VZCZCXRO5042
RR RUEHAST RUEHBI RUEHCI RUEHDBU RUEHLH RUEHNEH RUEHPW
DE RUEHCG #0083/01 0790039
ZNR UUUUU ZZH
R 200039Z MAR 09
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC 2164
INFO RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0210
RUEHRL/AMEMBASSY BERLIN 0034
RUEHFR/AMEMBASSY PARIS 0124
RUEHNR/AMEMBASSY NAIROBI 0040
RUEHLO/AMEMBASSY LONDON 0189
RUEHMO/AMEMBASSY MOSCOW 0129
RUEHKO/AMEMBASSY TOKYO 0128
RUCNDT/USMISSION USUN NEW YORK
RHEHAAA/WHITE HOUSE WASHINGTON DC
RUEHGV/USMISSION GENEVA 0217
RUEAIIA/CIA WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 CHENNAI 000083 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PHUM KWMN KDEM IN
SUBJECT:  WOMEN IN INDIA:  SOCIAL AND POLITICAL EMPOWERMENT THROUGH 
MICROFINANCE 
 
¶1.  Summary:  Self-help groups are at the vanguard of women's 
empowerment in South India.  Small groups of women organized by 
government and non-governmental organizations encourage poor women 
to pool funds and allow them to access loans from the formal banking 
sector.  In so doing, the groups afford members financial 
independence that yields dividends well beyond the pocketbook. 
Membership empowers women in their domestic lives, as well as in 
their communities and on the political front. End summary. 
 
Government and private sector encourage saving and microcredit 
---------- 
 
¶2.  Self-help groups (SHGs) facilitate microfinance in South India. 
A typical group is comprised of ten to fifteen women from 
economically backward areas, such as urban slums and rural villages. 
 They pool together savings from their members, which are used for 
small loans to members or as collateral for loans.  Tamil Nadu 
pioneered the use of SHGs in the late 1980s and early 1990s.  By 
2008, there were 370,312 government supported SHGs in Tamil Nadu 
with almost six million members.  The Tamil Nadu government made USD 
742 million available to these groups in the form of government or 
bank loans.  Private sector efforts to encourage SHGs are equally 
important.  The Managing Director of Tamil Nadu's Commission for 
Women Development told post NGO-supported SHGs cover another six 
million people, meaning that a total of 12 million of Tamil Nadu's 
65 million people work with a SHG.  In neighboring Andhra Pradesh, 
the state's Rural Development Department reported 850,000 SHGs 
benefitting close to ten million women in the state.  Andhra 
Pradesh's SHGs had USD 392 million in savings as of January 2009. 
 
SHG safety net reduces reliance on usurious money lenders 
---------- 
 
¶3.  SHGs first provide a crucial financial safety net to poor 
families.  The ability to take small loans from the group or a 
formal sector bank reduces reliance on informal money lenders, who 
charge exorbitant interest rates and may resort to physical violence 
to collect payments.  "Any time a child became sick, or there was a 
marriage, these women would have to go to the moneylenders, but now 
with the group they do not have to anymore," explained a fieldworker 
for the NGO World Vision.  SHG organizers commented that the groups 
help vulnerable families break free from the cycle of extreme 
poverty caused by their reliance on money lenders. 
 
SHG micro-credit improves incomes 
---------- 
 
¶4.  We met with women working in SHGs organized by two NGOs, about 
100 women associated with the Madras Christian Council for Social 
Services (MCCSS) and another 20 with World Vision.  MCCSS and World 
Vision staffers explained that the women all live in Chennai's 
slums.  Their husbands are typically manual laborers or drive 
auto-rickshaws (three wheeled motor vehicles used as taxis in 
Chennai), earning approximately USD 60 to USD 80 per month on 
average.  The women told us that small loans (either directly from 
the SHG or from a formal bank facilitated by the SHG) allowed them 
to almost double their families' incomes -- many women reported 
earning approximately USD 50 per month by setting up small 
businesses.  The women mostly establish small retail shops in their 
neighborhoods which sell basic provisions or sarees.  But some women 
use the money for other enterprises, such as selling phone cards or 
tailoring. 
 
