Topic: Development processes and the development industry the role of NGOs, SHGs, various groups and associations, donors, charities, institutional and other stakeholders



 — THE CIVIL SOCIETY — SHGs, Associations, NGOs, Trusts and Charitable Institutions, Endowments, Waqf boards



  • Backbone of the democratic society and its continuous deliberative process.
    • Evidence: Russia has only 4 lakh NGOs, Kenya some 240 and India has around 3 million, US has 2 million
  • Major economic force — provide employment opportunities
    • Evidence: 8% employment in US generated by NGOs
  • Enhance people centricity of the government
  • Contribute to inclusive wealth creation
  • Help to scale up productivity and competitiveness.




Funding Sources:

  • Individuals
  • Private foundations (national as well global)
  • Business houses


Government NGO interface:

  • The Central Social Welfare Board (CSWB) and National Institute of Public Cooperation and Child Development (NIPCCD) are two such prominent Bodies dealing with Government – NGO interface in the social welfare sector
  • The Council for Advancement of People’s Action and Rural Technology (CAPART) is an agency which finances voluntary organisations to stimulate grass roots participation and encouragement of rural technology.
  • There are more than 437 such autonomous organisations functioning under various Ministries of the Government of India excluding those under Scientific Departments.
  • Another way of support is through tax concessions.


Self Help Groups

  • “Self-Help is the best Help”, “United we stand, divided we fall”, “Unity is strength” 
  • A Gandhian Idea
  • self-help group(SHG) is a village-based financial intermediary committee usually composed of 10–20 local women or men. A mixed group is generally not preferred. Most self-help groups are located in India, though SHGs can be found in other countries, especially in South Asia and Southeast Asia.
  • Members make small regular savings contributions over a few months until there is enough capital in the group to begin lending. Funds may then be lent back to the members or to others in the village for any purpose. In India, many SHGs are ‘linked’ to banks for the delivery of micro-credit.
  • As per the recent microfinance report released by NABARD – as on March 2012, a total number of 76 lakh SHGs with active bank-linkages are operating in India which have been able to ensure involvement of around 9.7 crore people of this nation, with an aggregate bank balance of Rs. 6,551 crores; simultaneously latest statistics also indicate that over 90% of SHGs in India consist exclusively of women.


  1. The first organised initiative in this direction was taken in Gujarat in 1954 when the Textile Labour Association (TLA) of Ahmedabad formed its women’s wing to organise the women belonging to households of mill workers in order to train them in primary skills like sewing, knitting embroidery, typesetting and stenography etc.
  2. In 1972, it was given a more systematized structure when Self Employed Women’s Association (SEWA) was formed as a Trade Union under the leadership of Ela Bhatt.
  3. In the 1980s, Myrada – a Karnataka based non-governmental organisation, promoted several locally formed groups to enable the members to secure credit collectively and use it along with their own savings for activities which could provide them economically gainful employment.
  4. Kudumbshree


  1. Thrift and Savings — “Savings First, Credit Later”
  2. Collective planning for additional income
  3. Conduit for formal banking services to reach them
  4. Internal Lending
  5. Discussing problems
  • 8 million active SHGs in the country, consisting of around 780 million members, 80 per cent of which are female SHGs.
  • Contributes to financial inclusion as overall, 73% of the households do not have credit links with any financial institution.
  • Advantages/Benefits: (1) Financial Inclusion, (2) Income Generation and Self-Employment (3) Social Empowerment (4) Improvement in Social Indicators
    1. Reduced dependence on money lenders and exploitative institutions 
    2. Enabled households to spend more on education
    3. Reduction of child mortality and maternal mortality 
    4. Stop Exploitation of Women
    5. Group Support to Vulnerable individuals: An economically poor individual gains strength as part of a group.
    6. Low transaction costs: Besides, financing through SHGs reduces transaction costs for both lenders and borrowers.
    7. Reasonable interest rates 
    8. Accessibility: While lenders have to handle only a single SHG account instead of a large number of small-sized individual accounts, borrowers as part of an SHG cut down expenses on travel (to and from the branch and other places) for completing paper work and on the loss of workdays in canvassing for loans.
    9. Empowering: Where successful, SHGs have significantly empowered poor people, especially women, in rural areas.
    10. Promotes entrepreneurship and innovation for micro businesses by these individuals use NABARD study
  • Impact:
    1. Survey from 2000 by NABARD
      • (a) 58% of the households covered under SHGs reported an increase in assets;
      • (b) the average value of assets per household increased by 72% from Rs.6,843 to Rs.11,793;
      • (c) majority of the members developed savings habit against 23% earlier;
      • (d) there was a threefold increase in savings and a doubling of borrowings per household;
      • (e) the share of consumption loan in the borrowing went down from 50% to 25%
      • (f) 70% of the loans taken in post-SHG period went towards income generation ventures;
      • (g) employment expanded by 18%;
      • (h) the average net income per household before joining a SHG was Rs.20,177 which rose by 33% to 26,889; and
      • (i) about 41.5% of the household studied were below their State specific poverty line in the pre-SHG enrolment stage; it came down to 22%. Participation in group activity significantly contributed to improvement of self-confidence among the members. In general, group members and particularly women became more vocal and assertive on social and family issues.

