W13206

GRASSROOTS FEMALE ENTREPRENEURS: RURAL AND URBAN

SMALL BUSINESS GROUPS IN INDIA

Neha Paliwal Sharma wrote this case under the supervision of Dr. Tanuja Sharma solely to provide material for class discussion.
The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have
disguised certain names and other identifying information to protect confidentiality.

This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com.

Copyright © 2013, Richard Ivey School of Business Foundation Version: 2013-05-22

It was June 2012. The scorching sun added clout to the prickly thoughts that filled Pushpa Devi’s mind.
Having made several visits to the bank for more than a year, she felt miserable. Her loan application was
not yet approved. Devi headed the Radha Krishna group, a rural self-help group (SHG)1 of 10 women in a
village near the city of Mathura in Uttar Pradesh state in India.2 The group was set up in 1992 under the
Indian government’s Development of Women and Children in Rural Areas (DWCRA)3 scheme. It earned
its livelihood by making kanthi-malas (necklaces) and laminated photographs of deities. Struggling to
survive in the face of fierce competition, it was in dire need of finances. Burglary of its raw materials
amounting to INR50,000 had added to the despair. DWCRA had been merged into the Swarnajayanti
Gram Swarojgar Yojana (SGSY) scheme4 in 1999. As per the multiple-credit provision of SGSY, Devi
had applied for a bank loan of INR125,000 (US$1 = INR54.9100).5 But despite leaving no stone
unturned, her pleas for release of the funds went unanswered.
Raj Kumari was the chairperson of an urban SHG in Mathura, called the Jai Laxmi group. This group of
five women was relatively young. It was formed in 2011 under the Swarna Jayanti Shahari Rozgar
Yojana (SJSRY) scheme.6 Printing and painting work was the source of its income. Like Devi, Kumari
had been trying hard to get the release of funds to scale up operations.

1
A SHG is a small business group formed by micro-entrepreneurs with similar socio-economic backgrounds (see Exhibit 1).
2
Mathura is a city in the Uttar Pradesh state of India. It is famous globally as a holy pilgrimage site and abode of Lord
Krishna.
3
DWCRA is an Indian government poverty reduction scheme that assists rural women in taking up income augmentation
projects (see Exhibit 2).
4
SGSY is an Indian government poverty alleviation scheme that came into being in 1999 and 2000 through merging various
former rural development schemes such as DWCRA. It aims to enhance self-employment and income generation
opportunities for the rural poor (see Exhibit 2).
5
“Forex—The World’s Most Traded Market,” http://financeai.com/forex/cc?from=INR&to=USD&q=1, accessed March 2,
2013.
6
SJSRY is a parallel Indian government scheme launched in 1997 to improve the economic conditions of the urban poor by
supporting the setting up of self-employment ventures through formation of suitable community structures such as CDSs
(see Exhibit 3).

This document is authorized for use only in Prof. Sujit Jagadale's MBA 22-24 T-6 Rural & Inclusive Marketing (21/Nov/23) at Indian Institute of Management - Amritsar from Dec 2023 to Mar
2024.
 Page 2 9B13M054

Did being grassroots female entrepreneurs add to the challenges faced by Devi and Kumari as
businesswomen? How could these ambitious but financially weak women, hailing from two different
sections of society, overcome these hurdles to sustain their commercial ventures in the long run?

