This report on CSES study was published in The Hindu on 20.10.2020
For a large section of members, groups work as a source of credit
Only about 12% of Kudumbashree neighbourhood groups (NHGs) in rural Kerala are involved in income-generating activities, and for a large section of its members, the NHGs mainly work as a source of credit and easy means to access government-given benefits, says a pre-COVID-19 study of indebtedness among rural households in the State.
At the same time, the Kudumbashree Mission, established in 1997, has emerged as the second biggest source of formal credit for rural women after primary agricultural cooperative banks, says the study by Kochi-based Centre for Socio-Economic and Environment conducted in 12 districts.
The wide acceptance of Kudumbashree has drawn rural women away from moneylenders and other informal sources.
A total of 540 households with yellow and pink ration cards, who are priority targets of the public distribution system, were chosen for the study. Three wards and 45 households were drawn from each panchayat on a random sampling basis.
Loans availed of through NHGs largely go into house construction or renovation, healthcare, purchase of consumer durables, repayment of existing loans and meeting expenses arising from social obligations, the study says.
The pattern of using most of the credit for consumption is visible across the spectrum of loan sources, and Kudumbashree group loans, as such, are no exception though the mission prescribes that bank-linkage loans availed of by NHG members should preferably be used to create income-generating activities.
“Only a meagre share of Kudumbashree loans have been utilised for directly productive or income-generating activities such as business or agriculture,” says the study, which raised a question about the long-term viability of NHGs because a significant number of Kudumbashree members considered thrift loan as not having a stringent repayment schedule and gave it a low priority for repayment.
The study suggests that given the wide acceptance of the Kudumbashree network, the mission should be ‘revitalised as a facilitator of income-generating activities.’ Perception of the Kudumbashree as an easy source of credit should be changed. Understanding factors limiting the involvement of NHGs in income-generating activities is necessary to develop a strategy for improving the livelihood of the rural poor, the study adds.