Self-Help Groups (SHGs) 


Government is aiming at raising the annual income of each woman in Self-Help Groups (SHGs) to Rs 1 lakh by 2024.


GS III- Indian Economy

Dimensions of the Article:

  1. What are SHGs?
  2. General Issues related to SHGs
  3. Socio-Cultural Hurdles in Penetration of SHGs in Rural Areas
  4. Measures Taken by the Government to Promote the SHGs
  5. Suggestions to Improve the Working of SHGs

What are SHGs?

Self-Help Groups are informal associations of people who choose to come together to find ways to improve their living conditions. They help to build Social Capital among the poor, especially women.

 The most important functions of a Self-Help Groups are
  • To encourage and motivate its members to save
  • To persuade them to make a collective plan for generation of additional income
  • To act as a conduit for formal banking services to reach them.

Self-Help Groups have emerged as the most effective mechanism for delivery of micro-finance services to the poor. The range of financial services may include products such as deposits, loans, money transfer and insurance. 

General Issues related to SHGs

  • Agricultural Activities: Most of the SHGs work at local level and engaged in agricultural activities
  • Lack of Technology
  • Access of market: Also the goods produced by SHGs do not have access to larger market place.
  • Poor Infrastructure: Most of these SHGs are situated in rural and far reach areas that lack connectivity via road or railways. Access to electricity remains an issue.
  • Lack of training and capacity building
  • Politicization: Political affiliation is also a major reason for group conflicts.
  • Credit Mobilization: A study has shown that about 48% of the members had to borrow from local money lenders, relatives and neighbours because they were getting inadequate loan from groups. Also issues like hoarding of money was witnessed.
  • System of monitoring: The general reports on the progress of SHGs show statistics of growth and spread of SHGs without questioning the process and internal health of the SHGs.

Socio-Cultural Hurdles in Penetration of SHGs in Rural Areas

  • There has been uneven distribution in the spread of SHGs in India. Socio-cultural factors along with government support and presence of NGOs have been major reasons for that.
  • In March 2001, 71% of the linked SHG, were from southern region consisting of Andhra Pradesh, Karnataka, Kerala and Tamil Naidu.
  • These are also the states where society is deeply entrenched in patriarchy with limited financial and social role for women.
  • Due to family responsibilities, majority of the women members cannot give their attention to their enterprises.
  • One of the major hurdles in lack of support from family members.
  • Due to male dominated society, women members could not uplift their business followed by lack of social mobility.
  • In many SHGs strong members try to earn a major share of the profit of the group, by exploiting the ignorance and illiterate members.

Measures Taken by the Government to Promote the SHGs

Self Help Group-Bank Linkage Programme:
  • On the recommendations of SK Kalia Committee, the SHG-Bank linkage programme was started at the initiative of NABARD in 1992 to link the unorganised sector with the formal banking sector.
  • Under this programme, banks were allowed to open savings accounts for Self-Help Groups (SHGs). Banks provide loans to the SHGs against group guarantee and the quantum of loan could be several times the deposits placed by such SHGs with the banks.

Banks should consider entire credit requirements of SHG members, namely,

  • income generation activities,
  • social needs like housing, education, marriage, etc. and
  • debt swapping”.
  • It is being implemented by commercial banks, regional rural banks (RRBs), and cooperative banks.
Priority Sector Lending:
  • GOI has included SHG as a priority sector to mandate and enhance banks focus on them.
  • Bank credit to members of SHGs is eligible for priority sector advance under respective categories viz., Agriculture, Micro, Small and Medium Enterprises, Social Infrastructure and Others.
Deendayal Antodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM):
  •  It seeks to alleviate rural poverty through building sustainable community institutions of the poor.
  • Mission closely works with the Department of Financial Services (DFS), Reserve Bank of India (RBI) and the Indian Bank Associations (IBA) to provide bank credit to SHGs.
Mahila Kisan Shashaktikaran Pariyojana:

In order to promote agro-ecological practices that increase women farmers’ income and reduce their input costs and risks, the DAY-NRLM Mission has been implementing the Mahila Kisan Shashaktikaran Pariyojana (MKSP).

Suggestions to Improve the Working of SHGs

  • Credit needs to be provided for diversified activities including income generating livelihood activities productions, housing consumption loan and against sudden calamities.
  • The delivery system has to be proactive and should respond to the financial needs of the farmers.
  • Training programmes relating to management of finances, maintaining accounts, production and marketing activities etc. should be given.
  • Simplify the process of giving loans, i.e. reduce the number of questions to important non repetitive ones.
  • Provide gender sensitization training to bank staff so that they are sensitized to the needs of rural clients especially women.
  • Adequate insurance coverage should be provided to the business units promoted by SHG against the financial losses to safeguard the interest of the entrepreneurs.

