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Deposits Grow, Disempowerment Lingers

Permanent Link: http://ncf.sobek.ufl.edu/NCFE004562/00001

Material Information

Title: Deposits Grow, Disempowerment Lingers Economic Status and Social Empowerment in a Women's Self- Help Group Microfinance Program in Rajasthan, India
Physical Description: Book
Language: English
Creator: Comiskey, Claire
Publisher: New College of Florida
Place of Publication: Sarasota, Fla.
Creation Date: 2012
Publication Date: 2012

Subjects

Subjects / Keywords: Microfinance
India
International Development
Genre: bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: Using a case study from rural Rajasthan, India, this research examines the impact of women's involvement in microfinance self-help groups on their economic status and social empowerment. Microfinance � a financial service, small in size, provided by financial institutions to the poor � has garnered immense popularity as a strategy to empower and lift out of poverty low-income women in developing countries. However, there is disagreement as to whether microfinance programs achieve these dual aims. Although microfinance garners international acclamation, there has been neither widespread proof of its effectiveness nor many studies of its implementation on the ground. Thus, the knowledge gained from this field research helps inform the model of microfinance programs for women by illuminating what aspects of the self-help group model have and have not been effective in terms of poverty alleviation and women's empowerment. Conclusions from this study are made from content analysis of interviews with twenty-four women participating in microfinance self-help groups and the researcher's observations of how the NGO's approach impacted the program. Findings indicate that the women's participation did not cause them to make more money, but did allow them to accrue savings that they valued. Most women did not experience social empowerment from their participation. An analysis of this program's successes and pitfalls indicates broadly if and how women's microfinance programs can be better designed and implemented.
Statement of Responsibility: by Claire Comiskey
Thesis: Thesis (B.A.) -- New College of Florida, 2012
Electronic Access: RESTRICTED TO NCF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE
Bibliography: Includes bibliographical references.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Local: Faculty Sponsor: Hernandez, Sarah

Record Information

Source Institution: New College of Florida
Holding Location: New College of Florida
Rights Management: Applicable rights reserved.
Classification: local - S.T. 2012 C7
System ID: NCFE004562:00001

Permanent Link: http://ncf.sobek.ufl.edu/NCFE004562/00001

Material Information

Title: Deposits Grow, Disempowerment Lingers Economic Status and Social Empowerment in a Women's Self- Help Group Microfinance Program in Rajasthan, India
Physical Description: Book
Language: English
Creator: Comiskey, Claire
Publisher: New College of Florida
Place of Publication: Sarasota, Fla.
Creation Date: 2012
Publication Date: 2012

Subjects

Subjects / Keywords: Microfinance
India
International Development
Genre: bibliography   ( marcgt )
theses   ( marcgt )
government publication (state, provincial, terriorial, dependent)   ( marcgt )
born-digital   ( sobekcm )
Electronic Thesis or Dissertation

Notes

Abstract: Using a case study from rural Rajasthan, India, this research examines the impact of women's involvement in microfinance self-help groups on their economic status and social empowerment. Microfinance � a financial service, small in size, provided by financial institutions to the poor � has garnered immense popularity as a strategy to empower and lift out of poverty low-income women in developing countries. However, there is disagreement as to whether microfinance programs achieve these dual aims. Although microfinance garners international acclamation, there has been neither widespread proof of its effectiveness nor many studies of its implementation on the ground. Thus, the knowledge gained from this field research helps inform the model of microfinance programs for women by illuminating what aspects of the self-help group model have and have not been effective in terms of poverty alleviation and women's empowerment. Conclusions from this study are made from content analysis of interviews with twenty-four women participating in microfinance self-help groups and the researcher's observations of how the NGO's approach impacted the program. Findings indicate that the women's participation did not cause them to make more money, but did allow them to accrue savings that they valued. Most women did not experience social empowerment from their participation. An analysis of this program's successes and pitfalls indicates broadly if and how women's microfinance programs can be better designed and implemented.
Statement of Responsibility: by Claire Comiskey
Thesis: Thesis (B.A.) -- New College of Florida, 2012
Electronic Access: RESTRICTED TO NCF STUDENTS, STAFF, FACULTY, AND ON-CAMPUS USE
Bibliography: Includes bibliographical references.
Source of Description: This bibliographic record is available under the Creative Commons CC0 public domain dedication. The New College of Florida, as creator of this bibliographic record, has waived all rights to it worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.
Local: Faculty Sponsor: Hernandez, Sarah

Record Information

Source Institution: New College of Florida
Holding Location: New College of Florida
Rights Management: Applicable rights reserved.
Classification: local - S.T. 2012 C7
System ID: NCFE004562:00001


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DEPOSITS GROW, DISEMPOWERMENT LINGERS: ECONOMIC STATUS AND SOCIAL EMPOWERMENT IN A WOMEN'S SELF HELP GROUP MICROFINANCE PROGRAM IN RAJASTHAN, INDIA BY Claire Comiskey A T hesis Submitted to the Division of Social Sciences New College of Florida in partial fulfillment of the requirements for the de gree Bachelor of Arts U nder the sponsorship of Dr. Sarah Hernandez Sarasota, Florida April 2012

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ii ABSTRACT Using a case study from rural Rajasthan, India, this research examines the impact of women's involvement in microfinance self help groups on their economic status and social empowerment. Microfinance a financial service small in size provide d by financial institutions to the poor has garnered immense popularity as a strategy to empower and lift out of poverty low income women in developing countries However, there is disagreement as to whether microfinance programs achieve these dual aims. Although microfinance garners international acclamation, there has been neither widespread proof of its effectiveness nor many studies of its implementation on the ground. Thus, the knowledge gained from this field research help s inform the model of micro finance programs for women by illuminating what aspects of the self help group model have and have not been effective in terms of poverty alleviation and women's empowerment. Conclusions from this study are made from content analysis of interviews with twe nty four women participating i n microfinance self help groups and the researcher's observations of how the NGO's approach impacted the program. Findings indicate that the women's participation did not cause them to make more money, but did allow them to ac crue savings that they valued. Most women did not experience social empowerment from their participation. An analysis of this program's successes and pit falls indicates broadly if and how women's microfinance programs can be better designed and implemented ____________________________________________ Dr. Sarah Hernandez Division of Social Sciences

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iii ACKNOWLEDGEMENTS There are several people I would like to acknowledge who have made this thesis process as well as my entire time at New College possibl e, fulfilling, and meaningful. At New College, I would first like to thank my advisor and thesis sponsor, Sarah Hernandez. Your encouragement and mentorship positively shaped my experience at New College in innumerable ways. I would also like to extend m y gratitude to Professor Hicks and Professor Khemraj for your support and interest in me as a student throughout my time at New College, and for being on my committee. T hank you also to Professor Hirs hfield for your feedback during the Sociology Senior Sem inar, and to Professor Cooper for helping me with my statistics. I would also like to thank the New College Student Research and Travel Grant Program, whose generous funding supported my research in India. I would also like to thank my friends who made m y time at New College the amazing experience it was Thank you especially to Dany Rizzo for your spirit, humor, and love To the members of SWER over th e years I am so grateful to have had the opportunity to be part of a group where I found passion, purp ose, and family To my fellow teach in organizers it was an honor to organize with you this year May the work continue for years to come. In India, I would like to extend my gratitude to every one of the women I interviewed, who graciously shared a litt le bit of their lives with me Thank you to my co workers at Shakti, especially my interpreter, without whose support and encouragement conducting this research would not have been possible. I would also like to acknowledge the Rajawat family, for warmly welcoming me into your home. Dimpy I will always remember and appreciate the care and thoughtfulness you extended to me. Roopa thank you for the laughs, scooter rides, and conversations over endless cups of chai when I needed them most. To my fellow MSID cohort, thank you for bein g immediate friends and an amazing support system. I would also like to thank the MSID faculty and staff in Jaipur for their support. I would also like to acknowledge other friends far and wide, especially Ryan Patrick O'Neill for your love and support. Lastly, I want to acknowledge my family, especially my par e nts, Ellen and Michael Comiskey. Thank you for always believing in me. Y our support, trust, and love have guided me through life, and given me opportunities for which I cannot beg in to express all my gratitude.

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iv TABLE OF CONTENTS Introduction ................................ ................................ ................................ ........................ 1 Chapter 1: The Roots of Microfinance ................................ ................................ .......... 11 Defining Poverty ................................ ................................ ................................ ........... 12 Neoclassical Economic Notions of Poverty and their Embedment in Microfinance Neoclassical Notions of Poverty, Efficiency, a nd Women in Develop ment (WID) 19 Drawi ng Connections ................................ ................................ ................................ .. 22 Microfinance, Empowerment/Liberation, and Women in Development Microfinance and WID as C arriers of the Neoliberal Era ................................ ....... 29 What Financial Services do Poor People Need and Want? ................................ ...... 34 Institutional Differences in Varying Micr ofinance Institutio ns .............................. 40 Conclusion ................................ ................................ ................................ .................... 47 Chapter 2: Alternative Visions of Poverty and Empowerment ................................ ... 50 Poverty ................................ ................................ ................................ .......................... 51 Empowerment ................................ ................................ ................................ .............. 53 Chapter 3: Methods ................................ ................................ ................................ ......... 59 Chapter 4: Analysis ................................ ................................ ................................ ......... 69 Introduction and Background ................................ ................................ .................... 69 The Case Study ................................ ................................ ................................ ............ 75 Intentions of SHG Participation 76 Economic Status 79 Social Empowerment 97 Conclusion ................................ ................................ ................................ ................. 111 Chapter 5: Conclusion ................................ ................................ ................................ .. 112 References ................................ ................................ ................................ ...................... 123

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v MAP OF RAJASTHAN (NewKerala.com 2007)

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INTRODUCTION T he concept of microfinance became prominent in the development discourse s ince its creation and institutional development in the 1970s. From this time, economic liberalization spread to developing nations and socioeconomic disparities worldw ide have widened; in response, microfinance garnered immense popularity as a strategy for individuals to lift themselves out of poverty and women to become empowered. Microfinance programs largely developed in the "Self Help Group" (SHG) model, in which wo men organize themselves into groups to receive microfinance services from a nongovernmental organization (NGO), bank, or other institution. Through a case study conducted in Rajasthan, India, I explore the impact SHG microfinance programs have on women's social empowerment and economic status. What is Microfinance? Microfinance is generally thought of as "a financial service of small quantity provided by financial institutions to the poor" including services such as savings, credit, insurance, leasing, an d money transfers in order to meet life's basic needs (Dasgupta 2005). Generally, the transaction amounts involved in these services are low, and the customers are considered "poor" (Dasgupta 2005). Defining who is poor and measuring poverty on any level i s complicated and controversial; an entire development literature exists debating this subject (Araar and Duclos 2010; Deaton and Kozel 2005; Gordon 2005; Haughton and Khandker 2009 ; Ravallion 2003; Sen 1987; Sen 2000). Some literature focuses on the quant itative specificities of measuring poverty, important for defining the amount of poverty in a given country and setting policy, especially regarding eligibility for social welfare programs (Araar and Duclos 2010; Deaton and Kozel 2005;

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2 Haughton and Khandke r 2009 ; Sen 1987). Mainstream definitions of poverty that have heavily affected microfinance programs largely conceptualize it in monetary terms and in terms of macroeconomic growth. Other literature explores the more individual, humanistic definition of p overty, aiming to understand the constraints and challenges poor people face, how these constraints are formed, and how to remove them (Deaton and Kozel 2005; Gordon 2005 ; Sen 1987; Sen 2000). I discuss these various debates and definitions further in chap ters 1 and 2. Regardless of specific measures of poverty, microfinance programs generally focus on providing these services to individuals who do not have traditional means of collateral: substituting traditional lending with other approaches, such as gro up lending (Microfinance Gateway 2011). Microfinance first became prominent in the 1970s and 80s when now Nobel laureate Muhammad Yunus created the Grameen Bank in Bangladesh. Since then, t here has been immense enthusiasm in adopting microfinance to many d ifferent institutional structures in the developing world; microfinance programs have been implemented by small, local NGOs and large, international institutions alike. Microfinance and Poverty Alleviation Pro ponents of microfinance claim it is able to a lleviate poverty in t he developing world (BRAC 2009; Yunus 2003 ). However, empirical evidence demonstrates that microfinance has not alleviated poverty in regions or countries in which it is prevalent (Rahman 2007) Moreover, some scholars argue that the c redit microfinance does take for alleviating poverty is measured in an inherently flawed manner ; most impact analyses conducted on the practices of microfinance institutions are self reported, thus not rigorously designed and biased towards reporting drama tically positive results (Ellerman

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3 2007; Meyer 2007). Bangladesh, which is known as the home and root of microfinance, is not notorious for its growing economic success since the 1970s, when Grameen and similar projects appeared. In the country, only one p er cent of people are being lifted out of poverty per year, not all of which is attributed to microfinance activity (Rahman 2007). Similarly in India, microfinance has not had any widespread effect on poverty alleviation. In a representative study of 214 w omen's microfinance SHGs in India, even after six years participating in the programs, over half of participating women were still below the Indian poverty line (Sinha 2007 ). Moreover, in the state of Rajasthan where I conducted this research, there have b een anecdotal success stories on a small scale but no dramatic change in the poverty level despite the widespread prevalence of microfinance programs (Center for Microfinance 2010). Scholars attribute this lack of widespread success to structural constrain ts that are particularly prevalent in Rajasthan, including a low population density, high female illiteracy, tradition of female seclusion, and high migration rate (Ghate 2007). In my research I explore whether and how microfinance can be a tool for pover ty alleviation, providing further support to this earlier work. Microfinance and Women's Empowerment Additionally, m uch of the enthusiasm centered on microfinance has been due to its claimed ability to empower women. Most of the recipients of microfina nce around the world are women; they comprise 80 per cent of the "clients" of the thirty four largest microfinance institutions (Mody 2000 cited in Armend‡riz and Murdoch 2007). The rationale for providing microfinance to women is that there are disproport ionately more poor women than men, women are discriminated against in the formal labor market, and women are often depended on for the main source of income in the family, despite their

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4 abundant additional domestic duties (Leach and Sitaram 2002). Moreover some scholars argue that targeting resources to women may have strong impacts on poverty alleviation because women are generally more likely to invest in children's health and education than men (Blumberg 1989 cited in Armend‡riz & Mordoch 2007; Yunus 20 03). However, approaches and definitions regarding empowerment vary widely. Fetterman (1996) claims that self determination is the theoretical foundation of empowerment. The measure of this self determination is defined by "interconnected capabilities" in cluding "the ability to identify and express needs, establish goals or expectations and make a plan of action to achieve them, identify resources, make rational choices from various alterative courses of action, take appropriate steps to pursue objectives, and persist in the pursuit of these goals" (Fetterman 1996, 8). Similarly, Alsop and Heinson (2005, 4) from the Worl d Bank define empowerment as "the process of increasing the capacity of individuals or groups to make choices and to transform those choice s in to desired actions and outcomes. Most approaches to measuring empowerment recognize the dual importance of an individual gaining internal skills ("power within") as well as overcoming external constraints ("power to") (Kim et al. 2007; Kabeer 1994). S ome literature additionally emphasizes the communal importance of empowerment ("power with"), highlighting the empowering impact of social solidarity within a group (Kabeer 1994; Kim et al. 2007). More specifically within the microfinance literature, mea sures and understandings of women's empowerment vary widely. Hashemi, Schuler and Riley (1996) measure empowerment by the economic contribution of women to the household income due to the microfinance loan, whereas Goetz and Sen Gupta (1994) measure empowe rment

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5 according to the degree to which women have control over the loan. Scholars have also measured empowerment due to microfinance based on factors outside of the loan itself; these measures include the degree of the woman's power in intra household deci sion making (Holvoet 2005 cited in Ral and Ravi 2011), levels of domestic violence (Kim et. al 2007 cited in Ral and Ravi 2011), contraceptive use (Steele, Amin, and Naved 2001 cited in Ral and Ravi 2011), and health insurance utilization (Ral and Ravi 201 1). These measures and definitions emerge from various quantitative and qualitative research methodologies and also reflect researchers' varying ideologies and beliefs pertaining to empowerment. I will discuss various mainstream and alternative approaches for measuring empowerment and the methods I use in my research further in chapters 1, 2 and 3, respectively. Microfinance researchers have not come to a consensus on how to measure empowerment, and thus have not agreed whether microfinance is an empoweri ng force for women. The claim that microfinance can empower women is a contentious one; while some scholars claim microfinance can have a transformative effect on women's empowerment (Isserles 2003; Sinha 2007; Ware Newaz cited in Houssain 2002; Yunus 2003 ), others argue that the provision of microfinance to women only reinforces their subjugated role in the home and society (Armend‡riz and Morduch 2007; Rankin 2002). Those who argue microfinance can be an empowering force for women take this stance using various arguments. Yunus (2003) and the Grameen Bank hold that microfinance can empower women by putting money into their hands, capturing what they view as each woman's internal entrepreneurial spirit and transforming individuals into community business leaders. Others suggest that empowerment can also be the result

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6 of social networks provided by the microfinance groups rather than of the money dispersed in the groups. Ware Newaz (cited in Houssain 2002) claims that microcredit has offered rural women vit al social support networks and local prestige, which has improved the status of women specifically in Bangladesh in the past 30 years; he claims this is indicated by the increase of female workers in the garment industry, banks, schools, and other service sectors. Isserles (2003) also claims that women can be empowered by the solidarity they can find in microfinance grou ps; regular meetings help them escape the traditional patriarchal confines of the home to band together with other women. Sinha (2007) show s that microfinance may have a role in increasing women's role in public life; in her study of 214 SHGs in India o ne out of four women SHG members had been a candidate for the local village councils ( panchayats ). However, others argue that microfinance groups have not had the impact on women's empowerment that they claim. For example, about half of the women elected to the panchayat previously mentioned in Sinha's study (2007) were disengaged by the men on the council, rendering their representative posi tion powerless. Since 1995 India's panchayat law requires a 33 per cent quota of female representatives ( John 2000 ), it is up for interpretation whether this indicates that the men were using the women representatives as puppets, or if the women representa tives were truly empowered and therefore threatened the men on the council, who consequently responded through disengagement. Another common argument is that microfinance correlates with an increase in domestic violence. Research conducted in villages whe re Grameen Bank lending is prevalent has shown that microfinance has caused the increase in violence in the

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7 household because men feel their dominant role being threatened (Armend‡riz and Morduch 2007). Additionally, some claim that microfinance programs f urther entrench societal norms that subjugate women. Rankin's study of microfinance in India claims that the income generating activities in which participant women engage are mostly done at home and therefore "do not disrupt practices of isolation and sec lusion within their households" (2002, 16 17). Thus, it is argued that these activities do not challenge women's secondary role in society or full responsibility for the domestic sphere, and therefore do not offer opportunities for true empowerment. Thes e critiques are varied and can be understood from different perspectives. To Armend‡riz's and Morduch's point, it could be argued that precisely because women are being empowered, men use violence to attempt to reinforce their subjugated role. To Rankin's point, it could be argued that considering working outside the home as a requisite for empowerment is a Western interpretation of empowerment, and ignores the idea that women can be empowered even in the context of domestic life. As many of the women inter viewed in this study only worked at home, this will be an important consideration to make. This Study Evidently, there are mixed results regarding the impact that microfinance programs can have on the economic status and social empowerment of women. Thro ugh my research I contribute to this debate, not only exploring whether a microfinance program in India improves the economic conditions and empowerment of women, but also addressing how to improve microfinance programs so as to make them more effective in achieving these goals During March and April of 201 1, I conducted this

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8 research while als o working as an intern with an NGO I will call Shakti in the state of Rajasthan, India. As an intern I observed and participated in the daily workings of the NGO off ice and attended and observed several self help group meetings. The Shakti lead staff and I agreed that by the end of my time there I would conduct an impact analysis of their microfinance pro grams in an area of villages in Rajasthan for the use of their p rogram monitoring and improvement as well as my undergraduate th esis. At the end of my time at Shakti with the help of my coworkers and an interpreter I interviewed twenty four women in eight different SHGs to explore the impact of women's involvement in these SHGs on their economic status and social empowerment. In the analysis of these interviews, I explore whether the participants experienced an increase in economic status and social empowerment due to their participation in the SHG. Using qualitative analysis of interview responses conducted on HyperRESEARCH as well as my own observations from working at the NGO, I assess why or why not the participants experienced a rise in economic status and social empowerment from their participat i on in the self he lp group. I analyze qualitative data gathered in the twenty four interviews, the significance of the quantitative data Shakti had on their microfinance program, and my observations of the NGO's workings and how they impacted the implementation of the micro finance program. I use this case study to analyze current debates about the role of microfinance in development as it pertains to women's empowerment and economic status. This research is an important contribution to the microfinance literature for variou s reasons. First, although the concept of microfinance has seen immense popularity, there has been neither widespread proof of its effectiveness nor many critiques of its implementation on the ground; thus, it is necessary to be critical and

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9 skeptical of i ts claimed successes. The knowledge we gain from this research could help inform the model of microfinance programs for women by illuminating what aspects of the SHG model have and have not been effective in ter ms of poverty alleviation and women's empower ment. This study also allow s Shakti to evaluate and improve upon its microfinance model. I offer suggestions as to how Shakti and other NGOs can improve their microfinance programs to have more effective impact on women's social em powerment and economic st atus. Secondly, there have been few studies exploring the impact of microfinance programs conducted outside of the bias of the organization that runs them ; therefore, my research will offer an outside outlook to current research. I was able to conduct a study that was less biased towards success than it would have been had it been conducted by a Shakti staff member. I was able to achieve this because unlike staff members, I did not feel a special allegiance to the NGO nor was I worried about job security or work evaluation. However, my positionality as a foreign, white, young woman did add notable biases to this research that I discuss further in chapter 3, in which I explain my methodology. What is to Come The first chapter outlines the historical tra jectory of microfinance to show its development from the 1970s to its various forms today. This chapter elucidates the ideological underpinnings of microfinance that have shaped how it is understood as a development strategy for empowerment and poverty all eviation today. I discuss the implications of microfinance's rising popularity in the context of increasing global economic liberalization. Thus, this chapter ideologically positions microfinance as a

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10 development strategy in alignment with current neoliber al economic policy. The second chapter discusses alternative conceptualizations of empowerment and poverty that break from this mainstream, largely financial approach to understanding these issues; this discussion informs my methodology. Next, the third ch apter outlines my research methods, explaining how I conducted my interviews as well as my experience working in the NGO. The fourth chapter includes the analysis of my data, including participant interviews and my own observations. Lastly, in the fifth ch apter I illustrate how this research fits into the larger literature on microfinance, and accordingly, citing other innovative NGO models from South Asia, outline recommendations for Shakti and other microfinance programs for improvement.

