Question 1: Critically discuss the role of micro-finance in the social and financial inclusion of women entrepreneurs for economic development? (70 Marks, 500-600 words)

FEMALE ENTREPRENEURS: RURAL AND URBAN SMALL BUSINESS GROUPS IN INDIA Source: Neha Paliwal Sharma and Dr. Tanuja Sharma, 2014, Richard Ivey School of Business Foundation Note: certain names and other identifying information may have been disguised 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) of 10 women in a village near the city of Mathura in Uttar Pradesh state in India. The group was set up in 1992 under the Indian government's Development of Women and Children in Rural Areas (DWCRA) 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) scheme in 1999. As per the multiple-credit provision of SGSY, Devi had applied for a bank loan of INR125,000 (USSI = INR54.9100). 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. 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. Did being 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) 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) 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 fund provision of INR 15,000 under DWCRA. Group members were to be provided one week of free training at the rural department government training center 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 center. 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 INR 125,000 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 nongovernmental 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 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. 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) exhibitions 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) and the Community Development Society (CDS). 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. 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 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 INR 105,000. 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 INR 150,000 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. 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