20 April 2024

MAINS DAILY QUESTIONS & MODEL ANSWERS

Q1. Self-Help Groups (SHG) have emerged as a ‘socially relevant tool’ for social action and economic empowerment in society. Comment. Also, discuss some of the issues SHG face in society and suggest some measures to address these issues.

GS II – Self Help Groups related issues

Introduction:

• A self-help group (SHG) is a village-based financial intermediary committee normally consist of 10–20 local women or men. When the formal financial system fails to help the needy, then small groups volunteer to cater to the needs of the financially weak by collecting, saving and lending the money on a micro scale. SHGs have gained wide recognition in most developing countries in Asia where their presence is quite pervasive

Role of SHG’s in social action and economic empowerment in society:

• Capital formation: Through micro-finance, many SHG’s have created valuable assets and capital in the rural areas and are sustaining livelihoods.
• Access to credit: SHGs provide better access to credit at acceptable and convenient terms. The members have been able to obtain loans for emergent productive and non-productive purposes on comparatively easy terms. This has reduced their dependence on local moneylenders to a large extent.
• Government initiative such as SHG-Bank linkage program is also increasing their financial inclusion and easy access to credit from formal institutions.
• Poverty Alleviation: The approach of poverty alleviation through SHG is the most effective means and suits the ongoing process of reforms based on the policy of decentralization.
• SHGs have given the poor the access to microfinance and consequently led to important changes in their access to productive resources such as land, water, knowledge, technology and credit.
• Employment generation: Self-employment activities such as collective farming, bee-keeping, horticulture, sericulture have been taken up by SHG’s.
• Social welfare: There are many successful cases where SHG women have come together to close liquor shops in their village.
• Rural infrastructure: Schemes such as Aajeevika express have helped SHG’s in creating transport in rural areas.
• Women empowerment: SHGs have been able to improve the skills of women to do various things by managing the available natural resources.
• It is estimated that more than 25 million rural women of India have been benefited by the Self Help Groups (SHG).
• As a group they can help each other to learn so many things along with the money management because most of the women in the rural areas have a very little knowledge for the management of money.
• Kudumbashree in Kerala has been a huge success. Kudumbashree café is an exemplary example of nurturing entrepreneurship through SHG’s.
• They also act as a delivery mechanism for various services like entrepreneurial training, livelihood promotion activity and community development programs.

Challenges faced:

• There are issues like regional imbalance, less than ideal average loan size, lack of monitoring and training support by self-help group federations.
• Escalating non-performing assets of self-help group loans with banks.
• Several studies have also found issues related to governance, quality, transparency and irregularity in their functions.
• Low levels of literacy among the rural women.
• The study found that over time groups were disintegrating on account of coordination issues.
• Rural micro-enterprises run by SHG members suffer from critical bottlenecks, whether in raising funds for start-up, growth and working capital or accessing high-quality technical assistance.

Way Forward:

• Government programs can be implemented through SHGs.
• This will not only improve the transparency and efficiency but also bring our society closer to Self-Governance as envisioned by Mahatma Gandhi.
• Constant and enduring structural handholding support from the self-help group promoting institutions (SHPIs).
• Frequent awareness camps can be organised by the Rural Development department authorities to create awareness about different schemes.
• Periodic capacity-building of all members, to make the group the collective.
• With the Government’s focus on digital financial inclusion, investing in training of group members for transition towards technological platforms.
• It is important to invest in providing the right kind of support to maximize the impact these groups can have on livelihoods.
• Emphasising SHG movement on women’s entrepreneurship as an engine of growth in rural India.
• There should not be any discrimination among members based on caste, religion or political affiliations

Conclusion:

• SHG approach is an enabling, empowering, and bottom-up approach for rural development that has provided considerable economic and non-economic externalities to low-income households in developing countries. SHG approach is being hailed as a sustainable tool to combat poverty, combining a for-profit approach that is self-sustaining, and a poverty alleviation focus that empowers low-income households. It is increasingly becoming a tool to exercise developmental priorities for governments in developing countries.

