A. K. POKHRIYAL Assistant Professor, Faculty of Commerce, H.N.B. Garhwal Central University, Srinagar Garhwal, Uttrakhand, India

International Journal of Economic Issues, Vol. 4, No. 1 (January-June, 2011): 103-122 International Science Press SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE: AN EMPIRICAL STUDY OF NABARD SPONSORED MICROFINANCE PROGRAM IN DEHRADUN DISTRICT (UTTRAKHAND, INDIA) A. K. POKHRIYAL Assistant Professor, Faculty of Commerce, H.N.B. Garhwal Central University, Srinagar Garhwal, Uttrakhand, India VIPIN GHILDIYAL Graphic Era University, 566/6 Bell Road, Clement Town, Dehradun, Uttrakhand, India Microfinance has been successful in bringing the social and economic empowerment to the poor throughout the world. In India also it has been a policy success yet there has been a wide regional disparity. NABARD has been the major facilitator of microfinance in India. The present work is an attempt made to assess the socio-economic impact of NABARD sponsored microfinance programs in Uttrakhand state of Indian republic. The present work is based on the secondary and primary data. Primary data has been collected from the Dehradun district using a questionnaire placed to 600 people from different self help groups. Primary data has come from all the six blocks of the district. Analysis has been carried using t test, correlation and simple and multiple regression analysis. It is found that members of the self help groups have been empowered socially and economically. But they demand more services like marketing assistance for their products from NABARD it order to reap the maximum benefits. JEL Classification: I32, O2, O18. Key words: Micro finance, SHG, Poverty, socio-economic empowerment, NGOs. 1. INTRODUCTION Microfinance is a very renowned phenomenon worldwide now, which is helpful in eliminating poverty and strengthening the poor economically and socially. Almost all countries are practicing it as a part of their policy for combating against poverty. In India also, it has become a policy success. In India microfinance programs are implemented through self help groups. A self help groups is a group usually of 0-15 people, which are from the same economic and social background. Initiated by NABARD (National bank for agricultural and rural development) that is the apex body in the field of rural development, it has now come up a long way and has been very successful indeed. Yet there are regional disparities in the implementation and success of microfinance programs. In South India microfinance has created various

104 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES landmarks and has been very successful. It has now become a revolution for and of the common man there, but in other parts of India it has not been that successful. South India shares the majority of the self help groups. According to the recent findings South India shares 46.35 per cent of the total self help groups up to 31 March 2010 and more interestingly a whopping 76.39 per cent of the total loan disbursed to the self help groups at all India level. Self help groups are very efficiently running and improving the life conditions of the masses in South India. Keeping these disparities into view the present study analyzes the socio-economic effect of the microfinance programs on the poor in Uttrakhand state, with the field work has been carried in the Dehradun district. Uttrakhand is a hill state, which has come into existence on 9 th November 2000. Till 31 March 2010 there were 43997 self help groups in Uttrakhand forming 0.63 percentage at all India level and loan disbursed to these groups were Rs. 467.67 million, which constitute 0.32 per cent of the total loan disbursed at all India level. Micro finance is an effective tool to eliminate poverty. It empowers the poor people especially poor women both economically and socially. Poor people cannot approach the bank for their credit needs due to their incapability of furnishing the collateral security. Many of them have no bank account. Microfinance is a provision of money for them without any collateral. They use it in developing income generating activity for them, and sometimes in satisfying other needs too. Thus microfinance is a promise of regular income to these poor as they start indulging in various income generating activities. Gradually they come out of the vicious trap of the poverty. 2. REVIEW OF LITERATURE Impacts of micro finance were addressed by many researchers and some important studies are presented here. Ahmad (1999) maintained that self help groups have been successful in Assam (North Eastern India) even in the period of insurgency too. Women are coming to the administration directly for their just rights and to address their grievances boldly. Puhazhendhi (1999) analyzed that self help groups are performing well and have been a carrier to the economic and social empowerment of the poor. Bhatia and Bhatia (2000) explored that recovery of SHG s is higher than other credit extended to borrowers and living standards of the SHG s members, in terms of ownership of assets, increase in savings and borrowing capacity, income generating activities and income levels, changed significantly. Dasgupta (2000) in his paper assessed that the poor are reaping many benefits through self help groups like mobilization of savings, access to the credit etc. Gurumoorthy (2000) in his study found that SHG is a viable alternative to achieve the objectives of rural development and to get community participation in all rural development programs. Nagayya (2000) explored that an informal arrangement for credit supply to the poor through SHG s is fast emerging as a promising tool for promoting income-generating enterprises. He advocates that NABARD and SDBI are playing prominent role in implementing the microfinance programs. Rakesh Malhotra (2000) in his study explored the male dominance even in the in the usage of credit borrowed by the women participants. V. M. Rao (2002) maintained that due to the failure of the formal financial system in India, SHG movement flourished well and

