Sahulat Microfinance Society

Regd. No. : DELENG/2012/43962

SAHULATA Journal of Interest Free Microfinance

International Board of Advisors

M. Najatullah Siddiqi M. Umer ChapraIndia and USA Saudi ArabiaFormer Professor of Economics Research AdvisorKAAU, Jeddah, Saudi Arabia Islamic Development Bank, Jeddah

Zubair Hasan Mabid al JarhiMalaysia UAEProfessor of Economics Dubai Islamic Bank, UAEINCIEF, Kaula Lumpur, Malaysia

M. Obaidullah Rodney WilsonSaudi Arabia UKIslamic Development Bank, Jeddah Professor, Durham University, UK

Shashi Bhushan Waquar AnwarIndia IndiaNandi Foundation JIH, Delhi, Hyderabad, India India

Editor Najmul Hoda

Assistant Editor Mridu Kamal

Sahulat Microfinance Society Regd. Office: E-89, Darussalam Building, Flat No- 403, Near Hari Kothi, Alshifa Hospital Road, Abul Fazal Enclave Part-1, Jamia Nagar, Okhla, New Delhi-110025 (India)

` 150/-


5Contributors

Dr. Waquar Anwar

Dr. Rafiquz Zaman

Dr. Magda Ismail Abdel Mohsin

Datuk Syed Othman Alhabshi

Zainab Fida Ahsan

Shri Bhagat Nitin

Dr. Narwade Sunil

Mamata Patra

Dr Radhakrushna Panda

Harasankar Adhikari

Dr Seema P. Salgaonkar

Vol. 4 June 2016 No. 1

Guidelines for Authors

A Journal of Interest Free Microfinance is a research based refereed journal. To begin with, it is published twice a year – in January and June. It is brought out by the Sahulat Microfinance Society, New Delhi, India. Sahulat welcomes contributions from all interested scholars all over the world. The areas of special interest for the journal are: Economic Development of Minorities; Poor People and Economically Weaker Sections of the Society; Financial Sector; Co-operative Effort and Co-operative Movement; Commercial Banking; Interest Free Finance; Microfinance and Interest Free Microfinance. The sole purpose of the journal is to encourage free and frank discussion on the issues of concern in these areas so as to develop them as scientific disciplines.

The manuscripts submitted for publication should be typed double spaced. The manuscripts may be submitted in duplicate or through email. If submitted by mail, soft copy may also be sent on a compact disc. No bibliographical reference should be inserted within the text. Instead, all references must be cited at the end of the text as end notes, which should be consecutively numbered. The style of citation in the end notes should be as follows:

Mehta, S. K., Mishra, H. G. and Singh, A. (2011). Role of Self-help Groups in Socio-Economic Change of vulnerable poor of Jammu Region. International Conference on Economics and Finance Research, IPEDR.4, 519-23.

Mummidi, T. (2009). Women and Income Generating Activities: Understanding Motivations by prioritizing Skill, Knowledge and Capabilities. RUME working paper series. Marseiiie, 1, 6-29.

When reference to the same work follows without interruption ibid followed by the page number may be used; when interrupted by other notes, author’s last name, short form of the title, and Op. Cit. followed by page number may be used. Tables, maps and diagrams may be placed appropriately within the text or numbered consecutively and placed in an appendix at the end of the article after the end notes.

The Editor reserves the right to make editorial revisions.

All correspondence relating to editorial matters may be addressed to [email protected]

Submission of an article for publication in this journal implies that it has neither been submitted elsewhere nor published. It is the policy of the Sahulat Journal not to republish the articles that have been published before. The books for review may be forwarded to the editor in duplicate. However, the books shall be reviewed in the order in which they have been received.

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ISSN 2319-2941


A Bi-annual Publication of Sahulat Microfinance Society devoted to scientific investigation of issues involved in the

development of poor people in India and abroad.

Editor Najmul Hoda


Sahulat Microfinance Society Regd. Office: E-89, Darussalam Building, Flat No- 403,

Near Hari Kothi, Alshifa Hospital Road, Abul Fazal Enclave Part-1, Jamia Nagar, Okhla,

New Delhi-110025 (India)

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Sahulat: A Journal of Interest Free Microfinance is to provide a forum for academic dialogue in a spirit of free enquiry without indulging in personal insults and affronts. Accuracy of facts, responsibility of their interpretations, conclusions drawn and all other opinions expressed in the papers are the exclusive domain of authors. They do not necessarily reflect the view of the Journal, or its editor or the Sahulat Microfinance Society. All materials published in this Journal are accepted and published in good faith for academic dialogue and promotion of knowledge only. The Journal with its editor and other functionaries and Sahulat Microfinance Society bear no responsibility, whatsoever, in this connection.

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In the name of ALLAHThe Most BeneficentThe Most Merciful

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Printer and Publisher:Arshad Ajmal, on behalf of Sahulat Microfinance SocietyPrinted by : Drishti Printers, 9810529858, 9810277025 Printed at : Star Print o Bind, F-31, Okhla Industrial Area, Phase-1, New DelhiPublished from: E-89, Darussalam Building, Flat No- 403, Near Hari Kothi, Alshifa Hospital Road, Abul Fazal Enclave Part-1, Jamia Nagar, Okhla, New Delhi-110025 (India)

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CONteNtSARtiCleSAlternative Interest Free Economic System: Dr. Waquar Anwar 11Goals, Challenges and Road Map

Co-operatives and the Need for their Dr. Rafiquz Zaman 23Growth in India

Hybrid Model of Zakah, Waqf, Dr. Magda Ismail A. Mohsin, 27Qard-Hassan & Islamic Finance for a Prof. Syed Othman AlhabshiJust and Sustainable Microfinance

The Role of Zakah and Awqaf in Zainab Fida Ahsan 47Community Development: Rules, Applications and Suggested Framework

CASe StUDYA Study of Socio-Economic Impact Shri Bhagat Nitin and 63of SHGs on Women from Dr. Narwade SunilMarginalised Social Groups

Industrialisation and Socio-Economic Mamata Patra 79Status Tribals: A Study of Kalinganagarin Odisha

Return on Investment of the Self Help Group Dr. Radhakrushna Panda 107Enabled Micro Enterprises in Odisha

Urban Affiliation and Wellbeing: Study Harasankar Adhikari 119of Female Domestic Workers of Kolkata

Women Entrepreneurship and Micro Dr. Seema P. Salgaonkar 133Finance: A Case study of Goa

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CONtRiBUtORS tO tHe CURReNt iSSUe

Dr. Waquar AnwarFinancial Advisor, Jamaat-e-Islami Hind, Dawat Nagar, Abul Fazal Enclave - 1, Jamia Nagar, New Delhi, IndiaEmail: [email protected]

Dr. Rafiquz ZamanIAS (Rtd.) Vice Chancellor,Assam Rajiv Gandhi University of Co-operative Management, Sivasagar, Assam, India Email: [email protected]

Dr. Magda ismail Abdel Mohsin Associate Professor, International Centre for Education in Islamic Finance (INCEIF), The Global University of Islamic Finance, Kuala Lumpur, Malaysia Email: [email protected]

Prof. Datuk Dr. Syed Othman Alhabshi Chief Academic Officer, International Centre for Education in Islamic Finance (INCEIF), The Global University of Islamic Finance, Kuala Lumpur, MalaysiaEmail: [email protected]

Zainab Fida Ahsan Graduate student,International Centre for Education in Islamic Finance (INCEIF), The Global University of Islamic Finance, Kuala Lumpur, MalaysiaEmail: [email protected]

Shri Bhagat Nitin Research Scholar, Department of Economics, Hyderabad Central University, Hyderabad, Telangana, India

Dr. Narwade SunilProfessor, Department of Economics, Dr. Babasaheb Ambedkar Marathwada University, Aurangabad, Maharashtra, IndiaEmail: [email protected]

Mamata PatraAssistant Professor, Political Science, Bhuban Women’s Degree College, Bhuban, Dhenkanal, Odisha, IndiaEmail: [email protected]

Dr Radhakrushna PandaSenior Research and Documentation Expert, National Institute of Development Innovation (NIDI),Plot No-693, Near Kalinga Stadium, Nayapali, Bhubaneswar, IndiaEmail: [email protected]

Harasankar AdhikariSocial WorkerMonihar Housing Co-operative Society, Flat No-7/2, 1050/2, Survey Park, Calcutta, India Email : [email protected]

Dr Seema P. SalgaonkarAssociate Professor, Political Science, Government College of Arts,Science & Commerce, Khandola – Marcela, Goa, IndiaEmail: [email protected]

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editorial

It is indeed a great pleasure in presenting the fifth issue of this special journal that covers the various dimensions of the interest-free cooperative microfinance model. Continuing with our past issues, we carefully selected articles that were original, unique and relevant to the basic objective of the journal.The entries have substantially increased in a small period of years given the fact that the overall research in this area is still limited. In addition to this, we are also overwhelmed by some real empirical evidence-based articles.

The journal is still trying to find a full-time editor in absence of which the processing of articles suffer. This was the reason we could not publish the December issue. We hope to end our search soon and find a qualified editor who can deftly handle the responsibilities.

This volume consists of nine articles selected from more than a score of submissions received. The articles cover diverse issues in the microfinance sector in India. The common thread among all the articles is that the researchers focus on identifying a possible solution or highlight the best practice in the field.

The first article has highlighted the four goals of alternative system as need fulfillment, respectable source of earning, equitable distribution of income and wealth and growth and stability and also identified the challenge faced from within and outside. The author has eloquently suggested road map for the future actions.

The second article explores the historical development of cooperative sector in India. It lists the success stories and also highlights the challenges faced by this sector. It highlights the current legal infrastructure available for the growth of cooperative sector in India.

The third article proposes a hybrid model as a tool to eradicate poverty and maintain financial stability. The author basically advocates categorization of the society on the basis of needs. The allocation of zakah/charity or interest free loan may be decided on this categorization.

The fourth article discusses the role of Zakah and Waqf in community development. It argues that the instruments of Zakah and Waqf can effectively provide a paradigm in the achievement of equitable distribution of wealth and its healthy circulation. To substantiate this claim, the author discusses a Singapore waqf modal and also suggests some reforms in Islamic asset management.

The fifth article explores the role of SHGs in socio-economic development of women from marginalized communities. The empirical evidence from Washim

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of Vidharbha region famously known for highest number of farmer suicides in Maharashtra suggest that women from marginalized groups were comparatively less benefiting from the SHG movement and hence the author suggests that women bank should be established in each block and regular inspection of SHGs should be undertaken by Gram Sabhas along with provision of housing loans.

The sixth article investigates the impact of Industrializationon socio economic condition of tribals of Kalinganagar district in Orissa. It also traces the vulnerability faced by the community due to displacement and other exploitations. This study also highlights the responses of local people towards developmental projects and socio-economic and environmental impact of industrialization.

The seventh article examines the return on investment generated by the SHGs engaged in pursuing different economic activities either on individual basis or as a group with the assistance of bank loans and investment made in their micro enterprises. The authors analyse the primary data obtained from 200 SHG led micro enterprises operating in Ganjam and Gajapati districts in Odisha to understand the return on investment of SHG led business activities.

The eightharticle studies the impact of urban affiliation and wellbeing on female domestic workers of Kolkata. The study suggests that there are evidences that domestic workers life has quite improved however lack of employment certainty and social security makes them quite vulnerable to loss of job in case of ill health and other inevitable conditions. The author suggests some retirement scheme and secular education should be provided so that their safety and security is insured at elderly days.

The ninth article examines stimulus provided by micro financing in growth of women entrepreneurship skills. The data is obtained from in-depth personal interviews with members of women self-help group.While noting the challenges faced by women self-help groups in their entrepreneurial activities the study suggests that micro financing helps these women improve their entrepreneurial skills making them more independent and confident.

We welcome your feedback and also your contributions in the form of research articles, best practices, white papers, book-reviews or technical notes. You may send your queries for submission or request for a copy of the journal to [email protected]

Najmul HodaEditor

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ARtiCleS

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Alternative interest Free economic System: Goals, Challenges and Road Map

Dr. Waquar Anwar1

This paper is based on the assumption that Interest Free Economic System is a desired alternative. This assumption is the natural corollary of the assumption that states that the conventional economic system based on interest is very harmful and there is a need for an alternative system. Any detailed discussion on this assumption-within-assumption is beyond the scope of this write-up. But a rich literature is available on the desirability of interest free economic system as well as the undesirability of the conventional system. However, some reflections of these issues will by default crop up in this article.

Our task at hand is one step ahead. It requires unfolding the goals of such an alternative system and delineating the steps required for realising those goals. A goal cannot be realised without facing the challenges and obviating its consequences that may crop up in the process. Further, a clear idea about the road map and a blueprint will also be required. So the intent is to develop a model that can do both - describe the disease and prescribe the medicine. A description of Islamic economics, as such, is also not intended in these lines. However, its contours can be felt between the lines!

Our methodology of discussion will be to first visit the writing of renowned Islamic economists and find what goals they have proposed and then proceed further. I shall, for this purpose, be referring to the writings of Dr. M. Umer Chapra and Dr. Mohammad Nejatullah Siddiqi.

1. Goals of an islamic economic System

Dr. M. Umer Chapra, in his book “Islam and Economic Challenges,” has discussed the goals of an Islamic Economic System from different aspects. First, he talks about what an economic system should ensure? What it should do and what

1 Financial Advisor, Jamaat-e-Islami Hind, New Delhi

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not? Then he proceeds to describe the conventional interest based system and the Islamic interest free system, concluding with the failure of the former and the success of the latter.

Dr. Chapra says that an economic system should ensure:2

1. Need Fulfilment;

2. Respectable Source of Earning;

3. Equitable Distribution of Income and Wealth; and

4. Growth and Stability. [Chapra, 1992, p. 210]

While describing money and banking system he says that:

A. The system should not:

- Promote Inequalities

- Lead to Conspicuous Consumption

- Bring Unemployment

- Result in Unhealthy Monetary Expansion to the detriment of all [Chapra, 1992, p. 201]

B. Instead the system should:

- Support Need Satisfaction

- Lead to High Rate of Employment

- Result in broad-based Ownership of Means of Production [Chapra, 1992] [Ibid, p. 201]

Dr. Chapra after describing Maqasid Al-Shari’ah (Higher Objects of Islamic Law) links the goals of economy to fulfilment of the objects and opines that only that market may be considered optimum which is in harmony with, or not at least in conflict with, the Maqasid. Chapra says, “The Islamic worldview and strategy are blended together into a consistent whole and there is complete harmony between them.” [Ibid, p. 201-202] In his opinion an economy attains total efficiency when it achieves three goals: 1.Efficient employment of total potential of scarce human and material resources; 2. Stability; and 3. Sustainable rate of future growth.

2 Chapra, Islam and the Economic Challenge (1992), The Islamic Foundation and The International Institute of Islamic Thought, p. 210

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He further warns that equitable distribution of income and wealth should not affect the following four factors:

- Motivation to Work

- Saving

- Investment

- Undertaking Enterprise [Chapra, 1992, p. 3] [Ibid, p. 3]

One may refer to the thoughts and works of Dr. Mohammad Nejatullah Siddiqi in his book as well as his website3. He talks about two positive traits of the economy [justice (adl) and equity (ihsan)], stressing the need of obviating two negative traits [oppression (zulm) and corruption (fasad)].

“The desired state of the world is free of oppression (zulm) and corruption (fasad) and full of justice (‘adl)…. Its hallmark is justice and equity and elimination of oppression and corruption while ensuring need fulfilment and sustainability.”4]

Dr. Siddiqi has also defined, and distinguished between justice and equity.

“Justice is largely perceived in terms of equivalence (in exchange transactions) and reciprocity (in social relationship). But equity (ihsan) is urged on top of justice and is defined as giving more than is due according to the standards of equivalence and reciprocity to ensure with dignity for all…. There are persons in society who are weak, invalid, poor, etc. so they have little to give. But they must receive in order to survive. Hence exchange and reciprocity is no good for them…. That is what equity envisages.”5

In other words, justice is treating equally and with fairness while equity is bringing some benefit or preventing some disutility (mafasid). It means rendering to others even more than their due. It is benevolence along with justice.

Dr. Siddiqi has prescribed remedies and suggested goals for achieving the same. He has specially talked about, inter alia, discouraging interest and gambling and promoting production based economy.

3 www.siddiqi.com/mns4 [Islamic Economics between Aspirations And Realities, http://www.siddiqi.com/mns/ISLAMIC_ECONOMICS_BETWEEN_ASPIRATIONS_AND_REALITIES_.htm]5 [Siddiqi, Riba, Bank Interest and the Rationale of its Prohibition, Markazi Maktaba uislami Publishers (Delhi), 2004, p. 24]

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“Reducing the role of debt and eliminating gambling from financial markets should, therefore, be on top of the agenda for Islamic economics.”6

“Islamic Economics looks at production as a life sustaining activity. It aspires to promote a type of economy that sustains life for all, the weak and the poor included. It does not equate life sustaining productive activity with profit making activity. It is also aware of the limits to growth that ecological and environmental considerations impose on us.”7

“The key to Islamic economics lies in positioning the Islamic vision in place of the Anglo Saxon economic vision. But the Islamic economic vision has to be universal and contemporary not chauvinistic and medieval. As we move in that direction we may be pleased to discover we have good company from amongst modern economists in the West and East. The search for a more humane political economy is now universal. The challenge is, who leads the way.”8

It is true that ‘the search for a more humane political economy is now universal.’ It is also true that a majority of goals described above are also universally accepted. However, Islamic approach has certain characteristics which we are repeating hereunder for the purpose of highlighting so that our discussions ahead may become more meaningful.

1. Reducing the role of debt and eliminating gambling

2. Production based economy

3. Savings based economy resulting in investment wherefrom

Another very important goal of an interest free economic system is that wealth created should permeate all ranks and files of the economy and it should remain in circulation. One may refer to the verse of the Qur’ān that tells us the basic reason of this goal.

“And what Allah restored to His Messenger from the people of the towns - it is for Allah and for the Messenger and for [his] near relatives and orphans and the [stranded] traveller - so that it will not be a perpetual distribution

6 [Future of Islamic Economics, http://www.siddiqi.com/mns/future_of_islamic_economics.html]7 [Risk Management in an Islamic Framework, http://www.siddiqi.com/mns/RiskManagementInAnIslamicFramework.htm]8 [International Workshop on Islamic Political Economy in Capitalist Globalization: An Agenda for Change, http://www.siddiqi.com/mns/nature.html]

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among the rich from among you. And whatever the Messenger has given you - take; and what he has forbidden you - refrain from. And fear Allah; indeed, Allah is severe in penalty.” [Al-Qur’ān 59:7]

This verse has a particular historical reference to an event in Madinah. But the message of keeping wealth in circulation so that it may not remain in the hands of the rich alone is universal.

One can imagine a production based economy with least dependence on debt and high reliance on savings based investments wherein wealth created is not allowed to circulate only between upper strata of the society. Obviously the fruits of such an economic development will seep into all the fibres of the economy in all pervading fashion.

2. Challenges

A changeover to, even a move towards, interest free economy from conventional interest based economy will throw three types of challenges: (i) Natural challenges; (ii) Resistance from Stakeholders of the existing system; and (iii) Self Inflicted Problems.

Any system in vogue, whatever level of ills it may contain, cannot be thoroughly contaminated. It must be serving some purpose otherwise it would have been thrown into the dustbin. A completely bad thing cannot see the day of light even for some hours of a day. The whole idea of revolutionary changes makes no sense. Changes have to be evolutionary in nature. This step by step approach demands that questions arising at every stage are addressed logically and seriously.

Interest free economic system demands that all premiums on debts without any counterpart be prohibited. Conventional economy has been running on interest for the last more than two centuries and almost all economic transactions are contaminated by it. Answer to the following issues will be required for replacing the existing system by the desired system. These are genuine, rather natural, challenges.

● Developments in conventional economics which are agreeable to Islamic economics

● Developments in conventional economics which are not agreeable to Islamic economics

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● The ills of debt based economy including deficit financing.

● The possibilities of deploying capital in joint ventures on equity financing basis.

● The need and products of Islamic finance based on equity financing in production based economies as against those in rentier economies.

● The limits and conditions of current expenditure based on future income for individuals, families, corporate houses and nations.

● The pros and cons of the existing monetary system and the method and impact of creating money and bringing it to circulation, suggesting remedies based on the principles of equity and justice.

In addition to the above issues that require some research work based on empirical studies, there is another issue that interest free economic system, for all practical purposes, is another name for an Islamic economic system. There are persons who are averse to this idea. An interesting development is that most of such persons, groups and nations have agreed to the idea of Islamic finance because they get easy and low cost money in this name but when it comes to anything more Islamic than that, they get scared. It is a challenge for the proponents of Islamic economics to convince the world at large that this alternative is universal and it serves all.

2.1 Resistance from Stakeholders of the existing System

The conventional interest based economic system is serving the powerful persons, families and nations who are in minority but they sway the world of economics and finance. It serves them, and serves well. The vast and badly hit majority that is at the receiving end of the ill impacts of the system is either voiceless or unable to rise to the occasion. Such stakeholders may include rich people, big bankers, resourceful corporations and powerful governments. Their resistance is inevitable but this does not mean that the task ahead is insurmountable. Theirs is not a homogeneous entity as such and they are also members of the same society and are serving it from their specific sides. With conscious efforts, serious research and unambiguous practices of the alternative system, the tide can be changed and made favourable.

2.2 Self inflicted Problems

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Self inflicted wounds are more painful than others. It is an irony that interest free economics has been hit hard, rather below the belt, by its sister Islamic Banking and Finance Industry. The latter was supposed to be an offshoot of the former but with the passage of time it has assumed the role of game-changer, if not game-spoiler.

A very basic object of interest free economics is to reduce the role of debt in finance. Initially this object was kept in mind but with passage of time things have taken turn differently, if not u-turn. I shall be quoting Dr. Siddiqi in support of this charge sheet on this assault from the most unexpected corner.

“The thing to worry about is not the phenomenon of Islamic Banking and Finance emerging as the chief embodiment of the idea of Islamic economics but the particular form Islamic finance has assumed: Debt-financing.”9

The reason behind this strange phenomenon is that the Islamic Finance industry started making copies of existing finance products, with its own brand, of course. Following long quote is self-speaking:

“The few Islamic banks that had come up by the end of the seventies of the last century did not depend on brand name ‘Shariah Advisories’ for getting business. All that came during the eighties when, feeling the wind had started blowing the familiar way, giants of the conventional financial industry like City, HSBC, ANB AMRO…entered the field of Islamic finance…. Each and every contract currently used by Islamic financial institutions is certified by a Shariah scholar, often a team of scholars. Barring a few exotic speculative products like Debt Default Swaps, every product currently available in the conventional financial markets is also available or can be readily made available in the Islamic financial market.”

“The contributions to the subject prior to induction of murabaha in late seventies of the last century all revolved around the principle of sharing. Even after admitting a number of other debt creating modes such as ijarah and salam/istisna into the Islamic financial arrangements it was emphasized they had to have only a limited scope. The addition of ‘trade based modes of finance’ had the backing mostly of Shariah scholars, not of trained economists.”10

9 [A Vision for the Future of Islamic Economics, http://www.siddiqi.com/mns/AVisionForTheFutureOfIslamicEconomics.htm]10 [Islamic Economics between Aspirations and Realities http://www.siddiqi.com/mns/ISLAMIC_ECONOMICS_BETWEEN_ASPIRATIONS_AND_REALITIES_.htm]

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The solution could have come from trained economists or in association with the Shariah scholars. But alas!

“…whatever economic talent was forthcoming during the last thirty years was absorbed, largely, into the Islamic finance industry which had little time for theoretical niceties.”11

Dr. Siddiqi has placed himself in the category of those “who complain that Islamic economics proper has been submerged under the stormy waters of Islamic finance endangering its distinct identity….”

This is a painful story and, instead of prolonging it, I would close it with the description of the need for course correction in the Islamic bond industry, i.e. sukuk.

“What makes some of the sukuk debt instruments is inclusion of murabaha receivables into the package of assets against which sukuk are issued and the commitment to redeem them at their face value at some future date, regular periodical returns being paid in between. There is no difference, in effect, between this and a sum of money lent for an interval being serviced by periodical payment covering the interval.”12

3. Road Map

A description of challenges, particularly the last part above appears to be dampening. But no, the situation is not that bad. Conventional economics has inflicted far reaching injuries and there appears to be no way out as if the economics today has reached a dead end. A search for an alternative economics is on. There is no reason why this interest free alternative will not be considered if it is found to be the panacea. The task in hand is to present it with a clear road map and put it into practice wherever possible. A debate done in proper fashion is surely bound to be noticed.

11 [Future of Islamic Economics, http://www.siddiqi.com/mns/future_of_islamic_economics.html]12 [A Note on Sukuk and their Role in Islamic Finance, http://www.siddiqi.com/mns/NoteOnSukuk.htm]

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Dr. Nejatullah Siddiqi has prescribed a road map of five strategic changes required for the purpose as under:

1. Family, rather than market as the starting point in economic analysis

2. Cooperation playing a greater role in the economy, complementing competition

3. Debt playing a subsidiary rather than the dominant role in financial markets

4. Interest and interest-bearing instruments playing no role in money creation and monetary management

5. Maqasid based thinking supplanting analogical reasoning in Islamic economic jurisprudence13

In the current economic thinking an individual as an economic agent faces the market where he has to face competition on an impersonal basis. The idea of making family as the primary economic agent has an altogether different connotation. Family is a place where love, care and compassion take place. It is not impersonal as the market. Thus, this could be the beginning of co-operation instead of competition in the economy.

The role of debt can be reduced but it cannot be ended altogether. With abolition of interest the trading of debt documents will vanish in the thin air. It is possible only when equity financing is encouraged in a big way. Equity financing would mean an atmosphere of risk sharing.

Risk management is an important aspect of the road map of interest free economic system. This would begin with abolishing the system whereby the financier is able to play a win-win game, immunizing himself from any monetary risk by shifting it to the producer. Further all scope of buying and selling risk is required to be blocked. The culture of risk sharing and equity financing cannot be ushered in without treading this path.

Gambling, which is a zero sum game, needs to be disallowed. There is no scope of any type of gaming in interest free economic system. Buying risk too is a form of gambling which cannot find a place in this alternative to the conventional system.

13 [A Vision for the Future of Islamic Economics http://www.siddiqi.com/mns/AVisionForTheFutureOfIslamicEconomics.htm]

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The case of derailment of Islamic banking can be resolved and brought back to the desired main track. For example, Dr. Siddiqi has suggested ways and means of ending the malaise of excessive debt creation in the present day trade based finance practiced by Islamic banks. He says “The deposit money received by Islamic banks on the basis of mudaraba should be advanced on the same basis (of profit-sharing) to investors who would then finance productive enterprises directly or on the basis of murabaha, ijara, salam/istisna, etc.”14 This suggestion implies the separation of commercial banking and investment banking in a special way. Investment making institutions would not be allowed to accept deposits from the public. They either seek funding on mudaraba basis through banks or sell shares collecting funds on the basis of shirkah. Deposit taking banks, on the other hand, will manage the payments mechanism only.” This is an attempt of course correction by separating purely financial transactions from business transactions.

The tendency of Islamic banks to provide alternative financing products akin to the existing conventional products needs to be checked. This leads to the demand on the Shariah experts to adjust the features of the existing products by permutation and combination so that some analogy with a past Shariah decree of any school of jurisprudence may be found. There is a need to supplement this qias (analogy) based method of jurisprudence with Maqasid approach. Objects of Islamic law are defined. Hence any law making exercise should pass through this litmus test.

The idea of parallel window for Islamic financing products under conventional banking umbrella is obnoxious. This is a defeatist tendency whereby an alternative system is made a subordinate of the system it was supposed to replace. It is a case of losing the battle in the beginning itself.

Some aspects of the road map may be country specific. In respect of India, the following submissions are made in view of its characteristic features of being a democratic country with fast developing production based economy and large number of Muslims in minority:

A major portion of the features of interest free economy can be practiced. Enterprising persons have good scope of business opportunities. Arrangement for equity based finances on the mode of venture capital or angel finance can

14 [Risk Management in an Islamic Frameworkhttp://www.siddiqi.com/mns/RiskManagementInAnIslamicFramework.htm]

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be made within the existing laws of the land. Only problem faced will be in collection of public deposits because Reserve Bank of India will not permit that, in the existing rules and laws. India is a democratic country where efforts for opening avenues for public deposits under interest free mode can be done and we understand that it is being done in a manner that is suitable in democracies.

● There is scope of risk sharing mode of finance under the umbrella of state level and multi state level cooperative laws. Efforts are being made to keep the scope open and widen its base.

● Many regional communities are running activities for providing interest free capital on charitable basis, i.e. qarz hasan mode. Their efforts may be praised but the need of the hour is activities within the scope of the existing laws so that they can be replicated at other places. One cannot build any movement on the basis of such private exercises.

● There is a serious effort spearheaded by well-meaning persons for liaison work in favour of Islamic banking in India. A separate effort in favour of interest free economy is required primarily because the scope of economy is much wider than that of banking or finance. Further, the practices in the name of Islamic banking need course correction that can only be done from a more serious academic effort. So Islamic banking too requires the check and balance of interest free economics so that it may not become a misnomer.

A movement in favour of the alternative interest free economic system is required. We will not be alone in this. Dr. Siddiqi says

“The current endeavours of other faith-based communities, also of non-religious but well intentioned people, to escape from tyranny of ideologies by making economics serve humane objectives, deserve our involvement at the local as well as the global level.” [Ibid]

“As we move in that direction we may be pleased to discover we have good company from amongst modern economists in the West and East. The search for a more humane political economy is now universal. The challenge is who leads the way.”15

One can locate some serious groups and individuals, both activists and academicians who are working in the fields of alternative and development

15 [International Workshop on Islamic Political Economy in capitalist globalization:an agenda for change, http://www.siddiqi.com/mns/nature.htm]

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economics for eradication of poverty and economic development. Some of them may have to be convinced about the vices of interest based economy and satisfied about the worth including feasibility of an interest free economy. However, their work, particularly in collecting empirical data and developing theoretical base for providing a respectable life to the common man is very much common with the Maqasid based interest free economics. To name a few, for example, we may collect information about the Alternative Economic Survey Group of Delhi or noble prize winners like Amartya Sen and Angus Deaton, and their associate Jean Dreze. Amartya Sen did work on human rights, inequality and poverty and studied causes of famine, providing solution to these problems. Angus Deaton’s analysis and consequent measurement of consumption, poverty and welfare and his focus on household surveys and individual data enabled him to get the coveted award and international recognition. Jean Dreze has the distinction of being co-authors of several books of the two economists. This Belgium-born Indian economist has done remarkable work in the fields of hunger, child health and education. Their importance lies in empirical analysis, an area where academics related to interest free economics have much to learn. We may not only sympathise with these developmental economists but also associate with them and become wiser in the process.

