Self-help Groups as Drivers of Entrepreneurship: Evidence from Karnataka and Odisha States

Abstract

This paper has conceptualised and measured the graduation of a self-help group member as a two-dimensional index, combining savings and enterprise dimensions, that reflects the ability of SHG members to start their own enterprises/income-generating activities. The study has covered a sample of 240 SHG members drawn from four districts, viz. Khordha and Sambalpur (Odisha) and Dakshina Kannada and Koppal (Karnataka). It was found that about 27 per cent of the SHGs did not have any member having individual savings bank account. The less-developed districts (Sambalpur and Koppal) fared better compared to the developed districts (Khordha and Dakshina Kannada) in terms of savings bank account penetration. The SHG members opened savings bank accounts, mostly for pro-entrepreneurial purposes. They undertook multiple activities ranging from mere wage labour to income-generating/microenterprises. The membership in SHG helped about 40 per cent of the people in taking up two or more additional activities than before. Farming followed by wage labour have been found the primary activities among SHG members. The tendency for taking up additional activities was higher among members from less-developed districts. The members with higher accumulated savings and possessing a mobile phone or belonging to younger groups have shown higher probability of going for additional activity. The paper has identified personal factors, SHG-related aspects and environment-related factors that helped the graduation process. Savings have shown positive influence on graduation index. However, borrowings did not emerge as a positive factor behind graduation. Nor it stimulated members to take up additional activities. However, using loan for non-consumption use has encouraged higher level of graduation. The paper has suggested scale, scope, convergence of efforts by different agencies and training as important aspects for consideration and has recommended to start a registry to avoid duplication of efforts.