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Panchayat Raj and Rural Development · Chapter 9

SHGs, Women Empowerment and Community Organisations

What to remember

  • A Self-Help Group (SHG) is a small voluntary group of poor women (usually 10-20) who save regularly, lend to each other, and later take bank loans; in AP the SHG movement was scaled through Velugu / SERP.
  • SHGs form a federated structure: SHG, Village Organisation (VO), Mandal Samakhya (MS) and Zilla Samakhya (ZS), giving women collective strength.
  • Convergence means linking SHGs with many schemes and departments (banks, health, agriculture, nutrition, Panchayats) so that women get credit, skills and markets together.

1. The SHG model

An SHG is a self-managed group of people from similar social and economic background who come together to solve common problems through mutual help.

Key features:

  • Usually 10 to 20 members, mostly women from poor households.
  • Regular meetings (weekly or monthly) and regular savings from each member.
  • Internal lending: the group lends its pooled savings to members for small needs at agreed interest.
  • Written records: minutes, savings book, loan register and cash book.
  • Leaders are chosen by the members and rotated.
  • Panchasutra (five principles): regular meetings, regular savings, regular internal lending, timely repayment, and proper book-keeping.
  • After a trial period (grading), the group opens a bank account and becomes eligible for a bank loan or cash credit.

Benefits: easy access to credit without collateral, habit of saving, group discipline, confidence of women, voice in the village, and reduced dependence on moneylenders.

2. Evolution of group-based poverty programmes

PeriodProgrammeIdea
1982-83DWCRA (Development of Women and Children in Rural Areas)Group of poor rural women for income generation
1992SHG-Bank Linkage Programme (NABARD)Banks lend to SHGs
1999Swarnajayanti Gram Swarozgar Yojana (SGSY)Group-based self-employment
2000Velugu in AP (later Indira Kranti Patham)Community-driven poverty reduction under SERP
2011National Rural Livelihoods Mission, now DAY-NRLMNational scale-up of the SHG federation model

The DWCRA scheme began as a sub-scheme of the Integrated Rural Development Programme (IRDP).

3. SERP and the Velugu concept

SERP (Society for Elimination of Rural Poverty) is the State agency under the Rural Development department. The Velugu project (meaning "light" in Telugu) began in the year 2000 with World Bank support. Its core idea is that the poor are the best managers of their own development when organised, trained and given resources.

Main features of the model:

  • Participatory process: identifying the poorest using community-based wealth ranking.
  • Women are organised into SHGs, then into federations.
  • Community cadre: trained women from the community work as bookkeepers, animators and resource persons, instead of outside staff.
  • Special attention to the poorest, SC, ST, minorities and persons with disabilities.
  • Livelihood promotion: dairy, farm-based work, kirana shops, tailoring, food processing and market links.
  • Social development: health, nutrition, education and prevention of child marriage and violence against women.
  • Financial inclusion: savings, loans and insurance.

AP's SHG movement became a national model, and its community cadre approach was carried into the national mission.

4. Federation structure

SHGs are linked at higher levels so that they gain bargaining power, financial strength and shared services.

LevelBodyMade up of
GroupSHG10-20 women
VillageVillage Organisation (VO)Representatives of SHGs in a village
MandalMandal Samakhya (MS)Representatives of VOs in a mandal
DistrictZilla Samakhya (ZS)Representatives of MSs in a district

Functions of federations:

  • Monitor and support SHGs and fix their grades.
  • Manage a community investment fund and revolving funds.
  • Handle bank linkage, recovery and book audit.
  • Run community-managed procurement centres, nutrition programmes and enterprises.
  • Raise women's issues with Panchayats and officials.

5. Women empowerment

Empowerment means increasing the ability of women to make decisions and control resources. It has economic, social and political parts.

  • Economic: own savings, credit, enterprise, assets and control over income.
  • Social: better health, education, safety, dignity and reduced discrimination.
  • Political: participation in Gram Sabha and Panchayat. The 73rd Amendment reserves at least one-third of seats and of Chairperson posts for women; AP has gone further and provides 50 per cent reservation for women in local bodies.

Supporting laws and programmes: the Protection of Women from Domestic Violence Act, 2005; the Sexual Harassment of Women at Workplace Act, 2013; Beti Bachao Beti Padhao; and State schemes giving interest support or cash help to women. Details of current schemes change often, so check the latest official release.