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Co-operatives and the Need for their Growth in india

Dr. Rafiquz Zaman1

Father of the Nation, Mahatma Gandhi laid emphasis on development of Co-operatives. According to him, “Co-operation is the gateway to economic freedom”. The first Prime Minister of India, late Pandit Jawaharlal Nehru once said, “Ensure me a good Panchayat, a good School and a good Co-operative Society, I will ensure you the Ramrajya.”

The establishment of network of Registrar Cooperative Societies (RCS) started in different States of India, soon after Independence. For instance, in most states including Assam, RCS at State Capital, District RCS at District Headquarter and Assistant RCS at Sub-division Headquarter have been established. A good number of Junior & Senior Inspectors, Sub-Registrars are available to look into activities related to Co-operatives. The structured layers of Co-operation department are meant for the service of the people.

In fact, in Assam, the first Co-operative was formed in 1904 at Jorhat. Today, the number of Co-operative Societies in Assam is 7906 with a membership of 4.6 lakhs. It includes Apex, District and Primary level co-operative societies (Source: Statistical Hand Book, Assam, 2012). This development in over 110 years does not augur well. Clearly, it indicates snail’s pace in co-operative movement in Assam. The scenario in most of the states in India is similar to that of Assam, if not better.

Amul started its journey way back in 1948. In over 60 years, it has become a giant in its growth. Two leaders, Verghese Kurien and Tribubhavan Das Patel are primarily responsible in leading Amul to its present status. Kurien provided all sorts of technical expertise whereas T. D. Patel organized the farmers at the village level to rear buffaloes to produce milk. Farmers formed strong co-operatives which were the roots of Amul. Any apex level organization with strong roots is not susceptible to any kind of adversaries. This is our learning from the success story of Amul.

One of the concerns by many people of the country is that this successful model has not been replicated so far. It is, of course, partly true. But there are dairy co-

1 Indian Administrative Services (Rtd.). Vice Chancellor, Assam Rajiv Gandhi University of Co-operative Management, Sivasagar, Assam, India

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operatives in Karnataka, Madhya Pradesh and elsewhere functioning successfully with strong roots at village level. These societies are not publicized much.

Successful co-operatives in sectors, other than dairy, are also present in different parts of the country. In Bhopal, in addition to a dairy co-operative viz. ‘Sanchi’, ‘Vindhya Herbals’ is a successful Madhya Pradesh State Minor Forest Produce (Trading & Development) Co-operative Federation Ltd. This Apex level federation has 60 district unions and 1066 primary co-operative societies catering to about 1.6 million families of forest produce gatherers. In Karnataka there is ‘Yeshashvini Co-operative Farmers Health Care Scheme’ for all the members of the co-operative. Through this the member’s family can avail ‘Cashless surgeries’ on payment of nominal annual premium. This scheme is implemented by the department of Co-operation only. Total number of surgeries and members benefitted (till 3.10.2013) are as follows:

No. of surgeries Members (in lakh)

2003-04 9, 047 16.01

2013-14 31, 277 24.68

It is possible to identify many more sporadic examples of successful schemes of Co-operatives in the country.

The concern of Central and State Governments in India for adequate development of Co-operatives is apparent. After 2004, co-operation got special attention. Central Government set up a Committee for this purpose. In fact, 97th Amendment of the constitution is specifically for giving new shape to the cooperative movement. It declared the formation of co-operative as a fundamental right of citizens and ensured full autonomy to co-operatives without depending on Govt. funding.

Government of India has identified ‘Development of Co-operatives in India’ as a priority area. This concern is also reflected in United Nations Organisation. UNO had declared 2012 as the International Year of Co-operatives. Along with other nations of the world, India also celebrated it throughout the year. It is realized that co-operatives are less vulnerable in adversaries even in days of economic breakdown, because of improved system of information exchange and bonding. In fact, solutions for many problems of agriculture like mechanization, lies in co-operation. Forest can expect better management of collection of Minor Forest Produce through co-operatives. Vindhya Herbals is an excellent example in this regard. Dairies can be successful only through co-operatives.

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It appears that ‘Co-operatives’ is now at the crossroad. There is a huge opportunity before us. In the days of globalization and liberalization, co-operatives can be a savior for disadvantaged and marginalized families. Otherwise, income divide may push them farther away from the benefits of growth.

There are clearly three functions in the department of co-operation. The first one is Regulation which is to be performed by RCS and its subordinate officials. Another function is Facilitation of formation of the Co-operatives through promotion. The third and the most important one is Education, found to be the weakest link among the three. Unless we educate farmers properly and also create professional managers in Co-operative management, the pace of co-operatives may remain tardy.

Assam Government through the establishment of ‘Assam Rajiv Gandhi University of Co-operative Management (ARGUCOM)’ by an Act in 2010 had taken a very bold step in this regard. Victor Hugo once said, ‘Nothing in this world is more powerful than an idea whose time has come’. This idea of setting up a ‘University of Co-operative Management’ is certainly novel and the university can become the fulcrum for growth of co-operatives through capacity building.

This specialized University is a teaching, residential, non-affiliated University. There is no provision for distance education. The University stands on four pillars viz. Education, Research, Training and Promotion, (ERTP). The University aims to fulfill the needs of youth, farmers, co-operators, officials (regulators) etc. in the co-operative sector. The University would endeavor to change the mindset of people to adhere to the principles of co-operatives in order to start enterprises for self sufficiency.

The University had already started its under graduate course in Co-operative Management to award degree namely BBA (Co-operation) on 1st July, 2013. The course is trimester based according to the suggestions from IIM-Ahmedabad, as the architect of academic framework of the University.

The syllabus for BBA (Co-op.) has been specially designed in consultation with different resource persons. The model for the syllabus is a dynamic one with a provision to incorporate or delete topics according to the requirement of the syllabus. One significant provision is the requirement of each student to spend one trimester to study the functioning of a co-operative enterprise in any part of India. The purpose is to enhance the capacity of the students to be successful entrepreneurs or professional managers primarily, in the co-operative sector.

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More programmes like MBA and Masters, are introduced in the University after due consultation with IIM-Ahmedabad.

University of Co-operative Management is a higher academic platform. It is possible to showcase the successful stories of co-operative in any part of the country through research or case studies as learning material for the students and farmers. National Fisheries Development Board (NFDB), Hyderabad has sponsored 11 trainings, to be conducted by the University. Through these programmes 315 fishermen have been trained. Under Rashtriya Krishi Vikas Yojana (RKVY) programme also 1563 farmers have been trained.

The need for proper education and training to the farmers is paramount before selling a scheme to them. Construction of rural godowns by the societies is now promoted both by Government and other agencies. But managing a godown by the society involves many aspects. Godown is not simply a room with four walls. Unless proper training is provided to the farmers in advance, the scheme is bound to fail. For this reason, atleast 5 to 7 percent of the fund within the scheme must be kept reserved for training of the farmers on these management aspects.

There are other aspects in the functioning of Co-operatives. Sharing of experiences by different groups of farmers can be of great help. Moreover, apparently a Co-operative Society may look good on its face. But the inner functioning may not be that healthy. There may be problems in management, administration, finances and even profit sharing. It may be necessary to conduct surveys or document case studies of such societies to find out solutions to such problems. These documents can become the backbone of learning in the University. Students and trainees will be highly benefitted from such exercises.

Finally, I would like to stress on various technical aspects in the functioning of co-operative societies. No federation can sustainable itself for long in the absence of strong roots both at the district as well as primary level. Government can only promote the formation of co-operatives but it is necessary for farmers to be educated and make informed choices to become self sustained. The less they depend on govt. funding, the better for their growth opportunities. Govt. support should be mainly on regulation (R), education (E) and of course, facilitation (F) aspect.

The greatest challenge lies in integrating R, E & F together with the co-operation of the farmers at different levels. I hope with the change in the legal framework in relation to the functioning of Co-operative Societies and the awakening at both Central & State Govt. levels, the day is not far to see lights in the Co-operative movement of the country.

Hybrid Model of Zakah, Waqf, Qard-Hassan & islamic Finance for a Just and Sustainable

Microfinance

Dr. Magda ismail A. Mohsin1, Prof. Syed Othman Alhabshi 2

Abstract

The failure of interest based programmes, such as micro-finance and anti-poverty programmes, in assisting the destitute, eradicating poverty and reducing income inequality encouraged the authors to study in depth the alternative financial institutions to interest/riba that can solve such problems rather than harming individuals, communities, societies and countries. This raises the question of whether the different Islamic financial institutions can provide microfinance with zero-interest to eradicate poverty and reduce inequalities.

This paper attempts to propose a hybrid model integrating four religious financial institutions to eradicate poverty within a very short period of time in a just manner and in a sustainable way for generations to come. We shall use both primary sources including text from the Quran and the Hadith, and data collected from secondary sources including books, articles and journals besides World Bank reports from the web sites.

The paper intends to create awareness of the meaningful approach of religion in terms of eradicating poverty, reducing inequalities and creating a fair and just society for all, rather than following man-made system which hurt all societies. Moreover, this paper also intends to open the door wider for more researchers and postgraduate students to explore their knowledge in depth on these religious institutions and to adjust them according to the current needs of different societies. We hope to revitalize four neglected Islamic financial institutions and

1 Associate Professor, International Centre for Education in Islamic Finance (INCEIF), The Global University of Islamic Finance/Kuala Lumpur, Malaysia. e-mail: [email protected] Chief Academic Officer, International Centre for Education in Islamic Finance (INCEIF), The Global University of Islamic Finance/Kuala Lumpur, Malaysia. e-mail: [email protected]

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integrate them into a hybrid model for a promising way to eradicate poverty in a just and ethical manner.

Acknowledgement

This is a paper extracted from a research conducted by the author and the co-author and funded by INCEIF for two years research 2013-2014. The title of the research is: “An Islamic approach to poverty eradication through zakah & waqf based micro-financing (case studies: Malaysia, Egypt & Sudan).

1. introduction

The last decades witnessed many anti-poverty programmes which had been implemented in many countries to eradicate poverty and to empower the poor and the needy through micro-lending. Although some of these anti-poverty programmes succeeded in reducing poverty to some extent, yet they fail to reduce inequality which is quite high in many regions around the world. According to the World Bank statistics of 2012 on Global Issues, more than 80% of the world’s population live in countries where income inequality is very wide. For example 20% of the world’s poorest population account for less than 2% of global income where 20% of the richest account for almost 77% of the world income (World Bank 2008). Besides, almost half of the world specifically over 3 billion live on less than $2.50 a day; 640 million live without adequate shelter; 925 million people suffer from hunger; 400 million have no access to safe water; 270 million have no access to health services; 10.6 million died before they reached the age of 5 and 1 billion are illiterate. Muslim countries are no exception, according to Statistical, Economic and Social Research and Training Centre for Islamic Countries (SESRIC) statistics 27.2% of the Organization of Islamic Cooperation (OIC) population i.e. 351.2 million people, live on less than $1.25aday. Moreover, the various microfinance programmes which are meant to assist the financially excluded people and which started with a very low interest rate between 4% -7%, has recently increased to 20% and in some cases to 50%.

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The main objective of this paper is to revive four religious institutions which are meant to eradicate poverty, reduce inequalities and narrow the gap between the rich and the poor in an ethical and just manner. These religious institutions are the zakah, waqf, qard-hassan and interest-free institutions which are well known in all holy books that had been sent to man throughout history. Since the Quran is the last holy book which has been sent by Allah, it upholds all these institutions and discusses them in details. These were immediately put in practice by His final messenger (pbuh), the companions and the successors in more than thirteen centuries in the Islamic world. However, within the last century all these institutions had been replaced with man-made systems which led to the negligence of the Islamic institutions in the Islamic world. Consequently an unacceptable scenario, as highlighted above, has prevailed globally. To change this current scenario, it is highly recommended to revive these institutions and to put them in practice again for the benefit of the mankind. This can be achieved by integrating these four institutions i.e. the institutions of zakah, waqf, qard-hassan, and Islamic finance into a hybrid model as an alternative to the current anti-poverty programmes that deal with interest/riba, which is prohibited in the religion. This paper is divided into four sections including the introduction. Section two gives an overview on poverty; section three explains the Islamic approach of poverty eradication, while section four proposes a hybrid model for Islamic Microfinance followed by the conclusion.

2. Overview on Poverty

Currently the role of waqf, zakah, qard-hassan which are meant to eradicate poverty, eliminate riba and create employment for the majority of people in the Islamic world, have been neglected for over a century. Consequently, this has forced almost all Muslim countries to follow the conventional system in eradicating its poverty through many anti-poverty programmes, including the international and the national microfinance programmes, which are based on interest/riba. But instead of eradicating the poverty in some countries it initiated persistent poverty for generations to come due to compound interest.

To overcome this, we believe that the Islamic approach to anti-poverty programmes is the best scheme for eradicating poverty in a just way if zakah, waqf and qard-hassan are integrated into a hybrid model for Islamic microfinance. Accomplishing this will not only eradicate the poverty of the poor and needy, but

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will shift them to be among the active and well-off members in their societies. The basis for this shifting is found in the Sunnah of the Prophet (pbuh) as narrated by Anas ibn Malik:

“An Ansari (native of Madinah) man approached the Prophet (pbuh) seeking for his generosity. The Prophet (pbuh) instead asked him to bring whatever he has from his home. The man returned with a rug and an old mug. The Prophet (pbuh) then asked his companions seated with him if any of them would buy them. One of the companions offered to pay one dirham. The Prophet (pbuh) then asked if anyone would offer two dirhams and one of them did. He then gave one dirham to the man to buy food for his day and asked him to buy an axe with the other dirham. When he came back with the axe, the Prophet (pbuh) personally fixed a wooden handle to the axe and asked him to get firewood to sell at the market. A few days later, the man met the Prophet (pbuh) and told him he has been getting some fourteen dirhams selling firewood within the last few days". Then Allah’s Messenger said, “This is better for you than begging, for begging would come as a stain on your face on the Day of Resurrection” Narrated by Abu Daud, (H/1398) and al-Termizee (18410).

In the above hadith, the Prophet (pbuh) taught the beggar to earn his livelihood through his own skills in order to make a livingandearn respect in society rather than begging. This is followed by another Hadith of the Prophet (pbuh) as narrated by ibn Hakim ibn Hizam: "The hand that gives is much better than the hand that receives." (Sahih Muslim).

Hence, Islam promotes a developmental approach which enables the poor to use their skills with whatever they have in hand in order to earn their living and be independent of society as long as they are healthy and fit to work. Nevertheless, for those who cannot afford to work due to lack of skills or because of age or health problem, Islam provides regular income from those who have to support those who have not. This income comes from Bait al-Mal/Public Treasury which draws its resources directly from zakah (Alhabshi, 1992). According to the teaching of Islam, zakah is a compulsory due which has to be taken from the rich to be given to the less fortunate on yearly basis. Zakah scheme is a remarkable national annual programme which is meant not only to eradicate poverty, but also to reduce the gap between the rich and the poor and at the same time to eliminate riba from Muslim societies. Beside zakah there is also another national scheme, the waqf scheme; which provides goods and services to societies and which also benefits the less fortunate at large. In addition to these, the Islamic loan, al-qard

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al-hassan and the Islamic way of finance have great impact on eliminating riba which is the main cause of poverty and all evil corruption in the world.

3. islamic institutions to eradicate Poverty

Islam defines poverty as a state whereby an individual fails to fulfill any of the five basic needs such as protection of religion, protection of physical self, seeking of knowledge and education as well as protection of the family and wealth (M. Kabir, 2010). Moreover, Islam classified poverty according to the differences among people and according to the levels of human abilities. Even though individuals are provided with equal opportunities, Islam acknowledged that their economic status may differ according to their capability and needs which may be divided into three categories:

Category 1: Unhealthy individuals and incapable to work, they lack both skills and the capital.

Category 2: Healthy individuals but lack both the skills and the capital.

Category 3: Healthy and skilled individuals but lack the capital.

For those categories Islam provides four approaches of anti-poverty schemes each according to the above mentioned categories. These schemes are: compulsory scheme/zakah, voluntary scheme/waqf, Islamic Finance Scheme and al-qardal-hassan scheme.

3.1 Compulsory Scheme: Zakah

The basis for this compulsory scheme is stated in the following Quranic verse in Surah al- Surah Al-Taubah (9:103);

Of their goods (wealth), take alms, that so thou mightest purify and sanctify them; and pray on their behalf. Verily thy prayers are a source of security for them: And Allah is One Who heareth and knoweth.

Hence what is Zakah? Zakah is a compulsory due upon all eligible Muslims to give part of their wealth to the state to redistribute it to its recipients.

Literally it means blessing, purification, increase and goodness. Zakah is the third pillar of Islam, it is obligatory upon all Muslims to give part of their wealth

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and assets once it reaches al-nisab/the minimum or threshold assigned on annual basis or once harvested. It is also important to note that zakah has to be paid from lawful wealth and assets, and cannot be calculated on prohibited or unlawful wealth, such as income from interest, stolen property or wealth acquired or earned through unlawful means. There are two types of zakah, zakah al-Fitrah which has to be given by every Muslim in the month of Ramadan before Eid prayer and zakah on wealth. Zakah on wealth includes more than fourteen types of wealth that man possesses such as livestock, gold, silver currency and jewellery, commercial assets, agriculture, honey and animal products, mining and fishing, rented buildings, plants as well as fixed capital and lately italso includes salary, wages, bonuses, grants, gift and dividend income which if collected and distributed efficiently and according to the teachings of Islam, is more than enough to eradicate total poverty within a very short duration(A. Mohsin, 2013).

Scope of Zakah as Financial tool for Poverty eradication

The recipients of zakah are very clearly stated in the following Quranic verse in Surah al-Tauba (9:60);

"Zakah is for the poor, and the needy and those who are employed to administer and collect it, and the new converts, and for those who are in bondage, and in debt and service of the cause of Allah, and for the wayfarers, a duty ordained by Allah, and Allah is the All-Knowing, the Wise".

As highlighted above zakah is a compulsory financial tool to be given to eight recipients. Although eight recipients of have been mentioned in the above Quranic verse there is a general agreement that the first priority is to be given to eradicate the poverty of the poor, the needy and to assist the debtor (M. Kabir, 2010).As defined by Muslim scholars (al-Qaradawi, 1999) a poor person is a person who is without any means of livelihood and material possessions. The needy isa person who is without sufficient means of livelihood to meet his basic necessities. And the debtor is a person who has financial difficulties in repaying his borrowed loan to meet his basic necessities.

Zakah is an Alternative institution to Riba

One of the objectives of zakah is as an alternative institution to riba (A. Mohsin, 2013) as mentioned in Surat al-Rum, (30:39)

“And that which you give in gift (to others), in order that it may increase

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(your wealth by expecting to get a better one in return) from other people’s property, has no increase with Allah; but that which you give in Zakah seeking Allah’s Countenance, then those they shall have manifold increase.”

Therefore, by giving zakah to these three categories of people they will be prevented from borrowing with interest/riba under any anti-poverty programme to meet their crucial needs.

Zakah for elimination of Corruption

Besides the above objectives of zakah, it is also one of the tools for material and spiritual purification, i.e. elimination of any sort of corruption in a society. For example, with regards to the giver of zakah, it not only purifies his wealth but it purifies his heart from selfishness and from greed for wealth. On the other hand, zakah also purifies the recipient’s heart from envy and jealousy, from hatred and uneasiness; and it fosters in his heart instead, goodwill and warm wishes for the giver. In a large scale zakah purifies the society from any class warfare and suspicion, from ill feelings and distrusts, from corruption and disintegration and from all such evils. Hence, an automatic and an ethical strategy for poverty eradication will be realized on a regular basis through circulating the wealth from the have to the have not in a kindly and ethical manner eliminating all sorts of corruption.

Current Practice of Zakah on Monthly Salaries

At present income is the most important source of taxes today. It includes wages, salaries, rents, profits, dividend and other forms of earnings received in a given period. Therefore, people earning income including salaries cannot be excluded from the payment of zakah. Recently some Muslim countries enacted laws for the collection of zakah on income on obligatory basis such as in Sudan and on voluntary basis such as in Malaysia. Huge amount of money has been collected from this scheme and if managed according to the teachings of Islam it will eradicate poverty within a short duration. (A. Mohsin, 2013).

3.2 Voluntary institution: Waqf

The basis for this voluntary institution is found in the following Quranic verse:

“By no means shall ye Attain righteousness unless Ye give (freely) of that Which ye love” (Al-i-Imran 3:92)

Moreover, the Prophet (s) said: “When a man dies his acts come to an end, except three things, recurring charity, knowledge (by which people benefit),

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and pious offspring, who pray for him” (Narrated by abu-Hurraira, Sahih Muslim No. 1631).

Historically speaking the institution of waqf, which is voluntary in nature provided goods and services to all categories of people; the poor, needy middle class people and even the rich in terms of shelter, food, cloth, education, health as well as jobs and even providing qard-hassan/ benevolent loan through cash waqf. Similar to the institution of zakah, the institution of waqf is one of the alternative institutions to interest/riba as mentioned in Surat al-Baqarah (2: 276);

Allah will deprive usury of all blessing, but will give increase for deeds of charity…

Parallel to the above mentioned compulsory scheme of zakah by providing voluntary goods and services to the poor and needy in terms of education, training, healthcare, these people will not be forced to borrow from any anti-poverty programmes which lend with riba to meet their basic and crucial needs.

What is Waqf?

In Arabic language, the word means to stop, to withhold the thing. Hence it is a financial charitable institution established by withholding one's property to eternally spend its revenue on fulfilling any need that might arise in the society depending on the choice and conditions made by the founder. Once the property has been declared as waqf, it becomes perpetual, irrevocable and inalienable which means it can never be given as a gift, neither to be inherited nor sold, it belongs to Allah and the waqf property always remains intact while providing perpetual goods and services to the society.

Kinds of Waqf

Waqf can be classified into different kinds based on its purpose or usage. The following is the classification in terms of the waqf property itself. In this case waqf is classified into two, waqf ghair manqul and waqf manqul. Waqf ghair manqul means immovable waqf which includes immovable properties such as land, fields, farms or buildings such as mosques, schools and hospitals, orphanages and agricultural lands. Waqf manqul means movable waqfs which includes movable properties such as cattle and animals, books, crops, weapons, medical instruments, jewellery and cash. Both are important tools for poverty eradication.

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Scope of Waqf as tool for Poverty eradication

Since waqf is voluntary in nature through centuries, waqf has served its role as poverty eradication tool. Through creating immovable waqf, it serves the beneficiaries in terms of providing them with the much needed goods and services. For example, by creating immovable waqf in the form of agriculture land, schools, hospitals and factory it serves the poor and the needy not only in terms of feeding them, providing them with free education and free treatment but in terms of providing them with jobs too. Through creating movable waqf in terms of cash waqf, it provides funding for many services including the financial support for small entrepreneur, without riba. The most important implication of cash waqf is that it allows continuous accumulation of capital with time as more and more capital will be made into waqf (Alhabshi, 2013). This means that the proceeds of the waqf pool of funds will increase infinitely and which, if managed according to the teachings of Islam, can solve all the above mentioned economic problems.

Current Practice of Waqf

The last two decades has witnessed the revival of the institution of waqf and the creation of cash waqf in almost all Muslim countries and Muslim minority countries. Nine cash-waqf models have been practiced successfully providing many goods and services for the poor and the needy. Among these models are waqf shares model, waqf takaful model, direct model, mobile model, corporate cash waqf model, compulsory model, deposit product model, co-operative model and waqf mutual fund model (A. Mohsin, 2009), which can be adopted easily as anti-poverty programmes.

3.3 islamic Financial institutions

As mentioned earlier the issue of interest/riba is the main cause of persistent poverty in the developing countries (A. Mohsin, April 2014). And since it is not allowed in Islam, Islam provides alternative means of financing as mentioned in the following Quranic verse:

“…Allah hath permitted trade and forbidden usury…” (Surat al-Baqarah2: 276)

Hence, under trade (Alhabshi, 2014) many Islamic financial modes are allowed to finance any activity in the society including financing small entrepreneur through any of the following; murabaha, salam, istisna, mudharabah or musharakah.

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What is islamic Finance?

Islamic finance is a financing activity that is consistent with the principles of shari'ah/Islamic law where the element of interest/riba is not involved.

Current Practices of islamic Finance

Almost all of the current practices of Islamic finance is done through Islamic banking which is one of the fastest growing sectors at the present time in Muslim and non-Muslim countries. Since the ethical nature of Islamic finance means that businesses should provide some sort of positive benefits to the society in terms of goods and services, its investment has to be done through any lawful financial products mentioned above.

3.4 interest-Free institution: Al-Qard Al-Hassan

This is another tool to eradicate poverty through lending needy people qard-hassan/benevolent loan without any interest/riba. This is the only lending institution which is allowed in Islam in order to assist needy individuals who are facing crucial needs or trying to find lawful living. Since it is more to help others who are in crucial needs, the lender must not expect any return but seeks multiple rewards from His Creator as mentioned in Surat al-Baqarah (2:245):

Who is he That will loan to God A beautiful loan, which God Will double unto his credit And multiply many times?

4. Proposal for A Hybrid Model of islamic Microfinance (HM-iMF)

For more than 60 years, the World Bank Group has partnered with governments worldwide, reducing poverty by providing financial and technical help through many anti-poverty programmes. Since 2000, some developing countries have reduced extreme poverty by half, achieving Millennium Development Goals (MDG 1) five years ahead of schedule. However, milestone was not met in much of Africa and South Asia, and a billion people worldwide still live in extreme poverty. Many more experience hunger and are vulnerable to environmental or price shocks (World Bank). Among these anti-poverty programmes is the microfinance programme which is meant to give small loans to low-income

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individuals who lack access to banking and related services to start their small businesses and to lift them out of poverty. In these programmes, small loans will be given to the poor for the purpose of generating additional income or to expand their business. This is usually done through short term financing and repayment can be made on daily or weekly basis. Additional capital can also be given after the full settlement of the previous loan. In general the main objectives of microfinance programmes are to eradicate poverty and to improve the lifestyle for the regional societies. However, these microfinance programmes have been criticized of its conventional nature which does not suit Muslim countries. The following are some of the criticisms of the conventional approach compared to the Islamic microfinance approach.

islamic Microfinance vs. Conventional Microfinance

Recently some of the microfinance institutions managed to reduce poverty in Muslim countries while others failed. The failure was due to the conventional approach in seeking profit even from the moderate poor through interest based lending, which is prohibited in Islam. The following are some of the differences between conventional microfinance and Islamic microfinance (Al-Harran & others);

• The conventional microfinance assets are interest bearing debts while Islamic microfinance assets consist of diverse types of non-interest financial instruments such as qard-hassan, zakah, cash waqf and Islamic finance.

• The conventional microfinance is more towards enhancing the role of women in society by provide them loan which they have to repay with interest/riba, while Islam empowers women by providing them with regular income from Bait al-Mal/State Treasury.

• Usually the main target for conventional microfinance institutions are those from the moderate poor, thus neglecting the poorest segment of the society whereas this segment is the priority of the Islamic microfinance to tackle them through both zakah and waqf institutions.

• In conventional microfinance framework, the borrower will not receive the whole principal since a portion will be deducted from the beginning as a reserve. Besides, the borrower will have to pay interest for the whole amount that has been borrowed. On the contrary, under the Islamic microfinance the whole process is not acceptable as it is against the Islamic principles.

• In cases of default the conventional institutions will use its power to collect

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the defaulted amount from the other group members who are essentially poor whereas Islamic microfinance institutions use the share of zakah which is meant for such cases, without harming other groups.

Hybrid Model of islamic Microfinance institution HM-iMF

As mentioned above, Islam provides many anti-poverty schemes each according to individual’s capabilities and needs. For the success of this Hybrid Model of Islamic Microfinance (HM-IMF) we will integrate the above mentioned four schemes, each according to the categories of individual and their needs as mentioned above. Two anti-poverty schemes; zakah & waqf schemes have to be implemented directly as poverty eradicating schemes in order to tackle the basic needs for the first two categories of individuals before joining the HM-IMF. The other two anti-poverty schemes, qard-hassan and Islamic finance scheme have to be implemented after the third category of individuals join the HM-IMF. This will be explained in details as presented below:

Zakah Scheme for Poverty eradication

For individuals who belong to the first category of people mentioned above, i.e. unhealthy and lack both skills and capital due to old age, widowhood or orphanhood; Islam makes it mandatory for the institution of zakah to take care of this category of people in order to provide them with a regular income that covers their basic needs. Doing so will eradicate their poverty and will prevent them from borrowing with riba to meet their crucial needs.

Zakah & Waqf Schemes for Poverty eradication

For the second category of people who are healthy but lack both skills and capital, two schemes have to be implemented to provide them with the funds and the skills before joining the HM-IMF and start their small business. These two schemes are:

• Zakah Scheme: For individuals who fall under this group, zakah has to be given to them in cash and in kind (but for a short duration). This is done by giving them some cash in order to satisfy their basic needs (like for 3-6 months) and giving them in kind to provide them with the tools to start their small business in terms of providing them with necessary equipment and tools such as grass cutters, small boats, sewing machines, food stalls, etcetera.