RADHA KRISHNA GROUP

Radha Krishna group was a rural self-help group. Its 10 members, all illiterate village women, were from
below the poverty line (BPL)7 families. Before the group formed, they used to make artificial necklaces in
their houses. In 1992, Devi learned about the DWCRA scheme from a District Rural Development
Agency (DRDA)8 official. She convinced the other women to benefit from this scheme by forming a
group for sustainable income generation. The group was financed through the revolving fund9 provision
of INR15,000 under DWCRA. Group members were to be provided one week of free training at the rural
department government training centre in Mathura.
Devi found herself at the top of the world. However, all was not as well as it seemed. Her efforts towards
stepping out of the house to generate income for her family annoyed the village elders. The paternalistic
outlook of the rural population could not accept a woman’s progressive stance. Village males accused
Devi of having an immoral character. She was also charged with enticing other women into following her
footsteps. As the news spread like wildfire in the male-dominated society, she was forced even by her
family to remain confined in her home. Her husband and mother-in-law said that she was going out just
for wandering and having fun, instead of working. But Devi made up her mind to fight all odds and not
give up, came what may. She attended five days of training at the city centre.
However, it was difficult for a woman to challenge the social norms when her family had turned against
her. Devi was forced to forget her dreams and quit the SHG she had formed. A few days later, DRDA
officials visited her village. They met Devi at her house to inquire why she had stopped working.
Villagers were skeptical about the purpose of their visit, but the officials discussed the matter with Devi’s
family and convinced them to allow her to resume work.
In 1999, Devi managed to receive financial aid of INR125,000 as a subsidy under SGSY. After a year, her
group received an additional INR125,000 as a bank loan. By now, Devi’s success had become a matter of
uneasiness for many village men who feared government officials and who looked for any excuse to
cause her trouble. In the meantime, her group’s savings grew from initially INR50 per month to INR200
per month. Individual group members could take personal loans from the group savings as and when
required. Financial records maintenance for the SHG was facilitated by a government-approved non-
governmental organization (NGO). As the group was expanding, Devi now needed a workplace to work
and store raw materials. The free workplace provided by the government was too far away. She needed to
work near her home to look after her family. The villagers were against allowing her to use any village
public use land as her workplace. Some of them even threatened her, saying “We will shoot you in case
you even think about using the village land for your personal work” but Devi was determined to find a

7
BPL surveys are conducted by nations to spot individuals and families in need of financial assistance. The rural SHG
members in this case belonged to BPL families as per the survey carried out by the Indian government in 1992. In 2011, the
government made BPL surveys a part of the larger socio-economic and caste census launched on June 29, 2011. “Socio
Economic and Caste Census 2011 Begins,” www.livemint.com/2011/06/29204427/Socio--Economic-and-Caste-Cen.html,
accessed August 11, 2012.
8
DRDA is a government outfit that looks after the implementation of various poverty alleviation schemes in rural India;
“District Rural Development Agency (DRDA),” http://rural.nic.in/sites/downloads/right-information-act/10DRDA(F).pdf,
accessed August 11, 2012.
9
The revolving fund is a fund that receives revenues from the projects it finances, www.qfinance.com/dictionary/revolving-
fund, accessed August 11, 2012.

This document is authorized for use only in Prof. Sujit Jagadale's MBA 22-24 T-6 Rural & Inclusive Marketing (21/Nov/23) at Indian Institute of Management - Amritsar from Dec 2023 to Mar
2024.
 Page 3 9B13M054

way forward. She declared, “Even the late Indian prime minister, Mrs. Indira Gandhi, was shot at. It is
okay if I am too! You cannot scare me with such threats.”10

Devi sold her personal belongings to purchase a piece of land near her home for INR60,000, and DRDA
constructed a building on it, free of cost. The remaining bank loan was used to start silver jewelry work,
as it was in great demand in villages and nearby cities. However, Devi was inexperienced in dealing with
a product that had high market fluctuations. Her group generated meagre profits as middlemen siphoned
off most of the margin. Then, someone broke into their workplace and stole the silver raw material.
Devi was almost back to square one. She had to face the mocking villagers, but she did not lose hope. She
started work with whatever money and material were leftover. She also started to learn to read and write
with the help of a village-based tutor. She restarted her group and encouraged the other group women,
who had also faced a social stigma like hers, to return to work. As the income grew, her family began to
support her. She even involved her husband and son in her project. She started visiting nearby places such
as Agra and Delhi to arrange for cost-effective, high quality raw materials. By 2012, Devi, a woman who
had never stepped out of her house, had travelled almost all over India to showcase her products in The
Council for Advancement of People’s Action and Rural Technology (CAPART)11 exhibitions (see
Exhibit 4) and other trade fairs. She had also received an opportunity to participate in an international fair
in Dubai, but she could not go because she had no passport.
However, the challenge to sustain her business in the long run was yet to be met. Having benefitted from
the government scheme, she now owned a pucca (permanent) house. It was quite likely that she might not
be in the BPL category, as per the norms of the Socio-economic Caste Census 2011 which was expected
to be underway until December 2012. This could make it difficult for her to get SGSY benefits in future.
Except for the government fairs, marketing of products was also not easy. Profit margins were low. Banks
seemed more interested in funding financially sound large commercial undertakings instead of an all-
female small SHG. How Devi could turn the Radha Krishna group into a sustainable business venture was
a big issue.

