Livelihood Pattern and Financial Discipline of Self-Help Groups in Rural Tripura -A Regression Approach

Prabir Ghosh

Research Scholar, Department of Economics, Tripura University, Tripura.

*Corresponding Author E-mail: prabir.ghosh183@gmail.com, prabir.economics@tripurauniv.in

ABSTRACT:

Inclusive growth of an economy is indispensable for holistic development. The benefits of growth need to percolate amongst the poor people. Poverty alleviation through Self Help Group Model (SHG) of micro financing and financial inclusion has been a great instrumental success in India. The bank linkage programme launched in 1992-93 by National Bank for Agriculture and Rural Development (NABARD) is such a micro finance programme to give institutional credit facility to the poor people through the SHG. There are approximately 6.22 lakhs rural households in Tripura and out of these 2.58 lakhs households have been covered under SHGs. Moreover, a substantial amount of government fund is allocated for such SHG programme. Therefore, it is of paramount importance to examine the financial discipline and livelihood activities of these SHGs. The present study tries to examine livelihood pattern and financial discipline of Self-Help Groups in rural Tripura. The SHGs which practise non-farm livelihoods absorb higher loan and their repayment status is better than SHGs practising farm livelihood. Since, gestation period of return from investment for small business is much shorter than farming and livestock rearing so, loan repayment rates for those SHGs are higher. Moreover, in agriculture and livestock rearing practices the level of uncertainty as well as risk factors involved are higher and gestation period of return is longer, so the financial discipline for those SHGs are weaker compared to the SHGs practising small business. It is also observed that, the villages which are located along the close vicinity of urban area have more SHGs practising small business and villages situated far from the urban area have more SHGs which are mostly involved in livestock and agricultural livelihood.

KEYWORDS: Livelihood, Inclusive growth, Micro finance, SHG, Financial discipline.

INTRODUCTION:

India’s economic growth on an average has been on an upward trajectory since independence. But the benefits of growth have not been trickling down substantially amongst the people of lower strata. That is why India has been focusing on inclusive growth-oriented policy measures to percolate fruits of economic growth amongst poor masses. This has been reflected in different poverty alleviation programmes of government of India.

The bank linkage programme launched in 1992-93 by National Bank for Agriculture and Rural Development (NABARD) is such a micro finance programme to give institutional credit facility to the poor people through the Self Help Group Model (SHG). Swarna Jayanti Gram Swarozgar Yojana (SGSY) launched by government of India in 1999 is also same SHG programme to provide sustainable income to poor people living in rural area. This SGSY programme was restructured and renamed as National Rural Livelihoods Mission (NRLM) in the year 2011 which is presently known as Deendayal Antayodaya Yojana (DAY-NRLM).

SHG is a community based small group comprising of mainly poor women of 10 to 20 members. This group acts as a financial intermediary and deals with other social and economic problems at grass-root level. The crux of SHG can be traced back to the micro-credit plan instrumented by the Nobel laureate economist Mohamed Yunus of Bangladesh in mid of 70s and a decade later in 1986-87 NABARD initiated the same concept in India. Poverty reduction through SHG micro financing and financial inclusion has been a great instrumental success in India. There are higher level community based organisations namely, Village Federation (VF)/Village Organisation (VO) and Cluster Level Federation (CLF) which are constituted of many SHGs at the level of village and cluster of villages respectively. These higher-level organisations act as common platform for SHGs to provide mutual supports and uplift overall economic and livelihood activities. As on July 2021 there are 27,652 numbers of SHGs, 1,289 numbers of VOs and 31 numbers of CLF covering 2,58,226 households in Tripura and these organisations are functioning under Tripura Rural Livelihood Mission for socio economic betterment of rural poor people. These SHGs have received financial support in the form of Community Investment Fund (CIF) of Rs. 13,714.41 lakhs from different government funded projects. This SHG model has helped to strengthen the socio-economic structure of villages through increasing income, employment generation, capacity building, micro-financing and livelihood support.

RESEARCH ISSUE:

Tripura being one of the North-Eastern states of India has second largest economy in terms of size of GSDP after Assam in the region. The primary sector of the economy of the state has approximately 47 percent share in GSDP. The agro-climatic condition of the state of Tripura is favourable for agriculture and horticulture and significantly more than half of population of the state rely on primary sector activities. There are approximately 6.22 lakhs rural households in Tripura and out of these 2.58 lakhs households have been covered under SHGs. Moreover, a substantial amount of government fund is allocated for such SHG programme. Therefore, it is of paramount importance to examine the financial discipline and livelihood activities of these SHGs.