Unlawful Activities (Prevention) Act, 1967 (UAPA)


A Union Minister has said it was necessary to have certain laws like the Unlawful Activities Prevention Act (UAPA) so that action could be taken against terrorists and those who “behead other people”.


 GS III- Security Challenges

Dimensions of the Article:

  1. The Unlawful Activities (Prevention) Act (UAPA), 1967
  2. Unlawful Activities Prevention Amendment Bill, 2019
  3. Some Concerning Points about the designation of someone as terrorist
  4. Issues with UAPA

The Unlawful Activities (Prevention) Act (UAPA), 1967

  • The Unlawful Activities (Prevention) Act (UAPA) of 1967 is an upgrade on the Terrorist and Disruptive Activities (Prevention) Act TADA (which lapsed in 1995) and the Prevention of Terrorism Act – POTA (which was repealed in 2004).
  • Its main objective was to make powers available for dealing with activities directed against the integrity and sovereignty of India.
  • The National Integration Council appointed a Committee on National Integration and Regionalisation to look into, the aspect of putting reasonable restrictions in the interests of the sovereignty and integrity of India.
  • The agenda of the NIC limited itself to communalism, casteism and regionalism and not terrorism.
  • However, the provisions of the UAPA Act contravenes the requirements of the International Covenant on Civil and Political Rights.

Unlawful Activities Prevention Amendment Bill, 2019

  • The original Unlawful Activities Prevention Act, 1967, dealt with “unlawful” acts related to secession; anti-terror provisions were introduced in 2004.
  • It provides special procedures to deal with terrorist activities, among other things.

Key Provisions of the Amendment

  • The Bill amends the Unlawful Activities (Prevention) Act, 1967 (UAPA) and additionally empowers the government to designate individuals as terrorists on the same grounds.
  • Under the Act, the central government may designate an organisation as a terrorist organisation if it:
    • commits or participates in acts of terrorism
    • prepares for terrorism
    • promotes terrorism
    • is otherwise involved in terrorism
  • The word “terror” or “terrorist” is not defined.
  • However, a “terrorist act” is defined as any act committed with the intent –
    • to threaten or likely to threaten the unity, integrity, security, economic security, or sovereignty of India
    • to strike terror or likely to strike terror in the people or any section of the people in India or in any foreign country
  • The central government may designate an individual as a terrorist through a notification in the official gazette.
  • The Bill empowers the officers of the National Investigation Agency (NIA), of the rank of Inspector or above, to investigate cases.
  • Under the Act, an investigating officer can seize properties that may be connected with terrorism with prior approval of the Director General of Police.

Some Concerning Points about the designation of someone as terrorist

  • The government is NOT required to give an individual an opportunity to be heard before such a designation.
  • At present, legally, a person is presumed to be innocent until proven guilty.
  • In this line, an individual who is convicted in a terror case is legally referred to as a ‘terrorist’.
  • And those suspected of being involved in terrorist activities are referred to as ‘terror accused’.
  • The Bill does NOT clarify the standard of proof required to establish that an individual is involved or is likely to be involved in terrorist activities.
  • The Bill also does not require the filing of cases or arresting individuals while designating them as terrorists.
Issues with UAPA
  • UAPA gives the state authority vague powers to detain and arrest individuals who it believes to be indulged in terrorist activities. Thus, the state gives itself more powers vis-a-vis individual liberty guaranteed under Article 21 of the Constitution.
  • UAPA empowers the ruling government, under the garb of curbing terrorism, to impose indirect restriction on right of dissent which is detrimental for a developing democratic society. The right of dissent is a part and parcel of fundamental right to free speech and expression and therefore, cannot be abridged in any circumstances except for mentioned in Article 19 (2).
  • UAPA can also be thought of to go against the federal structure since it neglects the authority of state police in terrorism cases, given that ‘Police’ is a state subject under 7th schedule of Indian Constitution.
How can the names be removed?
  • Application – The Bill seeks to give the central government the power to remove a name from the schedule when an individual makes an application.
  • The procedure for such an application and the process of decision-making will also be decided by the central government.
  • If an application filed is rejected by the government, the Bill gives the person the right to seek a review within one month of rejection.
  • Review committee – Under the amendment Bill, the central government will set up a review committee.
  • It will consist of a chairperson (a retired or sitting judge of a High Court) and 3 other members.
  • It will be empowered to order the government to delete the name of an individual from the schedule that lists “terrorists”, if it considers the order to be flawed.
  • Apart from these two avenues, the individual can also move the courts challenging the government’s order.

G-Sec Yields


Recently, the government said that it had decided to keep interest rates on small savings instruments unchanged for the July-September quarter, defying expectations of a hike in rates given the sharp rise in government security (G-sec) yields over the last three months.


GS III- Indian Economy

Dimensions of the Article:

  1. What are G-Sec yields?
  2. How are G-sec yields calculated?
  3. How do G-sec yields go up and down?
  4. What do G-sec yields show?