JAI LAXMI GROUP

The Jai Laxmi group was an urban SHG consisting of five BPL women from a locality in the slum area of
Mathura. Three of them had dropped out of school after the fifth grade in primary school, while the other
two, including the group head, Kumari, were educated until secondary school. The group was formed in
2011 through the joint efforts of the District Urban Development Agency (DUDA)12 and the Community
Development Society (CDS).13 Kumari had come to know about the SJSRY scheme from CDS
volunteers. Though the locality had a population of more than 10,000, barely 2 per cent of the women
were working. Moreover, including this SHG, there were only two all-women groups functioning.14
Before the group formed, Kumari used to assist her husband in his printing and painting work. She had
also received work-related training from him. As community development initiatives undertaken by CDS
10
Interview with Devi, July 21, 2012.
11
CAPART is an autonomous body, formed in 1986 under the Ministry of Rural Development, Government of India. It
coordinates partnerships between the government and voluntary organizations for sustainable rural development. “CAPART
at a Glance,” http://capart.nic.in/orgn/index.html, accessed August 11, 2012.
12
DUDA is a government agency parallel to DRDA. It is responsible for the formulation and implementation of various urban
development schemes. “Development Agencies,” http://angul.nic.in/chap-19.htm, accessed August 11, 2012.
13
CDS is a community representative structure that works in close liaison with DUDA. It spreads awareness about
government schemes in its community as well as voices community needs in governance matters. “Operational Guidelines
for Program Administration & Monitoring under Swarna Jayanti Shahari Rozgar Yojana (SJSRY),”
http://urban.bih.nic.in/Docs/SJSRY-Guidelines.pdf, accessed August 11, 2012.
14
Interview with DUDA official, July 22, 2012.

This document is authorized for use only in Prof. Sujit Jagadale's MBA 22-24 T-6 Rural & Inclusive Marketing (21/Nov/23) at Indian Institute of Management - Amritsar from Dec 2023 to Mar
2024.
 Page 4 9B13M054

enhanced awareness about income generation and skill development prospects for poor city women,
Kumari met a CDS member with her SHG proposal. CDS sent this proposal to DUDA, which approved
group registration. However, that was not enough. Kumari had applied for a government grant to upgrade
her business. The total project cost was estimated at INR300,000. Under SJSRY, Kumari was entitled to
35 per cent of the project cost as subsidy, which amounted to INR105,000. While this grant had been
sanctioned by government authorities in 2011, she had not received a single penny from it yet.
By November, 2011, Kumari had spent approximately INR150,000 on this SHG operation. Group
members had somehow managed to pool this amount to sustain it so far. In 2012, the group had received
a bank loan of 60 per cent of the total project cost, which was also pending. This loan was to be directly
credited by the bank to a shopkeeper chosen by the bank authorities in consultation with the group head
from whom the group was supposed to purchase its raw materials.
As per SJSRY, urban SHGs were not entitled to buy raw materials on their own. They could also not take
the bank loan in cash. These provisions had been originally devised to ensure that poor SHG members
used the credit for the purchase of raw materials and not to meet their personal needs. But at times it
deprived these SHGs of their bargaining power. Also, it delayed the availability of raw materials to urban
SHGs and involved a lot of paperwork.
Besides, as the free workplace provided by the government was far away from group members’ houses,
Kumari’s residence was used for all work. Marketing of products was not trouble-free either, as retailers
bought the group’s products at cheap rates and sold them at much higher prices in the market.
Yet Kumari’s labour bore fruits and the group’s earnings increased, though modestly. However, she did
not have any prior experience in handling a commercial project. There was no assistance available for
maintenance of records related to expenses and revenue. No system for profit sharing among group
members had evolved as yet. All members claimed the right over whatever little yield the mutual
endeavour had generated. This led to misgivings and disputes. The unrest was on the rise as, with passing
time, members grew more skeptical about whether they would receive government grants to benefit all in
the long run. Every member wanted the maximum share as there was no guarantee of regular income in
an era of cut-throat competition.
“I worked for longer durations on a daily basis than the rest of the members, therefore, I should get a
larger share,” asserted one of the members. “My son contacted the local shop-owners for selling group
products, hence I should get more money,” stressed another.15
Kumari was under increasing pressure to somehow manage funds released for her SHG at the earliest
possible time. She was in urgent need of financial backing for her project. Keeping the group intact in
such circumstances was an additional problem. She returned from every meeting with the bank officials
empty-handed. Conditions such as arrangement for a guarantor and paperwork requirements kept
changing with every visit. DUDA officials expressed their inability to provide her with individual
assistance for release of funds in a short time, as they had to arrange government grants for hundreds of
SHGs at the city level. Kumari could not figure out how she could sustain her group operations in the
future.