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 105 helping the poor to come out of the vicious circle of poverty. Satish (2001) in his paper maintains that for the efficient functioning of the self help groups, it is essential that homogeneity of socio-economic status of the members, should be ensured while forming SHG s. 3. RESEARCH OBJECTIVE AND METHODOLOGY In the light of prevailing scenario and success of microfinance programs and importance of the role played by NABARD so far in promoting them, it is worthwhile to study the contribution of microfinance programs in Uttrakhand. Thus to accomplish the above said exploration the main objective of the present study is to Analyze NABARD sponsored microfinance programs and their role in the empowerment of the poor people in study area. The above said main objective is divided into following sub objectives: 1. To analyze the impact of NABARD sponsored micro-finance programs on the socio economic empowerment of poor people. 2. To analyze the functioning of self help groups in the study area. 3.1. Research Design In the backdrop of the above adjectives, the present work is an exploratory and descriptive research study. To suit this purpose ex-post facto research methodology has been adopted that is commensurate with both quantitative and qualitative techniques of data analysis so that the variables of the study could be analyzed better. Both primary and secondary data has been incorporated. Secondary data has been taken from the published and unpublished sources and primary data has been collected through a structured questionnaire. 3.2. Study Area The study area for the present work is decided to be Dehradun district of Uttrakhand. Dehradun being the capital city has a diverse and well developed banking infrastructure which assists microfinance activities to grow better, secondly NABARD has their regional office which implies that it would have put more rigorous effort for the promotion of Microfinance in Dehradun. 3.3. Sample Selection and Sample Size For the present work we have employed both purposive and convenient sampling techniques. In the region microfinance activities through self help groups are being carried out by various facilitators like NABARD, Block development offices, self help groups under Swarnjayanti Gram Swarojgar Yogna (SGSY) etc. As this work is confined to the impact assessment of NABARD sponsored microfinance programs only, therefore we have selected self help groups formed by various NGOs which are specifically connected with NABARD. NABARD encourages various NGOs by reimbursing the money to them which they have spent to form and nurture self help groups thereby promotes microfinance activities. The data has been collected by placing the

106 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES questionnaire to the members of the self help groups which are formed by the NGOs working in collaboration with NABARD. From every group we have selected three members randomly, thus we have tried to cover maximum as possible groups for maximum coverage of the program. The sample size has been decided to be 600 respondents, which were from the various self help groups selected randomly from all the six blocks of the district. 3.4. Data Collection and Analysis The primary data has been collected through Survey method using structured questionnaire, which comprised all the possible variables for the assessment of the effect of microfinance on the socioeconomic wellbeing of the participants. Questionnaire will comprise of close ended, dichotomous and multichotomous questions so as to reveal the demographic characteristics of the respondents as well as their perception regarding the effect of microfinance on the socio economic wellbeing (empowerment). For collecting the views of the respondents about the various aspects of microfinance programs we have used Likert scale having five points 1-5, 1 represent the highest level of dissatisfaction and 5 the highest level of satisfactions. Data analysis has been started from scrutiny of the questionnaires for their correctness and completeness. Thus incomplete questionnaires have not been included for the analysis. Out of the sample size of 600 we have found 579 questionnaires worthy to be analyzed. For the better analysis, we have employed one sample t test, correlation and regression analysis in addition to descriptive and percentage analysis. T test is performed on various variables to test the significance of the mean and the correlation for finding out the degree of association among variables. As the empowerment/ well being brought by using microfinance is a systematic and sequential process. Correlation analysis has helped us to find out whether there is any association between two consecutive processes. Finally both simple and multiple regression analysis have been used to find out the contribution of various independent variables on the dependent variable indicating socio-economic empowerment of microfinance. 4. DEMOGRAPHIC PROFILE OF THE RESPONDENTS Data collected from the field survey shows that most of the microfinance participants (self help group members) are female. Female constitute 92.8 per cent (537 respondents) of the total respondents sampled while male accounts for only 7.2 per cent with the strength of 62 out of total 579 respondents. Out of the total respondent surveyed 78 respondents(13.4 per cent) reported to have age below 25 years, while 233 respondent (40.2%) having age group of 25 to 35 years. 242 respondents(41.8%) belong to 35-45 years age group and only 27 respondents (4.6%) aged more than 45 years. Thus it is reported that most of respondents are young as altogether 95.4 per cent of the respondents are below 45 years of age. As far as education background is concerned study shows that majority of the group members which are 193 in number (33.3 per cent) have had education up to primary level only. Whereas 101 members (17.5 per cent) have had education up to Middle level (8 standard). 12.4 per cent of the total members had joined school up to high school level (10 th standard). Compared to that a good

