In India, the organization of self-help groups, especially for microfinance and microenterprise development programmes constitute a widely accepted development strategy for poverty reduction. This strategy is equally shared by government, commercial banks and civil society. The authors argue that, thus far, SHGs have shown a limited effectiveness in terms of their impact on rural poverty and their long-term sustainability. Due to the lack of proper understanding of their potential, the implementers have followed a minimalist approach that has restricted the scope of functioning of SHGs to promoting enterprises, that are stereotypically considered feminine. The universal fascination with SHGs has also resulted in obscuring the potential roles of alternative institutions like co-operatives, private sectors, etc. in poverty removal. The possessiveness of some of the implementers has resulted in the development of SHGs as stand alone organizations without having any meaningful interaction with other schemes or community based organizations like watershed user groups, village panchayats, etc. As a result of this, the SHG members have not been able to access substantial development funds, which could otherwise have been available to them. This study advocates that for SHGs to have a marked and sustained impact on poverty it is necessary for them to adopt a more encompassing approach with various community-based organizations & programmes by laying far greater focus on processes, capacity building, convergence with various on-going programmes, etc.
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