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11 CH APTER 1: THE ROOTS OF MICROFINANCE In this chapter, I delineate the economic and ideological underpinnings of microfinance. I argue that microfinance programs are rooted in the assumptions of neoclassical economic theory, and supported by Western liberal feminism. I show that Western liberal feminist scholars successfully integrated women into mainstream development discourses centered upon macroeconomic growth and liberalization in the 1970s and 1980s, giving rise to what is considered the Women in Develo pment (WID) paradigm. It was subsequently conceptualized that women needed to be integrated into development programs on grounds of efficiency. The feminist discourse of the time constructed work outside the domestic sphere as the locus of empowerment, an argument that fused well with the view that investing in women's work in the non domestic sphere was efficient. In this context, a variety of institutions began to support and fund microfinance programs that gave women opportunities for entrepreneurship a nd self employment across the Global South. Microfinance programs thus proliferated as economic liberalization and structural adjustment programs did, emerging as an individual safety net in lieu of dismantled social services I illustrate that poor women carry the burden of filling the gap left by this elimination of social services; various institutions have supported microfinance programs that aim to help women carry this burden, with the rhetorical justification that they alleviate women's poverty and e mpower them. However, the increasingly commercial makeup of the microfinance industry is often not responsive to the financial needs of the poor. Moreover, the goals of development financialization in

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12 the form of microfinance have often overstepped the ori ginal goals of true empowerment in assuming that empowerment is implicit in the taking of a microfinance loan. This discussion frames my analysis to show how many of these ideological underpinnings are inherent in the microfinance program that I researched and thus elucidate some of its pitfalls. Defining Poverty: Neoclassical Economic Notions of Poverty and their Embedment in Microfinance Though microfinance has expanded to fit various definitions in recent years, generally microfinance is thought of as "a financial service of small quantity provided by financial institutions to the poor" for meeting life's basic needs (Dasgupta 2005). These services can include savings, credit, insurance, leasing, and money transfers. Regardless of which service or serv ices are provided, those who receive microfinance are generally considered "poor," and 80 percent are women ( Mody 2000 cited in Armend‡riz and Murduch 2007) Provided that generally the aim of microfinance is to provide this service to "poor women" it is i mportant to understand how microfinance practitioners and scholars define poverty and its gendered implications. Varied conceptual understandings of what is poverty, who is poor, and how gender affects this shape the structure of microfinance programs. Th ese varied conceptualizations ultimately determine who is affected by these programs and how. Mainstream approaches that focus on economic growth and the international poverty line, respectively, are predominantly informed from a neoclassical economic pers pective, and conceive of poverty on a macro scale. Other approaches like the gender and development paradigm take more micro and meso level approaches, focusing on not purely economic,

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13 but also structural causes of poverty. Delineating these varied defini tions is important for determining if and how microfinance "alleviates poverty" in its varied definitions. The dominant poverty discourse is informed by mainstream economics, and thus mainly conceptualizes poverty in monetary terms. Largely, this mainstr eam school of thought focuses on the quantitative measurement and attainment of poverty alleviation on a macro scale. One part of this approach is the international poverty line (IPL) approach, which embodies an emphasis on the poverty headcount; using cut offs determined by quantitative measures, it aims to measure the amount of people living in poverty around the world. Another part of this school is the economic growth approach, which largely contends that economic growth in a country is the key to allev iating poverty; it ascribes to the economics aphorism that "a rising tide will lift all ships." These two related approaches form much of the ideological underpinnings of modern microfinance programs. The international poverty line (IPL), an index the Wor ld Bank created, is a well known mainstream approach to defining poverty (Pogge 2010). Under this definition, anyone who lives using US$1.25 dollars or less per day (at the value of US dollar in 2005) is poor (Pogge 2010). To convert this $1.25 to better r eflect the standard of living in other countries, the purchasing power parity (PPP) is used. This measure is used instead of a given country's nominal exchange rate, which would show how much of any given currency one could exchange for $1.25. For example, in India, for $1.25 one can exchange approximately 60 rupees. However, with this rupee amount one would be able to buy more in India than one would be able to buy in the United States with $1.25. The PPP is designed to reflect this difference. Thus, this conceptualization defines poverty as

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14 one's income level, and measures the amount of poverty in the world by the number of individuals in a given population who live at or below this consumption level per day. However, there are problems with conceptualizi ng poverty using the IPL approach (Pogge 2010). First, this approach automatically prioritizes the increase in consumption of the people living just below the international poverty line, because moving them above it requires the least amount of change in c onsumption. Thus, if this measure is used to design policy, the most impoverished are unlikel y to be allocated resources to reach even this pecuniary poverty threshold. Secondly, the exclusive focus on income and cost of consumption ignores other poverty r elated constraints, including those related to gender. For example, two individuals might have the same income but one might have to spend more to achieve the same standard of living. Someone in a cold climate might have to buy more clothes and food to sta y warm than a person in a warm climate with the same income (Pogge 2010). Or, a married man and woman might earn the same amount of money, but the woman might have less of an impact on household decision making; therefore even with equal amounts of income because of the woman's lack of household power, the husband may limit her ability to access resources that an increased income could otherwise perhaps buy As illustrated, the IPL approach does not consider intra household asymmetries in resource allocat ion. These critiques illustrate that one's ability to consume commodities does not reflect her full ability to improve her condition of life (Jackson 2010 ; Sen 1999 ). Thus, the possession of any given amount of commodities is not a representative indicator of well being because possessions do not ensure a guaranteed standard of living, or one's "capabilities" (Sen 1999 ). Instead, commodities are only important in the degree to which

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15 they allow a person to achieve something. Extending an increase in consumpt ion of commodities to an actual improvement in standard of living or capabilities depends on "gendered cultural forms and processes" (Jackson 2010, 49). The IPL approach, like most other mainstream ones, does not make these considerations, but rather conce ptualizes poverty in purely monetary terms. The international poverty line approach, nevertheless, is a fundamental underpinning to the justification for microfinance programs. Mainstream microfinance champions the sole action of putting money into women' s hands; the assumption is that if an individual living on less than $1.25 a day is provided with a small increase in capital in the form of a microfinance loan, she will be able to increase her level of consumption over the poverty line mark. Therefore, t he popular notion that microfinance can eliminate extreme poverty on a worldwide scale comes from a vision of aggregating millions of these individuals who are able to increase their consumption over $1.25 per day. Accordingly, Nobel laureate and Grameen f ounder Muhammad Yunus famously said that he considers credit a basic human right, and establishing this in mainstream financial institutions will "create a poverty free world" (Yunus 2003, 150, 262). This point of view resonates with microfinanciers and h as entrenched itself in the ethos of microfinance programs, giving rise to many programs that assume that the action of putting money into a woman's hands will automatically allow her to transcend poverty. Purveyors of this view generally diminish the str uctural elements, or "capabilities" side of poverty; Yunus writes, "credit creates economic power, which quickly translates into social power" (2003, 150). Thus, Yunus and other similar microfinanciers assume that giving people microfinance loans will quic kly empower

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16 them to transcend social barriers. This assumption constructs credit as the panacea for women's empowerment, and therefore abstracts and homogenizes empowerment's deeply complex meanings. Later in this chapter I explain further the problematic implications of this assumption when discussing the relationship between microfinance and women's empowerment. In the chapter that follows, I also further discuss alternative definitions of empowerment. Related to the international poverty line approach is the economic growth approach to poverty alleviation, another mainstream approach, which also has important consequences for microfinance programs. This approach, subscribed to by international financial institutions, holds that economic growth, as in a rise in an economy's GDP, will raise the income and therefore standard of living for ever yone in a country, alleviating poverty (Johnsson Latham 2010). Mainstream economic assumptions about economic

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17 growth underlie the argument that microfinance is capabl e of alleviating poverty in the developing world. A key foundation of this assumption is the neoclassical economic concept of diminishing returns to capital, illustrated in Figure 1. Using this model, economists assume that firms with relatively less capit al should generate high returns on investment in the beginning stages of capital investment (Armend‡riz and Morduch 2007). Thus, as a firm accrues more capital, it experiences diminishing returns to that new capital; it does not create as much new output a s early investments of capital do. For example, it assumes that if a tailor invests $100 in a new business to buy a new sewing machine, production will rise relatively quickly. The next $100 she invests to buy, for example, electric scissors, will also inc rease output relative to this capital investment, but not in the same proportion that the sewing machine did (Armend‡riz and Morduch 2007). Under this economic assumption the same comparison is made across firms and countries of varying development levels This model assumes that a woman with scarce resources, considered poor, will have higher marginal returns to capital than an established entrepreneur in a developed country who is already rich in resources (capital). Consequently, this model also assumes that the woman entrepreneur will experience a higher rate of return on her investment: and thus should be able to pay banks higher proportional interest rates than the rich entrepreneur (Armend‡riz and Morduch 2007). This notion forms the justification fo r many commercial microfinance operations that charge high rates of interest. Another important implication of this assumption is that financial investment in the poor through microfinance loans will result in many individuals experiencing high marginal re turns to capital, and thus in the aggregate a country will experience high economic growth. Neoclassical economics assumes that the

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18 macro economy is just an aggregate of micro level economic activity. Thus, adherents to this view champion microfinance as a fuel for widespread economic growth (Armend‡riz and Morduch 2007) The international poverty line and economic growth approaches to understanding poverty hold assumptions that underlie the foundation of many microfinance programs. Together, these approach es inform microfinance programs to target a specific type of "client." This person is only slightly under the poverty line of $1.25, but still considered quite poor, so under these assumptions is able to generate high relative returns to capital. Though un der the economic growth approach's assumptions, the person furthest from the $1.25 poverty line would generate the highest returns to capital, in reality economists see many transaction costs associated with this person and therefore are unlikely to reach out to her For example, reaching this person may require traveling into rural, remote areas which could be a costly endeavor Also, a microfinance program is not likely to have a lot of information about this person Attaining this information to disburs e the loan could be costly in terms of time and money; similarly, from a program's point of view, not attaining the information but still disbursing the loan could be costly, as it is seen as running a risk if this person defaults on her loan Thus, microf inance programs generally do not reach the most impoverished because the transaction costs are considered to outweigh the return to capital that this individual could generate (Weiss and Montgomery 2003). In fact, slightly less than half of those in Asia i dentified as specifically targeting very poor clients as their ins titutional mission" and only 10 per cent in Latin America, state this as their mission ( Weiss and Montgomery 2005, 619 ). I discuss these limitations further in the "Institutional Differenc es" section. So far

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19 we have explored the relationship between poverty and microfin ance. However, it is also necessary to understand how this vision of microfinance as the silver bullet to poverty become s entangled with gendered considerations in developmen t. Neoclassical Notions of Poverty, Efficiency, and Women in Development (WID) As noted above, t he international poverty line and economic growth mainstream approaches to understanding poverty fueled the dominant developme nt thinking since the 197 0s (Kab eer 1994) and t heir assumptions underlie the foundation of many microfinance programs. Microfinance discourse brought together these mainstream approaches and concerns with the experience of women in development. In the 1970s, a growing push to consider w omen in the development process gave rise to what is considered the "Women in Development" (WID) paradigm. WID incorporated women into the economic development thinking of the time, portraying poor women as holding latent economic potential to drive econom ic growth (Kabeer 1994). The entrenchment of these economic views in the Women in Development approach allowed for the growing popularity of microfinance as a development approach, and hence underlies its ideological background. In the decades following W orld War II, during the formal decolonization process, the role of women in economic development was ignored. This was largely due to a holdover from colonial discourses, in which women were seen as "the most backwards members of backwards societies," boun d by "traditional" attitudes and unable and unwilling to enter the "modern" world (Vavrus and Richey 2003, 7). This thinking reflects the prevalence of modernization theory in that time, which holds that all countries are on a unilinear trajectory of econo mic development (Kabeer 1994). This focus

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20 prioritized infrastructural and GDP growth in what was considered the "Third World." In this process, men were assumed to be the household heads and "productive agents" working within the market structure. In contr ast, women were assumed to be housewives, mothers, and "at risk reproducers" (Jaquette and Saudt 1988 cited in Kabeer 1994). With this dichotomy drawn, mainstream development efforts largely targeted men, who we re seen as economically productive; since wom en were seen as a vulnerable, unproductive group, they were largely relegated to the welfare sector (Vavrus and Richey 2003; Buvinic 1983 cited in Kabeer 1994 ). Normative assumptions about the universality of gender roles reinforced this welfare dependency approach in development agencies (Kabeer 1994). For instance, in 1960, during th e first of the United Nations' Development D ecades, no mention was made of the role of women in economic development. Only in the 1970s did development practitioners beg i n to recognize the importance of incorporating women into development programs. Much of the consciousness raising in the UN and other development agencies can be attributed to Ester Boserup's 1970 book, Woma n's Role in Economic Development which was the first attempt to consider women as productive laborers and contributors to the economy (Vavrus and Richey 2003). Boserup critiqued governments and international development agencies whose assumptions about women's domestic roles had caused them to systematicall y ignore the role o f women in economic development. For example, she cited that though women often play critical roles in agricultural systems, development agencies ignored this fact when disseminating new technologies and capital inputs. Boserup's goal wa s to change the emphasis on welfare to one of women's equality in the

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21 development process (Kabeer 1994). Other scholars and practitioners who drafted the World Plan of Action out of the 1975 International Women's Conference echoed the message of Boserup's book. This plan called for "the achievement of equality between the sexes within the context of changed relations between North and South" (Kabeer 1994, 7). Despite this strong message, the development agencies did not go so far as to adopt this rhetoric of equality. Buvinic (1983 cited in Kabeer 1994) argues that they did not because integrating this rhetoric of equality would have required a redistribution of power based on gender at all levels, including among policy makers in the internation al developm ent industry. By focusing solely on the basic needs of poor women in the Global South largely male staffed development agencies did not have to change their institutional structures or challenge the privileges that engendered them. Moreover, they did not have to challenge the structural inequalities that cause the poverty that some women experience. WID made the first step in showing the diversity of the gender division of labor across the world, turning development agencies' assumptions about gendered wo rk on their heads. To accomplish this, they used efficiency based arguments to move women from the "margins of development" and "integrate them into the mainstream" (Kabeer 1994, 24). This emphasis on efficiency entrenched itself in the microfinance ethos; microfinance programs' underlying emphasis on efficiency illustrates the impact WID had on them. Economists Armend‡riz and Morduch state that the primary advantage for microfinance programs in targeting women is "purely financial:" they "are more often mo re conservative in their investment strategies, and are often more easily swayed by

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22 peer pressure and the interventions of loan officers making [them] more reliable bets" ( 2007, 183). Another reason women are targeted in microfinance is because they ar e assumed to create a stronger development impact because they invest more in children's health and education than men. Simply, women are considered to be implicitly mor e reliable than men, and thus "efficient" investment s Moreover, Armend‡riz and Morduch argue: Unequal access to health, nutrition, and educational status of women in low income households has been linked to high fertility rates, low labor force participation, low hygiene standards, and the increased incidence of infectious diseases. And a ll these variables are clearly related to productivity and household income. (2007, 184) These arguments for why women are targeted for microfinance programs illustrate a clear emphasis on efficiency; microfinance programs often invest in women because it is efficient in terms of macroeconomic productivity and growth to do so. This historical overview of the WID approach illustrates the roots of the underlying assumptions of microfinance : assumptions that women are the efficient means through which to fuel development funding to have the largest impact. Next, an explanation of the roots of microfinance's emphasis on women's efficiency in the workplace, found in Western feminist thought that influenced the WID paradigm illustrates how microfinance programs conceptualized empowerment concurrently. Drawing Connections: Microfinance, Empowerment/Liberation, and Women in Development The WID approach nurtured the idea of microfinance as a source of poverty alleviation for women. The idea behind microfinance, l ike WID, is to emphasize women's productive and entrepreneurial c apacity in the economic sphere; microfinance sees them as agents of economic growth. Microfinance programs give women loans with

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23 the assumption that these will enhance their productive capaci ty and income. Thus, underlying microfinance programs are neoclassical economic assumptions that have been partially infused by previous Western feminist thinking, but only to the extent to which they do not challenge the existing international development structure. Similarly WID does not question structural causes of poverty or development structures, but rather aims to integrate women into the existing development paradigm that emphasizes macroeconom ic growth. In many ways, this approach became prominent because Western feminists of the time constructed work as the site of liberation; this conceptualization complemented the WID idea of investing in women in encouraging them to work as efficient. T hese ideas about efficiency and liberation (or in other wo rds, empowerment) fused together in the development thinking of the time, making a strong rhetorical case for the power of microfinance to empower women and alleviate poverty within a neoliberal capitalist structure. In this framework women's empowerment i s achieved solely by microfinance and the other forces it enables; empowerment is thus understood in a narrow and monolithic sense. I delineate a l ternative conceptualizations of empowerment in the following chapter. The ideological roots of the rhetorical justification for microfinance are important for this research because they have entrenched themselves in development thinking so much that they have begun to be taken as a given for many microfinance programs, even if those who run these programs do not h ave predatory, profit driven aims. Indeed, as Harvey argues that neoliberalism "has become incorporated into the common sense way many of us interpret, live in, and understand the world" (2007, 3), so have the purported achievements of microfinance as a pa rt of this neoliberal system often be come

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24 understood as implicit. A further critique of the WID approach to development considering these ideas can offer insights on the pitfalls of microfinance programs. As previously stated, postwar development thinking had largely ignored women's roles in the economy and fueled development resources tow ards men, assuming that they occupied all the productive roles in the formal economy (Kabeer 1994). WID scholars critiqued this view by showing how women around the world did fill many roles in the formal economy; namely, Boserup (1970 cited in Kabeer 1994 ) showed that in many countries women played a prominent role in agricultural activities that development practitioners and scholars had ignored She also argued that wom en are more empowered to the degree to which they work outside the home. She contended that women in developing countries are tacitly responsible for domestic and reproductive work; thus, she argued that the women who work outside the home in addition are empowered depending on the extent to which they do so (Kabeer 1994, 20 21). Tinker (1976 cited in Kabeer 1994, 22), another founding WID scholar, echoed Boserup's points in many ways; she critiqued Western development practitioners for reinforcing women's domestic and child rearing roles, and ignoring their role in the development process Rogers (1980 cited in Kabeer 1994, 22) added to this critique, arguing that Western men who run development agencies impose their beliefs about women's place being in the domestic sphere. Thus, any program geared towards women stressed domestic related skill building. These most prominent WID scholars thus emphasized the importance of women's roles in the formal economy. Accordingly, on the whole the primary critique to co me out of the WID paradigm was that women's roles in the formal economy should be recognized, and that women should be given opportunities to enter the formal sector to be empowered.

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25 As previously discussed, t he idea that women could be integrated into th e formal sector quickly caught on in the development indus try in an "efficiency" approach However, the intellectual development and subsequent prominence of these texts did not grow in a social vacuum; the idea that paid work in the formal sector would le ad to women's empowerment due to liberation from the domestic sphere emerged from the second wave feminism rising in the West in those decades (Eisenstein 2005; Keating, Rasmussen and Rishi 2010). Much of this feminism is rooted in Western liberal theory, which holds that all men are essentially equal across societies because they are able to reason. Liberal feminists argued that women are rational beings as much as men are, but have been robbed of the opportunity to express this rationality because of the ir socialization into limiting roles (Kabeer 1994, 27). Mohanty (2003) argues this assertion is wholly Western but problematically a pplied as universalist. She claims that these Western feminists writing about women in what she calls the "T hird World" cre ate an ahistorical conceptualization of the patriarchal dominance over women. Western feminists designate "women" as a homogenous category with "identical interests and desires" and without regard to "class, ethnic, or racial location" ( Mohanty 2003, 21). This conceptualization thus implies that women's liberation is achieved by following a unilinear path; Western, sometimes self designated feminist scholarship such as that in WID has reinforced this assertion ( Mohanty 2003, 23). This scholarship has co nstructed the "First World woman" as being educated, modern, having control over her own body and sexuality, and the ability to make her own decisions ( Mohanty 2003, 22): the embodiment of liberation. This woman stands in

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26 contrast to the construction of th e "average Third World woman" who is characterized as having a diminished existence because of her "feminine gender" and her being "Third World" therefore "ignorant, poor, uneducated, tradition bound, domestic, family oriented, and victimized" ( Mohanty 2 003, 22). This constructed dichotomy implies that the "average Third World woman" should necessarily aspire to the level of liberation (read: empowerment) as the "First World woman" by shedding herself of tradition and the responsibilities of the domestic sphere; moreover, it constructs the "Third World woman" as one who is "politically immature" and "who need[s] to be versed and schooled in the ethos of Western feminism" (Amos and Parmar 1984, 7 ). Mohanty also ar gues that this false dichotomy: Colonizes t he material and historical heterogeneities of the lives of women in the Third World, thereby producing/representing a composite, singular Third World woman' an image that appears arbitrarily constructed but nevertheless carries with it the authorizing s ignature of Western humanist discourse. (2003, 19) This homogenization ignores the "micropolitics of context, subjectivity, and struggle" ( p. 223) that affect women in terms of geography, race, class, or ethnic identity ; by casting the "feminine gender" as the ultimate determinant of oppression, it ignores differences among women across social class, ethnicity, and culture, and in doing so "robs [different groups] of their historical and political agency" ( p. 39). Mohanty's critique illustrates how moder nization theory remains entrenched in WID thinking. Modernization theory draws one path of economic development, the Western developed countries being the end to which less economically developed countries should aspire (Kabeer 1994). Similarly following t his logic, WID scholars construct one way to women's liberation; their theoretical assumptions define the market as the primary site for women's liberation.