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 107 proportion, 126 members (21.9 per cent) were intermediate passed. Very few have had education above intermediated. Data shows that respondents graduated were only 24 in number (4.6 per cent) and similarly only member (0.2 per cent) had a post graduate degree. The proportion of the respondents who were illiterate and did not achieve any formal education was 10.5 per cent. Thus the majority of the respondents were educated up to some extent. Marital status of the respondents shows that only 36 respondents (6.2 per cent) are unmarried while 543 respondents (93.8 per cent) are married. Majority of the respondents which are 357 in number (61.6 per cent) reported that they have a nuclear family while 242 of them (38.4 per cent) were from joint family. 307 respondents (53 per cent) reported that they have 0-4 members in their family, 203 respondents (35.3 per cent) have 5 to 8 family members whereas only 69 members (11.7 per cent) have more than 8 members in their family. This shows increasing awareness about the family planning even among the rural people. Another point highlighted is that 346 (59.8 per cent) respondents are from general category, 89 respondents (15.3 per cent) are from Scheduled Caste. Whereas 112 respondents (19.3 per cent) are from Scheduled Tribe and 32 (5.6 per cent) are form Other Backward Classes. This shows that microfinance programs are covering people from all the categories, and have not been confined to any special category of people. Though the coverage of the program towards the categories other than general is comparatively less. In addition to these basic information we have also enquired them about their income and poverty level before and after their participation into microfinance programs. 151 respondents (21.6 per cent) reported that their present income level is below Rs. 5000 per-month, while 416 respondents (71.9 per cent) reported that their present income is between Rs. 5000 to Rs. 10000 per-month, only 12 respondents (2 per cent) reported to have income level more than Rs. 10000 per month at present. About the income level before microfinance, 541 respondents (93.4 per cent) asserted that their income level before microfinance was below Rs. 5000 per month, whereas only 38 respondents (6.6 per cent) reported to have income level between Rs. 5000 to Rs. 10000 per month and no one was having income above Rs. 10000. Similarly 45 respondents (7.7 per cent) reported that they were below poverty line before their participation into microfinance programs while only 45 respondents (7.7 per cent) reported to be below poverty line after microfinance. 343 respondents (59.2 per cent) reported that they were slightly above poverty line before microfinance, this figure grown to 483 respondents (83.5 per cent) afterwards. Similarly only 4 respondents (0.2 per cent) reported that they were high above poverty line before microfinance and 51 respondents (8.8 per cent) said they are high above poverty line after microfinance. This show a positive impact of microfinance programs on the participants of microfinance programs. 5. STATISTICAL ANALYSIS AND DISCUSSION 5.1. Reliability Analysis Cronbach s Alpha The Cronbach s alpha has been calculated as part of the reliability test to assess how consistent the results were and whether similar results can be generalized if the sample size is increased. A value of 0.7 or higher is assumed to be very good. The Cronbach s

108 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES alpha was calculated for section B and C of the questionnaire which is associated to assess the socio economic impact of microfinance on the masses, and level of services gained by forming Self Help Groups, in this section all the questions have same scale. The results are shown in the following table. Table 1 Cronbach s AlphaReliability Statistics Cronbach s Alpha Cronbach s Alpha Based on Standardized Items N of Items.816.818 17 It is very much apparent form the table presented above that the data collected fulfills the reliability condition. We have computed the chronbach alpha coefficient for 17 variables which will be primarily used for the statistical analysis. The coefficient has a value.818 which is satisfactory as it is greater than.70. 5.2. Statistical Analysis The following statistical analysis is done with the view of the following two main hypotheses as discussed in chapter three. H1 : Microfinance has increased socio-economic well being among participants. H2 : Microfinance program participants are satisfied with the level of service and benefits they received by forming SHGs. 5.2.1. Section A: Assessing Socio Economic Well Being Having tested the reliability of data collected for various variables we, are now analyzing the variables for testing the socio economic impact (the first main hypothesis) of the microfinance on the participants. 5.2.1.1. One Sample Statistics and t Test of Different Variable At the first stage we have assessed the satisfaction level of the respondents for the various statements representing their economic and social well being, they have attained due to their participation in microfinance programs. We are striving to assess that whether or not respondents feel that as they have participated in microfinance programs they have an increment in income, food expenditure, savings, and enhancement in the level of physical asset, financial situation and living standard. Have they been able to avail better medical facilities, better education to their children after their participation in microfinance program? Did the participation increase their role at the household level decision making, did their confidence level increase and did they feel that their social status increase or not? For this purpose we have employed the t test after having analyzed the descriptive for all these parameters. The descriptive shows the mean of all these variables and standard deviation. The mean represent the average satisfaction level of the respondents for the above said parameters. The higher the mean the more satisfied the respondents are about the parameters. Standard deviation shows the deviation of the individual observation form the mean value.

