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SHG Sp08de01

SHG Sp08de01

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Published by: api-3729564 on Oct 18, 2008
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03/18/2014

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\ue000
1\ue000
\ue000
\ue000\ue000
Economic\ue000and\ue000Social\ue000Impacts\ue000of\ue000Self-Help\ue000Groups\ue000\ue000
in\ue000India\ue000
\ue000
by\ue000
Klaus\ue000Deininger\ue000and\ue000Yanyan\ue000Liu1\ue000
\ue000
Development\ue000Research\ue000Group,\ue000World\ue000Bank\ue000
1818\ue000H\ue000Street\ue000N.W.,\ue000Washington\ue000DC\ue00020433\ue000
kdeininger@worldbank.org\ue000
yliu3@worldbank.org\ue000
\ue000\ue000\ue000\ue000\ue000\ue000Selected\ue000Paper\ue000prepared\ue000for\ue000presentation\ue000at\ue000the\ue000American\ue000Agricultural\ue000Economics\ue000Association\ue000
Annual\ue000Meeting,\ue000Orlando,\ue000FL,\ue000July\ue00027-29,\ue0002008.\ue000
\ue000\ue000\ue000\ue000\ue000\ue000\ue000\ue000\ue000

Copyright\ue000 2008\ue000 by\ue000 Klaus\ue000 Deininger\ue000 and\ue000 Yanyan\ue000 Liu.\ue000 All\ue000 rights\ue000 reserved.\ue000 Readers\ue000 may\ue000 make\ue000 verbatim\ue000copies\ue000of\ue000this\ue000document\ue000for\ue000non-commercial\ue000purposes\ue000by\ue000any\ue000means,\ue000provided\ue000that\ue000this\ue000 copyright\ue000notice\ue000appears\ue000on\ue000all\ue000such\ue000copies.\ue000

\ue000\ue000
\ue000
2\ue000
Economic\ue000and\ue000Social\ue000Impacts\ue000of\ue000Self-Help\ue000Groups\ue000in\ue000India\ue000
1.\ue000Introduction\ue000

In\ue000an\ue000effort\ue000to\ue000improve\ue000the\ue000effectiveness\ue000of\ue000efforts\ue000at\ue000reducing\ue000poverty,\ue000programs\ue000that\ue000fall\ue000under\ue000 the\ue000 broad\ue000 rubric\ue000 of\ue000 \u201ccommunity\ue000 driven\ue000 development\u201d\ue000 (CDD)\ue000 have\ue000 recently\ue000 seen\ue000 tremendous\ue000 expansion.\ue000 The\ue000 amount\ue000 of\ue000 World\ue000 Bank\ue000 loans\ue000 under\ue000 this\ue000 category\ue000 alone\ue000 is\ue000 estimated\ue000 to\ue000 have\ue000 increased\ue000from\ue000US$\ue0000.3\ue000billion\ue000per\ue000year\ue000in\ue000the\ue000late\ue0001990s\ue000to\ue000some\ue000US$\ue0007\ue000billion\ue000annually\ue000in\ue0002006\ue000 (Mansuri\ue000 and\ue000 Rao\ue000 2004,\ue000 Mansuri\ue000 and\ue000 Rao\ue000 2007).\ue000 As\ue000 a\ue000 result,\ue000 CDD\ue000 is\ue000 now\ue000 applied\ue000 in\ue000 areas\ue000 ranging\ue000 from\ue000 delivery\ue000 of\ue000 agricultural\ue000 technology\ue000 and\ue000 inputs\ue000 to\ue000 health\ue000 care,\ue000 education,\ue000 micro- finance,\ue000 and\ue000 insurance.\ue000 The\ue000 motive\ue000 for\ue000 such\ue000 expansion\ue000 is\ue000 a\ue000 belief\ue000 in\ue000 local\ue000 actors\u2019\ue000 informational\ue000 advantages\ue000 regarding\ue000 local\ue000 needs\ue000 and\ue000 their\ue000 ability\ue000 to\ue000 monitor\ue000 outcomes\ue000 at\ue000 lower\ue000 cost.\ue000 However,\ue000 especially\ue000in\ue000stratified\ue000societies\ue000with\ue000few\ue000countervailing\ue000institutional\ue000arrangements,\ue000local\ue000groups\u2019\ue000 informational\ue000 advantages\ue000 may\ue000 be\ue000 more\ue000 than\ue000 compensated\ue000 by\ue000 the\ue000 dangers\ue000 of\ue000 elite\ue000 capture.\ue000 This\ue000 implies\ue000 that\ue000 empirical\ue000 assessment\ue000 of\ue000 the\ue000 impact\ue000 of\ue000 such\ue000 programs\ue000 and\ue000 the\ue000 factors\ue000 conducive\ue000 to\ue000 attaining\ue000outcomes\ue000will\ue000be\ue000desirable.\ue000\ue000