• Waqf Scheme: Waqf scheme is meant to provide the free training for this

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category of individuals in order to provide them with the skills to use the above mentioned equipment and tools as well as to teach them how to generate their own income in the future. In addition, a very close monitoring on this group has to be done on daily or on weekly basis for a quick result in eradicating their poverty. In case some individuals from this group fail to generate their own income within the proposed short duration of 6 months, extension of another 6 months can be given to them. For those individuals who succeed in earning their income within this short duration and hope to earn more income, they become eligible to register as participants in the HM-IMF through joining either the Islamic financial scheme or al-qardal-hassan scheme to get more funds to expand their small business.

islamic Finance Scheme for Microfinance

For the third category of people who are healthy and have the skills to work but lack the capital, in this case the HM-IMF has to finance them through the Islamic financial modes such as Murabaha, Mudarabah and Musharakahto start their own business each according to their capabilities and skills. Similar to the above schemes, for individuals in this group, have to attend a training programme to qualify for financing. After passing the training they become eligible to participate in this scheme. As a beginner, the HM-IMF can finance them through any of the low risk modes each according to his/her capabilities and skills, with a minimum financial amount, for example, $3000 and the maximum of $5000 anda repayment period ranging from 150 to 250 weeks. Examples of low risk modes are murabaha, salam and istisna‘. Again a very close monitoring has to be done on weekly and monthly basis for the success of this scheme in eradicating poverty. For those participants who have successfully repaid the full amount of money in the specified duration, they can either ask for higher finance up to, perhaps $10000 or they may ask to join the high risk finance such as mudarabah and musharakah as explained below.

Qard Hassan Scheme for Microfinance

After this short duration of satisfying participants’ basic needs and passing the training needed, individuals in this category are only allowed to get qard-hassan/benevolent loan in small amount to buy the equipment or tools to start their small business. The maximum amount of first loan can be up to, $3000 and the repayment period must not exceed 50 weeks. Similar to the above scheme a very close monitoring has to be done on daily or weekly basis. For individuals who have successfully repaid the full amount of loan, which is free from any interest/

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riba, they would be eligible to apply for a bigger loan amount for the following year in order to increase their income. The minimum loan size can be $5000 and the maximum can go for $10000 with repayment period ranging from 50 to 150 weeks.

In cases of default according to the teachings of Islam, beneficiaries will be categorised as gharim/debtors, thus they will be entitled to receive zakah money to cover thedefault.

5. Administration, Modus Operandi and Structure of HM-iMF

The following are the set up of the administration, modus operandi and the structure of the HM-IMF.

5.1 Set Up of the Administration of HM-iMF

Similar to the Amanah Ikhtiar Malaysia, the proposed HM-IMF can be established under the Trustee Incorporation Act 258 in 1988 and as an independent legal entity according to which it is capable of entering into contracts and has the right to litigate under its name. The main objective of HM-IMF is to be established as a poverty-oriented microfinance scheme that provides Qard-Hassan loans to the poorest household to enable them to undertake viable economic activities to upgrade their household income.

Additional Administrative income

The administrative cost of the HM-IMF cannot be covered with the 20% as highlighted below, since the management will involve upgrading the skills and training the staff, training the small entrepreneur and close monitoring. All these need huge amount of money. Similar to Amanah Ikhtiar Malaysia (AIM) part of the cost can be borne by government, banks, financial institutions and donations in the following manner:

• Direct or indirect government support. Directly, the government can allocate funds on yearly basis for the running expenses of HM-IMF. Indirectly, the government can provide waqf land in which a huge commercial tower can be built and all the revenue generated from its rent to be channelled directly for the running expenses of this scheme.

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• Through encouraging banks, financial institutions and the private sector,to donate from their profit on annual basis as part of their CSR for the running expenses of the HM-IMF scheme.

• In addition, the HM-IMF can be opened for donation to the public in terms of sadaqh for the running expenses of this institution.

5.2 Modus Operandi & the Structure for HM-iMF

As mentioned above this Hybrid Model for Islamic Microfinance combines zakah, cash-waqf, qard-hassan and Islamic finance which is based on interest-free finance or interest-free loan. The huge amount of capital accumulation for this Hybrid Model can be created through creating cash waqf by the different founders for the sake of financing the poor and needy individuals and to help them out of poverty. Using the concept of waqf many founders will be motivated to create cash waqf for this Hybrid Scheme which is meant for poverty eradication through microfinance. Since this is a waqf based scheme, both the perpetuity of the cash waqf and the HM-IMF scheme has to be ensured for generations to come. For an effective and an efficient management of HM-IMF, transparency, commitment, integrity and teamwork has to be established between staff and participants similar to Amanah Ikhtiar Malaysia AIM (Hassan, 2013), where both have to pledge for the success of this scheme in eradicating poverty. For example staff pledge can be in the following words:

“We will strive to work harder to help the poor and needy families to get out of poverty through any of the Islamic schemes without any interest/riba. We will train them and motivate them to work harder with honesty and discipline regardless of race, religion and political affiliation. In this work we are not allowed to receive arbitrary, anything from members and prospective members. We pledge we will carry out our work with full dedication”.

And participants pledge can be in the following words:

"It is our/my responsibility to strive, to work harder to increase our/my income and to improve our/my lives and the lives of our/my family and children and to send our/my children to school to gain the knowledge which will help them to find jobs in their future. We / I pledge to repay the qard-hassan loan or any finance we/I get on time and to abide by all Islamic financial conditions and fulfill them".

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Modus Operandi for the Hybrid Model of Islamic Microfinance (HM-IMF)

The following is the process flow or the modus operandi for the proposed hybrid model in financing the poor and needy people:

i. Capital, in the form of cash waqf can be collected from different founders, such as organization, companies, corporations, NGO, financial institution, government and individuals in order to finance small entrepreneurs, the poor and needy, through HM-IMF.

ii. The HM-IMF acts as a trustee that manages the accumulated cash-waqf according to the legal conditions of waqf. To ensure its perpetuity it is highly recommended that a portion of the accumulated cash waqf will be kept intact and the other portion, as decided by the trustee, will be invested in financing the small entrepreneurs through low or high risk investment depending on the capability of each individual.

iii. The responsibilities of the HM-IMF institution in its role as a trustee will closely monitor the small entrepreneurs, equip them with the knowledge needed and provide them with the training required as well as to meet them on weekly basis before joining such scheme.

iv. The proposed amount to finance the small entrepreneur can vary from $3000 up to $10000 according to individual’s ability, skills, knowledge and the selected mode of finance with low or high risk investment.

v. Target investor: Small entrepreneurs

vi. Mode of Finance: Low risk investment (Murabaha, Salam or Istisna)

- In case of Murabaha financing the trustee will buy the equipment for example, with $3000 then will sell it to the small entrepreneur with cost plus profit ($3000 + $500). The small entrepreneur will pay the total amount in installments for 2 years.

- In the case of salam financing, the trustee will buy a commodity from a farmer, the HM-IMF institution will make the prepayment for example, $3000 for future delivery of a specified quantity on a specified date, for example 1st January 2014. On 1st January 2014, the HM-IMF institution will then sell the asset to a small entrepreneur, for example ($3000 + $500). Then the small entrepreneur will pay the whole amount of $3500 to the HM-IMF institution.

- In the case of Istisna‘ financing, the trustee will buy a commodity from a manufacturer and make the prepayment for example, $3000 for future

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delivery of a specified good, on a specified date, for example 1st January 2014. On 1st January 2014, the trustee will sell the asset to a small entrepreneur, for example ($3000 + $500). Then the small entrepreneur will pay the whole amount $3500 to the H-IMF institution.

vii. Mode of Finance: High Risk Investment (Mudarabah)

- In the case of Mudarabah financing, the trustee acts as rab al-mal. It gives the mudarib/small entrepreneur the capital for a specified period of time with an agreement to share the profit according to an agreed proportion, for example 30%:70%. In case of loss, the HM-IMF institution will bear the loss and the small entrepreneur will lose his time and effort and will not get anything. In case it is a profitable business, then the profit would be shared between rab al-mal and the mudarib according to the agreed ratio.

- In the case of Musharakah financing the trustee will enter into a contract of partnership with a small entrepreneur in which both of them provide capital but not necessarily participate in the business. In case of loss in the investment both partners will bear the loss according to their shares. In case of profitable investment, the profit would be shared between the partners according to the agreed ratio.

viii. Profit generated from this investment can then be channeled in parallel to:

• Management Team: 20% of the generated profit can be allocated for the management team in terms of collecting, investing, giving training and closely monitoring the whole process, in addition to other sources as mentioned above No. (4.2- additional administrative income).

• Beneficiaries: 60% of the generated profit can be allocated for the beneficiaries. Since this is a microfinance scheme, the beneficiaries are the recipients of qard-hassan. Since all banks are reluctant to provide benevolent loans in this case the large portion of the revenue generated has to be channeled to finance the less fortunate with the qard al-hassan. For example, $1000 has been given as qard-hassan to participant 1. After full payment, it can be given to another participant and so forth. Participant who succeeds in repaying their loan will be eligible to join the Islamic finance scheme. However, in case of any defaults, the institution of zakah has to help these defaulters from al-gharimin share, so that new participants will not lose their chance in getting qard-hassan loan.

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• Self-Financing Device: 20% of the generated profit can be added as a Self-Finance Device (SFD) in order to increase the capital of the cash waqf on one hand and on the other to ensure its perpetual services in funding the less fortunate.

ix. Similar to AIM of Malaysia (Hassan, 2013), this scheme can encourage participants to develop saving culture through compulsory savings with the minimum amount of $1 to $5 per week depending on the total loan or fund taken. Compulsory savings can also be collected during compulsory weekly meetings.

Figure.1 Hybrid Model of islamic Microfinance (HM-iMF)

6. Conclusion

From the above discussion we realize that for an optimal result in eradicating poverty, reducing inequalities and eliminating riba from society in an ethical and just way, the need to revive the religious institutions of zakah, waqf, qard-hassan and interest-free financial institutions, integrate and adjustthem according to the current needs of the different societies in a hybrid model is much recommended..

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References1. A. Mohsin, Magda Ismail. Potential of zakah in eliminating riba and eradication poverty in

Muslim countries. Islamic Management and Business, EJBM-Special Issue. Vol. 5 No. 11, (2013). p 115.

2. A. Mohsin, Magda Ismail. Cash Waqf: A New financial product, person, Kuala Lumpur. (2009)

3. A. Mohsin, Magda Ismail. Towards Understanding the structure of Islamic Economic System in Solving the Current Economics and Financial Crisis, Journal of Business and Economics, Academic Start Publishing Company Vol. 4 No. 4 April 2013. p256.

4. Al-Harran Saad and Alfred Young FohSen – Sri Anne Haji Masri. Chapter 05 Microfinance and Poverty alleviation. An Islamic Microfinance Enterprise Page 27-29.

5. Alhabshi, Syed Othman. “Poverty Eradication from Islamic Perspectives”, paper presented atthe International Workshop on Rural poverty and ways and means to alleviate it, Malaysia, Melaka: 21-27 January (1992), pp1-2.

6. Alhabshi, Syed Othman. “Waqf: Its Fundamental Concepts and Principles and tis Application in Affordable Housing”. Paper presented at Khazanah Islamic Finance and Investment Circle (KIFIC) 4th Annual Meeting, ISTAC 30 July(2013), p 9.

7. Alhabshi, Syed Othman. Islamic Finance Education, what does it entail?, Islamic Finance, the Malaysian Reserve, 17 Feb. 2014.

8. Hassan, Salwana Micro financing for Poverty Reduction and Quality of Life Enhancement from the Shariah Perspectives: The case of Amanah Ikhtiar Malaysia, Ph.D. Thesis INCEIF (2013).

9. M. Kabir, Hassan. “An Integrate Poverty Alleviation combining Zakah, Awqaf and Micro-finance”. Paper presented at the Seventh International Conference, the Tawhidi Epistemology, Zakah and Waqf Economy, (2010). Bangi, p263.

10. Al-Qaradawi, Fiqh al-Zakah, Muassassat al Risalah, Beirut, Lebanon, 2nd Editions (Arabic) vol. 1(1999), p 52.

11. The World Bank at: http://www.worldbank.org/mdgs/poverty_hunger.html12. World Bank 2008: http://www.globalissues.org/article/26/poverty-facts-and-stats

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[email protected]

the Role of Zakah and Awqaf in Community Development: Rules, Applications and Suggested

Framework

Zainab Fida Ahsan1

Abstract

The Shari'ah is a comprehensive system which provides guidelines for the holistic development of human beings. As regards the engagement at the economic level and through financial transactions, it presents effective and sustainable tools for the development of resources viz. social, intellectual, spiritual, physical and financial assets. The instruments of Zakah and Waqf provide a paradigm in the achievement of equitable distribution of wealth and its healthy circulation.

This paper attempts to understand and explore the scope and potential of Zakah and Awqaf in the development of communities and their economic growth. It briefly discusses case studies in the present context where Zakah and Awqaf are being used as tools of extending financial inclusion and development of the resources of the community.

1. introduction

The Islamic tradition envisions the establishment of a just and equitable society while ensuring the preservation of human dignity. However, there is a substantial gap between the ideals and realities of society as can be seen from the enormous misdistribution of capital, assets and skills among its members at large. At the heart of society lie the community and the welfare of its members. Thus, it becomes an imperative concern for policymakers and social activists alike.

1 Graduate student in Islamic finance at International Centre for Education in Islamic Finance (INCEIF), The Global University of Islamic Finance, Kuala Lumpur, Malaysia; email: [email protected]

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In the context of the modern globalized world, civic participation is faced with new challenges and the demand for social services has been growing exponentially. This challenge is further contributed by the devolution of responsibilities of the government onto community based organisations which are faced with the need to assume responsibilities for providing social services, addressing housing needs and implementing welfare programs (Green & Goetting, 2010).

Following the above arguments, one may observe that the discipline of Community Development greatly resonates with the concept of social reform as envisioned by the Islamic world-view. This emphasis on building sustainable communities has been largely understated in the current industry.

As regards the need to address this problem from an Islamic Finance perspective, an important observance regarding the void of effective policies in the social welfare sector was made in a recent public lecture (Ismail, 2014).Certain noteworthy models have been proposed as regards the objectives of alleviating poverty through the integration of Awqaf and Zakah such as the integrative microfinance model (Hassan & Ashraf, 2010) and the discussion of the potential of Islamic financing schemes in poverty alleviation (Gustina & Ihsan, 2012).

Nonetheless, the discipline of Community Development and more specifically its resonance withthe Islamic tradition remains largely unexplored. This paper is an attempt to allude to the possibilities of an integrative approach using Awqaf and Zakah in the development of place-based communities and the revival of a sound social welfare and security structure in Muslim society.

2. Community Development

The United Nations defines ‘Community Development’ as a process where community members come together to take collective action and generate solutions to common problems. It is a term that is inclusive of the practices of activists, professionals and involved citizens, who synergize their strengths and entrepreneurial skills towards the efficient utilization of community assets.

Community development is therefore a planned effort to build assets that increase the capacity of residents to improve their quality of life(Green & Haines, 2011). It alludes to the process of socio-economic progress of a community with minimum reliance on the State authority, instead through the efficient channelization of the resources that are available yet underutilized within the community.

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One of the continuing debates in the field of 'Community Development' is whether the policies should be place-oriented or people-oriented. A different opinion in this regard is that the literature on Community Development has created a false dichotomy between place and people and that the two are not entirely disconnected, as can be seen in the approach of the Mobility Strategy(Alan Hughes, 1991).

Advocates of place-based community development often argue that people-based policies might not be very effective as people, once skilled, may migrate away to another place rather than contributing to the human capital of their community while place-based policies might lead to a more sustainable form of development through institution-building and improvement of existing infrastructure.

2.1 Community

The term 'community' is a complex one and has several dimensions. In common parlance, a community may be understood to be a group of people residing in a particular geographical area and often sharing common interests. As a matter of convention, these people have access to certain assets or factors of production at a collective level. An important concern in this regard is that most communities may not readily accept the responsibility for developing assets. Thus, for the proper utilization of these assets, communities may depend on technical assistance from professional organizations. Critics argue that this may lead to dependency on outside resources; nonetheless it is also possible that the professionals impart skill training and mentorship, especially to the youth. The latter approach seems to be more cognizant of constraints of time and resource mobility (Green & Haines, 2011).

Therefore, various resources of the community - physical assets or human capital, may by synchronised to bring about collective benefit to the residents.

2.2 Asset-Based Approach to Community Development

Community assets, as one may call them, are those factors of production which if developed effectively, may lead to substantial collective benefit of the society. These assets can be understood to be different forms of community capital because investments in them generate additional resources for the community. This definition alludes to the significant suggestion that the profit motive need not be removed from the process; instead social objectives are added to the profit motive. Furthermore, the goal of asset-based community development is

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to identify and fortify the resources and mobilize the residents to make use of these resources to meet their needs. Therefore, wealth in the community may be used to create additional wealth for the residents (Green & Goetting, 2010).

2.3 Social Capital

Another important aspect underlying the concept of Community Assets is that of Social Capital. In the words of Putnam (1993), social capital refers to 'those features of social organisation such as networks, norms and trust that facilitate coordination and cooperation for mutual benefits.' Therefore, social capital is an indispensable resource for a community that it based on the values of social coherence and solidarity, aimed to achieve collective progress.

3. the Shari'ah Perspective

In light of the above discussion, one may come to appreciate the resonance of the idea of collectivism and social capital with the Islamic tradition. In fact, this concept is deeply-rooted in the spirit that Islam seeks to imbibe in the social practice of its followers and thus it assumes a greater and more holistic significance to the Muslim community. Islam seeks to build communities that thrive upon a culture which binds individuals and families so that a natural infrastructure is built for providing support and assistance to those in need. An important feature of the Islamic world-view is that it promotes the idea of 'Asabiyah or social solidarity, as proposed by Ibn Khaldun (Dusuki).

In order to promote cohesion and efficiency in the social structure, it is necessary to focus on capacity building for all individuals, especially in order to facilitate for them the means to earn a lawful income to support their households. The ethos of the Maqaasid ash Shari'ah that encompass capacity building are reflected in one of the traditions as follows:

Narrated by Anas ibn Malik:

A man of the Ansar came to the Prophet (peace be upon him) and begged from him. He (the Prophet) asked: Have you nothing in your house? He replied: Yes, a piece of cloth, a part of which we wear and a part of which we spread (on the ground), and a wooden bowl from which we drink water. He said: Bring them to me. He then brought these articles to him and he (the Prophet)

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took them in his hands and asked: Who will buy these? A man said: I shall buy them for one dirham. He said twice or thrice: Who will offer more than one dirham? A man said: I shall buy them for two dirhams. He gave these to him and took the two dirhams and, giving them to the Ansari, he said: Buy food with one of them and hand it to your family, and buy an axe and bring it to me. He then brought it to him. The Apostle of God (peace be upon him) fixed a handle on it with his own hands and said: Go, gather firewood and sell it, and do not let me see you for a fortnight. The man went away and gathered firewood and sold it. When he had earned ten dirhams, he came to him and bought a garment with some of them and food with the others. The Apostle of God (peace be upon him) then said: This is better for you than that begging should come as a spot on your face on the Day of Judgment. Begging is right only for three people: one who is in grinding poverty, one who is seriously in debt, or one who is responsible for compensation and finds it difficult to pay. (Abu Dawud Book 9, Number 1637)

In the given example, the Prophet of God (peace be upon him) not only sold the existing assets of the needy person for a profit that was utilised to buy part of another functional asset i.e. an axe, but also contributed his skill to add value to the asset to develop its functionality. Thus, in the early ages of Islam, especially in the Madinan period when the community was being built, begging was a rare incidence. This was the case not only because the baytul-maal had succeeded in providing financial self-sufficiency for the community but also because peoples' capacities were being built so as to help them earn a lawful provision for supporting their households.

Therefore, the concepts of capacity-building and development of real assets are not foreign to the Islamic tradition but they need to be revived in a comprehensive manner if the true objectives or the Maqaasid ash-Shari'ah are to be attained.

3.1 the Concept of Wealth in islam

The concept of wealth in Islam takes into consideration its legality, ownership and rights of individuals over it. The ultimate owner of all wealth is God while human beings are considered to be trustees. The structure and classification of wealth may be illustrated as follows:

Source:(Lahsasna, 2013)

Hence, there are a variety of production possibilities through which wealth can be created and distributed. Our focus in this paper is the efficient distribution of

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wealth within a community so as to facilitate capacity building and sustainable progress. In this regard, one cannot iterate enough the significance of Infaq¬ in the Islamic tradition. It refers to the 'spending of wealth' for specific purposes and is tied to the motivation of both prosperity in this word and reward hereafter.

4. Zakah: A Brief Overview

Zakah is the term that is used to denote the share of wealth that the poor have in the wealth of the rich. It is a proportion of the wealth above the nisab level, which all Muslims are required to pay once in a lunar year for the purpose of infaq and towards certain legislated purposes.

The rightful recipients are clearly stipulated through divine legislation as follows:

'Zakah expenditures are only for the poor and for the needy and for those employed to collect [Zakah] and for bringing hearts together [for Islam] and for freeing captives [or slaves] and for those in debt and for the cause of God and for the [stranded] traveller - an obligation [imposed] by God . And God is Knowing and Wise.'2

2 The Qur'an, 9:60

Wealth

Movable Immovable

Tangible Intangible

Physical Assets/Machinery

Absolute ownership rests with God; human beings are trustees

Intellectual Property/Usufruct

Real EstateCash/PreciousMetals

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Thus, the general object of Zakah is to be a means of socio-economic relief for those in need and for establishing financial inclusion of all members of a community.

The clear stipulation of the eight categories of its beneficiaries is a measure of prudence to prevent misappropriation and wrongful claims to its funds. Thus the system of Zakah may be regarded as a vital institution that shall avert possible instances of financial exclusion by ensuring that all the vulnerable groups of society are taken care of.

In the current context, victims of child abuse, domestic abuse, drug addicts and unskilled labour etc. may all be considered as part of these vulnerable groups. In case that the fiqh opinions followed in a particular area refuse to consider these as rightful recipients of Zakahper se, they may still benefit from the income of Awqaf assets. Therefore, none of the vulnerable groups shall face financial and social insecurity, as would be expected of a Shari'ah based community.

Economists and sociologists have observed that the determination of the usage of proceeds is more important than the collection of funds. (Al Qardawi & Monzer, 2000)

4.1 Application of Zakah in Community Development

The diligent collection of Zakah funds is an important function of the administration while its distribution is a pertinent task that must be carried out effectively in order to realize its full benefit to the recipients. However, one of the most primary concerns of Zakah management, especially in countries where the government is not directly involved in regulating Zakah, is the lack of a central treasury akin to the Bayt ul-maal that served as a pool of funds in the early periods. This is a major deterrent in the regulation of Zakah distribution but it may be addressed with reforms at the level of community based organizations.

The usage of Zakah fund is already legislated by divine decree and the only responsibility of the community is to ensure that their benefits reach those to whom they are due. Considering the absence of state involvement in this task, it would be appropriate to regard this responsibility as a Fard Kifayah of the organization representing a community.

It is interesting to note that while the divine legislation defines clearly the recipients of Zakah, it does not restrict the use of funds to the purchase of consumption goods only. Therefore, the investment of unused Zakah funds

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shall be dealt under shuroot-jaaliyah and be used to generate returns or other functionality that ensures the well-being of the beneficiaries.

Many recipients of Zakah are in a dilemma about how to consume it due to multiple factors, lack of financial literacy being one of them. More often than not, the funds get used to purchase consumable goods and the ultimate object of improvement of living standards remains unfulfilled. As regards the case of Awqaf, the underutilization of these resources for the benefit of the community has been established by researchers and largely prevalent in Muslim society.

The applications of Zakah funds may be discussed by contextualising the eight heads legislated in the Qur'an to the modern societal structure as follows:

the Poor and the Needy

The funds of Zakah are an important source to extend financial inclusion to the BOP (Bottom of Pyramid) members of a community. Hunger, lack of access to healthcare and paucity of resources are some of the key issues faced by the poor and needy. Victims of domestic abuse and orphans may also be included in this category.

those employed to Collect Zakah

It is a common practice for students of madarsas to collect the funds for Zakah door-to-door from residential areas. Indeed the collection of Zakah is a noble task but very often it is disorganized. To formulate a standard practice in this regard would be a welcome reform for most Zakah payers as they will not have to worry about the credibility of each and every madarsa which asks for a portion of their Zakah.

Bringing hearts together to islam

The incidences of domestic violence are prevalent in many households and unfortunately among Muslim ones as well. With the exception of one or two developed countries, there is no support system for victims of such oppression. Most victims of zulm such as these may require special fortification of Eeman and Tawakkul; Zakah funds may be used to sponsor faith-enhancing activities in shelters.

Secondly, feeding non-Muslim poor and needy persons may be a source of inviting them towards Islam in a gentle and graceful manner.

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those in burden of debt or slavery

Members Of the community undergoing a debt crisis may be supported through the Zakah resources. While slavery is not commonplace in the modern world, it is not uncommon to see its manifestations through child labour, sexual slavery (prostitution), bonded labour etc. The funds of Zakah may be used to liberate people caught in this quagmire and for funding their legal cases, for instance

in the way of God

This is a very profound addition to the list of Zakah beneficiaries because it provides flexibility of ijtihaad, to judge the worth of a cause relevant to different contexts. For instance, to spend on the soldiers going out for war in the early days would have been considered as a cause of God. However, in our context, it could take a different implication such as building institutions that cater to establishing justice and freedom from oppression.

Nonetheless, such flexibility is to be used with caution and only credible mujtahids should qualify a cause as being acceptable in this category.

the stranded traveller

Communities may opt to maintain free-of-cost rest houses for travellers and the food and linen may be provided from the clothing bank. Funds may be extended to refugees or wayfarers in transit.

The idea of the above possibilities is to enhance the economic autonomy of the Muslim community and to prevent any misappropriation of rights and benefits.

The above discussion is a very brief and humble overview of the potential applications of Zakah funds to the development of a community. It is hoped that more elaborate ideas of contextualisation could be developed in future work.

In order to understand how the above functions can be institutionalised through communitybased organizations, we proceed to discuss the infrastructural assets.

5. Awqaf: A Brief Overview:

The concept of Sadaqah Jaariyah or perpetual charity is considered sacrosanct in the Islamic tradition, which emphasizes on social activism not only for the achievement of worldly prosperity but also towards maximising reward in the hereafter.

56

There are types of Sadaqah Jaariyah that are mentioned in the famous narration from the Prophet of God (peace be upon him):

'Abu Hurayrah reported from the Messenger of God (peace be upon him), "When a person dies, all his acts come to an end, but three: recurring charity, or knowledge (which benefits others), or a pious offspring (who prays for him).".'

Following Çizakça (2000), it may be argued that the institution of waqf encapsulates the combination of each of these three aspects. Therefore, the establishment and efficient management of Awqaf assets would entail not only spiritual benefit to the donor himself, but also to a general benefit of the community which has access to these assets.

5.1 Application of Awqaf in Community Development

Awqaf can be utilized as effective tool of wealth management. As most Awqaf are in the form of real estate yet underutilized, there is a pressing need to develop these assets for their reward to accrue to the donors. Attempts should be made to upgrade Awqaf to a level where they become a sustainable source of funding and are able to generate income on their own, thereby decreasing dependency on third-party donations(Lahsasna, 2013).

The Awqaf assets may be used to build housing projects, orphanages, shelters for victims of domestic violence and for providing healthcare facilities etc.

To understand the modern application of Awqaf, we discuss the case of Singapore which has effectively developed its waqf assets to accrue benefit to the community.

Case Study: Singapore

Primarily two structures have been observed with regards to Awqaf development in Singapore:

• Musharakah Bond Structure (example: Bencoolen Mosque project)• Sukuk Ijarah Structure

The Bencoolen Project:

The Bencoolen Mosque Project is a mixed project consisting of:• A Mosque• A Commercial complex• 103 rooms of Service Apartments

57

The rent and profits of the adjoining land are used to pay for the expenses of the mosque, as well as the salaries of the employees of the mosque. MUIS acted crucially to observe the need for specialized and separate administration and management of the Awqaf; to this effect MUIS established Warees Investments Pte. Limited. A, fully owned subsidiary of MUIS, in the year 2000. This entity specializes in the management of portfolio of real estate investments. MUIS has also established an internal REITs (Real Estate Investment Trusts).

In collaboration with the above resources, a Sukuk Musharakah structure was developed to raise SD $60 million for the project. The Musharakah or partnership was among the following three parties:

• MUIS Baitul Mal

• Warees Investments Pte. Ltd.

• Waqf Property

The certificates issued by MUIS were 100% subscribed by mosques, statutory boards' banks and institutional investors.

‘In light of the need to redevelop the mosque, as well as the undeveloped land next to the waqf mosque, the amount of financing needed for this project came up to about SGD$35 million dollars. This amount is quite substantial, looking at the projects that need to be undertaken. In a meeting with various scholars, professionals in the finance industry, architects and also the developer, MUIS came up with a proposal to keep the mosque intact and to attach the mosque to serviced apartments.’(Abdul-Karim, 2010)

• Mosque Building Cash Waqf:

Another example of Waqf in Singapore is the Mosque Building Fund (MBF) formed by the cash contributions of Muslim employees. The MBF was first introduced in the year 1975 for the purpose of raising funds from Muslim employees through the Central Provident Fund (CPF) Check-off mechanism, so as to build modern mosques in new housing estates.

In 1984, the CPF was expanded to include the Mendaki Fund and collectively they are called the Mosque Building Mendaki Fund (MBMF).The Mendaki Fund supports Yayasan Mendaki which pioneers educational and social upliftment programmes for the disadvantaged segment amongst the Malay Muslim community.From 1984-2007, SD $47 million were spent from Mendaki component of the MBMF on various educational and youth development programmes.

58

Figure.1 Disbursement (By type/Sector) of Awqaf in Singapore

Source (MUIS)

Through the efficient management of Waqf, MUIS has disbursed the return to beneficiaries.

In conclusion, the example of Singapore is a promising one and can be replicated by many more economies that are endowed with Awqaf assets. This could be done through instruments such as micro-franchising and training of asset managers in techniques employed by MUIS and its subsidiaries.

6. Suggested Reforms in islamic Asset Management

With special reference to Awqaf management, exclusive training should be imparted to individuals with a known zeal for community welfare and thus entrepreneurial capacities can be built. These highly specialised asset or wealth managers can either create an association as in the case of accountants or create model organizations which could expand using mechanisms such as micro franchising.

In either case, a code of Standard Practice with regards to Islamic wealth management should be prepared and all existing mutawallis should be equipped with financial literacy. New mutawallis should be appointment based on their zeal and their skill of being well-versed with the code of Standard Practice.

