An Analysis of Poverty and Inequality Among the Members of SHGs in West Bengal, India

An Analysis of Poverty and Inequality Among the Members of SHGs in West Bengal, India

Santanu Bisai, Debashis Mazumdar
DOI: 10.4018/978-1-5225-5240-6.ch011
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Economic development in the truest sense remains far from the development targets and millennium development goals in many less developed and developing countries of the world particularly because of the perennial problems of poverty and inequality in the distribution of income and wealth. The trajectory of planned economic development of India has also experienced the said problem. One of the escape routes for the poverty trap particularly in the rural areas of India has been the formation of self-help groups (SHGs) and the provision of microfinance to the SHGs. The present study tries to analyze the intensity of poverty and inequality among the rural households of some of the backward regions of West Bengal. This study indicates that the incidence of poverty remains less among the SHG members in comparison with the non-SHG households in both drought prone and non-drought prone areas of rural West Bengal. Further, the inequalities in the distribution of income and expenditure among the SHG members are also found to be more prominent in non-drought prone areas compared to drought prone areas.
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Literature Review

Hulme and Mosley (1996) conducted a comprehensive study based on the effect of microfinance on poverty. This study indicated that well-designed programmes could improve the income of the poor and could move them out of the clutches of poverty. When these poverty-stricken people are encouraged to save, they would become less vulnerable to poverty in future. The financial services to the poor, through the fulfillment of some social objectives, can become more inclusive and can contribute to poverty reduction (Chowdhury et al., 2004). Some related studies in this field indicated that the microfinance programme enabled the poor borrowers to spend greater part of their increased income on children’s health and education (Montgomery, 2005). A study made by Sivaramakrishnan (2003) mentioned that organization of the rural poor into Self-Help Groups (SHGs) was one of the ways to reduce the incidence of poverty. The SHG-bank linkage and the role of Regional Rural Banks (Thorat, 2005) in combating poverty through microfinance in Indian context was the focal of point of some research studies. Pattenden (2010) noted the prominence of SHGs within current anti-poverty policy framework of India, and analysed the impacts of government and NGO-backed SHGs upon poverty alleviation in rural areas of North Karnataka. This study also indicated that the SHGs represented a partial neo-liberalisation of civil society in that they addressed poverty through low-cost methods that did not challenge the existing distribution of power and resources between the dominant class and the labouring class of poor. A study undertaken by Puhazhendhi and Satyasai (2000) covered 560 sample households from 223 SHGs spread over 11 states across India, and this study indicated a 33 per cent rise in average annual income of the households through group activities, and a decline in BPL (below poverty line) families by about 20 per cent after the formation of SHGs.

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