e-Shakti [SHGs] — NABARD’s SHG-Bank Linkage Program

  1. SHG-Bank linkage programme was started as a test project in 1989 when NABARD, the Apex Rural Development Bank in the country, sanctioned Rs.10 lakhs to MYRADA as seed money assistance for forming credit management groups.
  2. “By aggregating their individual savings into a single deposit, self-help groups minimize the bank’s transaction costs and generate an attractive volume of deposits. Through self-help groups the bank can serve small rural depositors while paying them a market rate of interest.”
  3. NABARD estimates that there are 2.2 million SHGs in India, representing 33 million members, that have taken loans from banks under its linkage program to date.
  4. Has resulted in increase of SHG deposits in banks from 9000 crore to 17000 from 2013 to 2014, almost an 88% increase
  5. e-Shakti has been implemented to improve the quality of interface between SHG members and banks for efficient and hassle-free delivery of banking services
  6. A bank manager will be able to track the activities of SHGs sitting in a room, including particulars like how much savings an SHG has or how regularly it meets and the profile of its members. This will not only help the banker but also change the risk perception of SHGs

Organizations involved:

  2. Rashitriya Mahila Kosh:
    • It was felt that the credit needs of poor women, specially those in the unorganized sector, were not adequately addressed by the formal financial institutions of the country.
    • Thus RMK was established to provide loans in a quasi formal credit delivery mechanism, which is client-friendly, has simple and minimal procedure, disburses quickly and repeatedly, has flexible repayment schedules, links thrifts and savings with credit and has relatively low transaction costs both for the borrower and the lender.
    • The Kosh lends with a unique credit delivery model “RMK – NGO-SHG Beneficiaries”
    • The support is extended through NGO’s, Women Development Corporations, State Government agencies like DRDA’s, Dairy Federations, Municipal Councils etc.



Success Stories

  1. Andhra Pradesh
  2. Tamil Nadu
  3. Kudumbshree in Kerela

Self-Help Promoter Institutions (SHPIs)

  1. Guidance and training
  2. Seed funding for very poor members
  3. Eg: MYRADA — MYRADA was effective in setting up several Self-Help Groups in rural areas of Karnataka in 1989 by providing (a) sustained guidance and (b) by granting seed money to them from the corpus of 10 lakhs which was given to it by NABARD under a demonstration project.
  4. SEWA in Ahmedabad, Nav Bharat Jagriti Kendra and Ramakrishna Mission in Jharkhand, and ADITHI in Bihar


  1. High NPAs:
    • The biggest challenge with SHGs currently is higher NPA percentage due to multiple financing, inadequacies in account keeping and other things. On an average NPA of SHGs stands at around 7-8 per cent, which Nabard intends to bring down to 2 per cent in the next five years.
  2. Regional variations (north and north east vs. south india) — not present in credit deficient areas of India
  3. Issue of Sustainability — too much dependent on State for funds, marketing, skills etc.
  4. Present mostly in rural areas only, and not in urban areas of India and peri-urban areas due to heterogeneity of community
  5. Poor skills in rural areas exacerbate situation in such SHGs
  6. Members of the group not necessarily from the poorest families
  7. Social Inequities: Does not address the social inequities of poor people
  8. Lack of Staff: there is lack of qualified resource personnel in the rural areas who could help in skill up-gradation / acquisition of new skills by group members
  9. Politicization like Cooperatives 
    • used as launchpads of politicians
    • used to fund political activities





