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G. S. PAPER II GOVERNANCE, SOCIAL JUSTICE


Development processes n! t"e !evelopment #n!$str%& t"e role o'
NGOs, S(Gs, vr#o$s )ro$ps n! ssoc#t#ons, !onors, c"r#t#es n!
ot"er st*e"ol!ers




















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/. 0"% "s 1prt#c#pt#on2 n! 1empo,erment2 )#ne! ,#!e c$rrenc% #n recent !evelopment l#tert$re3
Decades of development efforts have provoked a feeling of disenchantment with the conventional growth-oriented
strategy of development not prodcing the desired trickle-down effect. !he failres sensiti"ed the planners and
administrators to the need for drawing on the indigenos knowledge system of the local people. #nless people
themselves participate$ the programmes administrated %y e&ternal agencies remain e&ogenos to the rral
commnity there%y affecting reslts. A people-centred vision is %eing advanced %y citi"en's organisations working to
create an alternative world order %ased on economic (stice$ environmental sta%ility and political inclsiveness.
As the )man Development *eport +#,D- 1../0 commented1 2-eople's participation is %ecoming the central isse of
or times3

/. So, #s people prt#c#pt#on recent !#scover%3
4-eople' as real actors in history have %een %roght forward %y the 4S$.ltern' school. -easant resistances were
s%tle and effective peoples' actions against oppression. -eople do act$ it is for s to appreciate it and mo%ilise it for
participatory people-centric movements. -eople as development actors emerged long ago in the vision and action of
!agore at Shantiniketan and 5andhi at 6ardha. !agore e&perimented with people centred rral development in the
villages for the re(venation of rral arts and crafts and economy in general. 5andhi relied on the mo%ili"ation of
masses and their economic pliftment throgh the development of cottage and small-scale indstries

/. O*. I )et t"t prt#c#ptor% !evelopment #s #mportnt. 0"t s"pes4'orms !oes #t t*e3
Anisr*ahman has identified the following different forms of commnity organisations representing collective action
%y the nderprivileged people to improve their socio-economic conditions1
5#rst$ there are grassroots organisations that are %asically economic in natre$ ndertaking income-generating
activities with the help of internal resorce mo%ili"ation spplemented %y resorce and knowledge spport
from otside
Secon!$ there are other organisations that emerge in 4pressre grop' activities. !hey resist e&ploitation or
oppression %y other grops$ assert economic$ social and hman rights inclding women's rights$ or demand
services from the p%lic agencies
T"#r!$ some of the organisations ndertake social and cltral activities in sch areas as health$ edcation$
cltre and so on
5o$rt"$ some aim at the promotion of holistic life %y way of activities that integrate spirital advancement
with economic and social development
5#'t"$ commnity organisations to promote ecologically oriented socio-economic life are also growing in many
areas sch as organic agricltre$ social forestry$ coastal fishing etc.
S#6t"$ participatory action research is %eing prsed %y some organisations to develop people's own thinking
a%ot their living conditions and environment

/. T"#s prol#'ert#on o' comm$n#t% .se! or)n#st#ons m$st .e .c*e! .% some .ene'#ts, r#)"t3
!he vale of participation as a facilitative development process has %een widely recognised and ma(or %enefits have
%een identified as follows1
!he participatory process provides important information in the planning$ programming and implementation
stages there%y ensring congrence %etween o%(ectives and commnity vales and preferences
7y rationali"ing manpower resorces tili"ation$ the process redces pro(ect cost
Any change %roght a%ot throgh development is more accepta%le to the commnity if the local people are
involved$ also$ mistakes are more tolera%le if these are made %y people who have to live with them
8onitoring is %etter$ and sstaina%ility of the pro(ect is more likely even after the withdrawal of the e&ternal
agent$ %e it government or ,59 agency

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!he commnity learns from its own involvement and from this point of view$ participation is a 2 way learning
process in which the administrator and the people %ecome co-learners
Active commnity participation helps re%ild commnity cohesion and installs a sense of dignity into the
commnity. -eople gain in confidence and steadily emerge as real actors in the development process.

/. Is comm$n#t% prt#c#pt#on t"en& t"e ns,er to ll !evelopment pro.lems3
:ritics of commnity participation arge1 participation has poplarity withot clarity and is s%(ect to growing
faddishness and a lot of lip service.
Serios analysis of local commnity life reveals differentiation in terms of stats$ income and power. :onflicts and
rivalries are not ncommon even among the poor and nderprivileged. !he romantic vision of frictionless$
harmonios commnity life does not match grond realities
;&ternal intervention %y social workers or political activists has %een fond necessary almost everywhere to organi"e
the local commnity and mo%ili"e the local people
It has also %een o%served that there is an imaginary notion of continos activism %y the local people %ehind all
discssions on commnity participation. !otal and continos commitment to activism is more a revoltionary's
dream than the poor people's actal %ehavior
!here are critics who do%t the efficacy of commnity participation in %ringing a%ot radical change in the life of the
poor and the nderprivileged throgh atonomos local action only. Small changes are not rled ot$ %t commnity
participation$to %e really effective$ needs profond social strctral change at %oth domestic and international levels.
:ommnity mo%ili"ation cannot$ on its own$ correct the %asic social im%alances that have their roots in deeper socio-
economic layers of the society
7r6#st r)$ment1 participatory development within capitalistic mode is nworka%le$ the prpose of participation is
to diffse revoltionary movements and create an illsion of soltion. !he state seeks to s%vert poplar movements
throgh maniplative co-optation of the poor

/. O*%. Prt#c#ptor% !evelopment "s #ts '$lts n! s"ortcom#n)s .$t #t !oes stn! 'or ct#on, e8$#t% #n reso$rce
!#str#.$t#on 9 soc#l cp#tl n! "ence cnnot .e #)nore!. 0"t #s t"e role o' stte #n ll t"#s3
!he state plays a fndamental role in helping or hindering participation. Different social science theories evoke
different images of state-society relationships. 6hile 8ar&ian and elite theories are pessimistic a%ot the possi%ility
of commnity participation$ li%eral-democratic and plralist theories are mch more helpfl.
State's actions depend pon the definition and prpose of commnity participation$ state's perception a%ot its role
and the political will to decentrali"e power and resorces to local instittions
Accordingly < different state's responses have emerged +ideal models to characteri"e %etter01
Ant#&prt#c#ptor% mo!e1 !he state in a capitalist system is interested$ not in ameliorating the conditions of the poor$
%t in promoting the interests of capital and the rling class. -ower is$ therefore$ concentrated and not dispersed to
facilitate accmlation of wealth
7n#p$lt#ve mo!e1 !he state follows a diplomatic approach and the state spport to commnity participation is
intended to ensre political and social control as well as redce local development costs and facilitate sccessfl
pro(ect implementation. State seeks to netrali"e political opposition %y co-opting atonomos movements with the
lterior motive of gaining control over them. !he rhetoric of participation is invoked to mo%ili"e local la%or in state's
development activities and to give legitimacy to the regime in power
Incrementl mo!e1 It is marked %y an am%ivalent approach to commnity participation. !here is no lack of
government spport to participation %t the policy is nclear and piecemeal = ad-hoc approaches are the norm. !he
state in reality is not willing to part with power and to devolve resorces to local commnity grops. Also$ the
%reacrats and the technocrats have their own ways of %ringing a%ot 2efficient3 local development management.
Still$ commnity participation is not$ in theory$ re(ected and decentralisation contines in an ad-hoc fashion with a
plrality of actors