What are G-Sec yields?

  • G-secs, or government securities or government bonds, are instruments that governments use to borrow money. Governments routinely keep running into deficits — that is, they spend more than they earn via taxes. That is why they need to borrow from the people.
  • But G-secs are different from everyday lending between two private individuals or entities.
  • For one, G-secs carry the lowest risk of all investments.
  • After all, the chances of the government not paying back your money are almost zero. It is thus the safest investment one can make.
  • The other ways in which G-Secs are different are in the manner in which they are structured, and how their effective interest rates (also called yields) are calculated.

How are G-sec yields calculated?

  • G-sec yields change over time; often several times during a single day. This happens because of the manner in which G-secs are structured.
  • Every G-sec has a face value, a coupon payment and price. The price of the bond may or may not be equal to the face value of the bond.
  • Example:
    •  Suppose the government floats a 10-year G-sec with a face value of Rs 100 and a coupon payment of Rs 5.
    • If one were to buy this single G-sec from the government, it would mean that one will give Rs 100 to the government today and the government will promises to 1) return the sum of Rs 100 at the end of tenure (10 years), and 2) pay Rs 5 each year until the end of this tenure.
    • At this point, the face value of this G-sec is equal to its price, and its yield (or the effective interest rate) is 5%.

How do G-sec yields go up and down?

  • Imagine a scenario in which the government floats just one G-sec, and two people want to buy it.
  • Competitive bidding will ensue, and the price of the bond may rise from Rs 100 (its face value) to Rs 105. Now imagine another lender in the picture, which pushes the price further up to Rs 110.
  • But here is the crucial thing: the coupon payment on the G-sec is still Rs 5.
  • So, if you bought the bond at Rs 100, then the yield is 5% but if the price of the bond goes up to Rs 105 then the yield will fall; it will become 4.76% because the second person will be getting Rs 5 over an investment of Rs 105.
  • Further, if bidding leads to the price going to Rs 110, then the third person (who finally bought the bond at Rs 110) will find that the yield has fallen further to 4.54%; because the third person would have invested Rs 110 for the same return of Rs 5.

What do G-sec yields show?

  • G-secs are the safest investments in any economy, and the G-sec yield is the lowest risk-free interest rate in any economy.
  • As such, they are a good way to figure out the broader trend of interest rates in the economy.

If G-sec yields (say for a 10-year bond) are going up,

  • It would imply that lenders are demanding even more from private sector firms or individuals; that’s because anyone else is riskier when compared to the government.
  • It is also known that when it comes to lending, interest rates rise with the rise in risk profile. As such, if G-sec yields start going up, it means lending to the government is becoming riskier.
  • If you read that the G-sec yields are going up, it suggests that the bond prices are falling.
  • But the prices are falling because fewer people want to lend to the government. And that in turn happens when people are worried about the government’s finances (or its ability to pay back).
  • The government’s finances may be in trouble because the economy is faltering and it is unlikely that the government will meet its expenses.
  • By the reverse logic, if a government’s finances are sorted, more and more people want to lend money to such a G-sec. This in turn, leads to bond prices going up and yields coming down.

Small Savings Schemes


Recently, the government kept interest rates unchanged on Small Savings Schemes, including NSC (National Savings Certificate) and PPF (Public Provident Fund), for the second quarter of 2022-23 amid high inflation and rising interest rate.

  • The interest rate on small savings schemes has not been revised since the first quarter of 2020-21.


GS III- Indian Economy

Dimensions of the Article:

  1. About Small Saving Schemes/Instruments
  2. What are the different saving schemes?

About Small Saving Schemes/Instruments

  • They consist of 12 instruments and are the main source of household savings in India.
  • Depositors receive a guaranteed interest rate on their funds.
  • They are popular as they provide returns higher than bank fixed deposits, sovereign guarantee and tax benefits.
  • The National Small Savings Fund receives payments from all small savings instruments (NSSF).
  • Small savings have become a crucial source of funding the government deficit, particularly when the Covid-19 outbreak caused the deficit to inflate and further borrowing became necessary.
Determination of Rates:
  • Interest rates on small savings schemes are reset on a quarterly basis, in line with the movement in benchmark government bonds of similar maturity. The rates are reviewed periodically by the Ministry of Finance.
  • The Shyamala Gopinath panel (2010) constituted on the Small Saving Scheme had suggested a market-linked interest rate system for small savings schemes.

What are the different saving schemes?

Small savings instruments can be classified under three heads:

  • Postal Deposits (comprising savings account, recurring deposits, time deposits of varying maturities and monthly income scheme).
  • Savings Certificates: National Small Savings Certificate (NSC) and Kisan Vikas Patra (KVP).
  • Social Security Schemes: Sukanya Samriddhi Scheme, Public Provident Fund (PPF) and Senior Citizens‘ Savings Scheme (SCSS).


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