3. Impact of Microfinance on Poor Women: Lessons from Sabarkantha, Gujarat

Abstract

Microfinance, in simple terms, can be defined as financial services for the poor. Currently, the policy-makers all over the globe are increasing their emphasis on microfinance. At this point of time, considering the energy and money being channelized to this sector, one of the issues that need to be addressed is that of effectiveness of the various models of microfinance delivery. With this backdrop in mind, the present study is an attempt at carrying out an impact assessment of microfinance. This cross-sectional research has been conducted in the Sabarkantha district of the state of Gujarat among the women living below the poverty line (BPL), where the control group comprises new entrants, while the treatment group has old participants of the programme. The study involves both quantitative and qualitative data analysis at the household level and the individual level. The study found that microfinance increases the income of the poor clients who are into the programme for more than two years. It also found that consumption expenditure came down during the initial period of participation as the participants learnt financial prudence, and after that, the change was negative but insignificant. At the individual level, it was found that participation in the programme improved the financial security for the clients and the proportion of daughters attending school to those eligible for schooling. However, there was no significant change in the financial decision-making process. The impact assessment concluded that microfinance does impact the poor women positively, but in order to improve the quality of their lives and to sustain this improvement over a period of time, further interventions at the social and human level are required.