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Prt#c#ptor% mo!e1 :haracteri"ed %y state's own initiative to create instittions of commnity participation to ensre
effective involvement at the grassroots level. !here are no lterior motives and genine poplar involvement is
ensred %y providing resorces to local %odies and sensiti"ing %reacracy throgh training and directives. 6ithin an
overall development planning framework$ the central$ regional and local development policies and activities are
harmoni"ed throgh positive political will and %reacratic spport
>5ollo,&$p /1 6hich of these modes is tre for India? )ave we evolved from one mode to another or is there one
particlar mode more applica%le or does the state adopt different modes at different times@placesA
Eno$)" o' prt#c#pt#on, lets come to vol$ntr% or)n#st#ons:

/: 0"t #s NGO3
According to the 6orld 7ank$ 2a ,on-governmental 9rgani"ation +,590 is a private organi"ation that prses
activities to relieve sffering$ promote the interests of the poor$ protect the environment$ provide %asic social
services$ or ndertake commnity development3. In other words$ ,59s are legally constitted organi"ations$ operate
independently from the government and are generally considered to %e 2non-state$ non-profit oriented grops who
prse prposes of p%lic interest3. !he primary o%(ective of ,59s is to provide social (stice$ development and
hman rights. ,59s are generally fnded totally or partly %y governments and they maintain their non-governmental
stats %y e&clding government representatives from mem%ership in the organi"ation.
In a democratic society$ it is the state that has the ltimate responsi%ility for shering development to its citi"ens. In
India$ throgh the progressive interpretation of the :onstittion and its laws and policies$ the scope of development
has %een significantly %roadened to inclde not (st economic progress for citi"ens$ %t also promotion of social
(stice$ gender eBity$ inclsion$ citi"en's awareness$ empowerment and improved Bality of life. !o achieve this
holistic vision of development$ the state reBires the constrctive and colla%orative engagement of the civil society in
its varios developmental activities and programs. ,on-governmental organisations +,59s0 as the operational arm of
the civil society therefore have an important role in the development processes.

/: 0"t re t"e !#''erent t%pes o' c#v#l soc#et% or)n#;t#ons3
C#v#l r#)"ts !vocc% or)n#;t#ons1 to promote hman rights of specific social grops e.g. women$ migrants$
disa%led$ )IV$ se& workers$ Dalit people$ tri%al people$ and the likes.
C#v#l l#.ert#es !vocc% or)n#;t#ons1 to promote individal civil li%erties and hman rights of all citi"ens$
rather than focsing on particlar social grop.
Comm$n#t% .se! or)n#;t#ons, c#t#;en2s )ro$ps, 'rmers2 coopert#ves1 to increase citi"en's participation
on p%lic policy isses so as to improve the Bality of life in a particlar commnity.
<$s#ness n! #n!$str% c"m.ers o' commerce1 to promotion policies and practices on %siness.
L.o$r $n#ons1 to promote the rights of employees and workers.
Internt#onl pece n! "$mn r#)"ts or)n#;t#ons1 to promote peace and hman rights.
7e!#, comm$n#ct#on or)n#;t#on1 to prodce$ disseminate$ or provide prodction facilities in one or more
media formsC it incldes television$ printing and radio.
Nt#onl reso$rces conservt#on n! protect#on or)n#;t#ons1 to promote conservation of natral
resorces$ inclding land$ water$ energy$ wildlife and plant resorces$ for p%lic se.
Pr#vte n! p$.l#c 'o$n!t#ons1 to promote development throgh grant- making and partnership.
Also the :ivil society incldes - -olitical -artiesC *eligios 9rgani"ationsC )osing cooperatives$ slm dwellers
and resident welfare associations.

/: 0"t "s .een t"e #nterct#on n! relt#ons"#p .et,een t"e In!#n stte n! NGOs l#*e3
In India the state policies have significantly inflenced the formation of ,59s and their activities. !he government
sponsored and aided programmes provided financial assistance to ,59s either as grants or as matching grants to
spport the implementation of social development pro(ects. !he need for the involvement of volntary organisations
has %een acknowledged %y a nm%er of official committees dealing with development.