This\ue000paper\ue000focuses\ue000on\ue000a\ue000large\ue000CDD\ue000program\ue000in\ue000the\ue000Indian\ue000state\ue000of\ue000Andhra\ue000Pradesh\ue000(AP)\ue000that\ue000 combines\ue000 a\ue000 number\ue000 of\ue000 characteristics\ue000 of\ue000 interest.\ue000 The\ue000 program\ue000 focuses\ue000 exclusively\ue000 on\ue000 women\ue000 and\ue000draws\ue000on\ue000self-help\ue000groups\ue000(SHGs)\ue000as\ue000the\ue000primary\ue000channel\ue000for\ue000delivering\ue000interventions.\ue000To\ue000do\ue000 so,\ue000 it\ue000 builds\ue000 on\ue000 a\ue000 large\ue000 infrastructure\ue000 of\ue000 pre-existing\ue000 SHGs\ue000 that\ue000 largely\ue000 focused\ue000 on\ue000 micro-credit\ue000 established\ue000 in\ue000 the\ue000 state\ue000 during\ue000 the\ue000 1990s.\ue000 To\ue000 expand\ue000 coverage\ue000 of\ue000 the\ue000 poor\ue000 and\ue000 to\ue000 generate\ue000 synergies\ue000between\ue000social\ue000and\ue000economic\ue000development,\ue000SHGs\u2019\ue000traditional\ue000focus\ue000on\ue000micro-credit\ue000is\ue000 complemented\ue000 by\ue000 an\ue000 emphasis\ue000 on\ue000 empowering\ue000 women\ue000 socially\ue000 and\ue000 economically.\ue000 Key\ue000 instruments\ue000 used\ue000 to\ue000 accomplish\ue000 this\ue000 are\ue000 (i)\ue000 targeted\ue000 efforts\ue000 to\ue000 foster\ue000 formation\ue000 of\ue000 SHGs\ue000 by\ue000 the\ue000 \u201cleftover\ue000 poor\u201d;\ue000 (ii)\ue000 capacity\ue000 building\ue000 for\ue000 existing\ue000 SHGs\ue000 and\ue000 establishment\ue000 of\ue000 second\ue000 tier\ue000

\ue000
3\ue000

institutions\ue000 at\ue000 the\ue000 village\ue000 and\ue000 mandal\ue000 (county)\ue000 levels\ue000 to\ue000 capitalize\ue000 on\ue000 economies\ue000 of\ue000 scale\ue000 in\ue000 capacity\ue000building,\ue000credit\ue000and\ue000insurance,\ue000and\ue000interaction\ue000with\ue000the\ue000public\ue000and\ue000the\ue000private\ue000sectors\ue000in\ue000 larger-scale\ue000 programs;\ue000 and\ue000 (iii)\ue000 a\ue000 one-time\ue000 injection\ue000 of\ue000 equity\ue000 to\ue000 the\ue000 second\ue000 tier\ue000 institutions\ue000 to\ue000 provide\ue000 the\ue000 seed\ue000 capital\ue000 for\ue000 them\ue000 to\ue000 take\ue000 measures\ue000 to\ue000 remedy\ue000 the\ue000 multiple\ue000 market\ue000 and\ue000 government\ue000failures\ue000encountered\ue000in\ue000rural\ue000India.\ue000\ue000

