SHGs for poverty alleviation: Insights from a Tamil Nadu village under rapid economic development

Abstract

The full-scale economic liberalization in India since 1991 has been largely successful in terms of accelerated economic growth,1 but it should be emphasized that the broad-based agricultural development in the preceding 1980s in India paved the way to such a growth. The second wave of the Green Revolution, took place in India in the 1980s, covering most of the major crops and most of the rural area, did have a substantial impact on rural income.2 Poverty reduction thus attained in rural India became an important prerequisite for the accelerated growth after 1991 since rural India provided a good market for products and services for the nonagricultural sectors (Fujita 2010). Since the mid-1990s Indian economy entered a new stage of development. Agricultural sector growth decelerated to 2-2.5 % per annum, mainly due to the sluggish growth of demand for foodgrains. Rural-urban income disparity expanded rapidly, inducing accelerated internal labor migration. Such a phenomenon was typically observed in south India. In Tamil Nadu, for instance, the farm household income data collected since 1971 by the Cost and Cultivation of Principal Crops Scheme showed that a sharp increase was observed in nonfarm income vis-à-vis farm income for the sample farm households since the mid-1990s (Kajisa and Palanichamy 2006). After the mid-1990s, the development of nonfarm sectors started to affect rural areas more directly in Tamil Nadu.3.