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<l,ntR# 7e"t Comm#ttee, =>?@1 !oday in the implementation of the varios schemes of commnity
development$ more and more emphasis is laid on ,59s and workers and on the principle that ltimately people's
own local organisations shold take over the entire work
R$rl&Ur.n Relt#ons"#p Comm#ttee, =>AA1 Eocal volntary organisations can %e very helpfl in mo%ili"ing poplar
spport and assistance of the people in the activities of local %ody. It is possi%le to maintain constant and close
contact with the people throgh these organisations
As"o* 7e"t Comm#ttee1 9f the several volntary organisations engaged in rral welfare$ a few have helped the -*Is
in preparation of area development plans$ condct feasi%ility stdies and cost@%enefit analysis$ e&plore ways and
means to indce local participation in planning and implementation.
In the S#6t" 5#ve Ber Pln C=>DE&=>D?F$ the government identified new areas in which ,59s as new actors cold
participate in development
!he Sevent" 5#ve Ber Pln C=>D?& =>>EF$ envisioned a more active role for ,59s as primary actors in the efforts
towards self-reliant commnities. !his was in tne with the participatory and empowerment ideologies$ which was
gaining crrency in the developmental discorse at that time
5overnment spport and encoragement for ,59s contined in the E#)"t" 5#ve& %er pln$ where a nation-wide
network of ,59s was soght to %e created
!he N#nt" 5#ve&%er pln proposed that ,59s shold play a role in development on the p%lic-private partnership
model. Also$ the agricltral development policies of the government and its implementation mechanisms provided
scope and space for ,59s. A case in point is the watershed development program$ which has led to the growth of
,59s working for rral development
In 8arch 2FFF$ the 5overnment declared Plnn#n) Comm#ss#on as the no!l )enc% 'or GO&NGO #nter'ce. !he
message was clear- government has to and will work with the volntary sector. A 1C#v#l Soc#et% 0#n!o,2 was started
in 2FF<$ in the hope that it wold ena%le people to engage with the -lanning :ommission and offer the %enefit of
their field e&periences
Dring the ==t" 5#ve Ber Pln process a regional consltation was organised to get civil society feed%ack.
-articipation of :ivil Society +:S0 had ths already %ecome a strong and ro%st element in the preparation of the -lan
:onsltations with citi"ens on the Approach -aper to the 12th -lan %egan on many platforms$ inclding the internet.
8em%ers of -lanning :ommission travelled across the contry attending -%lic 8eetings called %y :S arond varios
sectoral isses to gather inpts for the 12 Give Hear -lan
Nt#onl Pol#c% on t"e Vol$ntr% Sector, GEE@1*ecogni"es the contri%tion of the volntary sector and the need for
5overnment- Volntary Sector partnership and that pro(ect grants are a sefl means for %oth the 5overnment to
promote its activities withot its direct involvement and a vala%le sorce of spport to small and medim Volntary
9rgani"ations. It highlights the need for 5overnment to encorage all :entral and State 5overnment agencies to
introdce pre-service and in-service training modles on constrctive relations with volntary organi"ations. It
recogni"es the difficlties faced %y the volntary sector in accessing government schemes and sggests ways to tackle
this. !he main o%(ective of the ,ational -olicy on the Volntary Sector is to identify systems %y which the 5overnment
may work together with the Volntary 9rgani"ations on the %asis of the principles of mtal trst$ respect and shared
responsi%ility. It also recogni"es the importance of independence of volntary organi"ations$ which allows them to
e&plore alternative models of development. !he ,ational -olicy on the Volntary Sector is (st the %eginning of the
process to evolve a new working relationship %etween the government and the volntary sector withot affecting its
atonomy and identity. !here are many areas in which help of the volntary sector is soght- for social adits$
%ehavior change$ good governance and increasingly even for %etter service delivery.

/: (o, "s In!# .ene'#tte! 'rom NGOs3
India has a long history of civil society %ased on the concepts of 2daana3 means giving and 2seva3 means service.
Volntary organi"ations were active in cltral promotion$ edcation$ health$ and natral disaster relief as early as the
medieval period. Dring the second half of the 1.th centry$ nationalist consciosness spread across India and self-
help emerged as the primary focs of socio-political movements. !he early e&amples of sch attempts are Griend-in-
,eed Society +1IDI0$ -rathana Sama( +1IJ<0$ Satya Shodhan Sama( +1IK/0$ Arya Sama( +1IKD0$ the ,ational :oncil for

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6omen in India +1IKD0$ the Indian ,ational :onference +1IIK0 etc. !he Society's *egistration Act +S*A0 was approved
in 1IJF to confirm the legal stats of the growing %ody of non-governmental organi"ations.
In India$ it was the 1.KFs which saw rapid growth in the formation of formally registered ,59s and the process
contines to this day. 8ost ,59s have created their respective thematic$ social grop and geographical priorities sch
as poverty alleviation$ commnity health$ edcation$ hosing$ hman rights$ child rights$ women's rights$ natral
resorce management$ water and sanitationC and to these ends they pt to practice a wide range of strategies and
approaches. -rimarily$ their focs has %een on the search for alternatives to development thinking and practiceC
achieved throgh participatory research$ commnity capacity %ilding and creation of demonstra%le models. 6hen
we review some of the work done %y ,59s over the past / decades$ we find that they have contri%ted greatly to
nation %ilding.
8any ,59s have worked hard to inclde children with disa%ility in schools$ end caste- %ased stigma and
discrimination$ prevent child la%or and promote gender eBality reslting in women receiving eBal wages for the
same work compared to men. Dring natral calamities they have played an active role in relief and reha%ilitation
efforts$ in particlar$ providing psycho-social care and spport to the disaster affected children$ women and men.
,59s have %een instrmental in the formation and capacity %ilding of farmers and prodcers' cooperatives and
women's self- help grops. Several ,59s have worked hand in hand with the 5overnment to ensre that millions of
ot of school children are enrolled and contine their school edcation$ ths making the right to edcation a reality.
!he leprosy eradication programme was spearheaded %y ,59s and today only residal leprosy remains in or
contry. ,59s have implemented the JeevnD"r programme for creation of wells for safe drinking waterC
promoted commnity toilets for total sanitation$ and spported the p%lic health programs on immnisation and for
eliminating t%erclosis and malaria. !he mch cele%rated ,*;5A$ I:DS$ I:-S$ ,irmal 5ram and Swasthya7ima of the
government have their roots in the work of many ,59s. ,59s have significantly inflenced the development of laws
and policies on several important social and developmental isses sch as the right to information$ (venile (stice$
ending corporal pnishment in schools$ anti-trafficking$ forests and environment$ wildlife conservation$ women$
elderly people$ people with disa%ility$ reha%ilitation and resettlement of development indced displaced people to
name a few. Grther$ ,59s made their modest attempts to ensre the effective implementation of these laws and
policies %y condcting and disseminating findings from participatory research$ %dget analysis$ p%lic hearings$ social
adits$ workshops$ seminars and conferences.
Smming p$ it is now well esta%lished that ,59s have an important role to play in the development processes and
that %oth the state and market need the colla%oration of credi%le$ active$ and acconta%le ,59s. 5iven their connect
with the grassroots realities$ ,59s can and shold play the 2game changer3 to pro-poor development throgh
leadership on participatory research$ commnity empowerment and search for development alternatives.
6ith the increasing role of the ,59s in development activities they are now attracting professionals from varios
other sectors$ and capacities are %eing %ilt in spport areas sch as financial management$ resorce mo%ili"ation$
hman resorces$ leadership development$ governance procedres and practices and instittional development. At
another level ,59s have %een addressing the social service isses and empowerment related advocacy efforts have
%een increasing. !he stdy condcted %y a ,ew Delhi %ased ,59 conclded that every fifth ,59 in India works on the
isses of commnity and social service. !he favora%le disposition of the governments and the political will to involve
,59s is more prononced in implementation of the welfare schemes addressing cases of women and children.
Grther$ the indstrial policies have inflenced the formation and relations %etween the %sinesses and ,59s. !he
:onfederation of Indian Indstries +:II0$ a leading organisation$ has %een raising the isses of corporate social
responsi%ility. !he emphasis of indstrial policies on the promotion and development of small$ cottage and village
indstries has also lead to the formation of agencies sch as the Lhadi and Village Indstries :ommission$ Small
Indstries Associations and likes.
Pro'#l#n) NGOs:
India has possi%ly the largest nm%er of active non-government$ non-profit organi"ations in the world. !here has %een
a sharp increase in the nm%er of new ,59s in the past decade in India. According to a government stdy$ there were
only 1.<< lakh registered societies till 1.KF. !he ma&imm increase in the nm%er of registrations happened after
2FFF. A recent stdy commissioned %y the government showed that there are a%ot /./ million ,59s in India %y the
end of 2FF. i.e.$ one ,59 for less than an average of <FF Indians. ;ven this staggering nm%er may %e less than the
actal nm%er of ,59s active in the contry. !his is %ecase the stdy$ commissioned in 2FFI$ took into
consideration only those entities which were registered nder the Societies *egistration Act$ 1IJF or the 8m%ai
-%lic !rst Act and its variants in other states.