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27 The designation of the market as the locus of women's liberation thus entrenched itself in the Wom en in Development literature and programming and had important policy implications in doing so. First, this model maintains a preference for the "domain of production" versus the "domain of reproduction," emphasizing how women can be incorporated into the "dom ain of production" (Kabeer 1994, 29). In stressing this incorporation, WID consequently devalues the caring activities involved in the "domain of reproduction" and thus the "labor, time and energy of those who carry them out" ( Kabeer 1994, 28). The dev aluation of these essential caring activities causes women's mothering role taken as a given to be denied policy recognition, and the resources that would be devoted along with that recognition (Kabeer 1994; Kabeer 2003). Secondly, this assumption dimi nishes the importance of this "domain of reproduction" and care, ignoring the reality that women's labor in the domestic sphere often relieves men of the task of taking care of themselves, therefore allowing them to act as "rational individual[s]" (Kabeer 1994, 29) in the market. Lastly, this focus on proving "women's capacity to display rational economic behavior without any equivalent emphasis on men's potential for displaying feminine' qualities of caring and nurturing" ( p. 29) fails to challenge normat ive gender roles, and so absolves men of any responsibility for caring or reproductive activities. Additionally a complete emphasis on work as the only site of empowerment neglects other contexts in which women can be empowered, and ignores resources tha t could be invested to achieve empowerment through noneconomic means (Charusheela 2003; Barker 2005; Bergeron 2006 all cited in Keating et al. 2010). Moreover, this assumption ignores the idea that while work could be empowering "for those who are

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28 already economically advantaged, for example, for others work is a means of survival rather than an experience of empowerment" (Keating et al. 2010, 156). The idea of work as the ultimate site of empowerment also ignores the instances in which seemingly we ll mean ing development and microfinance programs can actually disempower women. Often, microfinance focused NGOs achieve their touted outcomes (such as loan repayment) through a patriarchal approach that undermines the values of women's em powerment (Fernando 1997 ). Largely microfinance in stitutions are judged on their outcomes as they relate to women's income and empowerment, but how these outcomes are achieved within the organization are left unanalyzed. A patriarchal approach within microfinance institutions ca n be created and reinforced by various forces. First, donor funding can pressure NGOs to focus on the more financial aspects of development, which causes poor women's interests to be "progressively subordinated to the priorities of development" (Fernando 1 997, 151). Secondly, patriarchal approaches can come from NGO infrastructures and workers themselves, who may not be truly committed to women's empowerment; these failures can demonstrate themselves in individual behaviors that may be patriarchal in nature or in NGO structures that do not have built in programming focused on subverting patriarchy. These considerations are important in my analysis of Shakti's microfinance program's pitfalls because patriarchal influences limited the impact they could have on social empowerment. Despite these critiques, development agencies and international financial institutions latched on to the idea of work being empowering for women in a period of worldwide economic restructuring in the 1970s and 1980s. Thus, "ironically, the transformation of empowerment into a subordinate discourse occurs by using its own

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29 language and strategies, progressively censoring and muting its radical aspirations" (Fernando 1997, 151). As a pathway to work, these institutions often used microfina nce as a practical and rhetorical vehicle for the justification of neoliberal economic liberalization and restructuring. Microfinance and WID as Carriers of the Neoliberal Era The rise of neoliberalism created an apt environment for the proliferation of microfinance programs in the 1970s and 1980s. Neoliberalism is "a theory of political economic practices that proposes that human well being can best be advanced by liberating individual entrepreneurial freedoms and skills within an institutional framework characterized by strong private property rights, free markets, and free trade" (Harvey 2007, 2). It is neoclassical economics infused into an ideology of financial globalization. Within this framework, the role of the state is to both ensure the laissez f aire functioning of markets and create "an institutional framework" in order to do so, including guaranteeing the value of money and creating "military, defense, police, and legal structures and functions required to secure private property rights (Harvey 2007, 2). The neoliberal ideology pervades the dominant educational structure, media, corporations and financial institutions, state financial institutions such as central banks, and international financial institutions like the International Monetary Fun d (IMF) the World Bank, and the World Trade Organization (WTO) ( Harvey 2007, 3). During the 1970s and 1980s these international financial institutions pushed the neoliberal agenda on a variety of economies in the Global South to integrate these countries into the global economic structure ; this push came in the form of structural adjustment programs (SAPs), policy packages that demanded compliance for market liberalization, widespread

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30 privatization of state firms, and the dismantling of state subsidies, bu reaucracies, services, and safety nets (Harvey 2007; Weber 2003). They imposed massive debt financing to achieve this aim; as of 1994 18 countries capitulated to SAPs that financed US$60 billion in debt (Harvey 2007, 75 ; Weber 2003 ). The case of India pr ovides an illustrative example. In the late 1980s, a combination of poor fiscal management, a restrictive investment regime and external shocks began to hurt the Indian economy, ultimately downgrading its credit rating in international financial markets. T his caused a swell of capital flight that left India with merely $1.1 billion in national reserves, an amount that was barely sufficient to pay for even two weeks of imports (Sharma 1999). 1 At this critical juncture, then Prime Minister P. V. Narasima Rao accepted conditional emergency loans from the IMF, and then in June 1991 released India's new "market friendly" economic liberalization program (Sharma 1999). Then, the rupee was valued 22 per cent against the US dollar, and production, prices, interest ra tes, and wages were stripped of restrictions and protections to find what neoliberal economic reformers saw as their "natural equilibriums." By mainstream macroeconomic standards, these neoliberal policies in India were successful. However, India has faile d to achieve the nation's stated goal of "economic liberalization with a human face" (Sharma 1999). While the upper two economic deciles have seen a marked growth in their wealth and consumption, people on the lower rungs of the socioeconomic ladder have s uffered; a 1994 95 National Sample Survey shows that both rural and urban areas have seen a profound deterioration of the consumption shares of 1 A country must have foreign currencies on reserve to be able to purchase (thus import) goods from other countries. If what is called the balance of payments (BOP) is in a severe deficit, a country must finance imports with central bank reserves in a country's own currency, or borrow money to finance these imports.

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31 individuals in the lowest three and middle four deciles (Sharma 1999). The devaluation of the rupee has translat ed into higher food prices that are likely to be felt most by poorer people Additionally, inflationary pressures have lowered real wages, because nominal agricultural wages are slow to adjust to inflation. These two factors have further diminished of the quality of life of the rural poor. Accordingly, in 1992, an extra 9.4 million rural household s fell below the Indian poverty line (Datt and Ravallion 1996 cited in Sharma 1999). The case of India is indicative of the neoliberal pattern, one th at integrate d economies of the Global S outh into the global capitalist infrastructure often at the expense of the most poor. Specifically, much of the burden of structural adjustment was piled onto poor women's backs; as health care and education became privatized, gi ving rise to new fees, and subsidies for food were removed, women were expected to assume the responsibility for providing for these essentials (Kabeer 2003; Tickner 1999 cited in Eisenstein 2010). Then, w omen garnered the resources to provide in the infor mal sector. Economists expected the informal sector to shrink after the initial shock of adjustment that gave rise to large scale unemployment in the formal sector; however, it expanded with the spread of liberalization since the 1970s and took a permanent place in the global economy (Bener’a 2003 cited in Eisenstein 2010; Weber 2003). When IFIs began to recognize that the insecure informal sector was to become a mainstay, they began to implement development schemes targeting groups to which structural adj ustment had done harm (Elyachar 2002 ; Weber 2003 ). Microfinance, a concept that entrusts the ingenuity of the individual and the market to fix social problems, was the natural choice (Elyachar 2002; Eisenstein 2010). Thus, in several countries where

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32 SAPs w ere implemented, "the World Bank established Social Funds [microfinance programs] as the social safety net' of choice" (Elyachar 2002, 501). The proliferation of microfinance programs indicated the privatization of this social safety net (Keating et al. 2 010). Moreover, it reinforced the idea that social problems like unemployment and poverty are a result of individual failures, not larger social and economic problems (Isserles 2003; Keating et al. 2010). Weber argues that international financial instituti ons proliferated commercial microfinance programs to achieve "a form of social discipline aimed at commanding compliance for neoliberal restructuring" (2003, 356). As developing economies were pushed into the weave of financial sector globalization, compet ition became steeper and many of the poor who previously had jobs in the f ormal economy were forced out ; thus, the World Bank introduced commercial microfinance as a way to give the poor some kind of employment activity in the informal sect or (Isserles 200 3; Weber 2003). Among other countries, the World Bank and the Bolivian government implemented this strategy in Bolivia as a part of the 1986 "New Economic Program;" they funded microfinance programs with commercial interest rates on a widespread level (Web er 2003). The idea that microfinance is a palliative individual safety net that demands compliance for the neoliberal privatization scheme has been put forth. A less emphasized idea, but one that is relevant for th is study is Keating et al 's (2010) conce ptualization of Harvey's Marxist notion of the neoliberal "accumulation by dispossession" ( Keating et al. 2010, 144) that implies the "mass dispossession of resources from existing social structures to enable the concentration of capital" (Keating et al. 2 010, 154). Hartsock (2006) emphasizes how this accumulation by dispossession is a markedly gendered

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33 process in which the brunt of neoliberal restructuring in the Global South is carried by poor women. Keating et al use Hartsock and Harvey's theories to co nceptualize microfinance as "a mechanism of accumulation by dispossession (Keating et al. 2010, 160). Commercial microfinance assumes this function because it aims to integrate poor women as new clients in the financial services industry. By doing this, i t reinforces informal, volatile sources of work as a mainstay work that has limited possibilities for organization. Lastly, by expanding the reach of financial services into social groups, microfinance facilitates the privatization of the newly enclosed commons" ( Keating et al. 2010, 160). On first look, they argue, microfinance might appear to be a way to democratize credit by giving access to it to more people. However, the terms on which microfinance is often circulated is an indication of its less d emocratic features. Peer borrowing groups, often a pillar of micro lending activities, depend on peer pressure to pay back loans, therefore "facilitat[ing] an intensification o f surveillance and regulation" (Keating et al. 2010, 162). Moreover, if microfin ance is used for entrepreneurial work, this work is often in informal secto r with low rates of profit; consequently its spread implies the permanence of vulnerable work that limits workers' abilities to make demands such as they could in unions for examp le (Hartsock 2006 cited in Keating et al. 2010). Lastly, in places where structural adjustment policies dismantled social services, microfinance is often used to provide women with capital to buy goods that were communal or subsidized before structural adj ustment ( Keating et al. 2010, 162). Thus, microfinance can be conceptualized not just as a palliative force that allows the forces of privatization on the

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34 large scale to continue, but in and of itself is a tool for capital accumulation and increased financ ialization of society. This ideological critique is necessary when considering the makeup of the microfinance industry today. The microfinance industry proliferated the availability of credit in various countries in the Global South with the stated goals of alleviating poverty or quelling the ills of structural adjustment. On the other hand, Keating et al. (2010) argue that microcredit itself can be a tool for the aims of structural adjustment. Investigating the face of the industry as compared to the real financial needs and desires of the most impoverished people sheds more light on this debate. What Financial Services Do Poor People Need and Want? Since the Grameen Bank gained widespread popularity, many different institutions adopted microfinance int o their frameworks, including other commercial, for profit, individual banks like Grameen, nonprofit non governmental organizations (NGOs) and international finance institutions like the World Bank. Ultimately, what differentiates the various microfinance institutions is whether they only offer "microcredit," meaning only loans, or whether they offer an array of other financial and social services. To delve into the differences between these institutional structures however, it is first important to discuss what financial services poor people need and want to compare these to the financial services and social initiatives that various microfinance programs offer. One step in analyzing the financial services poor people want and need is considering the me aning of credit and debt to those with scarce resources. Dichter (2007a) claims that the microfinance industry has largely ignored the contentious issue of poor debt, failing to recognize how social and cultural understandings of debt can shape a

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35 microfina nce program's trajectory. He argues that gaining a deep social meaning of debt can provide insight into many of the issues MFIs face, such as understanding why women drop out of programs or give their microfinance loans to th eir male family members. I n man y developing countries, debt carries negative moral stigma in family and religious structures, engendering guilt and shame in social settings. When microfinanciers steeped in purely economic thinking, and especially those exclusively from developed countr ies, intervene in credit markets, they do not always make this consideration. Dichter argues this error occurs in part because socio cultural meanings of debt vary between many developing and developed countries; generally, in developed countries, credit c ards and credit card debt are ubiquitous, whereas saving is not as encouraged. In 2005, the Unite d States hit a savings rate of zero perce nt, the lowest rate in 75 years (Dichter 2007a, 195). People in some developing countries, who largely live in cas h based economies, are generally more reluctant to a ccrue debt. On the whole Dichter claims that the microfinance practitioners and "credit evangelists" must reevaluate their enthusiasm for credit, and shift the emphasis of programs to what many potential microfinance program participants want: a means to save. Many critics of microfinance claim that savings, not credit for financial investment, is the financial service that the poor truly need (Allen 2007; Armend‡riz and Morduch 2007; Dichter 2007b ; Von derlack and Schneider 2002 ). Vonderlack and Schneider (2002) argue that specifically in India, savings mechanisms provide an invaluable service to buffer spikes in household expenses for emergencies and to save for long term livelihood activities. Dichter calls upon the early financial history of the modern cap italist economies of the Global North to demonstrate that "the first efforts at

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36 democratizing financial services were almost entirely savings and thrift' based" (2007b, 181) Moreover, when credit f or the poor did emerge it followed the savings movement, and developed largely for consumption, not entrepreneurial purposes. Thus, the touted notion that providing credit to individuals will allow them and the countries they live in to lift themselve s out of poverty is not supported when comparing the economic history of personal saving s and credit of the Global North At the beginning of the Industrial Revolution in the United States, most people who started a business did so by self financing throu gh savings or borrowing from within a close social network (Bairoch 1992 cited in Dichter 2007b). Today this trend continues. The Global Entrepreneurship Monitor reports that in a survey of 12 developed countries in 2000, an average of 78 percent of fundin g for business start ups came from infor mal sources ( cited in Dichter 2007b). Dichter argues that this pattern remained constant because the entrepreneur, whether in the developing or the developed world, seeks the least amount of risk when taking a loan; therefore, generally, entrepreneurs will seek an informal loan from a social tie because it will be more risk tolerant and softer than a formal loan (Dichter 2007b). Savings programs characterized the first early form of finance to poor people in the nine teenth century in the United States and Western Europe. For example, in Scotland, the penny savings bank movement that began in 1810 was largely targeted towards the poor (Haythornthwaite 1993 cited in Dichter 2007b). Similarly in the United States, the su ccess of Benjamin Franklin's Poor Richard's Almanac and the widespread production of the cop per penny in 1793 popularized the penny or piggy' banks for the working poor (Dichter 2007b). Later, when formal credit was introduced as a financial

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37 service in th e early twentieth century, its primary use was for consumption, not for investment. The United States even created a "microcredit" program of sorts; in 1910 the first Morris Plan Thrift Bank was opened, specifically targeting low and middle income househo lds to reduce the power of the "loan shark" (Dichter 2007b). Similar to how current MFIs function in developing countries, each borrower did not have to put up any collateral, but instead required two co signers of the same general background to attest to the borrower's "character." Thus, it is clear that in the Global North, savings institutions were accessible to help the poor long before credit, which was later used for consumption Dichter argues that providing credit rather than savings to poor people is neither what they want nor a proven strategy for development, when considering the economic history of the richest countries. Conclusively he argues that: The average poor person in the past (and today) is not an entrepreneur, and when he or she has acc ess to credit it is largely for consumption or cash flow smoothing. The average entrepreneur prefers to start with informal credit or savings rather than formal credit. The best financial services for poor or low income people are saving based, which in th eir pure form do not need outside financial helpor the large microfinance industry that has evolved. (2007b, 190 191) Others support Dichter's argument that people with limited resources in developing countries prefer savings over credit Armend‡riz and Morduch (2007) argue that "microsaving" can be a sustainable way to solve credit mar ket problems for the poor High frequency saving, they argue, is the approach that microfinance programs should take to help fund short term investments and smooth consumpt ion. Informal savings institutions have become popular as a response to the lack of savings options available to the poor in the formal market ( Armen d‡riz and Morduch 2007). Formal savings institutions in the form of microfinance may be able to address so me of the pitfalls of these informal mechanisms. For decades poor women in India

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38 have used informal savings mechanisms to maintain their standard of living over time; the existence of these show that they indeed want or need to save (Vonderlack and Schneid er 2002). One prominent informal savings device that has been prominent in India is ROSCAs, or rotating savings and credit associations ( Armend‡riz and Morduch 2007 ; Vonderlack and Schneider 2002). In each ROSCA, a group of people gather s to pool a set am ount of funds per time period in a common pot. Each time the ROSCA meets, one individual collects all of the deposits until the last member in the last period receives her portion. Armend‡riz and Morduch give the example of twenty people agreeing to contri bute $15 every month for twenty months to a ROSCA pool. Every month, one member is allowed to collect the $300 until the last recipient receives her portion. The problem lies for the person who is last, because in the end, she hypothetically could have sav ed up the $300 over twenty months by herself, without taking the time and effort to participate in the ROSCA. However, the last person is paramount to the survival of the ROSCA; without her, it could not exist. Anders on, Baland, and Moene (2002 cited in Ar mend‡riz and Morduch, 2007) suggest that married women who are ROSCA members participate because they would have had trouble keeping the accumulated savings from their husba nds over time. Gugerty (2003 cited in Armend‡riz and Morduch 2007) argues that the schedule and structure of ROSCAs allow poor women to save in a constant, reliable way. T he prevalence of ROSCAs demonstrates many poor women's desire to save and fulfill this need in an informal sector, without ways available to formally save (Armend‡riz a nd Morduch 2007). However, issues like the predicament of the member in

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39 the last time period as well as the potential insecurity of deposits are pitfalls in the ROSCA model Another informal savings mechanism that has gained popularity in India is annual s avings clubs, which are run by religious groups, social clubs, or trade unions; they have low transaction costs because savings deposits are made at regular meetings individuals would attend anyway for non financial reasons, such as weekly services at a mo sque (Vonderlack and Schneider 2002). However, the most common form of informal savings in India is in kind storage, or investing in small items of high value such as jewelry that can be sold for cash in case of emergency. But, if this emergency occurs, je welry is generally sold for less than its relative worth and it can be difficult to find a buyer quickly; thus, this is not always the most convenient or dependable way to save. ROSCAs, annual savings clubs, and in kind storage are strategies that women ha ve used to save in an informal manner. Formal savings services can learn from the successful strategies of informal savings approaches but offer higher safety of deposits, higher rates of return, faster access to funds, and greater anonymity to savers (Von derlack and Schneider 2002). Many formal microsavings institutions that have emerged in developing countries have adapted policies that have made them both successful and popular. Safe Save, a savings cooperative in Dhaka, Bangladesh, sends its staff out on a daily basis to its 7000 strong base in slums, asking if they want to make deposits or not make any transactions that day (Armend‡riz and Morduch 2007). Bank Rakyat Indonesia (BRI) created a similar scheme targeting the most poor that has attracted 25 million saving clients by

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40 reducing minimum opening amounts and required balances (Armend‡riz and Morduch 2007). Allen (2007) claims that the most poor are interested in income generating activities, not long term investment; most poor people will want to save enough to generate enough income to smooth consumption rather than access the long term credit as many microfinance organizations offer. He argues that because the poorest have the most vulnerable livelihood, they would prefer to maximize savings for meeting predictable expenses like food, health care and education, managing household cash flow, and unpredictable expenses like recovery from a disaster or unexpected illness in the family. Thus, savings are attractive to the most poor who will steer awa y fr om the risks inherent in loans in an economic environment they are not able to control ( Allen 2007). I f the very poor prefer low risk, savings based financial services, why is the main focus of microfinance on credit, and not savings? This calls into q uestion the various types of microfinance organizations and their program approaches and effectiveness further informing my research question Institutional Differences in Varying Microfinance Institutions During the past decade, a notable divide has gr own in the field of microfinance between the aims of social welfare vis ˆ vis financial sustainability and profit. This schism has been quite visible in India, where many have claimed that the last few years of microfinance activity and scandal across the subcontinent has led to a crisis and a crossroads for the development activity. Microfinance institutions around the world fall on various parts of the spectrum between seeking full social welfare for the most impoverished and attaining financial

