How is the 2019 Budget going to help Self Help Groups?

The Budget 2019 proposed several game-changing policies for the FY20. How exactly will it benefit the Women Self Help Groups?

How is the 2019 Budget going to help Self Help Groups?

The Union Budget 2019 delivered by the first full-time woman Finance Minister of India, Nirmala Sitharaman was incumbent with important announcements for women. Without going out of the way, Nirmala Sitharaman did not disappoint Indian women. It may be noted that the interim budget wasn’t very inclusive regarding women-centric initiatives.

The FM stressed the importance of woman as a growth partner for the country’s economy. She triumphantly pointed out the record presence of women in the present Lok Sabha. One of the women related announcements made was regarding the expansion of interest subvention programme to be extended in all districts. 

Under this initiative, apart from the expansion of the interest subvention programme, every verified woman Self Help Group (SHG) member having a Jan Dhan Bank account will be eligible for an overdraft of Rs. 5,000. Besides, one woman from every SHG will be eligible for a loan of up to Rs. 1 lakh under the MUDRA scheme.

Women empowerment was one of the top agenda in the BJP election manifesto, and if the first budget of the new government is any indication, it will remain a priority throughout the term.

Is this programme an expansion of other schemes?

The FM in her speech mentioned that the government has supported and encouraged the entrepreneurial spirit among women through various schemes like MUDRA, Stand Up India and the well-established SHG movement. Stand Up India supports entrepreneurship among women, scheduled caste and scheduled tribe communities. MUDRA offers affordable credit to micro and small enterprises. The MUDRA scheme aims to bring small enterprises into the formal financial system and ensure that the “unfunded” receive the funds.

Related: Union Budget 2019 – Key Highlights

What is SHG, and what is its role in women empowerment?

SHG is a programme that seeks to include micro-enterprises comprising a group of men and women and promotes self-employment and capacity building. It is an informal group of people compared to, say, a company or a partnership. It empowers the members with the power of self-governance and collective bargain. Through SHG, people can save and contribute to a common fund. This common fund is then used by a member in case of an emergency.

Because of its informal and simple structure, women, particularly rural women, have found it convenient to associate themselves with SHGs. These groups of women, generally 15-20 in number, can come together to pursue common interests commercially or tackle common problems together. Besides, the credit availability for these SHGs is being facilitated by the government, like the ones announced in the budget. 

How is MUDRA strengthening women entrepreneurship?

In order to encourage female entrepreneurship, the MUDRA scheme extends a reduced interest rate to institutions who are providing loans to women entrepreneurs. The scheme also encourages financing institutions to provide additional facilities to encourage women entrepreneurs.

How can SHGs apply for these loans?

Most banks and financial institutions have loan products intended for SHGs. SHGs must meet the bank’s criteria regarding the age of the group, number of members, corpus etc. and submit documents related to its identity and address, apart from constitutional documents verified by government officials. MUDRA refinances the banks for the loans when they are accordingly linked to the scheme.

Have a look at Budget 2019: What it means for you? to understand the nuances of the changes being brought forth in the financial year 2019-2020.

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