Policy Update
Karnavi Shende
BACKGROUND
The Andaman and Nicobar Islands Rural Livelihood Mission (ANIRLM), operating under the Directorate of Rural Development, Panchayati Raj Institutions (PRIs), and Urban Local Bodies (ULBs) of the Union Territory Administration, has been implementing rural financial inclusion programmes since the 2015–16 fiscal year (Directorate of Rural Development, PRIs & ULBs, 2024). While early iterations focused strictly on the core institutional guidelines of the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM), the geographical fragmentation of the archipelago demanded a customized regional intervention (Ministry of Rural Development, 2025). Therefore the Andaman and Nicobar Women SHG Empowerment Scheme (Directorate of Rural Development, PRIs & ULBs, 2024).
The underlying socio-economic drivers for this specialized scheme are deeply tied to the island territory’s isolated geography. The region’s split across 38 permanently inhabited islands, separated by vast stretches of the Andaman Sea, cuts off small communities from traditional mainland markets and financial institutions (Directorate of Economics and Statistics, 2024). Prior to this intervention, rural and indigenous women from South Andaman up to the isolated villages of Diglipur and the Nicobar district faced high shipping overheads, irregular shipping schedules, and limited options for local wage employment (Santhosh & Biswas, 2026; Directorate of Rural Development, PRIs & ULBs, 2024).
These factors combined to restrict their household cash flows and trap them in cycles of non-formal credit dependency (Santhosh & Biswas, 2026). By introducing a decentralized, state-backed capital delivery mechanism, the scheme corrected this infrastructure market failure, creating a reliable pathway to foster local entrepreneurship among women’s groups (Directorate of Rural Development, PRIs & ULBs, 2024).
FUNCTIONING
The operational architecture of the Andaman and Nicobar Women SHG Empowerment Scheme is anchored in a specialized three-tier community-based organization (CBO) model, explicitly adapted to manage financial linkages across isolated islands (Directorate of Rural Development, PRIs & ULBs, 2024).
Tier 1: The Self-Help Group (SHG): Neighbourhood groups gather weekly to practise mandatory micro-savings and build an initial internal lending pool (Directorate of Rural Development, PRIs & ULBs, 2024). Each unit functions strictly under the Dashasutras framework—ten core tenets governing regular savings, thrift tracking, and local social indicators such as nutrition and active involvement in local Gram Panchayats (Santhosh & Biswas, 2026).
Tier 2: The Village Organization (VO): Individual SHGs are federated at the revenue village level into VOs, which distribute seed funds, audit member ledgers, and manage specialized community enterprise loans (Directorate of Rural Development, PRIs & ULBs, 2024).
Tier 3: The Cluster/Block Level Federation (CLF): Operating at the block tier, these apex institutions handle inter-island market linkages, manage large cold-storage supplies, and coordinate banking access for more isolated groups (Directorate of Rural Development, PRIs & ULBs, 2024).
Financing under the scheme follows a structured, three-tiered progression:
- Revolving Fund Support: ANIRLM implementation reporting records ₹15,000 in revolving fund assistance for SHGs following the Panchasutras, strengthening their collective corpus and internal lending. Member loans drawn from this corpus remain repayable for further circulation. Separately, Community Investment Fund assistance of ₹50,000 is reported on a loan basis.
- Interest-Free Micro-Credit: Stabilized groups can access specialized interest-free loans up to ₹1 lakh directly through the UT administration’s dedicated funding pool, with the interest burden fully absorbed by the administration’s budget, enabling women to launch small poultry, handicraft, or tailoring units without accumulating heavy start-up debt (Directorate of Rural Development, PRIs & ULBs, 2024).
- Advanced Institutional Credit Linkage: For large enterprise expansions, the scheme interfaces with the Andaman & Nicobar State Cooperative Bank (ANSCB) and commercial banks, under which mature groups can draw down customized personal loans up to ₹50,000 per individual member or scale up to advanced collateral-free commercial credit extensions up to the national limit of ₹20 lakh (ANSCB, 2024)
PERFORMANCE
The operational rollout of the scheme has significantly expanded the institutional microfinance footprint across the archipelago. Empirical field reviews published by the Directorate of Economics and Statistics and progress briefs from ANIRLM show that the mission has successfully mobilized women into self-managed groups (Directorate of Economics and Statistics, 2024; Santhosh & Biswas, 2026).
NFHS-5 reported that 89.2% of women aged 15–49 in the Andaman and Nicobar Islands had a bank or savings account that they themselves used, compared with 78.6% nationally (Ministry of Health and Family Welfare [MoHFW], 2021). Livelihood diversification has seen strong growth in sectors optimized for the local island economy. Prominent initiatives include group-managed poultry projects in the Diglipur block, where individual loans have enabled women to generate monthly net profits of ₹20,000, allowing them to rapidly repay up to 30% of their initial principal balances (Directorate of Rural Development, PRIs & ULBs, 2024).
Furthermore, by integrating the scheme with the PM Formalisation of Micro Food Processing Enterprises (PMFME) Scheme, advanced entrepreneurs (such as those running the Shyama SHG in Little Andaman) have combined ₹2 lakh in baseline bank financing with ₹40,000 PMFME seed grants (Ministry of Food Processing Industries, 2025). This targeted capital blending has helped scale up local virgin coconut oil and organic spice production (Ministry of Food Processing Industries, 2025). The overall health of this credit framework is sustained by strong peer monitoring, maintaining a cumulative repayment rate above 94% (Santhosh & Biswas, 2026).
IMPACT
Economic Independence and Asset Building
Primary evaluation data indicate that micro-loans have shifted households away from subsistence fishing and vulnerable daily agricultural wage labour toward structured, multi-source income systems, ensuring a steady, year-round flow of cash (Directorate of Rural Development, PRIs & ULBs, 2024).
