Self-help Groups and Employment Generation among Urban Poor Households: ACase Study in Chennai, Tamil Nadu

  • Gajendran V Assistant Professor, PG Department of Development Management Madras School of Social Work, Chennai - 600008
  • Yuvaraj S Investigator, Labour Bureau (SR) Ministry of Labour and Employment, Government of India
Keywords: Self-Help Groups, Financial institutions, Governmental Organizations, Financial burden


The aim of Self-Help Groups (SHG) is to alleviate poverty through self-employment generation by providing financial support to the members of SHGs. The formation of SHGs is promoted by the state, financial institutions and NGOs, and the financial support offered by financial institutions is successfully channeled to every SHG member. However, the ground reality shows a different picture, where self- employment generation through SHGs with the help of loans from financial institutions was not impressive among the urban poor. This paper identifies two reasons for the failure: 1) Structural constraints of the market 2) Diverting money for other uses. On the one hand, money channeled through SHGs was used to reduce familial financial burdens rather than in investments to generate self-employment. On the other hand, SHG members were unable to invest money to create self- employment, given the structural constraints of the market. Consequently, to avoid the risk of investing money, SHG members preferred to use it to cover family expenses and so lessen their financial burdens.