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Evaluation and Improvement of SHG

(Micro-Credit) Program at Project

Vikahar

Center for Development of Corporate Citizenship

S P Jain Institute of Management & Research

Mumbai

2008-2010

A Project under Economic Rural Development Society, Kolkata

By

Vikram

PGP-08-175



ContentsPREFACE ...................................................................................................................................... 3

1. Introduction & Context ............................................................................................................ 6

2. Scope & Strategy ....................................................................................................................... 8

3. Organisation ........................................................................................................................... 9

4. Problems & Challenges ....................................................................................................... 12

4.1 The SHG Program ........................................................................................................ 12

4.2 SWOT Analysis .................................................................................................................. 16

5. Analysis of Findings ................................................................................................................ 17

5.1 Demographic Profile ......................................................................................................... 17

5.2 Education Profile ............................................................................................................... 17

5.3 Occupation & Income Profile ........................................................................................... 18

5.4 Micro-Credit program ...................................................................................................... 19

5.5 SHG Formation and Factors of Success .......................................................................... 21

5.6 Awareness of members ..................................................................................................... 22

5.7 Psychological Empowerment ............................................................................................ 23

6. Recommendations ............................................................................................................... 24

6.1 Economic Development ..................................................................................................... 24

6.1.1 Dairy Farming/ Milk Production .............................................................................. 25

6.1.2 Handicrafts & Tailoring ............................................................................................ 27

6.1.3 Vegetable Growing ..................................................................................................... 29

6.2 Microcredit Program ........................................................................................................ 30

7. Implementation of recommendations ................................................................................ 33

8. Training eed Assessment .................................................................................................. 34

9. Conclusion ............................................................................................................................ 37

Appendix ...................................................................................................................................... 38

Appendix-I: Contact Details ....................................................................................................... 39

Appendix-II: Cost Structure of Diary Farming ....................................................................... 40

Appendix-III: Training eed Assessment Form ...................................................................... 43

Appendix-IV: Questionnaire Form ........................................................................................... 45



PREFACEIn India, Self Help Groups or SHGs represent a unique approach to financial intermediation. The

approach combines access to low-cost financial services with a process of self-management and

development for the women who are SHG members. SHGs are formed and supported usually by

NGOs or (increasingly) by Government agencies. Linked not only to banks but also to wider

development programmes, SHGs are seen to confer many benefits, both economic and social. SHGs

enable women to grow their savings and to access the credit which banks are increasingly willing to

lend. SHGs can also be community platforms from which women become active in village affairs,

stand for local election or take action to address social or community issues (the abuse of women,

alcohol, the dowry system, schools, and water supply).

However, the state of SHGs identifies key areas of weakness which undermine the sustainability of

SHG movement. Namely, areas such as financial management, governance and human resources

range from weak to average quality for a majority of SHGs. While the spread of the movement is

impressive, these are key areas that need to be addressed if any external intervention is to be

effective.

ERDS has taken the initiative to promote this movement in rural hinterlands of West Bengal for

the upliftment of the womenfolk of the villages. It is SHG program running in three regions of

Malda and one region of Dakshin Dinajpur districts of West Bengal. As a result of this initiative

the women have not only been able to contribute the household income but also enhanced their

communication skills and self-confidence in dealing with the matters related to health, finance

and society. In this project, a study of SHG program running at Project Vikahar had been done

and recommendations for the improvement of same have been suggested which encompass not

only new business initiatives but also changes in the current program structure.

Vikram



ACKNOWLEDGMENTS

I would like to place on record my gratitude Mr. Madhu Basu, Founder & Gen. Sec., ERDS for

giving me an opportunity to work with ERDS. The project has really enlightened me on the

issues faced by the villagers and NGOs in doing developmental work.

I am grateful to Mr. Bhabhesh Burman, Project Co-ordinator, Vikahar Project and Mr. Nimai

Burman, Accountant, Vikahar Project for helping me in getting the data from the books and the

field. I would specially like to thank Mr. Nimai Burman for the help extended in conducting the

survey and the hospitality extended to me during my stay at Vikahar Project.

I would also like to acknowledge the help extended by other workers at Vikahar Project namely

Mr.J.N. Mondal, Mr. M.M. Hassan, Mr. Musa Haq, Mrs. Mina Bhagat, Mrs. Shefali Burman for

helping me in my project work. I would like to thank entire team of ERDS for providing the

guidance and support for the project work.

I would like to express my sincere gratitude to Dr. M.L. Shrikant, Dean, S.P.J.I.M.R and Prof

Nirjaa Mattoo, Chairperson, Development of Corporate Citizenship, S.P.J.I.M.R who gave us all

this wonderful opportunity to work in a rural environment and enhance our learning. I would also

like to extend my gratitude to Prof. Parimal Merchant for valuable guidance provided for the

project.



EXECUTIVE SUMMARY

Microfinance has evolved over the past quarter century across India into various operating forms and

to a varying degree of success. One such form of microfinance has been the development of the self-

help movement. Based on the concept of “self-help,” small groups of women have formed into

groups of ten to twenty and operate a savings-first business model whereby the member’s savings are

used to fund loans. The results from these self-help groups (SHGs) are promising and have become a

focus of intense examination as it is proving to be an effective method of poverty reduction.

The formation of common-interest groups consisting primarily of women has had a substantial

impact on their lives. The impact of SHGs on women’s empowerment and social security has been

invariably an improvement from the status quo but there is a need for support in several areas whichare analyzed in this report. The status of women has generally improved as they have developed

stronger confidence which has changed gender dynamics and their role in the household. In south

India, significant improvements in fertility rates, female literacy, participation in development

programmes and economic independence are evident. Women are able to fight for their rights and

entitlements and have emerged as a force to be reckoned with. Further, SHGs are becoming more

than just financial intermediaries, instead they have emerged into a more political and social unit of

society.

ERDS has been running SHG program from 2002 in regions of Malda and Dakshin Dinajpur. The

program was started with a view to empower the women in these areas.

This project studies and evaluates the current status of the SHG program running at Project Vikahar.