6. Community Based Organisations (CBOs)

A CBO is an organisation owned and run by community members. Besides SHGs and federations, CBOs in rural AP include:

  • Water Users Associations (farmers managing canal water, from 1997 law),
  • Vana Samrakshana Samithis (Joint Forest Management committees),
  • Farmer Producer Organisations (FPOs),
  • School Management Committees and village health and sanitation committees,
  • Mother committees (for nutrition and child care),
  • Youth clubs and self-help associations of disabled persons.

Roles of CBOs:

  • 1. Identify local needs and plan.
  • 2. Manage funds and assets in a transparent way.
  • 3. Monitor government schemes (social audit).
  • 4. Link villagers to departments and banks.
  • 5. Create collective enterprises and markets.
  • 6. Raise awareness about health, sanitation and education.

7. Convergence

Convergence means bringing together programmes, funds, staff and institutions so they work for the same people and goal.

Examples:

  • SHG women supplying food to anganwadi centres or school meals.
  • Rural wage-employment works (MGNREGA, replaced from 1 July 2026 by the VB-G RAM G Act, 2025) planned with Gram Panchayat and SHG participation.
  • Bank loans through SHG linkage, with insurance from insurance companies.
  • Natural farming promoted through SHG community resource persons.
  • Village organisations running procurement centres for farm produce.
  • Health and nutrition messages delivered through SHG meetings.

Benefits: less duplication, better targeting, and wider reach. Challenges: lack of co-ordination between departments, delay in funds, and unequal capacity among groups.

8. Strengths and weaknesses of the SHG approach

StrengthsWeaknesses
Collateral-free creditGroup dependence on a few active leaders
Women's confidence and savingsLoan overlap and multiple borrowing
Peer pressure for repaymentWeak marketing of products
Strong state-wide networkLow skill and technology

9. Role of SHGs in village governance

SHG women take part in Gram Sabha meetings and raise issues such as water supply, school meals and health. Some SHG members contest and win Panchayat elections. SHG federations help in social audit of wage works and in checking ration distribution. In this way SHGs strengthen the link between the elected Panchayat and the village community. Strong SHGs also support child protection, school enrolment and sanitation drives through group discussion.

10. Training and capacity building

SHG members receive training on book-keeping, leadership, financial literacy, health and nutrition, and skills for enterprises. Exposure visits help groups learn from each other. Community cadres such as book-keepers and animators keep records. Digital tools and mobile apps are now used to maintain SHG records and to make loan repayments. Regular grading of SHGs shows which groups are strong and which need support.

Exam traps

  • Velugu began in 2000; DWCRA is earlier (1982-83); SGSY is 1999; NRLM is 2011.
  • Velugu means "light"; SERP is the agency, Velugu was the project.
  • SHG size is usually 10-20; do not confuse it with the 73rd Amendment seat reservation.
  • A VO is formed by SHGs of a village; an MS by VOs of a mandal.
  • Panchasutra are the five principles of SHG working, not five-year plans.
  • SHG-Bank Linkage lends to the group, not to each woman directly.
  • Convergence means linking programmes; it is not a merger of Panchayat tiers.
  • The 73rd Amendment reserves one-third seats for women; State laws may give more.

One-liners

  • 1. An SHG normally has 10 to 20 members.
  • 2. SHG members save regularly and lend among themselves.
  • 3. Velugu was launched in 2000.
  • 4. DWCRA was started in 1982-83 under IRDP.
  • 5. DAY-NRLM is the national livelihoods mission.
  • 6. The federation chain is SHG, VO, MS and ZS.
  • 7. The SHG-Bank Linkage Programme began in 1992.
  • 8. Community resource persons are trained women from the community.
  • 9. The 73rd Amendment reserves one-third of seats for women.
  • 10. Water Users Associations are CBOs of farmers.
  • 11. Convergence links schemes and departments.
  • 12. Panchasutra are five working principles of an SHG.

Practice questions

  1. A typical SHG has

    1. 500 members
    2. 50 to 100 members
    3. 2 to 4 members
    4. 10 to 20 members
    Answer

    D. 10 to 20 members

    SHGs are small groups.

  2. Velugu was launched in AP in

    1. 1982
    2. 2000
    3. 1992
    4. 2011
    Answer

    B. 2000

    Velugu began in 2000.

  3. The word 'Velugu' means

    1. road
    2. water
    3. bank
    4. light
    Answer

    D. light

    Velugu is Telugu for light.

