Pentakota | Women taking first steps towards economic resilience through SHG Model

In the coastal strip of Pentakota, situated in Puri, Odisha, the Telugu-speaking migrant community resides across 7,000 households dispersed among 36 hamlets, locally known as ‘barafs’. With fishing as their primary occupation and limited diversification of livelihood options, the community is vulnerable to shocks in the fishing industry, lacking alternative sources of income.?

In 2021, Vrutti and Community Action Collab (CAC)?partnered with Gopabandhu Seva Parisad (GSP), to pilot ‘Economic Resilience Building for Vulnerable Households’ in Pentakota, Odisha. Since then, the team has been helping to restore hope and power besides building resilience among the people of Pentakota.

What is Economic Resilience??

Economic Resilience is the capability of individuals, households, and communities to survive and bounce forward from shocks, disruptions, and hardships. This involves the ability to adapt, recover, and strengthen in the face of any kind of shock.

In 2022, the CDAR Approach—Conservation, Diversification, Aggregation, and Risk Pooling—was implemented in Pentakota to enhance economic resilience among households. This pilot project focused on fostering community unity and financial stability. Notably, Women-Led Self-Help Groups (SHGs) were introduced as a key initiative, with six SHGs—Indu, Veejuwada, Jagannath, Durga, Nukatata, Simanchalam, and Sairam—comprising 60 women. Supported by Gopabandhu Sewa Parishad (GSP), these SHGs have made impactful contributions by actively building a financial cushion for emergencies, showcasing the success of the CDAR Approach in Pentakota as of November 2023.

A pivotal catalyst for change has been the introduction of interest-free loans by GSP. This community has been considered as non-bankable by formal lending agencies and hence access to affordable credit was a distant dream to them. Each SHG receives Rs. 25,000 to lend to its members. The loans given to the members of the SHG for their livelihood activities are returned at 1% interest while the SHG returns the principal sum to GSP at zero interest. This circular rotation of loans provides the members with financial support at low interest rates, while it also helps the SHGs to generate a corpus of their own through the interest received. Along with the savings from the members. The whole process helped them to create a credit history in the SHG books of records, making them one step closer to accessing format credit.

The repayments and savings form a source of credit for the SHG. This fund is a first ever collective financial resource that the group members can tap into through the SHG model for various purposes related to their livelihoods. C. Sujata expresses the significance, stating, “This low interest loan has enabled me to meet my basic needs, including the purchase of fishing nets and oil.”

Furthermore, the introduction of a nominal 1% interest rate per month for repayments has provided the SHG to see this as a business case and take ownership of the same. This collective approach enables them to address vulnerabilities independently, without relying on external agencies and private money lenders.

Chepala Ammani, a fish vendor, attests to the positive change, stating, “Earlier, I was unable to secure credit from private money lenders, and if I did, I would get it at high-interest rates. Sometimes, if we are unable to pay off the loan, harassment would follow. But now, the loans with low interest rates have helped me.”?

Due to the efficient rotation of funds among Self-Help Group (SHG) members, a commendable practice has emerged. Women within the SHG prioritize loans based on their immediate needs, ensuring that financial support is extended to those facing the greatest need at a given time.

Eripilli Manga expresses optimism, stating, “I will be using the loan to provide education to my kids and hopefully a better quality of life!”?

Recognizing the practical constraints of disbursing loans to everyone simultaneously, this thoughtful approach underscores the community-driven nature of the SHG and its commitment to supporting members during immediate challenges. This has created tangible credit worthiness for the SHG members and they are one step closer to accessing formal credit.

As women actively assume the responsibility of managing funds via savings and the revolving fund, their leadership skills and knowledge is undergoing a significant enhancement.?

Aligned with the United Nations #SDG Goal 1, the Economic Resilience pilot aims to make a meaningful impact on poverty eradication in Pentakota.?

Kudos to Team GSP, under the leadership of Elina Mishra and her passionate team - Sushree subhasmita Parija , Surendra Pradhan, Pradip Kumar Moharana, Bismaya Mishra, Sabita Rath, Nibedita Swain, and Konada Krupa Rao, Bhagyarathi Khatoi, S. Mani, M. Bharati, C. Venu for their unwavering commitment to ensuring the seamless execution of Self-Help Group (SHG) meetings and the enrollment of new members. Their dedication and passion have played a crucial role in instilling hope within the Pentakota community.

We extend sincere gratitude to our partners Head Held High Foundation and Transform Rural India for their ongoing impactful work with 2000 households each in Gulbarga, Karnataka and Barwani, Madhya Pradesh.?

Heartfelt gratitude to our incredible partners, Vitol and Skoll Foundation for their generous funding support. Their steadfast commitment has been instrumental in our journey towards realizing the vision of building an economically resilient community.

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