¶5.  The Managing Director of Andhra Pradesh's SHARE Microfinance 
Limited agreed that SHGs improve poor families' incomes.  "Access to 
financial services improved economic conditions of the households, 
improving their asset base, and diversifying them into higher return 
occupations," he said.  He added that members experienced a 
significant increase in income, ownership of livestock, and levels 
of savings, which reduced their reliance on moneylenders.  He said 
the groups move the women away from daily wage labor and increase 
their engagement in more profitable forms of self-employment like 
the ones the World Vision and MCCSS SHG members described to us. 
 
More than microcredit:  empowering women 
---------- 
 
 
CHENNAI 00000083  002 OF 003 
 
 
¶6.  Through our conversations with SHG members we learned that the 
groups are more than microcredit institutions; they are powerful 
tools for empowering women in virtually all aspects of their lives. 
At post's International Women's Day celebration, several women's 
rights advocates commented that SHGs started as a microcredit 
phenomenon, but have evolved into a mechanism for solving a broad 
range of social problems facing women.  One said "finance is the key 
that opens the first door, but there is so much more" that the SHGs 
can accomplish. 
 
¶7.  Membership in an SHG increases women's power within their 
families.  SHG members told us that they experience less domestic 
violence than women outside of the groups.  MCCSS-organized women 
told post that the reduction in domestic violence coincided with 
length of membership in the group.  They said that the decrease in 
violence was a direct result of the women's access to funds to 
assist in supporting their families.  An MCCSS organizer explained 
husbands were unwilling to run the risk of losing the income their 
wives generate by engaging in domestic violence. 
 
¶8.  The groups directly intervene in family disputes on behalf of 
their members.  Members of both World Vision and MCCSS's groups 
stated that they had intervened in domestic abuse cases by speaking 
with husbands or going to the police if necessary.  When asked if 
the offending husbands paid them any heed, the answer was a 
resounding "yes, they have to listen or we go to the police."  The 
SHGs become a social support network for the members, "our unity 
allows us to solve the problems we face," said a World Vision SHG 
member.  She cited the example of a member who was having trouble 
with her mother-in-law.  The group intervened on her behalf with the 
mother-in-law and husband to resolve the dispute.  In the Indian 
context, where the mother-in-law traditionally dominates, outside 
intervention on the daughter-in-law's behalf is extraordinary. 
 
 
¶9.  The SHGs allow women to take control of decisions relating to 
birth control and education.  A United Nations Development Program 
(UNDP) case study on SHARE Microfinance, Ltd. stated that "[b]irth 
control is almost universally practiced" and that women "are 
discussing contraception issues with their husbands."  In addition, 
while the preference for a male child is still prevalent, "there is 
an increase in valuing girls."  The report further states 
that,"daughters are more likely to remain in school for longer 
periods and married later.  Increased value for daughters is related 
to [SHG] membership." During our meetings with World Vision and 
MCCSS, every one of the approximately 120 women reported that their 
daughters are in school. 
 
From personal empowerment to political power 
---------- 
 
¶10.  SHGs have also become a source of political power for 
disadvantaged women.  MCCSS organizers said that local politicians 
respect and listen to the demands of SHG women because they see them 
as a valuable, well-organized voting bloc.  SHG members told post 
that ground-level district administrators are responsive to their 
needs, and will receive their petitions for redress and generally 
respond without serious delay.  The MCCSS SHG women related an 
anecdote demonstrating their political empowerment.  Many of the 
women's homes flooded during the recent monsoons.  When the local 
government was slow in handing out promised disaster relief funds to 
the families of SHG members whose homes had been damaged, leaders 
from several of the SHGs went directly to the Minister for Local 
Administration, MK Stalin.  Stalin is no ordinary minister; he is 
the son of the state's Chief Minister and the heir apparent in the 
ruling party.  After the meeting, 256 families who had originally 
been denied assistance received the funds.  (Note:  Securing a 
meeting with Stalin is exceptionally difficult; Consulate officers 
have not met with him in several years.  End note.) 
 
¶11.  Comment:  The SHG members we met come from some of Chennai's 
worst slums, where they face the violence, filth, disease and 
poverty common in the ugly corners of all of India's mega-cities. 
Nonetheless, they exhibited remarkable confidence in themselves and 
hope for their children's futures.  The self-help groups appear to 
have had a transformative impact on their lives.  This 
transformation begins with the confidence derived from knowing that 
 
CHENNAI 00000083  003 OF 003 
 
 
there is a loan available to help with an emergency and from earning 
one's own income, however modest.  But the dramatic change appears 
to be the result of groups of women coming together, enhancing their 
collective power through mutual support.  End comment. 
 
SIMKIN