poor. The paper makes an attempt to critically examine the role and rationale of these SHG federations. Based on a review of available studies and secondary data, the paper highlights several features of the spread of SHG federations besides the prevailing perplexity as regards their role and form. The paper reveals that despite the felt needs, the promotion of federations has largely been a top down process compromising on the principle of participatory federalism essential for their sustainability. Their prime goal to emerge as effective microfinancial intermediaries of the poor is found to be severely constrained. The socio-economic backwardness of the members, weak organisational capacities, lack of clear legal framework and inadequate policy support are some of the key factors seen as restraining the SHG federations from attaining their potential strengths. Emphasising on the relevance of SHG federation, the paper concludes by identifying measures both to consolidate their spread as well as to take them forward.