The evaluation of the program started with collection of data from Vikahar Project Office. The

effectiveness of the program has been evaluated with a survey which was conducted for SHG

members spread across 5 villages in Vikahar area. The survey was conducted for 100 respondents

from 20 different SHGs. Shortcomings in the program have been pointed out and ways to improve

and enhance the program have been suggested. In addition to this market research was done by

interviews with the local shopkeepers and traders. As a result, new business initiatives have been

suggested which can be undertaken to drastically improve the household incomes of the SHG

members and also help them psychologically in gaining business and trade management skills.

Implementation of the recommendations has only been initiated with the future path depending on

the funding tied up and the in-depth evaluation of the recommendations by the Kolkata head office in

consultation with the Project Office.



1. Introduction & Context

The country is on a high economic growth trajectory. However, there are also concerns among

policy makers for the even distribution of wealth created among various segments of the

population. There is need for continuously searching for products and strategies for delivering

financial services to the poor in a sustainable manner consistent with high repayment rates.

NABARD initiated the SHG (self help groups) Bank Linkage Programme in 1992 to bring the

poor together for pooling in their savings and dispensing small and emergent unsecured loans.

While no definitive date has been determined for the actual conception and propagation of

SHGs, the practice of small groups of rural and urban people banding together to form a savings

and credit organization is well established in India. In the early stages, NGOs played a pivotal

role in innovating the SHG model and in implementing the model to develop the process fully. In

the 1980s, policy makers took notice and worked with development organizations and bankers to

discuss the possibility of promoting these savings and credit groups. Their efforts and the

simplicity of SHGs helped to spread the movement across the country. State governments

established revolving loan funds which were used to fund SHGs. By the 1990s, SHGs were

viewed by state governments and NGOs to be more than just a financial intermediation but as a

common interest group, working on other concerns as well. The agenda of SHGs included social

and political issues as well.

.The SHG bank linkage programme has become the largest and fastest growing micro-finance

programme in the world, with over 2.8 million SHGs having been provided credit by the formal

banking structure by the end of March 2007. Annual credit flow to SHGs from the formal

banking system was of the order of Rs 6570.39 crore covering 1.10 million SHGs during 2006-07 with a loan outstanding of Rs 12366.49 crores against 2.89 million SHGs as on 31 March

2007.

This project covers the SHG (Micro Credit) program being run by ERDS in Vikahar Project.

Vikahar Project is located in the Dakshin Dinajpur district of West Bengal. Vikahar village falls

under block Tapan of the district. Dakshin Dinajpur is predominantly an agricultural district with

large area of land being under cultivation. The district is drained by a number of North-South





2. Scope & Strategy

The main objective of the project was to suggest steps for the improvement of the on-going

program. Therefore, evaluation of the current status of the program was necessary. Consequently

the main tasks under the project were:

i) Conduct a survey to find the current status of the program. The survey would take into

consideration all the aspects of the program and aim to evaluate the effectiveness of

the program.

ii) Based on the findings of the survey, analysis of results to be done for finding the lacking

areas and opportunities to improve the program.

iii) Suggest and develop plans for the improvement of the program. The implementation part

of the plans would be taken in future after the plans have been evaluated extensively

and the resources for the same have been allocated.

For evaluation of the program, the research carried out was divided into two main categories.

1. Primary Research- The primary research was carried out by getting the data from the

records at the VIKAHAR PROJECT office, getting the figures from the Project Co-

ordinator and Accountant .The major portion of the primary research was carried out by

conducting a questionnaire survey. The survey was conducted for 100 members of more

than 25 SHGs spread across 5 villages. The 5 villages covered under the survey were

Vikahar, Badalpur, Vior, Ghatul & Sukhdevpur. The no. of respondents was limited to a

small no. in comparison to the total no. of SHG members due to severe constraints faced

in terms of distance to be travelled, time taken in interviewing individual member and the

environmental conditions.

2. Secondary Research- The secondary research was carried out by studying the background

of the SHG movement in India and the work done by various agencies. It is important to

note that the SHG program was linked with micro –credit program to facilitate

development.



3. Organisation

Economic Rural Development Society (ERDS) is a non-profit, secular and non-political

organisation dedicated to ameliorate the misery and privation of downtrodden people. ERDS

owes its existence to the unstinted effort and dedication of Mr. Madhu Basu, who is at present

the General Secretary of the organisation. The organisation came into existence in the year 1982.

It started its humble journey in Boral, ( South 24 Paraganas), Vihakar ( Dakhin Dinajpur) and

Thinagar ( Malda). In the initial years, it concentrated non-formal and adult education. Gradually

with the passage of time, ERDS diversified its activities in various directions of women & child

development, health & nutrition, low cost sanitation, care & rehabilitation of the elderly people,

micro-credit , skill development training. It is at present covering approximately 1, 00,000

beneficiaries. The humble journey that started in 1982 has now traversed a long way trying to

serve the poor and the needy with a view to assist them to lead a dignified lifestyle. The

organisation hopes to move forward to take more people in its fold and ensure the development

of the villages.

Vision of ERDS

Society is beleaguered with the problem of poverty, exploitation, oppression and uneven

distribution of wealth. This upsetting scenario is due to wanton greed of small section of human

society. Our vision is to cure our society of this sickness through the empowerment of the

underprivileged. To be precise, our vision is to create an environment in which any and every

individual in society can look forward to a promising future, nurtured in the cradle of a secure

and stable present.

Mission of ERDSMission of ERDS is to facilitate the process of recognizing the divisive forces which have cast an

evil spell over our society, leaving a deep chasm between human beings and nature, between

man and woman and between human beings on the basis of caste, religion and class. It will strive

to encourage human endeavour that will turn the tide in favour of an egalitarian society. Its

Mission is therefore to strengthen human efforts to strive for a change that will ensure the safety,



security and empowerment for all those in the society who are blighted by poverty and lack of

privilege and opportunity.

Management Structure

The General Body is the highest decision making body of the organisation. The General Body

elects the Executive Committee. It also oversees the day-to-day administration of the

organisation. The General Secretary acts on behalf of the Executive Committee. There are sub-

committees that are headed by a member of the organization to oversee the implementation of

the individual programmes.