  4. DWCRA began in

    1. 2000
    2. 2011
    3. 1992
    4. 1982-83
    Answer

    D. 1982-83

    It started as a sub-scheme of IRDP.

  5. DWCRA stands for

    1. Directorate of Women and Child Rights Administration
    2. Development of Women and Children in Rural Areas
    3. District Women's Credit and Rural Assistance
    4. Development of Workers and Cooperatives in Rural Areas
    Answer

    B. Development of Women and Children in Rural Areas

    DWCRA targeted rural women and children.

  6. The National Rural Livelihoods Mission was launched in

    1. 1999
    2. 1982
    3. 2020
    4. 2011
    Answer

    D. 2011

    It was launched in 2011 (now DAY-NRLM).

  7. The SHG-Bank Linkage Programme was piloted by

    1. UPSC
    2. NABARD
    3. SEBI
    4. ISRO
    Answer

    B. NABARD

    NABARD began it in 1992.

  8. In the federation chain, SHGs of a village form a

    1. Gram Sabha
    2. Zilla Samakhya
    3. Mandal Samakhya
    4. Village Organisation
    Answer

    D. Village Organisation

    VO is the village level federation.

  9. Mandal Samakhya is formed by

    1. Gram Sabhas
    2. Village Organisations
    3. individual SHG members
    4. Zilla Parishads
    Answer

    B. Village Organisations

    VOs federate into an MS.

  10. The Panchasutra of an SHG include

    1. only loans
    2. regular meetings, savings, internal lending, repayment and book-keeping
    3. only subsidies
    4. only training
    Answer

    B. regular meetings, savings, internal lending, repayment and book-keeping

    These are the five working principles.

  11. SGSY, a group-based self-employment scheme, began in

    1. 2005
    2. 2015
    3. 1982
    4. 1999
    Answer

    D. 1999

    Swarnajayanti Gram Swarozgar Yojana was launched in 1999.

  12. The 73rd Amendment reserves how many of the seats for women?

    1. one-tenth
    2. one-half exactly everywhere
    3. at least one-third
    4. three-fourths
    Answer

    C. at least one-third

    The Constitution requires one-third; States may give more.

  13. Water Users Associations are examples of

    1. community based organisations
    2. political parties
    3. banks
    4. courts
    Answer

    A. community based organisations

    They are farmer bodies managing water.

  14. Vana Samrakshana Samithis are linked to

    1. school meals
    2. bank credit
    3. forest protection
    4. market yards
    Answer

    C. forest protection

    They are Joint Forest Management committees.

  15. Community resource persons in SERP are

    1. central ministers
    2. private bankers
    3. outside contractors
    4. trained women from the community
    Answer

    D. trained women from the community

    The community cadre approach uses local women.

  16. A Farmer Producer Organisation is a

    1. group of banks
    2. group of farmers for collective business
    3. court
    4. political party
    Answer

    B. group of farmers for collective business

    FPOs help farmers market produce together.

  17. Convergence means

    1. merging all villages
    2. closing schemes
    3. ending Panchayats
    4. linking programmes, funds and institutions for common goals
    Answer

    D. linking programmes, funds and institutions for common goals

    Convergence reduces duplication.

  18. How are SHG leaders chosen?

    1. The Collector appoints leaders for life
    2. Banks appoint leaders
    3. Members choose and rotate leaders
    4. The Governor appoints leaders
    Answer

    C. Members choose and rotate leaders

    SHGs are self-managed.

  19. The main purpose of internal lending in an SHG is to

    1. avoid all savings
    2. meet members' small needs from pooled savings
    3. finance big industry
    4. pay taxes
    Answer

    B. meet members' small needs from pooled savings

    Members borrow from the group fund.

  20. Why do SHG bank loans seldom need collateral?

    1. The group's savings and discipline act as security
    2. Interest is zero
    3. Banks give gifts
    4. Government guarantees land
    Answer

    A. The group's savings and discipline act as security

    Group guarantee replaces collateral.

  21. What is the main benefit of federations like VO and MS?

    1. They give bargaining power and shared services
    2. They replace Gram Sabha
    3. They run courts
    4. They set taxes
    Answer

    A. They give bargaining power and shared services

    Federations support groups.

