Q11. The legitimacy and accountability of Self Help Groups (SHGs) and their patrons, the micro-finance outfits, need systematic assessment and scrutiny for the sustained success of the concept. Discuss.
Model Answer:
Introduction
Self-help groups (SHGs) and microfinance institutions (MFIs) play a pivotal role in promoting financial inclusion and empowerment in rural India, particularly for women. However, their legitimacy and accountability require systematic evaluation to ensure the concept’s sustained success.
Body
Key Issues in Legitimacy and Accountability:
- Lack of Regulation: The informal nature of SHGs and the semi-regulated status of MFIs can lead to exploitative practices, such as high interest rates, inadequate grievance redressal, and coercive loan recovery methods.
- Transparency in Operations: Limited transparency around fund allocation, repayment tracking, and profit-sharing hinders the effectiveness of SHGs, often leaving members unaware of their financial standing.
- Social Impact Measurement: While SHGs aim to foster economic and social empowerment, there is little data on their actual impact, making it challenging to assess outcomes like improved livelihoods and decision-making power among members.
Conclusion
Systematic scrutiny, transparent policies, and robust regulatory frameworks are essential to enhance the legitimacy and accountability of SHGs and MFIs, ensuring they remain effective instruments for financial and social empowerment.
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