Neha Paliwal Sharma and Dr. Tanuja Sharma are from Management Development Institute, India.

15
Interview with Kumari, July 22, 2012.

This document is authorized for use only in Prof. Sujit Jagadale's MBA 22-24 T-6 Rural & Inclusive Marketing (21/Nov/23) at Indian Institute of Management - Amritsar from Dec 2023 to Mar
2024.
 Page 5 9B13M054

EXHIBIT 1:SELF-HELP GROUPS

SHGs are small business groups formed by micro-entrepreneurs belonging to a similar socio-economic background.
They function as financial bodies of approximately 10 to 20 members, by and large impoverished women or other
poor people. A large number of SHGs are found in India, though they can also be found in other countries,
particularly in Southeast Asia and South Asia. In India, most of these SHGs are linked to financial institutions such as
banks to deliver micro-credit. SHG members pool resources and try to generate small savings on a regular basis.
When sufficient capital has been accumulated, the funds may be utilized for lending back to the members at minimal
flat interest rates. SHGs are generally supported by government and NGOs. Generation of micro-entrepreneurship
and self-employment opportunities for poverty alleviation and inclusive growth are the primary objectives.1

An important milestone in the SHG movement in India was the initiation of a SHG-bank linkage scheme in 1992 by
the National Bank for Agriculture and Rural Development (NABARD). This marked the first direct financing of mature
SHGs by commercial financial institutions. The informal SHGs gained recognition as bankable clients. Later, the
Reserve Bank of India also recommended that commercial banks consider funding these small business groups
under their micro-credit operations, thus facilitating the SHG-bank association. Overall, the ensuing associations
resulted in a win-win situation for both partners. While the banks gained access to the yet unexplored huge market of
low income households with small transaction costs and high repayment rates, SHGs got access to finance in the
2
form of a range of micro-credit products and services to scale up their operations. Promotion of micro-credit in India
was supported by principal financial institutions such as NABARD and the Small Industries Development Bank of
India as well as by NGOs such as Myrada, Self Employed Women’s Association and JK Trust. However, as the
financial viability of micro-credit grew over the years, even commercial and international banks, including HDFC,
ICICI, UTI, ABN AMRO and Citibank, began to work with SHGs.3

The setting up of SHGs involves three main stages:

FIRST STAGE: FORMATIVE

Discussions/surveys among local people
Coming together of members from similar backgrounds

SECOND STAGE: STORMATIVE

Withstanding resistance from family/society
Financial pressures

THIRD STAGE: NORMATIVE

Evolving of norms pertaining to records maintenance, savings’ custody, etc.
Asessing cost-effective strategies for venture profitability and sustainability

Notes:
1
“Self Help Group (SHG),” http://graminemitra.hpage.in/shg_73459125.html, accessed July 27, 2012.
2
“Self Help Groups: A Keystone of Microfinance in India — Women Empowerment & Social Security,”
www.aptsource.in/admin/resources/1273818040_SHGs-keystone-paper.pdf, accessed July 27, 2012.
3
“Chapter 6: Microfinance Instruments for Women’s Empowerment and SHGs,”
http://shodhganga.inflibnet.ac.in/bitstream/10603/3936/12/12_chapter%206.pdf, accessed January 11, 2013.
Source: Created by authors.