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41 sustaina bility and profit. Thus, a divide has developed between two broad types of MFIs. On one side, there are commercial microfinance institutions, which are generally large, for profit, and whose goal is to be financially self sustaining; they may have started out being supported by subsidies and donations, but their ultimate goal is to move towards financial sustainability. Many who tout commercia l MFIs claim that if they adhere to conventional banking practices following a profit motive they will be able to alleviate the most poverty by having more capital to lend to more people (Morduch 2000; Yunus 2003). However, much evidence suggests that these microfinance organizations reach the somewhat poor population, but fail to reach the most impoverished because t he high transaction costs of reaching them would offset their profit (Allen 2007; Von Pischke 2007). On the other side of the spectrum are the non profit nongovernmental organizations (NGOs), which are generally small to medium size, supported by subsidies grants, and donors, and generally aim and succeed at reaching the most impoverished better than the commercial microfinance organizations (Allen 2007). Commercial microfinance institutions (MFIs) have become overwhelmingly prevalent in the last two dec ades. Twenty nine large NGOs worldwide transformed into commercial microfinance banks between 1992 2003 (Fernando 2003 cited in Weiss and Montgomery 2005). However, despite many NGOs' efforts to achieve financial self sustainability, Allen (2007) estimates that of the approximately 10,000 MFIs worldwide only three to five percent have attained full financial sustainability. In spite of the fact that few MFIs are achieving financial sustainability, many are shifting towards a more commercial model. Some cons ider this increasingly commercial orientation of microfinance around the world to be at odds with its original poverty alleviation goals

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42 (Morduch 2000 ; Weber 2003; Weiss and Montgomery 2005 ). As discussed previously, commercial microfinance programs were u sed in part to facilitate financial sector liberalization during the advent of structural adjustment programs. Microfinance programs that have used commercial interest rates and aim for financial self sustainability generally fail to reach the most impov erished (Morduch 2000; Weber 2003; Weiss and Montgomery 2005). Morduch claims that "socially minded practitioners have had to contend with the assertion that these core poor' can potentially benefit from microfinance services" (2 000, 618) but their avera ge loan size would be too small to allow the large economies of scale that have pushed some commercial MFIs towards financial self sustainability. Therefore, the MFIs that wish to achieve complete financial self sustainability must sacrifice reaching the m ost impoverished to do so. Howe ver, Weiss and Montgomery claim, from the outset "many MFIs do not consider their institutional mission to b e serving the most impoverished (2005, 619). They report that "among the MFIs that report to the MIX [Microfinance I nformation Exchange] Market, slightly less than half of those in Asia identified as specifically targeting very poor clients as their institutional mission" (p. 619) and in Latin America, only ten percent state this as their mission. Moreover, of the Latin American MFIs that claim to target the most impoverished, only two utilize a specific targeting methodology to identify these individuals. In some cases, commercial microfinance programs have been overtly predatory towards poor borrowers. This argument i s illustrated by the 2010 microfinance scandal in the state of Andhra Pradesh, India. Famously, three of Andhra Pradesh's (and the country's) largest microfinance companies (Spandana, SHARE, and SKS) co opted their

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43 own charitable operations, using their c lients, poor women, to structure equity growth in their favor (Raja D and Rajshekhar 2011). These organizations, who were at one point NGOs, asked the women to invest in mutual benefit trusts, and then as the businesses grew sold shares to external private investors and promoters. When the companies began to see tremendous profits, the vast majority of the dividends were distributed to the promoters, not the women (Raja D and Rajshekhar 2011). Most of the women did not understand the complex investment stru cture nor knew what dividends were supposed to be distributed to them. Thus, on the night of 8 March 2006 the district officer of the Krishna district in Andhra Pradesh seized the records and closed close to 57 branches of the MFIs in the district (Ghate 2 007). Since then, the debate has been centered around these companies raising interest rates for the profit of investors and to the detriment of the borrowers. Clearly, these, the largest microfinance institutions of the country, did not have the well bei ng of their clients in mind, but rather let their original mission of providing financial services to the poor fall by the wayside when the opportunity for profit presented itself. Broadly, commercial MFIs are becoming increasingly popular, but most are ne ither attaining financial self sustainability nor reaching the most impoverished. Some, like these three in India, are actually predatory in nature. The pitfalls of commercial MFIs will be important to consider in my analysis of Shakti's microfinance progr ams because many of the pitfalls of commercial microfinance programs are applicable to Shakti, and so can illustrate aspects of their microfinance programs that can be changed for improvement. M ost non profit NGOs or foundations differ from commercial mic rofinance organizations in that they hold that subsidies are essential in order to cover the high

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44 transaction costs of targeting the most poor (Von Pischke 2007) Their primary mission is to alleviate poverty and to construct the MFI to attract donors and subsidies. Lastly, their boards are comprised of management, donors, and representative members that are often the borrowers themselves. One example of a non profit NGO in this model is Grassroots Organizations Operating Together in Sisterhood (GROOTS), a network of grassroots organizations that focus on rural development, housing, savings, and credit (Isserles 2003). This MFI incorporates microfinance as a part of its larger poverty alleviation program, but also develops other programs that can have posit ive impacts on poverty alleviation. One of GROOTS' member organizations in Zimbabwe, Organization of Rural Associations for Progress (ORAP), requires its members to build up savings first, after which ORAP offers them small amounts of credit. With the savi ngs, many women build kitchens and purchase the necessary utensils to cook and sell food. ORAP ensures the participation of the most poor by always preparing the food from the home of a very poor family; subsequently, a percentage of the food sales is put into their savings account to be used for future needs (Isserles 2003). Another GROOTS member organization in Maharashtra, India, Swayam Shikshan Prayog, offers microfinance but has an emphasis on creating collectives owned by women and their communities. This group has also been involved in local government issues pertaining to the delivery of public health and educational services (Isserles 2003). These two GROOTS organizations demonstrate how microfinance programs on a small, nonprofit scale generally lo ok and function; they use microfinance as a portion of their strategy for poverty alleviation and empowerment. Isserles suggests that these programs may have to remain small and local to retain their

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45 more radical characteristics, which she argues may be co mpromised if they expand and bureaucratize. An example of a large scale NGO that has been able to target the most poor with some success is the Bangladesh Rural Advancement Comm ittee (BRAC) (Matin, Sulaiman, and Saleque 2007). Institutionally, BRAC falls between a non profit NGO and a com mercial MFI; it is 80 percent financially self sustainable, cross subsidizing its development initiatives with other separate enterprises like retail handicraft stores and a dairy business (BRAC 2009). In 2002 BRAC realize d that its "microfinance [program], though a successful, thriving program, was failing to reach the bottom 25% of the absolute poorest, composed of mostly women headed families falling on the bottom rung of the poverty ladder" (BRAC 2009). Realizing its f ailures, in January 2002 BRAC introduced a new program, Challenging the Frontiers of Poverty Reduction Targeting the Ultra Poor (CFPR TUP) This program developed a set of criteria to identify families in the margins of society those who because of thei r poverty level could not take advantage of standard microfinance options (BRAC 2009 ; Matin et. al 2006). This program used a targeting methodology combining participatory approaches and simple surveys with the aim of reaching the most poor (Matin et. al 2 006). It covered what BRAC designated as 100,000 ultra poor women between 2002 and 2 006. CFPR/TUP used a variety of approaches includin g promotional programs that involved asset grants and skills training as well as protective measures including health c are se rvices and stipends. CFPR/TUP also aimed to dismantle constraints at the household and policy level. The res ults from Matin et al.'s assessment of this program suggested that the ultra poor participants enjoyed "better

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46 access to land, diversification and more physical assets, reduced illness and better health seeking behavior, better access to the formal and informal credit market, a greater social and legal awareness, and improved nutrition and calorie intake" (2006, 31 32) because of their participa tion. One downfall of BRAC's CFPR TUP is that it has not yet had significant effects on education and health of the clients' children. BRAC and the CFPR/TUP program present an interesting hybrid MFI by implementing some programs with a profit mot ive to sub sidize others with which t hey take a nonprofit approach. BRAC and GROOTS both present interesting mo dels for microfinance programs, that will assist my analysis of Shakti's microfinance programs social impact. The Indian government has supported a nother interesting hybrid of the commercial and nonprofit approaches to microfinance in the NABARD/SHG linkage progr am. Under this program, NABARD ( the National Bank for Agri cultural and Rural Development) loans large sums to NGOs who encourage the poor, especia lly poor women, to form small self help groups with the goal of poverty alleviation and women's empowerment (Bansal 2003). These women pool their savings to open a formal bank account through the NGO that is then opened in NABARD to create the first establ ished link between them and the formal banking system. Groups then are supposed to meet on at least a monthly basis to give small loans from the savings account to members for their small needs as well as to collect more savings (Bansal 2003). Shakti, the NGO with which I worked, participated in this linkage program. A major schism in the field of microfinance today is between commercial microfinance institutions and non profit microfinance organizations. On one side, commercial microfinance institutions hold that achieving financial sustainability will

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47 allow them to be better functioning organizations and achieve both social and business aims. However, because of their need for profit or at least to break even, most do not spend the increased operating co sts necessary to reach the core poor. On the other end of the spectrum are non profit NGOs, whic h are supported by donors and subsidies, and are generally more successful at aiming at bringing the core poor out of poverty. They are generally smaller than c ommercial microfinance institutions and often offer other development programs in addition to microfinance. There are also hybrid MFIs like BRAC and the NABARD/SHG linkage program that aim to combine the financial self sustainability of commercial MFIs wit h the depth of outreach to the core poor achieved by nonprofit NGOs. Considering the pros and cons of commercial, nonprofit and hybrid microfinance programs will be important for suggesting how Shakti's microfinance programs can have a greater social impa ct. Conclusion Examining the historical and ideological development of microfinance in the context of development thinking over time illustrates how microfinance has gained the level of prevalence it has today. The idea behind microfinance is largely held up by neoclassical economic theory and supported by Western liberal feminism. In the 1970s and 1980s, these schools of thought met, giving rise to the Women in Development paradigm. WID integrated women into development programs on grounds of efficiency, and the Western feminist thought of the time supported this move by constructing work outside the home as the site of liberation or empowerment. Moreover, with the rise of neoliberal economic globalization and structural adjustment programs across the Glob al South during this time, unemployment ballooned and social services dwindled. In this

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48 context, poor women were largely responsible for filling the gaps that structural adjustment left. When these initial shocks of structural adjustment did not subside, i nternational financial institutions began to support microfinance programs abundantly; microfinance reinforced the idea that individuals could pull themselves out of poverty and thus absolved the state of its responsibility to provide a social safety net. Since poor women bore the brunt of this responsibility and were seen as efficient, dependable borrowers, they became the primary recipients of microfinance. Microfinance has thus become a widespread development activity around the world. Its prevalence and popularity have been fueled by neoliberal economic globalization and a romantic idea that merges the ideas of self determination, entrepreneurship, Western feminism, and grassroots capitalist growth all joined together as the panacea for alleviating pov erty and empowering women. As I have illustrated, the increasingly commercial nature of microfinance is not designed with the needs and wants of most poor people in the Global South in mind and has largely not alleviated poverty or empowered women. Despite this fact, microfinance has garnered such popularity over time that an implicit assumption has developed in the popular sphere that putting money into a woman's hands in the form of a loan will empower her to transcend structural barriers and poverty. As is clear from other research, evidence does not fully support this assumption; though some microfinance programs have successfully alleviated poverty and empowered women, many others have not. It is in this context that I turn to study the effectiveness of Shakti's microfinance program. This background will facilitate our understanding of Shakti's pitfalls and challenges. However, before addressing my case study, it is also necessary to review alternative

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49 conceptualizations of poverty and empowerment. These challenges to the assumptions of mainstream microfinance and the ideological forces that engender its uncritical proliferation and touted success provide a new approach for understanding Shakti's programs.

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50 CHAPTER 2: AL TERNATIVE VISIONS OF POVERTY AND EMPOWERMENT I have illustrated how the mainstream development agenda in many ways is reflected in the mainstream microfinance agenda in order to show how these assumptions were in many ways implicit in Shakti's microfinance programs. In this chapter, I discuss alternative approaches to understanding poverty and empowerment that can offer insights as to how Shakti's microfinance programs, as well as development programs at large can be changed to be more "pro poor;" this can be achieved by NGOs employing participatory approaches as a necessary means of allowing women to empower themselves. Defining empowerment and poverty is a broad and ambitious undertaking. With this consideration, I engage in a selective discussion of certa in scholars' ideas of these concepts in order to frame my analysis. This discussion will be informed primarily by Amartya Sen's (1999; 2000) capabilities' approach to poverty, and Naila Kabeer's (1994) and Steven Lukes' (1974) discussion of power and emp owerment. These scholars' alternative conceptualizations of poverty and empowerment offer lenses through which I view these concepts in my analysis. As discussed in the previous chapter, in mainstream circles, poverty has been understood in a narrow, pur ely economic sense. The most common ways of approaching the measurement of poverty have been in terms of the international poverty line (at US$1.25) as well as the economic growth approach, holding that economic growth of a country will alleviate poverty n aturally. Expanding this view gives us a broader understanding of the multidimensionality of poverty. A wider understanding takes into account constraints on living that cannot often by encompassed by looking solely at

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51 income or consumption levels. Because this multidimensional understanding of poverty frames the analysis of the economic impact of the women's participation in the SHGs it is important to explore it more fully. Poverty Poverty "must be seen as the deprivation of basic capabilities rather th an merely as lowness of incomes, which is the standard criterion of identification of poverty" (Sen 1999, 87). Though Sen (1999) recognizes the importance of income as a component of poverty, he sees income as solely a means to purchase commodities, and co mmodities only important in the degree to which they allow a person to achieve something. Recognizing thus that poverty is a complex and multifaceted concept, Sen (1987) notes the challenge in achieving a measure of poverty that is both relevant, capturing the complexity of the issue, and practical, useful for a real assessment of living standards over time; hence, "relevance wants us to be ambitious, [but] usability urges restraint" (1987, 20). Sen argues that though low income and low capability can often correlate to indicate poverty, overall "the impact of income on capabilities is contingent and conditional" (1999, 88). These conditionalities include one's gender and social roles within a family or community, ability, and age. Though in mainstream eco nomics poverty is often measured at the unit of the household, this approach does not capture the differential levels of poverty that various members of a household experience (Kabeer 1994; Sen 1999). Within a household, women generally experience poverty more harshly than their male counterparts. In South Asia, women often take up the brunt of a downward spiral of poverty, selling their own assets before men have to. Therefore, they are required to gain income in work that is

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52 unstable, poorly paid, and all ows little room for organization or rights on the job (Kabeer 1994). On the other hand, when resources are scarce within a household, some members, like boys, are more likely to have access to more resources than girls (Sen 1999). It is clear that a focus on household level poverty does not show the significant internal disparities that may exist; accordingly, targeting resources to only the male heads of household with the assumption that this will result in the welfare of other household members is flawed (Kabeer 1994). Sen (1999) also points out that traditional measures of poverty do not take into account special conditions of individuals conditions that require a higher than average income to achieve the same standard of living. For example, pure in come measures do not capture the increased difficulties of functioning associated with disability, illness, or the fragility of old age (Sen 1999, 88). These examples illustrate how it can be difficult to convert income into an understanding of capability; an older, more disabled, or more seriously ill person would need more income to achieve the same functioning as a person without these conditions (Sen 1999, 88). Also important to consider and not captured by general income measures that purport to meas ure poverty is relative deprivation; that is, being comparatively poor in a generally wealthy country can be difficult, even when one's income is high in absolute standards across the world (Sen 1999, 90). Accordingly, depending on the wealth of a country, differential levels of absolute income are required to achieve the same capabilities. Moreover, seeing poverty only in terms of income deprivation to then justify spending on education, health care, and so on in order to raise income would be a

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53 "confound ing of ends and means" (Sen 1999, 108). Indeed, levels of education and health care, as well as issues of unemployment and social exclusion should be variables that are included in poverty measures. A capabilities approach to poverty measurement includes t hese measures to give a more holistic idea of one's poverty level. Unlike the income focused approach that most microfinance programs take, I use a capabilities approach in looking at the impact of the women's involvement in the microfinance self help gr oups. Because most mainstream microfinance programs assume that an increase in income results in a decrease in poverty, analyses of these programs are not fully indicative of whether microfinance recipients' degree of poverty is being alleviated due to the income being generated or other factors. By using one on one interviews, this research develops a more in depth account of women's lives, allowing the study to approximate more closely a capabilities' approach to poverty analysis. Empowerment As discus sed in the previous chapter, many MFIs express a commitment to women's empowerment as part of their goals. For many, it has become an implicit assumption that simply putting money into a woman's hands will allow her to take charge of her own economic desti ny and become "empowered." Others have argued that through the vehicle of the microfinance group meeting, women gather collective strength and thus become empowered individually and as a group (Armend‡riz and Murdoch 2007; Isserles 2003; Ware Newaz cited i n Houssain 2002; Yunus 2003). However, it has not often been investigated how this empowerment is achieved, or even what "empowerment" means; many scholars and practitioners tacitly assume that if women get together in groups with some frequency and are gi ven microfinance loans, they will become empowered.

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54 Investigating the complex meanings of empowerment gives us a broader understanding of this concept, and thus both how to measure and improve it within a program. "Empowerment" is an overused word in dev elopment; it is one that has been taken from the grassroots to contribute to academic development thinking, but one that in many ways has been watered down such that it often holds little political meaning (Kabeer 1994, 223). In development programs and pr oposals, "empowerment" has often been used as a substitute word for "integration" or "participation," which can be equally empty words; though these words might be used, in reality parameters and goals for a given development program might have been set el sewhere (Shetty 1991 cited in Kabeer 1994, 223). "Empowerment" was not always a focus of development programs; before the advent of the WID paradigm there was a focus on the powerlessness of women, suggesting that women had no power to make change in their lives, when "in reality, even those who appear to have very little power are still able to resist, to subvert, and sometimes to transform the conditions of their lives" (Kabeer 1994, 224). Since the late twentieth century in development thinking, the focu s has shifted "to the more processual aspects of power empowerment and disempowerment" (Kabeer 1994, 224). To understand the process of empowerment, it is first important to understand the concept of power. Lukes' Power: A Radical View (1974 cited in K abeer 1994) provides a conceptual framework for understanding different types of power, and which type of increase in power constitutes "empowerment." Lukes draws differences between the power to the power over, and the power within. The "power to" generally concerns issues over which there is an observable conflict, and "defines power as the capacity of an actor to affect the pattern of outcomes against the wishes of other actors"

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55 (Kabeer 1994, 224) asking who has the power in the decision making pr ocess. This view of power underpins much of the WID literature, in that it looks at individuals' power in different situations, but does not approach power from a structural perspective. A broader view of power would not only consider the outcome of cert ain decisions, but also consider the significance of the exclusion of certain issues from the decision making agenda altogether (Giddens 1979, 90 cited in Kabeer 1994, 225). Non decision making, as in an ability to keep certain issues off the agenda entire ly, is also an exercise of power (Kabeer 1994, 225). This view of power can be seen part of what Lukes classifies as the "power over," that is, the power within institutions including agenda setting that "systematically and routinely benefit certain indivi dual and groups at the expense of others" (Bachrach and Baratz 1962 cited in Kabeer 1994, 225 226). This "power over" is well illustrated by the division of labor in the household; often, the degree of domestic responsibilities that women hold is instituti onally engrained, such that they appear non negotiable (Kabeer 1994, 226). This "power over" is intimately related with what some feminist analyses of power have called "the power within" (Kabeer 1994, 227). The "power within" "entails the experiential r ecognition and analysis [of domination and gender inequality]. Such power cannot be given; it has to be self generated" (Kabeer 1994, 229). This "power within" is one definition of empowerment that frames this analysis. However, "power within" is difficult to attain; gender asymmetries are sustained in social rules, norms, and values, appearing "so secure and well established that both subordinate and dominant groups are unaware of their oppressive implications or incapable of imagining alternative ways of being and doing'" (Kabeer 1994, 227). The status quo of male domination is

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56 often naturalized' through strong ideological mechanisms, causing women to experience subordination "as inevitable and interpersonal" (Kabeer 1994, 253). It is not that individual women do not recognize their own interests; naturally, interests are formed from lived experience in the social world (Kabeer 1994, 228). It is precisely restrictions on women's life choices that limit their ability "to engage in the analytical process b y which their structural, rather than individual, interests as a subordinated category come more clearly into view" (Kabeer 1994, 228). Power, and thus empowerment, can be understood from a variety of vantage points, and as "more socially embedded than t he conventional focus on individual decision making would suggest" (Kabeer 1994, 229). Power is inherent both in terms of men's greater ability to consume and distribute material resources in their favor, as well as in their structural agenda setting power ; these powers are often so embedded in social norms and rules that they "construct the illusion of consensus and complementarity" (p. 229). Because power is constructed and sustained in a variety of dimensions, strategies for empowerment in development pr ograms must focus on building "power within" in order to improve women's ability "to control resources, to determine agendas and make decisions" (p. 229). This "power within" is only one component of empowerment; its important counterpart is the "power t o," which implies "mobilization strategies by women around self defined concerns and priorities" (Kabeer 1994, 256). Related is some scholars' focus on the expressly communal aspect of the "power to," or "power with," which emphasizes the importance of soc ial solidarity in action (Mayoux 1998; Mosedale 2005; Wallerstein 2006 all cited in Kim et al. 2007). Strategies for empowerment, if encouraged by

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57 development programs, must then give women space and resources to develop the "power within," and accordingly the "power to" take action to improve their collective position. If development organizations set agendas for action, they ultimately substitute themselves as the change agents for those they are seeking to "empower," and necessarily eliminate the possibi lities for true empowerment (Kabeer 1994, 256). How can NGOs operationalize this dual understanding of empowerment, to encourage the "power within" and the "power to" without setting their own agendas? A first step to instituting this approach is to alte r hierarchies of knowledge that generally privilege positivist knowledge over knowledge gathered by local, experimental means (Kabeer 1994, 72). Most development data is collected using a reductive approach that "assumes complexities of nature and society can be broken down into constituent components" (Kabeer 1994, 72). Accordingly, objectivity is considered essential in the data collection approach, such that "knowledge is only considered valid when it is undertaken in a value free and disinterested fas hion" (Kabeer 1994, 72). If data collection that determines program operations and funding does not take into account poor women's lived experiences, it is not surprising that many development programs are not driven by these women's self defined interests and thus are not successful in encouraging empowerment. This positivist approach to data collection downplays the validity of women's self described experiences as data. In order for these programs to change to focus on true women's empowerment, a space must be created "for women's own voices to be heard, either through participatory processes of needs identification or else by organizational practices that encourage

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58 participation in shaping and changing the decisionable agenda" (Kabeer 1994, 230) of the NGO. Viewing empowerment as the processual action of gaining different types of power within, with, and to allows us to gain a more nuanced view of empowerment. This more multifaceted view of empowerment, coupled with a capabilities focused understan ding of poverty, frame the methodology of my analysis.

