International Journal of Mechanical Engineering and Technology (IJMET) Volume 9, Issue 1, January 18, pp. 472 481, Article ID: IJMET_9_1_51 Available online at http://www.iaeme.com/ijmet/issues.asp?jtype=ijmet&vtype=9&itype=1 ISSN Print: 976-63 and ISSN Online: 976-6359 IAEME Publication Scopus Indexed THE IMPACT OF MICROFINANCE THROUGH SELF-HELP GROUPS (SHG): A STUDY ON THE ECONOMIC STATUS OF URBAN WOMEN WORKING IN PRODUCTION AND MANUFACTURING INDUSTRIES IN MYSURU DISTRICT Sandhya P.S and Sri Ranjini S Department of Management and Commerce, Amrita School of Arts and Sciences, Mysuru Amrita Vishwa Vidyapeetham, Karnataka, India ABSTRACT Poverty in urban areas is a matter of prime concern in contemporary India. Its roots lay partly in uneducated workforce working in urban areas and partly in the socio-economic structure of urban India. Among various poverty alleviation schemes introduced, micro-finance envisages to bring about qualitative changes in the living conditions of the poor, uneducated urban women has become vital for their economic and social sustainability. Women working in Manufacturing and Production industries form a large part of the above said group in the urban areas. The beneficiaries who have access to credit under microfinance are playing important role in the socioeconomic life of their family. Nevertheless, one of the weaknesses of microfinance is a tendency to utilize the facility for urgent monetary requirements of the households instead of spending on self-employment micro-enterprise (SEM). In this research paper, the primary data was collected from women working in production and manufacturing industries of Mysuru district of Karnataka.This paper makes an attempt to look at the usage of loans of 124 women members of self-help groups who participated in microfinance programmes. The findings indicate that majority of the beneficiaries have used the loans for starting their own part- time micro-enterprises which is supplementing their wages they are getting from the factory. This has enabled the women members of self-help groups to become economically independent and helped them earn a stable income. Keywords: Microfinance; Self-help group; Microcredit; Production and Manufacturing Industry; Self-employment Micro-enterprise http://www.iaeme.com/ijmet/index.asp 472 editor@iaeme.com
Sandhya P.S and Sri Ranjini S Cite this Article: Sandhya P.S and Sri Ranjini S, The Impact of Microfinance through Self-Help Groups (SHG): A Study on the economic status of urban women working in Production and Manufacturing Industries in Mysuru District, International Journal of Mechanical Engineering and Technology 9(1), 18. pp. 472 481. http://www.iaeme.com/ijmet/issues.asp?jtype=ijmet&vtype=9&itype=1 1. INTRODUCTION: The 11 socio-economic census of India shows disturbing trends. The factshows that more than 75% of the households in the country earn less than Rs8, per month or Rs.53 per capita per day. Also, more than % of the population are landless and an equal number are homeless living in urban low rental areas and slums. This shows that India has the largest concentration of the economically weak people in the world. Majorityof them work as manual casual labour which reflect the prevailing social situation seven decades after independence and the type of development we have made. The problem of women in poverty is in fact even more complex. Over the last two decades, the number of women living in poverty across the country has grown both in absolute terms and in comparison with men. The fact remains that the women who constitute one half of the population are still suffering because of discrimination and poverty. We have to admit that this is the outcome of a number of social and economic factors. To mitigate the problem of poverty NABARD during the year promoted microfinance. This provision of thrift, credit and other financial services and products of small amounts will help the poor enabling them to raise their income levels and improve their living standards. Presently, under the self-help group (SHG) there are two models of microfinance viz., (i) bank linkage model(sbl) and (ii) the microfinance institution model (MFI). In the case of SBL, SHGs are formed and financed by MFIs which obtain resource support from different sources. In our country, most of the microfinance activity is under the SBL model. Microfinance programmes aimed at the poor women are designed to help them to come out of the clutches of poverty and make a sustainable living. One of the assumptions of the scheme is that loans are the only financing system that can provide sufficient capital to meet the needs for micro-enterprise finance. Under this scheme, credit is available for various purposes ranging from urgent consumption needs to accumulation of assets. Also, the credit users are encouraged to initiate small income generating micro-enterprise. It is a fact that self-employment activities bring income, increase consumption levels, lead to a rise in the demand for education of children. Empirical studies also underline the impact of micro-enterprise on the lives of the poor resulting in an increase in income and improvement in their standard of living. The question is to what extent women SHG members are making use of the credit opportunities that are available to them for productive entrepreneurial purposes and how can this be further encouraged to produce sustainable incomes for them? Against this background, the present study makes an attempt to analyse the impact of micro-finance programmes aimed at poor and impoverished urban women in particular, using survey data gathered from members of women SHGs functioning in Mysuru district of Karnataka state. 2. LITERATURE REVIEW: In the field of micro financing and self-help groups a considerable literature has emerged as a result of interest shown in different aspects of economic relations by social scientists during the last two decades. This interest is understandable in view of the immense contribution of women self-help groups to the process of economic and social change in India. http://www.iaeme.com/ijmet/index.asp 473 editor@iaeme.com