This document is authorized for use only in Prof. Sujit Jagadale's MBA 22-24 T-6 Rural & Inclusive Marketing (21/Nov/23) at Indian Institute of Management - Amritsar from Dec 2023 to Mar
2024.
 Page 6 9B13M054

EXHIBIT 2: DWCRA AND SGSY

DWCRA was launched by the Government of India in 1982 as a sub-scheme under the Integrated Rural
Development Program. It was an outcome of the recognition of the fact that the financial assistance available to
grassroots rural women was too trivial to make it possible for them to rise above the poverty line. This scheme was
one of the first of its kind that had a special focus on quality of life improvement for rural women. Its main objective
was empowerment of rural women by organizing them into small micro-entrepreneurial groups for self-employment
and sustainable income generation in the long run.1

SGSY is a government scheme that came into existence in 1999 to 2000 through the merging of former rural
development schemes such as DWCRA, Supply of Improved Toolkits to Rural Artisans and Training for Rural Youth
under Self Employment. It aims to create self-employment and income generation opportunities for the rural poor,
especially women. In order to meet this objective, the scheme supports the formation of groups of micro-
entrepreneurs by organizing them into SHGs. The scheme is implemented throughout the nation through the DRDA.
It is funded by both central and state governments in the ratio of 75 to 25. Based on local requirements, available
2
outlays are used for training, infrastructure building and provision of subsidies to the micro-entrepreneurs.

Notes:
1
“Awareness of DWCRA Program among Rural Women,” www.vri-
online.org.uk/ijrs/April2007/Awareness%20of%20DWCRA%20programme%20among%20rural%20women%20in%20India.p
df, accessed August 10, 2012.
2
“Poverty Eradication through Self Help Groups,” www.rd.ap.gov.in/SGSY/SGSY_Brief_Note.pdf, accessed August 10,
2012.

Source: Created by authors.

EXHIBIT 3: DWACUA AND SJSRY

Development of Women and Children in Urban Areas (DWACUA), a Government of India scheme parallel to
DWCRA, was introduced as a poverty alleviation scheme aimed at the socio-economic development of women and
children in urban areas. Later, on the pattern of SGSY, DWACUA was subsumed into SJSRY.1

SJSRY was begun in 1997 with three main objectives:

1. Reduction of poverty in urban areas through the generation of employment opportunities for the unemployed
and/or underemployed urban poor.
2. Provision of training and/or skill development opportunities to the urban poor to make various market-related and
self-employment opportunities available to them.
3. Tackling urban poverty issues through the formation of appropriate community structures and capability building
interventions.

In order to meet its objectives, SJSRY incorporates five key components, namely, Urban Self Employment Program,
Urban Women Self Help Program, Skill Training for Employment Promotion among Urban Poor (STEP-UP), Urban
2
Wage Employment Program and Urban Community Development Network.

Notes:
1
“Chapter 6: Microfinance Instruments for Women’s Empowerment and SHGs,”
http://shodhganga.inflibnet.ac.in/bitstream/10603/3936/12/12_chapter%206.pdf, accessed January 11, 2013.
2
“Operational Guidelines for Program Administration & Monitoring under SJSRY,” http://urban.bih.nic.in/Docs/SJSRY-
Guidelines.pdf, accessed August 11, 2012.

Source: Created by authors.

This document is authorized for use only in Prof. Sujit Jagadale's MBA 22-24 T-6 Rural & Inclusive Marketing (21/Nov/23) at Indian Institute of Management - Amritsar from Dec 2023 to Mar
2024.
 Page 7 9B13M054

EXHIBIT 4:SMALL BUSINESS GROUPS IN INDIA HEADED BY GRASSROOTS FEMALE

ENTREPRENEURS

Devi displaying a sample of products made by the Radha Krishna Group products being showcased at a
Radha Krishna Group CAPART exhibition

Kumari at the work desk used for printing and

A sample wall painting made by Jai Laxmi Group
painting work performed by the Jai Laxmi Group

Source: Photograph one was taken by the author on July 21, 2012. Photograph two was provided to the author by the
Radha Krishna Group on July 21, 2012. Photographs three and four were taken by the author on July 22, 2012.

This document is authorized for use only in Prof. Sujit Jagadale's MBA 22-24 T-6 Rural & Inclusive Marketing (21/Nov/23) at Indian Institute of Management - Amritsar from Dec 2023 to Mar
2024.