Mosques, 45%

Education , 26%

Madarsa (religious

school), 13%

Poor and Needy, 9%

Others, 7%

Disbursement of Waqf income by sector

59

The scope of operation of these individuals may not necessarily remain restricted to Awqaf assets only; their operations could incorporate the supervision of collection and redistribution of Zakah funds as well. For this purpose, the collectors employed may be remunerated through a portion of the funds collected. Incentives of combining remuneration from collection of Zakah and as employees of asset management firms may attract employment from within the community.

Micro-franchising is an option that may be used to replicate successful models of Islamic asset management in developing markets. Training and research seminars can further enhance the existing knowledge base in this sector.

Therefore, it is of utmost importance that community based organizations and motivated individuals come forward to enhance the productivity of assets available to them and add value to the economy.

7. Conclusion

God has ordained Islam as a comprehensive religion reflected by the Maqaasid ash-Shari'ah which expounds the guidelines for the holistic progress of human beings.The Islamic tradition aims at developing a Social Welfare Society as opposed to a Social Welfare State (Bazian, 2012). A social welfare society would imply that the members of society themselves design structures that contribute to development. This may not be seen as a digression from the principle of establishing social welfare policies at the state level, rather as an iteration of the significance of a participative spirit in society.

Throughout the sources that shape the Islamic world-view, there exists a theme of enrichment of the individual, civility and social distributive justice across all facets of society.As regards the field of Islamic economics for instance, the classical perception is to build a nation or society that is economically self sufficient and where the production possibilities are being exercised to their optimum potential.

A major source of capital for the development of communities, are the instruments of Zakah and Awqaf. The efficient utilisation of these resources could entail amongst others, the benefits of financial independence and self-sufficiency of the community, while considerably taking away the burden from the government in this regard.

60

Thelack of effective policies and regulation in the Islamic Social Welfare Sector has led to many problems preventing the development of sustainable communities. Applying the community development approach incorporating the development of Zakah and Awqaf assets might provide an effective solution to these problems in order to enhance the benefit that can be generated from Zakah and Awqaf in this world and towards reward in the hereafter.

References1. Abdul-Karim, Shamsiah. (2010). Contemporary shari'ah structuring for the development and

management of waqf assets in Singapore. Durham University. 2. Al Qardawi, Yusuf, & Monzer, Kahf. (2000). Fiqh al Zakah: King Abdulaziz University.3. Alan Hughes, Mark. (1991). Employment decentralization and accessibility: A strategy for

stimulating regional mobility. Journal of the American Planning Association, 57(3), 288-298. 4. Bazian, Dr. Hatem. (2012). Waqf : An Islamic Model of Sustainable Development. The Zaytuna

Faculty Lecture Series. Berkeley, California, USA: The Zaytuna Faculty Lecture Series.5. Dusuki, Asyraf Wajdi. Ibn Khaldun’s Concept Of Social Solidarity And Its Implication To Group-

Based Lending Scheme. 6. Green, Gary Paul, & Goetting, A. (2010). Community assets: Building the capacity for

development. Mobilizing communities: Asset building as a community development strategy, 1-13.

7. Green, Gary Paul, & Haines, Anna. (2011). Asset building & community development: Sage.8. Gustina, Gustina, & Ihsan, Hidayatul. (2012). Integrating Islamic Banking, Zakat And Waqf

With Islamic Microfinance In Poverty Alleviation. JURNAL AKUNTANSI & MANAJEMEN, 5(1), 45-52.

9. Hassan, M Kabir, & Ashraf, Ali. (2010). AN Integrated poverty alleviation model; combining Zakat, Awqaf and micro-finance. Paper presented at the Seventh International Conference–The Tawhidi Epistemology: Zakat and Waqf Economy, Bangi.

10. Ismail, Dato’ Dr Abdul Halim. (2014). My Wishful Thought on The Development Of Islamic Banking and Finance Products for The Social Welfare Sector. Paper presented at the GIFF 2014 ( Global Islamic Finance Forum) Kuala Lumpur, Malaysia.

11. Lahsasna, Dr. Ahcene. (2013, 27 November 2013). Family Waqf as a Wealth Management Tool. Paper presented at the Islamic Wealth Management Seminar, Kuala Lumpur, Malaysia.

61

CASe StUDieS

62

A Study of Socio-economic impact of SHGs on Women from Marginalised Social Groups

Shri Bhagat Nitin1, Dr. Narwade Sunil2

Abstract

This work is an attempt to study the role of self-help groups in social and economic development of women from marginalised social groups in Washim of Vidharbha region. This region is known for farmer suicides in Maharashtra. The primary data were collected from SHGs in two talukas of Washim district- Karanja and Mangrulpir, on the basis of highest number of SHGs and loans from banking sector. The study used random sampling method for primary data collection from 188 SHG members in Mangrulpir and Karanja taluka. It was observed that the women from SCs and STs were comparatively less benefitted from the SHG movement in the study area. The members of SCs used the loans taken from SHGs for children’s education. It was also found that Muslim women participated least in the SHGs. The study suggested establishment of women bank in each block; regular inspection of SHGs by Gram Sabhas; provision of housing loans for SHG women members in the below poverty line category, who mostly do not have pucca homes; Intervention by the Government to encourage the inclusion of Muslim women in Self Help Groups and SHGs of minorities.

1. introduction

The intensity of poverty is high in India as one of every three persons is either undernourished or malnourished. The role played by finance in stimulating substantial economic development has been emphasized by the eminent

1 Research Scholar Department of Economics, Hyderabad Central University, Hyderabad, Telangana, India2 Professor, Department of Economics, Dr. Babasaheb Ambedkar Marathwada University, Aurangabad, Maharshtra, India. e-mail: [email protected]

63

64

economists like Kalecki and Keynes. Thereafter, the relationship between financial development and economic growth has been attributed in the pioneering works of Goldsmith (1969), McKinnon (1973), Sha (1973) and later by the works of the endogenous growth school and many others (Das, Nanda and Rath 2008). Microfinance, regarded as the best way to tackle poverty, is under attack in South Asia where microfinance began and has flourished since 1970's. There has been a surge of interest in microfinance in the recent past particularly in the content of reaching the world’s poorest families in a more effective way. In South Asia 70 percent poor are female, as a result women are deprived of equal access to economic opportunities. New approaches of helping these women micro entrepreneurs with support from financial institutions are becoming prominent. The urban and rural poor have been dependent on money lenders for their financial needs such as marriage in the family, illness or other emergency needs. The formal credit system of banks by and large has been beyond the reach of the poor. An innovative approach called "Self Help Groups" with lot of promises for attacking poverty in rural areas surfaced in the area of development and received the attention of policy makers and the Government. Formation of SHGs became an essential element in poverty alleviation programmes viz. SGSY and Mahalir Thitam.

According to National Bank for Agriculture and Rural Development, “self help group” means a group of about 10-20 poor homogeneous people who came together for addressing their common problems. They voluntarily save on a regular basis to a common fund, mobilize their saving and invest on micro enterprise” (Feroze and Chavan 2011). According to planning commission of India, SHG is a self – governed, poor controlled small and informal association of the poor, usually from socio-economically homogenous families who are organized around saving and credit activities. Members of SHGs meet weekly or monthly to discuss common problems and make efforts to find solutions through mutual assistance. The process empowers the poor and enables them to find directions of their own development by identifying their needs. Ever since independence in 1947, the Government of India and Reserve Bank of India (RBI) have made concerted efforts to provide poor with access to credit. The Self Help Group (SHG) - bank linkage programme was formally launched in the year 1992 as flagship programme by National Bank for Agricultural and Rural Development (NABARD) and aptly supported by the RBI through its policy support.

65

2. Review of literature

The present study examines the socio-economic impact of self-help groups (SHGs) on women specifically on empowerment of women. Since the early 1980s, a large number of studies have examined the various dimension of SHGs and women empowerment. This study reviewed literature from various microfinance studies in India.

A Study by Galab and Rao (2003) reported that women’s involvement in economic activities has increased substantially after joining SHGs in Andhra Pradesh, as they have increased access to credit. Women’s access and control over their saving, credit and income have improved. This has helped women in reducing their dependence on moneylenders. Sinha and Frances (2005) found that microfinance makes significant contribution to both the saving and borrowing options for poorer clients. Mahendra (2005) observed that in Tamil Nadu SHGs helped in increasing the number of accounts of rural people, especially for women. It was observed that improved banking habits among the poor became a positive outcome of the microfinance programme.

Kabeer Naila (2005) in her study found that access to financial services generally improved the economic position of a household by promoting irrigation and other new agricultural practices in Odisha, Andhra Pradesh and Jharkhand. It was also useful in reducing reliance on moneylenders among SHG members in Jharkhand. It improved agricultural practices and nutritional level of the members. The study observed that channelizing loan through women’s group instead of an individual woman, substantially increased the likelihood of women taking decisions and negotiating. A study by Vasimalai and Narendra (2007) concluded that Kalanjiam programme in Tamil Nadu has triggered the development process at the local level. It is building the local economy and providing employment for the local people and the federations & clusters particularly helped the educated young women.

Sudalaimuthu and Kumar (2008) in their study observed that the Scheduled Castes and Backward Class played a dominant role in Self Help Groups. The study showed that income, savings and expenditure of SHG members has considerably increased after their entry into Self Help Groups (Natarajan 2009).

Study in Tamil Nadu concluded that the SHG bank linkage programme has not reduced the income inequality among the SHG women between the pre-SHG and post–SHG period, but has increased the educational attainment level among members.

66

Gnanadhas and Mahalekshmi (2011) observed that about 65 percent of the groups recorded more than 90 percent attendance during the group meetings, which indicated the active involvement of the members. About 24 percent of sample members were illiterate and 26 percent could sign. Members with primary level education accounted for 21 percent and those with secondary level constituted 23 percent.

Kumar Laxmi (2013) found that about 65 percent women in SHGs were below the age of 35 in Tamil Nadu. About 90 percent of women who were interviewed were Hindu. These women belonged to the backward or most backward class. 80 percent women got full support from their spouses for their business activity. The study also found that most literate women among this sample served as group leaders. It showed that in attaining empowerment most of the interviewed women had an increase in income but that resulted in increased contribution in small consumption, not in large consumption needs. Rao Srinivasa (2014) observed that the savings and its use for children’s education increased in Andhra Pradesh among SHG members of SCs, STs and OBCs. Suresh (2015) found that the SHGs assisted in the socio–economic development of the economically, marginalized and socially backward in the study area. It helped in eradicating the poverty of the rural poor as well as in the empowerment of women.

The above reviews of previous studies have found change in the empowerment, income, saving, investments, living conditions and dependency on money lenders of women SHG members. Majority of these studies were carried out in south India with less emphasis on impact of SHGs in Maharashtra.

The present research work is an attempt to study the role of self-help groups in social and economic development of women in Washim district of Maharashtra. It also studies the impact of self help groups on income, expenditure, living standard and self-employment of women in Washim district of Vidarbha region of Maharashtra.

3. Research Methodology

The present work is socio-economic study of women in Washim district of Vidharba region in Maharashtra. Vidharbha region is known as socio-economically backward region and also known for farmer suicides in Maharashtra. Most of the people of

67

the Washim district depend upon agriculture sector for their livelihood. The rural economy of Washim district has historically suffered from the exploitation from the moneylenders. Washim was known earlier as Vastsagulma and it was the seat of power of the Vakataka dynasty. The district was separated on 1 July, 1998 from Akola district. In 2011, Washim had population of 1,197,160 of which male and female were 620,302 and 576,858 respectively. Washim district population constituted 1.07 percent of total Maharashtra population.

The study is based on primary as well as secondary data. The primary data are collected from women SHGs members of Washim district in Maharashtra. These SHGs members were selected from Mahila Arthik Vikas Mahamandal (MAVIM) and District Rural Development Agency (DRDA) under Swarna Jayanti Gram Swarojgar Yojana. The Washim district is divided into six talukas namely, Karanja, Mangrulpir, Malegaon, Manora, Risod and Washim. The study has selected two taluka of Washim district, Karanja and Mangrulpir on the basis of more SHGs and loans from banking sector. The study used random sampling method for primary data collection from 188 SHG members from Mangulpir and Karaja talukas. The secondary data was collected from various books, reports and records of NABARD, RBI, District Rural Development Agency (DRDA) offices and Mahila Arthik Vikas Mahamandal (MAVIM) office in Washim district and Panchayat Samitee offices of Mangrulpir and Karanja talukas.

4. Findings of the Study

Caste based Socio-economic Study of Women SHG Members

The caste based socio-economic study of women SHG members in Washim district observed that (55.85 per cent) members participated in Gramsabha meetings. Out of 188 members studies 129 (68.62 per cent) were under BPL, but in case of SCs and STs 81.73 and 87.5 per cent were below poverty line respectively. 67 (35.64 per cent) respondents have kucchha houses, this number was 41 (39.42 per cent) for SCs, 5 (45.45 per cent) STs and 18 (27.27 per cent for OBCs.

68

table.1Demographic Profile

Source: Data collected through Primary Survey, January – March, 2015

Sr No Mangrulpir Karanja

Age Age group SC ST OBC NT VJ

NT Open Total SC ST OBC VJNT To

tal Grand

Total %

Below 25 2 0 0 0 --- -- 2 0 0 1 0 1 3 1.59

25 to 35 14 2 12 1 -- 1 30 16 2 10 4 32 62 32.98

36 to 45 18 1 7 1 -- -- 24 18 6 10 0 34 58 30.85

Above 45 19 2 4 2 1 1 32 17 3 12 1 33 65 34.57

Religion Hindu 3 5 17 4 1 1 31 -- 11 33 5 49 -- 42.56

Muslim -- -- 6 -- - 1 7 -- -- -- -- -- 7 3.72

Buddhist 50 -- -- -- -- -- 50 51 -- -- -- 51 101 53.72

Marital

Status Married 48 5 19 3 1 1 77 47 6 30 4 87 164 87.23

Unmarried -- -- 1 -- -- -- 1 -- -- 1 -- 1 2 1.06

Widow 5 -- 3 1 -- 1 10 4 5 2 1 12 22 11.70

Educatio

nal

Status

Illiterate 16 1 8 2 1 1 29 16 5 10 2 33 62 32.98

Primary 23 3 3 2 -- -- 21 14 3 5 -- 22 43 22.88

SSC 20 1 10 -- -- -- 31 13 2 15 3 33 64 34.04

HSC 4 -- 2 -- -- -- 6 7 -- 3 -- 10 16 8.51

Degree -- -- -- -- -- 1 1 1 1 -- -- 2 3 1.59

P.G. -- -- -- -- -- -- -- -- -- -- -- -- -- --

Income

Level

(Rs.)

Less

than15000 4 -- 1 -- -- -- 5 2 1 -- -- 3 8 4.25

15001 to

25000 40 4 10 3 -- 2 59 44 9 16 3 72 131 69.68

25001 to

35000 9 1 10 1 -- -- 21 5 1 7 1 14 35 18.62

Above

3500 0 -- 2 -- 1 -- 3 -- -- 10 1 11 14 7.45

Land

Holdings Landless 28 2 11 1 -- 1 43 33 8 5 2 48 91 48.40

Marginal 2 -- 2 1 -- -- 5 2 -- 1 1 3 8 4.26

Small 18 2 6 2 -- 1 29 13 3 11 1 28 57 30.32

Medium 5 1 4 -- -- -- 10 3 -- 14 1 15

9 29 15.43

Large -- -- -- -- 1 -- 1 -- -- 2 -- 2 3 1.59

69

Table 1 shows demographic profile of SHGs members in Mangrulpir and Karanja talukas of Washim district. Out of 188 women SHG members 3 (1.59 percent) belonged to the age group of below 25, out of them 2 (1.06 per cent) respondents were SCs from Mangrulpir taluka and 1 (0.53 per cent) was OBC from Karanja taluka. 62 (32.98 per cent) respondents belonged to the age group of 25 to 35, out of them 30 ( 15.96 per cent) respondents were SCs, 4 ( 2.13 per cent ) were STs, 22 (11.70 per cent) were OBC, only 1(0.53 per cent) was NT, 4 (2.13 per cent) respondents were from VJNT category. It was observed that 58 (30.86 per cent) respondents were from the age group of 36 to 45 and 65 ( 34.57 per cent) respondents were in the age group of 45 year and above. It is also observed that out of 188 sample of women SHGs members, about 80 ( 42.56 per cent) respondents were Hindus, 7 ( 3.72 per cent) respondents were Muslims and mostly 101 ( 53.72 per cent ) were Buddhist. Table shows that about 164 (87.23 per cent) respondents were married. The number of widow members (11.70 per cent) was observed to be significant. Out of 188 sample of woman SHGs members, 62 (32.98 per cent) respondents were illiterate, 43 (22.88 per cent) respondents had primary education, 64 (34.04 per cent) respondents completed secondary education, and only 3 (1.59 per cent) completed their degree level education. The above table also indicated that most SHGs members were educated till higher secondary level and the participation of highly educated women had low participation in SHGs. It is also observed that most of the members (69.68 per cent) have annual between 15001 to 25000, out of them 84 (69.68 per cent) were SCs, 13 (6.91 per cent) were STs and 26 (13.83 per cent) were OBCs. (7.45 per cent) had annually income more than 35000 and they belonged to OBC category. It can be seen that most of the SHG members (48.40 per cent) were landless and mostly SCs and STs women SHGs members were landless and marginal farmers.

70

Tabl

e.2

show

s fa

ciliti

es a

vaila

ble

to w

omen

SHG

s m

embe

rs in

thei

r hou

se. O

ut o

f 188

sam

ple

of w

omen

SHG

s m

embe

rs, 1

85

(98.

40 p

er c

ent)

have

ava

ilabi

lity

of e

lect

ricity

in th

eir h

ouse

s, 13

7 (7

2.87

per

cen

t) re

spon

dent

s ha

ve to

ilets

in th

eir h

ouse

s, 35

(18.

62 p

er c

ent)

resp

onde

nts

have

tails

in t

heir

hous

es, w

here

as o

nly

75 (3

9.89

per

cen

t) re

spon

dent

s ha

ve c

ooki

ng g

as

conn

ectio

n in

thei

r hou

ses a

nd a

ll of

them

hav

e m

obile

faci

lity.

Amon

g SC

s onl

y 66

.34

per c

ent h

ave

toile

t fac

ility

, 68.

75 p

er ce

nt

in ca

se o

f STs

and

71.

21 p

er ce

nt o

f OBC

s wer

e ha

ving

toile

t fac

ility

in th

eir h

ouse

s. It

was

also

obs

erve

d th

at o

nly

29.8

0 pe

r cen

t SC

s mem

bers

, 18.

75 p

er ce

nt S

Ts, a

nd 5

1.51

per

cent

OBC

s hav

e ga

s con

necti

ons.

tabl

e 2

Faci

lities

Ava

ilabl

eM

angr

ulpi

rKa

ranj

aGr

and

Tota

l%

Hous

ing

Faci

lities

SCST

OBC

NTVJ

Ope

nTo

tal

SCST

OBC

VJTo

tal

Elec

tric

ity52

523

41

287

5010

335

9818

598

.40

Toile

ts37

415

41

263

327

323

7413

772

.8

Tile

s6

15

––

113

71

131

2235

18.6

2

Gas

201

112

12

3711

223

538

7539

.89

Mob

iles

535

234

12

8851

1133

210

018

810

0.0

Sour

ce: D

ata

colle

cted

thro

ugh

Prim

ary

Surv

ey, J

anua

ry –

Mar

ch, 2

015

71

Tabl

e.3

show

s tha

t mos

t of t

he S

HG m

embe

rs re

ceiv

ed lo

ans f

rom

Gra

mee

n ba

nks f

ollo

wed

by

Cent

ral b

ank,

priv

ate

bank

ICIC

I an

d M

ahar

asht

ra b

ank.

Mos

t of t

he m

embe

rs w

ho re

ceiv

ed lo

ans f

rom

priv

ate

bank

ICIC

I wer

e fro

m O

BC c

ateg

ory

follo

wed

by

SCs.

Mos

t of t

he S

Cs/S

Ts re

ceiv

ed lo

ans f

rom

Gra

mee

n ba

nk a

nd B

ank

of M

ahar

asht

ra. O

BC d

epen

ded

upon

Gra

mee

n ba

nk a

nd

priv

ate

bank

for t

heir

cred

it re

quire

men

ts.

tabl

e 3

Bank

ing

Sour

ce o

f Cre

dit

Man

grul

pir

Kara

nja

Gran

d To

tal

%Ce

ntra

l Ban

kSC

STO

BCNT

VJO

pen

Tota

lSC

STO

BCVJ

Tota

l

Mah

aras

htra

Ba

nk8

–5

––

–13

141

54

2437

19.6

8

SBI

174

13

1–

26–

––

––

2613

.83

Gram

een

Bank

5–

11

––

7–

1–

–1

84.

26

ICIC

I6

–5

––

112

71

141

2335

18.6

2

Dist

rict

Cent

ral

Bank

s2

––

––

–2

––

––

–2

1.06

Dist

rict C

o- o

p-er

ative

Ban

ks2

–3

––

–5

––

––

–5

2.66

Loan

s not

ta

ken

5–

––

––

5–

––

––

52.

66

535

234

12

8851

1133

510

018

810

0.0

Sour

ce: D

ata

colle

cted

thro

ugh

Prim

ary

Surv

ey, J

anua

ry –

Mar

ch, 2

015

72

The

abov

e ta

ble

show

s th

at o

ut o

f 18

8 w

omen

SHG

mem

bers

53

(28.

19 p

er c

ent)

resp

onde

nts

used

cre

dit

for

agric

ultu

re

activ

ities

and

ani

mal

pur

chas

ing

(42.

02).

It w

as im

port

ant t

o ob

serv

e th

at m

embe

rs u

sed

loan

s for

agr

icul

tura

l pur

pose

, ani

mal

pu

rcha

se a

nd ch

ild e

duca

tion.

Out

of 1

8 m

embe

rs w

ho sp

end

loan

s on

child

edu

catio

n w

ere

17 m

embe

rs b

elon

ged

to sc

hedu

les

cast

es. I

t was

obs

erve

d th

at S

HG m

embe

rs h

ardl

y us

ed lo

ans

for c

onsu

mpti

on p

urpo

se o

r for

sel

f-em

ploy

men

t. 25

(13.

29 p

er

cent

) SHG

mem

bers

use

d lo

ans f

or o

ther

acti

vitie

s lik

e m

arria

ge fu

nctio

n, d

owry

etc

.

tabl

e N

o 4

Cred

it U

seM

angr

ulpi

rKa

ranj

aGr

and

Tota

l%

Cred

it Us

eSC

STO

BCNT

VJO

pen

Tota

lSC

STO

BCVJ

Tota

l

Agric

ultu

re9

–6

11

–17

93

222

3653

28.1

9

Self-

empl

oym

ent

––

––

––

––

–1

–1

10.

53

Child

ed

ucati

on6

–1

––

–7

11–

––

1118

9.58

Cons

umpti

on1

––

––

–1

––

––

–1

0.53

Anim

al

Purc

hase

265

33

––

3727

49

242

7942

.02

Oth

er10

–5

––

116

44

1–

925

13.2

9

No u

ses o

f lo

an1

–8

––

110

––

––

111

5.86

Tota

l53

523

4–

288

5111

334

100

188

100.

0

Sour

ce: D

ata

colle

cted

thro

ugh

Prim

ary

Surv

ey, J

anua

ry –

Mar

ch, 2

015

73

Tabl

e.5

show

s th

e us

es o

f sav

ings

of S

HG m

embe

rs a

fter t

hey

join

ed S

HGs.

Out

of 1

88 w

omen

SHG

s m

embe

rs 1

45 (7

7.12

per

ce

nt) u

tilize

d th

eir s

avin

g fo

r pay

ing

inte

rnal

deb

t, al

mos

t sam

e pr

opor

tion

of SC

s mem

bers

use

d th

eir s

avin

gs fo

r pay

ing

inte

rnal

de

bts.

6.38

per

cent

of t

he m

embe

rs u

tilize

d th

eir s

avin

gs fo

r agr

icul

tura

l acti

vitie

s, m

ost o

f the

m w

ere

OBC

s. 10

.64

per c

ent o

f th

e SH

G m

embe

rs u

sed

thei

r sav

ings

for c

hild

edu

catio

n an

d m

ost o

f the

m w

ere

(75

per c

ent)

wer

e SC

s.

tabl

e N

o 5

Util

izatio

n of

Sav

ings

Man

grul

pir

Kara

nja

Gran

d To

tal

%SC

STO

BCNT

VJO

pen

Tota

lSC

STO

BCVJ

Tota

l

Paid

Inte

rnal

De

bt38

–16

––

–65

428

264

8014

577

.12

Agric

ultu

re3

54

41

17

––

5–

512

6.38

Child

ed

ucati

on7

–1

––

18

82

11

1220

10.6

4

Savi

ng n

ot

Used

5–

2–

–1

81

11

–3

115.

86

Tota

l53

523

41

288

5111

335

100

188

100.

0

Sour

ce: D

ata

colle

cted

thro

ugh

Prim

ary

Surv

ey, J

anua

ry –

Mar

ch, 2

015

74

The

abov

e ta

ble

disc

usse

s th

e ch

ange

s in

wom

en S

HGs

mem

bers

afte

r the

y jo

ined

SHG

s. O

ut o

f 188

sam

ple

of w

omen

SHG

s m

embe

rs 5

9 (3

1.38

per

cen

t) re

spon

dent

s ob

serv

ed in

crea

se in

the

ir m

obili

ty a

fter

join

ing

in S

HGs.

The

mem

bers

from

SCs

w

ere

35 (3

3.65

) and

10

(62.

50) f

rom

STs

whi

ch e

xper

ienc

ed in

crea

se in

mob

ility

afte

r joi

ning

SHG

s. Am

ong

SCs,

35 (3

3.65

per

ce

nt),

07 (4

3.75

per

cent

) mem

bers

from

STs o

bser

ved

incr

ease

in e

cono

mic

free

dom

, whe

reas

40.

96 p

er ce

nt o

f OBC

s obs

erve

d in

crea

se in

eco

nom

ic fr

eedo

m. M

ost i

mpo

rtan

t ben

efits

of j

oini

ng S

HGs w

as th

at w

omen

SHG

s mem

ber’s

self-

confi

denc

e (6

6.49

pe

r cen

t), sa

ving

s (29

.79

per c

ent)

deci

sion

mak

ing

(44.

15 p

er c

ent)

and

lead

ersh

ip q

ualiti

es (4

8.40

per c

ent)

have

incr

ease

d. It

w

as im

port

ant t

o ob

serv

e th

at 1

65 S

HG m

embe

rs (8

7.77

per

cen

t) ob

serv

ed im

prov

emen

t in

thei

r liv

ing

stan

dard

afte

r joi

ning

SH

Gs.

tabl

e N

o 6

impa

ct o

n M

obili

ty, e

cono

mic

Fre

edom

, Sel

f-con

fiden

ce, S

avin

gs a

nd D

ecisi

on M

akin

gM

angr

ulpi

rKa

ranj

aGr

and

Tota

l%

Chan

ges i

nSC

STO

BCNT

VJO

pen

Tota

lSC

STO

BCVJ

Tota

l

Mob

ility

195

32

–1

2916

57

230

5931

.38

Econ

omic

Free

dom

255

111

11

4413

216

233

774.

96

Self

-co

nfide

nce

335

174

1–

6125

927

364

125

66.4

9

Savi

ngs

225

10–

–1

3711

–8

–19

3629

.79

Deci

sion

Mak

ing

215

133

1–

4417

811

339

8344

.15

Self

-em

ploy

men

t2

–1

––

13

2–

5–

710

5.32

Lead

ersh

ip19

514

31

–43

186

213

4819

48.4

0

Sour

ce: D

ata

colle

cted

thro

ugh

Prim

ary

Surv

ey, J

anua

ry –

Mar

ch, 2

015

75

Tabl

e.7

show

s the

dec

reas

e in

dep

ende

ncy

on m

oney

lend

ers o

f SHG

s mem

bers

afte

r the

y jo

ined

SHG

pro

gram

me.

Out

of 1

88

mem

bers

stu

died

175

(93.

09 p

er c

ent)

resp

onde

nts

said

tha

t th

eir

depe

nden

cy o

n m

oney

lend

ers

has

after

join

ing

in S

HGs

prog

ram

me.

Onl

y 8

(4.2

5 pe

r ce

nt)

SHGs

mem

bers

stil

l dep

end

upon

mon

eyle

nder

s fo

r th

eir

cred

it re

quire

men

t. M

ost

of

mem

bers

who

still

depe

nd u

pon

mon

eyle

nder

s wer

e fro

m S

Cs ca

tego

ry (7

5 pe

r cen

t).

tabl

e N

o 7

Depe

nden

cy o

n M

oney

lend

ers

Man

grul

pir

Kara

nja

Gran

d To

tal

%De

crea

sed

De-

pend

ents

on

M

oney

lend

erSC

STO

BCNT

VJO

pen

Tota

lSC

STO

BCVJ

Tota

l

Yes

515

204

12

8349

1128

492

175

93.0

9

No2

–2

––

–4

2–

2–

48

4.25

Neve

r Too

k–

–1

––

–1

––

31

45

2.66

535

234

12

8851

–33

510

018

810

0.0

Sour

ce: D

ata

colle

cted

thro

ugh

Prim

ary

Surv

ey, J

anua

ry –

Mar

ch, 2

015

76

5. Policy Measures

On the basis of the field study carried out, some of the important policy measures required for better working of SHGs in benefitting its members are discussed in this section of the paper. The women bank should be established at each block which will help the self–help Groups. The women’s should be appointed at the post of officer and peon. This bank of women will easily understand the problems of other women. The self–help Groups officer should prepare three monthly reports about the working and should be presented to Gram Panchayat committee to bring the transparency in their working and check the corruption. There should be inspection of self–help Group member’s activities carried out like purchasing goats or self–employment out of loans provided by SHGs. It should be checked whether loans are utilized for the same purpose or not by Gram Sabhas. Housing loans should be given to women below poverty line from self–help Groups as most of them have kucchha homes. The members of the bank should treat reasonably to the SHG members. It should make compulsory to SHG members to deposit their savings in banks personally and they should not depend upon Sahayogini (women who deposit savings of SHG members in banks). The meeting of self–help Groups should be arranged at least twice in a month. Every candidate should be made compulsory to attend the meeting so that women will get more information about the affairs of self–help Groups. Self–help Groups should have more than 50% literate women, so that the chairperson and secretary will conduct the entire affair impartially. The chairperson, secretary and member should have equal rights in credit disbursement as it was observed that chairman or secretary take the decisions without consulting members or taking them into consideration. It is also important that the socially weaker sections should be given preference at the time of disbursement of loans. Also the SHGs from weaker sections should get preferential treatment in getting loans. There are a low proportion of women in this self–help Groups movement below 25 years of age and unmarried girls, their involvement should be increased d in this SHGs programme. As the economic condition of some Self–Help Groups below poverty line is very critical, such poor self–help Groups should be given subsidy by the government. There is very little participation of Muslim women in self–help Groups. Government should encourage the self–help Groups to involve the Muslim women in self–help Groups and SHGs of minorities.

