SHGs for Poverty Alleviation?: Insights from a Tamil Nadu Village Under Rapid Economic Development



The ‘official’ purpose of the SHG program in India is poverty alleviation through providing cheap credit to the rural poor. However, after the mid-1990s India entered a new developmental stage with accelerated growth of nonfarm sectors and a large-scale rural–urban migration started with substantial impact on increase in rural income, especially in Tamil Nadu. The chapter aims at clarifying the actual functions and meanings of the SHGs under such a rapidly changing rural scenario, based on a recent case study in a Tamil Nadu village. The major findings include; (1) The SHG program gave a certain apparent impact on poverty alleviation through lowering the interest rate imposed by village moneylenders and providing the poor with the subsidized bank loans, in spite of several limitations such as the small amount of loan disbursed from the banks, (2) The poor, however, was relatively reluctant to join in the program due to various socioeconomic reasons, and it was found that one of the major reasons was paradoxically the lack of labor by the poor (especially for the female-headed households) for keeping goats, since the program was strongly connected with goat rearing in the study area, (3) The SHG program was most suited to the ‘upper-middle’ and the ‘middle’ classes (out of the five classes) who were able to keep goats more easily with their family labor, which is mainly devoted to self-employed agriculture, and the SHG program functioned as one of the opportunities for them to save money, (4) The SHG program was largely ineffective in financing the rural households for higher education of children, which was the real route for the rural people in India to escape from poverty, because of the huge amount of expenditure necessary for higher education.


Poor Household Bank Loan Poverty Alleviation Study Village Daily Laborer 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Dhan Foundation (2004) Impact of Kalanjiam community banking programme. Dhan Foundation , Madurai, NovemberGoogle Scholar
  2. Dhan Foundation (2010) Annual Report 2010Google Scholar
  3. Fujita K (2000) Credit from the poor to the rich: the financial market and the role of the Grameen bank in rural Bangladesh. Dev Econ 38(3):343–373CrossRefGoogle Scholar
  4. Fujita (2010) The green revolution and its significance for economic development: the Indian experience and its implications for sub-saharan Africa. JICA-RI Working paper No. 17Google Scholar
  5. Fujita K (2011) Introduction: socio-economic dynamics in a tank-irrigated rural area in contemporary Tamil Nadu, India. SE Asian Stud 49(1):3–21Google Scholar
  6. Fujita K, Sato K (2011) Self-help groups and the rural financial market in South India: a case of a Tamil Nadu village. SE Asian Stud 49(1):74–92Google Scholar
  7. Government of India (GOI) (2001) Census of India 2001, series 33 Tamil Nadu, district census handbook. Part-B Madurai District, Village and Town-wise Primary Census AbstractGoogle Scholar
  8. Gardin BE (1988) Wealth ranking in smallholder communities: a field manual. Intermediate Technologies Publication Ltd, LondonGoogle Scholar
  9. Government of Tamil Nadu (GoTN) (2009) Annual statistical abstract of Tamil Nadu 2007–2008. Department of Economics and StatisticsGoogle Scholar
  10. Global Development Research Centre (GDRC) (2010) Credit assessment–the ASSEFA way. Accessed 5 Sept 2010
  11. Kajisa K, Palanichamy NV (2006) Income dynamics in Tamil Nadu, India from 1971 to 2003: changing roles of land and human capital. Agric Econ 35(Supplement):437–448CrossRefGoogle Scholar
  12. National Bank for Agriculture and Rural Development (NABARD) (2010) The status of micro finance in India 2009–2010. NABARDGoogle Scholar
  13. Sato K (2011a) Employment structure and rural-urban migration in a Tamil Nadu village: focusing on differences by economic class. SE Asian Stud 49(1):22–51Google Scholar
  14. Sato K (2011b) Goat rearing practices and limited effects of SHG program in India: evidences from a Tamil Nadu village. SE Asian Stud 49(1):52–73Google Scholar
  15. Squido (2010) Madurai India on PARD project details. Accessed 24 August 2010
  16. Tamil Nadu Corporation for Development of Women Ltd (TNCDW) (2010) Tamil Nadu Corporation for development of women Ltd., rural development and Panchayat Raj department. Accessed 14 June 2010

Copyright information

© Springer India 2014

Authors and Affiliations

  1. 1.Center for Southeast Asian StudiesKyoto UniversityKyotoJapan
  2. 2.Graduate School of Asian and African Area StudiesKyoto UniversityKyotoJapan

Personalised recommendations