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59 CHAPTER 3: METHODS In April 2011 I conducted separate interviews with 24 women who were participating in microfinance self help groups organized by Shakti. These women were in eight separate self help groups in various small villages in the state of Rajasthan, India. An analysis of the content of these interviews forms the bulk of the qualitative da ta of this thesis. Supplemental to this data are my own observations of the NGO's workings as a volunteer intern for two months. I also collected and refer to Shakti's files of the eight groups' financial profiles, which indicate what they deemed important to measure in the microfinance program. Lastly, I use the responses of the individuals as to their income over time to undertake a short quantitative analysis. I began volunteering full time at Shakti in March 2011 through the connection of my study abroad program, Minnesota Studies in International Development (MSID), base d in the city of Jaipur, Rajasthan. The MSID program was designed such that I studied in a classroom setting for half of the semester and had a fieldwork experience for the other half. For the fieldwork placement I set out with the intention of finding an NGO that would find it useful for their program monitoring and analysis for me to complete research on their microfinance programs; I wanted to make this research a partnership, useful for Shakti's programs, and ultimately the participants' lives, and also be a good research and learning experience for me. After I met with the head of the microfinance program at Shakti in March 2010, it seemed that working with them would result in this kind of partnership, so we decided to move forward.

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60 For the month of March 2011 I mostly observed the day to day workings at Shakti, attending SHG meetings and trainings for new groups. This period allowed me to get to know coworkers and with their guidance and advice, design the research in a way that made sense given our goals and limitations. I collected data in a variety of ways. Part of the quantitative data I originally planned to use in this thesis I collected from Shakti's computer database of SHGs. From this database I gathered each of the eight groups savings, l oans, and in some cases recurring deposit portfolios that were recorded in excel documents. This also gave me information on the interest rate used on loans, a uniform 18 per cen t. I did not perform a quantitative analysis of this data because it inherentl y did not provide sufficient information on economic status or empowerment. However, having this data was useful because it illustrated what data Shakti thought it useful to collect; thus, I analyze this descriptively. Most of the quantitative and qualit ative data I used in my analysis come from the twenty four interviews I conducted with twenty four group members from eight different SHGs, three interviews from each of the eight groups. I made contact with all of t hese groups through the branch man ager a t the village office and my interpreter, who was a young female co worker I will call Ritu I worked with both to make a plan for visits to the eight separate SHGs. These eight were chosen based on which SHGs already had scheduled meetings in the approxima te week I had available to complete the interviews after I gained approval from the IRB. Various factors limited the choices available of groups to study. First, Shakti's SHGs only meet formally with a field worker once a month Second, I could only be in the field for two months. Third, it was necessary for

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61 me to be accompanied to the group meetings by one particular field worker from the village office Although my sample was restricted by these conditions, the eight cases are representative of the overal l sample in terms of the typical size of these groups and their rural character. T he group meetings and interviews went as follows The branch manager, the one field worker, Ritu and I would travel to the different villages on motorcycles through dusty, d esert dirt roads. In these villages, that generally had little to no vehicle traffic, the arrival of two motorcycles loudly picking up the reddish dust and gravel while rolling into town was at times something of a spectacle. Compared to the bustle of the city, these were quiet villages; usually when we arrived in the afternoon, the streets were empty. Many community members were out at this time, working the fields in the sun A griculture and tending to livestock were the main sources of livelihoods for th e people in these communities. If not working in the fields, people could be found tending to corner shops or inside their homes, taking refuge from the sun and drinking successive cups of chai spiced tea. That a foreigner, me, was on the back of one of these motorcycles created often even more of a spectacle, which is important to note for this research because I perceived that my presence at times had an altering effect on the regular functioning of meetings. Many times, as I dismount ed the motorcycle and removed the scarf covering my face to keep out the dust, some people in the immediate surroundings would nudge and whisper to each other while looking and pointing at me. Others, would come up and warmly greet me and start to ask questions, or in the c ase of children, just approach me and stand there blankly staring As we walked toward the SHG's meeting place, usually some people

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62 would trail behind us, or a curious person or two would talk to me as we walked, asking me who I was, and be amused by my li mited, accented Hindi. When we arrived usually the SHG members were in their meeting place sitting in a circle, chatting in a family home on a concrete or dirt floor, outside on a tarp, under a shady tree, or inside a vacant one room schoolhouse. Usual ly they would stop talking as we entered the room, and everyone exchanged the respectful greeting of namaskar or namaste with the palms flatly clasped together at the heart. Often the people that had followed us from the motorcycles hovered in the doorway or peeked in the windows, which was at times distracting for the meetings. Sometimes the SHG members absolutely insisted that we sit on chairs or on an elevated cot in the circle, and other times we would be able to sit on the ground with them. The meetin gs I attended were generally informal in nature. The field worker would begin by introducing himself, after which the rest of the three of us introduced ourselves. In what Hindi I spoke, I thanked them for welcoming me and explained that I was a student fr om the US doing research on SHGs and microfinance, and that I was talking with women in Shakti's SHGs to lea rn about their experiences. We then would explain more in detail how the goal of the research was to talk to many SHG members so that the wo men's ex periences in the SHG could inform impr ovements to Shakti's programs We would then ask if they had any questions. Afterwards, the field worker and I would explain the consent form to the group. It was translated into Hindi, but all of the women I interview ed were illiterate. Discussing the consent form in a group setting offered a less intimidating atmosp here than a one on one setting and a better environment for people to ask questions.

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63 After this, and after answering any questions the members had, I chos e SHG members to ask for an interview at random. I did this by writing down in the order in which they were sitting short descriptions of each woman's sari (the traditional dress), which were always unique from one anot her. Next I divided the number of me mbers present by three, the number of interviews I hoped to get from each S HG. For example, if there were six members present I would ask every second member i n the order they were sitting down. I chose the initial person to ask randomly by closing my eyes and randomly pointing to a description of a sari, and then counting off accordingly from there. After I had the descriptions of the people I wanted to ask for an interview, I asked the first p erson if she would be willing If she said yes, then she, Rit u and I went away from the group to a place where the interview could be confidential. This was usually another room in a house, or if there was no other room in the house or we were outside, somewhere far enough away that no one could hear us. When we a rrived at this spot, Ritu and I ask ed if she had any questions, reiterate d the explanation of the consent form and if she consented to the interview, proceeded with the questions. The questions were as follows: 1. What was your income before joining the SHG? 2. What is your current income? 3. If you are making more money since you joined the SHG, what has allowed you to do so? 4. How do you use your income generally? 5. How long have you participated in the SHG? 6. Why did you choose to join the SHG? What did you hope to g ain from participation in the group? 7. Do you think you have changed since you joined the SHG? If so, how? I ask ed each question in English, after which Ritu would interpret in Hindi. We focused on asking these questions specifically, only asking follow up questions for clarification.

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64 The precision of the interview transcript was limited by a few factors. Firstly I was not able to record the interviews; my Shakti coworkers said that using a voice recorder could intimidate the SHG members Thus, wanting to create a c omfortable environment for the women I interviewed, I did not use one Had this been a possibility I could have been able to revisit the interviews with Ritu and others to get a more precise translation. Secondly Ritu did not have experience as an interpreter, so at times translations were not as precise as they could have been had I had an interpreter with more experience. For the purposes of accuracy I wrote down verbatim what Ritu verbally translated during the interview, so her phrasing is l eft intact on the interview transcript. The interviews and group dynamics at the SHG meetings were impacted by my own positionality. It can be inferred that how the SHG members perceived me affected how they answered the interview questions in various wa ys. Though I was not formally affiliated with Shakti, I can assume that some were afraid of giving the "wrong" answer to some of the questions, for the fear that it would get them in trouble with the NGO and cause them to lose their place in the group or t heir access to the financial services. For example, answering the question "How do you use your income generally?" interviewees might have been hesitant to tell the truth about saving up for dowries or paying back a moneylender from whom they borrowed mone y with their microfinance loan, both widespread practices for which Shakti might have looked down upon them. If women who took out loans were using the money to pay for weddings, or giving it to their husbands, they might have thought that Shakti would cha stise them for that as well. It is possible that some women I interviewed did not disclose this type of information in fear

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65 of some kind of punishment. I can infer that some of this truth was lost in the women perceiving my and Ritu's affiliation with Shak ti. The women I interviewed would have been even less likely to disclose certain information to me not only because I was perceived to be formally affiliated with Shakti, but also because I was an outsider in many dimensions to the community. As such, my positionality as a white, foreign, young woman was indisputably an important part of this research. I perhaps appeared intimidating to some of the women I interviewed, many of whom had never interacted with a foreigner before. Many rightfully inquired abo ut my motives and asked my story, causing me to further question myself. My intent was always to fuel this self questioning into this methodology, conducting this research in as thoughtful and compassionate a way as possible. Though my intention was to wor k in a partnership with Shakti to make positive change, I realized as my time there went on that partnering with this NGO did not necessarily mean partnering with the people. Unfortunately, as I came to this realization and other challenges presented thems elves, it became clear that conducting this research completely in the way I would have liked would have been impossible given several limitations. One notable limitation was that I did not have the opportunity to live in any of the communities where the SHGs were located, nor spend any significant time there. My ability to go to the SHGs' villages was limited by the Shakti workers' workday (9 am 6 pm) and other reasons. One, many of the villages were remote and could not be reached by bus, so I had to get there by car or motorcycle with a Shakti worker. Secondly, I was advised to not take buses alone because I was not familiar with the area or fluent in the language, and more importantly a woman, and thus could not be out past dark. Also

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66 because I am a young woman, I would not have been able to live in the community. For safety reasons, my study abroad program would have disallowed it. Moreover, it would be at odds with cultural norms, since most people in the villages live with their extended families. Also, most of the families were very poor and would not have been able to host me for financial reasons, even if they wanted to. Unfortunately, with these limitations it was difficult to build any sustaining relationships with the women I interviewed. This situation colored my research greatly. In retrospect, I would have liked to approach this research using a participatory action framework, building relationships with SHG members and working with them to make the program more accountable to them. Given th e limitations I already noted, this was not possible to achieve. This said, my position as a white foreign person also gave me indisputable power and privilege in this research. Assumingly because I was foreign and white, some people automatically thought I was wealthy and important, someone to whom they were obliged to give their attention. When I arrived at one village, for example, one woman who saw me immediately starting running through the village telling people I was there to pass out money and food As we arrived at the SHG meeting some people who had heard the news came to the meeting site to ask me for their portion. Though these dynamics did not play themselves out everywhere so plainly, it was clear that they were present and had an impact on th is research. In a different way, my position as young woman had notable impacts on this research in various ways. Being a woman gave me access to confidential spaces for interviews, space I perhaps would not have had access to as a man; a man going off al one with a woman for an interview would perhaps have been unacceptable. Though being a

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67 woman limited the scope of this research, it also affected it in an important way. As I stated previously, because I am a woman I could not live in the communities wher e I was conducting this research, or travel to them alone without supervision. Also because I was a young woman, I was sexually harassed by the Shakti field officers in the village office where I was working. This experience affected my research in importa nt ways. As I mentioned previously, only one individual out of the several male fieldworkers in the village office could accompany me to do the interviews, because all of the others except for this one participated in this harassment. After this experienc e it was unsafe and uncomfortable for me to be in the presence of these other fieldworkers. Moreover, after the harassment escalated and was brought to the attention of the NGO's director, one was fired and others not allowed in the office for the duration of my time there. At first, intentionally and constantly self conscious of my position as a privileged outsider while I was in India, I was hesitant to describe how this could have negatively impacted this research in any way. However, I inevitably carri ed with me my negative experiences at Shakti while approaching my research and making observations; my frustrations, challenges, and negative experiences as a young woman living in Rajasthan, albeit one with a lot of foreign white privilege, were an inevit able lens through which I thought about issues of power and empowerment while conducting this research. Another notable limitation of this research was my incomplete knowledge of the culture and language. If I were to do this research again, I would live in Rajasthan for a year before conducting it and become conversationally fluent in Hindi. Though I read a lot about Rajasthan and India before and during my stay there, and actively immersed myself in the language and culture for four months before doing t his research, it is

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6 8 inevitable that I did not grasp everything fully because I did not understand all the cultural and social norms and was not fluent in the language. However, in my analysis I try to note instances where my position in this sense was part icularly important. My qualitative analysis of the interviews is thus supplemented by my own analysis of observations made while working at Shakti and in Rajasthan in general. I performed qualitative coding of the interviews using HyperRESEARCH, which al lowed me to organize the themes of responses. I also used Excel and SAS to run basic statistics of quantitative data I gathered from the interviews, largely about the women's income. With this methodology outlined, I move into my analysis.

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69 CHAPTER 4: ANALYSIS Introduction and Background In previous chapters, I illustrated how mainstream microfinance developed and noted that in mainstream development circles it is understood as a force for alleviating poverty and empowering women. I explained alternative ways in which we can view poverty (and thus poverty alleviation) as well as a more complex concept of empowerment. Additionally, I explained how I carried out my research. In this chapter, I first offer an explanation of the context in which my interviews took place, addressing the economic and social conditions in Rajasthan as well as Shakti's goals and organization. I use the alternative concepts of poverty and empowerment in order to analyze the interviews I conducted with women in rural Rajasthan. The conversations I had with these women are telling of their experiences in the SHGs, allowing me to study the impact or lack thereof of their participation in the SHGs on their economic status and social empowerment. I also draw upo n my own observations of Shakti's and the SHGs' functioning to contribute to this analysis. Rajasthan Background Before delving into an analysis of the impact of the women's participation in the SHGs on economic status and social empowerment, it is import ant to give some background information about Rajasthan as a region. This will provide a useful foundation from which to understand the context in which Shakti works, and women's experiences in SHGs in rural Rajasthan. Rajasthan is among the least develo ped states in India, with a harsh geographical landscape and low human development measures, especially amongst women. More than

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70 61 percent of the state's total area is classified as arid or semi arid, and accordingly, it is often wrought with drought ( Pla nning Commission Government of India 2006, 11). Still, the majority of the economy is rural and agricultural, with output depending almost entirely (70 per cent) on rainfall; agriculture is dependent on the monsoon season, which generally takes on a shor t and erratic nature ( Planning Commission Government of India 2006, 30). Animal husbandry is also a primary occupation in the economy of Rajasthan; the state has the largest population of cattle, sheep, and camels in the entire country ( Planning Commissi on Government of India 2006, 30). While India itself is among the lowest ranking countries in the world in terms of Human Development Index (HDI) 2 the state of Rajasthan has amongst the lowest HDI of all of the states in India. In 2007, India ranked 1 27 th out of 177 countries in terms of HDI. The most recent state data in India comes from the 2001 census, in which Rajasthan was ranked nine out of 15 states in India (Rajasthan Planning Department Annual Report 2008 2009, 27.1). Women generally experienc e this low human development most acutely in several spheres of their lives. Women who work do so in poorer conditions than men and face routine discrimination and harassment. In Rajasthan, women make up almost 90 per cent of the total amount of people wor king in casual or marginal employment meaning work that offers little security or protections against discrimination ( Planning Commission Government of India 2006, 257). Most of the women I interviewed who worked outside the home worked in the informal sector. In contrast, the total employment of women in what is called the organized sector is less than 4 per cent ( Planning Commission Government of India 2006, 259). In addition to 2 The HDI is a com posite index that equally weighs per capita income, education level, and life expectancy.

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71 working outside the home, working women in Rajasthan are generally expe cted to complete domestic chores as well; if they begin to do paid work, generally children, girls, will take up chores like fetching water, collecting fuel wood and fodder, and tending to livestock ( Planning Commission Government of India 2006, 259). Of ten, this can contribute to the perpetuation of low literacy and education levels for women, as the education of girls takes a backseat to the priority of maintaining the domestic sphere. In Rajasthan, the female literacy rate was 44.34% in the 2001 cens us (Mathur 2004, 18). The young average marriage age of women in Rajasthan coupled with their low literacy rates contribute to a norm of female seclusion (Mathur 2004). The average woman in Rajasthan is 15.1 years old when she gets married, and begins coha bitation at 16.2 years old ( Planning Commission Government of India 2006, 258). Though the legal age of marriage is 18, more than 68 per cent of women in the state marry before they turn 18 ( Planning Commission Government of India 2006, 258). When a wo man gets married and moves in with her husband's family, in Rajasthan the practice of purdah is common, a custom which emerged in the medieval period in bot h Muslim and Hindu communities (Mathur 2004). Purdah practices vary in South Asia and the Arab world so it is important to qualify that this is s pecific to Northern India. I n Northern India, other than defining practices for women for covering skin and masking the female figure, purdah defines a strict social distance between men and women, establishes a gendered hierarchy in the family that discourages women from expressing themselves in the presence of men and elders, and generally strictly limits women's roles in the public sphere (Mathur 2004) Mathur argues that in childhood and adolescence, especia lly rural girls' lives are shaped by the purdah they will adh ere to as women. For example, if a

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72 family is following purdah women only stay in the private domestic sphere, so with this consideration, a family is more likely to send a boy than a girl to scho ol because he is more likely to enter the former labor market and employ these skills learned in school to make money. Though women who work outside the home would break strict rules of purdah that restrict them inside the home, this social practice often informs the rest of their interactions outside the home, limiting them to their workplace. Rajasthan is a state in India that suffers from drought and exhibits low levels of human development, especially amongst women. In the interviews I conducted with women in the SHGs, both of these characteristics were clear. Shakti Background With a background of Rajasthan, we can now see the cultural and geographical context in which Shakti works. An overview of Shakti as an NGO as well as its microfinance program specifically offers the necessary foundation to analyze the successes and pitfalls of their microfinance program. Shakti is a non profit non governmental organization based in Rajasthan, India. It was formed in 1981 in response to floods that struck the Jaipur d istrict of Rajasthan. Since then, the organization has grown substantially in both geographical and institutional scope, and now works in many areas a round Rajasthan as well as in some selected areas in neighboring states. Currently, there are ini tiatives and offices in seven different districts of Rajasthan. Shakti is a large organization that undertakes many activities. Its mission is to: Build the capacities of Shakti's partner communities scheduled castes and tribes, small and marginal farme rs, the landless, and deprived women and children in order to ensure that they are able to take action independently and effectively to secure their rights for long term well being.