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It can %e noted that a great ma(ority of the ,59s are small and a%ot three-forths of all ,59s are rn entirely %y
volnteers. A%ot 1/ percent of the ,59s have %etween 2 to D employeesC a%ot D percent have %etween J to 1F
employees and only a%ot I.D percent ,59s employ more than 1F people. According to a srvey condcted %y
society for -articipatory *esearch in Asia +-*IA0$ K/.< percent of ,59s have one or no paid staff$ althogh across the
contry$ more than 1. million persons work as volnteers or paid staff at an ,59. 8ore often ,59s are registered as
trsts$ societies$ or as private limited non-profit companies$ nder Section- 2D of Indian :ompanies Act$ 1.DJ. !hey
also en(oy income ta& e&emption. Goreign contri%tions to non-profits are governed %y Goreign :ontri%tion
*eglation Act +G:*A0$ 1.KJ.

/: 0"t re t"e *e% )overnnce c"llen)es 'c#n) NGOs3
In view of the emergence of a new paradigm of scaling p$ in which ,59s are seen as catalysts of policy innovations
and social capitalC as creators of programmatic knowledge that can %e spn off and integrated into government and
market instittionsC and as %ilders of vi%rant and diverse civil societies$ it's imperative to critically analy"e the role of
,59s in the process of development and nderstanding the challenges facing the sector.
!ransparency and acconta%ility are key ingredients of 5overnance in the ,59 Sector as these determine operational
efficiencies and risk mitigation. 9ver the years$ corporate sector has %een a%le to recogni"e and implement %est
governance practices throgh appropriate instittional framework. )owever$ the ,59 sector is yet to evolve any
instittionali"ed framework$ which cold potentially play an important role in overall development of the nation.
,59s play an increasingly active role in today's political and social arenas. :ivil society organi"ations are increasing in
nm%er all over India. 9f late$ some of the local and national ,59s have %een fond involved in malpractices and
acting irresponsi%ly$ ths ndermining the credi%ility of civil society. It's a hge concern and poses a great challenge to
the development movement spearheaded %y ,59s in the contry.
!here is a hge flow of fnds into the non-government organi"ation sector and this reBires prdence and good
practices to maintain acconta%ility and transparency to the %enefit of all stakeholders. Althogh ,59s do internal
aditing %t for more acconta%ility and transparency$ it is advisa%le to go throgh e&ternal aditing also$ especially
where p%lic fnds are involved. )ence$ isses of internal control mechanisms$ professionalism$ acconta%ility$
transparency and financial management mst %e given impets. !he challenge is mltidimensional$ and is
componded %y the4norganised' natre of the sector$ lack of reglatory frameworks and the fact that India %oasts of
more than a million ,59s of different roles$ strctres and si"es. In particlar$ the Indian volntary sector rgently
needs self-reglatory gidelines and transparency mechanisms to increase the trst and awareness as to how the
philanthropic fnds are %eing tilised.
!his is a critical challenge that creates a %arrier to raising fnds and capital for the sector. !he general lack of
transparency in the fnctioning of a large proportion of ,59s leads to aversion in donating fnds for charita%le cases
since the general p%lic is largely cynical a%ot the 4genineness' of the non-profit spirit of the sector. !he stringent
governance standards of an ,59 will facilitate the effective management and increase the acconta%ility to its
stakeholders inclding donors$ the government and the commnity. It is in the self-interest of the ,59s to reali"e the
fact that to implement a strctre of 4corporate governance' principles wold provide the real vale to the
stakeholders.
Also$ this wold ena%le to track the potentially d%ios sorces of fnding coming in for the volntary sector M an
aspect which has gained impets in the wake of the increased nm%er of terror attacks and e&tremist activities.
*ecently$ the #nion )ome 8inistry has identified some ,59s as secrity threat to the contry. Sch secrity
considerations have nderscored the rising need of improving the governance practices in the Indian ,59s and
e&ercising %etter reglatory mechanisms$ disclosre norms$ and management processes inclding financial
management and %dgeting systems as well. 8oreover$ in the larger interest going %eyond the secrity
considerations$ the impets has to %e on inclcating a cltre of inclding performance goals$ condcting financial
and performance adits$ and reforms for increasing the operational acconta%ility and transparency in the eyes of the
p%lic$ volnteers$ donors and other stakeholders.
S$))est#ons:
!he implementation of a strategic framework is essentially important in the management of an ,59. !he
endorsement of sch a framework %rings in professionalism and internal control mechanisms$ which frther makes
the organi"ation's performance more effective. Developing strategies also inclde esta%lishing a mechanism of
consistent monitoring of whether they are %eing implemented and linking the reslts to the organi"ation's goals.