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 109 Table 2 One Sample Statistics of Various Variables Name of the variables N Mean Standard Standard deviation error of mean Increment in income 579 4.4093.89015.03699 Increment in food expenditure 579 3.9827.93549.03888 Increment in saving 579 4.6114.81886.03403 Improvement in physical assets 579 4.0345.90492.03761 Improvement in financial situation 579 4.2522.80996.03366 Improvement in living standard 579 4.3109.80444.03343 Better medical facilities 579 4.3644 1.06867.04441 Better Education Facilities 579 4.1744 1.05995.04405 Enhanced participation in decision making 579 4.3299 1.10048.04573 Increased confidence 579 4.4162 1.15172.04786 Increased Social status 579 4.3333 1.14114.04742 Source: Field data. Almost all the above variables show the mean value more than 4. All the responses are collected using a five point likert scale (1 strongly disagree and 5 strongly agree). Thus the mean value 4 or above 4 indicates that the respondents are satisfied for all the above parameters more than the average level of satisfaction (2.5) on the scale. Thus it is proved from the descriptive that the respondents strongly agree that their income, food expenditure, savings has been increased due to their participation in microfinance program. They are also in agreement that they could increase physical assets, their financial situation improved, and living standard gone up. They could avail better medical facilities and could have been able to provide better education to their children. Due to microfinance they are now enjoying enhanced recognition in the household decision making and their confidence and social status has been increased. We now examine whether or not the above results are statistical significant using the one sample t test. The significance level for rejecting/accepting the hypothesis is determined to be 5 per cent or.05. we are comparing the mean scores of all the above variables to a hypothetical mean 3 which shows above average satisfaction level on likert scale. We took the following null and alternative hypotheses: H0 : Participants are less satisfied than the above average level of satisfaction (3) or (µ<3). H1 : Participants are satisfied more than the above average level of satisfaction or (µ>3). The analysis in the table demonstrates that the t value for the variable increment in income is 38.097 and significance level is 0.000 so at the 5% level of significance the null hypothesis is rejected since the p value is less than.05 and it is strongly significant. So our results are in favor of alternative hypotheses.this means that the satisfaction level of the respondents, about the increment of their income after they have been provided with micro credit is more than above average satisfaction level. The same

110 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES Table 3 One-Sample t Test Results hypothesis is used for examining the significance of the mean for other statements indicating increment/enhancement in food expenditure, savings, physical assets, financial situation, living standard, better education, better medical facilities, confidence and social statusit is evident from the above table that the p value for all the variables is.000 which is less than.05 and therefore the null hypothesis is rejected and alternative hypothesis is accepted. Conclusively it can be said that the mean is significantly above than 3 or respondents are satisfied more than the above average level for all the above parameters 5.2.1.2. Relationship Among Various Variables Test Value = 3 As the income increases the people also increase food expenditure, and after it they try to save with the belief that saving will assist them in the future. Savings is used to create physical asset and eventually the financial situation and living standard goes up. Increasing living standard generates confidence to them and they become socially active thereby their social status enhances. Therefore, now we tried to find out the whether or not there exist significant relationship among the various variables. In order to test whether or not the variables significantly related or not. We have decided the following null and alternate hypotheses: H0 : No relationship exists among the various variables. H1 : Significant relationship among various variables. 95% Confidence Interval of the Difference T df Sig. Mean Lower Upper (2-tailed) Difference Increase in Income 38.097 578.000 1.40933 1.3367 1.4820 Increment in food expenditure 25.278 578.000 0.98273 0.9064 1.0591 Increment in Savings 47.352 578.000 1.61140 1.5446 1.6782 Enhancement in physical Assets 27.509 578.000 1.03454.9607 1.1084 Increment in financial situation 37.200 578.000 1.25216 1.1860 1.3183 Increment in Living standard 39.211 578.000 1.31088 1.2452 1.3765 Better medical facilities 30.722 578.000 1.36422 1.2772 1.4517 Better education 26.661 578.000 1.17444 1.0879 1.2610 Enhanced role in decision making 29.078 578.000 1.32988 1.2401 1.4197 Improved confidence level 29.589 578.000 1.41623 1.3222 1.5102 Improved social status 28.115 578.000 1.3333 1.2402 1.4265 Source: Field Data. The table below demonstrated that our null hypothesis is rejected and their exist a significantly positive relationship among various variables since p value is less than.005 for all cases. The correlation table reveals that increment in income is significantly

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 111 and positively related to all other variables. Similarly enhancement in living standard and enhancement in social status is also significantly and positively correlated (r =.515, sig=.000). Thus we can conclude that those participants who have been able to increase their income also have been able to increase food expenditure and savings. Their physical assets have also been enhanced, their financial situation improved and living standard has gone up. They also have been able to attain better medical facilities, better education for their children, their role in household decision making has also increased, and their confidence and social status have also improved. Similarly participants who have enhanced living standard have also attained enhanced social status. Correlation shows the degree of association among various variables but it does not show the causation between two or more variables. Therefore now we try to establish that whether or not increment in income is the cause for other variables using simple regression and multiple regression techniques. Table 4 Pearson s Coefficient of Correlation Among Various Variables (N=579) 5.2.1.3. Simple Regressions Analysis between Increment in Income and Other Variables We have conducted the regression analysis to test whether or not the increment in income is significant predictor of other variables and have come up with result given in following tables. In the Table 3 above, every row represent a different model showing the effect of independent variable increment in income on all other variables separately. Information in the first model summary row indicates that the value of R-square for the model is 0.259. This means that 25.9 per cent of the variation in the variable increment in food expenditure of respondents (dependent variable) can be explained by the independent variable increment in income. In general, R square always increases as independent