77

References 1. Das S. K, Nanda B. P and Rath J. (2008): “Microfinance and Rural Development in India”, New

Century Publication New Delhi India, pp 1.2. Feroz S M and A K Chauhan (2011): “Microfinance in India a Performance Evaluation”, New

Century Publications, New Delhi, Page 3.3. Galab S and Rao N C (2003): “Women Self Help Groups Poverty Alleviation and Empowerment”,

Economic and Political Weekly, Vol.- XXXVIII, No 12-13, March 22, pp 1274-83.4. Gnanadhas M, Edwin, Mahalekshmi M. (2011): “Microfinance and Self Help Groups”,

Discovery Publishing House Pvt. Ltd., New Delhi 110002, pp 1-2.5. Hulme David and Thankaon Arun (2011): “What Wrong and Writes with Microfinance”,

Economical and Political Weekly, Vol. XLVI, No 48, November 16, pp 23.6. Kabeer, Naila (2005): “Is Microfinance a Magic Bullet for Women’s Empowerment”, Economic

and Political Weekly, Vol. - XL, No 44-45, October 29, pp 4709-18.7. Kumar, Laxmi (2013): “Illusion of Women Empowerment through Microfinance: A Case

Study”, Economic and Political Weekly, Vol.- VIII, No 15, April 13, pp 70-73.8. Mahendra, Varman (2005): “Impact of Self Help Groups on Formal Banking Habits”, Economic

and Political Weekly, Vol. - XL, No 17, April 23, pp 1190-95.9. Natrajan, Jayaseelan (2009): “Micro Credit Opportunities and Challenges for Self Help

Groups”, Dominant Publishers Distributers, New Delhi, India. 10. Rao, Srinivasa (2014): “Impact of SHGs of Indira Kranti Pattan on Status of Women”, Southern

Economist, Vol. 53, No. 10, September 15, pp 48-54.11. Sinha, Frances (2005): “Access Use and Contribution of Microfinance in India”, Economic

and Political Weekly, Vol. - XL, No 17, April 23, pp 1714-19.12. Suresh K P (2015): “Impact of Microfinance on SHGs in Karnataka: A Case Study of Tumkur

and Chitradurga”, Southern Economist, Vol. 53, No. 19, February 01, pp 11-15.13. Vasimalai M P and K Narendar (2007): “Microfinance of Poverty Reduction: The Kalanjiam

Way”, Economic and Political Weekly, Vol. - XLII, No 49, December 08, pp 67-72.

78

79

industrialisation and Socio-economic Status of tribals: A Study of Kalinganagar in Odisha

Mamata Patra1

Abstract

Industrialisation and threats to human security, as a social science subject has been an important area of investigation. Now, at the national and international level the subject has acquired immense importance. In most of the poor communities’ displacement, land alienation, misappropriation of wages and the products of labour, lack of opportunity for education and employment, sexual abuse and exploitation, environmental crisis and climate change have become the bane of life. As a matter of fact, acute poverty, malnutrition and starvation deaths have come to be associated with the life of many of the common and tribal people living in different parts of the country. The problems which haunt them commonly are illiteracy, ignorance, economic backwardness and one of the recent crises of displacement due to development. Environmental change, the threat of displacement and loss of secured livelihood are serious issues faced by general as well as tribal people in the Kalinganagar due to setting of plants, buildings, residential township and roads in the name of development.Thus, this study attempts to deal with the socio-economic threats faced by the tribal for the industrialisation in Kalinganagar and also makes a systematic effort to collect the relevant data to know the responses of local people towards developmental projects and the social, economic and environmental impact of industrialisation.

1 Assistant Professor in Political Science, Women’s Degree College, Bhuban, Dhenkanal, Odisha, India

79

80

1. introduction and Overview

Development has been so far defined in terms of what the West has defined in their Judaeo-Christian tradition. It is premised on a view of the world that is mostly held by scientists as matter to be exploited and expended for their highly inordinate luxurious high standard of materialistic living. It is based on relentless industrialisation which was founded on fossil fuel technology. Mostly it is development of the few at the cost of many, and against nature, human beings, societies and nations. By pursuing blindly with a religious attitude this kind of western centric development which is precoded in their culture and tradition, the basic human needs of other people and societies and the basic needs of the nature were sacrificed and ignored. It understands as a mere technological and scientific mechanism to be applied to other people and to the nature. The result is the development of the few dominant in the west at the expense of the earth and other people in the south of the world. Kalinganagar represents a case where the western model of development synonymous with industrialisation has been applied tooth and nail ignoring the basic human needs of the tribal people, their rights to define their own way of life and the threats that industrialisation poses to the human security of the tribal people and subsequently the irreparable damages brought to the nature which have had serious implications on the people living around the plant area.

With the advent of the new economic policy, the idea of the “Kalinganagar Industrial Complex” (KNIC) was conceptualised in the early 90’s with the advent of liberalization and privatisation leading to globalisation. One “Continuous retrain that sought to attract people’s attention”2 was that Odisha needs rapid industrialization to mitigate its abysmal poverty. By all account, initially the local people welcomed the idea of the industrial complex, believing that the new industries would usher in development of the area, give employment to the local people and improve their standard of living. Kalinganagar Industrial Complex (KNIC) is in the process of becoming a major global hub in steel and ancillary products. But the industrial and technological progress has been accompanied by a growing negative impact on it. Threats to human security started from the tragic history of displacement due to industrialization. Though poor, deprived and mostly scheduled tribe people, inhabit most of these lands. To acquire their land, these people need to be displaced by hook or crook. Over the years these people have come to view the development plans of the government

2 Bhaduri, (2009)

81

with suspicion; they feel they are being given a short shift. Suspicion leads to resentment and resentment leads to resistance. Wherever there is resistance, the government comes down on its own citizens with a heavy hand. Greater the resistance, greater was the repression of the government. The police firing at Maikanch that led to the loss of three tribal lives in December 2000 is still afresh in the public memory. Earlier in 1997 there was a police firing at Sindhigaon, Gopalpur where people protested against the proposed steel plant by the Tata, steel major3. The incident (The tragic death of 12 tribal on 2nd January by police firing) at Kalinganagar, can be seen as the latest in a series of ongoing conflict between the two sides: between the one favouring industrialization, led by the government, and those opposing to it.

The new policies of development in consonance with the needs of the market forces have been forcing the indigenous people to leave their traditional rights of community (common property) resources and minor forest produces. In course of time, tribal lands and forests become the property of the state, denying them their right to employment, work and livelihood. Instead of protecting the interest of the people, protection of the interest of the multinationals and profit occupied the central place in every move of progress by the state. This process of development by the state has brought disentitlement for the people, where the tribal are gradually denied access to the support system for their livelihood.

Tribal people happen to be among the most disadvantageous and unprivileged communities in India. Even after five decades of planning and development, they still remain outside the pale of any form of visible change. Thus, the effects of displacement, in case of tribal whose very survival is already at stake, are disastrous. However, socially and legally it is agreed that the oustees should be rehabilitated to new locations with an improved economic, social and cultural environment, which is however, not happening in reality. Hence, development-induced displacement entails loss of habitats, traditional organisations and cultural ethos, with total disturbance in the socio-economic status of the affected population. Displacement forces people to start life afresh, often leading to the loss of their socio-economic conditions.

Development is often a mask for extracting resources in a way that destroys communities and ecosystems. So, the present study leads to questioning industrialization as the basis of development. If industrialization causes poverty, environmental pollution, and social upheaval and does not solve it,

3 Mishra, (2006)

82

then “it is illegal to use poverty as legitimating for the uncritical continuation or acceleration of industrial development policy“4. Since the onset of new economic policy, the Government of Odisha is in a hurry to invite national and multinational corporations to set up industries, to develop the socio economic condition of the people, on the other hand, local people, mostly tribal and dalits, the most neglected section of our society are resisting these development/industrial projects fearing displacement and loss of a secured livelihood. In every step industrialization has proved to be security threats to their lives. This study also identifies that inspite of profound increases in human security threats derived from industrial development; the history of industries does not inspire confidence that further industrial development can reduce fear and want, because industrialization is in itself the source of terrible threats.

The objectives of the study were:

• To study the threat of displacement and loss of secured livelihood.

• To map out the socio-economic status of the people after industrialization.

• To study whether industrial development is the need based development or growth oriented economy.

2. Historical and Physical Background of Study Area

Kalinganagar is a geographical unit consisting of a compact landmass of Danagadi and Sukinda blocks of Jajpur district of Odisha, India. Kalinganagar is neither a village nor a town. It is a name given to a geographical area by Odisha Industrial Infrastructure Development Corporation (IDCO). It is 100 kms from the state capital, Bhubaneswar. The NH -53, connecting the iron ore/chromites belt of Jajpur and Keonjhar districts with the Paradeep port, runs through this area. Unlike the plains of coastal Odisha, the topography of the area is undulating and interspersed with hillocks and jungles. Nallas and rivulets are the main water sources for the area, which also provide fish and crab. The Brahmani, one of the major rivers of Odisha, flows around 4 to 5 kms away from the Kalinganagar industrial complex. In the Khapuria- Kumvargadia locality, there is a large grazing land, which supports hundreds of milkmen families rearing cattle. However, rice cultivation is the main source of livelihood for a majority of the local

4 Lohmann, (2006)

83

people. The area has a high concentration of schedule tribes and schedule caste population5. In the two blocks Sukinda and Danagadi- under which Kalinganagar falls,it is significant to note that the schedule tribe population in the acquired area is much higher than the block average. Of the tribes, people belonging to Ho community constitute nearly 80% of the population, and the rest of them belong to Munda and Santhal communities.6 Odisha Government has signed with 12 various private companies (Table-1) to set up steel plants and ancillary product plants in Kalinganagar and land allotted to them comprises of ‘7818 Acres’7.

3. Research Methodology

The methodology will be interdisciplinary based on a collection of primary data and secondary data. Modern methodologies like techniques of questionnaire,

5 Dyal, et al (2014)6 ibid7 ADM Office, Kalinganagar.

table 1Plants and land allotted in Kalinganagar

Sl. No. List of plants Years of arrival Investment in Crore Rs. Land allotted

1 Mideast (MESCO) 1993 530 530 Acres

2 Orion 2004 100 150 Acres

3 Maithan Ispat 2004 324 100 Acres

4 Uttam Gala 2004 1179 370 Acres

5 NINL 1997 1510 2500 Acres

6 Maharastra Seamless 2004 450 500 Acres

7 TISCO 2004 16000 2400 Acres

8 Rohit Ferrotech 2004 100 50 Acres

9 JINDAL 2003 4764 678 Acres

10 VISA industries 2003 400 390 Acres

11 Dinabandhu 2004 85 100 Acres

12 K.J. Ispat 2005 75 50 Acres

Total Land allotted 7818 Acres

Sources: ADM office, Kalinganagar and IDCO, Bhubaneswar

84

interview and survey method shall be followed. Direct interview with the victims shall be conducted. Apart from this secondary data like books, articles, magazines, reports, news papers, journals and unpublished writings shall be consulted. It adopts a pragmatic approach without disregard for disciplinary boundaries. Study of the relationship between industrial based development, environmental degradation and threats to human security involves a daunting range of highly technical fields, from Soil Science to Developmental Economics, from Atmospheric Chemistry to Social Psychology and from Demography to Political Science. So, this study accepts purely interdisciplinary methods.

4. Study and Data Analysis

This study embraces the use of empirical research techniques in the collection of data. It deploys both direct and indirect observations and data are being analyzed by the use of the quantitative analytical method through descriptive calculation of percentage. This analyzes the reaction of the local people towards the development projects at Kalinganagar with the social, economic and environmental impact of industrialisation.

This is the part of the study that gives a comprehensive and analytical overview of the collected data from the questionnaires formed by the researcher, to map out the socio-economic condition of the people before and after industrialization. Tables are used to elaborate the data from the questionnaires, and this allows generalizations of results from a sample. 1500 questionnaires were given to the Project Affected People in Kalinganagar, to be filled. 98 forms were not returned. This implies that there were 1402 questionnaires successfully filled. The questionnaires had a combination of both multiple choice and open ended questions. Mostly the data was collected from the Resettlement colonies/villages and project affected villages nearest to Kalinganagar.

We visited Kalinganagar and toured around the area to get a demographic picture and feel the biodiversity and its environment. Primarily, door-to-door surveys were conducted in 1402 households; to gather detail information regarding the family members, head of the households through interview. Moreover, some elders were also selectively interviewed in order to draw information concerning their opinion, condition and plights with the advent of industrialization.

The high concentration of the study was to find out the impact of industrialization

85

on tribal’s socio-economic status. It would help to know how the tribal people struggle to survive and manage themselves in the era of industrialisation based development.

4.1 Displacement and Rehabilitation

In the absence of rational rehabilitation and resettlement (R&R) policy, a series of guidelines issued by the government for Kalinganagar Industrial Complex, regulates the rehabilitation and resettlement of families affected owing to acquisition of land. Three areas have been considered for the resettlement and rehabilitation of the displaced persons, viz. (i) Financial compensation for the loss of land, (ii) Provision of homestead land and assistance for house building and (iii) Compensation for the loss of livelihood8. But the provision of jobs to the displaced families is not obligatory for the companies, in the guidelines. Land for land as a rehabilitation measure for the affected people was also not considered by the government.

Table.2 shows the extent of displacement of the-three social groups - SCs, STs and General category by six major companies. It clearly shows that the STs comprise the maximum number of displaced families (around 60 percent) followed by the “General” category (34 percent) and the SCs (around 6 percent). Neelachal Ispat Nigam Limited and Jindal Stainless Steel Limited have together displaced around 60 percent of the total displaced ST families.

8 Dyal, et al (2014)

table 2Group-wise displaced families

Name of industrial units ST SC GeneralTotal no. of displaced families

Neelachal Ispat Nigam Ltd (NINL) 478 22 140 640

Mid-east Integrated Steel Ltd. (MISL) 0 6 146 152

Iindal Stainless Ltd. (JSL) 82 36 47 165

VISA Steel Ltd. (VISL) 25 1 13 39

Rohit Ferro Tech Ltd. (Rohit) 12 0 0 12

K.J. Ispat Ltd. 8 0 0 8

Total 605 65 346 1016

Source: ADM Office, Kalinganagar

86

Rehabilitation and Resettlement

Table.3 shows the details of families displaced from various industrial projects, resettled, families who relocated themselves, families in transit camps, employment provided and cash paid in lieu of employment. The table shows that the TATA Company has displaced the highest numbers of families. The rehabilitation and resettlement programmes are still ongoing. Besides this, table suggests the tendency of the people to relocate. Overall 600 displaced families have chosen not to move to rehabilitation colonies and have relocated themselves on their own. As far as providing employment to the displaced families is concerned, Neelachal Ispat Nigam Limited has provided the maximum number of jobs (445 out of 640) to families displaced by it followed by Jindal Stainless Steel ( 116 people out of 165 ). However, it is difficult to conclude the employment scenario of these industrial projects as most of these steel plants are in their formative stage and can provide employment only after they become fully operational. Till date, most of the jobs that have been provided have been in the construction of the plant such as bending of rods or similar daily contractual jobs.

Resettlement Colonies

There are resettlement colonies in Trijanga, Sansailo and Goberghatito rehabilitate

table 3Group-wise displaced families

Name of industries

No. of Dis-placed Families

Families reset-tled in colony

Self- re-located families

Families in transit camp

Employ-ment provided

Cash paid in lieu of employ-ment

Mid-east Integrated steel Ltd 152 102 Nil Nil 74 1

Neelachal Ispat Nigam Ltd 640 135 491 Nil 445 168

VISA Steel Ltd 39 3 36 Nil 29 10

JSL Stainless Ltd 165 139 19 Nil 116 15

K. L. Ispat Ltd 8 Nil 8 Nil 6 2

Rohit Ferrotech Ltd 12 Nil 12 Nil 11 1

TATA Steel Ltd 1195 366 34 463 Nil 146

Total 2211 745 600 463 681 343


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the displaced people by various industrial projects in Kalinganagar. The Trijanga Resettlement Colony built in Danagadi block of Jajpur District has two parts, namely Trijanga-1 and Trijanga-2. Families displaced by all the companies other than TATA Company have been resettled in Trijanga-1, whereas families displaced by TATA Company have been resettled in Trijanga-2.

Rehabilitation and Resettlement by Mesco Kalinga Steel ltd.

The 6 SC families displaced by MESCO Kalinga Steel Limited have been resettled in Trijanga-1 colony. The company promised to compensate them with proper homes in lieu of their acquired land but it did not live up to its promises. They have been compensated with a plot of land and cash amount but have been given low-paid jobs of a temporary nature which is insufficient to make their two ends meet. They have become doubly disadvantaged as neither can they access the forests to supplement their income nor get grains from the PDS owing to the change in their housing location. These families also find it difficult to meet their water related needs as MESCO has stopped supplying them with water after the initial 5 months of doing so. They manage their water requirements from the water supplied by TATA Company to its displaced masses. Being agricultural labourers, they also reared livestock in their village which was quite a profitable venture but now they can no longer do so due to insufficient space in the new houses. Their children now attend classes in nearby New Siaria Primary School as well as the Trijanga R.C. Nodal Upper Primary School. The only aspect in which they are better than before is that they now live in houses with electric supply.

Rehabilitation and Resettlement by Jindal Stainless ltd.

The people displaced by Jindal group have been mainly rehabilitated in Trijanga-1 resettlement colony. Most of these displaced people are farmers belonging to the Ho community of Boispur village in Danagadi block of Jajpur District. As part of compensation in lieu of land, the company promised that each family will be given a 2-room house with all facilities and a job to 1 member of the family.

As compensation, each family was given a plot of land and Rs. 50,000 for building their houses. They were also compensated with Rs. 37,000 per acre of their land, which they said was below the market rate. The houses that have been built by the company are quite qualitatively poor; as they are small, lack regular water supply and lavatories. They told that they were not provided with any physical or financial assistance while shifting their belongings from the transit camps to the resettlement colonies. Only some were provided with a job after a long struggle. However, these jobs were lowly paid.

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Due to storage of space in their new house, they were forced to sell off their animals. This displacement has raised a new problem of food insecurity among the displaced people. Previously, their agricultural activities provided them sufficient food to survive. But now they have to buy everything from the market. With the change in their housing location, they are no longer entitled to get grains from the PDS. Their current employment in low-paid jobs is insufficient to meet their expenses with the result that instead of proving to be a boon, resettlement has proved to be a bane for these hapless people.

Rehabilitation and Resettlement by tata Company

Table.4 shows the number of families displaced and resettled by TATA Company in the revenue villages. A total of 1,195 families have been displaced from the 3 revenue villages, namely Chandia, Gadapur and Goberghati. The ST families were worse hit because of displacement caused by TATA Company. Of the total displaced families, the STs constituted 86.7 percent, followed by the general category (8.9 percent) and the SCs (4.4 percent). Of the displaced families, 68 percent have already been shifted to resettlement colonies (355 families from Chandia, 233 from Gadapur and 225 from Gobarghati village).

Moreover, the conditions in the so-called rehabilitation model colony at Goberghati are far from the promises of the government. Around 120 displaced families reside in the colony. Almost all the houses except three/four pucca houses are tiny thatched and mud huts strike one’s eyes. Till date, only 120 families out of total 639 families (displaced from the villages Khandiapusi, Madhapur and Sarangapur for the NINL) are residing in the colony. Rest of the families, around 70 percent of the total displaced persons who didn’t come to settle in the colony had opted for Rs 50,000 as cash compensation in lieu of 10 decimal homestead lands in the rehabilitation colony, because of lack of livelihood in the vicinity. Even the compensation money was not sufficient to purchase land as the price of land suddenly increased many times in the surrounding area, due to the prospect of industrialisation. The conditions to get the cash compensation of Rs 50,000 in three stages makes it extremely difficult for a poor displaced family to avail housing assistance and to resettle. On the other hand, the displaced families settled since 1997 in the colony, have not been provided with patta for their homestead land. Instead, an ‘Intimation Slip for Settlement of Land’ has been issued from the office of Tahasildar, Sukinda, with the instruction that ‘transfer not possible without the prior permission of the Revenue Officer’9.

9 PUCL,(2006)

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Of the people staying in the colony, only 25 families had got employment in NINL. The remaining families were working on their own in the stone crushers, earning Rs. 100 to 150 per day. Even for that they had to cover daily 14 to 15 kilometres. There was no other work opportunity available in the nearby area. These displaced families, although living as daily wage earners were not considered as BPL families. For 120 families 5 tube wells had been installed out of which two were not working. Inside the colony, roads are murram and get washed away in the rainy season. Only one primary school existed in the colony. The next higher school is at a distance of 5-6 kilometres. Electric connection was provided up to the colony but people were not in a position to afford connection. There was no Primary Health Centre in the colony, the nearest PHC being about 20 kilometres away10.

10 Pattnaik,(2006)

table 4Distribution of displaced people by tAtA Company in various villages

Categories of displaced

Villages Hamlet ST SC GeneralNo. of

families displaced

Shift-ed

so far

Chandia

Sanachanidia 27 0 0 27 27

Baiduburi 53 0 1 54 38

Baligotha 159 0 1 160 90

Kalamatia 4 0 88 92 89

Champakoila (p) 2 0 4 6 6

Majhisahi 220 0 7 227 105

total for Chandia 465 0 101 566 355

Gadapur

Main Basti 259 0 6 265 193

Bandargadia 0 42 0 42 40

total for Gadapur 259 42 6 307 233

Goberghati

Champakoila (p) 47 0 0 47 27

Bamiagotha, ambagadia, Majhisahi

170 0 0 170 106

sasagotha 94 11 0 105 92

total for Gobarghati 311 53 0 322 225

Total All three villages 1035 97 107 1195 813


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4.2 Pre-industrialisation Region of Kalinganagar

Duburi & Sukinda (Renamed as Kalinganagar) area is rich in bio-diversity as full of natural variety. The river Brahmani flows nearby giving water. Before industrialization, tribals were dependent on traditional agriculture, regenerative forest economy and forest products such as edible fruits, leafs and tuber for survival. No bullock or plough was necessary for farming. In the fertile land and amidst water, seeds used to germinate and grow and rice was reaped after four months, in summer. Yield then was far higher than that of the current improved varieties of rice. In upland, castor, mustard, ragi, gram, biri and mung were cultivated. The method was completely natural: just sow and reap. Those days, there was no vegetable farming in Kalinganagar. From the fertile wetland, people collected seasonal leafy vegetables like madaranga, sunsunia and kalama and ate them. They also did fishing in the Kalinganagar rivers to meet their consumption needs, and fishing was not confined to the fishermen. Round-the-year consumption of fishes and crabs was in fact a part of the people of all classes in the villages.

It is 30-40 meters above the sea-level. One of the uniqueness of the area was the slow-moving water in stretches of wetland; this slow motion avoids land-erosion. In summer, when there is water-crisis in other regions, one can get water from the ground here with slight digging. The wetland of this area provides plenty of grass land to cows and buffaloes. So for hundreds of years, herdsmen in search of grazing land have been coming here with their buffaloes during the summer. Coriander farming began in winter. Vegetable farming increased manifold. A lot of land has been brought under paddy cultivation in rainy season. Biri, mung, groundnut, and the like are harvested in winter.

When water enters Kalinganagar and maroons its marshland, one gets an opportunity to appreciate its bio-richness. After flood water enters Kalinganagar, local people collect fish, crabs and edible aquatic animals over the subsequent three months. Among these are found climbing fishes, sheats, eels and gudgeon.

The socio-environmental value of Kalinganagar’s land is far higher than its market price. We have tried to present here an overall picture of what locals typically earn per year from Kalinganagar’s farm land, grazing land and water. Towards this, we have taken into account the average annual agricultural income during the last five years after subtracting labour costs and fertilizer expenses. That apart, it is not only the villagers of the five gram panchayats of Kalinganagar who collect fish, crabs, and other edibles from the water; villagers at the highlands also collect. Besides

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these, we also have included some aquatic species that are not sold in the market but are used traditionally as food by some communities. Green leaves collected from Kalinganagar are sold during almost eight months a year in the weekly haat. In summer, koilekha seeds are collected and sold to pharmaceutical companies which are in need of them. Because of the medicinal properties of flowers of the madar plants of Kalinganagar, people come from Kolkata in winter to collect it. Sale of lotus flowers collected from Mantirapat is nothing in comparison to the sale of their petals and seeds to the traders coming from Medinipur in West Bengal. Cheaper lotus-leave-plates substitute sal-leave-plates for serving food during social and religious festivals in villages within a ten kilometres radius. Around 50,000 people depend upon Kalinganagar for livelihood, collection of livelihood necessities and employment. The study has incorporated in it people from the five local gram panchayats and a part of the local municipality, people coming to

table 5Annual income of Kalinganagar in pre-industrialisation period

Sl. No. Source of Income Total Income (in Lakh)

1 Kharif Paddy (in rainy season) 190/-

2 Paddy (in winter season) 90/-

3 Vegetables (in summer & winter) 500/-

4 Mung, urad, groundnut etc. 120/-

5 Cows, buffaloes milk 375/-

6Live stock production for meat (goat, sheep, hen, pig etc.)

300/-

7 Cow, buffalo & goat dung 50/-

8 Fish, crab & other edible aquatic animal 135/-

9Collection of green leaves, lotus, medicinary plants, benna grass (used for mats), flowers, fire woods, bamboo bushes etc.

160/-

10Daily labourers engaged in fishing, cultivation and livestock production

180/-

11 Business of the local production 95/-

12 Labourers outside of the locality 25/-

total annual income22,20,00000/- (22 crore 20 lakh)

Source- Primary Data

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Kalinganagar for cattle-rearing and collection of natural food and those having indirect business links with agricultural, fishing and animal-husbandry activities in the locality. According to this estimate, summarized in Table.5, Kalinganagar area generates an annual income of more than 22 crore rupees.

As we clarify in the Figure-1, before industrialisation 97 per cent of tribals were dependent upon the traditional agriculture and other 3 per cent of population was dependent upon other sources like vegetable seller, mine worker and daily labourer.

Figure.1Scenario before industrialisation

Source: Field survey

4.3 Post-industrialisation

The post-industrialisation has represented a different scenario, in the name of development people have been pushed off their land; forests and water have been taken over by the state government so that except their labour power, they are deprived of everything. In course of time, tribal lands and forests become the property of the state, denying them their right to employment, work and livelihood. The interests of corporate houses are given the priority. The socio-economic issues related to industrialization are never given due importance before or during the finalization of a project. As a result, the tribals have been the worst victim of such large scale industrialization projects.

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Figure.2, shows the details that, in the post industrialization period, there is a huge change in the life style of tribals. In fact, the dependency upon agriculture has been disappearing and the people became dependent upon the civil labour work, contract labour, construction work, rickshaw pulling, auto driving etc.

Figure. 2Post-industrialisation Scenario


Table.6 & 7 show people’s response about the industrialisation effects. Table.6 & Figure.3, highlight that the Kalinganagar project affected people expect less to benefit from industrialisation; there is absolutely no support for the industrialisation. But during our field study we came to know that a section of the younger generation (inexperienced as it is about the world) is the segment of the society that supports industrialisation. Table.7 & Figure.4 reveals that the greatest livelihood challenges in Kalinganagar, are lack of water for irrigation, environmental pollution, unpredictable rain due to industrialisation. They perceive that with growing industrialisation of the area destruction of agricultural land, loss of source of income from agriculture, loss of crops, destruction of grazing field, less availability of fish, crab & other aquatic creatures, less collection of green leaves, bena, fire wood etc., less employment for the project affected people, more environmental pollution of air, ground water, sound, soil, facing health effect etc. would become inevitable part of their lives. This would also be contrary to the dreams that corporations sell to get their support and land. There would be no employment for them.