Formalizing Island Value Chains
The scheme has successfully driven localized trade aggregation. By financing groups to set up dedicated community retail counters such as the Sanjog Outlets and Purbasa retail windows the administration has created reliable marketing spaces for island products (Directorate of Rural Development, PRIs & ULBs, 2024). This ensures that profits from local handicrafts, processed sea fish, and coconut products flow directly back to the producing women (Directorate of Rural Development, PRIs & ULBs, 2024).
Household Decision-Making and Civic Status
Qualitative social indicators reveal that shifting financial leverage to women has adjusted traditional domestic dynamics (Santhosh & Biswas, 2026). Financial self-reliance has given women a larger voice in household budgeting, family healthcare, and children’s higher education choices (Santhosh & Biswas, 2026). Furthermore, regular attendance at weekly block federation meetings has raised civic awareness, leading to greater female participation in Gram Sabha planning sessions (Santhosh & Biswas, 2026).
EMERGING ISSUES
- Limited Marketing Opportunities: NABARD’s Status of Microfinance in India 2023–24 identifies limited marketing opportunities for SHG members in the islands and notes that their remote location restricts participation in mainland marketing events. This supports a market-access constraint, but not a claim that local markets are saturated or that competition has reduced profit margins (NABARD, 2024, p. 71).
- Gaps in Bank Credit Linkage: South Andaman’s banking review for March 2025 records 1,190 SHGs sourced by the Rural Development Department, with bank accounts opened in most cases but credit linkage completed for 136 groups. These figures warrant closer monitoring of access to bank finance; however, they do not establish that all remaining groups were eligible applicants awaiting loans (District Consultative Committee/District-Level Review Committee, South Andaman, 2025).
WAY FORWARD
- Improve Local Market Access: ANIRLM and Gram Panchayats should organise regular SHG sales stalls at local markets and community events. Shared transport arrangements among nearby groups could help consolidate deliveries without creating a separate shipping or cold-storage network.
- Simplify Banking and Loan Support: Block-level mission staff should coordinate periodic bank–SHG assistance sessions to help members complete applications, update documents and resolve pending cases. A designated contact person could track unresolved applications and communicate their status to groups.
- Provide Short Business Training and Follow-Up: ANIRLM should offer practical sessions on costing, bookkeeping, packaging and digital payments, followed by periodic mentoring. Groups should assess local demand before borrowing or expanding production.
- Strengthen Basic Disaster Preparedness: SHGs should maintain backup financial records, keep stock and equipment in safer storage, and prepare emergency contact lists. Mission staff could also help members understand available insurance options and claim procedures.
REFERENCES
Andaman & Nicobar State Cooperative Bank (ANSCB). (2024). Annual Report 2023–24. Port Blair. https://www.anscbank.in/wp-content/uploads/2024/07/Annual-Report-2023_2024.pdf
Directorate of Economics and Statistics. (2024). Basic statistics of Andaman and Nicobar Islands: Social welfare and livelihoods metrics. UT Administration. https://ecostat.andamannicobar.gov.in/basicstatPDF2023_24/23.Socialwelfare.pdf
Directorate of Rural Development, PRIs & ULBs. (2024). Annual implementation review of DAY-NRLM in Andaman and Nicobar Islands. Union Territory Administration, Port Blair. https://dt.andamannicobar.gov.in/epaper/30032026111258659.pdf
District Consultative Committee/District-Level Review Committee, South Andaman. (2025). Meeting background papers: March 2025. https://www.utlbcandaman.com/uploads/South/DCC%20South%20Andaman%20march%202025-final.pdf
Ministry of Food Processing Industries (MoFPI). (2025). PMFME livelihood convergence project signings for Union Territories. Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2199453®=3&lang=1
Ministry of Rural Development. (2025). National Rural Livelihoods Mission (DAY-NRLM) state-wise performance indicators. Government of India. https://www.pib.gov.in/PressReleaseDetail.aspx?PRID=2297764®=6&lang=1
NABARD. (2024). Status of microfinance in India 2023–24, p. 71, “AVSAR: Giving New Wings (Port Blair, Andaman and Nicobar Islands).” https://www.nabard.org/auth/writereaddata/tender/0808244223NABARD-SOMFI%20%20%20%20%20%20%20%2020232024%20%20%20%20%20%2030072024.pdf
National Family Health Survey (NFHS-5), 2019–20: Union Territory Fact Sheet—Andaman & Nicobar Islands, included in the Phase I factsheet compendium. https://healthnutritionindia.in/static_files/nfhs5/FS_P1.pdf
Santhosh, M., & Biswas, A. (2026). Economic upliftment and decision-making: The impact of self-help groups on women in Andaman and Nicobar Islands. ResearchGate Social Sciences Repository, 18(3), 142–159. https://www.researchgate.net/publication/399768651_Economic_Upliftment_And_Decision-Making_The_Impact_Of_Self_Help_Groups_On_Women_In_Andaman_And_Nicobar_Islands
ABOUT THE CONTRIBUTOR
Karnavi Shende is a Research and Editorial Intern at IMPRI. She holds a Master’s in Politics, specializing in International Relations, from Jawaharlal Nehru University, New Delhi. Her interests include International Relations, Strategic Studies, Public Policy, Gender, and Human Rights, with a focus on policy research and contemporary governance challenges.
ACKNOWLEDGEMENTS
The author extends sincere gratitude to the reviewers (Manisha Kumari and Tanisha) and the IMPRI team for their expert guidance and constructive feedback throughout the process.
REVIEWED BY
Manisha Kumari and Tanisha
DISCLAIMER
All views expressed in the article belong to the author and not necessarily to the organization.
