Govt subsidises loans for women self-help groups

Three months from the Lok Sabha 2014 polls, the rural development ministry implemented a proposal which had been announced a year ago for subsidisation of interest rates on loans for women self-help groups (SHGs).

Rural Development Minister Jairam Ramesh on Monday said it would be implemented with “retrospective effect” from April 1, 2013. In the first phase, it would be implemented in 150 districts, predominantly in the Maoist-affected areas where such SHGs would pay only seven per cent of interest. Gradually, it would cover all 640 districts in the next five years.  

Ramesh said the ministry would be bearing a burden of Rs 1,400 crore on account of subsiding interest loans and coughing it from its own resources.

“The greatest shortcoming is that only four states have been accessing the financial help rendered by banks — Andhra Pradesh, Tamil Nadu, Kerala and Karnataka,” he said. By announcing this incentive formally, the government is attempting to rope in greater participation from other states.

Bihar was singled out by Ramesh as a “success story” which had undergone a sea change in accessing financial help to its SHGs due to efforts by Chief Minister Nitish Kumar and former Deputy Chief Minister Sushil Kumar Modi.

Apart from Maoist-affected districts, states have also selected backward and poverty stricken districts such as Bahraich, Deoria, Azamgarh, Badaun in Uttar Pradesh to be included in the select 150 districts.

To ensure that SHGs in other districts are not deprived of this benefit, the government will give a rebate of four per cent on timely repayment of loans.

Currently, the scheme will benefit three core women enrolled in 2.5 million SHGs under the National Rural Livelihoods Mission. The government’s target is to double these figures in the next five years.