Self-help Groups and Entrepreneurship: An Insight from Literature

Abstract

The use of collective advantages and group-based problem-solving is not new; it has been practiced since time immemorial, sometimes consciously and deliberately, while at other times unconsciously. The well-known proverb “Unity is strength,” which we have heard since childhood, aptly emphasizes the benefits of working in groups. Similarly, the proverb “United we stand, divided we fall” highlights the importance of collaboration in overcoming challenges. The concept and functioning of Self-Help Groups (SHGs) are based on the idea that people can come together to find solutions to their social and economic issues. An SHG typically consists of 10-20 individuals from similar socio-economic backgrounds who unite to address common challenges. Since their inception, SHGs have played a crucial role in mobilizing funds, leading to economic and social upliftment, particularly in rural and semi-urban areas of our country. Entrepreneurship is a key driver of economic growth, requiring both funds and manpower. SHGs can serve as a vital source of these two critical resources. Members pool their savings to generate funds, earn interest from internal lending, and may receive grants or donations from various sources. Once a group accumulates sufficient savings, it can approach banks for loans, often receiving amounts ranging from one to four times its savings. These funds can be utilized for entrepreneurial ventures, leading to employment generation and contributing to GDP growth. While SHGs primarily address socio-economic issues, with focused efforts, they can effectively leverage their collective savings, competencies, and skills to engage in entrepreneurial activities. This would not only strengthen their financial sustainability but also enhance their contribution to economic development.