The Impact of Microfinance through Self-Help Groups (SHG): A Study on the economic status of urban women working in Production and Manufacturing Industries in Mysuru District DiptiBeghel and A.K.Srivastava. Role of self-help groups in socio-economic development of rural women (15). The study indicates that social and economic indicators have positive impact on social development of women. It recommends that government should promote income generating activities among women to achieve economic stability. K.C.Mishra. Problems of self-help groups: A micro study (16). Here an attempt has been made to know the difficulties faced by the beneficiaries regarding selfemployment, marketing, finance, product and quality, infrastructure and facilitators. Also suggestions are included for successful working of the SHGs. SaritaTakur. Microfinance through self-help groups (SHGs): A key drive for sustainable growthin India (16). At the grass root level the microfinance scheme is being implemented through the commercial banks, co-operatives and regional banks with government agencies. The findings of the study reveals that microfinance can contribute to poverty alleviation programmes. H.R.Uma and K.N.Rupa. The role of SHGs in financial inclusive: A case study (13). The poor in India have no access to credit from a formal source. These days SHGs have been considered as cost effective and help groups in financial inclusion. The study confirms that women SHGs help their members to have access to financial system and thereby become socially and economically empowered. Jun Goto. The impact of self-help group programmes: Experimental and survey evidence fromsouth India (14). The outcome of the study of SHGs by a foreign scholar indicates that group members who are rich are more likely to be benefited economically. In the case of poor members asset creation and consumption requirements are taking out poverty through SHG modeled microfinance initiatives. Ajay Tankha. Banking on self-help groups Twenty years on. (12). The book attempts a critical assessment of the growth of the SHG movement in the country. The study has focused on three core issues concerning SHGs like cost effectiveness, sustainability and impact. Also it has reviewed the existing state of affairs of SHGs and address the question of what should be the next phase in the development of SHGs. C.S.Reddy and Sandeep Manak. Self-help groups: A keystone of microfinance in India-womenempowerment and social security (5). The study indicated that the repayment rates were high and that the bank linkage made difference in the lives of the SHG members. The authors conclude that non-financial areas such as social security and gender dynamics are also affected by the SHG movement. Vasantha. Microfinance through self-help groups as catalyst for poverty reduction andwomen empowerment (15). The study recognized the potential of micro-finance in reducing poverty. The participation of poor women in SHGs has not only enabled these women to meet their credit needs but also resulted in general awareness, capacity building, self-confidence and courage which has been translated into empowerment. Sarumathi. S and K.Mohan. Role of Microfinance in women empowerment (An empirical study in Pondichery region SHGs) (11). The authors have discussed the problems women members face in SHGs and analysed the role played by microfinance in women s empowerment under psychological, social and economic dimensions. http://www.iaeme.com/ijmet/index.asp 474 editor@iaeme.com
Sandhya P.S and Sri Ranjini S Somasekar. K. Financial inclusion through Self Help Groups for livelihoods-an Analysis (15). The study has noted that SHGs are playing vital role in providing livelihoods to the poor. However, the programmes confront many challenges for further scaling up. These need immediate remedial measures. Shijina. A.S and P.Ezreth. Role of self-help groups in microfinance(16). The study emphasises that SHGs are the financial relief for the illiterate and provide a social commitment to its members. Anjugam, M. Ramaswamy. C and R. Balasubramanian. Impact of microfinance programme in empowering women: Evidences from self-help groups (SHGs) in Tamil Nadu (7). The study has considered the role of microfinance in empowering women in terms of improving their access to resources, assets and income at the house-hold level. It has concluded that the microfinance programme has made stronger impact on socio-economic empowerment of women in less developed region than in the developed region. Objectives: 1. To analyse the effectiveness of microfinance on poverty reduction and economic empowerment of women SHG members in Mysuru district; 2. To examine the pre and post economic status of SHG women members 3. To study the benefit received by the respondents through various income generating activities. Hypothesis: H1-there is a significant change in the economic status of urban women