The staffs of the organization are accountable to the Co-ordinator or Project Manager and theCo-ordinator /Project Manager are accountable to the Executive Committee.

The day-to-day accounts are maintained by the Accountant.

Beneficiaries

The beneficiaries constitute families living below the poverty line or marginally above the

poverty line. They are mainly drawn from Schedule Caste/ Schedule Tribe/ Other Backward

Caste communities and also from Minority Community.

Areas of Operation

• Kolkata

• Boral, South 24 Paraganas

• Vikahar, Dakshin Dinajpur

• Thinagar, Malda

• Habibpur, Malda

• Majhra, Gazole, Malda

Current Activities Mainstreaming Street & Working Children Child Sponsorship Programme Education Support Programme Adopt a Grand Parent Programme Campaign against Child Trafficking Self-Help Group( Micro-Credit) Programme



Staff Details

Gender Part Time Full Time

Male 22 33

Female 16 62

Organisational Structure

Fig. 1 Organisational Structure of ERDS

General Body

Executive Committee

Program-wise

Sub committee

Program-wise

Sub committee

Program-wise

Sub committee

Program

Manager

Project Care

Worker

Mart

Manager

Co-ordinator

Accountant Field Level Staff



4. Problems & Challenges

4.1 The SHG Program

The women in particular were suffering from the lack of education and low social outlook.

ERDS considered women to be driving force of the households and as a measure to counter the

problems faced by women, it started the SHG program. Currently the SHG program is running at

four Project locations. The details of the SHG groups are given below.

Operational Area No. of Villages No. of SHGs No. of Members

Boral 13 50 1530Thinagar 36 198 1664

Gajole 41 201 1344

Habibpur 12 50 327

Vikahar 6 110 925

Total 108 609 5790

Table 2: SHG Program Details

The program at Vikahar centre was launched in 2002. During the initial years, since the workers

were not well versed with the nuances of this particular program, the program remained stagnantfor few years. But with the help of training and visits to other NGOs running the similar type of

program gave them some idea of how to exactly go about the program. This resulted in

transformation of some sort and as a result SHGs flourished in Vikahar Project.

During the initial phase, ERDS emphasised only on formation of SHGs and promoting the notion

of Savings among the SHG members. After a while, it started micro-credit program. The micro-

credit program was meant for providing easy access to finance for development of households,

but the focus remained on the idea of savings for the future.



The micro-credit program was structured as:

The SHG were formed first in a location. Based on previous experience and the training, some

criteria were formulated to be taken into consideration for the purpose of group formation. These

were:

• Similar Income Level

• Similar Living Conditions

• Similar Social Status

• Proximity of Households

These criteria ensure that the groups formed were good ones and hence, would function properly.

The members of the group are supposed to deposit a pre-decided amount per month for the first

year. Normally this amount is Rs. 20, but may be increased or decreased depending on the

savings capacity of the group members. The amount is kept same for all the members. Savings

for one year is a mandatory condition for a group to become eligible for taking a loan from the

organisation. The group members have to decide within themselves which member wants to take

how much loan. As a result a resolution for taking the loan is passed and the request for same is

given to the Project Office, which after scrutiny passes the application to the Head Office. Head

Office finally approves the loan taking into consideration the current status of funds and the

purpose for which the loan has been applied for.

The interest charged on the loan comes to approximately 12% p.a., which is in line with the

rates charged by the bank in rural areas. The members also get interest on savings, which is kept

same as that given by banks on saving deposits (3.5 % p.a.). The interest earned on the savings

gets added to the individual members’ account. The loan repayment instalments are fixed and

loan payment period has been kept at 1 year. The instalments are fixed as Rs. 25/ week for a loan

of Rs. 1000 and get multiplied as the loan amount grows. The group is jointly responsible for

payment of loans and therefore, there have been no cases of default upto financial year 2008-09.

There are some cases where the payments get delayed, but those are allowed taking into

consideration the situation of the borrowers. There is also a facility for intra-group borrowing

which means that the members can borrow the amount from the other group members. The

interest on the amount is same as that charged for the group loan and it is deposited in the



members’ accounts who are contributing to the loan. However, as of today, no intra-group

borrowing/lending has been observed. The groups can also withdraw their savings if they want to

by passing a resolution and there is no limit on the withdrawal. The amount that can be taken as

loan is limited to 4 -5 times their accumulated savings. The cap has been put to ensure that

enough liquidity is maintained in terms of lending to groups.

The group size is limited to a maximum of 12 members with the average size being 6 or 7

members. This has been done to ensure that the communication within the group members is

maintained. Every group has three leaders. The first leader is point of contact with the Project

Office and is effectively in-charge of running the group. The second leader assists the first leader in handling the group and the third leader is responsible for maintaining the accounts. The

leaders are fixed at the time of formation of the groups and in absence of any leader; the next in

line takes the charge. There is no rotation of leaders within the groups.

Every group has to maintain certain books given by the Project Office. These are:

i) Minutes of Meetings Book

ii) Resolution Book

iii) Group Account Book

The groups are also mandated to hold meetings at least once every month and discuss their

problems and issues.



Fig. 2 Flow of Funds

Chart 1: Growth of SHG Program



4.2 SWOT Analysis



5. Analysis of Findings

5.1 Demographic Profile

Age distribution of the members indicates a fairly young population. This implies that they can

do some work and contribute to the income of the families. Also being young implies that they

would be willing to both spend and consume more. Inculcation of saving habits in a young age

would enable them to save enough for their future.

Caste distribution indicates that the population largely consists of marginal categories of society.

This means that the section has been neglected so far and therefore, their potential for development remains large. Also the schemes available from the government are numerous

which can help them provided implemented properly.

Chart 2: Demographic Profile

5.2 Education Profile

Education level profile confirms the well known fact that the villages have low education

background. Though combined percentage of Primary and High School education may be higher than Illiterate population, in depth analysis reveals something else. In most cases, the High

school education meant education upto Class 8 only.



Chart 3: Education Profile

5.3 Occupation & Income Profile

Work Profile also indicates the well known fact that majority of population is engaged in

agriculture. Those engaged in non-agriculture work have either a shop or some trading business.

