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Microfinance transforms the face of Western Rajasthan

Aug 30, 2010

Six districts of Western Rajasthan are engaged in a novel venture which provides micro-credit to self help groups of local women. This initiative empowers these groups to efficiently regulate credit flow and reduce poverty and unemployment.


With an objective to improve livelihoods and reduce poverty, the Centre for Micro Finance, Jaipur along with six partner agencies is engaged in a regional development initiative through finance - “Sakh se Vikas”. The model is built around women SHGs in six districts of Rajasthan. 

The centre claims, “we strive for timely availability of microfinance services to the poor and marginalised on fair terms and with dignity to help them enhance their livelihood."

Jai Pal Singh, Executive Director, Centre for micro Finance (CmF) said that the approach - Sakh se Vikas (SSV), initiated in 2003 and with support from Sir Ratan Tata Trust, is currently involved in promoting more than 4700 women Self Help Groups (SHGs) which spanning 70,000 poor households in Dholpur, Tonk, Ajmer, Alwar, Banswara and Dungarpur districts of Rajasthan. The SHGs have been able to generate savings of approximately Rs 13 crore and have benefited from credit loans of more than Rs 40 crore from the banks.

The SSV initiative seeks to demonstrate poverty reduction through community-owned financially viable microfinance programmes for the underprivileged communities in the state.

Jai Pal said that knowledge from SSV has proven that in the beginning, the poor need saving services and credit to meet their small needs of buying food grains, fodder, for paying the school fee etc. Later on, credit demand is made to repay costly debts of the moneylenders or to reclaim their land and jewellery from mortgage and own cattle etc.

It is futile, and at times dangerous, to push the SHGs to take up ‘income generation activities’ - pickle, agarbatti, chalk sticks making - in the beginning. As a result, only about 1% SHGs take up such IG activities.

SGH Rajasthan

He further emphasised the need to merge various SHGs to ensure sustainability of the programme and added that “22 federations - promoted as apex institutions of the SHGs under SSV - are progressing towards ensuring full operational costs.”

As an impact of the initiative, it was observed that there was a reduction of 59% in loans taken from moneylenders. Loans from SHGs currently comprise 60% of total loans accessed by member households.

Jai Pal pointed out social impacts on women, which reflected in an increased involvement in decision making in the family and in increased utilisation of health services by the members.

Impressed with the long and rich experience of demonstrating quality microfinance and livelihood programmes through SSV, the learning from this initiative is being used for the capacity building of various department promoted SHGs within Dungarpur Project with support from Bank of Baroda; and a Pilot Project under Department of Women and Children - Government of Rajasthan (DWCD). SSV initiative plans to expand its outreach to 1, 90, 000 household over the next two years.

Sourav Roy, Programme Officer - SSV, while talking about the experiences of SSV partners in livelihood promotion, observed that the approach ensured credit linkage for investment in employment generation and also provided critical services along with credit.

“Agriculture and livestock are the two major sub-sectors through which more than 20000 households secure their livelihood and make additional incomes of Rs 8000-12000 annually”, Sourav Roy added. Under the initiative, Microfinance was catalysed to include the poor and marginalised within financial mainstream. Also, their requirement for credit and other financial services was met on fair and equitable terms.

SGH meetingsSVS initiative has prompted Government of Rajasthan to adopt this model for poverty reduction in the whole of Western Rajasthan. Lives of poor women in the region have taken a quantum leap through the approach.

In an attempt to address poverty through diversification and enrichment of livelihood options, the Government of Rajasthan has launched a project - Mitigating Poverty in Western Rajasthan (MPOWER) - with financial aid from International Fund for Agriculture Development, Rome and The Sir Ratan Tata Trust, Mumbai. Technical assistance to the project is provided by  CmF and  is expected to impact 87,000 households across 1,040 villages in Western Rajasthan.

The two project funders – Government of Rajasthan and Sir Ratan Tata Trust - have entered into a MoU which recognises the achievements of SSV. Based on the experiences of the Sakh se Vikas, the Government of Rajasthan plans to build synergies and enhance capacities at various levels.

Centre for Micro Finance  would establish Community Finance and Livelihood Resource Centers in Alwar, Dungarpur and Jodhpur to provide training and capacity building support to NGOs, banks, government and other community based institutions and empower them to regulate the credit flow to the ones who are in need.

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