This\ue000paper\ue000aims\ue000to\ue000evaluate\ue000the\ue000impact\ue000of\ue000this\ue000program\ue000at\ue000the\ue000household\ue000level.\ue000To\ue000do\ue000justice\ue000 to\ue000program\ue000objectives,\ue000we\ue000consider\ue000economic\ue000and\ue000non-economic\ue000outcomes.\ue000We\ue000draw\ue000on\ue000a\ue0002004\ue000 survey\ue000 of\ue000 more\ue000 than\ue000 6,000\ue000 households\ue000 in\ue000 program\ue000 and\ue000 control\ue000 districts,\ue000 i.e.\ue000 districts\ue000 where\ue000 the\ue000 program\ue000 became\ue000 available\ue000 in\ue000 2001\ue000 and\ue000 2004,\ue000 respectively.\ue000 Our\ue000 data\ue000 provide\ue000 a\ue000 rich\ue000 set\ue000 of\ue000 information\ue000 on\ue000 female\ue000 empowerment,\ue000 nutritional\ue000 status,\ue000 consumption,\ue000 income,\ue000 and\ue000 asset\ue000 endowments\ue000that\ue000can\ue000be\ue000used\ue000as\ue000measures\ue000of\ue000the\ue000economic\ue000and\ue000social\ue000impacts\ue000of\ue000the\ue000program.\ue000\ue000

Methodologically,\ue000we\ue000combine\ue000three\ue000elements,\ue000namely\ue000(i)\ue000a\ue000pipeline\ue000setting\ue000to\ue000create\ue000groups\ue000 that\ue000 are\ue000 arguably\ue000 comparable\ue000 in\ue000 unobservables;\ue000 (ii)\ue000 propensity\ue000 score\ue000 matching\ue000 on\ue000 observables\ue000 over\ue000an\ue000appropriate\ue000area\ue000of\ue000common\ue000support\ue000at\ue000village\ue000and\ue000household\ue000levels;\ue000and\ue000(iii)\ue000difference- in-difference\ue000estimates\ue000for\ue000information\ue000on\ue000assets\ue000and\ue000empowerment\ue000that\ue000can\ue000credibly\ue000be\ue000obtained\ue000 via\ue000 recall.\ue000 At\ue000 the\ue000 village\ue000 level,\ue000 we\ue000 use\ue000 propensity\ue000 score\ue000 matching\ue000 to\ue000 control\ue000 for\ue000 selection\ue000 on\ue000 observables.\ue000 Results\ue000 point\ue000 towards\ue000 significant\ue000 positive\ue000 average\ue000 impacts\ue000 from\ue000 the\ue000 program\ue000 on\ue000 female\ue000 empowerment,\ue000 nutritional\ue000 outcomes,\ue000 and\ue000 consumption,\ue000 but\ue000 fail\ue000 to\ue000 reject\ue000 the\ue000 hypothesis\ue000 that\ue000the\ue000program\ue000had\ue000no\ue000impact\ue000on\ue000income\ue000and\ue000asset\ue000accumulation.\ue000\ue000

To\ue000allow\ue000for\ue000(indirect)\ue000effects\ue000on\ue000households\ue000in\ue000program\ue000areas\ue000who\ue000did\ue000not\ue000join\ue000the\ue000program\ue000 and\ue000 to\ue000 prevent\ue000 crediting\ue000 the\ue000 program\ue000 with\ue000 effects\ue000 that\ue000 are\ue000 attributable\ue000 to\ue000 the\ue000 formation\ue000 of\ue000 SHGs\ue000 prior\ue000 to\ue000 its\ue000 coming\ue000 into\ue000 force,\ue000 we\ue000 allow\ue000 for\ue000 heterogeneity\ue000 of\ue000 program\ue000 impact\ue000 across\ue000 three\ue000 sub- groups\ue000 of\ue000 households\ue000 in\ue000 program\ue000 areas,\ue000 namely\ue000 (i)\ue000 those\ue000 who\ue000 joined\ue000 new\ue000 groups\ue000 under\ue000 the\ue000

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