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Figure.3Responses with respect to effects of industrialisation


table 6Responses with respect to effects of industrialisation

Response

Do you get any better job due to industri-alisation

Is there any sec-tion which is being benefitted

Is there any sec-tion which is being suffered

Is there any expecta-tion about future engage-ment

Do you support industri-alisation

Have you raised your voice against industri-alisation

Yes 154 202 1193 317 140 1233

No 1240 1181 150 1057 1255 116

No response 08 19 59 28 07 53


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Figure.4Responses about the livelihood Challenge due to industrialisation


table-7Responses about the livelihood challenge due to industrialisation

Sl. No. Response in favour of the challenges No. of Respondents Percentage

1 Destruction of agricultural land 1278 91%

2 Loss of source of income from agricul-ture 1098 78%

3 No vegetables grown here 1006 71%

4 Loss of crops 1152 82%

5 Destruction of grazing field 988 70%

6 Less availability of fish, crab & other aquatic creatures 954 68%

7 Less collection of green leaves, bena, fire wood etc. 987 70%

8 Less employment for the project af-fected people 1076 76%

9 Facing environmental pollution of air, ground water, sound, soil etc. 1386 98%

10 Facing health effect 804 57%


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Without proper resettlement and providing alternatives, industrialization has been the greatest threat to human beings in Kalinganagar. Industrialization, not only threatens human security through displacement, there is also the problem of environmental degradation which is self-defeating and destructive. The biggest and most visible disadvantage of industrialization in Kalinganagar has been the environmental pollution. “Pollution has not only harmed the variety and beauty of natural environment and its flora and fauna, it has also affected human health and happiness”.11 While on one hand, “industrialization has provided many conveniences and luxuries at economic cost and eliminated drudgery of many household chores”.12 It also brought with it degradation of quality of life due to effect of polluted environment. Environmental threats to health are broad, stemming from both biological risks associated with poverty and chemical risks associated with industrialization. Industrialization has also created many psychological and sociological problems. Operation of industries on such a large scale in a cluster will have definite load on the physical, chemical and biological characteristics of the natural environment as iron and steel production involves usages of huge raw-materials and the manufacturing process generates a lot of waste materials. Consequently, there will be considerable air pollution in pace with industrial advancement13. The KNIC increases air pollution, water extraction and other negative impact on local area. This might even involve destruction of places that people consider sacred. The Kalinganagar industrial project displaced many farmers who were living comfortably with their limited agricultural land resources, fishing ponds and other available resources. Once the resources are gone, they lost the permanent sources of their livelihood income, which they had been using since generations. What can they do with the compensation money? How long they can survive on it? They will be virtually forced to work as daily labourers or industrial labourers. New employment opportunities for local people tend to be limited because there are few roles for low skilled workers at capital-intensive industrial sites. Local people might therefore only incur cost of the business that some of them start. These could be small shops or business units, most of the tribal depend on the alcoholic drink Handia (Handia is a kind of liquor prepared from rice. It is used to make offerings during ancestral worship and as a drink, which is alcoholic in nature) business. Many of them migrate to other places in search of work; many would be forced to beggary. The whole consumer market in and around the project site depends on outside markets

11 Gaan, (2009)12 Mohapatra,(1999)13 SPCB, Odisha.(2014)

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for basic needs like food grains and vegetables. The cost of living becomes higher as the prices never remain the same as before. Can these people survive comfortably with the compensation money, they have today? So compensation arrangements have frequently been woefully inadequate.14

However, the change in the occupation was very problematic and the displaced were not swift in adapting to the new occupation. From the field survey, it was observed that, even though the company provided technical training to the people to help them get into jobs in company’s plant, and most of the displaced people took the training, only a few of them are working as welders and masons in Tata fabrication and rehabilitation construction site, while most seem to be uninterested. Before displacement, they were happy with their traditional occupational pattern that is agriculture, because they were not dependent on others for their needs and there was no one to boss over them. In their own words, they were ‘the king of their own life’. But after displacement, the jobs that they get are completely different and new. Even if the company pays them a good salary, they do not find the job interesting.

4.4 impact on Social and economic life

The economic condition of the people improved in the transit camp after displacement. This is because they got better economic and livelihood opportunities from the Tata company (not from the other companies of Kalinganagar), which they never got before displacement. Moreover, they got a chance to come into contact with the non-tribal or the mainstream population. On the other hand, they lost their social co-operation because after displacement, they started living an individual life, as it was stated in the resettlement and rehabilitation policy where major sons and unmarried daughters were regarded as a different family. This to some extent hampered their social and group life. Many displaced families stated that their families and relatives still live in the main village, because they do not want to leave their traditional land. Hence, after displacement families got fragmented. In hope of a better life and future, they left their close kin and became isolated from their social as well cultural life. After displacement they live a materialistic life, lose their social contacts and traditional life style, and try to imitate the urban ways of living. According to some of the displaced persons living in the camp, there is no enjoyment and merry making left in their lives, as it was before displacement.

14 Cernea,(2000)

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According to the displaced families, the post-displacement phase, not only disturbed their social relations but also their community co-operation. Those in favour of the construction of the plant and who accepted the rehabilitation and resettlement package formed one community known as Kalinganagar Surkshya Committee (KNSC), and stood against the Visthapan Virodhi Jana Manch (VVJM). In this division they lost the neighbourhood relationship, and the co-operation of their kinsmen as well as their community.

Adherence to cultural customs declined invariably in all projects, during the post-displacement period. This happened when displaced community members adapted their culture to the host communities in the new place. While struggling for life and livelihood in the new locations, the observance of traditional rituals and practices has been pushed to a secondary place. Along with the change in other social institutions, the displaced families in the transit camps were affected due to the impact of non-tribal as well as the surrounding town. Even if they were recognised as Hindus, their festivals were completely different. After displacement all their traditional festivals are gradually losing importance, and along with that, their gods and deities are slowly losing importance because their places of worship are inside the forest which is far away from the transit camp. Earlier, they celebrated their festivals by consuming Handia, offering sacrifice and eating meat. After displacement, all these festivals are losing their importance and even the rate of offering sacrifice has decreased. Most of their festivals like Maghaparab, Herra Parab, Jtara Parab and Baa Parab are associated with their agricultural land and cattle and worshiping marangbonga (ancestral god). Now Tata is inspiring them to celebrate other Oriya Hindu festivals, which includes raja, deepavali, dusshehra, kumarpurnima and so on.

4.5 impact on Common Property

The forest acts as a natural insurance which protects the tribal against crop failure due to natural hazards15. Loss of forest land causes the loss of grazing land, burial ground, traditional herbal medicines and also the common land, earmarked for different community activities. The common people have also lost their ancestral burial grounds (Sasang soonom), which gives unique symbolic identity to each and every Ho family, as well as community in general. So after displacement, their concept of Ganaen Gerangand Ukku Sasaan, burying the dead has also collapsed. These days, they do not bury the dead bodies as they live in transit

15 Mohapatra,(1999)

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camps and no particular land has yet been allotted to them, as burial ground. With the help from Tata Steel Company, they are taking the bodies to Swargadara (a holy cremation ground in Odisha in Puri for cremation. This system has now broken their age-old practice of burying their dead.

Before displacement, the Ho community had access to all the nearby green hills namely Kiajhara, Sunajhara, Badasundi, Mahagiri, from where they collected the firewood needed for their own use. These forests were also taken care of and watched by the community. In other words, the access was within the hands of the local people and the forest committee was formed jointly by the villagers and the Athagarha forest range, but after displacement most of the people stopped going to these forests for firewood and other forest produce. They also lost their grazing lands and other common places they used for social and cultural gatherings.

The large scale migration of tribal people to Kalinganagar from the hinterland in recent years and their dependence on the informal sector economy of the Kalinganagar Industrial Complex in no way can be characterized as upward mobility of the aboriginal population of the region. Rather they may be called ‘ecological refugees’16, in the city, struggling hard to eke out subsistence and finally bearing the brunt of the environment pollution generated by the Kalinganagar Industries. It is not only Kalinganagar or the tribal populations of Odisha that are being pauperized due to the one dimensional industrial development designed at the top to serve the interest of the privileged sections of society. The entire industrial belt of Chota Nagpur stretching from Durg-Bhilai in Chhattisgarh to Rajgangpur-Rourkela in Odisha, Ranchi-Bokaro and Jamshedpur in Jharkhand has experienced a similar type of development, where the aboriginal population are reduced to being distressed migrants in urban-industrial centres of their own homelands.17

Ecological refugee refers to people who are forced to migrate from or flee their home due to sudden or long-term changes in their local environment which compromise their well being or secured livelihood18. Many of the displaced tribal of Kalinganagar could not be properly rehabilitated. From their independent self-employed status in agriculture and forest economy, the tribal have become wandering wage earners in the informal sector urban economy with their

16 Meher, (2003)17 Reddy, (1994)18 Senapati, (2013 )

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traditional sources of livelihood almost lost. The domination of the upper caste Hindus in the organized sector jobs of the region leaves them with little scope to enter to the formal job market. Extensive Industrial activities in the entire area of Kalinganagar have destroyed dense forests and fertile agricultural lands, and the tribal are now dependent upon the unsustainable Industry economy by hiring themselves out as daily wage workers. When they fail to get work they migrate to different areas as turnover and seasonal migrants, working as contract labour in the industries or as informal sector workers such as coolies, rickshaw pullers, unskilled construction workers, domestic maids and the like.19

While taking the case of industry, ecology and society in Kalinganagar, the present study indicates a vivid evidence of relationship amongst these three factors. This rapture has occurred not only because of runaway industrialization and the use of modern technology, but also due to the negligence of the residents of the city towards the issue of environmental pollution. Nowadays hardly any industry is concerned about the industrial pollution but only thinks of maximizing their profit from the common resources20. Significantly, the tribal people of Kalinganagar believe that Kalinganagar Industries and the state Government are both responsible for the condition that they are into at present. Over the years, they develop an anti-developmental (policy and programmes) attitude as they are often marginalized and deprived of the profit sharing. Therefore, the state led development agendas need to be more inclusive so that the tribal people also become a shareholder. This would be essential in order to bridge the gap between the poor and the rich, the haves and have-nots21.

It is also noted that in some cases, displacement may occur not simply by the outright removal of people but by the prohibition or prevention of established activities that people rely on. Thus, forest dwellers may be displaced not through eviction, but through the prohibition of activities such as collecting wood or other forest products, that are central to their livelihood. Moreover, water rather than land may be involved, as water may be the basis of people’s livelihood e.g. fishing etc.

This also adds to the loss of complex social relationship which used to provide avenues of representation, mediation and conflict resolution. Essentially, the

19 Meher, (2003)20 Dharitri,(2012)21 Kohli, (2012)

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very cultural identity of the displaced community and individual is subjected to massive onslaught leading to very severe physiological stress and psychological trauma22.

4.6 impact on Women and Children

These impacts are felt more by women and children than by men. Alcohol is the coping mechanism of many men and its result is a rise in domestic violence. Both drinking and wife beating did exist in the past. But drunkenness as a coping mechanism increases domestic violence. A majority of tribal women in Odisha mentioned more drinking and violence than in the past as a major problem they faced23. One understands it better when one realizes that tribal women enjoyed a slightly higher social status than women in caste societies did. But no tribal treated them as equal to men. The relatively high status was linked to their land and forests. As long as their sustenance was community owned, women had some decisions-making power since in most tribal societies they were in charge of the family. These resources were thus the locus of their work that made them economic assets. That was the foundation of their relatively high social status. When the project alienates the resources from them, women lose access to work but do not get access to work in the project. But for exceptions, tribal women who want to work are forced to take up low paid unskilled daily wage jobs. Others are reduced to being house-wives alone living on the man’s single salary. However, they have to continue to play their role of providers of the family even after losing the resources24.

Tribal women resort to three coping mechanisms to deal with these changes. The first is to treat sustenance as a commodity. As stated above the communities that had till then treated the natural resources as renewable, begin to destroy them as a source of income for sheer survival. The second is change of attitude towards children. In the absence of alternatives, the displaced families pulled their children out of the school or did not send them to school in order to turn them into child labourers to earn an income for the family. The third is a new view of women’s bodies. Many women cope with their impoverishment by earning some income to maintain their families by selling their bodies. Prostitution grows enormously among displaced women in general and tribal women in

22 Jeevan,(2000)23 Fernandes and Bharali, (2011)24 Thukral and Singh, (1995)

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particular25. The renewable natural resources are treated as a commodity for present income. Children cease to be providers of future livelihood. They as well as women’s bodies are used as sources of present income. Thus the displaced people and the project affected peoples in Kalinganagar internalize the commercial value system as a source of survival.

The entire process of displacement is disempowering because it breaks up socio-political organisations opposing the project or the development process itself. In the case of tribal, the experience of displacement becomes much more monstrous. They encounter tremendous odds in dealing with the market economy. Their unfamiliarity with modern technology and skills coupled with official indifference to their entry into the mainstream economy pushes a majority of tribal into conditions of servility and bondage26. It is tragic irony that the government – sanctioning authority of development projects - is well aware about these traumas faced by tribal. The Union Ministry of Home Affairs has acknowledged in a report that, “in the tribal areas, where the displaced persons are given only cash compensation, the tendencies to spend the compensation amount by buying consumer goods and becoming destitute are common. In most of the projects, the tribal oustees become listless wanderers without a mooring"27. Even if compensation were just, it would not solve the problem of people’s impoverishment and immediate marginalization.

5. Suggestions

The study clearly suggests that, for environmental, social as well as economic progress of backward regions of the study area the following should be done:

• The displaced should be rehabilitated with care. The rehabilitation programme and its implementation should be accomplished in a planned way, which may slow down the shocks involved with displacement. The government should involve some officials, along with the company officials which will help in successful rehabilitation. While planning and executing rehabilitation and resettlement programmes, one should also take the socio-economic, cultural and livelihood aspects of the displaced into consideration

25 Fernandes and Bharali, (2011).26 Biswal,(2000).27 Freeman,(2011).

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and before implementation, it is important to ensure that participation of the displaced people and their concerns are given priority.

• A good and well-planned rehabilitation and resettlement policy can improve the condition of the displaced and pave the way for building a just society. Only then, development has a meaning for the displaced. The government should stop selling the public purpose land/tribal land to the private industries/corporate houses etc.

• Since forests are an important source of food and income for the tribals in this area, efforts should be made for conservation of forests along with ensuring tribals access to forest for collection of Non-Timber Forest Products (NTFP). Increasing awareness about the Panchayats Extension to Scheduled Areas Act (PESA) and Participatory Rural Appraisal (PRA) and working for its proper implementation will also improve the livelihood condition of the tribals.

• Land is to be given to the government or company only on lease. Therefore, monthly rent is to be paid to the land owner.

• The common/public amenities such as good roads, electricity, telephones, post office, ponds, drinking water, schooling, hospitality, recreation, play grounds, places for worship, cremation and grazing should be properly provided for and maintained. All pending compensation and other facilities promised in the policy and during the time of evacuation should be provided immediately.

• The training provided for the income-generating activities should be further strengthened and marketing arrangements should be provided for the products/services created by the trained people.

• There should be an alternative system of livelihood arranged for all the people, those who lost their agricultural land as well as for those who were dependent on them.

• To achieve sustainable development or inclusive growth and in order to overcome risks, arising out of the development process, without leaving them as the by-products of development, there is the need to deal with the situation properly. Reservation of seats for the children of the displaced families in professional, educational institutions will help the future generations to be better job seekers and to be part of the development processes.

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3. Concluding Remarks

If one looks at development as a social process, it has two components, i.e. the material component and the human component. The material component is necessary but not sufficient, while the human component is the sufficient condition for the development process. It is the primacy of this material component of development which has driven out the STs and SCs and other vulnerable sections of the society including women without integrating them into the production framework. The development policies instead have destabilized the material base. Therefore, despite the modern giant steel plant at Kalinganagar and the Steel City, a number of government and private schools and colleges, markets, restaurants with attached bars, clubs etc., the villages remained at the same level without much change: as poor as it was, as superstitious as it was, as illiterate as it was, as socially tabooed as it was, as unhygienic as it was and without medical facilities as it was. Hence, I would call upon everyone to make an earnest appeal to join hands in bringing under one roof the oppressed sections of the society affected by the projects for a viable alternative in the developmental process.

The present study will no doubt give a picture of how the industrialization based concept of development has been a threat to human security in Kalinganagar of Odisha, so that the planners, administrators, industrialists, environmental scientists and researchers can find the means to solve the issues discussed in the study.

Reference

1. Bhaduri, Amit and Medha Patkar, (2009), ‘Industrialization for the People, by the People, of the People’, Economic and Political Weekly, Vol. XLV, No. 1.

2. Biswal, Durgesh N (2000), Forced Displacement: Illusion and Reality, Manak, New Delhi.

3. Cernea, M. (2000 )’ Risks, Safeguards and Reconstruction: A Model for population Displacement and Resettlement’, Economic and Political Weekly, October 7

4. Dyal,Harishwar, Faria Noamani, Debraj Bagchi and Jaykishan Godsora, (2014) ‘State of the Adivasis in Odisha 2014: A Human Development Analysis’. SAGE publication: New Delhi.

105

5. Dharitri, (2012), In Odia “94 Silpa Sansthaa Neichhanti 36,531 Acre Jami”. ( 94 Industrial Units have taken 36,531 Acreas land), Bhubaneswar, 9 October

6. Fernandes, Walter and Gita Bharali, (2011), “Uprooted for Whose Benefit? Development – Induced Displacement in Assam 1947-2000,” Guwahati: North Eastern Social Research Centre.

7. Freeman, M. (2011), Human rights: An interdisciplinary approach. UK: Polity Press.

8. Gaan, N. (2009), “Climate Change and Threats to Human Security, A Shifting Paradigm”, Reference press, New Delhi.

9. Jeevan K. D. (2000), Rights of Internally Displaced Persons In The Light of the GuidingPrinciples,http://repository.forcedmigration.org/show_metadata.jsp?pid=fmo:3044,

10. Kohli, A. (2012), Poverty amid plenty in New India, Cambridge University press, New York.

11. Lohmann, Lorry, (2006),Carbon Trading: a Critical Conversation on Climate Change, Privatization and Power. Uppsala, Sweden: Dag Hammarskjold Center. Available at- www.dhf.uu.se and www.thecornerhouse.org.uk

12. Meher, Rajkishor, (2003), "The social and ecological effects of industrialization in a tribal region: The case of the Rourkela Steel Plant." Contributions to Indian sociology 37, no. 3 429-457.

13. Mishra, Banikanta, (2006), people’s Movement at kalinganagar An Epitaph or An Epitome? Published in Economic & Political weekly, Feb. 18, 2006.

14. Mohaptra, L.K. (1999), “Resettlement, Impoverishment and Reconstruction in India: Development forthe Deprived”. Vikash Publishing House pvt. Ltd. New Delhi.

15. Pattnaik, Sudhir, (2006), In Odia, “Jagatikarana Prushattabhumire Adivasinka Bisthaapana Samasyaa “ ( Problem of Globalization –Induced Displacement of Adivasi ), Samadrusti April, 1-15

16. People’s union for civil liberties (PUCL) Odisha, ‘Police firing at Kalinganagar, 2nd January 2006 published in PUCL Bulletin April 2006. Available at www.pucl.org/../kalinganagar.htm , accessed on 10th April 2016.

17. Reedy, I.U.B (1994), “Industrial Development and the Problem of the uprooted”, Jaipur: Rawat Publications.

18. Senapati, A. (2013), “Will Fight POSCO till Last Breath” Down to Earth, Centre for Science and Environment, New Delhi.

106

19. Sing, Chatrapati, (1995), ‘Rehabilitation and the Rights to Property’, in Walter, Fernandes and Enakshi Ganguly Thukral (eds), Development, Displacement and Rehabilitation: Issues for a National Debate, New Delhi: Indian Social Institute, pp. 91-103.

Sources Consulted

• Additional District Magistrate (ADM) Office, Kalinganagar, Jajpur.

• Rehabilitation periphery development Advisory Committee. (RPDC), Jajpur.

• Industrial Development Corporation of Odisha, (IDCO), Bhubaneswar.

• State pollution control Board (SPCB), Odisha, Bhubaneswar.

• Visthapan Virodhi Jan Manch (VVJM), 2004.

Return on investment of the Self Help Group enabled Micro enterprises in Odisha

Dr. Radhakrushna Panda1

Abstract

Return on Investment (RoI) analysis is one of several commonly used approaches for evaluating the financial consequences of business investments, decisions, or actions. For ensuring better recovery and to avoid default repayment, banks are very much interested to know the return on investment of different type of business entities. Microenterprise development through Self Help Group (SHG) mode in India has covered a number of milestones through the last two decades. The SHG Bank Linkage Programme (SBLP) anchored by NABARD is largely viewed as a major micro financing intervention in the country. In addition to this programme, there are different other forms of micro financing intervention as reported in different states. Most of the SHGs formed in India have graduated to micro enterprises from micro savings and micro credits. The SHGs engaged in pursuing different economic activities either on individual basis or group basis have taken bank loans and invested in their micro enterprises. It is important to know about the returns generated by these activities and the role of these investments in smoothening income flows or enhancing income streams in poor households. The study on the basis of primary data obtained from 200 SHG led micro enterprises operating in Ganjam and Gajapati districts in Odisha, analyses the Return on Investment of SHG led business activities.

1. Background

Return on Investment (RoI) analysis is one of several commonly used approaches for evaluating the financial consequences of business investments, decisions or

1 Senior Research and Documentation Expert, National Institute of Development Innovation (NIDI), Plot No-693, Near Kalinga Stadium, Nayapali, Bhubaneswar, India

107

108

actions. For ensuring better recovery and non-default repayment, banks are very much interested to know the return on investment of different type of business entities. Micro enterprise development through microfinance is considered a mechanism for poverty reduction based on its capacity to generate employment and raise earnings. Microfinance and Micro enterprise always go hand in hand (Badatya et al, 2006). The SHG Bank Linkage Programme (SBLP) initiated by National Bank for Agriculture and Rural Development (NABARD) in the year 1992 has traversed a long journey from micro savings to micro credits and then to micro enterprises. The recent introduction of SHG-2 concept by NABARD is based on the belief that existing matured SHGs need to be engaged in micro enterprise activities for their sustainability. Guha (2010) remarks, “the success of SBLP depends on the performance of SHGs and the graduation of SHG members into micro entrepreneurs”. Towards this end, many matured SHGs created under the SBLP have graduated into micro enterprises. It is indeed imperative to examine the returns generated from the bank loans acquired by the members of SHGs, for pursuing different micro enterprises and income generating activities. It is also important to assess whether the RoI is sufficient to ensure additional cash flow to the SHG household.

Acknowledgement

Present study is a part of a larger study “Return on Investment of the SHG led Micro Enterprises” for which financial support was provided to the author by Bankers Institute of Rural Development (BIRD), Lucknow. I acknowledge BIRD, Lucknow for this study. However, the errors if any in the study constitute to be the exclusive responsibility of the author.

2. Study Approach and Methodology

Most forms of RoI analysis compare investment returns and costs by constructing a ratio, or percentage. In most RoI methods, a RoI ratio greater than 0.00 (or a percentage greater than 0%) means the investment returns are more than its cost. A business activity with a higher RoI is considered a better choice, or a better business decision. Return on investment is frequently derived as the

109

“return” (incremental gain) from an action divided by the cost of that action. Though there are several methods to calculate RoI, but considering the simplicity of the income generating activities undertaken by the borrowers of SHG, simple rate of return method has been employed to arrive at activity wise RoI. The return on investment formula:

RoI = (Gain from investment–Cost of Investment) Cost of InvestmentOr

RoI=Net Income/Total Assets

For calculating the RoI of SHG enabled micro enterprises two southern districts, Ganjam and Gajapati, were chosen purposefully because they bordered Andhra Pradesh and the success of microfinance programme in Andhra Pradesh has had positive impacts on the functioning of SHGs in these districts. Further, in each selected district, 50 oldest functioning SHGs were identified in consultation with District Micro Finance Coordination Cell, incidentally functioning in both the districts. The SHGs were based in a cluster comprising of adjacent villages in Gumma and Kashi Nagar blocks in Gajapati district and Surada and Hinjilikatu blocks in Ganjam district. Even after covering the oldest well functioning SHGs of the district, very few micro enterprise initiatives were found. Roughly around 5 percent of the SHG members were pursuing micro enterprises. Due to the non-availability of micro enterprises on the ground l, the focus of the study was shifted from micro enterprises to income generating activities. 50 SHGs comprising 100 members from each district adding up to 200 SHG members, constituted the sample size for the study. All the quantitative information pertaining to the study was obtained by administering a pre-designed pre-tested semi structured questionnaire.

3. Findings of Study

3.1 Spread of income Generating Activities

There were 23 business activities that were started with the loan, as reported by the SHG members. These identified activities among 200 sample borrowers (as shown in Table-1) reveal that seasonal business, business related to kerosene, forest produce, grocery etc. in Gajapati district; and agriculture/farming operations, goat/milch cattle rearing, leaf plate making etc. in Ganjam district were some of the prominent business activities. RoI has been calculated for all these

110

identified activities except 3 activities - nursery, biscuit making and pickle/papad making. For these three activities, information regarding sales turnover and cost components could not be gathered sufficiently. Hence, these activities could not be included in the final calculation of Return on Investment. Again RoI for business related to clothes and cloth shop has been separately calculated because in cloth

table 1Distribution of Respondents on the basis of type of iGA/Me for last

one month

Sl. No. ActivityNumber of

respondents in Gajapati district

Number of respondents in Ganjam district

1 Seasonal Business 32 0

2 Hotel Business 0 1

3 Banana Business 1 0

4 Grocery Shop 0 1

5 Cloth Business 12 3

6 Tent House 7 0

7 Forest product business 15 0

8 Nursery 0 0

9 Rice Mill & Business 2 3

10 Biscuit Business 0 0

11 Goat/Milch cattle 0 12

12 Kerosene Business 19 0

13 STD, stationary, pan sop 0 9

14 Agriculture/Farming 1 23

15 Tea Stall 1 1

16 Leaf Plate Business 0 14

17 Bangle Business 7 6

18 Pickle, Papad Making 0 0

19 Tailoring 0 4

20 Weaving 0 3

21 Stone Cutting Business 0 5

22 Chhatua Business 0 9

23 Cloth Shop 3 6

Total 100 100

111

shops, seller has a fixed point of sale whereas in a business, the seller reaches the customers by taking clothes on a cycle. The subsequent section of this write up, analyses the RoI for the rest 20 types of reported business activities.

3.2 extent of Fixed Capital

An analysis of fixed capital is of critical significance for analyzing the RoI of a particular business. Fixed capital influences the total annual cost in terms of the repair and maintenance expenditure, which is the appropriate proxy for defining

table-2iGA wise total Fixed Capital (Average of the total fixed capital)

Sl. No. Activity

Mean Total Fixed Capital in business in Gajapati district

(in Rs.)

Mean Total Fixed Capital in business in Ganjam district

(in Rs.)

1 Seasonal Business 26326 NA

2 Hotel Business NA 10200

3 Banana Business 74886 NA

4 Grocery Shop NA 1500

5 Cloth Business 833 6167

6 Tent House 51384 NA

7 Forest product business 22880 NA

8 Rice Mill & Business 27500 16667

9 Goat/Milk cattle NA 6125

10 Kerosene Business 10634 NA

11 STD, stationary, pan sop NA 7822

12 STD, stationary, pan sop 0 3883

13 Tea Stall 3500 13000

14 Leaf Plate Business NA 5264

15 Bangle Business 7857 7000

16 Tailoring NA 9750

17 Weaving NA 4833

18 Stone Cutting Business NA 1100

19 Chhatua Business NA 20222

20 Cloth Shop 11833 20000

112

depreciation. For the identified activities the extent of fixed capital formation is explained by considering the average of the activity-wise fixed capital. Table.2 shows that the mean fixed capital is highest in banana business and lowest in tea stall business. In Ganjam district, fixed capital is found to be the highest in Chhatua (mix of multi-grain powders used as baby foods and adult breakfast food) business and lowest in stone cutting activity. Chhatua business of the SHGs in Ganjam district is a promising activity because the district level administration has some tie-up with the Integrated Child Development Services (ICDS) programme through which local SHGs supply Chhatua powder to Angan Wadi Centres (AWCs) for their Supplementary Nutrition Programme (SNP). Perhaps this is a very good example of convergence and could be replicated in any part of the country.

3.3 Nature of Variable Capital

Activity wise analysis of variable capital is of utmost significance to arrive at activity wise RoI because such type of variable capital influences the cost structure of the business. The variable capital in the reported business activities were analyzed under two broad categories - total operating expenses and total labour charges. Total Operating Expenses comprise the total money value of different components like raw materials, interest, rent, fuels, electricity, transport and marketing, repair and maintenance and other miscellaneous costs. Total Labour Charges comprise labour charges for hired labourers and own labour charges. Own labour charges was the imputed value of own labour (while carrying out the study) at the minimum market wage rate of Rs.100 per day as fixed under MNREGA scheme during data collection from December 2011-February 2012. Activity wise average value of annual variable capital under different components is shown separately for Gajapati and Ganjam district in Table.3 and 4 respectively.

113

tab

le-3

iGA

wise

Ann

ual V

aria

ble

Capi

tal u

nder

diff

eren

t Com

pone

nts i

n Ga

japa

ti Di

stric

t (in

Rs.

)

Activ

ityRa

w

mat

e-ria

lIn

tere

stRe

ntFu

els

Tran

sp

ort

and

mar

ke

ting

Repa

ir an

d m

aint

e-na

nce

Misc

el-

lane

ous

Ow

n La

bour

Hire

d la

bour

-er

s

Tota

l O

per-

ating

Ex

-pe

nses

Tota

l La

bour

Ch

arge

s

Seas

onal

Bus

ines

s28

800

4283

3131

1485

4058

3113

5648

5032

917

2514

888

1661

2.5

Bana

na B

usin

ess

6000

060

000

3600

024

0018

0012

0096

0010

800

Clot

h Bu

sines

s34

400

040

400

4040

012

1243

690

9100

9100

Tent

Hou

se10

371

5469

3737

1440

3146

010

2926

049

5314

1902

924

342.

86

Fore

st p

rodu

ct b

usin

ess

1164

0012

000

1032

033

6060

0012

000

1120

017

1280

4880

1912

024

000

Rice

Mill

& B

usin

ess

1800

030

0030

0012

0024

0036

0036

0033

600

3000

1680

019

800

Kero

sene

Bus

ines

s53

747

053

3756

842

0015

0331

3968

495

048

0048

00

Agric

ultu

re/F

arm

ing

4800

00

024

000

1200

8400

1200

9600

1080

0

Tea

Stal

l57

6024

0024

000

2400

1200

2400

1656

012

0033

600

3480

0

Bang

le B

usin

ess

3857

185

751

40

2829

023

1445

086

514

9086

9600

Clot

h Sh

op21

200

360

1620

360

2640

024

0028

580

1200

8800

1000

0

114

tab

le 4

iGA

wise

Ann

ual V

aria

ble

Capi

tal u

nder

diff

eren

t Com

pone

nts i

n Ga

njam

Dist

rict (

in R

s.)