I www.visionias.in Vision IAS
!here is need to %olster p%lic confidence in the volntary sector %y opening it p to greater p%lic scrtiny. !he
5overnment shold encorage :entral and State level agencies to introdce norms for filing %asic docments in
respect of ,59s$ which have %een receiving fnding %y 5overnment agencies and placing them in the p%lic domain
+with easy access throgh the internet0 in order to inclcate a spirit of p%lic oversight.
-%lic donation is an important sorce of fnds for the ,59 sector and one that can and mst increase s%stantially.
!a& incentives play a positive role in this process. !he 5overnment cold simplify and streamline the system for
granting income ta& e&emption stats to charita%le pro(ects nder the Income !a& Act. At the same time$ the
5overnment might consider tightening administrative and penal procedres to ensre that these incentives are not
missed %y paper charities for private financial gain.
!he 5overnment shold encorage all relevant :entral and State 5overnment agencies to introdce pre-service and
in-service training modles on constrctive relations with the volntary sector. Sch agencies need to introdce time
%ond procedres for dealing with the V9s. !hese cold cover registration$ income ta& clearances$ financial
assistance$ etc. !here mst %e a formal system for registering complaints and for redressing grievances of ,59s.
!he 5overnment shold encorage setting p of Noint :onsltative 5rops @ Gorms or Noint 8achineries of
government and volntary sector representatives$ %y relevant :entral Departments and State 5overnments. It also
needs to encorage district administrations$ district planning %odies$ district rral development agencies$
"illaparishads and local governments to do so. !hese grops cold %e permanent forms with the e&plicit mandate to
share ideas$ views and information and to identify opportnities and mechanisms of working together. !he
5overnment also might introdce sita%le mechanisms for involving a wide cross-section of the volntary sector in
these 5rops@Gorms.
S$mm#n) Up:
6e are entering into an important phase where there are many targets that the government intends to achieve with
the active colla%oration of V9s$ in the 12
th
plan. !herefore$ it is important to condct an effective review or report
card of the ,ational -olicy with specific recommendations. !hese recommendations cold %ecome an agenda for all
Volntary 9rgani"ations$ -lanning :ommission$ state governments and national 8inistries. ;fforts are also needed to
frther disseminate the information a%ot the policy and its intentions with small V9s as well as government
fnctionaries. !here is a need to solicit commitment from state governments and national ministries. A systematic
intervention is also needed to get ,ational -olicy approved and adopted %y the Indian -arliament. !he most serios
challenge faced %y India today is the conflict %etween violent and non-violent approach of development. ,eedless to
say that ma(ority of poplation of India is still deprived of %asic frits of development$ %t rather than adopting the
approach which is more inclsive and look for soltions within the constittion$ India is faced %y distr%ances in many
parts of the contry. !his not only hampers the development pro(ects %t also shrink the space for people's
participation to achieve their goals throgh peacefl means. !he volntary sector %eing present in sch locations
faces the challenge of delivering the services and even mo%ili"ing people on the development agenda. !he need of the
hor is to work closely with each other for the %enefit of the marginali"ed people$ as even today the dream of
8ahatma 5andhi has not %een achieved.
(v#n) loo*e! t NGOs, no, let $s t*e loo* t S(Gs:

/: 0"t re S(Gs3
Self-)elp 5rops are informal associations of people who choose to come together to find ways to improve their living
conditions. !hey help to %ild Social :apital among the poor$ especially women. !he most important fnctions of a
Self-)elp 5rops are
to encorage and motivate its mem%ers to save
to persade them to make a collective plan for generation of additional income
to act as a condit for formal %anking services to reach them.
Sch grops work as a collective garantee system for mem%ers who propose to %orrow from organised sorces.
:onseBently$ Self-)elp 5rops have emerged as the most effective mechanism for delivery of micro-finance services
to the poor. !he range of financial services may inclde prodcts sch as deposits$ loans$ money transfer and
insrance.


. www.visionias.in Vision IAS
/: Evol$t#on o' t"e S(G movement #n In!#:
!he first organised initiative in this direction was taken in 5(arat in 1.D< when the !e&tile Ea%or Association +!EA0 of
Ahmeda%ad formed its women's wing to organise the women %elonging to hoseholds of mill workers in order to
train them in primary skills like sewing$ knitting em%roidery$ typesetting and stenography etc. In 1.K2$ it was given a
more systemati"ed strctre when Self ;mployed 6omen's Association +SE0A0 was formed as a !rade #nion nder
the leadership of El <"tt. She organised women workers sch as hawkers$ vendors$ home %ased operators like
weavers$ potters$ papad @ agar%atti makers$ manal la%orers$ service providers and small prodcers like cattle
rearers$ salt workers$ gm collectors$ cooks and vendors with the primary o%(ective of +a0 increasing their income and
assetsC +%0 enhancing their food and ntritional standardsC and +c0 increasing their organisational and leadership
strength. !he overall intention was to organise women for fll employment. In order to %roaden their access to
market and technical inpts$ these primary associations were encoraged to form federations like the 5(arat State
8ahila S;6A :ooperative Gederation$ 7anaskantha D6:*A$ 8ahila S;6A Association etc. :rrently$ S;6A has a
mem%ership strength of .$D.$FFF which is predominantly r%an. In the 1.IFs$ 8H*ADA M a Larnataka %ased non-
governmental organisation$ promoted several locally formed grops to ena%le the mem%ers to secre credit
collectively and se it along with their own savings for activities which cold provide them economically gainfl
employment.
8a(or e&periments in small grop formation at the local level were initiated in !amil ,ad and Lerala a%ot two
decades ago throgh the !amil ,ad 6omen in Agricltre -rogramme +!A,6A0 1.IJ$ -articipatory -overty
*edction -rogramme of Lerala$ +Ldm%ashree0 1..D and !amil ,ad 6omen's Development -ro(ect +!,6D-0
1.I.. !hese initiatives gave a firm footing to S)5 movement in these states. !oday$ arond <<O of the total 7ank-
linked S)5s of the contry are in the for sothern States of Andhra -radesh$ !amil ,ad$ Larnataka and Lerala.
!he positive e&perience gained from the a%ove programmes has led to the emergence of a very strong consenss that
the twin concepts of CF smll )ro$p or)n#st#on and C.F sel'&mn)ement are potent tools for economic and social
empowerment of the rral poor. ;fforts have %een made almost in all parts of the contry to adopt this model as a
necessary component of the poverty alleviation programmes.
Gorming small grops and linking them to %ank %ranches for credit delivery has %een the most important featre of
the growth of the S)5 movement in or contry. !he S)5-7ank linkage programme was started as a test pro(ect in
1.I. when ,A7A*D$ the Ape& *ral Development 7ank in the contry$ sanctioned *s.1F.F lakhs to 8H*ADA as seed
money assistance for forming credit management grops. In the same year$ the 8inistry of *ral Development
provided financial spport to -*ADA, to esta%lish Self-)elp 5rops in some rral pockets of *a(asthan. 9n the %asis
of these e&periences$ a fll-fledged pro(ect involving a partnership among S)5s$ 7anks and ,59s was lanched %y
,A7A*D in 1..2. In 1..D$ acting on the report of a working grop$ the *7I streamlined the credit delivery procedre
%y issing a set of gidelines to :ommercial 7anks. It ena%led S)5s to open 7ank Acconts %ased on a simple inter-se
agreement. !he scheme was frther strengthened %y a standing commitment given %y ,A7A*D to provide refinance
and promotional spport to 7anks for credit dis%rsement nder the S)5 M 7ank linkage programme. ,A7A*D's
corporate mission was to make availa%le microfinance services to 2F million poor hoseholds$ or one-third of the poor
in the contry$ %y the end of 2FFI. In the initial years$ the progress in the programme was a slowC only //FFF grops
cold %e credit linked dring the period 1..2-... 7t$ thereafter$ the programme grew rapidly and the nm%er of
S)5s financed increased from I2FFF in 1...-2FFF to more than J.2F lakhs in 2FFD-FJ and J.IK lakhs in 2FFJ-FK.
:mlatively$ // million poor hoseholds in the contry have %een a%le to secre access to micro-finance from the
formal %anking system.
+As 'ollo,&$p read p on the sccess stories particlarly the Ldm%ashree programme of Lerala in A*: 2 - *eport
F. Social :apital -age IF-I10

/: 0"t ot"er A)enc#es re #nvolve! #n t"e S(G movement3
Apart from ,A7A*D$ there are 'o$r other ma(or organisations in the p%lic sector which too provide loans to financial
intermediaries for onward lending to S)5s. !hey are +a0 Small Indstries Development 7ank of India +SID7I0$
+%0*ashtriya8ahilaLosh +*8L0$ +c0 )osing and #r%an Development :orporation +)#D:90 and+d0 then$ there are
p%lic sector@other commercial %anks which are free to take p any lending as per their policy and *7I gidelines.