after joining SHG 3. METHODOLOGY: The researcher has collected the data through a closed ended questionnaire. The questionnaire was personally distributed to 13 respondents who are working in production and manufacturing industries of Mysuru district. Six respondents did not return the questionnaire even after repeated follow ups. So finally the researcher has used 124 questionnaires for the analysis. The analysis was done using SPSS software and the statistics used was percentage analysis. Analysis: Keeping in view the objectives of the study an attempt is made to analyze the empirical data collected for the purpose of study. To begin with the socio-economic status of women SHG members are explained below: Table 1 Age (individual) Range Number of respondents Percentage Between -3 years 29 23.38 Between 3- years 33 26.63 Between -5 years 38 3.64 Above 5 years 24 19.35 http://www.iaeme.com/ijmet/index.asp 475 editor@iaeme.com
The Impact of Microfinance through Self-Help Groups (SHG): A Study on the economic status of urban women working in Production and Manufacturing Industries in Mysuru District 3 1 age Between -3 years Between 3- years Between -5 years Above 5 years Interpretation: It is evident from the above chart that nearly 5% of the respondents are in the age group of - years. Those who are aged beyond 5 years constitute less than %.The middle aged in the age group of -5 years account for 31%. Table 2 Education Particulars Number of respondents Percentage Less than SSLC 55 44.36 SSLC 37 29.84 PUC 32 25.8 Graduate Others 6 education Less than SSLC SSLC PUC Graduate Others Interpretation: It is observed that a number of women SHG members have had school education up to SSLC. Those with SSLC qualification account for 3%. Another 26% had PUC education. Table 3 Purpose of loan taken Options Number of respondents Percentage Business 42 33.87 Debt payment 24 19.35 Domestic needs 19 15.32 Productive purpose 39 31.46 http://www.iaeme.com/ijmet/index.asp 476 editor@iaeme.com
Sandhya P.S and Sri Ranjini S purpose of loan 5 3 1 Business Debt payment Domestic needs Productive purpose Interpretation: It is observed that maximum number of respondents have taken loan for doing business and for productive purposes. The rest used loans for domestic needs and debt payment. Table 4 Are you benefited by SHG economically? Options Number of respondents Percentage Yes, easy loans for urgent financial needs 44 35.48 Yes, easy repayment 41 33.6 Yes, encourages savings 39 31.46 Others 5 3 1 benefited by SHG economically Yes, easy loans for urgent financial needs Yes, easy repayment Yes, encourages savings Others Interpretation: It is evident from the chart that a large number of respondents are benefited economically because SHGs give liberal loans, repayment is easy besides encouraging thrift Table 5 Nature of business you do Options Number of respondents Percentage Petti/tea shop 18 14.52 Condiment vending 13 1.48 Laundry 14 11.29 Agarbatti making 19 15.33 Beedi making 23 18.55 Others 37 29.83 http://www.iaeme.com/ijmet/index.asp 477 editor@iaeme.com
The Impact of Microfinance through Self-Help Groups (SHG): A Study on the economic status of urban women working in Production and Manufacturing Industries in Mysuru District nature of business 3 1 Petti/tea shop Catering Laundry Nursery Vegetable vending Others Interpretation: It is observed from the chart that 7% of the respondents are engaged in small business like Condiment vending, petty shop, tea shop, laundry work, Beedi making andagarbatti making catering. The 3% under other category are engaged in engaged in selling Plastic and fancy goods. Table 6 Do you possess the following? Options Number of respondents Mobile 53 T.V dish 19 Motor bike 12 Furniture 32 Gas connection 49 Electricity connection 51 Tap water connection 3 Toilet 54 Others Interpretation: It could be seen from the table that the women SHG members have achieved relatively higher economic status by possessing modern household utility articles and gadgets. Significantly mobile phones, Dish TV, cooking gas, electricity and tap water connections have reduced the impact of poverty on urban families. HYPOTHESIS H-there is no significant change in the economic status of urban women after joining SHG H1-there is a significant change in the economic status of urban women after joining SHG 4. CHI-SQUARE TEST Table 7 After joining SGH is there a change in your economic status? Options Number of respondents Percentage Yes, I am comfortable 54 43.54 Yes, built house 13 1.48 Yes, purchased land 2 1.62 Yes, educated children 6 4.83 Yes, started business 27 21.78 Yes, acquired leadership 5 4.3 Yes, learnt accounting 17 13.72 http://www.iaeme.com/ijmet/index.asp 478 editor@iaeme.com
Sandhya P.S and Sri Ranjini S changes in economic status 6 5 3 1 Yes, I am comfortable Yes, built house Yes, purchased land Yes, educated children Yes, started business Yes, acquired leadership Yes, learnt accounting Formula: X 2 = (O i - E i ) 2 E i Expected value (E i ) = 124 = 18 7 = 72 + 1.38 + 14.22 + 8 + 4.5 + 9.38 +.5 = 19.53 Degrees of freedom = (n-1) = (7-1) = 6 Alpha value=.5 Table value=12.592 Interpretation: according to the hypothesis, the alpha value taken is.5 and degrees of freedom at 6, the nullhypothesis is rejected and alternative hypothesis is accepted. Therefore there is a significant change in the economic status of urban women after joining SHG. 5. FINDINGS: The demographic and social background of the respondents reflected positive features and was favorable to achieve economic prosperity. To increase their income the women SHG members used loans pragmatically for productive activities like microenterprises. Predominantly SHG members in the study were engaged in small business avocations.with their jobs in the industries. Loan amounts ranging from Rs.5 were used for starting income generating activities. SHG members, to a great extent, improved their economic status with the help of microfinance. The positive impact of microfinance activities on the urban poor women and their family wasvisible through their possession of modern electronic gadgets like Mobile http://www.iaeme.com/ijmet/index.asp 479 editor@iaeme.com