OBJECTIVE OF THE STUDY:

The present study tries to examine livelihood pattern and financial discipline of Self-Help Groups in rural Tripura.

METHODOLOGY OF THE STUDY:

The livelihood pattern of SHGs have been analysed with the help of diagrammatic (Pie) representation. The financial discipline of VF/VO have been analysed based on the parameters namely, loan disbursement and loan recovery rate. The methods used in the study are scatter plot with trend line, regression equation, R²values and bar diagram. To examine the above-mentioned objective of the study primary sources of data have been used. The study area is Bamutia Block located in the close vicinity of Agartala suburban area in West Tripura. The block has 20 (twenty) Gram Panchayat (GP), 641 numbers of SHGs and each GP has one VF/VO which were formed under the regime of North East Rural Livelihood Projects under Ministry of Development of North East Region (MDoNER). There are 20 number of VF/VO in the block and these organisations have been graded as ‘A’ (score > 70), ‘B’ (score 70>B>50) and ‘C’ (score < 50) on the basis of regularity of meeting, books of record updating and other key financial parameters like loan disbursement and repayment.

Average Loan (Principal) Recovery Rate:

This parameter for each group of VF/VO (‘A’ or ‘B’ or ‘C’ graded) may be mathematically formulated as follows-

Average Loan (principal) Recovery Rate =

Where,

L_rdenotes loan repayment by different SHGs to different VF/VO

L_dindicates loan disbursement by different VF/VO to different SHGs

i = 1, 2, 3........n; n stands for number of loan repayment

j = 1, 2, 3.........m; m represents number of loan disbursement

k = 1, 2, 3.........N; N is number of VF/VO under each group, A, B or C

DATA ANALYSIS:

Livelihood Pattern of SHGs under different VF/VOs:

The pattern of livelihood of the existing SHGs of the block under different categories of VF/VOs has been plotted in pie chart below-

Fig.1: Comparison of Livelihood Pattern:

Source: Calculated from data received from BMMU, Bamutia

It is observed from the above diagram that most of the SHGs under ‘A’ graded VF/VOs are involved in small business activities and on the contrary the SHGs of ‘B’ graded and ‘C’ graded VF/VOs practise more livestock and agricultural activities. In fact, villages which are located along the close vicinity of urban area have more SHGs practising small business and villages situated far from the urban area have more SHGs which are mostly involved in livestock and agricultural livelihood.

There are approximately 355 to 360 numbers of SHGs engaged in small business namely, grocery shops, beauty parlour, tailoring, handloom and small vehicles (mainly auto, electric rickshaw). This is the major source of livelihood which gives quick return after investment financed from the loan of SHGs. The SHGs involved in this sector have absorbed highest percentage of loan and have higher recovery rate. In Bamutia block most of the SHGs, involved in farming are small and marginal farmers and they are mostly involved paddy, vegetable and some high value-added fruits like dragon fruits and mosambi which require comparatively less area of land and market value is also very high. Approximately, 325 to 330 numbers of SHGs are engaged in vegetable cultivation in the block. There are many farmers in the block who have been using Non-Pesticide Management Practices (NPM) for producing vegetable which have high market demand at lucrative market prices. The block supplies good quantity of vegetables to the markets of Agartala. There are good prospects of vegetable cultivation in the block owing to good number of SHGs’ involvement along with financial support from VFs/VOs and favourable location of the block to get easy market access with least logistic cost. Apart from that the SHG members rear different livestock namely, goat, cow, pig, duck, chicken for which they take loan from VOs.

To examine the financial discipline of the SHGs/VFs/VOs have been analysed and tabulated below. The table-1 given below represents the loan disbursement, principal of loan recovery rate and weighted percentage of scores of all the VFs of Bamutia Block-

Table1: Loan Disbursement and Principal Loan Recovery Status:

Sl. No.	Name of GP/ VC	Name of VO/VF	Total loan disbursed to SHGs (In lakhs)	Principal Recovery Rate (%)	Percentage of weighted score	Grade of VF/VO
1	Natun Nagar	Sree Shakti Federation	77.00	81.10	85.00	A > 70
2	Uttar Gandhigram	Uttar Gandhigram Shatadal VF	84.96	69.55	79.97
3	Narsingarh	Narsingarh Mahila Shakti VF	71.45	65.92	74.54
4	Paschim Bamutia	West Bamutia Mahila SHG VF	79.60	65.59	73.01
5	Debendra Nagar	Debendranagar Roshni VF	82.50	64.40	73.21
6	Uttar Lembuchara	Uttarr Lembucherra Pohar VF	38.15	61.26	70.05
7	Uttar Laxmilunga	Uttar Laxmilunga Natun Alo VF	67.12	59.26	56.49	70>B>50
8	Lembuchara	Lembucherra Pradip VF	68.35	57.86	55.14
9	Uttar Bamutia	Uttar Bamutia Srishakti SHG VF	88.70	55.89	54.81
10	Purba Bamutia	Purba Bamutia Mahila VF	36.85	55.81	53.21
11	Singarbil	Singerbil Mahashakti Mahila VF	54.80	54.76	52.45
12	Ananga nagar	Ananga Nagar Pragati Mahila	73.15	54.33	52.12
13	Digalia	Digalia Mother Teresa VF	20.10	49.76	49.25	C<50
14	Purba Gandhigram	East Gandhigram Joutha VF	41.10	49.55	49.10
15	Paschim Gandhigram	Sri Shakti SHG VF	23.53	49.49	48.95
16	Bhagalpur	Bhagalpur Unnati SHG VF	41.40	49.34	47.56
17	Taltala	Gitanjali Taltala Federation	27.50	48.72	46.01
18	Laxmilunga	Laxmilunga Shristy SHG VF	46.60	45.69	44.51
19	Nabagram	Nabagram Mamani VF	41.79	44.70	43.15
20	Patunagar	Patunagar Nari Pragati VF	33.70	35.54	42.00

Source: Calculated from data collected from BMMU, Bamutia

It is observed from the data analysis that ‘A’ graded VF/VOs are from those villages which have livelihood patter with higher number of SHGs involved in small business and lesser number of SHGs engaged in livestock and agriculture respectively. Conversely, ‘B’ and ‘C’ graded VF/VOs are from those villages which have livelihood patter with higher number of SHGs involved in agriculture and lesser number of SHGs engaged in livestock and small business respectively. Since, gestation period of investment for small business is much shorter than livestock, so return from small business comes faster than livestock and agriculture. Moreover, in agriculture and livestock rearing practices the level of uncertainty as well as risk factors involved are higher, so the financial discipline for those SHGs are weaker compared to the SHGs practising small business. This has been reflected from the table1, as the SHGs pertaining to ‘A’ graded VF/VOs have better financial performance compared to the SHGs belonging to ‘B’ graded VF and accordingly ‘C’ graded VF.

One of the key financial indicators, loan disbursement plotted in the following pie chart shows that SHGs (green segment) belong to ‘A’ graded VF/VOs and having mostly small business practices have highest loan absorption compared to SHGs pertaining to ‘B’ and ‘C’ graded VF/VOs. More specifically, it is seen that out of total Rs.10.98 crore loans disbursed to different SHGs, percentage of loan disbursement to SHGs of ‘A’ graded VF is highest with 40% followed by SHGs of ‘B’ and ‘C’ grades with 35% and 25% respectively.

Source: Calculated from data received from BMMU, Bamutia

Fig.2: Loan disbursement to different SHGs under different VF/VO:

Now, another key financial indicator, the loan repayment by the SHGs to the VFs/VOs has been analysed by calculating Average Loan (Principal) Recovery Rate which has been discussed as follows-

Source: Calculated from data received from BMMU, Bamutia

Fig.3: Average Loan Repayment Rate by SHGs:

The result of average loan (principal) recovery rate plotted through vertical bar chart shows that the loan repayment rate for the SHGs under group ‘A’ VF is 67.97% followed by SHGs of group ‘B’ and group ‘C’ VF with 56.32% and 46.60% respectively.

Regression Approach- Principal Loan Recovery Rate and Weighted Scores of VF/VO:

The scatter plot (green dots) along with trend line has been put in graph (Fig-4). The Principal Recovery Rate (endogenous variable) along the Y-axis and percentage of weighted score (exogenous variable) of VO along the X-axis are measured in the graph. It is seen that with the increase in percentage of weighted score, principal recovery rate (loan repayment) also increases. More technically, high value of coefficient of determination; i.e., R²value (goodness of fit) support to infer that financial discipline of VF/VO improves along with higher weighted scores (grades). ‘A’ graded VOs (SHGs) have higher weighted scores; i.e. those SHGs which practise non-farm livelihood have better financial discipline. On the other hand ‘B’ and ‘C’ graded SHGs VOs (group of SHGs) have less weighted scores and those SHGs practise farm livelihood and consequently their loan repayment rate is also low. So, in present study it can be concluded that pattern of livelihood of SHGs impacts their loan recovery rate.