Therefore, the income of nearly 90% is not constant due to vagaries of rains as well business

cycles. As a result the income profile has also remained in low brackets for majority of

population.

Chart 4: Occupation & Income Profile

A look at Savings profile indicates that the majority of population saves only because of the

compulsion imposed by the micro-credit program of ERDS. This has ensured that the members

develop and maintain savings habit. Some percentage of respondents which figure in higher



savings bracket were found to be contributing to some schemes run by some NBFC e.g. Peerless,

Alchemist etc. They had enticed to contributing to schemes through some innovative and

emotional advertising campaigns. The financial viability and sustenance of these programs

remains doubtful and therefore, the members of SHGs need to be educated about the details of

the schemes.

Chart 5: Savings Profile

5.4 Micro-Credit program

A look at the loan program shows the kind of improvement brought into the lifes of the people.

The results clearly show that the improvement is there, but the quantum is quite low for major

members. The only solace can be that the household income has become more stable. Also the

fact may be considered that the low base enhances even the smallest increment in income.

The amount of loan taken indicates that more than 50% members had taken loan which is quite

small and in several cases not utilised properly. This also points out the fact that due to lack of



training and awareness the women are not able to invest in any such initiative which may require

substantial investment. And this results in low increment to household income. In fact, some

cases were found where the loan was used to repay the loan taken previously from other sources.

Chart 6: Micro-Credit Program

A look at the utilisation of the loans indicates the amount being primarily being invested in

agriculture and some kind of shop or trading business. However, the point to be noted is that the

investment is meant to support current status of the occupation in many cases and hence, does

not improve the earnings substantially. Largest utilisation being for agriculture means that the

loan was utilised for purchasing seeds, equipments for farming etc., the impact of which on

household is quite low due to out-dated farming techniques. Loans taken for purchase of cows or

goats resulted in asset creation and an opportunity for income, but the milk is primarily meant for

household consumption and not trade.

Chart 7: Utilisation of Loans



A look at the ownership of assets created by taking the loan indicates that the assets are still

owned largely by the male earning member of the family. This is a hurdle in the economic

empowerment of the women and needs to be addressed.

5.5 SHG Formation and Factors of Success

Survey also looked into the aspects of formation and success of SHGs. In most cases, the

response for the motivating factor for formation of SHG was Inculcation of savings habit. In

addition Family welfare was also another factor. This has direct correlation with the Benefits

derived from the SHG. The major benefit is Increase in Knowledge, which is very important

factor for growth and development of individual and the group. In majority of cases, the factor

for successful running of SHG was attributed to Co-operation within the group. This clearly

indicates that the members are willing to help each other and lend support in times of need. But

this also highlights the fact the leadership is not quite impactful in running the groups. The

previous questions give us an indication of the factors preventing the growth of groups. The most

important factor is Low Education. Therefore, this and Lack of Training needs to looked at to

provide the right kind of development to the villagers.

Owner Percentage

Wife 15%

Husband 55%

Both 5%

Others 0%

Motivating Factor Percentage

Loan 25%

Saving Habit 70%

Family Welfare 55%

Knowledge 50%

Benefits of Joining SHG Percentage

Income 60%

Knowledge/Info 100%

Awareness 15%

Personal Development 10%



Factor of Success of SHG Percentage

Leadership 15%

Co-operation 95%Transparency 10%

Others 0%

Factor Preventing Growth of SHG Percentage

Low Infrastructure 35%

Low Education 70%

Low Financial Assistance 10%

Lack of Training/ Awareness 45%

Others 0%

Table 3: SHG Program

5.6 Awareness of members

A look into level of awareness of members on different areas concerning their growth paints a

remarkable picture. Most of the members are not aware of the various govt. schemes running for

their development. The reason for that may be several. Low education has resulted in low

awareness of legal aspects i.e. knowledge of rules and rights. However, they are well aware of

the social issues in the villages and the need of Planning for growth. Also they are aware of the

financial aspects of living and the need for skill development.

Table 4: Members’ Awareness

Aspect Well Aware Limited Awareness No Awareness

Govt Program 5% 45% 50%

Health & Family

Welfare 40% 60% 0%

Social / General

Issues 25% 70% 5%

Skill Development 30% 45% 25%

Financial Aspects 30% 55% 15%

Local Planning 60% 35% 5%

Legal aspects 5% 25% 70%



5.7 Psychological Empowerment

Besides the economic empowerment, the real need is for psychological empowerment. A study

into various factor considered for psychological empowerment shows that empowerment has

occurred, but needs to be augmented in some areas to make a real impact. This part of survey

show the members’ perception on the factor considered for psychological empowerment. Due to

participation in the SHG program, the self-confidence and communication skills of members

have grown. They are ready to take initiative on their own for solution of their household

problems and can go wherever required to get the things done. The results also indicate thatsense of mutual help and co-ordination amongst themselves is quite high. This is also a factor for

success of SHGs, but there is a need to build on this to start new projects. However, attitudinal

change and social outlook of members continue to pose hurdle for the growth of SHG program.

Members need to be emphasised the need to change their thinking and broaden their outlook for

benefit of all.

Aspect High Medium LowSelf Confidence 45% 50% 5%

Communication Skills 50% 35% 15%

Mutual Help & Co-ordination 65% 35% 0%

Attitudinal Change 15% 50% 35%

Social Outlook 40% 40% 20%

Table 5: Psychological Empowerment



6. Recommendations

6.1 Economic Development

As it has been mentioned earlier that the effort made in SHGs is largely individual and not group,

it will lead to economic development of only a few households that have been able to

successfully deploy the financial assistance received from the group for elevation of their

household income. Therefore, to ensure that the development is spread across the households, it

is imperative that the SHGs start working as a group for any particular activity. Such group effort

would be beneficial in several ways, some of which are outlined below:i) The individual effort required in the activity would be distributed throughout the group.