1F www.visionias.in Vision IAS
Rs"tr#%7"#lHos":
!he *ashtriya8ahilaLosh was set p %y the 5overnment of India in 8arch 1../ as an Atonomos 7ody registered
nder Societies *egistration Act$ 1IJF nder the Department +now 8inistry0 of 6omen and :hild Development. !he
o%(ective was to facilitate credit spport to poor women for their socio-economic pliftment.It was felt that the credit
needs of poor women$ especially those in the norgani"ed sector$ were not adeBately addressed %y the formal
financial instittions of the contry. !hs *8L was esta%lished to provide loans in a Basi-formal credit delivery
mechanism$ which is client-friendly$ has simple and minimal procedre$ dis%rses Bickly and repeatedly$ has fle&i%le
repayment schedles$ links thrifts and savings with credit and has relatively low transaction costs %oth for the
%orrower and the lender. !he Losh lends with a niBe credit delivery model 2*8L M ,59-S)5- 7eneficiaries3. !he
spport is e&tended throgh ,59's$ 6omen Development :orporations$ State 5overnment agencies like D*DA's$
Dairy Gederations$ and 8nicipal :oncils etc.
SID<I:
Small Indstries Development 7ank of India +SID7I0 lanched its micro finance programme on a pilot %asis in 1..<
sing the ,59 @ 8GI model of credit delivery wherein sch instittions were sed as financial intermediaries for
delivering credit to the poor and nreached$ mainly women. Eearning from the e&perience of the pilot phase$ SID7I
reoriented and pscaled its micro finance programme in 1.... A specialised department vi". 4SID7I Gondation for
8icro :redit' +SG8:0 was set p with the mission to create a national network of strong$ via%le and sstaina%le 8icro
Ginance Instittions +8GIs0 from the informal and formal financial sectors. SG8: serves as an ape& wholesaler for
micro finance in India providing a complete range of financial and non-financial services to the 8GIs so as to facilitate
their development into financially sstaina%le entities$ %esides developing a network of service providers and
advocating for appropriate policy framework for the sector. SG8: is implementing the ,ational 8icro Ginance
Spport -rogramme +,8GS-0. !he overall goal of ,8GS- is to %ring a%ot s%stantial poverty elimination and
redced vlnera%ility in India amongst sers of micro-finance services$ particlarly women.
Pr#vte In#t#t#ves:
!hogh$ government efforts have played a ma(or role in advancing the S)5 movement in the contry$ there have
%een a large nm%er of volntary organisations +,59s0 which too have facilitated and assisted S)5s in organi"ing
savings and credit in different parts of India. S;6A in Ahmeda%ad$ 8H*ADA in Larnataka$ ,av 7harat Nagriti Lendra
and *amakrishna 8ission in Nharkhand$ and ADI!)I in 7ihar are some of the names which took the lead in promoting
Self-)elp 5rops +mostly of women0 arond income generation activities sing local skills. Grom organi"ing villagers
into grops which cold work on via%le activities$ to making a pro(ect and secring fnds +own contri%tion or
throgh a tie-p with the financial instittion0$ these V9s have worked with involvement and dedication. -*ADA,
+-rofessional Assistance for Development Action0$ D)A, Gondation$ ASS;GA +Association of SarvaSeva Garms$ 8AEA*
+8ahalir Association for Eiteracy$ Awareness and *ights0$ SLS$ Nanodaya$ :ohesion Gondation and Nan
:hetnaSansthan are some of the other ma(or non-governmental instittions which are promoting and nrtring a
large nm%er of S)5s of poor people$ mostly women into effective organisations which cold leverage credit from
formal sorces$ and develop local resorces and skills to increase prodctivity and income. It is ths$ de to the
com%ined efforts of the government and these private volntary agencies that the S)5s have come to occpy a place
of prominence in the socio-economic fa%ric of rral India.
/: 0"t "s .een t"e #mpct o' S(Gs on r$rl l#'e3
A random impact evalation stdy covering DJF mem%ers of 22/ S)5s linked to 7anks located in 11 States was carried
ot %y ,A7A*D. A three year period was selected for this stdy. !he reslts of this srvey released in 2FFF1I
indicated that
DIO of the hoseholds covered nder S)5s reported an increase in assetsC
the average vale of assets per hosehold increased %y K2O from *s.J$I</ to *s.11$K./C
ma(ority of the mem%ers developed savings ha%it against 2/O earlierC
there was a threefold increase in savings and a do%ling of %orrowings per hoseholdC
the share of consmption loan in the %orrowing went down from DFO to 2DOC
KFO of the loans taken in post-S)5 period went towards income generation ventresC
employment e&panded %y 1IOC
the average net income per hosehold %efore (oining a S)5 was *s.2F$1KK which rose %y //O to 2J$II.C and
a%ot <1.DO of the hosehold stdied were %elow their state specific poverty line in the pre-S)5 enrolment
stageC it came down to 22O.