The Impact of Microfinance through Self-Help Groups (SHG): A Study on the economic status of urban women working in Production and Manufacturing Industries in Mysuru District phones, TV sets, Motor bike, Gas, Electricity, protected water and other household facilities. Suggestions: With the focus on poverty and employment among urban women, the development of income generating activities has to be approached strategically, more or less simultaneously, from several directions. These are: Credit provisions should be tied up with support components of training in organisational management to enable women borrowers to become confident in managing their microenterprises. The SHG members should be motivated and convinced that SEMs will be a source of regular income to improve their living standards. Microfinance schemes have to emphasize the use of loans for productive purposes only. The Urban development administration should be oriented towards pro-poor and proactive by providing critical services to SHGs. Non-governmental or voluntary organizations like MYRADA should be drafted to provide linkages between SHGs and micro financing agencies/institutions. Concerted efforts should be made to develop human resource skills, including entrepreneurial skills in urban areas. The need of the hour is to make the existing economic institutions work more efficiently or making small adjustments in them. 6. CONCLUSIONS: The poor women working in production and manufacturing industries in urban areas of Mysuru city are helped by the SHGs in finding ways and means to get credit in their neighborhoods. There are cases reported from different societies which are success stories. SHGs in Karnataka also have proved to be an effective mechanism for the accumulation of small and regular savings of women pooled for future use of loans. As against 9 % of the members who have availed consumption or bank loans from their respective SHGs, nearly 7% have taken loans for SEM. More often the women act as bread winners and are burdened with huge responsibility of taking care of their family. Most of our respondents in the study, in addition to their work take up small business and odd jobs to support their family. The study confirms that women through SHGs are increasingly becoming economically independent and thereby bring stability in their personal income. The literature on microfinance have indicated that women have the potential, skill and ability to succeed in microenterprises. In the case of Karnataka the success of creating confidence to run a business of their own lies in the socio-economic context of the society. A general improvement is found in the living conditions of the women members after they joined SHG and availed credit. Also there is a feeling that the use of loans for domestic and family need can help improvement in their living standards. The outcome is that they are forced to open some kind of regular income generating self-employment enterprise. http://www.iaeme.com/ijmet/index.asp 48 editor@iaeme.com
Sandhya P.S and Sri Ranjini S REFERENCES: [1] Ajay Tankha, Banking on Self-Help Groups-Twenty years on New Delhi, Sage. [2] C.S.Reddy and Sandeep Manak, Self-Help Groups: A keystone of microfinance in Indias_women empowerment and social security Hyderabad, MahilaAbhirudhi Society, Andhra Pradesh 5. [3] DiptiBaghel and A.K.Shrivastava Role of Self-Help Groups in Socio-economic development of rural women: A study in Durg district of Chattisgarh, Excel Internal Journal of Multidisciplinary management studies, vol.15 (11) November (15), pp.1-23. [4] H.R.Uma and K.N.Rup, The Role of SHGs in Financial Inclusion: A case study, International Journal of Scientific and Research Publications, vol.3 (6), June 13. [5] Jun Goto, The Impact of Self-Help Group programmes: Experimental and Survey evidence from South India Histotsubashi University, Tokyo Japan 14. [6] K.C.Mishra, Problems of Self-Help Groups:A micro study International Journal of Advanced research and Review:vol 1(3)16;23-33. [7] M. Anugam. C. Ramaswamy and R. Balasubramanyiam, Impact of Microfinance Porgramme in Empowering Women: Evidences from Self-Help Groups (SHGs) in Tamil Nadu, Tropical Agricultural Research vol.19:346-358 (7). [8] Mohd.Arif, Self-Help Group: A Potencial Tool for Financial Inclusion SSIJMAR, vol 3(1) Feb-March 14. [9] Sarita Thakur, Microfinance through Self-Help Groups (SHGs): A key driven for sustainable growth in India, ISRO Journal of Business and Management vol.18 (2) Ver.I (Feb16) pp 1-16. [1] Shijina. A.S and P. Ezreth. Role of self-help groups in microfinance Primax International Journal of Commerce and management Research, vol.4(1)april-june 16. [11] Vasantha Microfinance throughself-help groups as catalyst for poverty reduction and women empowerment. Asian Journal of management research vol.6 (2)15. http://www.iaeme.com/ijmet/index.asp 481 editor@iaeme.com