112 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES Table 5 Regression Analysis Model Summary Model R R Square Adjusted Std. Error of R Square the Estimate 1.509 a 0.259 0.258 0.80581 2.736 a 0.542 0.541 0.5548 3.453 a 0.205 0.204 0.80754 4.629 a 0.396 0.395 0.63003 5.740 a 0.548 0.547 0.54146 6.489 a 0.239 0.237 0.93325 7.538 a 0.29 0.289 0.89391 8.478 a 0.229 0.227 0.96727 9.527 a 0.278 0.277 0.97957 10.521 a 0.27 0.270 0.97494 a Predictors: (constant), increase in income. variables are added to a multiple regression model. To avoid overestimating the impact of adding an independent variable to the model, we prefer to use the adjusted R-square value (it recalculates the R-square value based on the number of predictor variables in the model). This makes it easy to compare the explanatory power of regression models with different numbers of independent variables. The adjusted R-square for the first model is 0.258., which represent that 25.8 per cent of the variations in the dependent variables are due to independent variable. In the ANOVA table. The regression model is statistically significant (F ratio=201.994, probability level 0.000). The probability level 0.000 means that the chances are almost zero that the results of regression model are due to random events instead of a true relationship. Here we develop null hypothesis and alternate hypotheses that: H0: There is no relationship between increment in food expenditure and increment in income. H1: Increment in food expenditure is significantly related to increment in income. Since the p value in anova table for the first model less than.05 therefore we reject the null hypothesis and accept the alternative. Similarly the variable increment in income represent respectively 54.1,20.4, 39.5, 54.7, 23.7, 28.9, 22.7, 27.7 and 27 per cent variation(as shown by adjusted R square column in model summary table) in the variables Increment in food expenditure, increment in savings, enhancement in physical assets, enhancement in financial situation, enhancement in living standard, better medical facilities, better education to their children, enhanced role in decision making, enhanced confidence level, enhanced social status as given by the model summary table. The Anova table shows that all these models are statistically significant as the p value is less than.05 for all the models. We employ the above mention null and alternative hypothesis separately for each variable separately for testing its relation with increment in income. For all the variables the alternative hypothesis is accepted

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 113 Table 6 Anova b Model Sum of Square Df Mean Square F Sig 1. Regression 131.162 1 131.162 201.994.000 a Residual 374.666 577 0.649 Total 505.827 578 2. Regression 209.163 1 209.163 682.439.000 a Residual 177.601 577 0.308 Total 387.565 578 3. Regression 97.038 1 97.038 148.804.000 a Residual 376.271 577 0.652 Total 473.309 578 4. Regression 150.154 1 150.154 378.284.000 a Residual 229.037 577 0.397 Total 379.185 578 5. Regression 204.89 1 204.88 698.83.000 a Residual 169.162 577 0.293 Total 374.041 578 6. Regression 157.565 1 157.565 180.91.000 a Residual 502.542 577 0.871 Total 660.107 578 7. Regression 188.29 1 188.19 235.623.000 a Residual 461.091 577 0.799 Total 649.382 578 8. Regression 160.141 1 160.141 171.16.000 a Residual 539.852 577 0.936 Total 699.993 578 8. Regression 213.027 1 213.027 222.007.000 a Residual 553.661 577 0.96 Total 766.687 578 9. Regression 204.45 1 204.45 215.184.000 a a b Residual 548.217 577 0.95 Total 752.667 578 Predictor: Increment in income Dependent variables: Increment in food expenditure, increment in savings, enhancement in physical assets, enhancement in financial situation, enhancement in living standard, better medical facilities, better education, enhanced role in decision making, enhanced confidence level, enhanced social status. and null hypothesis is rejected since the p value is less than.05.the following coefficient table shows that how significantly the independent variable increment in income predicts the value of various dependent variables separately. The beta coefficient in the following table shows the effect of increment in income on the other variables. For example the beta coefficient for model 1 indicating the dependent variable increment in food expenditure is.509 which shows that an increment of 1 unit in income cause increment of.509 unit in food expenditure.

114 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES Unstandardised Coefficient Table 7 Coefficient a Standardized Coefficient Model Beta Standard. Error Beta t Sig. 1. Constant 1.623 0.169 9.583.000 Increase in Income 0.535 0.038 0.509 14.212.000 2. Constant 1.626 0.117 13.943.000 Increase in Income 0.677 0.026 0.736 26.118.000 3. Constant 2.005 0.17 11.812.000 Increase in Income 0.46 0.038 0.453 12.119.000 4. Constant 1.727 0.132 13.045.000 Increase in Income 0.573 0.029 0.629 19.45.000 5. Constant 1.362 0.114 11.965.000 Increase in Income 0.669 0.025 0.74 26.435.000 6. Constant 1.778 0.196 9.065.000 Increase in Income 0.587 0.044 0.489 13.45.000 7. Constant 1.347 0.188 7.17.000 Increase in Income 0.641 0.042 0.538 15.35.000 8. Constant 1.723 0.203 8.473.000 Increase in Income 0.591 0.045 0.478 13.083.000 9. Constant 1.409 0.206 6.844.000 Increase in Income 0.682 0.046 0.527 14.9.000 10. Constant 1.387 0.205 6.771.000 a Increase in Income 0.668 0.046 0.521 14.669.000 Dependent variables: Increment in food expenditure, increment in savings, enhancement in physical assets, enhancement in financial situation, enhancement in living standard, better medical facilities, better education, enhanced role in decision making, enhanced confidence level, enhanced social status. Similarly form the beta values for the other models we can reveal that 1 unit increment in income cause increment of.736, 453,.629,.74,.489,.538, 47.8,.527, and.521 units respectively in the variables under discussion. Since the p value here again is less than.05 we can conclude that increment in income is a significant predictor of all other variables.thus it is evident that participants of microfinance programs have increment in income and due to the increased income many other parameters have also been changed for them. Their living standard has gone up and social status improved. 5.2.1.4. Multiple Regressions Between Increment in Living Standard and Different Related Variables We now measure the composite impact of various independent variables on the dependent variable Improvements in living standard using multiple regression technique.