  • Under Muslim rule in India, the concept of Waqf was more widely comprehended as aligned with the spirit of charity endorsed by the Quran.
  • Waqf implies the endowment of property, moveable or immovable, tangible or intangible to God by a Muslim, under the premise that the transfer will benefit the needy.
  • As a legal transaction, the Waqif (settler) appoints himself or another trustworthy person as Mutawalli (manager) in an endowment deed (Waqfnamah) to administer the Waqf (charitable Trust).
  • As it implies a surrender of properties to God, a Waqf deed is irrevocable and perpetual.
  • Mussalman Waqf Validating Act, 1913,
  • Currently, 300000 Waqfs in India are being administered under various provisions of the Waqf Act, 1995.
  • At the national level, there is Central Waqf Council which acts in an advisory capacity.



CSR (Corporate Social Responsibility)

  • The commitment of business to contribute to sustainable economic development working with employees and their families, the local community and society at large to improve their quality of life, in ways that are both good for business and good for development.
  • Traditions of “trusteeship”, “giving” and “welfare” have existed since long in our society.
  • The concept of social good has always been part of the Indian psyche.
  • From the beginning of the 20th century, business and industry in India have in different ways been paying attention to their obligation and commitment towards society and the community.
  • The large number of schools, colleges, hospitals and other charitable establishments, which were set up in the 20th century in different parts of the country, are fine examples of such social commitment
  • Not just charity anymore:
    • In recent years, CSR has shifted from the domain of charity to the domain of standard business practices.
    • Together with ‘profit’ and ‘growth’, it is one of the essential parameters which define a business.
    • Stakeholder awareness, increasing power of civil society, intensity of competition and environmental challenges are some of the factors which have increased the emphasis on CSR in recent times


Self-Regulatory Authorities

  • The Self-Regulatory Authority of a profession means a select Body of its members which is responsible for growth and development of the profession in the background of its responsibility towards society and State.
  • The functions of such a Self-Regulatory Body may include:
    • (i) issues of professional education: development of curriculum, setting up of teaching standards, institutional infrastructure, recognition of degrees etc. and
    • (ii) matters connected with licensing, and ethical conduct of the practitioners.
    • (iii) a significant role as technical advisers to the government in conceptualizing, formulating and implementing policies and standards for providing important public services to the citizens
  • Currently, there are six major professional Bodies operating in India each having been formed under a specific law.
    • Bar Council of India (BCI) – formed under the Advocates Act, 1961
    • Medical Council of India (MCI) – formed under the Indian Medical Council Act 1956
    • Institute of Chartered Accountants of India (ICAI) – formed under the Chartered Accountants Act, 1949
    • Institute of Cost and Works Accountants of India (ICWAI) – formed under the Cost and Works Accountants Act, 1959
    • Institute of Company Secretaries of India (ICSI) – formed under the Company Secretaries Act, 1980
    • Council of Architecture (COA) – formed under the Architects Act, 1972
  • Then, there are organisations like the Institution of Engineers which have been formed purely by voluntary action by respective members of the profession. They do not have any statutory background.
  • However, their mandate to manage and regulate education for their respective professions has been challenged on the ground that it prohibits innovation
  • National Knowledge Commission has recommended establishment of an Independent Regulatory Authority for Higher Education (IRAHE).
    • The IRAHE must be at an arm’s length from the government and independent of all stakeholders including the concerned Ministries of the government
    • The IRAHE would have to be established by an Act of Parliament, and would be responsible for setting the criteria and deciding on entry.
    • It would be the only agency that would be authorized to accord degree-granting power to higher education institutions.
    • It would be responsible for monitoring standards and settling disputes.
    • It would apply exactly the same norms to public and private institutions, as it would to domestic and international institutions.
    • It would be the authority for licensing accreditation agencies
  • Renewal/Revalidation of Registration
    • No such practice in India while this is must for professions like doctors
  • Disciplinary Mechanism
    • Not well developed except a few cases
    • Also, reporting are very low
    • ICAI has an innovative mechanism to punish errant members and prevent unethical practices.
    • It has a pro-active disciplinary cell which speedily investigates complaints against its members. ICAI entertains complaints not only from stakeholders or user-groups but also takes suo-motu action on the basis of its in-house information.
    • The provisions contained in the code of conduct of ICAI are very stringent and the agency is equally effective in taking action against its defaulting members. Peer review is undertaken to ensure compliance with technical standards and adherence to quality control policies and procedures. Often, ICAI on its own, looks into public accounts of different organisations including Banks and financial institutions. Disciplinary actions is taken if there is any deficiency in reporting. Quality control among Chartered Accountants is ensured by peer pressure and financial reporting review.
  • Accountability and Parliamentary Oversight 
    • Self-Regulatory Authorities enjoy considerable functional autonomy.
    • Though, they are creatures of the law, their accountability is currently ambiguous and incomplete.
    • The law does not provide for an explicit mechanism which can hold them responsible for their performance. The Public, Parliament, Government and the profession have a right to know how a Self-Regulatory Authority discharges its functions and to hold them accountable.
    • Self-Regulatory Authority’s primary accountability as a statutory Body must be to Parliament, which, on behalf of the public, defines its powers and responsibilities