Therefore, the effort required from an individual would be low.

ii) In times of difficulty, some individuals may not be able to contribute to the activity. This

would be compensated by the other members of the group.

iii) The financial liability would be shared by the group as a whole and therefore, the burden

of loan repayment would not be contingent on any particular individual.

iv) Working as a group, SHGs can have a certain scale of operations of their activity which

would make it economically viable and sustaining.

v) Working as a group, ideas generated would be more and hence, there would be better

scope for future development and growth of the group and business.

vi) Also as it has been observed that the ownership of assets created from loans is largely

with the husbands of the families, the economic empowerment is not really happening. With

working as a group, the SHGs would be owners of their business and hence, it would help in

economic empowerment of members.

Based on the market conditions , demand /supply conditions and the skills present in certain

individuals observed, three business can be carried out which would be viable in terms of

profitability, long term sustenance and future growth. These are:

a) Dairy Farming/Milk Production

b) Handicrafts & Tailoring

c) Vegetable Growing



For each of the business, the outline has been in made for three phases, namely: Start-up,

Medium Term and Long Term.

6.1.1 Dairy Farming/ Milk Production

It has been observed that already several households own a cow. The market for the milk is quite

good one. A rough estimate can be made from the following facts:

No. of Shops in local markets using Milk for their business: 6-8

Avg. Milk Consumption in Shops: 10-15 Litres( With some exception where the figures go to

excess of 25 litres

Avg. Rate at which Milk is Sold: Rs.14-15 ( This figure reaches upto Rs.30-40 in times of

festivals such as Durga Puga, Baisakh etc).

Besides these facts, in survey, results show that the loan has been utilised for buying a cattle by

several members. The production from individual household is not much, therefore, it makes

sense to group the production and this would help in getting a fair price from the market. Since

the distribution of cattle is not uniform i.e. not all households within a group have a cow, this

business would have to be started in distributed manner in which individuals would contribute on

standalone basis.

Phase-1: Start-Up

The method suggested is: The milk would be collected from the individual households. Each

household would contribute on the basis of its capacity and would be paid according to the

quantity of milk contributed. The collection of milk would have to be assigned one man hired for

this particular service. This man can be a VAN owner or driver. He would be paid a fixed charge

based on the estimation of the distance he would be covering per day. The entire process would

be as outlined:

The process would start in early morning, preferably around 6-7 am. The man would start from a

designated starting point and travel through a route outlined earlier. This way the households

would know of the approximate time of arrival of collection man. The collection man would visit

each and every household in the route and collect the milk. The collection process would be



essentially measurement of the milk contributed from the individual household and transfer to a

common collection vessel. For sake of simplicity in accounting, only fixed measures of milk

would be collected i.e. in multiples of ½ litres. The contribution would be noted down in a

register present with the collection man and the contributing household would acknowledge the

correctness of the entry made by putting a signature or LTI besides the entry. The payment for

the milk contribution would be made on daily basis i.e. the payment would be for the milk

contributed on the previous day. The salary for the collection man would be paid at the month

end.

Some figures for the consideration of this phase:

Cost of Collection and measuring vessel: Rs. 2500Salary of Collection Man: Rs. 1000 (on daily wage basis of Rs. 35)

Selling Price of Milk: Rs. 15

Milk Production from 1 cow (local variety): 3-4 Litres (After taking out 1 litre for household

consumption).

A detailed cost analysis is given in Appendix-II.

Phase-II: Medium Term

After the households have established the business in the Phase-I, the business can be expanded

to the Phase-II. In this phase, it is recommended that the business would be carried out from

central location. This would involve setting up dairy farms consisting of 10-15 cows per group.

The group would have to work as a team and manage the dairy farm. All the activities involved

in taking care of the cattle and the milking process would be carried out by the group members

only. Now the milk collection would be done only from the dairy farms only and not from the

individual households. For commercial viability and sustenance, it is suggested that the business

should be run as two groups operating a dairy farm. The cows may be of from individual

households or new ones purchased from by taking loans. Since the scale of the milk production

would be increased, the supply may outgrow the local demand. Therefore, tie-ups would have to

be made with shops outside the village (Vikahar). The collection man’s role would then change

to not merely supplying the milk in the local market, but also distributing the milk to other



nearby villages. Since the scale is sufficient, a shop may be setup in the village itself (to save on

the costs of the owning/renting a shop in the market) for selling the milk to individuals who

desire so for their individual household consumption. Since the milk would have to be stored,

therefore milk preservation techniques would have to be taught.

Phase-III: Long Term

After successful running of business in Medium Term, structure of the business should be

changed to make the business sustainable for the long run. This implies that the demand for the

product is always available. Since the demand from the villages nearby Vikahar would have

limited, it is advisable now to focus on new and larger markets e.g. Malda, Gangarampur,Balurghat etc. For this, there should be a network of diary farms should be established not only

in Vikahar but also in villages where ERDS projects are running. This essentially means setting

up of a co-operative society. For initial stage, no processing of milk is recommended. Only basic

preservation process should (boiling) be carried out to ensure the milk remains good till

delivered at destinations. Each village would have the collection centre. The entire produce of

the village would be collected and boiled at the collection centre. A small truck (Tata Ace etc.)

or pick-up vehicle would take the milk from the collection centre of each village and deliver to

the destinations. Since the logistics and accounting of the project would require quite good effort,

therefore, additional staff would have to be recruited (preferably from the village).

6.1.2 Handicrafts & Tailoring

During the survey carried for evaluation of SHG, it was observed that several women possess

skills in embroidery and handicrafts. They had learned the skills mostly before the marriage, butdid not continue making the wares after the marriage. The reasons for not making the handicrafts

were various namely lack of time, lack of support etc. The crafts they had kept were of quite

good quality. If such products were to be sold in markets like Malda, Balurghat etc., they would

fetch a good price. Therefore, this business of handicrafts is a good opportunity for generating

income.



Phase-I: Start-up

Groups have to be organised according to the kind of skill speciality they possess. Therefore,

separate groups for Jute handicrafts, fabric handicrafts, and bamboo handicrafts would be

formed. Those members who are trained in this particular craft would be made leader of the

group and the responsibility of training other members of the group lies on them. Once the other

members have picked up the basics of the craft, the production should be initiated. Since the

business is new and the demand for the product is not known exactly, therefore the production

target for Phase-I would be kept low. For marketing of the produce, some research has to be

done in the target markets of Malda, Balurghat etc. to determine the traders dealing with these

kinds of goods. Contracts would be made based on the samples shown to them. Example- JuteHandbags sell in these markets starting at Rs.80. So after adjusting for the dealer margin,

transportation cost and other miscellaneous expenses, the cost to the trader would be determined.