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 115 Table 8 Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1.867 a.752.749.40269 a Predictors: (Constant), Increase in Income, Increment in food expenditure,increment in Savings, Enhancement in physical Asset, Increment in financial situation. Information in the Model summary table indicates that the value of R-square for the model is 0.752. This means that 75.2 per cent of the variation in the improvement of living standards of respondents (dependent variable) can be explained from the five dependent independent variables. The adjusted R-square for the model is 0.749, which indicates only a slight overestimate with the model. Even R square also represent that 74.9 per cent of the variations in the dependent variables are due to independent variables. Table 9 ANOVA b Model Sum of Squares df Mean Square F Sig. 1 Regression 281.126 5 56.225 346.736.000 a Residual 92.915 573.162 Total 374.041 578 a b Predictors: (Constant), Increment in financial situation, Increment in food expenditure, Increase in Income, Increment in Savings, Enhancement in physical Assets: Dependent Variable: Increment in Living standard. The overall regression results are shown in the ANOVA table above. The regression model is statistically significant (F ratio=346.736, probability level 0.000). The probability level 0.000 means that the chances are almost zero that the results of regression model are due to random events instead of a true relationship. Here we develop null hypothesis and alternate hypotheses that: H0 : There is no relationship between improvements in the living standard of respondents and increment in income, increment in food expenditure, increment in savings, enhancement in physical assets and increment in financial situation. H1 : Increment in income, increment in food expenditure, increment in savings, enhancement in physical assets and increment in financial situation are significantly related to improvement in living standard. The null hypothesis is rejected and the alternative hypothesis is accepted and therefore it is revealed that all the five independent variables are significantly related to the dependent variable. In the significance column in above table, we have noticed that beta coefficients for increment in income, increment in food expenditure, increment in savings, and increment in financial situation are all significant as the p value is less than.005. The beta coefficient for all the independent variables in the above table shows the effect of these on the dependent variable. For example the beta coefficient for the variable increment in income shows the value.234 which mean that every time the income

116 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES Table 10 Coefficients a Unstandardized Coefficients Standardized Coefficients Model B Std. Error Beta t Sig. 1 (Constant).125.103 1.214.225 Increase in Income.212.030.234 7.130.000 Increment in food expenditure.096.025.112 3.781.000 Increment in Savings.290.034.296 8.467.000 Enhancement in physical Assets -.036.032 -.041-1.154.249 Increment in financial situation.395.036.397 11.057.000 a Dependent Variable: Increment in Living standard. increases by 1 unit it leads the living standard o increase on an average by.234 units. The coefficient table shows that the variable increment in financial situation is the most significant predictor of improvements in living standard with a beta coefficient 0.397 (probability 0.000) followed by increment in savings (beta.296 and probability.001), improvement in income (beta.23 and probability of.000) and increment in food expenditure (beta.116, probability.000). Thus for all these variables we can conclude that the independent variables are significant predictors of the dependent variable. The p value is less than.05 for all these four variables. The only independent variable which has a negative beta value is enhancement in physical assets which indicated that enhancement in physical assets by 1 unit represent a decrement on an average of.041 unit in living standard. So for the independent variable enhancement in physical assets we accept the null hypothesis and conclude that enhancement in physical assets and improvements in living standard are not related and enhancement in physical assets does not affect improvements in living standard. One important fact to be considered here is that though the variable enhancement in physical assets shows a negative value, it cannot be out rightly rejected as a predictor because the multiple regression technique looks at the combination of these five variables to predict the independent variable. The coefficient table shows the contribution of each independent variable but only in combination with other independent variables. If we look at the correlation table, it shows that the variables enhancement in physical capital and enhancement in living standard are highly and positively correlated (r=.603, sig=.000). The overall model summary shows that it is a good model to predict the dependent variable. Thus the concluding remark is that because of participation in microfinance programs the respondents became economically better off. Having proved the economic betterment through microfinance, we now try to analyze whether or not the participants social status improved after they join microfinance program. Again we have employed the multiple regression technique to analyze the causal relationship between the various independent variables and the dependent variable improvements in social status indicating the social well being of the respondents. The independent variables are increment in income and improvements in living standard. As already indicated in the above t test analysis that participants are satisfied more than average level of satisfaction that the social status increased