Q2. Highlighting the rationale behind the government’s move to monetize assets of state-owned companies, discuss some of the challenges and measures that need to be taken to overcome them.

GS III – Indian Economy

Introduction:

• Prime minister of India last year announced investment opportunities worth ₹2.5 trillion in the national asset monetisation pipeline mentioned in the Budget through sale of around 100 assets of central public sector enterprises (CPSEs).

National monetisation Pipeline:

• The target is to monetize around 100 assets in oil, gas, port, airport, railways and power sectors to raise about Rs 90,000 crore in the current financial year. For instance, the Indian Railways has approximately 43,000 hectares of vacant land across the country and many road projects are in the pipeline for monetization as well.
• The government is increasingly looking to monetize physical assets such as land, buildings and brownfield operational assets like roads, railways stations, pipelines, mobile towers, etc. to raise resources in recent times.
• In addition, the Ministry of Shipping is in the process of recycling 11 assets, including 10 berths and the International Cruise Terminal at Goa Port. While in the telecom sector, BSNL and MTNL towers are planned to be monetized.

Review of previous asset monetization exercises:

• Learnings from past success: Since 2016, the National Highways Authority of India (NHAI) has been deploying the Toll-Operate-Transfer (TOT) model for asset monetization in the highways sector.
• Furthermore, the Airports Authority of India (AAI) has already completed the privatization of six identified airports (Ahmedabad, Mangalore, Lucknow, Thiruvananthapuram, Jaipur, and Guwahati).
• The railway station redevelopment program was among the initial projects which involved monetization of physical assets.
• As part of this initiative, Habibganj and Gandhinagar railway stations are being redeveloped into airport-like world class stations by the Indian Railways Station Development Corporation (IRSDC)
• Learnings of the past failures: The government has faced many challenges in its asset monetization efforts in the past.
• Lack of proper maintenance of asset register and title and encroachment issues have adversely affected the Indian Railways’ plan to monetize its land.
• Furthermore, the progress of the flagship railway station redevelopment program has been marred by improper planning including land unavailability, delayed approvals and clearances, policy constraints and lack of coordination among stakeholders.
• The current market conditions and legacy real estate industry issues could further impact the progress.
• In the roads sector, refinancing remains an issue considering the long-term nature of the TOT concessions despite the model providing more certainty of cash flows to the investors than under the greenfield projects.
• So far, the TOT model has witnessed limited participation in all its previous packages or bundles.
• Further, the unprecedented situation caused by COVID-19 which has severely impacted the toll collections could delay the asset monetization plan of NHAI.
• Clarity on the number, size and type of assets that would come to the market would instil confidence among investors who are looking to acquire a specific package or category of assets.

Measures to make National Monetization Pipeline a success:

• NITI Aayog has therefore suggested the creation of an Empowered Group of Secretaries for fast approval and clearances under the railway station redevelopment program.
• An underlying objective of asset monetization is to raise resources for future investments into the sector. The Infrastructure Investment Trust (InvIT) model which provides a way for recycling of capital invested in operational assets in an efficient manner, could be adopted to achieve the desired objective.
• In the power sector, the Cabinet Committee of Economic Affairs (CCEA) has recently approved monetization of the transmission assets of the state-owned Power Grid Corporation of India (PGCIL) through InvIT model.
• Another advantage of this model is that it would attract both domestic and global investors, including sovereign wealth funds, retail investors and institutional investors such as pension funds.

Conclusion:

• Monetization of public assets is a complex and rigorous process that involves stakeholders’ management, efficient coordination, and detailed due diligence of the technical, operational and financial aspects of the assets. Successful implementation of the monetization exercise will ease the burden on existing projects, enable asset value unlocking, and propel economic growth. As a way forward, asset monetization could be a game changer for the infrastructure investment in India.