Since the initial volumes would be low, the transportation cost would not be much. The goods

can be packed in 2-3 cartons and carried through the public transport i.e. buses and autos.


After the business starts up and the demand picks up, more groups should be trained in the

similar crafts. Also since the markets always want newer and better products, special training

sessions for the groups should be organised. Now since the volumes would be larger, there

would be needed to make contracts with the trucks which transport goods to the target markets.

Since the products are not of perishable nature nor demand is persistent, the delivery period can

be fixed accordingly. Also to generate more income in future and command a respect for quality,

trade name should be given to the products. This would help in marketing the products to

markets beyond these regions.


After the business has established itself in the nearby markets, the thrust should be made on

marketing the products outside these markets. This means going to larger markets e.g. Kolkata,

Siliguri. Here, products can be sold in two ways. First- the present way of tying up with the shop

owners selling these products can be done. This is more time and effort intensive job. Second-



The product can be marketed to big business groups e.g. Spencer, Big Bazaar, Bazaar Kolkata

etc. This would ensure that the product reaches not only Kolkata, but also throughout India.

Besides Handicrafts, there is great scope for Tailoring business in the village. As already

observed, several women in the village possess tailoring skill and are also doing some temporary

tailoring jobs for the bigger shops. Group should be organised of such women so that they can

take contract work in larger volumes and also deliver in time. Also it was observed that there was

not a single ladies’ garment tailoring shop in the village i.e. all the women clothes are stitched by

men tailor only. This is a real opportunity as more women would be willing to come to ladies

tailor. Initially the tailoring business can be operated out of some member’s home. At later stage,a shop can be rented in the market to step up the business. Also special tailoring skills sessions

should be conducted for the members to take up bigger jobs.

6.1.3 Vegetable Growing

In the local village market (HAAT) which happens every Thursday, it was observed that the

prices of the vegetables are comparatively more than some sold in the cities. This is quite a

paradoxical situation where the individual earning lesser in a village has to pay more for

vegetables than a person in the city. Also it was observed that there was only a single shop that

too temporary for selling the vegetables in the village on other days. The shopkeeper sourced the

vegetables from Gangarampur. If the vegetables were to be grown in the village itself, the entire

transportation cost would be wiped out of the prices of the vegetables. Moreover, when grown in

certain quantity would yield decent profit. Groups for this business would have to be formed and

trained according to type of vegetables they are willing to grow.

Phase-I: Start-Up

The groups can start growing the vegetables in either homes or part of their fields itself. The

produce would be collected in the group and the sold. For the initial stage, to ensure that all the

vegetables get sold, the selling would be done in two ways. First- a shop ( temporary) should be

set up in the market place which would be running from morning till evening to ensure that

buyers get the vegetables throughout the day. Therefore, some basic preservation techniques



would have to be taught. Second- a certain portion of the produce would be kept in a VAN and

the van would go round the village twice through the day, once in morning and once in evening.

Since the food is prepared at both these times , there are chances of getting all vegetables sold.

Also since the vegetable would be available at doorsteps of households, the housewives would

be more willing to buy the vegetables since it would save them time and effort of going to the

market.


After the business has started running, it should be scaled up to take advantage of the market

conditions. Field should be purchased and some irrigation arrangements should be made for thevegetables. Secondly a permanent shop should be setup in the village market. Since the produce

from the fields would be over and above the daily demand, the vegetables need to be preserved,

which would be done in the shop. The excess produce can then be stocked and sold in HAAT. To

grow vegetables on large scale, certain agricultural skills would be required. Training regarding

the same should be imparted to the groups and also new groups should be incorporated in the

business to take advantage of the opportunity as well as help in growth of business.


After achieving capability to perform in local markets, the production of vegetables should be

expanded to grow more quantity and variety of vegetables. Growing new vegetables would

require certain skills, training for the same should be provided. Secondly, since the produce

would be in excess of local consumption, transport arrangements should be made to sell the

vegetables in nearby villages.

After attaining success with the vegetables, certain fruits growing can also be tried out.

6.2 Microcredit Program

From the results of the survey, it clearly indicates that the micro-credit program is a success. But

in a limited manner because the level of upliftment is not much and also several households have



not been able to properly utilise the funds for their development. This calls for a review of the

program.

Funds shortage is a perennial program for NGO. However, funds can be generated internally by

increasing the no. of groups to increase the savings deposit. Also from the survey it was found

several groups are willing to increase the savings amount. This should be addressed immediately.

Funding from Govt. agencies as revolving loans can be obtained. This would ensure that the

funds requests are not rejected and also the amount is not cut down from the originally requested

amount. This would also ensure that the loans taken by the groups can be invested in something

substantial which would really raise their income levels. At present the loan amount taken bysome are too meagre to be put to any substantial use.

Loan Program needs certain modifications. At present the loan payment period remains the same

i.e. 1 year irrespective of the amount of loan taken. This in turn translates to higher instalments

for higher amounts which puts strain on the individual. Also the loan repayment starting time

needs to be reviewed because in some businesses the income generation does not start from the

first day itself. Instead of this, the term of loan should be decided based on the amount of loan

taken and the loan payment moratorium period should be decided according to type of

investment.

Secondly the instalments are fixed according to the loan taken as Rs. 25 per week per Rs.1000

taken. This roughly translates to 12% interest. Now if the individuals prepays the loan before the

due time period, he has actually paid more interest than desired varying according to the time

taken to pay the loan. Also the interest has been calculated on whole amount and charged

proportionately. But in common banking parlance, the interest is charged on the principal

outstanding i.e. Declining Balance Method. This would ensure that the individual face less

interest burden. These problems may have been due to accounting problems. But these need to

be changed.

Accounting of the program is done manually and the accounts are maintained in several

registers. Since a single transaction e.g. loan instalment payment requires making entries in

several books, there arises a possibility of error in the entry resulting in corruption of accounts.