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73 To achieve these aims, Shakti focuses on three major themes including livelihood security, economic justice, and basic rights. In the past years in the area of livelihood security the NGO has undertaken some key activities. They have worked to identify cases to maintain land rights for poor farmers. Additionall y, they have c onducted capacity building programs centered around crop and livestock maintenance, including information about insurance programs Shakti also successfully lobbied the Rajasthan state government to declare 26 districts as drought affected areas, facilitat ing these communities' demands for fodder, water, and food grains from the state government Additionally, Shakti conducted a baseline survey on credit and insurance in Rajasthan to assess the financial needs of the communities, as well as held financial l iteracy panels for women from rural areas. Shakti also focuses its efforts on economic justice, which the organization states "aims to demand justice from economic development through ensuring equitable benefit sharing, participation in decision making, assertion of basic human rights... and government accountability... for the impacts of its decisions In this area, Shakti has organized with various other NGOs to urge the government not to enter into any free trade agreement that would not be in the int erest of local small farmers. Additionally, they have met with farmers to explore the possibility of declaring certain agricultural areas as Special Economic Zones (SEZs). However, Shakti' s main focus in this area has been climate change, around which they have organized many public forums and begun to conduct a survey on how small farmers are affected by climate change. The last thematic area in which Shakti works is what they entitle basic rights, in which they have worked on several initiatives concer ning child rights, health and gender

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74 equality In the area of child rights they have organized around teacher attendance issues and insuring children receive the mid day meal. I n the area of health, Shakti has promoted a salt iodization program with salt producers in Rajasthan and established a community center to provide medication to people living with HIV/AIDS. Lastly, Shakti's SHG microfinance program is subsumed under this thematic area, which they label as an initiative in the area of gender equality Shakti's SHG microfinance program was founded as a part of the Indian federal government's SHG NABARD (The National Bank for Agricultural and Rural Development) Linkage Program. The goal of this program is to link the capital and in stitutional resourc es of NABARD to women's self help groups in rural areas with the help of NGOs (Bansal 2003). As discussed previously, t his program began in 1992 as a small pilot, linking approximately 500 SHGs with branches of six citizen banks through the aid of a handfu l of NGOs (Harper 2002). As of 2005, the SHG NABARD linkage program was reported to be providing microfinance services to women in 1.1 million SHGs throughout India (Dasgupta 2005). Within the program, the NGOs serve as intermediaries between the social st ructure of the SHG and the institutional structure of NABARD. The banks themselves are not connected to populations that would be in SHGs nor do they have experience working with these populations. However, these banks are legally and institutionally able to mobilize deposits and make loans. Therefore, NABARD uses the structure of the NGO sector that does have connections to these populations to efficiently channel their resources to the poor (Harper 2003). On the ground level, the program works as follo ws. First, the NGO spreads the word throughout its area about the program and facilitates the creation of SHGs. These

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75 nascent SHGs then save collectively for six months before being allowed to take out loans. An NGO worker goes to the SHG meeting once a mo nth to collect deposits, which are then stored in community banks. After six months, this money (and interest) can be dispersed to the group or individuals in the group in loan form. Individuals are not obligated to take out loans, and can continue to use the group only as a means for saving. If individuals who do take loans establish a good repayment rating they can also open individual credit accounts through the bank linked NGO (Bansal 2003). Shakti's program was founded in 2001 with help from NABARD, bu t now receives funds for the program's continuation from Rashtriya Mahila Kosh (The Ministry of Women and Child Development) and the Small Industries Development Bank of India (SIDBI) This background information illustrates that Shakti is a large NGO in institutional and geographical scope, undertaking several different types of programs in many areas around Rajasthan and parts of other neighboring states. Shakti's SHG microfinance program is just one small part of the NGO's programming. This will be an i mportant consideration to make when I discuss the broad challenges that Shakti faces, its microfinance program's challenges, and actionable improvements that it can make. The Case Study With this background in mind, I now begin a discussion of the resear ch I conducted in Rajasthan, beginning with an analysis of the intentions of various actors for the SHGs, followed by an analysis of the impact of the program on women's economic status and social empowerment.

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76 Intentions of SHG Participation Given the b ackground of Shakti's microfinance program, it is interesting to explore the expectations and goals of the various actors involved in the program. We can compare these actors' vantage points and expectations to the outcomes from the women's participation, and this comparison opens the way for suggested improvements for the program. There are a few groups of key actors who have an impact on the SHG program, and therefore their roles are necessary to explore. These actors include the members of the SHGs thems elves, and the various actors within the NGO divided into two tiers: the top leadership or management, based in the Jaipur office, and the field workers, based in the rural village office. The top leadership of Shakti stated to me that their primary goal in administering the SHG microfinance program was the empowerment of women; they claimed that the institution saw the financial services that the SHG structures provided as secondary to this main goal. After I finished my field research, I shared my initia l observations from the interviews with the senior leadership, telling them that few of the women stated they had been changed or empowered by their participation, and that most wanted to join because of the financial services the SHG offered. When I share d these preliminary results the senior staff became quite defensive, expressing almost an unwillingness to believe that the SHGs were not having the empowering effect they thought they were. Some of the field workers on the ground in the village office pr esumably saw the goal of the program differently. My interviews with two separate women elucidated that the field officers' view of the programs often shined through in their interactions with the SHG members, encouraging them to join the groups so they co uld make a profit.

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77 The other people told me to join so I joined. (Why?) I didn't ask why. The earlier bank manager told me to join. [I joined the SHG because] they told me to join so I did. (Why?) I don't know, I just joined. (Who told you?) The field of ficer. The field officer told us that if we joined we can make a profit and collectively save for the future so I just joined the SHG. These women's responses indicate that the field workers often encouraged them to join, but on the basis of making money Interestingly, the first woman says that the bank manager told her to join; in this SHG program, there are no people affiliated with any bank involved in the provision of the microfinance services they are all NGO workers. The fact that she perceived o ne of the NGO workers as a bank manager rather than a field worker suggests that she viewed him mostly as a purveyor of financial services. As such, we can assume that his encouragement to her to join the group was probably of a financial nature. The secon d quote indicates more explicitly that the field worker encouraged her to join the SHG because of the financial incentives it could offer her. On one hand, one could interpret these interactions to say that the field workers enticed the women to join for the economic opportunities, while knowing that the underlying goal of the program was to offer a space for women to empower themselves. However, there are several reasons why it is more likely that the field workers themselves saw the program as more of a provider of financial services rather than a social program. One, the very financial nature of the meetings and SHG structure, as reinforced by the leadership of the field workers, indicates that they saw their position more as financial. Secondly, also a s I will elucidate more later, much of the behavioral conduct of the field workers with me (as a de facto member of the NGO staff) and the women in the SHGs indicated that they were not committed, or at least not cognizant, of the kinds of interactions and spaces that needed to be created for the process of empowerment to

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78 occur. It is significant that the senior leadership's intentions for this program did not align with those of the field workers, whose job it was to facilitate the program on the ground. A s I illustrate, this disconnect can be part of the explanation for why the participation of the women in these SHGs resulted in limited social empowerment, instead acting more as an informal bank with limited success. In accordance with the field workers the primary reasons that the women themselves stated for joining the SHG was for financial opportunities the structure offered. Nineteen out of the 24 women I interviewed stated that the savings opportunities that the SHG offered were a reason for them t o join. For one third of the women I interviewed, the ability to get a loan enticed them to join the SHG. Four plainly stated that their reason for joining the SHG was for profit, in whichever way they could attain it. In fact, out of all the women I talke d to, only one stated non financial reasons for joining the SHG; all the others were incentivized financially. This exception was an outlier in the group: the only literate SHG member I talked to, who had a bachelor's degree as well as an additional certif icate diploma. She did not work outside the home, but her husband did on a government project, making 5000 6000 rupees a month quite a steady, middle class income, especially for the rural area in which she lived. She joined the SHG in order to help peop le. She said (and I followed up with questions noted in parentheses): I joined the SHG because I want to do something. (What do you want to do?) If I go somewhere I can also make another SHG and guide them on how to work together and show them what are the benefits of joining the SHG. Thus, the only person who stated non financial reasons for participating in the SHG was a middle class woman with an advanced formal education whose goal was to help others. This is significant because it is likely that her higher education gave her the ability to think analytically about inequalities in her community and how she could act to

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79 alleviate them; moreover, her comfortable financial status and time not working allowed her to devote her time to doing so. On the othe r hand, most of the other women I talked to were less financially stable, less formally educated, and had to work outside the home to make a living, and therefore were perhaps less able to take the same type of action. So, with one exception, the women's goal in joining the SHG was to access the financial services it offered. Again, it could be argued that this outcome is only natural; the NGO's goal could be to entice the women to become involved with the financial incentive and through this structure mak e some kind of social impact. Still, the stark contrast between the senior leadership's goal of the SHGs achieving social empowerment, and borderline incredulity that they were not achieving this, compared with the markedly more financial focus of both the field workers and the women who were actually participating in the SHGs is significant. The disconnect in the intentions of these three groups offers a useful starting point from which to analyze the impact of the women's participation on economic status and social empowerment. From the beginning, there was a disconnect between these actors' intentions and actions; it is therefore not a surprise that the impact seen was not substantial. Economic Status Given that microfinance programs seek to improve th e economic status of women and that this is one of SHGs' central goals, it is necessary to analyze the impact the SHGs had on women's economic status. In order to conduct this analysis, I undertake a capabilities centered approach (Sen 1999). In this analy sis I do not purport to measure poverty per se because to achieve a comprehensive evaluation would have required more in depth interviews and ethnographic research that I did not have the ability to conduct.

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80 Thus, I measure what I call economic status usi ng a capabilities approach, looking at the women's income, savings, and access to financial services, and moreover what if any changes in capabilities changed with an analysis of these components of their lives. This analysis breaks from Shatki's self eva luation of their microfinance groups. The only records that Shakti kept of the progress of the SHGs were balance sheets, which detailed the amount of money that came in and out of the SHGs in the form of loans, savings, and recurring deposit savings. This data did not speak to any change in the women's financial status; as this analysis shows, even if women were taking out loans and saving on a regular basis, their economic status was not necessarily improving. Income One vital component of economic status is women's income. In the 24 interviews I conducted, I asked about the women's income before they joined the SHG (variable=BEFORE) as well as their current income (variable=AFTER). When I asked these questions of each of the interviewees, if she could sta te the amount she would generally expand upon this answer, telling me what kind of work she did to earn income, as well as whether her participation in the SHG changed her income source or the amount of income she earned. For example, a few interviewees re ported that they used their loan money or savings to invest in a new business, which would change what sort of work they did from BEFORE to AFTER. The two out of the twenty four for whom the SHG had a direct impact on changing their income source had purch ased a goat or buffalo with money they saved or borrowed through the SHG structure. Using this animal, they produced dairy products to sell.

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81 A quantitative analysis of the income data shows that for the majority of the SHG participants, their participati on did not have a significant positive impact on their income. I was able to collect 17 clear measures of income data for BEFORE and 16 clear measures of AFTER. The collection of this data was limited for various reasons. The vast majority of the women I interviewed had very low incomes, and before the SHG presumably did not have any access to financial services. Moreover, even if their family had experience handling money, as women it is unlikely that they ever did. Most women I interviewed lived hand to mouth, spending all of their income, except maybe 100 or 200 rupees in savings, on their daily basic expenses for their families; these included food, healthcare, and their children's education. Moreover, many of the women whom I interviewed had fluctuatin g incomes over varying time periods, which made it difficult for them to state their average income. Out of the 17 women who reported working outside of the home, three mentioned that they had inconsistent work conditions, and four mentioned that their inc ome amount depended on the harvest conditions. This volatile work environment made it difficult for some of the respondents to give an exact measure of their income before the SHG and since their participation in the SHG. In most cases, this volatile work environment did not have to do with the SHG itself, but just the nature of their environment and their work. One woman said: Earlier I was doing harvesting but harvesting is not much because there hasn't been rain for 15 years, so there's not water, and in come is also less. She stated making less money than before because of the harvest conditions, and so started to pick up other work through NREGA, the Mahatma Gandhi National Rural Employment Guarantee Act, a federal program instituted in 2005 through th e Indian

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82 Ministry of Rural Development. 3 Its goal, according to the government is to "enhanc[e] the livelihood security of people in rural areas by guaranteeing [a] hundred days of wage employment in a financial year to rural household whose adult members volunteer to do unskilled manual work." Since this program only guarantees 100 days of work, it is not a steady source of employment. Most of the women I interviewed who did work outside the home engaged in work that was not steady over a year's time. Eigh t out of seventeen did harvesting work, which was seasonal and depended on the rains. This created income instability. As one woman put it: [My income] depends on the rain, but I don't have my own land. We are poor people; we don't have our own land. Thus it is clear why under these volatile conditions it was often difficult for women to self report their income; often they didn't know what it was in one year or even what it was currently, because it could even depend on the day. Also, all but one woman I interviewed was illiterate, and therefore presumably did not keep written, personal record of their income or expenses over time. These factors contributed to limiting the ability of some of the women I interviewed to self report their own income. Howeve r, I did have several income measures with which to work. But, depending on the type of work each of the respondents did, they would report their income in terms of different time periods. For example, all of the women who did harvesting work reported thei r income in terms of six months, as this was one harvesting period. Others who did bricklaying work or did other hard labor work through NREGA or otherwise would get paid at the end of a workday, so would report their income at a 3 Ministry of Rural Development Government of India. "The Mahatma Gandhi Rural Employment Guarantee Act," Government of India, http://nrega.nic.in/netnrega/home.a spx (accessed March 15, 2012).

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83 daily rate. Therefore, in order to analyze all of the data on the same terms to put into SAS, in Microsoft Excel I made all of the income measures on monthly terms: dividing the self reported 6 month income by six, and multiplying the daily income by 26 (assuming that people work 2 6 days out of a 30 day month, because the typical Indian work week is six days). Achieving this uniformity allowed me to analyze the differences in income using the same variable and length of time. Measured in the aggregate, the mean incomes of BEFORE an d AFTER were generally the same. Before joining the SHG, the mean income of 17 participants who had income before joining the SHG was INR 3568 (or about US$70) a month and the median was INR 2500 (US$50). After joining the SHG, the mean income of 18 partic ipants who reported their income was INR 3818 (US$75), and the median income was INR 3120 (US$61). Nineteen out of 24 women stated they were not making any more income since they joined the SHG. Only two explicitly stated that they were making more money s ince joining the SHG and because of their participation in it. Delving more into these exceptions can elucidate why they were able to use the SHG structure to increase their income; these cases can then be juxtaposed to others. SHGs as a Means to Start a Business The two women who made more money due to their participation in the SHG were two of five who started new entrepreneurial endeavors due to their participation. The first woman I interviewed took out a loan to buy a buffalo and goat, which she used to sell milk to the dairy. The second woman I interviewed also bought a buffalo with a loan, which she used to be able to sell milk on a daily basis. Thus, the two women who were able to increase their income by way of the SHG did so by taking out loans t o start

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84 their own businesses. However, contrary to other research claims, these two women who started their own businesses did not express that they or their lives had changed particularly because of this business. The first woman I interviewed, when asked if she had changed at all since joining the SHG, said "no." The second woman I interviewed, despite her new business, expressed low self esteem and disempowerment when asked about her participation in the SHG. When asked why she chose to join the SHG, she responded by saying: I joined for happiness. Earlier I had one child and it died, after I had a daughter and then I joined the SHG for happiness I thought it would make me happy because it would allow me to save. Her response indicates that she origin ally thought the SHG would make her happy, but her last sentence called into question whether her participation had made her happy. Following up, I asked her if she thought she had changed since she joined the SHG, which made it clear that her participatio n had not made her any happier. She responded: No. No bad habits. [I] just come here and give 100 rupees of my savings. I don't understand anything because I'm illiterate. I don't do anything and I only have one eye. Though the SHG did give her a vehicle through which to save her money, it is clear from her response to this question that the SHG had not had any other sizable impact on her life. She was still self disparaging of her own intelligence, lack of education, and physical appearance, diminishing h erself as unintelligent and unattractive in her response. Interestingly, neither of the women who started successful businesses that ultimately increased their income over time expressed that their lives had changed significantly. It appears for that this group, starting a new successful business was not necessarily an empowering or even decidedly positive force in these women's lives.

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85 My conversation with two of the three other women who had started businesses through their participation the SHG (but who were not making more money through it) indicated that the new business did not necessarily have such a positive or empowering impact on their lives either. One woman who also started a business selling milk (but was not making more money from it) also expr essed that she had not changed since joining the SHG, and joined solely for the purposes of saving for the marriage of her four unmarried children. Another woman opened a shop with a loan of INR 20,000 after she joined the SHG in order to save. However, wh en I asked her if she was making more money since joining the SHG, she said, No, I am not earning so much money My husband doesn't give me any money. She stated that any income she earned in the shop was "only for saving, and my husband's income is for d aily expenses." This response indicated that although the money she got from the SHG allowed her to open the shop, she effectively did not have control over the shop or any of the money earned in it; her husband did. Though she did not state this expressly it is quite possible that her husband used her ability as a woman to join the SHG in order to secure savings for the family. Her stated lack of control over any money indicates that she probably has little control over her shop as well. Moreover, she did not say that she joined the SHG on her own volition. Rather, she said, in response to me asking her why she chose to join the SHG (my follow up questions in parentheses): Other people told me to join the SHG. They told me to join so I did. (Why?) I don't know, I just joined. (Who told you to join?) The field officer. The field officer told us that if we joined we can make a profit and collectively save for the future so I just joined. Though technically this woman started a business through her particip ation in the SHG, two men largely controlled this participation. One field officer (who was a man) told her

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86 to join, so she did. While in the SHG, she got a loan to open a shop; the profit from that shop went into savings, but she had no control over any o f that money rather, her husband did. Thus, on the surface level, this woman did start her own business: an action that many microfinance proponents would consider empowering. However, my more in depth conversation with her shows that her participation i n the SHG and money she got out of using the group as a financial instrument was largely controlled by men. Only one of the women who took a loan to start a business said that this had made a positive change in her life. She took out a loan to purchase a sewing machine, which she had not started using when I interviewed her; she said, "I have to learn how to use it and then I'll start working and selling later." Despite the fact that she had not yet started the business, in response to me asking her if she had changed since joining the SHG she said, "YesI can do anything with a loan." This statement shows some sense of empowerment in her ability to start her own business that she believes in herself that with the help of the loan, she can be successful. On the whole, most of the women I interviewed in the SHGs had not used the program in order to start their own businesses; in fact, even the five women who did start a business through their participation in the SHG did not necessarily join the SHG with t he intention of doing so. With one possible exception, the women who used their participation in the SHG to start their own businesses were not empowered by this experience. The experience of these women who did use the SHG to start their own business call s into question the assumption that starting a business will be automatically empowering for women. For most of these women, these businesses were either just an

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87 additional way to make income, or a vehicle through which their husband used them to secure mo re income for the household. Other Uses for Loans and Their Significance While some of the SHG members used loans they procured through the SHGs to start businesses that had varying levels of success and positive outcomes, other women who took loans did so for varying reasons that had different levels of impact on their economic and/or social status. The uses that the women cited for the loans they took out are for buying livestock, using it for covering daily expenses, paying other people back, and payi ng for wedding and marriage costs. Animal Purchase for Consumption While some of the SHG members bought animals to produce dairy products to sell, others used the loan amounts to buy animals to procure dairy products for their own household consumption. For some of the women, the ability to have an additional steady source of food consumption through the loan had a notably positive impact on their lives. One woman joined the SHG specifically for this purpose. She explained: I joined the SHG for the milk, water, and facilities we don't [sic] [didn't before] have the facility of water and milk. By getting the loan we are getting food to feed the buffalo for milk. (Do you think you have changed since you joined the SHG? If so, how? Any good or bad change?) Y es I have changed. Now I have the family of the buffalo by which I get milk. I drink it at home making milk, chai or curd [yogurt] for me. Another woman, in response to me asking her if she was making more money since she joined the SHG, remarked: With the loan amount I bought a goat from which we get milk and drink tea. Thus, though she did not explicitly state that she was making more money since joining the SHG, it is significant that in response to this question she instead explained how the

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88 loan had otherwise improved her life: allowing her to buy the goat, which provided a source of steady source of milk for the family. Another woman took the loan to buy a buffalo to produce milk both for the purposes of consumption and sale. She explained: I took [ the loan] to buy a buffalo now I'm earning 50 rupees per day. It gives milk two times per day. One time I use it, one time I sell it. For this SHG member, the purchase of the livestock via the loan positively impacted her life in two ways. Thus, one sig nificant use for the loans for the women was the ability it gave them to buy animals, which in turned offered them and their families the ability to consume dairy products on a more regular basis. So, though the loans did not necessarily offer some women t he ability to make more money, that the loan allowed them to make their livelihood more stable by securing an additional source of food for the families is significant. In this sense, for these specific women, the loans increased their quality of life with out increasing their income. Meeting Basic Needs Four women used the money they borrowed to meet their basic needs. Two of these four mentioned that they used the loan money to cover their daily expenses. One woman said, I took a loan by which I purchase d wheat and other food material, and then I paid it back. Another SHG member, in response to me asking her why she joined the SHG, stated: The other women told me to join the SHG so I joined (Why?) We can meet our expenses with a loan. So, these women took the opportunity to take a loan to pay for their daily expenses directly. For these two women, the loan had the ability to improve their quality of life.