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 117 after they join microfinance activity. Moreover there exists a significant positive relation among these variables. The multiple regression analysis shows the following results. Table 11 Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1.555 a.308.306.95070 a Predictors: (Constant), Increment in Living standard, Increase in Income. The above table indicates that the value of R-square for the model is 0.308. This means that 30.8 per cent of the variation in the improvement of social status of respondents (dependent variable) can be explained by the two independent variables. The adjusted R-square for the model is also 0.306 which is almost same to the R square value. Table 12 ANOVA b Model Sum of Squares df Mean Square F Sig. 1 Regression 232.055 2 116.028 128.372.000 a Residual 520.612 576.904 Total 752.667 578 a Predictors: (Constant), Increment in Living standard, Increase in Income. b Dependent Variable: Enhanced social status. The overall regression results are shown in the ANOVA table below shows that the regression model is statistically significant (F ratio=128.372, probability level 0.000). The null alternate hypotheses are as follows for the above said purpose: Ho: There is no relationship between improvements in social status of respondents and increment in income and enhancement in living standard. Ha: Increment in income and enhancement in living standard are significantly related to enhancement in social status. Since the p value is less than 0.05, we reject the null hypothesis and accept the alternate hypothesis. Thus the two variables are significantly related to the dependent variable. The coefficient table below shows that the variables increment in income and enhancement in living standard are significant predictor of enhancement in social status. Table shows that every single unit change in increment in income brings.310 unit changes in enhancement in social status. Similarly.285 unit change in enhancement in social status is represented by one unit change in increment in living standard. Table 13 Coefficients a Unstandardized Standardized Coefficients Coefficients Model B Std. Error Beta t Sig. 1 (Constant).837.223 3.750.000 Increase in Income.398.066.310 6.024.000 Increment in Living standard.404.073.285 5.526.000 a Dependent Variable: Enhanced social status.

118 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES Thus the above analysis shows that due to the participation in the microfinance program income of the participants increased and this brings enhancement in living standard and social status. As the variable enhancement in living standard indicates the economic well being and the other variable enhancement in social status represents the social wellbeing, it can be concluded that microfinance brings them socio economic wellbeing. 5.2.2. Assessment of the Services and Benefits Availed by Members of Self Help Groups This section provides the analysis of the services and benefits availed by the members of self help group keeping the second main hypothesis into consideration. We have tried to assess the satisfaction level of the members on the various statements on likert scale showing various services and benefits to the members. Table 14 Descriptive Statistics N Minimum Maximum Mean Std. Deviation Reasonability of Interest Rate on microcredit 579 1.00 5.00 3.5354 1.79678 Operational Assistance from NABARD 579 1.00 5.00 1.8670 1.51621 Increment in Employment 579 1.00 5.00 4.2332 1.45136 Capacity Building services from NABARD 579 1.00 5.00 2.0950 1.66158 Ease of process of availing Loan 579 1.00 5.00 4.2388.53272 Marketing Assistance from NABARD 579 1.00 5.00 1.1952.59547 Valid N (listwise) 579 Source: Field data. As shown in table above, the mean for three statements is above 3 which show the members are more satisfied than average level. Whereas for the other three it is below 2.5 showing that they are not satisfied with these statements. The following table shows the results of the t test. We have developed the following null and alternative hypothesis for the variables reasonability of interest rate on microcredit, increment in employment and ease of the process of availing microcredit. H0 : Participants are less satisfied than the above average level of satisfaction (3), in terms of reasonability of interest rate on microcredit, increment in employment and ease of the process of availing microcredit. H1 : Participants are satisfied more than the above average level of satisfaction. It can be concluded that the respondent are more satisfied than the above average level, that the interest rate on the microcredit is reasonable, that the microfinance activity has yielded them the increased employment opportunities for them and that the process of availing micro credit is easier. With the following t test results we have rejected the null hypothesis since the p values are less than 0.005(significance level), for the variables reasonability of interest rate on microcredit, increment in employment, Ease of the process of availing microcredit.

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 119 For the other three variables we have developed the following null and alternative hypothesis: H0 : The satisfaction level of the participants is equal to average level (2.5) in terms of receipt of operational assistance, Capacity building services, Marketing services from NABARD. H1: Participants are satisfied less than the above average level of satisfaction. Table 15 One-Sample t Test Results Test Value = 3 95% Confidence Interval of the Difference t df Sig. Mean Lower Upper (2-tailed) Difference Reasonability of interest rate on microcredit 7.170 578.000.53541.3887.6821 Ease of process of availing microcredit 82.321 578.000 1.2388 1.7804 1.8673 Increment in employment 20.445 578.000 1.23316 1.1147 1.3516 Source: Field survey. The table below shows that the p values for all three variables is less than the significance value.05. Hence the null hypothesis is rejected for all these variables and the alternative hypothesis is accepted. Thus it can be concluded that that participants are not receiving operational assistance, capacity building services and marketing assistance form NABARD. The above analysis leads the first main hypothesis to be fully supported and the second main hypothesis is partially supported. Table 16 One-Sample t Test Results Test Value = 2.5 95% Confidence Interval of the Difference t df Sig. Mean Lower Upper (2-tailed) Difference Operational assistance from NABARD -10.046 578.000 -.63299 -.7567 -.5092 Capacity building services form NABARD -5.865 578.000 -.40501 -.5406 -.2094 Marketing services form NABARD -52.728 578.000-1.30484-1.3534-1.2562 Source: Field survey. 6. ASSESSMENT OF THE FUNCTIONING OF SELF HELP GROUPS Another objective of this study is the assessment of the functioning of the self help groups in the region. The first part of the questionnaire consist if the question regarding the functioning of the groups. We have chosen the guidelines framed by NABARD in