This also limits the quantum of work that can be handled. In addition to these, when need arises

to know of current status of the program, much time is spent in getting the data and making the

report. Therefore, there is a high need for computerisation of accounts.

Micro-Credit program has largely been focussing on the financial aspects. The real problem with

the villages is not only several financial assistance shortfall but also lack of proper guidance and

training. Therefore, there arises a need that in addition to providing the finance, the NGO starts

looking into type of investment being made and the kind of progress achieved. They also need to

advise villagers on kind of investments to make and type of business to take up. Opportunities of

income generation are many, but they remain invisible to common man due to short-sightednessof thinking and mental framework.



7. Implementation of recommendations

Group Initiative

Meetings were held with 10 different groups in 3 villages. In these meetings, the members were

educated on the importance and benefits of working in groups. Some success stories were also

outlined as examples for better under. Some groups have agreed to start working as a group,

provided proper training and direction is imparted.

New Business Initiatives

Groups have been identified which can start working for the Handicrafts and Jute handicrafts

business. Analysis of groups past performance is under process. Also reorganisation of 2 groups

have been completed to ensure smooth functioning of groups( groups had some members who

were irregular in their savings and attending the meetings; these members are assigned some

other groups)

During the survey, some women are found to have undergone some training on handicrafts work.

These women have been identified and designated as the leader of the groups for time being.

Also they have initiated training of skills of other members of the groups. Besides leader, one

woman (with appropriate competency) has been selected as the accountant for the projects. Also

the resolution and draft proposal for requesting the loan have been made.

Micro-Credit Program

Regarding improvement of accounting program, consultation done with Mr. Sukumar Santra(

accountant) at Thinagar Project Office. Four basic sheets have been developed for assistance in

accounting of micro-credit program. However, much work is still required to be done.

Training

Regarding Training of workers at Project Vikahar, 10 hrs of computer training has been provided

to 10 members the Project. The training was regarding basic computer usage and doing some

basic tasks like usage of MS-WORD for typing letters, MS-EXCEL for making tables and lists.

The low level of training was done due to extremely low knowledge of computers among the

workers.



8. Training Need Assessment

Unlike business sector, human resource management in microfinance is quite new and not well

understood. It is also worth to be noted that all NGOs are having problems on human resource.

The continuing problems on human resource aspect are caused by lack of focus study and

development of the subject. Human resource for NGOs is having distinctive characteristics

different with other activities. The characteristics are: ability to serve the poor, ability to work

with customized method ( balance of the context of the poor and on the other hand meeting the

standard of prudential principles and cost effectiveness), a bility of having paradox values; they

have to understand the situation of the poor but also maintaining discipline, need to have specific

competency needed by the job.

The first step to conduct appropriate training for SHG program is to consider the target group,

methodology of the organization, and the recruits in needs assessment. Identification of the target

group is very important since the poor in different context has their own characteristics. The

result of the assessment use to develop training objectives that elaborate further in training

content and training method. Training delivery need to be followed by evaluation of the skills,knowledge, and ability of staff. The evaluation will be used as an input for further training and

improving the next training.

Organization

Methodology

TargetGroup

The

Recruits

NeedAssessment

TrainingObjective

Training

Content

Training

Method

TrainingDelivery

Evaluation



In context of ERDS, the training need assessment was carried out by means of TNA survey of

the employees working at Project Office in Vikahar. The results of the survey brought out some

important facts, which are:

1) Language Skills: The workers are well versed with Bengali which is the mother tongue of

the areas of influence. Also knowledge of English is quite sufficient to deal with the

office work. But severe lacking in knowledge of Hindi was observed.

2) Special Skills: Few workers are observed to some special skills. These skills can be used

in various programs for the benefit of the community.

3) Training History: All workers have undergone some specific training programs, bothinternal (conducted in-house) and external. However, their learnings are not been utilised

properly.

4) Knowledge of Programs: Almost all the workers have the knowledge of Education

support programs, but the knowledge of SHG program is very limited.

5) Knowledge of Issues: The knowledge of some workers is good in area of govt. programs

and the legal aspects regarding the individual rights and laws formulated by state, but

overall the knowledge is quite low. In contrast, knowledge of social problems in the

village and the Health issues is quite good among all the workers.

6) Rating of Skills: Almost all the workers said that they have good mathematical skills and

can maintain book of accounts. Similarly communication skill is also good for majority.

However Leadership and Teamwork skills are fairly known to all. The only lacking area

is the Entrepreneurial skills, which was found lacking in almost all the workers.

7) Further Training & Development: All the workers are willing to undergo further training

to enhance their skills. The constraints from families are low for most of them. Also they

are willing to take charge of any new initiative.

Based on this assessment, the areas for training are:

i) Language Skills: To improve the communication skills of the workers in order to enable

them to co-operate with other NGOs and organisations to facilitate their work.



ii) Role Specific Training: Workers involved in keeping the accounts need to imparted

training in accounting. Those involved in Education support program need training on

how to deal with children of different age groups and handle their learning process.

iii) Awareness Training: Training programs on govt programs and schemes should be

conducted to make all the workers aware of the facilities provided by the govt. In

addition to that, workshops on rights and legal aspects of living in a society need to be

conducted to raise the awareness on these areas.

iv) Entrepreneurship: To take advantage of opportunities in the villages, workers need to

imparted training in entrepreneurship and undertaking new business initiatives. This

would go long way in sustenance of current programs.v) IT skills: With low level of knowledge of computers prevalent in the workers, there is a

dire need to impart training on computers and IT tools. This would enable them to work

more efficiently and effectively.

vi) In-House Training: In-house training should be made part of regular office schedule.

This would not only help in utilising the knowledge of persons in some specific areas but

also help in integrating the workers with the goals of the organisation. They should be

made aware of all the programs running in the organisation so that they can also act as

ambassadors for promoting those programs.