11 www.visionias.in Vision IAS
-articipation in grop activity significantly contri%ted to improvement of self-confidence among the mem%ers. In
general$ grop mem%ers and particlarly women %ecame more vocal and assertive on social and family isses.
!he strctre of the S)5 is meant to provide mtal spport to the participants in saving money$ preparing a
common plan for additional income generation and opening %ank acconts that wold help them in developing credit
relationship with a lending instittion. It ltimately spports them in setting p micro-enterprises e.g. personalised
%siness ventres like tailoring$ grocery$ and tool repair shops. It promotes the concept of grop acconta%ility
ensring that the loans are paid %ack. It provides a platform to the commnity where the mem%ers can discss and
resolve important isses of mtal concern.
6hile some of the S)5s have %een initiated %y the local commnities themselves$ many of them have come throgh
the help of a mentor 7ody +either government or an ,590 which provided initial information and gidance to them.
Sch spport often consists of training people on how to manage 7ank acconts$ how to assess small %siness
potential of the local markets and how to pgrade their skills. In the end$ it creates a local team of resorce persons.
5rop formation %ecomes a convenient vehicle for credit delivery in rral areas. :ommercial 7anks and other
instittions which are otherwise not receptive to the demands of marginali"ed individals$ start considering sch
grops as their potential cstomers. 9verall sch Noint-Eia%ility 5rops e&pand the otreach of the micro-finance
programme in an effective way$ reaching ot to the e&clded segments e.g. landless$ sharecroppers$ small and
marginal farmers$ women$ S:s@S!s etc.
!he ma(ority of Self-)elp 5rops comprise of women mem%ers. !here is evidence in this contry as well as elsewhere
that formation of Self-)elp 5rops has a mltiplier effect in improving women's stats in society as well as in the
family. !heir active involvement in micro-finance and related entreprenerial activities not only leads to improvement
in their socio-economic condition %t also enhances their self-esteem. 6omen in a gropenvironment %ecome more
articlate in voicing their concerns and a change occrs in their self-perception. !hey start to see themselves not only
as %eneficiaries %t also as clients @ informed citi"ens seeking %etter services. 9n the home front$ their new fond
awareness and the confidence generated ot of their entreprenerial skills make them more confident vis-P-vis their
menfolk.
!he S)5 programme has contri%ted to a redced dependency on informal money lenders and other non-
instittional sorces. It has ena%led the participating hoseholds to spend more on edcation than non- client
hoseholds. Gamilies participating in the programme have reported %etter school attendance and lower drop-ot
rates.
!he financial inclsion attained throgh S)5s has led to redced child mortality$ improved maternal health and the
a%ility of the poor to com%at disease throgh %etter ntrition$ hosing and health M especially among women and
children.
7t the S)5 movement has certain weaknesses as well1
contrarytothevisionforS)5development$mem%ersofagropdonotcome necessarily from the poorest familiesC
the S)5 model has led to definite socialempowerment of the poor %t whetherthe economic gains are
adeBate to %ring a Balitative change in their life is a matter of de%ateC
many of the activities ndertaken %y the S)5s are still %ased on primitive skills related mostly to primary
sector enterprises. 6ith poor vale addition per worker and prevalence of s%sistence level wages$ sch
activities often do not lead to any s%stantial increase in the income of grop mem%ers.
!here is lack of Balified resorce personnel in the rral areas who cold help in skill pgradation@acBisition
of new skills %y grop mem%ers.

/: 0"t t"en re t"e *e% #ss$es 'c#n) S(Gs to!%3
!hogh$ dring a short span of fifteen years the S)5 movement has recorded remarka%le progress mch still remains
to %e done. !he movement shows steep territorial variations. 8any areas of the contry lack adeBate %anking
strctre. #r%an and semi-r%an areas$ to a large e&tent$ stand e&clded from this mode of credit delivery. Grther
growth of this movement faces threat from inadeBacy of skills in the rral areas. And finally the pace of the
movement needs to %e accelerated. !he following eight isses of this sector deserve priority attention1


12 www.visionias.in Vision IAS
Q 7#nt#n#n) t"e prt#c#ptor% c"rcter1
6e saw the cooperative sector %ecame a spring%oard for political aspirants. !hogh the S)5 movement is relatively
new$ government interventions and s%sidies have already started showing negative reslts. !he patronage and
s%sidies provided to the S)5s %y government and the -anchayats often lead to their politici"ation. !herefore$ de
care mst %e taken to ensre that government initiatives do not erode the fndamental principles of self-help and
empowerment of the poor.
Q Nee! to e6pn! the S)5 movement to States sch as 7ihar$ #ttar -radesh$ 8adhya -radesh$ 9rissa$ *a(asthan and
in the ,orth-;ast +where the S)5 movement and micro-finance entreprenership is weak01
9verall K/O of the farmer hosehold +in rral areas0 have no access to any formal sorce of credit. In 8arch$ 2FF1$
K1O of the total linked S)5s of the contry were in (st for States of the sothern region vi". Andhra -radesh$
Larnataka$ Lerala and !amil ,ad. !he figre went down to DIO in 2FFD$ D<O in 2FFJ and to <<O in 2FFK. 7t even
the crrent figre is a case of concern when one talks of financial inclsion for the whole contry.
Q Nee! to e6ten! small grop organisations +S)5s0 to peri-r%an and r%an areas1
According to the 2FF1 censs$ /1<.D< million persons changed their place of residence +vis-P-vis the sitation in the
1..1 censs0 within the contry and ot of this 2...F million or .O changed their place of residence in search of
%etter prospects elsewhere. Since isse of any form of identity card is invaria%ly linked with the possession of an
immova%le property$ sch migrant workers do not have any formal docment to prove their domicile in the city. 7t
the overall economic and social well-%eing of the city is closely linked with the condition of this section of the city
dwellers. In the a%sence of any docmentary proof$ it appears that this class of people do not have access to
organised financial services. As per the e&isting stattory provisions$ ,A7A*D's mandate is to provide micro-finance
facilities only to rral and semi-r%an areas. 7ranches of the mainstream 7anks too$ thogh$ eBipped with
manpower and technology$ are not keen to service this sector. ;ven money lenders are relctant to lend to them. !he
net reslt is that this segment of the r%an poplation e.g. pavement sellers$ street hawkers$ constrction workers
etc. remains financially e&clded.
Q 7o!e o' S(G !evelopment n! '#nnc#l #nterme!#t#on1
;sta%lishing sta%le linkage %etween a S)5 and a local financial instittion is one of the key elements of the S)5
movement. :rrently$ for distinct models of financial intermediation are in operation in varios parts of the contry
namely1
S)5-7ank linkage promoted %y a mentor institte
S)5-7ank direct linkage
S)5-8entor Instittion linkageC and
S)5-Gederation model
Since the %orrowing S)5s consist mainly of low income mem%ers who cannot afford to miss even a day's wages$ a
hassle-free transaction with a 7ank which is ready to come to their doorsteps with appropriate credit prodcts is of
great vale to them. !he S)5 M 7ank Einkage 8odel with a mentor S)-I in tow +8odel I a%ove0 wold %e the most
appropriate one for delivery of financial services to the S)5s.
Q Sel'&(elp Gro$ps n! Re)#onlR$rl <n*s1
As on 1st April$ 2FFK$ ot of a total of J22 districts in the contry$ D/D have a network of *egional *ral 7anksC the
rest IK districts have no **7 presence. !hese %ranches have %een created %y the *egional *ral 7anks Act$ 1.KJ
primarily for providing instittional credit to the marginali"ed sector of the rral economy +small$ marginal farmers$
landless la%or and rral artisans0. !hee&tension of the **7 network to the remaining IK districts wold considera%ly
speed p the process of inclsive %anking and help in e&tending micro- finance to local S)5s.
Q Iss$es o' s$st#n.#l#t%1
!he instittional sstaina%ility and the Bality of operations of the S)5s are matters of considera%le de%ate. It is
generally held that only a minority of the Self-)elp 5rops are a%le to raise themselves from a level of micro-finance
to that of micro-entreprenership. ,either do sch 7ank linkages lead to sanction of larger individal loans nder the
7ank's normal lending programmes. !he ltimate o%(ective of sch a tie-p is to impart financial strength to the S)5s
so that they can enter into a sta%le relationship with the local financial instittions - withot any e&ternal spport.

