Impact of Micro-credit on the Agrarian Economy – A Case Study in Hooghly District of West Bengal, India

This study focuses on the impact of micro-credit upon the livelihood of rural households based on empirical study over 549 stakeholders of SHGs (Self Help Groups) in Hooghly district of West Bengal State in India. One of the distinct areas of the study concerns with the comparative analysis of different rural enterprises propagated through micro-credit. Another objective of this study has been to compare and contrast income as well as savings position of the sample households before receiving financial credit. Additionally, this study attempted to discriminate between high-performing and low-performing stake-holders on the basis of selected socio-economic indicators.

The aggregate savings-income relationship among the stakeholders using regression analysis with dummy variables referring to time-periods was examined. The groups of stakeholders in terms of performance using Linear Discriminant Analysis (LDA) were also studied. Characteristics of groups have also been identified by LDA method.

This study revealed striking impacts of micro-credit on the livelihood of rural households, particularly on the resource-poor, marginal households in terms of income, employment and savings. However, degree of impact has varied across different rural enterprises. Micro-credit has expanded employment opportunities of rural women irrespective of enterprises. This study also found high-level of performing scores among the groups being engaged in non-agricultural or nonfarm activities.

In fine, some policy measures have been advocated for improvement of livelihood of rural households.