“The emergence of the Self-Help Groups (SHGs) in contemporary times points to the slow but steady withdrawal of the State from developmental activities.” Examine the role of the SHGs in developmental activities and the measures taken by the Government of India to promote the SHGs.
Approach · directive: “examine”
What it asks · Examine the SHGs' role in credit, livelihoods, empowerment and service delivery, list what the Government has done to promote them, and question the premise that they show the State stepping back.
It asks 3 things — answer each
- Examine the role of SHGs in developmental activities
- Examine the measures taken by the Government of India to promote SHGs
- Test the premise: do SHGs show the State withdrawing from development? Add a way forward
Open with · Self-help groups are small groups, mostly of poor women, who save, lend among themselves and borrow from banks as a group; many were built by State-backed programmes, which makes 'withdrawal' a doubtful reading.
Cover
- Financial inclusion: thrift, internal lending and NABARD's SHG-Bank Linkage Programme (1992) replace the moneylender.
- Livelihoods: micro-enterprises, farm and non-farm work and marketing federations raise household income.
- Empowerment and last-mile delivery: voice at home and in the panchayat; groups carry health, nutrition and sanitation campaigns.
- State model: Kerala's Kudumbashree, whose thrift societies NCERT calls the largest informal banks in Asia by participation and savings.
- Government measures: SGSY restructured into NRLM (2010, now DAY-NRLM) with collateral-free loans and interest subvention; 10.05 crore households in 90.9 lakh SHGs (PIB, 2025); NULM; skill and marketing support.
- Premise tested: SHGs grew with State support while the State widened MGNREGA and the NFSA, 2013; it has become an enabler, not a deserter.
- Limits and way forward: uneven spread, skills and market linkage; federations, graduation to enterprise, convergence with panchayats.
Close with · SHGs are the most practical route to SDG target 5.a, equal rights for women to economic resources and financial services, provided the State stays a partner.
Add value (verified)
- DAY-NRLM has mobilised 10.05 crore rural households into 90.9 lakh self-help groups (PIB, October 2025).Deendayal Antyodaya Yojana-National Rural Livelihoods Mission: A Blueprint for Empowering Rural Communities - PIB backgrounder, October 2025 ↗“Mobilized 10.05 crore rural households into 90.9 lakh SHGs across India.”
- NCERT on Kudumbashree, Kerala's women-oriented poverty-reduction programme: its thrift and credit societies are acclaimed as the largest informal banks in Asia.NCERT Class 11, Indian Economic Development, Chapter 5, Box 5.1 'The Poor Women's Bank' ↗“These societies have been acclaimed as the largest informal banks in Asia in terms of participation and savings mobilised.”
- SDG target 5.a: equal rights for women to economic resources, including financial services.Goal 5 - Sustainable Development Goals, United Nations ↗“Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws”
Question: UPSC's CS (Main) 2017, GS Paper II — paper ↗. Approach: Minimalist IAS, checked 3 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer· 353words · Minimalist IAS
Self-help groups (SHGs) are small groups, mostly of poor women, who save regularly, lend among themselves and borrow from banks as a group. Their rise is often read as the State stepping back, yet many SHGs were built by State-backed programmes.
Role of SHGs in developmental activities
- Financial inclusion: thrift and internal lending replace the moneylender; NABARD's SHG-Bank Linkage Programme (1992) made group credit a mainstream bank product.
- Livelihoods: micro-enterprises, farm and non-farm work and marketing federations raise household income and build assets.
- Women's empowerment: members gain confidence, mobility and a voice at home and in the panchayat, creating a pipeline of women leaders.
- Last-mile delivery: groups can carry health, nutrition and sanitation campaigns, helping schemes reach the poor.
- State model: Kerala's Kudumbashree, whose thrift societies NCERT notes are acclaimed as the largest informal banks in Asia by participation and savings.
Measures taken by the Government of India
- 1992: SHG-Bank Linkage (NABARD)
- 2010: SGSY restructured into NRLM
- 2016: DAY-NRLM
- 2025: 90.9 lakh SHGs
- DAY-NRLM: SGSY was restructured into NRLM (2010; renamed DAY-NRLM in 2016) with capitalisation support, collateral-free loans and interest subvention; it has mobilised 10.05 crore rural households into 90.9 lakh SHGs (PIB, 2025).
- Urban reach: the National Urban Livelihoods Mission extends the model to the urban poor.
- Credit and markets: collateral-free loans, skill programmes and marketing support for SHG products.
Is the State really withdrawing?
- Premise is weak: SHGs grew with NABARD and State support, while the State widened rights-based entitlements such as MGNREGA and the National Food Security Act, 2013.
- Provider to enabler: the State now works through organised communities; this changes its role rather than ending it.
- Real limits: uneven regional spread and the need for stronger skills and market linkage.
Way forward
- Market linkage: federations, common brands and online sales for SHG products.
- Graduation: move members from savings to enterprise with skill and credit packages.
- Convergence: link SHG federations with panchayat plans and line departments.
SHGs are the most practical route to SDG target 5.a: equal rights for women to economic resources, including financial services. They reach it only if the State stays a partner, not a spectator.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 3 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
