Effectiveness of Microfinance under SGSY scheme to reduce Poverty and Vulnerability of Rural Households: A Natural Experiment

Abstract

This paper shows that government of India supported microfinance programme under SGSY scheme is partially effective to reduce poverty of the rural households. Few expansion of National Rural Employment Guarantee scheme plays here the supportive role. Taking the help of Natural Experiment it is also proved that microfinance programme is also able to reduce vulnerability of the rural participating households. This is done through constructing vulnerability index. The social factor i.e. enhancement of empowerment of the participating Self-Help Group members all of whom are women under SGSY scheme between the concerned time period and size of microcredit taken for income generating activities plays a significant role to reduce vulnerability of the participating households of this microfinance programme.Microfinance, SGSY Scheme, Poverty, Vulnerability, Natural Experiment