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

  • Koichi Fujita
  • Keiko Sato


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 
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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

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