Social capital — SHGs and Cooperatives — a Gandhi idea of self-reliance

  • During the struggle for Independence the whole emphasis of the Gandhian movement was on self-help and cooperation.
  • The cooperative movement gained momentum as a part of such self-help ethos embedded in the independence movement.
  • To Gandhiji the swadeshi movement was “the greatest constructive and cooperative movement in the country”.
  • In propagation of khadi and village industries, he found “the panacea for India’s growing pauperism” and “an object lesson in cooperation”.
  • Gandhiji looked at cooperation as a moral movement.
  • Social capital refers to those institutions, relationships, and norms that shape the quality and quantity of a society’s interaction.
    • It consists of trust, mutual understanding, shared values and behaviour that bind together the members of a community and make cooperative action possible.
    • The basic premise is that such interaction enables people to build communities, to commit themselves to each other, and to knit the social fabric.
    • A sense of belonging and the concrete experience of social networking (and the relationships of trust and tolerance that evolve) can bring great benefits to people.
  • Corporate Foundations
    • Towards the end of the 19th century the corporate community in India also began setting up organisations dedicated to the welfare and development of the underprivileged.
    • The J N Tata Endowment Trust was established in our country in 1892, much before Rockfeller and Carnegie set up their philanthropic foundations in the USA.
    • A major contribution of this endowment was the establishment of the Indian Institute of Science at Bangalore.
    • The JJ School of Arts, Tata Institute of Social Sciences, Tata Institute of Fundamental Research, Birla Institute of Technology, Sri Ram College of Commerce
  • Socio-Political Movements
    • 1960s and 70s: Vinoba Bhave’s Bhoodan and Jai Prakash Narain’s Sarvodaya movement were the two major voluntary action initiatives which caught the attention of people across the country in the 1950s and 60s
  • Constitutionalism
    • 1970s and 1980s, the growth of constitutionalism and the emergence of economic liberalisation fueled ideals of equity, human rights and expansion of economic opportunities.
    • The environment of liberalism led to a recognition that people needed to be empowered through social action network. This supported emergence of newer categories of charities and voluntary action groups in our country.
  • Cooperatives, Societies and Waqfs
    • Started in the early years of the 20th century when farmers were organized into voluntary groups to secure cheap credit on collective basis and thus save them from usurious practices of money lenders.
    • Started in Europe
    • Spread to India by the 1920s, as it became very well suited for the Indian rural areas.
    • After Independence the Union and State Governments enacted several laws with regard to Public Trusts, Waqfs, Producer Companies, other voluntary sector / civil society organisations and cooperative societies.
    • The Societies Registration Act, 1860
    • The Waqf Act, 1954
    • Constitutional Positions: (Constitutional Right to form associations and cooperatives)
      • The Indian Constitution provides a distinct legal space to social capital / civil society institutions
      • (a) through its Article on the right to form associations or unions – Article 19 (1)(c);
      • (b) through Article 43 which talks of States making endeavour to promote cooperatives in rural areas; and
      • (c) through explicit mention in entries made in Schedule 7