  22. Economic empowerment of women mainly means

    1. depending on moneylenders
    2. staying out of groups
    3. having no job
    4. control over income, savings and assets
    Answer

    D. control over income, savings and assets

    It is about resources and decisions.

  23. SHG women supplying food to anganwadi centres is an example of

    1. privatisation
    2. disinvestment
    3. convergence
    4. bank nationalisation
    Answer

    C. convergence

    SHGs link with nutrition programmes.

  24. The wealth ranking of households by the community is used in SERP to

    1. print notes
    2. identify the poorest
    3. fix taxes
    4. allot seats
    Answer

    B. identify the poorest

    Participatory ranking finds the poor.

  25. A weakness of the SHG model is

    1. no federations
    2. multiple borrowing and dependence on active leaders
    3. no savings
    4. no women
    Answer

    B. multiple borrowing and dependence on active leaders

    Over-borrowing and leader dependence are risks.

  26. Political empowerment of rural women is supported by

    1. lower tax
    2. reservation in Panchayat seats
    3. free ration only
    4. nationalisation
    Answer

    B. reservation in Panchayat seats

    The 73rd Amendment reserves seats.

  27. Which law protects women at the workplace?

    1. Sexual Harassment of Women at Workplace Act, 2013
    2. RRB Act, 1976
    3. Co-operative Societies Act, 1912
    4. MSME Act, 2006
    Answer

    A. Sexual Harassment of Women at Workplace Act, 2013

    The 2013 Act deals with workplace harassment.

  28. The Protection of Women from Domestic Violence Act was passed in

    1. 1976
    2. 2013
    3. 2005
    4. 1992
    Answer

    C. 2005

    It is a 2005 law.

  29. Mother committees mainly help in

    1. road building
    2. bank audit
    3. tax collection
    4. nutrition and child care
    Answer

    D. nutrition and child care

    They are CBOs for child welfare.

  30. Which one is the community-run tier above the SHG?

    1. Lead Bank
    2. Zilla Parishad
    3. Mandal Revenue Office
    4. Village Organisation
    Answer

    D. Village Organisation

    VO is the next level.

  31. A key aim of Velugu-style projects is to

    1. let the poor manage their own development
    2. stop savings
    3. ban credit
    4. end all rural schemes
    Answer

    A. let the poor manage their own development

    The model builds on community institutions.

  32. Which agency name is correct for the AP state rural livelihoods mission?

    1. APIIC
    2. NABARD
    3. SERP
    4. RBI
    Answer

    C. SERP

    SERP is the State Rural Livelihoods Mission body.

  33. Consider the statements: 1. An SHG usually has 10 to 20 members. 2. SHG members save regularly. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  34. Consider the statements: 1. Velugu began in 2000. 2. DWCRA began in 2011. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    DWCRA is from 1982-83.

  35. Consider the statements: 1. A VO is formed by SHGs of a village. 2. An MS is formed by VOs of a mandal. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  36. Consider the statements: 1. Panchasutra means five principles of SHG working. 2. Panchasutra means five-year plans. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    They are SHG principles.

  37. Consider the statements: 1. The 73rd Amendment reserves one-third seats for women. 2. States cannot give more reservation. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    States may give more.

  38. Consider the statements: 1. Convergence links programmes and departments. 2. Convergence abolishes Panchayats. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    Convergence does not abolish bodies.

  39. Consider the statements: 1. Water Users Associations are CBOs. 2. Farmer Producer Organisations are CBOs. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are community based organisations.

  40. Consider the statements: 1. SHG-Bank Linkage lends to individual women only. 2. SHG-Bank Linkage lends to the group. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    B. 2 only

    The group is the borrower.

  41. Consider the statements: 1. DAY-NRLM is a national livelihoods mission. 2. SERP is the State agency in AP. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  42. Consider the statements: 1. Community resource persons are outside contractors. 2. They are trained women from the community. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    B. 2 only

    CRPs come from the community.

  43. Consider the statements: 1. SHGs help women access savings. 2. SHGs help women access credit. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  44. Consider the statements: 1. Federations manage community funds. 2. Federations support bank linkage. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    C. Both 1 and 2

    Both are correct.

  45. Consider the statements: 1. Mother committees are CBOs. 2. Mother committees are banks. Which of the statements is/are correct?

    1. 1 only
    2. 2 only
    3. Both 1 and 2
    4. Neither 1 nor 2
    Answer

    A. 1 only

    They are CBOs for child care.

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