The Hindu : Tamil Nadu News : Rising costs hit self-help groups

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Tuesday, May 13, 2008
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Tamil Nadu

Tamil Nadu

Rising costs hit self-help groups

J. Malarvizhi

Incomes are up, but not in step with the increased cost of living

Self-help groups involved in production and marketing bear the brunt of inflation, often seeing a direct reduction in profits

Photo: R. Ragu

joint effort A self-help group at work in Vyasarpadi.

The rising cost of materials is eating into the profits of Self-Help Groups (SHGs) in the city.

R. Parimalam, who makes and sells jewellery made of silver or copper coated with gold as a member of the Mangadu Amman Self Help Group, K.K. Nagar, says, “The cost of silver has increased from Rs. 10 per gram to Rs. 24. Our profits are going down because we can’t hike the prices too much.”

In Chennai alone, there are more than 2000 such groups involved in income generation activities, according to Susan Mathews, Chairperson, Corporation for Development of Women.

The groups make soft toys, artificial jewellery, jute products, leather goods, packaging and stationery items, sell ready-made clothes and run provision stores and beauty parlours.

K. Panchaksharam is founder and secretary, Federation of South India Producer Associations (SIPA), a network of groups that help in generating income for the poor. “SHGs involved in production and marketing bear the brunt of inflation, often seeing a direct reduction in profits. Those involved in just marketing might lose a portion of their margins, buying and selling at adjusted rates,” he says.

The Indira Gandhi self-help group in Bharathi Nagar, Korukkupet, makes soft toys. According to P. Meenambal, they purchase fur cloth and beads for eyes and noses from Parry’s Corner and Bangalore. The toy dogs that fill the shelves of her home have coats of pink, greenish yellow, orange and white fur, a fur that is slowly growing more expensive: a quarter metre now costs Rs. 80, up from Rs. 60 a couple of years ago.

Officials at the Women Development Corporation say revolving funds have been extended to urban SHGs in 2006-07. While these funds have helped to stabilise them financially, most depend on loans to start and run their small businesses. In the past year, more than Rs. 4 crore credit linkage has been arranged by the Corporation from Indian Bank, Chetpet, to about 250 groups.

Kala is a member of a group that sorts paper trimmings from presses in Mannady and Kasimedu into white and coloured paper. Each member sorts 80 to 100 kilos a day. They buy the mixed paper at Rs. 12-13 per kg and sell the white trimmings at Rs. 17.50 a kg and the rest at Rs. 3. “We have repaid the earlier loans of Rs. 25,000 and Rs. 1 lakh and have now sought a Rs. 2 lakh loan,” she says.

Incomes may be increasing for most groups, but it is not commensurate with the increase in the cost of living,” says Mr. Panchaksharam. SHGs are also less skilled than other retailers in competitive pricing that allows profit margins with room to manoeuvre in case of rising material costs. “China is able to dump handicrafts that are largely machine-made at much lower costs. We have been lobbying for clustering of groups to enable efficient production at competitive prices,” he says.

In Jeeva Nagar, K. Uma, a member of a group that makes paper bags for Tata Indicom, says the group has adjusted pricing for material and labour. “We started making the bags at Rs. 7 a piece. Now, depending on the model, we set the price at around Rs. 11,” she says.

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