Economic and Social Impacts of Self-help Groups in India

Although there has been considerable
recent interest in micro-credit programs, rigorous evidence
on the impacts of forming self-help groups to mobilize
savings and foster social empowerment at the local level is
virtually non-existent, despite a large number of programs
following this pattern. The authors use a large household
survey to assess the economic and social impacts of the
formation of self-help groups in India. They find positive
impacts on empowerment and nutritional intake in program
areas overall and heterogeneity of impacts between members
of pre-existing and newly formed groups, as well as
non-participants. Female social and economic empowerment in
program areas increased irrespective of participation
status, suggesting positive externalities. Nutritional
benefit was more pronounced for new participants than for
members of pre-existing groups. Evidence of higher
consumption - but not income or asset formation - by
participants suggests that at the time of the survey, the
program's main economic impact had been through
consumption smoothing and diversification of income sources
rather than exploitation of new income sources. Evaluation
of such programs in ways that allow heterogeneity of program
impact can yield highly policy-relevant insights.