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89 However, it did not necessarily have a sustainable effect in doing so. In contrast to the other wo men who bought animals or started their own businesses endeavors that have the potential to self sustainably create more resources this loan money was finite. That these two women borrowed money just to be able to meet their basic needs precisely indic ates the precariousness of their living situation; a loan offering some extra money offered them a cushion so they did not go hungry, but it did not address the underlying issue that they are not able to meet their own basic needs on a normal basis. The ot her two SHG members used the loan money to build their homes; both of these women joined the SHG specifically to get this loan to build homes. For these two the loan was a way for them to ensure basic shelter. Paying Other People Back Five of the women I interviewed stated explicitly that they were spending either the loan money or their own income to pay people back from whom they had borrowed money previously. Many of these responses did not make it clear whether the women were using money directly from the loans to pay people back, but we can infer that the loan could play a part in doing this. For example, in response to me asking one member how she uses her income generally, she stated: I use it on expenses, the loan installment. If I borrow money from other people, I pay back. Both my son and I are paying back a loan. Thus, she does not explicitly state that she is using the loan money to pay back other people, but we can presume that the money she is getting from the loan is at least allowing her to offset other expenses so that she can pay other people back. Three other women did not explicitly state that they were using loan money to pay other people back,

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90 but they were using money out of their income to do so. For example, when I asked one woman h ow she used her income generally, she said, I spend on my house expenses and when I need to borrow from others and pay them back when I earn. Another woman explicitly stated that she took the loan to be able to pay back another person, saying: Earlier w e took the loan to pay back another loan that we took from another place. Interestingly, in asking her how she had changed since joining the SHG, she said: I have tension [I'm stressed] to pay back the installment and saving and I'm so excited about givi ng for my children. I have tension for their studies even now when they're small. This SHG member's account is telling of many of the women's precarious financial situations. All of these women mentioned explicitly using their income to pay people back, and some of them mentioned specifically taking loans from the SHG to do so. Both uses of SHG loans to pay for daily expenses or to pay back another loan indicate that the women are not readily able to make ends meet on a normal basis. The loans provid ed through the SHG structure allowed them to cover some of their expenses and obligations, but some women also continue in a longstanding cycle of debt. Though the loan serves as a means to meet these obligations, it does not address the underlying issue t hat some SHG members are unable to meet their basic needs. Covering Wedding and Marriage Costs Another important subject that many women mentioned when talking to me was marriage and weddings. Different SHG members came from various vantage points on thi s theme; some women were saving up for the weddings and marriages of family members, some were parents who already had married children, and others were recently

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91 married women. In Rajasthan, even weddings of poor people can be lavish; families will save fo r years and borrow money to be able to have a fancy wedding for their child. Traditionally it is the daughter's family's responsibility to pay for the wedding, as well as pay a dowry to the future husband's family. However, the son's family may also contri bute. Although the dowry is technically outlawed in India, it is still a widespread practice, especially in rural, traditional areas. Thus, we can assume that most of the women who mentioned marriage expenses might be planning for some sort of dowry cost. One woman joined the SHG with this in mind, saying: [I joined the SHG] for saving which I will use when I need in my son or daughter's marriage. I have three sons and three daughters and four are unmarried. Another woman, when I asked her how she used he r income generally, stated: Generally I use my income on my daughter's marriage, daily expenses. Three of my children are married; one is remaining to be married. Similarly, another who was not saving for her own child stated that she used her income on: Food for my children, daily expenses. If there is any marriage in this period, gifts. Another woman joined the SHG because she needed money for a marriage. She stated: I have some family problems. My husband is not doing work properly or getting a salar y. There is also a marriage of my husband's sister, so I need money. That's why I took the loan. Others, even if they were not saving or taking out a loan for the purposes of a wedding or marriage, explicitly stated their children's marital status in our short interview, showing its importance in their lives. When I asked one woman if she was making more money since the three to four years after she had joined the SHG, she stated she was making more, because:

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92 earlier, the children were in the house eati ng, now girls are married and gone, so there are less daily expenses. Another woman simply mentioned her children's marital status in passing, when I asked her how she used her income generally: I spend on house expenses, shop expenses, spending on childr en one girl is married, two boys are studying. In other interviews, marriage took on a more central role. One woman's participation in the SHG was essentially controlled by the fact that she had recently gotten married. When I interviewed this young wo man, she still had her traditional wedding jewelry on: bangles worn all the way up both arms, which are kept on for at least one month after the wedding. When I asked her why she joined the SHG, she said: I don't know why I joined, my mother in law said to so I joined. But, when I asked her how she used her income generally, she said: My husband's income is 2000 [rupees] per month. We spend on the house expenses and before marriage expenses, so now we're paying people back from that time. She later add ed: I took a loan but I don't know why, I'll ask my mother in law and tell you. We can assume from this account that it is likely that the reason that this woman was participating in the SHG is because her mother in law wanted to get a loan for some reaso n. It is possible that this mother in law's family actually contributed to cost of the wedding/marriage and was taking the loan to pay back costs. Or, it is also a possibility that the mother in law wanted the loan for some other purpose. Her daughter in l aw was either not privileged to know this reason, or was not willing to tell me. I discuss this case more later when talking about empowerment.

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93 It is quite clear that marriage was an important social factor for many of the women in the SHGs, and several of them used the financial resources provided in the SHG structure to cover marriage costs. Some would say that this implies that the women were using the money from the SHG to engage in a social practice that in many ways perpetuates gender inequality. In dian feminists have for a long time fought against what they see as the patriarchal implications of the dowry system; namely, many argue that the dowry upholds the norm of women being viewed as property, and thus as burdens because their family has to rais e a dowry for them (Mathur 2004). On the other hand, it is clear that at the point when I talked to these women, they were inextricably tied to this system, and in no individual position to challenge it. Living hand to mouth, in a tightly knit family unit, and with little formal education, it would be overwhelmingly difficult for a woman to challenge marriage norms. Thus, these women concede to this system to achieve the best possible quality of life they can within it. However, it remains significant that several of the women I talked to used the money from the SHG structure to put into dowries and other marriage costs, which in some cases could be seen as undermining the goals of women's empowerment. In some of these cases, it was unclear whether the woma n really had any choice over how the money she was getting from the SHG was going to be used. For example, one woman had to take out a loan to cover the costs of her husband's sister's wedding because he wasn't working. Another had joined the SHG on her mo ther in law's demand, and likely taken out the loan for the use of paying back debt from her earlier marriage/wedding costs. These cases call into question whether these women had any agency in choosing how the money they got from the SHG would be used. On the other

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94 hand, other women who were planning on saving in the long term for their children's marriages could be seen as having more of a choice. Through saving or taking out a loan in the SHG it is possible that they could be providing a better life for their children; with more money saved, they could pay a higher dowry cost, which would allow them perhaps to marry their daughter into a family that is better off than they could have before. Though the SHG structure may have allowed women to improve their or their household's position within the context of existing marital social rules, the SHG did not offer an opportunity for women to challenge this system. Savings The most sizeable impact that the women's participation in the SHG tended to have was re lated to the savings opportunities the group structure lent. In fact, the opportunity for saving that the SHG structure offered was the primary reason that women joined the groups; out of 24 interviewees, 19 stated saving as a reason for joining the SHG. F ive women said that before joining the SHG, saving was impossible. Three different women made the following statements, which exemplify this sentiment: I joined the SHG so that every month I could save 100 rupees; before I could not have done that. It's li ke a drop of water in the glass that eventually adds up. I joined the SHG for saving because it's not possible to save otherwise, but here I save my money having the habit of saving is good, here we save and can get the collective amount which is good fo r us. Here in the SHG the good thing is that we're doing saving and otherwise we're not able to do this, so this is beneficial to us in the future. Earlier I wasn't saving and we made the SHG and by this every woman can do her saving collectively. Most women mentioned saving 100 to 200 rupees a month (between ~US$2 and ~$4). This amount, as one woman stated, "will collectively be a lot for us in the future." Amongst the majority of the SHG members I interviewed then, there was an emphasis on

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95 the SHG str ucture allowing a formalized setting for saving in small amounts over time, an action that five people stated explicitly would have been impossible. The cumulative nature of the savings was thus a draw for women in the group. None of the women I interviewe d mentioned a bank or any other informal or formal structure they could use in the past. Thus, it can be gathered that women did not have access to the kinds of financial services they wanted, and hence, the SHGs provides this desired service. Conclusion Economic Status This analysis illustrates that the impact of the women's participation in the SHG in regard to economic status, using a capabilities lens, is mixed. Overall, the women's participation in the SHG did not have a significant impact on chang ing their income. For five women I talked to, the SHG offered them the opportunity to begin a new entrepreneurial endeavor. Only two out of these five made more income as a result of their new business. However, none of these five expressed that they had b een empowered or that their capabilities in the household or the public sphere had increased because of this new entrepreneurial endeavor. On the contrary, the accounts of a few indicated that their new economic pursuits were not improving their quality of life, and were often controlled by their husband. Eight women wanted to join the SHG explicitly for the opportunity it offered to procure a loan. For women who took out loans through the SHG, the impact was also mixed, and largely not positive. The excep tion to this was a few women who took out loans in order to buy animals to be able to produce milk and dairy products for their and their household's consumption. In this sense, this loan gave them an increased capability to achieve a more steady consumpti on of food. A few other women used the loans to

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96 cover daily expenses; however, them taking this loan did not address the fact that they did not readily have enough money to cover their daily expenses. This situation is illustrated further by some of the wo men's use of the loan to pay back other people from whom they had borrowed money in the past. These two uses for the loan are indicative of the often precarious nature of these women's lives. Though these loans offered a quick fix for them to cover their c osts, they did not address this underlying problem. Another recurring theme was that of marriage and weddings, for which several women took out loans or were saving. In some cases, it was clear that it was not entirely the woman's choice to put money into these weddings and marriages, often into a dowry. In other cases, weddings and marriages were just expenses for which women had to spend income or save, either for gifts for others or for their own children. The finances the SHG provided may have allowed the women to increase their or their family member's position within the existing social norms of marriage. However, the SHG structure did not allow them to gain either financial or social autonomy to perhaps be able to challenge this system. Saving was the primary reason women joined the SHG structure, with 19 out of 24 stating this as a reason for joining. The SHG structure did give them a new ability to save; several women stated that it was impossible for them to save before joining the SHG, and that the accumulation of their savings in small amounts was something they valued. This result is consistent with past literature discussed previously, which indicated that often poor women prefer to have access to savings over loans (Allen 2007; Armend‡riz and Morduch 2007; Dichter 2007b ; Vonderlack and Schneider 2002 ).

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97 The following analysis of the impact of the women's participation in the SHGs on social empowerment will offer more explanation to this mixed picture. Although many of the women I interviewed w ere content with their new ability to save in the SHG, I will illustrate that in most cases this did not translate into any sort of social empowerment. Rather, it seems that Shakti's SHGs have rather worked as small scale banks; they provide loans and savi ngs opportunities to people who want them, but are not accountable for the social impacts they may or may not have. Social Empowerment Essential to understanding the effect of the women's participation in SHG is the impact or lack thereof it had on their social empowerment. As discussed previously, microfinance is often touted as a way to empower women (Isserles 2003; Sinha 2007; Ware Newaz cited in Houssain 2002; Yunus 2003). As such scholars define and measure empowerment in varied ways: for exampl e, the degree of women's economic contribution to a household from a microfinance loan (Hashemi, Schuler and Riley 1996), or women's power in intra household decision making (Holvoet 2 005 cited in Ral and Ravi 2011). In my analysis I rely on Kabeer's (199 4) analysis of Lukes' (1974) distinction between "power to," "power within," and "power with." Through this lens, empowerment is the processual action of gaining these types of power. On this basis, few women I interviewed reported experiencing empowerment through the SHG. Thus, after exploring the empowerment that a few women did experience in the SHG, I analyze why Shakti's SHG program has fallen short of providing an empowering program for women. Then, I discuss ways they can improve the program to be mo re impactful.

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98 Empowerment Experienced in the SHG The approach I used to gauge whether women had been empowered by their participation in the SHG was asking them to answer in their own words if they thought they had changed since they joined the SHG, and if so, why. Posing this question gave the SHG participants the opportunity to evaluate the impact of the program; thus, I view consciousness of self change or lack of self change as the measure of empowerment. Only three out of the 24 women to whom I talked answered that they had changed or their social agency had increased due to their participation. Investigating these cases closer illustrates what kind of empowerment these women experienced. One woman, when I asked her how she had changed, resp onded by saying: I have changed now I am going outside. I am learning how to speak and teaching others to do so publicly. We are also learning about hygiene. This woman's response indicates that she has experienced increased confidence from her partici pation in the SHG; she is learning how to speak publicly, and taking it upon herself to pass on to others this knowledge. Her response indicates that before she joined the SHG, she had limited, if any, public presence beyond her home; in the beginning of o ur interview, she stated that she did not work, saying: I don't do anything. I still sit at home. She said she had only participated in the SHG for five to six months. The rest of our interview indicated that she might have been new to the village. When I asked her what her income was before she joined the SHG she said: Zero. I had no work earlier. I was in Delhi. Now I shifted here to live at my mother and father in law's house. I didn't make any money before. These answers together suggest that she is r elatively new to the village due to her new marriage, joined the SHG when she moved to the village around five to six months ago,

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99 and is seeing a change in herself since she began participating. Her first answer suggests that she has experienced empowermen t both "power within" and "power with". That she is going outside in public space and feeling more comfortable speaking publicly indicates an increased inner confidence ("power within"). Furthermore, she shows that she has been empowered alongside other wo men; she is relaying the confidence and skills she has gained herself to others, and learning alongside them as well ("power with"). Another woman in a different SHG also told me that she had changed because of her participation in the SHG, saying: I am changing because I can sit around and talk about happy and sad things in our family, and marriages together in our group. We have a leadership quality that allows us to do things. Similar to the previous SHG member, this woman mentioned the importance t hat the other women in her group had for her change ("power with"), and that together, they could take action ("power to"). Like many of the other women in the group, and as is typical of women in rural Rajasthan, we can assume that because of purdah socia l norms, this woman did not experience public life significantly before she participated in the SHG. Accordingly, it is likely that she would not have had the ability to bond with other women outside of her private home. Thus, the SHG gave her a space to b e able to build relationships with other women, sharing joys and commiserating about their struggles. Her response illustrates how this relationship building among them has made them collective leaders, thus positively impacting her self esteem. When we ha d our interview, this woman stated that she had been a member of the SHG for 12 months. The third woman did not specify exactly how she changed when I prompted her, but stated:

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100 Yes, I like [the SHG]. (What do you like?) I'm learning (What are you learnin g?) Yes, there's a change in myself but I don't know how to say it, but I feel good in the SHG. This woman's response indicates that she recognized a positive change in herself because of her participation in the SHG. Though she could not find the exact words to articulate this change, in our interview she stated this answer with a smile and an air of self confidence. It is clear that this woman experienced some sort of change in her "power within" because of her participation in the SHG. She had been par ticipating in the SHG for two and a half years. These three women's experiences were similar in that their participation in the SHG contributed to their empowerment, either internally ("power within") or along with the other women in their group ("power with" and "power to"). When analyzing why these three women and not the other 21 women in the group experienced change, I wondered whether length of participation in the SHG might explain the difference. However, these three women who had each participated in their SHGs for 5 6, 12, and 30 months, respectively, were not SHG members on average any longer than the other women I interviewed. Their average of 15.6 months is actually lower than the average length of participation of the rest of the 20 person sam ple, 20.1 months However, it is slightly higher than the median of the rest of the sample, which was 11 months. Still, the length of these three women's participation fits into the differential lengths of participation amongst the rest of the 20 person sa mple. The least amount of time any of the women had participated in the SHG was 2.5 months, and the most was 42 months. Additionally, each of these three women was in a different SHG, so there was not one SHG that was more empowering for multiple women. T he other two women who were in an SHG with the first woman noted above said that they had not changed at all

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101 from their participation. Similarly, the cohort of the second woman who had been empowered said that they had not changed either. The fellow SHG m embers of the last woman who experienced empowerment showed a different trend; when I asked them whether they had changed since they joined the SHG, they responded with an answer that talked about a financial change in their lives. The two other women in t his group specifically said: Yes. The amount that will be collected in the SHG I can use. (How?) I can do anything with a loan. Yes. Having the habit of saving is good. Here we save and can get the collective amount, which is good for us. In addition t o these two, seven others in three other different groups expressed a similar sentiment: Here in the SHG the good thing is that we're doing saving and otherwise we're not able to do this, so this is beneficial to us in the future. Earlier I wasn't saving and we made the SHG and by this every woman can do her saving collectively. Yes I have changed. Now I have the family of the buffalo by which I get milk. I drink it at home, making milk, chai, or curd for me. Every month I am giving 100 rupees for savin g and every first day of the month I'm also giving the loan installment. We join the SHG and have the benefit of saving and do any work, and when we need a loan we get it. My saving deposits have increased, every month I'm giving [INR] 2500. It's good because with this collective amount poor people can get a loan. I don't take a loan. Others are, but I don't because I don't have the need. I make my home by taking the loan and with the crop money, which is good for me. Another woman, who had joined t he SHG to take out a loan to help her husband improve his shop, said: We are living in peace after joining the SHG because we were suffering from problems and losses in the shop, which have been removed, and now my husband's business is going smoothly.

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102 I t is significant that nine of the twenty four women I talked to mentioned changes in their financial situation or quality of life in terms of their consumption when I asked them this question. However, that they stated their financial situation changed is not necessarily indicative of any empowerment. Indeed, one of the women who responded to this question by mentioning financial changes indicated in the rest of the interview that she was disempowered in other ways; she said that her husband did not give he r any of the money she made by opening a shop. The others who mentioned these financial changes did not mention any positive social changes in their lives in the interviews. Though it is possible that these women's participation in the SHG increased their quality of life by giving their household more access to financial services, this change cannot be equated with social empowerment. Indeed, the most of the women I interviewed did not say they had changed because of their participation in the SHG. Ten cle arly stated that they had not changed at all since their participation. The majority of these women solely stated "no," but a few expanded on their response: No [I] just come here and give 100 rupees of my savings. I don't understand anything because I'm illiterate. I don't do anything and I only have one eye. No, nothing. We do a meeting only every first day of the month. No difference in my life, no. The first two responses examined together again suggest that for many, the SHG groups have function ed as de facto banks, rather than empowering social groups. The first woman said that she just attended to give her savings, and still expressed low self esteem ("I don't understand anythingI only have one eye") and disempowerment ("I'm illiterate. I don 't do anything"). The second response speaks to the

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103 infrequency of the meetings, and thus illustrates the more financial nature of the group; whereas it would make sense for a financially focused group to meet only once a month, a group with a more social agenda would likely meet more often in order to be able to strengthen relationships between the group members. One woman out of these ten, who was an outlier in the extent of her disempowerment, is important to mention because her case is indicative of h ow women's participation in the SHG can be co opted and thus actually be disempowering. I discussed this case previously when talking about the use for the loans for marriage. When I asked this SHG member what her income was before joining the SHG, she res ponded: No. No I didn't work before, I just got married. I'm a newlywed. My mother in law knows everything, I don't know anything. When I asked her why she chose to join the SHG, she said: I don't know why I joined, my mother in law said to so I joined I took a loan but I don't know why. I'll ask my mother in law and tell you. Again, when I asked her if she had changed since she joined the SHG, she said: No, I don't know. My conversation with this young woman clearly indicated that her mother in la w was controlling her participation in the SHG, and likely controlling other spheres of her life too. Her statements and the shy, self dismissive way she relayed them to me illustrated her lack of confidence and self esteem. Two other women gave more ambi valent answers when I asked them if they had changed because of their participation in the SHG, but did not indicate that they had been empowered. One woman, who I mentioned previously, stated: Earlier there was Ram ji [previous Office Manager] and now the re's Mahesh ji [current Office Manager].

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104 This response again speaks to many of the women's perceived financial nature of the groups; as mentioned previously, this SHG member referred to the NGO branch managers (Ram ji and Mahesh ji) as bank managers, whi ch shows how she viewed the purpose of the group. That the only change she experienced over her stated three to four years in the SHG was the change in who the male authority was is significant, because it shows that she still places importance in the auth ority of the male NGO leaders. Another woman, in response to me asking her if she had changed due to her participation, stated: I have tension to pay back the installment and saving and I'm so excited about giving for my children. I have tension for their studies even now when they're small. She expressed that is she is stressed about paying back the loan, but also excited about the prospect of improving her family's quality of life. She perhaps was not individually empowered by her participation, but the SHG structure gave her hope for improving her own children's lives. Overall, with some exceptions, women in Shakti's SHGs were largely not socially empowered by their participation. Three out of 24 women I talked to expressed that they had become socia lly empowered, but this group did not share any specific pattern. If I were doing follow up research, I would like to talk to these three women again to ask them to expand upon their experience in the SHG; this would allow Shakti to look at small successes it has made and see how they can replicate these on a larger scale. However, it is possible that for whatever reason, these three women were already predisposed to become empowered before they joined the SHG, and that Shakti's actions had little to do wit h this change. When I asked many women I interviewed if they had changed since joining the SHG, they mentioned changes relating to financial matters or

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105 their quality of life; thus, the SHG structure might have improved their financial stability, but this d id not necessarily equate any level of social empowerment. The rest of the women I talked to expressed that they had not changed since joining the SHG. Thus, on the whole, Shakti's SHG program has not been consistently empowering for women. Why was Empowe rment Lacking? Though the Shakti senior staff expressed that their primary goal with the SHG program was to empower women, my analysis indicates that they did not achieve this goal on any programmatic level. Thus, it is important to analyze why Shakti's programs are not having the desired impact in order to offer concrete solutions for improvement. A primary reason that women have not been empowered from their participation in Shakti's SHGs is because there is no specific programming that focuses on wo men's social empowerment. Instead, as some women mentioned, Shakti's SHGs meet only once a month for women to deposit their savings or pay back a loan installment. All of the SHG meetings were short, and had a very transactional nature. Women would sit in a circle along with the male field worker, who often sat elevated on a chair. Then, one by one, each of them would come up to the field worker to give him the money they had, after which they would press their thumb in an inkpad and press it on a certifica te of deposit sheet because they were illiterate, this took the place of their signature. As each woman came up, others would talk amongst themselves or sit quietly. After a woman deposited her money, she would often leave, even if the rest of the group was still there. Sometimes (and perhaps this was due to my presence), other non SHG members, men, women, and children would be present watching the meeting.