1/ www.visionias.in Vision IAS
;ven after many years of e&istence$ %y and large$ S)5s are heavily dependent on their promoter ,59s or government
agencies
Q 5#nnc#l ss#stnce toS(PIs n! ot"ers$pport#nst#t$t#ons1
Gorty-five per cent of the total nm%ers of women S)5s of the contry are located in Andhra -radesh. !his envia%le
position of the State is primarily de to the initiative shown %y promoter ,59s often known as Self-)elp -romoting
Instittions +S)-Is0 @ mentor organisations. If the S)5 movement is to spread across the entire contry$ there is need
to provide ma(or incentives to S)-Is @ promoter ,59s. :rrently$ the financial spport to S)-Is comes from the 8icro
Ginance Development and ;Bity Gnd +8GD;G0 of ,A7A*D. It is limited to an amont of *s.1DFF per S)5 +formed
and activated0. !o attract more and more S)-Is to the rral areas$ this Bantm of spport needs to %e revised.
Q Role o' 7#cro&5#nnce Inst#t$t#ons1
8icro-credit is defined as provision of thrift$ credit$ and other financial services +sch as deposits$ loans$ payment
services$ money transfer$ insrance and related prodcts0 of very small amonts to the poor in rral$ semi-r%an and
r%an areas for ena%ling them to raise their income levels and improve living standards. 8icro-finance instittions are
those which provide sch micro-credit facilities. 8icro-credit is an instrment of %oth social as well as economic
policy. It opens p integral development processes sch as se of financial and technical resorces$ %asic services and
training opportnities to the nprivileged. Access to savings$ credit$ money- transfer$ payment$ and insrance can help
poor people take control of their financial life. It also empowers them to make critical choices a%ot investing in
%siness$ sending children to school$ improving health care of the family$ covering the cost of key social o%ligations
and nforeseen sitations. 7t the most important of all$ an access to finance generates self- esteem among them.
ARC&G has made the following recommendations and the 8icro Ginance Sector +Development and *eglation0 7ill$
2FFK needs to %e amended to inclde the following sggestions1-
!he scope of 8icro-finance Services shold %e s%stantially widened to cover credit @ savings$ insrance$
pension services$ money transfer$ isse @ discont of warehose receipts and ftre @ option contracts for
agricltral commodities and forest prodce.
!he activities of Section 2D :ompanies to the e&tent they concern micro-financial services as descri%ed nder
the proposed 7ill shold also %e %roght nder the prview of this legislation. )owever$ for their
management and other fnctions$ they will contine to %e governed %y the provisions of the :ompanies Act.
!he isse of interest rate charged %y the 8GIs shold %e left to the *eglatory Athority which is %eing
created nder the proposed 7ill.
It shold %e ensred that if 8GIs are allowed to handle thrift @ savings and money transfer services$ they
wold do so only as %siness correspondents of commercial 7anks.

/: 0#t" n e%e on t"e '$t$re, let $s e6plore Corporte&S(G l#n*)es 'or r$rl mr*ets:
*ral 8arket offers tremendos potential of growth for corporations %y making their prodcts and services availa%le
to these areas. Eot of interventions are designed %y varios companies to tap the rral market inclding designing
tailor made spply chain$ rral marketing campaigns$ prning marketing mi& elements and integrating social elements
to develop their %rand awareness and market for their prodcts. Apart from all these endeavors there is still a
significant area largely ntapped. Integration of S)5s with corporations as a part of their company policies in tackling
the isses of reach and market awareness is a win-win soltion. 6ith varios government initiatives inclding
-romotion of S)5 formation$ microenterprise development$ microcredit %y GIIs and ,7G:s and skill training$ S)5s are
%ecoming via%le in their operations. Sym%iotic association of corporations and S)5s tili"ing distinctive competence
can prove to %e fritfl for %oth in the long rn %roadly in the form of market and socio-economic development. S)5s
are %roadly stdied on two %asis- 8icrofinance and 8icroenterprises. !he first aspect of S)5s +8icrofinance0 is widely
stdied and several changes have %een incorporated towards making S)5s via%le. Development of 8icro-enterprises
is relatively a new phenomenon. As per stdy of 8.Lnhaman$ 2F12$ S)5s can %etter promote 8icro-enterprises$
especially in rral areas.
!he real effort to spport S)5s in India$ however$ came in the late 1..Fs when the central government of India
introdced a holistic program$ S5SH- Swarna(ayanti 5ram Swaro"garHo(ana %ased on the grop approach for rral
development. !he S5SH approach was to encorage the rral poor to organise themselves into S)5s and to
independently take p via%le economic activities as micro-enterprises with spport from government s%sidies and

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%ank credit. 6ith the development of indstrial norms$ micro-enterprises are also coming p apart from large$
medim and small indstries. 8icro-enterprises can %e started and managed %y individals$ grops or S)5s. Intended
to strengthen via%le$ small %sinesses$ reslting in increased hosehold income and savings and ths alleviating the
crnch of economic poverty$ 8icro-enterprise development aims at %ilding self-esteem$ self-reliance$ encoraging
atonomy and creating a commnity atmosphere. It %ilds economic capital %y creating (o%s and generating income$
ltimately working towards commnity development in impoverished or nemployed areas.
!he report of the working committee of *7I +1..<0 proposed the integration of S)5s into the strategies and policies of
corporations. S)5s can provide a sita%le option for companies to integrate into varios fnctions sch as- 8arketing$
Distri%tion$ -rocrement of varios raw materials and semi-finished materials$ -rodction and processing of
indigenos prodcts etc. Gor e&ample$ !AN grop has adopted a S)5 for procrement of sea food and meet JFO of
their demands throgh the S)5. S)5s can also %ecome a sita%le vehicle for distri%tion of rral prodcts and help in
faster diffsion of innovation in the rral market.











RE5ERENCES:
Mohit Bhattacharya- Social Theory and Development Administration
ARC-2 Report 9- Social Capital
Yojana Nov 2!"" iss#e on N$%s










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:orporate ,eeds1
7siness ;&pansion
5reater 8arket Segment
-rodct -enetration = Diffsion
7rand Awareness
S)5 ,eeds1
Scale of -rodction
8arketa%ility
-rodction 8ethods
:apital$ !echnology and Skills