Activ

ityRa

w

mat

eria

lRe

ntFu

els

Tran

sp

ort

and

mar

ke

ting

Repa

ir an

d m

aint

e-na

nce

Misc

el-

lane

ous

Ow

n La

bour

Hire

d la

bour

-er

s

Tota

l Op-

erati

ng

Expe

nses

Tota

l La

bour

Ch

arge

s

Hote

l Bus

ines

s14

400

9600

6000

00

3600

3360

00

1800

018

000

Groc

ery

Shop

4200

012

000

1200

4800

2400

062

400

1200

3000

2120

0

Clot

h Bu

sines

s30

800

00

600

016

0038

400

028

000

2800

0

Rice

Mill

& B

usin

ess

2200

016

000

00

4800

2840

028

0028

800

3160

0

Goat

/Milk

Catt

le19

500

010

032

000

6600

2940

018

0029

360

3166

0

STD,

Sta

tiona

ry, p

an so

p19

333

080

020

0086

790

0031

333

2667

2080

023

466

Agric

ultu

re/F

arm

ing

1677

40

783

4534

809

5259

2789

768

3526

598

3353

7

Tea

Stal

l18

000

00

3600

024

0024

000

012

000

1200

0

Leaf

Pla

te B

usin

ess

1260

00

029

140

4714

2022

936

0026

743

3034

2

Bang

le B

usin

ess

3020

00

036

0020

0011

600

4740

030

0023

600

2660

0

Tailo

ring

1380

030

0090

00

2250

1050

030

450

018

000

1800

0

Wea

ving

3200

040

020

0024

8040

037

280

028

000

2800

0

Ston

e Cu

tting

Bus

ines

s12

720

00

1920

600

1440

1668

088

8023

040

3216

0

Chat

ua B

usin

ess

4106

736

0010

000

9067

4400

1000

083

600

1200

040

933

5293

3

Clot

h Sh

op39

000

200

6400

9000

1600

1000

060

200

2000

3140

033

400

115

3.4 Annual Sales Proceeds

Annual Sales Proceeds (ASP) of different business activities are the money value of the total transactions carried out by the identified business activities. Though primary data for such activities were obtained on last month basis, but for calculating RoI, these were adjusted annually. Activity wise value of annual sales proceeds, also defined as gain from investment, for the reported business activities in Gajapati and Ganjam are shown in column-2 and column-6 of the Table 5.

3.5 Return on investment

Activity wise annual RoI for the reported business activities was arrived at by deducting the sum of the Average annual Operating Expenses (AOE) and Average Labour Charges (ALC) from the Total annual Sales Proceeds (TSP) and dividing this figure by the sum of average operating expenses and average labour charges. Out of 20 reported activities in both the districts, 10 activities were found in Gajapati district and 14 in Ganjam district. The calculated values of the average RoIs showed that among all the business activities, hotel business in Ganjam district had provided maximum RoI at 23.26 percent which was followed by Tent House in Gajapati district at 22.53 percent. On the basis of these maximum RoIs, the study pointed out that the maximum RoI for the SHG led micro enterprise could not be more than 24 percent. For the rest of the activities, RoI was found to be less than 20 percent. Less than 10 percent RoI was found to be for seasonal business, forest produce business, rice milling business and agriculture and farming operations. The minimum RoI was found to be for the tailoring work which was as low as 1.44 percent. It was reported that despite such low RoI, SHG members carry out these activities because they provide continuous employment support. It was also reported that the imputed value of the ‘own labour component’ is a key driving force for the sustainability of SHG led micro enterprises in rural areas. In addition to this, majority of members pointed out that RoI was of minor interest to SHG members. Quick availability of money at the time of financial emergencies was the most important reason for becoming a member of SHGs. Further the members lacked entrepreneurial or business competencies due to lack of exposure to markets, low level of business practices, low literacy skills and lack of investment capacity. It was found that the SHG federations created in the district did not organize capacity development programmes for the members of the SHGs. These were found to be the contributing factors for lower level of returns on their business activities.

116

tabl

e 5

iGA

wise

Roi

Sl. N

o.IG

Afo

r Gaj

apati

dist

rict

for G

anja

m d

istric

t

ASP

(in R

s.)AP

E(in

Rs.)

ALC

(in R

s.)RO

IAS

P(in

Rs.)

APE

(in R

s.)AL

C(in

Rs.)

ROI

2Se

ason

al B

usin

ess

7269

050

329

1661

29.

92NA

NANA

NA

2Ho

tel B

usin

ess

NANA

NANA

6360

033

600

1800

023

.26

3Ba

nana

Bus

ines

s29

400

1800

010

800

2.08

NANA

NANA

4Gr

ocer

y Sh

opNA

NANA

NA10

8000

6240

031

200

15.3

8

5Cl

oth

Busin

ess

5907

243

692

9100

12.6

068

000

3840

028

000

2.81

6Te

nt H

ouse

6325

726

049

2434

222

.53

NANA

NANA

7Fo

rest

pro

duct

bus

ines

s20

9600

1712

8024

000

7.36

NANA

NANA

8Ri

ce M

ill &

Bus

ines

s57

600

3360

019

800

8.12

6800

028

400

3160

012

.49

9Go

at/M

ilk ca

ttle

NANA

NANA

6970

029

400

3166

015

.22

10Ke

rose

ne B

usin

ess

8178

968

495

4800

11.7

7NA

NANA

NA

11ST

D, st

ation

ary,

pan

sop

NANA

NANA

6020

031

333

2346

610

.16

12ST

D, st

ation

ary,

pan

sop

2040

084

0010

800

6.25

6960

027

897

3353

711

.20

13Te

a St

all

6000

016

560

3480

016

.82

4200

024

000

1200

016

.67

14Le

af P

late

Bus

ines

sNA

NANA

NA56

743

2022

930

342

11.2

4

15Ba

ngle

Bus

ines

s62

314

4508

696

0019

.27

8040

047

400

2660

014

.48

16Ta

ilorin

gNA

NANA

NA46

200

3045

018

000

1.44

17W

eavi

ngNA

NANA

NA78

000

3728

028

000

19.1

8

18St

one

Cutti

ng B

usin

ess

NANA

NANA

5376

016

680

3216

010

.09

19Ch

hatu

a Bu

sines

sNA

NANA

NA14

6733

8360

052

933

12.9

8

20Cl

oth

Shop

4400

028

580

1000

014

.66

1118

0060

200

3340

019

.10

117

4. Concluding Remarks

The calculated values of the average RoIs showed that among all the business activities, hotel business in Ganjam district had provided maximum RoI followed by Tent House in Gajapati district. On the basis of maximum RoI, study pointed out that maximum RoI for the SHG led micro enterprises could be 24 percent. For a significant number of SHG run business activities RoI was found to be less than 20 percent. It was reported that despite such low RoI, SHG members carry out these activities because of continuous employment support. The imputed value of the own labour component is the key force driving for the continuance of SHG led micro enterprises in rural areas. It is further viewed that getting profit by doing business is of secondary importance. Majority of members continue to remain active under SHG programme because SHGs have been proved to be enormously successful in delivering prompt credit to its members at the time of financial emergency. It is suggested that the members of the matured SHGs can become more successful in their business activities if these members are provided with capacity development programmes by NABARD by involving NGOs and SHG federations.

References1. Badatya, K. C., Wadavi, B. B. and Ananthi, S. (2006). “Micro Finance for Micro Enterprises:

An Impact Evaluation of Self Help Groups”. Evaluation Study Series, Andhra Pradesh, No-13, NABARD. Andhra Pradesh Regional Office, Hyderabad.

2. Guha, Samapti (2010). “Micro Finance for Micro Enterprises: An Impact Evaluation of Self Help Groups”. Occasional Paper-55, Department of Economic Analysis and Research, NABARD.

118

Urban Affiliation and Wellbeing: Study of Female Domestic Workers of Kolkata

Harasankar Adhikari1

Abstract

This study examined how employment and attachment to the urban place brought changes in personal as well as others in the family domain of life including their ability to manage basic needs, children’s care and education of female domestic workers of Kolkata about their socio-economic status, educational background, income pattern and changing dynamics as determinants of their development. The study showed that firstly it influenced significantly in their personal life and secondly, they were participating in their public domain of life through political rights, women’s agencies and community development. But patriarchal based gender practice and social security measures at post retirement life were neglected and it was their prime hindrance to achieve equity and justice. The ‘secular education’ and orientation for social security measures would be introduced rapidly to ensure their happiness at post retirement.

Women’s development is a broad perspective where social and economic opportunity plays the central role. It facilitates freedom of choice in daily life of an individual (Sen, 1999:32). It might be compared globally with the role of basic education in social transformations and it emphasizes the importance of women’s agency in bringing major changes is another central area to be measured. Women’s independent income from paid sources and their education could enhance their social status in their family as well as society. The meaningful employment of women is significant for her development and well-being (Dreze and Sen, 2002: 67-68).

Historically, it has been seen that women use to perform most of valuable labour throughout the globe whether it is bearing and caring of children, domestic activities marketing of foods and working in shops to factories and offices. Bringing up family and work -two jobs would be considered utterly opposed

1 A Social Worker based in Kolkata, India

119119

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and mutually destructive. No one asks these women about their feelings of conflict, their problems with child care, the luxury of caring for a baby whose mother chooses to work outside the home. “War against the poor”- The public and the private spheres are still in disjunction. Due to labour demands of global economy, working class women continue to be demonized for both poverty and their employment (Rich, 1996: 13). It reminds us that Factories Act did not end capitalism, but they changed the relations of the workers to their own lives.

The relations between production and reproduction has been differentiated the activities performed by both genders (male and female) in a family as well as society. But the property rights to women and the emergence of marriage institution transform the status of women as men’s property. It is the historic defeat of the female sex and the emergence of patriarchy. The female lives are trapped within the realm of reproduction. From that time, female folk was considered as “the second sex” and their identity is associated as counterpart of male counterpart, nay they have little or no self-identity. Thus, the gendering and gender practices were the causes of violence against them in manifolds. It was (the) prime cause of darkness of each society because women are the key change agent of every society which was realized by the American society. Social reforms and women’s development initiatives have brought subsequent changes in their daily affairs. So, the development of the nation is determined by the development of women in particular country. So, according to Engles (1948), the emancipation of women and their equality would be possible when they would take part in production on large social scale, and domestic duties would be a minor (Engles, 1948). To add to it, structural transformation towards equality is not a structural adjustment to intensify inequality (Mazumdar, 2007: 46).

To cure depressed economy in a country like India, globalization was welcome through rapid urbanization and industrialization which are the ‘ingredients of economic, social and political development processes spurred by a relatively resilient monetary economy, a shift from agricultural to nonagricultural employment, including that in industrial enterprises and services, the spread of social amenities, and drastic changes in socio-cultural systems which have transformed urban environments’ (United Nations, 1969). Thus, urbanization and economic development are co-factor of development in the developing countries (Lampard, 1955: 72), and it guides towards a socially desirable pattern of economic transformation (Jones, 1972: 132-35).

The explosion of middle classes in Indian society is a significant one because not only material civilization nay consumerism is traded new commodities in new

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markets where money is the marker of social status. Emergence of new class relation in the division of labour is an important impact of consumerism and materialism (Hoselitz, 1969: 73-75). To add to add it, a middle class life style is the resilience on domestic help in different forms i.e. the maid, the cook or a lesser extent, and the driver, etc and dependence on domestic help is a distinct feature of middle class (Mahapatra, 2009:85).

It generally creates a labour market to serve the middle classes in urban areas. So, it facilitates rural migration significantly (Lipton, 1977: 29). In the third world cities it has been seen that there are various economic activities in urban areas. It builds up an urban-rural interdependence relationship. This circumstance creates a scope of human development through emergence of various services sector in urban area. It obviously increases the rate migration as well as mobility of people from rural to urban area. And women’s mobility in searching of job in urban area is an important area because it increases social and economic exchanges between rural and urban area. Changes in life styles and life choices i.e. pattern of relationship and interaction, food habits and so forth are the result of this transformation.

This study attempted to evaluate various development aspects of female workers for domestic helps in urban area. By the way, it was also observed- was their future life safe and secure? Had their involvement in employment brought any changes in their life so far as women’s development for equity and justice was concerned? Was it a new platform for their harassment or the new way of deprivation of female in the society?

1. Aim of the Study

Aims of the study was to explores the changes in the social and economical life of maid servants; to explore how they used to perform their role as mothers and housekeepers, and their conflict of interest as working women; and would it be a pathway for their empowerment in terms of gender justice and gender equality?

2. Participants/informants

Daily affairs of urban middle and higher classes are depending on female domestic workers (maid servants) who are considered as unorganized wage

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earners of Kolkata and its suburban area (only metro city of Eastern India). Their job patterns are usually for cooking, washing utensils, cleaning houses and cloth, taking care of their children as matrons. The working hours are limited for few hours in a day. They are unregistered and their recruitment process is based on an informal channel i.e. Personal contacts and different recruitment agencies. There is no policy or control mechanism regarding recruitment, fixation of wages and so forth. Even sometimes, they are being recruited through verbal contact and mutual understanding.

They belonged to basically lower social and economic strata of varied religious background (Hindu or Muslim). And they were residents of either at the adjacent districts of Kolkata or residing at slums within the city. Marital relation spoke that a significant portion of them was deserted by their male partner or divorced. Majority of them was sole earners of their household and they used to maintain their children and other members of their families. Their male counter parts hardly shared or took care of their family. But their affiliation to urban area significantly brought changes in their life style and life choices.

3. Apparatus

For the purpose of this study, 200 domestic workers of 20-45 years of age were selected adopting random stratified sampling. And the following parameters were followed in selecting these respondents: Respondents were daily commuters (100 nos.) and respondents living in the city. Data collected on their socio-economic status, marital status, children status, income pattern and use of income for self and for household purpose, their role and participation in decision making process, magnitude of violence facing in their daily life within family and at work place, and their association with women’s agencies. A structured interview schedule and focused groups discussion were used to collect data.

4. Finding of the Study

4.1 Age, Marital Relation and Residential Pattern: Criteria for Selection of the informants

Table.1 described the factors (age, marital relations and residential pattern) of

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engagement of the informants. It was found that respondents age i.e. 25-30 years and 30-35 years were more suitably attached to the job of maids because both age groups represented 65.5%. Altogether it was found that among them, 42% females were distressed or divorce. They chose it as their self dependent means of survival. Due to the loss of their physical ability the age group 35-40 years was not suitable for this job. Here we found only 13.5% of the females of 35-40 age were in this job.

4.2 educational Status of the informants

Table.2 simply stated the educational status of the informants in this study. In their job education was not a determining factor of getting a job. We find that highest percent (39.5) had primary level education and their urban affiliation did not bring for attainment of their higher education like the females who were living in the rural area. Poor education also led a distressed /divorce marital status and it was 3% more among females living within the city. Of them 26.5% informants had class V-VIII education and their percent was 3% more in case of informants living in the city. Rate of distressed/divorce informants was almost double among the informants living within the city. The informants of rural

table.1Distribution of the informants According to Age, Marital Relations

and Residential Pattern

Age group

Daily commuters to the work place Living within the city

TotalLiving with husband

Distressed/Divorced

Living with husband

Distressed/Divorced

20-25 Yrs

13(6.5%)

6(3%) 13(6.5%)

10 (5%) 42 (21%)

25-30 yrs

18 (9%) 14 (7%) 22 (11%) 16 (8%) 70 (35%)

30-35 yrs

22 (11%) 12 (6%) 14 (7%) 13 (6.5%) 61 (30.5%)

35-40 yrs

9 (4.5%) 6 (3%) 5 (2.5%) 7 (3.5%) 27 (13.5%)

Total 62 (31%) 38 (19%) 44 (22%) 46 (23%) 200 (100%)

Source: Field Work

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background i.e. those who were daily commuters were high in percentage for their higher education. Out of 12% of the informants who had secondary and above education, 8.5% informants were daily commuters and they had no other alternative means of earning rather than domestic help.

4.3 earning Pattern of the informants

The informants had joined in this job for meeting their basic needs daily. But gradually their increasing income and affiliation to their work place had influenced for saving and other activities. Their earning ranges (Table.3) were between Rs. 2000-5000 (USD 33 – 66) or above per month. From this table we found that only 13% had an earning of about Rs.2000 (USD 33) per month. But majority of them (24.5%) earned about Rs.2000-3000 (USD 33-50) per month. Earning range Rs.3000-4000 (USD 50-66) per month of these respondents was 32.5%. Earning range within Rs. 4000-5000 (USD 66-82) per month was for 16.5% respondents. Highest earning range was above Rs.5000 (USD 82 and above) per month and 8.5% of them was fallen under this group. The age group of 25-30 years and 30-35 years were more suitable for this job because by that period, women were more physically fit and it was suitable for rapport and familiarity in their working places. The females of 20-25 years were new comers and they were low earners while females of 35-40 years were low earners because of their physical inability.

table.2educational Status of the informants

Educational back-ground

Daily commuters to the work place Living within the city

TotalLivingwith husband

Dis-tressed/ Divorced

Livingwith husband

Dis-tressed/ Divorced

Unlettered 11(5.5%) 8(4%) 7(3.5%) 2(1%) 28(14%)

Upto Primary level(Class-IV) 19(9.5%) 17(8.5%) 20(10%) 23(11.5%) 79(39.5%)

Class V-VIII 21(10.5%) 9(4.5%) 19(9.5%) 17(8.5%) 53(26.5%)

Secondary level/Pass school certificate 11(5.5%) 3(1.5%) 6(3%) 4(2%) 19(9.5%)

Higher Secondary and above 2(1%) 1(0.5%) 2(1%) – 5(2.5%)

Total 62(31%) 38(19%) 44(22%) 46(23%) 200 (100%)

Source: Field Work

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4.4 Reproductive Status of the informants

From Table.4, we get the children’s status of these females in respect of their age. Some of them (31%) of 25-30 years had children below 5 years of age and higher age group of their children (4.5%) was 5-10 years of age. But 20% of them of 20-25 years had children below 5 years and only 1% had children of 5-10 years of age.

The above picture was differed among the females of 30-35 years and 35-40 years. Among them (9%) of 30-35 years had children below 5 years, 16% of them had 5-10 years and 6.5% had children 10-15 years of age.

table.4Distribution of Children According to the Mothers’ Age

Age groupChildren’s age group

TotalBelow 5 Yrs

5-10 Yrs 10-15 Yrs 15-20 Yrs 20 Yrs & above

20-25 yrs 39(20%) 2(1%) – – – 41(20.5%)

25-30 yrs 62(31%) 9(4.5%) – – – 71(35.5%)

30-35 yrs 18(9 %) 32(16%) 13(6.5%) – – 63(31.5%)

35-40 yrs 2(1%) 4(2%) 13(6.5%) 4(2%) 2(1%) 25(12.5%)

Total 121 (60.5%) 47(23.5%) 26(13%) 4(2%) 2(1%) 200

(100%)Source: Field Work

table.3Monthly income of the informants According to their Age

Age groupIncome per month / Contribution to their family

TotalRs.2000/- Rs.2000/- -3000/-

Rs.3000/- -4000/-

Rs.4000/- -5000/-

Above Rs.5000/-

20-25 yrs 12(6%) 18(9%) 6(3%) 6(3%) – 42(21%)

25-30 yrs 8(4%) 20(10%) 32(16%) 5(2.5%) 5(2.5%) 70(35%)

30-35 yrs 6(6%) 14(7%) 15(7.5%) 16(8%) 10(5%) 61(30.5%)

35-40 yrs – 7(3.5%) 12(6%) 6(3%) 2(1%) 27(13.5%)

Total 26(13%) 49(24.5%) 65(32.5%) 33(16.5%) 17(8.5%) 200 (100%)

Source: Field Work

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Children status of the females of 35-40 years showed that 1% females had children below 5 years, 2% of them had 5-10 years. Of them, 6.5% females had 10-15 years, 2% females had 15-20 years and 1% females had 20 years and above.

4.5 Children’s Health Status during One Year of this Study

We got health status of the children of these informants during one year of the study (first half of 2013).

Table.5 described that their children were suffering mainly from the diseases like fever, cold & cough, respiratory infection, stomach infection, skin diseases and diarrhea, etc. twice – thrice in a year. And 50% and more children suffered from skin diseases about more than four times. We found that their pattern and frequency of illness had been decreasing

5. Analysis of the Findings

5.1 their economic Relation in their Family

The informants of this study were from socio-economically poor community. In their life, males were associated variously. Majority of them was disserted by their husbands or their husbands were insignificant or parasitic in their life because they had no instrumental role of financial support and joint planning in the family. In these cases, the female folks were independently taking their

table.5Children illness during a Year

Nature of Illness

% of children suffered and frequency in a year

Once Twice- Thrice

Four times-

Five times

More than 6 times

Fever, cold and cough 10-15% 40-50% 15-20% 10-15%

Respiratory infection 20-25% 50-60% 5-10% –

Stomach infection 15-20% 30-40% 10-15% 5-10%

Skin diseases 10-15% 20-25% 50-55% 10-15%

Worm infection 20-25% 30-40% 20-30% –

Diarrhea 10-15% 40-50% 20-25% –

Others 30-40% 50-60% – –Source: Field Work

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decision relating to self-management, and management and care of their offspring. Their choice and life style were not walled by their partner.

Secondly, those who had stable nuptial relation were supervised by their husband as watch dog because they were dubious about their engagement in work force and it was a cause of strife regularly. On the other hand, when they were involved in joint planning for their better family management, its result was effective. Her earning usually spent for their children’s education, health care and they spent their earning for fruitful purpose of their family. In all cases, somehow, they were trapped by the culture of patriarchy existing in our society because they were still considered as “the second sex” and their earning was for betterment of their family nay their economic independence for their equity and justice.

5.2 Changing living Standard or life Style and life Choices of the Domestic Workers

It was revealed that female folks (maid servants) were engaged in this job and even, they were regularly commuting their work place ignoring their difficulties so far as transportation and other obstructions were concerned aimed to save themselves and their household from poverty. Their earning was basically incurred for their daily needs i.e. food, shelter, cloths and children’s education, and so forth. Non-availability of jobs as per their suitability in their locality was the prime cause of joining as domestic workers.

Their mobility towards urban area and affinity with the place had brought changes their life style and life choices. Interaction with their employers and other as well as their fellows was significant in their life. Their work had also a demand for better management of themselves so far as their cloths/dresses and personal health and hygiene were concerned. The material civilization and consumerism in urban life attracted them to turn their behavior- “happy go lucky”. So, it was observed that majority of them maintained at least their beauty care and cloths standard. They used to visit qualified registered practitioners for their health care purpose. In this study, 95% of them adopted birth control strategies and small family norms with only two children and their attitude towards gender preference for male child had been changed. Their sacrifice and devotion were restricted for their family’s betterment and children’s future. They opined that their children would take proper care in their elderly life. So, their investment for their children would be their future insurance. Depending on their earning, about 30% of them up-graded their shelter and about 80% of them arranged modern amenities i.e.

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television, music player, water purifier and so forth. Only 30% of them had their monthly saving scheme in bank or post office.

5.3 effect of Changing Role as Caregiver of Children as well as Family

The informants of this study were the primary care givers of their children and they performed dual duties of instrumental and expressive leaders (Jamaison, 1998:85). The micro and macro world (Waksler, 1991: 21) of these children were being influenced by their mothers attachment. Their occupation was the prime hindrance of fostering their care and attention as per the requirement of their children. Consequently, they had to depend on the secondary care-givers who were their relatives, elder siblings or neighbors. The informants used to prepare their feeding before their leaving at early morning. They also used to provide some guidelines to care givers (secondary) or to their children for their feeding, bathing and other aspects. They used to take rice, chapati, puffed rice, dal, vegetables and sometimes fishes, eggs and meat at least once in week. Personal hygiene care like bathing was monitored either by their care-givers or it was a self managed process.

We found that their earning was low in respect of their labour input and working hours. But their daily attachment to their employers (called higher classes) influenced their care for their children’s health and hygiene. Thus, they (60%) used frequently to give health drinks (beside cow milk) and fruits to their children.

The secondary caregivers used to take care of their children during their illness. But at the time of serious or prolonged illness, the informants took leave from their job either with prior permission to their employers or desperately in spite of threat in their occupation. The children who reached to 8 years or more, they were managing themselves alone.

5.4 the education Status of their Children

From the collected data on their social, educational and economic background, we find that they were deprived of opportunities for development needed at their childhood. They faced gender based negligence in their natal family. But changing scenario due to their employment and attachment to urban area, turned their attitude towards their children’s education. It was observed that all of them were supporting their children’s education. The children of 60% domestic workers were attaining high school and completed secondary and higher secondary examination. The offspring of 20% informants were attending college for their bachelor degree

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in general stream and it excluded the children of 5% informants who were in technical education. Another group of children of 10% informants were in their university for post graduation. Their family environment and interaction with social world along with their continuous support and encouragement were the prime stimuli to their children. So, we find that the informants had taken appropriate control strategies for their children’s development.

5.5 Dynamics of Relationship with employers

In this study, we found that majority of the informants (84%) dealt with more than on employers according to nature of their work and wages. Only 14% of them were fixed their work with one employer. When we analyzed their recruitment process, it was revealed that there was no scheduled process. They were either self-introduced or their fellow workers (sometimes their relatives) introduced them with their prospective employers. Here, it had been seen that they were not registered workers or they had no workers’ union. A few of them (2%) recruited by job placement agency. Therefore, there was no fixed rule and regulation. Their job was generally finalized according to the nature and volume of work comparing with wages. Both of them (employee and employer) fixed their date of payment (once in month) and leave, and other benefits i.e. bonus, advance and so forth. They used to perform their particular job in schedule hours daily and thus, they used to maintain their relationship with their employers. The conflict or commotion, if any arose, used to resolve by them. They mutually turned over their jobs. Here, there was not third party interference in their relation with their employer(s). These female folks were from socially and economically as well as educationally from depressed community. But they were very much conscious in relation to their demand/rights in work place and they did not hide themselves to bargain their rights and duties. Urban affinity and work relations had brought their attitudinal change for their survival.

5.6 Domestic Workers in Public Affairs

The affinity to urban places which was their work place had been changed their dynamics of life. From their educational back ground, we found that they had less education which was in generally without doubt not enough to be acquainted with daily social, political and economical debate. It was more impossible if they confined their life within their household. The interaction with urban life and attachment to the electronic media was made them conscious about the social, political and economical aspects in their daily life.

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Case i:

Jamuna (35years) were about 10 years as maid servants. She used to commute her work place from rural area daily. She had education upto class VIII. She generally returned back from her work place by 2:00 pm daily. She was regularly participating in development process of their Gram Sabha. She was a member of village planning committee.

Case ii:

Sandhya (28 years) was living at slum of South Kolkata. She was about 10 years in her job of domestic workers. She was also affiliated member of a political party. Her daily working hours were limited for 5 years daily. She was a member of local committee of her affiliated party. Shed used to regularly organise meeting and used to participate in policy formulation at their level.

They were actively taking part in political discussion and participation in politics so far as development schemes were concerned. They were sensitized how to move for any demand and justice to the appropriate authority. They learnt how to negotiate with authorities for their own as well as community development at their villages/slums.

They formed their own platform for development and it was registered as self-help groups. As members of these groups they participated in economic development programme, joined in micro-credit, and so forth. They used to access benefits individually or collectively. Their social awareness was raised for resolution of any crises. But according to them, due to government level default in policy was caused to dissolve their platform or these were not in active presently.

But they were active members of a particular political party of their choice. Regularly they were participating in activities undertaken by their affiliated political party. Here, it might be reminded that their political affiliation was restricted depending on their males’ choice or according to the benefits to be provided by their party.

6. Conclusion

The urbanization as well as globalization influences the growth of trade and services sector rather than sustainable industrial development as expected.

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Consequently a new middle class who are dependent on paid employees for domestic help in their daily affairs considered to be a symbol of status has been emerged in our society. The non-agricultural development and poor economy and others factors are the cause of increasing migration of people from rural to urban. Poor economy status and patriarchy are the factors pushing the female of poor depressed class to develop work relations with urban area. Domestic help sector is an important sector of employment of women of low education and poor background. A sizable number of women are engaged as domestic helpers in Kolkata city. Basically there is no particular process of recruitment of these workers. There is not any such organisation for their registration and so forth. It is open process. But the involvement of female in this earning process brought meaningful changes in their daily family life where food, shelter and cloths usually managed by them without support of their male partners (more than 50%). They were conscious about self-care, but it was second priority because their family management with children care and development were significantly primary. On the other part, they oriented a skill of decision making in their family and at their work place alone. The management of work and their employees were under their control and they were well-enough to deal with their relationship with their employers. Their interaction and affiliation were turned their participation in development of their community, politics and their own agencies for collaborative action.

Lastly we observed that gender practices and gendering in Indian patriarchy were their controlling force for their equity and justice. In their employment, there was no social security measure at their postretirement. It was strictly based on “no work no pay”. Their earning was almost spent for their family including children’s education and so on. But when their children would not be extended their support to their elderly mothers, their living would be faced crisis at their postretirement.

So, the scheme for saving for their retired life would be facilitated and secondly there is need of secular education (skill information in relation to agricultural production and industrial technology) for their safety and security at elderly days.

“The water in a vessel is sparkling;the water in the sea is dark.

The small truth has words that areClear; the great truth has great silence”.

Tagore, Stray Birds, CL XXVI

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Reference1. Dreze, J. and Sen, A,(2002). India Development and Participation, New Delhi: Oxford

University.2. Engels, F. (1948). The origin of the Family, Private Property and the State, Moscow: Progress

Publishers3. E.E. Lampard, (1955). ‘The History of Cities in Economically Advanced Areas’, Economic

Development and Cultural Change, Vol. 3(page not mentioned)4. Hardoy, J.E. and Satterthwaite (1989). Squatter Citizen: Life in the Urban Third World, London:

Earthscan Publications5. Jamieson, L (1998). Intimacy, UK: Polity Press6. Jones, Gavin W. (1972). Implications of prospective urbanization for development planning

in Southeast Asia, New York: Asia Society 7. Lipton, N. (1977). Why Poor People Stay Poor: Urban Bias in Developing Countries, London:

Temple Smith8. Mahapatra, S.(2009). ‘The Explosion of the Middle Class’ in Contemporary India: Economy,

Society, Politics edited by Chandhoke, N and Priyadarshi, P, India: India Dorling Kindersely9. Majumdar, I. (2007), Women Workers and Globalization: Emergent Contradiction in India,

Kolkata: Stree 10. Oberai AS, Singh HKM. (1983). Causes and Consequences of Internal Migration: A Study in

the Indian Punjab. New Delhi, India: Oxford University Press11. Rich, A. (1996). Of Women Born: Motherhood As Experience and Institution, USA: W.W

Norton & Company12. Sen, A., (1999). Development as Freedom, Oxford: Oxford University Press13. United Nations. (1969). ‘Growth of the World Urban and Rural Population, 1920 – 2000’,

Population Studies No. 44, New York: Department of International Economic and Social Affairs)

14. Waksler, F.C. (1991). Studying the Social World of Children, UK: Routledge

Women entrepreneurship and Micro Finance: A Case study of Goa

Dr. Seema P. Salgaonkar1

Abstract

Micro financing has given an impetus to the growth of Women Self Help Groups (WSHGs) which in turn have given a fillip to women entrepreneurship, especially in developing countries like India. The main focus of the paper is to study the extent to which micro financing has resulted in growth of women entrepreneurship. The study is conducted in the state of Goa. Data is collected through in-depth personal interviews with members of WSHGs. Sample respondents consisted of members of the WSHGs from all over Goa. Emphasis is laid on qualitative analyses of data collected. Case study method is adopted for substantiating the argument made.