Source: Estimated from data collected from BMMU, Bamutia

Fig-4: Scatter plot, Regression equation and R²value:

CONCLUSION:

It has been observed that SHGs showing better financial performance mostly practice non-farm livelihood which supports to infer that marginal efficiency of investment in farm livelihood is low and the pace of return is also slow. The demographic distribution, topography, land holdings as well as existing financial support from the SHGs of the block favour the farmers to practise livelihood which are high value addition based agro and livestock farming like, dragon fruits, ‘moshambi’, NPM (Non-pesticide management) vegetables, mushroom, goatry, duckery, dairy, piggery and small business activities, namely tailoring, beauty parlour and grocery shops. As SHGs belong to ‘A’ graded VFs/VOs show better financial discipline, i.e., those SHGs involved in small business have higher loan absorption and repayment rate. On the other hand the SHGs practising farm livelihood like agriculture and livestock rearing have lower loan repayment rate. This observation can be explained with the difference between gestation period of return in farming and non-farming. The gestation period of return and risk involved is higher in farm livelihood which is why the loan repayment rate is low compared to non-farming.

REFERENCE:

1. Anand, Jaya S (2002), Self Help Groups in Empowering Women: Case Study of selected SHGs and NHGs, Discussion Paper No. 38, 2002, Kerala Research Programme on Local Level Development, Centre for Development Studies, Thiruvananthapuram,

2. Athena, C (2009), A Study on the Levels of Living of Self-Help Groups in Coimbatore District, Tamil Nadu, Language in India, Vol 9, 1 February,

3. Basu, Priya and Pradeep Srivastava (2005) “Exploring possibilities: Micro finance and rural credit access for the poor in India” Economic and Political Weekly. April 23, pp. 1747-1756.

4. Bensal, Hema (2005) “SHG bank linkage program in India” Journal of micro finance Vo.5 No.1, pp 1-40

5. Das Sanjay Kanti (2012), Microfinance and Women Empowerment: Does Self Help Group Empowers Women, International Journal of Management and Business Studies, Vol 2, Issue2

6. Dasgupta Raja Ram.(2005) “Micro finance in India: Empirical Evidence, Alternative Models and Policy Imperatives” Economic and Political Weekly March 19, pp. 1229-1237.

7. Fisher, Thomas and Sriram, M. S. (2002) Beyond Micro-Credit: Putting Development Back into Micro-Finance. New Delhi: Vistar.

8. Ghosh, M (2012) “Micro-Finance And Rural Poverty In India SHG–Bank Linkage Programme.” Journal of Rural Development, Vol. 31, No. 3, July - September: 2012

9. Guha, Sampati (2010), Microfinance for Micro Enterprises: An Impact Evaluation of Self-Help Groups, Department of Economic Analysis and Research, NABARD, Occasional Paper 55, Mumbai, www.nabard.org.

10. Kaber, Naila.(2005) “Is micro finance a magic bullet for women‟s empowerment: Analysis of findings from South Asia” Economic and Political Weekly Oct 29, pp 4709-4718

11. Parida, P. C. and A. Sinha (2010), „Performance and Sustainability of Self-Help Groups in India: A Gender Perspective‟, Asian Development Review, 27(1): 80-103.

12. Srinivasan,N(2011)“State of the Sector Microfinance India 2011. New Delhi: SAGE Publications

13. Todd, Helen (1996). Women at the Center: Grameen Bank Borrowers After One Decade. Dhaka: University Press Ltd.

14. World Bank (2003). “Microfinance in India: Issues, Challenges and Policy Options”. Washington DC: World Bank.

15. Yunus, Muhammad (2002). Grameen Bank II: Designed to Open New Possibilities. Dhaka: Grameen Bank.

16. Directorate of Economics and Statistics Planning (Statistics) Department, Government of Tripura: https://ecostat.tripura.gov.in

17. National Bank for Agriculture and Rural Development (NABARD): https://www.nabard.org

18. TRLM: https://trlm.tripura.gov.in

Received on 18.12.2021 Modified on 21.02.2022

Int. J. Ad. Social Sciences. 2022; 10(1):7-11.