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106 These characteristics largely prevented an empowering environment for several reasons. The meetin g was expressly focused on financial transactions, so there was no specific space to talk about non financial concerns; no one made any concerted effort to neither bring up topics for group discussion, nor activities to engage the group together. Since the program did not include any activities to specifically focus on social empowerment, it is not surprising that most women did not experience any change in the SHG. That women would not be empowered in the groups because there were no specific activities focused on social empowerment seems logical; thus, why did Shakti not incorporate any of this programming, yet continue to state and expect that the primary goal of the program was women's empowerment? This disconnect speaks to the micro level manifestatio n of the strong macro ideological currents of neoliberalism and Women in Development (WID) in the mainstream development arena that I discussed in Chapter One. The NABARD SHG Linkage program from which Shakti's programs was started was following the flow o f ideology and resources into microfinance in the 1990s, as a surefire way to empower women through financial services. Shakti adopted the program and took the resources, which were only put into programming for strictly financial transactions, assuming th at this would empower women. Thus, the implicit assumption that microfinance allows women the opportunity work outside the home and handle money as a way to empower themselves manifested itself in the SHG NABARD linkage program, which then spurred the crea tion of Shatki's programs. Shakti staff cannot be entirely blamed for their assumption that microfinance would empower the women in the

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107 communities in which they work; indeed, at the time the purported achievements of microfinance were understood as autom atic. This problem of having no programming specifically focused on social concerns also speaks to the question of leadership. The dynamics of the SHG meetings clearly indicated that the women in the group looked to the male field worker as the leader; h e was the one to whom they reported and gave their money. This problem contributed to an environment that precluded most women from developing their own self esteem and emerging as leaders empowering themselves. From what I observed throughout the time I was at Shakti, male domination colored not only the SHG meetings, but their formation as well. One day at the village office, I had the opportunity to attend a training for women who wanted to form an SHG through Shatki. This training specifically was f or a group of women who wanted to sell dairy products. Thus, the training included two components. The first training day gave the women information about how to organize into self help groups, and the following day they were taken on a visit to a local da iry to show them techniques to increase and sustain the milk yield of their livestock throughout the year. The extent of my observation was the first day of the training, when the Shakti staff in the village office talked to the group about SHGs. The staff present included two young female staf f members, one older woman, one man the branch manager and me The participants (all female) present for the meeting were sitting on the ground in a circle. The man, the branch manager, ran the meeting, walking in the middle of the circle talking to them. He first told them that t hey should stand up and then an nounce their names and group names, which they proceeded to do. After this, the man continued to run the training, standing

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108 and talking down, while the women continued to sit on the floor, listening. Although I could not understand all of what he was saying because I did not have an interpreter present, his tone and physical actions connoted an authoritative demeanor. T he other staff members and I continued to sit on the ground while he continued to lecture about the ins and outs of SHGs. After a few hours, the meeting ended. Then, a few men started trickling in the door and looking around. I quickly found out they were some of the husbands when some of the wome n quickly pulled their saris over their hair to cover their faces. The men began asking the female Shakti workers sitting down what this was all about, all in a quite accusatory tone. "Why were they here? How would they be working [in the SHG]?" The staff, in more word s, assured them that it was all fine. Although I was not able to fully observe this event because I could not completely understand the language I could discern the gist and therefore make some initial analysis about this training. It was a pparent to me that this was not a fully empowering space for the women who were supposed to be organizing themselves into self help groups. Patriarchal power dominated the meeting in many aspects. First and foremost, the only man in the room the branch ma nager, was running the meeting, when there were also upper level NGO female staff that could ha ve taken this role. The branch manager assumed a very authoritarian role by standing up and talking down at the women, who were all sitting on the ground looking up at him. The structure of this meeting as such seemed to be defying the very reason on which it was supposedly predicated, which was giving women the tools and space they need to organize and empower themselves. Instead, this meeting involved a man tell ing w omen what they should do and how they should do it.

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109 Throughout the entire two hour meeting, there were only a few interspersed comments and questions raised by the women sitting on the floor. The branch manager was speaking the majority of the time. It also occurred to me that this was not necessarily a safe space for women to organize together, because their husbands were right outside the door and able to come in to interrogate the NGO workers about the meeting. When they did walk in at the end of t h e meeting, the tension in the room clearly rose as the women covered their faces and looked away from them. My observations of this event suggest that at the offset, the formation of the SHGs was not done so in an empowering way. Because of my limited l anguage skills, my analysis of this event was still incomplete. However, judging from body language and physical arrangement of the meeting alone the set up of this meeting was less than empowering. Based on my observations of the initial formation of th e SHGs and several meetings of established SHGs, it is clear that male dominance of the groups contributed to the lack of social empowerment experienced by the participants. Moreover, the male field workers did not seem to have an ideological nor practical commitment to gender equality. In addition to seeing their interactions with the women in the SHG as authoritarian, their lack of respect towards me as a female researcher made me seriously question their commitment to gender equality and women's empowerm ent. As I discussed in my methods section, I experienced sexual harassment from all but one of the male field workers in the village office branch. Their conduct with me is important to note because it illustrates problems of patriarchy within the NGO that prevent it from truly contributing to women's empowerment. That said, t hese men

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110 assumingly viewed me differently than a woman from their own communities, because I was different; I was foreign, white, living in a new country alone, relatively affluent, an d 20 years old and unmarried. These very characteristics put me in a relatively removed position from caste class, and family relations that in Rajasthan often define boundaries and rules about relationships between women and men who are not married to ea ch other. In part, I can infer that this, and perhaps common stereotypes wh ere I lived in Rajasthan about W estern women's openness to sex, caused these men to more readily treat me differently than they would a young woman from their own communities. Howev er, despite the assumption that these men treated me differently than they would women from their own communities, the lack of respect toward me deeply calls into question these men's commitment to women's empowerment. This doubt in mind, it is possible that these field workers contributed to the disempowerment of the SHG members in their jurisdictions. Given my situation, I was not able to ascertain if this possibility was true. Instead, I only had access to the SHGs that were working with the one male f ieldworker who had not harassed me, with whom I could travel and work. However, based on these men's behavior, I have no doubt that their work failed to contribute to the empowerment of the women in the SHGs with which they worked. Conclusion Empowermen t My interviews with the SHG participants indicated that the majority of women did not experience empowerment from their participation in the group. My observations of several SHG meetings, an SHG formation training, and experience working at Shakti for two months illustrate that the lack of specific programming to address social

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111 empowerment and male dominance of the SHG and larger NGO structure have prevented Shakti's SHGs from contributing to women's social empowerment on a regular, programmatic level. Conclusion In this chapter, I used a capabilities approach to poverty and an alternative understanding of empowerment to analyze the interviews I had with women in Rajasthan. I also drew upon my own observations of Shakti's daily functioning to underst and the areas in which Shakti's microfinance programs can improve. I found that the women's participation did not cause them to make more money, but did allow them to accrue savings that they valued. In some cases, women also reaped financial advantages fo r their households from the SHG, but this did not structurally change their level of poverty nor have an impact on their social empowerment. With a few exceptions, m ost women did not experience social empowerment from their participatio n in the SHG. The ma le dominance that permeates the NGO and the SHG formation and meetings is a force that precludes this program from being more successful in terms of women's empowerment. Moreover, the SHGs do not involve any programming focused on social empowerment, which also seriously undermines the potential of the groups to provide an empowering space for women. In the following chapter, I discuss examples of successful NGOs that Shakti can model to have greater social impact.

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112 CHAPTER 5: CONCLUSION Thus far, I illustrated the historical and ideological development of microfinance. I showed that despite the questionable overall success of microfinance programs, they are frequently touted as the panacea for women's poverty and empowerment in the Global South. Mic rofinance programs have been supported on a large institutional scale because they make these claims without challenging the ideological assumptions of the dominant neoliberal paradigm. Moreover, microfinance developed in the vein of Women in Development, tapping in to a rhetoric that claimed liberation/empowerment for women through their participation in paid work in the neoliberal economy. I showed how the narrow assumptions of neoclassical economics and Western feminism have been fused together to constr uct the assumption that the act of putting money into a woman's hands will automatically empower her and allow her to pull herself out of poverty. Next, I delineated alternative, more nuanced conceptualizations of poverty and empowerment that inform the an alysis of my own data: Sen's (1999) capabilities approach to poverty, and Kabeer's (1994) and Lukes' (1974) approach to empowerment as the process of gaining "power to," "power with" and "power within." I also explained the research methodology I used to a nalyze Shakti's microfinance program in Rajasthan; I conducted interviews with women in this NGO's self help groups (SHGs) to investigate the impact of their participation in the group on their economic status and social empowerment. Now, I show how my an alysis of the historical and ideological development of microfinance can elucidate some of Shakti's microfinance programs' pitfalls and challenges illustrated in Chapter Four. This then serves as a transition to discuss what improvements Shakti can make to its microfinance programs, and how it can do so. This

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113 discussion is applicable on a broader level, serving to illustrate how microfinance programs can have greater impact on women's lives in terms of poverty alleviation and social empowerment. We can see how Shakti's microfinance program made many of the assumptions of the mainstream microfinance sector, which prevented it from reaching its stated primary goal of empowering women. Shakti's microfinance program, originally part of the NABARD SHG linkage pr ogram, stated that its primary goal was to empower women. However, it did not have any programming except for that which focused on financial transactions: the accrual of savings and dispersal of loans to women. This fact illustrates that Shakti's microfin ance program at least tacitly subscribed to the assumption that the provision of microfinance services to women which would facilitate their participation in the formal labor market would be automatically empowering. This assumption is consistent with the Women in Development paradigm, which assumed that women doing paid work would result in their empowerment and ultimately poverty alleviation ( Eisenstein 2005; Keating, Rasmussen and Rishi 2010). Thus, Shakti's microfinance program is part of a larger institutional trend in development in the last decades of the twentieth century. It is structured with the assumption that the provision of microfinance services result in poverty alleviation and the empowerment of women. The spread of microfinance in In dia (of which the SHG/NABARD Linkage program and thus Shakti's program was a part) is consistent with the global trend discussed previously, in which microfinance proliferated as a social program ideologically consistent with neoliberal structural adjustme nt programs (Elyachar 2002; Eisenstein 2005; Isserles 2003; Keating et al. 2011; Weber 2003). India began to

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114 experience structural adjustment in 1991, causing people in the lower socioeconomic rungs to suffer (Sharma 1999). Soon after, in 1992 the SHG/NABA RD linkage program began, connecting NGOs and banks to get capital to the poor. This can be interpreted both as a move to palliate social suffering in a way that is consistent with India's move to a free market ideology ( Eisenstein 2010; Elyacha r 2002) as well as a mechanism for the increased reach of the financial services industry in India (Hartsock 2006 cited in Keating et al. 2010). Thus, Shakti's SHG microfinance program, which came out of the SHG/NABARD linkage program, was part of a larger free marke t trend at this time. Accordingly, this program implicitly assumed that microfinance would alleviate poverty and be empowering for women. Despite the program's beginnings with the free market trend of the time, the SHG/NABARD linkage program did still ma intain a non commercial microfinance model; accordingly, so did Shakti's program. In terms of economic status, the maintenance of a non profit approach has allowed Shakti to serve poor women in Rajasthan better than it would had it adopted a commercial mod el. As discussed in chapter 1, despite an overwhelming move towards a commercial microfinance model in the last two decades, commercial microfinance programs have not served the poor well. For profit MFIs have not expended the high transaction costs requir ed to reach the core poor, and thus have tended to target borrowers who are less poor from whom they demand higher interest rates (Morduch 2000; Weber 2003; Weiss and Montgomery 2005). Many scholars have concluded that the primary financial service that po or people want is access to savings in order to smooth consumption (Allen 2007; Dichter 2007b; Vonderlack and Schneider 2002). Indeed, in the case of Shakti, we see that the majority

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115 of the participants did join with the goal of saving, and were content th at their participation in the group allowed them to accrue savings that they valued. Thus, Shakti's maintenance of a non profit NGO microfinance model, rather than a commercial microfinance model, likely made it more successful in addressing the needs of t he poor women and families in Rajasthan. Shakti's lack of programming on social empowerment, however, indicates that the program planners assume the provision of financial services and paid work are the key to women's empowerment. This lack of programming and emphasis on true empowerment can be attributed both to the larger structure, in the SHG NABARD linkage program, and patriarchal tendencies within the NGO. In many ways, these forces go hand in hand. Largely microfinance in stitutions are evaluated on their outcomes as they relate to women's income and empowerment, but how these outcomes are achieved and measured within the organization are left unanalyzed (Fernando 1997) Often, the priority of the funding source can pressure NGOs to focus more on the financial aspects of development; in the case of Shakti, funding for the program came from the SHG/NABARD linkage program and later Rashtriya Mahila Kosh (The Ministry of Women and Child Development) and the Small Industries Development Bank of India (SIDB I); these entities focused on the financial aspect of the microfinance programs. This reality is consistent with the larger Women in Development (WID) paradigm discussed previously, which emphasizes women's economic contributions on grounds of efficiency, thus limiting more a more grassroots, nuanced focus on social empowerment (Kabeer 1994).

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116 The potential for Shakti to operationalize a grassroots approach to empowerment was limited by the larger trends in WID in India. It was also limited by patriarchal a pproaches within the NGO infrastructure and workers themselves, who may not be committed to gender equality, justice, and women's empowerment. As discussed, patriarchal approaches from within NGO structures can limit a NGO's true impact with regard to gend er equality if outcomes are achieved in a patriarchal manner (Fernando 2007). In the case of Shakti, the male fieldworkers who largely administered the program in the field conducted themselves in a patriarchal manner, which probably precluded some opportu nities for women's empowerment. Shakti had some positive impact on women's economic status because of the opportunities for savings the microfinance program provided, but did not have an impact on raising women's incomes. In some cases, the SHG structure allowed women to smooth their consumption using savings and loans. The SHG allowed a few women to buy capital or an animal in order to start a new business; in a few cases this improved women's capabilities and ability to meet their basic needs, but largel y did not change their unstable level of consumption or low position as a woman. Though when asked how they had changed, many women discussed financial changes in their lives, particularly relating to savings, these changes were largely not of a social nat ure. Other than three women who stated that they had changed in terms of their self esteem, leadership ability, and public presence, the majority of the women who I interviewed stated they did not change from their participation in the SHG. With these res ults in mind, there are several steps that Shakti can take to improve its microfinance program. If Shakti maintains its primary goal of empowering women through the microfinance program, it should

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117 actively create a program structure with the aim of doing s o. Concurrently, it can improve women's economic status by aiming to enhance their capabilities. Given that Shakti's primary goal with its microfinance program continues to be empowering women, it can follow the example of several NGOs in South Asia that have operationalized a focus on women's empowerment. A vital step in creating a program that empowers women is creating a participatory agenda that allows the women themselves who are supposed to benefit from the program to identify their own needs (Kabeer 1994). Shakti can learn from innovative NGOs who are making change by creating a space for women's own voices to be heard either through participatory processes of needs identification or else by organizational practices that encourage participation in shaping and changing the decisionable agenda" (Kabeer 1994, 230 my emphasis). One organization that has taken this participatory approach is the Self Employed Women's Association (SEWA) in India, which works to organize women laboring in the informal sec tor whose struggles go beyond the power dynamics between formal employer employee relationships (Kabeer 1994). Because SEWA reached out to women to ask them to identify their struggles, they were able to pioneer an innovative approach to labor organizing t hat went beyond the traditional approach of the male dominated trade union movement in India. Women were largely self employed and working based at home, as "petty traders" or performing casual wage labor; by identifying these categories and the struggles self employed women faced, SEWA was able to take a new approach that made sense for poor working women's unique struggle.

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118 Shakti could model aspects of SEWA to have positive results. It could be formally incorporated into the program that field workers or SHG members themselves routinely discuss the needs of the group, around which the group would decide a plan of action for addressing these concerns. These needs could fall outside of the bounds of what financial microfinance services could address; thus, S hakti could direct other resources from its many other gender and livelihood focused programs to making the SHGs more responsive to the needs as identified by the members. Accordingly, it is important that if greater participation is to be built into the S HG structure that "built into the planning process is the interdependency between different categories of needs, particularly in the lives of women" (Kabeer 1994, 234). This approach would recognize that the provision of microfinance may be a part, but not the panacea, for addressing women's myriad needs in rural Rajasthan. Another vital aspect needed to improve the microfinance and SHG structure to better impact women's empowerment is to ensure that women have a sense of agency and leadership in the pro gram. Kabeer notes that it is essential to build "a sense of ownership and responsibility among poor women in relation to the organization's activities, rather than on limiting their participation to the more instrumental and limited version of participati on as the take up of services or meeting of project targets" (1994, 236). An example of an organization that has achieved this is the Women's Development Program in Rajasthan, a joint NGO/government collaboration. The government of Rajasthan set up the WDP because it recognized that though it had attempted to direct development resources to women, women's low condition largely had not improved (Kabeer 1994, 243). Moreover, "it also took note of the fact that men had been entrusted with the

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119 responsibility fo r women's development in the family, government, and society far too long" (Dighe and Jain 1989, 78 cited in Kabeer 1994, 243). The goal of the program was to institute new delivery mechanisms for resources and build community organizations and alliances t hat would make local institutions more responsive to the needs of women (Kabeer 1994). The primary worker for this program was the village sathin a female leader on the village panchayat the local government structure. It was the responsibility of the sa thin to establish women's groups at the village level to address local concerns. The Information Development and Resource Agency of Rajasthan supported groups of ten sathin s on a regional level, and the program was monitored and evaluated by the Jaipur Ins titute of Development Studies, a local think tank (Kabeer 1994). The sathins were selected for their commitment to the cause and courage rather than for any formal qualifications. The WDP is an example of a program that has entrusted leadership in women in rural villages to rally their cohort and identify their concerns; concurrently, government and NGO resources are available to support these leaders achieve these goals in their communities. Shakti could adopt the best practices of the WDP model by focus ing on leadership development in the SHGs. As mentioned in Chapter 4, most of the field workers are men, who administer the meetings and are seen as the de facto authority figures of the groups. Shakti could facilitate the empowerment of women by perhaps i dentifying initial female leaders of the SHG to facilitate the groups' creation and early development. These initial leaders could then focus on developing new female leaders who could also lead the group together.

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120 In order for this leadership transfer t o take place, another fundamental action Shakti has to take is addressing the internal patriarchy in the NGO. Because men dominate the NGO structure both in the senior leadership and amongst the field workers, they maintain a gender hierarchy that undermin es the goals of women's empowerment. If Shakti continues to hire male field workers, it must be more selective in hiring based on potential staff members' commitment to the cause. Shakti should also implement gender sensitivity training for all staff. Surp risingly, Shakti has not facilitated trainings like this in the past. For all staff working in this program, both men and women, gender sensitivity training should be required. However, if Shakti truly wants to create a program to achieve gender justice, it must also actively facilitate the employment of committed women in the NGO structure. This may require making changes to the NGO's practices that could have a transformational effect. For this initiative Shakti could look to Saptagram in Bangladesh, an NGO that is staffed predominantly by women at all levels of the organization (Kabeer 1994, 244). Saptagram has created a flexible work environment that takes women's family responsibilities into account, ensuring that most women continue to work for the or ganization even after they get married. Staff can take time off for family responsibilities, and can bring children into the office; accordingly, the organization expects that the staff will work more intensively when needed (Kabeer 1994, 245). Moreover, f ield officers can use public transport or rickshaws to get around to their assignments, rather than motorcycles, which often are off putting for many potential women applicants to NGOs in Bangladesh (Kabeer 1994). Kabeer notes: This emphasis on recruiting committed women staff has had the effect of slowing down Saptagram's rate of expansion, since it can grow only as fast as it can find good female staff. Nevertheless, in its attempt to combine feminist and

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12 1 development principles, it offers a different mod el of organization to most other NGOs in Bangladesh It offers a glimpse into what would become possible were existing institutions to adapt their rules and practices to the needs of working women rather than requiring working women to adapt to the logic o f male dominated institutions. (1994, 245) Shakti could improve the impact of its external programs by making similar internal institutional changes. Feminist women working in the NGO would be more likely than men uncommitted to the cause to be able to re late to women in the SHGs, as well as be more likely to help them develop their own leadership abilities. Shakti faces challenges in implementing these types of changes to their microfinance program. Firstly, they could encounter the opposition of male s taff members who do not want to relinquish their position of power. Secondly, they could confront funding problems; as SIDBI and The Ministry of Women and Child Development now fund the program the program money may have strict allocation rules such that these funds could not be redirected to shift the focus of the program. However, Shakti has the advantage of being a large NGO that undertakes several programs at the state level; thus, it can attempt to leverage its power and other funding to shift new res ources to a revitalized SHG program. Shakti's microfinance program is not unlike many others around the world; it emerged in an ideological and institutional environment that assumed that women would be empowered and transcend poverty by the sole act of p utting money into their hands. This assumption arose out of a neoliberal trend in development beginning in the 1970s, and concurrently, the rise of the Women in Development paradigm that emphasized that investment in women could be an efficient fuel for ec onomic development (Kabeer 1994; Isserles 2003; Keating et al. 2011; Weber 2003 ). For microfinance programs, this discourse was further supported by Western feminist thinking, framing the opportunity to

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122 work outside the home as the way to empowerment/liber ation ( Elyachar 2002; Eisenstein 2005) As I have shown in this analysis and discussion, these assumptions, which in many ways formed the basis for Shatki's microfinance program, are flawed. For the women I interviewed, the provision of microfinance servic es did not structurally change their economic status; however, consistent with other findings on microfinance (Dichter 2007b), the program did allow them to accrue savings that they valued. However, the women's participation in the group and the microfinan ce services they received through it largely did not cause them to be empowered. This analysis has provided an account from the voices of women who participate in these programs, whose interests are not fully served by them. Today, Shakti and other microfi nance NGOs have the opportunity and the responsibility to restructure their programs in a way that will truly serve the interests of those whose lives they aim to improve.

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