9. Conclusion

VIKAHAR PROJECT and ERDS is doing quite a decent job in the empowerment of women and

integrated rural development. However, the scope for improvement is still more. The survey

results clearly indicate the dire need for education and training to identify and exploit the

opportunities present in the villages. The willingness to act for change is present in villagers, but

they lack in guidance and support, which needs to be fulfilled. Business Initiatives which have

been suggested are based on observations made during the project period. However, if in depth

analysis and fact finding is carried out, more opportunities of growth and development would

come up which exploited properly would lead to greater benefit of all. Financial assistance needs

to be stepped up, but with effective management of funds and planning with a sharp eye of

utilisation of loans and implementation of programs. With Govt. not very forthcoming in

implementation of the programs for the development of villages, the onus lies on NGOs like

ERDS to uplift the villagers for the darkness of poverty and neglect to a new life of development

and growth.



Appendix



Appendix-I: Contact Details

ECOOMIC RURAL DEVELOPMET SOCIETY 6,KIRON SANKAR ROY ROAD

GROUND FLOOR ROOM NO – 3KOLKATA – 700 001

WEST BENGAL, INDIA.

Telephone No. : (0 33) 2248 - 6888 (0 33) 2410 - 1986 / 3122.

Name Designation Contact No.Mr. Madhu Basu General Secretary 098316 54430

Mr. Bhabhesh Burman Project Co-ordinator,Vikahar 09932618540

Mr. Nimai Burman Accountant, Project Vikahar 09733220352



Appendix-II: Cost Structure of Diary Farming

Sr.o. Items Specifications Phy units Unit Cost

(Rs. /Unit)

Total Cost

(Rs.)

1 Cost of animals 2 9,000 18,000

2 Insurance 2 800 1,600

3 Conc. Feed (4.5

kg/day/animal for 30

days)

135 Kg 1 3.4 460

4 Total cost 20,060

B TECHO ECOOMIC PARAMETERS

i) No.of milch animals 2

ii) Cost of milch animals 9,000

iii) Lactation period (days) 215

iv) Dry period (days) 140

v) Milk yield (lts./day) 3

vi) Sale price of milk (Rs./lt) 13vii) Insurance premium for five years (%) 8.0

viii) Veterinary aid/animal/year (Rs.) 150

ix) Labour (Rs.) Family labour

x) Misc. Expenses (Rs./animal) 100

xi) Interest rate (%) 12

xii) Repayment period (years) 5

S.o. Type of fodder/feed Price (Rs./kg) (Quantity in kg/day) Lactation

/Drya) Green fodder 0.2 25 /25

b) Dry fodder 0.5 5/ 5

c) Concentrate 3.4 4.5 /1

It is assumed that the expenditure on calf

rearing will nullify the sale value of calf

Closing stock value (Rs. per animal) 4500



CASH FLOW AALYSIS

Sr.o. Particulars Years

I II III IV V

I Costs:

1 Capital cost 18,000

2 Recurring cost

a) Feeding during

lactation periodGreen fodder 2,150 2,300 2,300 2,100 2,100

Dry fodder 1,075 1,050 1,050 1,050 1,050

Concentrate 6,386 6,237 6,237 6,237 6,237

Total 9,611 9,587 9,587 9,387 9,387

b) Feeding during dry

period

Green fodder 550 1,150 1,300 1,300 1,300

Dry fodder 275 575 575 750 750

Concentrate 363 760 850 990 990Total 1,188 2,485 2,735 3,240 3,240

c) Veterinary aid & breeding cover

225 300 300 300 300

d) Misc. Expenses 150 200 200 200 200

Total 29,174 13,937 13,515 13,127 13,127

II BEEFITS

a) Sale of milk 24,080 25,500 25,500 25,500 25,500

b) Closing stock value 9,000

Total 24,080 25,500 25,500 25,500 34,500III DF @15% 0.870 0.756 0.658 0.572 0.497

IV DISCOUTED

COSTS AT 15%

25,175 10,537 8,886 7,505 6,526

V DISCOUTED

BEEFITS AT 15% 20949.6 19278 16779 14586 17146.5

VI PV @ 15% 17,453

IX ET BEEFITS -4,225 8,741 7,893 7,081 10,621

X DISCOUTED ET -3676.1 6608.196 5193.594 4050.332 5278.389



BEEFITS AT 50%

REPAYMET SCHEDULE

Bank Loan (Rs) – 18,000

Interest Rate (%) - 12

Year Income Expenses Gross surplus Equated

annual

instalment

et surplus

I 24080 10,728 12906 4994 7912

II 25,500 13,936 12928 4994 7934

III 25,500 13,514 12678 4994 7684

IV 25,500 13,127 12373 4994 7379

V 25,500 13,127 12373 4994 7379



Appendix-III: Training Need Assessment Form

TRAINING NEED ASSESSMENTPersonal Details

Name:

Age: Gender:

Educational Qualification:

No. of Members in Family:

No. of Children in Family:

Sources of Income: Agriculture Business

Self-Employed Others

Work Details

Position in Project:

Primary Job Responsibility:

Secondary Job Responsibility:

Language Proficiency

V. Poor Avg. V. Good1 2 3 4 5 6 7 8 9 10

English Read

Write

Speak

Hindi Read

Write

Speak

Bengali Read

Write

SpeakAny Other Languages Known:

Any special Skills:

Training Details

No. of Training Programs Attended:

Training Type: Internal / External

Title of Training Program(s):



Knowledge of Project Programs

V.Poor Avg. V.Good

1 2 3 4 5 6 7 8 9 10

SHG(Micro-Credit)

Read to Lead

Knowledge of Issues

V.Poor Avg. V.Good

1 2 3 4 5 6 7 8 9 10

Govt. Programs

Health Issues

Community Welfare

Social Problems

Laws & Rights

Rating of Skills:

V.Poor Avg. V.Good

1 2 3 4 5 6 7 8 9 10

Mathematical Skills

Communication Skills

Leadership

Teamwork

Entrepreneurship

Willingness

Given responsibility of Handling a particular project/program, will you able to do it?

YES / NO

If NO, Why? Lack of Confidence Lack of Knowledge/Skills

Lack of Time Other reasons

If chosen for External Training Program, will you attend? YES / NO

Max. Time for which you can attend External Training Program:

Suggestions

Any Particular Area in which you require Training:

Any ideas/suggestions for improvement of Programs or working of Project:



Appendix-IV: Questionnaire Form





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