The study reflects that micro financing and formation of WSHGs has helped in exploring the chances of springboards for women to be independent entrepreneurs. However the transformation is never an easy one. There are various challenges faced by women members in both the cases, either venturing in group entrepreneurship or being individual entrepreneurs. The study reflects that there are various factors that influence entrepreneurship among the members of WSHGs. Issues like bank WSHG linkage, nature of membership, infrastructural facilities, marketing facilities, risk taking ability, societal attitude etc. need to be understood and analyzed for enabling women to become effective entrepreneurs.

1 Associate Professor in Political Science, Government College of Arts, Science & Commerce, Khandola – Marcela, Goa, India. email: [email protected]

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1. introduction

The United Nations Report has concluded that economic development is clearly related to the advancement of women. In the nations where women have advanced, economic growth has usually been steady. Advancement of women promotes women entrepreneurship and more women entrepreneurship leads to women empowerment. Encouraging women entrepreneurship also contributes to the national growth.

Various reasons are cited for women opting for entrepreneurship. Moore and Buttner (1997) have given reasons like need for self determination, self esteem, expectation for recognition etc. which motivates women to take up entrepreneurship. In developing countries, women may take up to self employment and resulting entrepreneurship for different reasons. In these countries, especially in informal sector at micro level, the poor economic conditions force women to take up self employment. It is not easy to take up individual business and be successful in it. Various obstacles slow down the process of women becoming successful entrepreneurs. Lack of access to sufficient funds, balancing of roles between family and business, lack of infrastructure, risk aversion, lack of confidence, gender discrimination, lack of training opportunities, inaccessibility to information, lack of leadership and motivation, difficulty in negotiating with the banks etc. affects women entrepreneurship.

The rise of Women Self Help Groups (WSHGs) is seen as a panacea to many of these problems. WSHGs are viewed as a great booster for the rise of women entrepreneurship in developing countries. Across the world, women account for 90 percent of the borrowers or clients of micro credit and the most accepted strategy for disbursement of micro credit is through women at group level. UN’s Millennium Development Goal has emphasized on provision of financial support to the poor or low income people by realizing the fact that instead of targeting individual development it would be more useful to apply this idea to group development. This is mainly because it is easy to form and sustain women’s groups with credit as the binding activity, and it is believed that women are better at repayment and have higher creditability than men. Women groups based on credit also receive social sanctions easily. Thus micro credit today has transcended its limited boundaries as credit which is not only accessible to the poor, but is a comprehensive strategy for poverty alleviation and promotion of women entrepreneurship. It is seen as a solution for solving women’s difficulties for obtaining finance as the savings of the group itself acts as collateral. Thus

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WSHGs are increasingly assuming the role of a facilitator for creation and nurturing of women entrepreneurship.

2. literature Review

Malhotra (2004) examines how women entrepreneurs affect global economy, why women start business, how business association promotes entrepreneurship and the role of micro finance in producing women entrepreneurship. Studies undertaken so far to examine the impact of micro finance on women entrepreneurship through WSHGs reflects mixed results. A study conducted way back in 1999 in two different project areas of Chitradurga district of Karnataka and Periyar district of Tamil Nadu concluded that the informal groups of rural poor with active intervention of NGOs, adequately supported by training and financial subsistence, ensured and also significantly improved women’s participation both from economic and social aspects (Puhazhendhi & jayaraman, 1999). Another study conducted in Kanyakumari District with around 6000 SHGs and membership nearly 100000, revealed that women trained through SHGs had taken to self employment and were involved in the production and sale of products like syrup, shampoo, pickles and soap (Selvi 2005). A study conducted in Belgaum and Haveri districts of North Karnataka during 2004-2005 with a total sample size of 240 WSHGs members observed that there is a good impact on economic aspects of the members and improvements in their material possession, financial position and total family income. There is a good improvement in the employment generation because of improvement in the different income generation activities (Hirevenkanagoudar et al. 2007). A Study from Ludhiana district of Punjab and Kancheepuram from Tamil Nadu made the following observations. Success of any enterprise is determined by factors such as entrepreneurial and management skills of the entrepreneur. It further observed that, in Sriperumbadur one group was formed which started a super bazaar as part of Poomalai complex near bus stand. This group of 12 women was formed to start a provisional store. Later this store was converted into modern super bazaar in Poomalai complex (Reddy et al. 2004).

Despite so many WSHGs mushrooming and so much credit being disbursed, not all WSHGs are a success story. This may be chiefly due to non availability of the right credit at the right time and in right quantum. A study on SHGs in Pondicherry concludes that among the problems encountered by the SHG respondents, the

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first rank, (mean score 63%) was given to the problem ‘loan not received on time’ as a result of which production activities suffered (Nirmala 2004). Manimekalai and Rajeswari (2000) in their study on SHGs in Tiruchirapalli district of Tamil Nadu found that the dominant problem faced by the WSHG members was shortage of capital. Further the units engaged in service provider business performed better and helped to repay the loan on time, whereas the production units not only failed to generate its own capital but also affected loan repayment.

There could also be reasons related to the group members which may affect group entrepreneurship. A study on SHGs in Tamil Nadu observed that the assistance under the SGSY scheme reached the intended beneficiaries, however the groups by and large failed to turn into micro enterprises as they were risk-averse. The study suggested that imparting skills and disbursement of credit alone would not lead to promotion of entrepreneurship among the members of the groups. Efforts were to be initiated to cultivate risk bearing ability among the members of the groups (Narayanswamy 2005).

Falendra (2003) in a case study on micro enterprises under SGSY in Jammu & Kashmir, observed that the skill development of the Swarozgaries was not attempted, and that the training funds remained unutilized or misappropriated. Manimekalai (2004) in his article observed that to run the income generating activities successfully the SHGs must get the help of NGOs, and that the bank officials should counsel and guide the women in selecting and implementing profitable income generating activities. Another study reflected that women were not interested in group activity. Making of the groups into entrepreneurial groups appeared to be inviting problems for their interpersonal relations. Lack of group efforts in attending to critical inputs such as raw material, technology and training were some of the missing links to make enterprise viable (Reddy 2004).

3. the Problem

The main focus of the paper is to study the extent to which micro financing has resulted in growth of women entrepreneurship. The important questions probed are: Does formation of WSHGs guarantees women easy access to finances? Does availability of finances ensure success of the entrepreneurship? What other factors, besides finance, are necessary for starting up and sustenance of any business activity?

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Case Selection

The present study is conducted in the state of Goa. The state is selected because of the following reasons. Goa has had a long colonial history. While the British ruled India for barely 200 years, Portuguese ruled Goa for nearly 450 years. Thus the impact of the Portuguese domination, in political and socio-cultural terms, has been deeper as compared to the impact of the British domination in India. Portuguese introduced various reforms like ban on Sati and child marriage, promoted widow remarriage and education for women. Goa, unlike the rest of India, has a Uniform Civil Code (UCC). The laws with regards to property, inheritance, marriage and divorce have given women legal equality at par with men. This has had a significant impact on the social status of women in Goa.

Goan society is undergoing an economic transformation from agriculture and fishing to industrialization. Industrialization has resulted in both positive as well as negative impact on women in Goa. It has created more employment opportunities, though it has adversely affected primary sector where women were employed on a larger scale. It has also affected the ecosystem, damaging paddy fields and increasing shortage of water and electricity which has resulted in increasing burden of development on women. The cultural contact with the West is significant because of tourism. However the increasing visit of tourists to Goa has resulted in increasing the cost of living in Goa. Migration of male members of the family in search of jobs to other countries, especially to Gulf countries, is another factor which has influenced women’s position in Goa. The migration of male members in the family has led to tremendous influence and change in life of female family members. This has also led to female dominated families, where women control the expenditure and investment of the valuables: and decides how to manage their property, children’s education and family consumption. It has led to confidence building in these women. The social mobility enjoyed by the women has had positive impact on the minds of people, resulting in granting larger space and scope for women in Goa. So when these women have got an opportunity through WSHGs to establish themselves as entrepreneurs it is expected that they will take it up and make the best out of it.

4. Data Collection

The required data for the study was collected in two phases. In the first phase the data was collected through in-depth personal interviews with the members

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of WSHGs. This comprised of data dealing with the personal attributes of women members, functioning of the group, fund management by the group, characteristics of the group, factors influencing the group, activities of the group, WSHGs and bank linkage etc.

The second phase comprised data collection using observation technique, by attending various activities of the group such as monthly meetings of the group, income generating activities i.e. work they do, exhibitions, kiosks run by the members etc. The sample respondents consisted of members of the WSHGs from all over Goa. Sample size was 100 (hundred) WSHGs, at least 8 (eight) from each of the 12 (twelve) Talukas of Goa. However for this paper emphasis is laid on qualitative analyses of the collected data. The Case study method is adopted for substantiating the argument made.

5. Data Analyses

The study reflected that micro financing and formation of WSHGs has helped in exploring the chances of springboards for women to be independent entrepreneurs. However the transformation is never an easy one. There are various challenges faced by women members in both cases, whether venturing in group entrepreneurship or being individual entrepreneurs. The study reflects that there are various conditions that influence entrepreneurship among the members of WSHGs. These conditions can be divided into two parts: necessary conditions and enabling conditions.

A. Necessary Conditions

Adequate and timely Availability of Credit

The WSHG members could get credit mainly from three sources: (a) loans from the banks, (b) subsidy or revolving fund from the State, and (c) loan from their own group’s saving or from their corpus fund. The Government of Goa under District Rural Development Agencies (DRDA) established revolving funds for the WSHGs which are BPL groups. This subsidy has helped the women to raise their own capital to start up their business. Also the monthly contribution of the members contributes towards creating a stable and sound corpus fund for the group. The Below Poverty Line (BPL) group members contribute minimum

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of Rs 50 per person per month and Above Poverty Line (APL) group members contribute nothing less than hundred rupees per person per month. This corpus fund also fetches them good interest rate from the banks over a period of time. It also serves as collateral to get loan from banks.

A favourable WSHG Bank linkage has been an advantage for WSHGs in Goa. There are various factors which influence the WSHGs and bank linkage; a) Location of the bank influences the decision as to which bank the WSHGs should operate. b) The services provided by the bank officials - the approach of the bank employees, their availability, willingness to help with paper work, etc. also decides the bank chosen. c) The word of mouth is important, as women in the village communicate to each other about the benefits of operating in a particular bank. d) The role of the inter-mediator (NGO) is also important.

The nationalized banks, especially Bank of India has maximum linkages with WSHGs in Goa. In fact some of these groups have been initiated and nurtured by this bank. It was observed that though the banks followed their own criteria in disbursing loans to WSHGs, the capital did reach the beneficiaries on time. The banks sanction the loans by assessing the performance of the groups. The performance of the group is assessed by the bank by looking at the amount of inter-lending availed by the members of the group. The savings are as partial collateral. The loan is disbursed by the bank depending on the savings of the group in the bank. The purpose for which credit is availed is decided by the group. The credit is availed for various purposes for productive investment such as to start a small group business, buy cattle, start a masala unit, poultry farming, vegetable growing on cooperative efforts etc. The banks carry out timely inspection to monitor proper utilization of loans. Some banks train the women members in financial transactions. Training with regard to maintaining and updating the passbook, timely contribution to savings, written and not oral on-lending, use of cheque books, etc. has been imparted.

A few case studies are cited below to substantiate how availability of timely and adequate credit benefited members of WSHGs to become effective entrepreneurs.

Case I: Manjunath SHG from Gaondhongari, Canacona is a success story. The group was formed in 2004 with sixteen members. The leader of the group, Navidita Gaonkar, is also a member of the Forest Committee of Forest Department. This contact helped the group in getting the yearly contract from the forest department for cashew harvesting on collective basis. They approached the

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bank in which they had their group account and the bank sanctioned them a loan of eighteen thousand. They worked hard during the season and were able to make brisk business. This augmented the financial position of the members. With increased income, the group further diversified its activities. It purchased public address system with mikes, speakers, plastic chairs, pandal items etc. and rent them out for occasions like birthdays, weddings and other ceremonies.

Case II: Sateri Mahila Self Help Group with 20 members was formed in 2004 in Honda Sattari. The group participated in exhibitions at various places. The members were also provided an open space by the village Sarpanch where they prepared sweets for Diwali and sold at good rate to the neighbouring people. They could get net profit of 2500. They also put up stall in their village during social gatherings, local festivals etc. The manager of the bank in which they had their group account was co-operative. Besides sanctioning small loans as and when required by the group, the bank employees also placed catering orders to the group. They got the contract of providing tea and snacks to the bank employees on daily basis. The group had no problems with the bank employees and found them very co-operative.

Case III: Luisa from Ribander continues her traditional business. The male members from the family venture in sea early morning in their canoe for fishing. Luisa carries the fish catch to the market and sells it. Till recently she carried the fish in ‘Pantalee’(cane container)and travelled by public bus. As she became the member of WSHG she also felt empowered. She, through the group, approached the Bank for a loan to purchase a two wheeler (Activa Scooter). Her loan was sanctioned. Now she drives to the market on her own, this saves her time and also she is no longer dependent on public transport. She now aims to take another loan to buy cold storage provision as shelf life of fish is short.

A major opportunity came to the WSHGs when the Government of Goa introduced the Mid-Day Meal Scheme in Schools in Goa. WSHGs were able to get contract of supplying these meals to the government schools and government aided schools in their locality. The seed money was provided by the banks in which the group had its account.

Women not treated as Monolithic Bloc

A minute observation of the WSHG-bank linkage reflected that some banks had different approach towards different WSHGs much of which depended on the members who constituted the group. Women were not treated as a monolithic

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bloc/homogenous group by the banks. The class, residence, reference, political affiliations etc. influenced bank’s decision whether to sanction the loan and how much to sanction. It was observed that some WSHG members had to face hardships in getting the required loan assistance from banks. The amount of loan disbursed to WSHGs was not constant. The criteria as well as the amount of loan sanctioned changed from group to group. Similarly different conditions were posed by banks as requirements for disbursement of loan. A BPL WSHG in Chimbel, Tiswadi Taluka, Goa, was denied loan for starting a ‘Ready-made Garment sale business’ on the ground that they did not have proper space to store the garments. In another case it was observed that the bank refused to sanction the loan, as one of the WSHG members’ husband had taken an individual loan and had defaulted. In Assonora, Bardez Taluka, Goa, the bank did not release the revolving fund of the BPL group in a particular village, as another SHG from that village had defaulted. The bank manager asked the group to get the other group to repay the loan if they wanted the bank to release the fund to them. This definitely reduces the entrepreneurial chances among women.

Case IV: A BPL WSHG from Chimbel in Tiswadi taluka approached the bank for loan. The members were interested in ready -made garment business. The members were migrants from neighbouring state of Karnantaka, but currently living in Goa for last five years. The bank manager told the members that they lived in ‘Kaccha’ houses and the business they were interested in could not be started in such a space which was prone to rat menace. The members purchased a steel cupboard from their own savings and met the manager and requested him to sanction the loan. But still he refused. When the researcher inquired with the manager the reason for denial of loan to this group, he said that they were migrants and therefore there were chances that they could default. He was therefore not keen on taking the risk.

B. enabling Conditions

Besides adequate and timely finances, there are also other enabling conditions necessary for individual or group entrepreneurship of women to be successful. Some of these are discussed below:

Nature of Membership

Much of the success of the group entrepreneurship depends on the type of members it consists of. Whether the members are core members v/s others, interested v/s non interested, committed v/s non committed, old v/s young,

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volunteered v/s nominated, literate v/s illiterate, short sighted v/s far sighted, new v/s older members, possessing knowledge v/s lack of knowledge, members from family with political linkage v/s members with no political background, skilled v/s non-skilled members, risk averse or otherwise influences the success of the entrepreneurship. A case is cited below to substantiate how membership influences entrepreneurship.

Case V: Mahamaya SHG formed in the year 2003 with ten members in Canacona is praiseworthy for the novel adjustment worked upon by its members. The members of this group cultivated on a common land and grew vegetables collectively. They sold the vegetables in the main market at Canacona. All their work was divided on a rotational basis by the members. They sowed together. Watering was done on rotation. Two members carried the vegetables to the market on rotation and sold them. The profit was deposited in the SHG account. All the members were housewives who eventually became entrepreneurs mainly due to the cohesion in the group members.

But there are cases where due to illiteracy and disinterest of some members of the group, the groups which had ventured in income generating activities had to give up their activities and dismantle their group.

Availability of infrastructure Facilities

Availability of infrastructure also influences the functioning of the entrepreneurship. Availability of adequate space, training, guidance and cooperation from government officials, type of activity selected like manufacturing/non manufacturing, service oriented or trade related, availability of markets for raw materials as well to sell finished goods and assistance from NGOs, also influence the success of entrepreneurship initiated by WSHGs. Lack of role models, inadequate experience, lack of relevant networks and social positions, lack of access to social capital, lack of resources like land, premises, competing demands on time, gender discrimination by bankers, customers, suppliers also influence entrepreneurship.

Case VI: Five women from Guiridolim, Salcete, South Goa, came together and decided to form a group in 2000. They decided that they could start a small business of mat-making. Though the initiative to form the group was taken up by the RDA, the women were not provided with any skills. They however, had the traditional skill to produce cane mats. But they did not have sufficient space and more importantly could not get the raw materials required. They decided to start

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a ‘flour mill’ however as per the Goa Mundkari Act, they had to get permission from the Bhatkar (landlord) to start such a mill, which was refused. They now began to look out for newer options. Meanwhile they continued to make local goods which were much in demand like cake, bibinka, crosses etc. and sold their items at various exhibitions. They had to face a lot of hardships in marketing their produce. A major opportunity came their way when the Government of Goa introduced the Mid-Day Meal Scheme in Schools in Goa. They were able to get a contract of supplying these meals to the government school in their locality. It was the determination of these women that helped them sail through the adverse winds and keep the SHG going.

Marketing Skills

The marketing strategy adopted by the WSHGs to promote their products also influence the entrepreneurship. WSHGs are just one of the players in the market. They have to compete with the existing players with regards to offering products or services. Markets are dynamic and changing. Women entrepreneurs have to compete for space (area of operation), compete for the type of business and for recognition. They have competition from branded products and competition from other players in the organized sector (e.g. shops). Newer SHGs forming in the same locality, newer SHGs starting similar activities, existing groups splitting and forming newer groups and doing similar activities also can be a competition for WSHG members. With free availability of products and services around, customer has a very high bargaining power. Therefore it is necessary that women entrepreneurs concentrate on 5Ps that is Product, Price, Promotion, Place and Public relations.

It was observed that though the products of the WSHGs were of good quality, they lacked variety, were not branded, and were poorly packaged (did not carry warranties, durability date etc.). Most of the WSHGs were engaged in selling eatables and few others were involved in decorative items, soft toys and readymade garments. The products did not have consistency. The prices also were on the higher side. Some of these groups failed to do sales promotion and also lacked public relations. This affected the sale of their goods. The market is buyers market and therefore WSHGs need to have proper marketing strategies to meet these challenges.

Case VII: Sateri Self Help Group from Khorlim, Mapusa, North Goa started with manufacturing and selling of “Puran-Poli” a local sweet delight. Today the group has its own dough mixing and frying machinery and is selling Puran-Poli all over

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Goa, earning brisk profits. In fact this group is more popularly known as Puran-Poli Group in North Goa.

Societal Attitude

The societal attitude towards women entrepreneurs, which normally is not very positive, also affects women entrepreneurship. Business is normally regarded as men’s forte. In organized business houses at least the women belonging to the families of these houses have scope to venture in business. But in informal sectors, for women to make a place for themselves is a very difficult ride, especially so when their activities are regarded as supplementary to their main role of a housewife. The attitude of a banker, supplier, retailer and customer (most of them being men) should not be one of apathy. Women need fair opportunities and co-operation to do the business. In Goa the atmosphere is comparatively congenial to women taking up group entrepreneurship. As mentioned earlier the existence of UCC and the overall socio-economic conditions in the state has created opportunities for women to venture into entrepreneurship.

Miscellaneous Factors

There are other factors also that affect women entrepreneurship. One of them that influence the functioning of the group is its ‘risk taking capacity’. The group can venture in new areas, provided it is willing to incur the loss in case if failure of the enterprise.

Case VIII: Shradda Sawant from Marcela, Goa completed her post graduation and joined teaching. She had deep interest in cooking and she joined the WSHG in her village. She managed her job as a teacher and contributed to her Group’s catering activities. But her teaching job was temporary. She decided to take risk. She left the job, took loan from her group’s savings and started her own catering business. She put up her stall at various strategic places on important occasions. She became famous for her ‘raw mango pickle’ and ‘papad’. Today she has the fame as successful entrepreneur.

Case IX: Mahila Self Help Group Co-operative Society (MSHGCS) – Result of Collective Efforts

Though there are more than 10,000 WSHGs in Goa, not all are co-operative societies. In the type of enterprises running under SEWA banner in Gujarat funded by Co-operative Bank of SEWA, the most important aspects are asset-

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building, asset creation and asset ownership for women. Same is the emphasis of AGRAGAMEE in Odisha. One such effort is Mahila Self Help Co-operative Society in Bardez Taluka of Goa, which has around 1000 members with around 80 WSHGs.

Motivated by the business made by WSHGs, the groups of Bardez under the leadership of National Co-operative Union of India (NCUI) decided to come together and form a Co-operative Society. This gave birth to Mahila Self Help Group Co-operative Society. Each member of the Self Help Group was now made a member of this society and had to buy at least one share of Rs 100.The meetings were held at the NCUI motivator’s residence. 11 members were elected as office bearers. Monthly meetings were held. The members decided to go for large production of goods. They required a permanent space to do that. A request was made to the Government of Goa as a result of which they were able to get a shop at Kadamba Bus stand Mapusa. Subsequently they got an opening at Kadamba Terminus at Panaji, the capital of Goa. Slowly their business grew.

At present nearly 400 women earn their living by being a member of this MSHGCS. The goods sold include food items, even chappatis and subji, besides ladoos, chaklis, shankarpalis, dodol, bibinca, dosa, puranpoli, etc. catering to both the communities, Christian as well as Hindu in Goa. Now customers flock to this centre as they get fresh items, with a feel of homely made goods. Their service is very prompt. Proper standardization and quality assurance is ensured as the rates and date of manufacturing is put in the form of tag on the packets. Today the business of the Society is running in lakhs. Members prepare the goods at their respective homes and put them on the stall. Members volunteer on rotation basis to be at the stall and only those are allowed to sell their goods at the stall. The society also takes orders and caters lunch boxes, ceremonies etc. The Society has been able to get major breakthrough by getting the contract of supplying meals to school children under the Government’s Mid Day Meal Scheme. Nearly 3000 children are provided meal by this society. The society has been able to make even LIC Policy of all its members. Thus it has gone a long way in empowering women in these villages of Bardez Taluka. The society has its own yearly audit. The members have picnics and other outing and get togethers, celebrate woman’s day, have cultural programme, competitions and prize distribution.

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6. Conclusion

There is potential for WSHGs to be successful entrepreneurs and availability of timely and adequate credit is an essential condition for this potential to become a reality. However one should not assume that credit can automatically translate into successful micro enterprises (Mahajan 2005). For microfinance to be more effective there is a need for positive change at macro environment level. Much bigger role is expected from the state machinery in this regard. A holistic approach, and not a piecemeal one, is called for. To serve the purpose of economic growth, we need a new paradigm of livelihood finance with much larger levels of resource allocation, both from public resources as well as from capital markets (Mahajan 2005). The focus should be on most important aspects of asset building, asset creation and asset ownership for women.

There should be further enhancement in the Micro credit financing like there should be promotion of market linkages, insurance coverage to crops, livestock etc. NGOs should take greater initiative. Also women have to be provided with formal training in financial transactions. It was observed that the procedures of banking with emphasis on complicated qualifying requirements, margin etc. still leads to women shying away from banks.

Market depends on the customers for the produce, and the goods produced. While some goods may find market within the locality, others may have to be moved out to be sold. In such cases the WSHGs could get the help from NGOs and government officials. They could be promoted by organizing exhibitions, providing them sales counters in various government offices, and other outlets. Allotment of space for WSHGs in shopping complex constructed by the government, at bus stands and other strategic places can go a long way in promoting women entrepreneurship. Tie up arrangement with the co-operatives, purchase of materials produced by the WSHGs by the government departments and academic institutions could also be of help.

Most importantly the mindset of the society has to change. There are studies which reflect that setting up of enterprise has resulted in only small increase in income at the cost of heavier workloads and repayment pressure. There could also be withdrawal of male support in the family and thus increased autonomy of women could be only temporary (Mayoux 1997). The traditional gender division of work and the general mindset of the society have to undergo a sea change. Women are important human resources and they should be encouraged to come out of the four walls of their house, from clutches of patriarchy, from the typical

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9 to 5 job concept, and should be recognized as potential entrepreneurs. By providing the necessary infrastructural support and with proper training, role models, experience, and support from NGOs, State and society at large, women can prove themselves as successful entrepreneurs.

References 1. Das, S.K., (2012), Best Practices of Self Help Groups and Women Entrepreneurs: A Case of

Barak Valley of Assam, Far East Journal of Psychology and Business, Vol. 7, No. 2, May; pg. 25-47.

2. Datta, K. & Raman, M., (2001), Can Heterogeneity and Social Cohesion Co-exist in Self Help Groups: An Evidence from Group Lending in Andhra Pradesh in India; Indian Journal of Agricultural Economics; Vol. 56(3), July-Sep.; pp. 387-400.

3. Falendra (2003), Quoted in C. Hemalatha P., Rizwana A., Ramana Rao, D.V.V., & Yadappanavar, A.V., (2004), Marketing Channels for Select Products of SGSY: A Study in Four States, Research Report Series-63, NIRD, Hyderabad.

4. Hirevenkanagoudar, L. V, Kunnal, L.B,.Hnchinal S. N & Bheemappa. A.,(2007), Impact Of Women Self-Help Groups On Rural Poor – A Case Study Of Belgaum And Haveri, Districts, Karnataka, Manual on Women Self Groups, Government College, Quepem, Goa.

5. Mahajan, V. (2005), From Microcredit to Livelihood Finance; Economic and Political Weekly, Oct. 8, pg. 4416- 4419.

6. Malhotra M., (2004), Empowerment of Women; Isha Books; Delhi.7. Manimekalai K; (2004), Economic Empowerment of Women through Self Help Groups; Third

Concept, Delhi.8. Manimekalai, N. &Rajeshwari G., (2000), Empowerment of Women through Women Self

Help Groups, Margin, Vol. 32, No. 4, July-sep., pp. 74-87.9. Mayoux (1997) quoted in Ranjula, B. S., (2007), Can Microfinance Empower women? Self

Help Groups in India; ADA Dialogue, No. 37, May, pg. 69.10. Moore, D.P., & Buttner, E.H., (1997), Women Entrepreneurship: Moving beyond the Glass

Ceiling; Thousand Oaks, CA: Sage Publications.11. Narayanswamy N., Manivel S., Baskar B., (2005), Micro-credit: Driven Rural Enterprises-

Lessons from SHGs assisted under SGSY Scheme’ Journal of Rural Development. Vol. 24(3), pp. 353-376.

12. Nirmala V., Sham Bhat K, Buvaneshwari P., (2004), SHGs for Poverty Alleviation in Pondicherry, Journal of Rural Development. Vol. 23(3), pp. 205-215.

13. Puhazhendhi, V. & Jayaraman, B., (1999), Increasing Women’s Participation and Employment Generation among poor: An Approach through Informal Groups, Indian Journal of Agricultural Economics, Vol. 54, No. 3, July-Sept., pp. 287-295.

14. Reddy Y.G., Ramachandraiah G., Sudhakar Rao B., (2004), ‘Positive and inhibiting factors in Cluster approaches and group functioning of Micro Enterprises under SGSY’, Research Report Series -57, NIRD, Hyderabad.

15. Selvi V. D. (2007), Self Employment through Self Help Groups, Readers Shelf, Vol. No. I; Issue No. 11, pg. 16-18.

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Regd. No. : DELENG/2012/43962


International Board of Advisors

M. Najatullah Siddiqi M. Umer ChapraIndia and USA Saudi ArabiaFormer Professor of Economics Research AdvisorKAAU, Jeddah, Saudi Arabia Islamic Development Bank, Jeddah

Zubair Hasan Mabid al JarhiMalaysia UAEProfessor of Economics Dubai Islamic Bank, UAEINCIEF, Kaula Lumpur, Malaysia

M. Obaidullah Rodney WilsonSaudi Arabia UKIslamic Development Bank, Jeddah Professor, Durham University, UK

Shashi Bhushan Waquar AnwarIndia IndiaNandi Foundation JIH, Delhi, Hyderabad, India India

Editor Najmul Hoda


Sahulat Microfinance Society Regd. Office: E-89, Darussalam Building, Flat No- 403, Near Hari Kothi, Alshifa Hospital Road, Abul Fazal Enclave Part-1, Jamia Nagar, Okhla, New Delhi-110025 (India)

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5Contributors

Dr. Waquar Anwar

Dr. Rafiquz Zaman

Dr. Magda Ismail Abdel Mohsin

Datuk Syed Othman Alhabshi

Zainab Fida Ahsan

Shri Bhagat Nitin

Dr. Narwade Sunil

Mamata Patra

Dr Radhakrushna Panda

Harasankar Adhikari

Dr Seema P. Salgaonkar


Sahulat Microfinance Society

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