120 / INTERNATIONAL JOURNAL OF ECONOMIC ISSUES this respect as the criteria against which the functioning of the groups is examined. NABARD rates a self help groups having a size of 15 to 20 members as very good, of 11 to 15 as good and of 0-10 as unsatisfactory. 24.5 per cent of the respondents in our field survey have reported to have 0-1- members in their group, whereas 65.3 per cent have group size of 11-15 members and rest of the members have group size more than 15 members. So most of the groups fulfill the criteria. Another fact is the poverty level of the group member. Conceptually self help group members come from the same socio economic background, and as per NABARD all members should be very poor or most should come from very poor level for attaining a rating of very good or good. Field survey shows that 19.5 per cent of the respondent reported that all of group members are very poor, whereas 74.5 per cent respondents have most of their group members are very poor. 93.8 per cent respondents reported that their group meeting is conducted every month, while 5.8 respondents say that their group meeting is held every fortnightly and mere 0.4 per cent respondents reported that they used to have weekly meeting of their group. This shows that the timings of the group meetings are fixed. Fixed timing of the meeting is a condition which a group must fulfill essentially to be ranked very good. Another aspect is the strength of the members in the meetings, 44.2 per cent reported that 90 per cent of their group members attend the meetings, whereas 35.8 per cent respondents reported that 70-90 per cent of the members join the meetings and only 20 per cent reported that less than 70 per cent members join group meetings. 97.2 respondents reported that they have all accounting books maintained. The make timely entries in accounting books. Only 2.8 per cent respondents reported that they do not have well maintained accounting books.75 per cent of the respondents says that in their group they use the entire savings for interloaning purpose, 24.7 per cent says that they use partly savings for interloaning while only 0.2 per cent says that no saving is used for interoaning. Thus the groups also fulfills these two conditions to be ranked very good or good. The average repayment rate of the loan taken by the members is more than 90 per cent as reported by 51.6 per cent of the respondents, 41.6 per cent of the respondents reported that repayment rate in their group is between 70-90 per cent. 3.8 per cent respondents say that their group s repayment rate is 50-70 per cent. Only 3 per cent of the respondents say that they have a repayment rate less than 50 per cent. Thus almost all the groups show a good repayment rate. But the only point groups are lacking is the level of information about the schemes of NABARD and government. NABARD provides various services and launches various scheme for the betterment of the poor people who are engaged in self help groups. But our most of our respondents reported that they lack any such information or receive late information. 42.8 per cent of the respondents say that they receive late information about NABARD s schemes and programs of their benefits. 39.8 per cent say that they never receive any such information. Only 17.8 per cent respondents say that they get complete and timely information. Thus the groups running in the region are functioning well as they have qualified for the rank of very good or good at least on most of the criteria. Moreover 44 per cent of the respondents reported that they are associated with the groups for 1 to 2 years, 48.2 per cent says that they are continuously associated for 2 to 5 years, 7.8 per cent respondents were in

SOCIO-ECONOMIC EMPOWERMENT OF THE POOR THROUGH MICROFINANCE:/ 121 association for 5 to 7 years and no respondent was there in the group for more than seven years. Thus it is evident that the groups are not sustaining a long. that is very much required for reaping the maximum benefits out of microfinance. 7. CONCLUSION AND SUGGESTIONS The study concludes that microfinance has brought economic and social empowerment to the participants. Like self help groups in other regions, here also the main participants of the group are the women, which shows that microfinance through self help groups efficient strategy for the women empowerment. Microfinance has caused the increment in income of the respondents. They have been able to increase their food expenditure and savings. They have been able to build physical assets and their financial situation has gone up. Their living standard has also enhanced due to participation in microfinance programs. Almost most of the members are women who have been confined to their household activities earlier, but due to their participation in microfinance programs they have been conferred the opportunity to come out of home and participate in group activities. Most of them are now active members of the self help groups. More over they interact with the bank official as the representative of their group, they get their bank account opened, deposit their savings to the bank and start the process of obtaining bank credit. This whole process leads to increment in their confidence and social status. Women who have not been given much importance so far are now playing a crucial role at their household level also. Thus the participation in microfinance programs has been a turning point of their lives. As far as the services and benefits are concerned, though they availed increased employment opportunities, credit facility at reasonable rate yet there are still many important aspects are overlooked in this process. There is a lack of a capacity building programs and operational assistance to the group members. They are also not provided with any kind of marketing assistance by NABARD. Moreover many of the times the loan provided to the members is not adequate. Most of the times the loan is provided to the self help groups. The following suggestion can be posed: (i) Amount of loan per member should be increased, so that it can become sufficient to use fruitfully. So far in its best case also it is less than Rs. 10000 per member. This amount cannot be expected to be sufficient for initializing a entrepreneurial activity. (ii) The group members should be provided with the capacity building and other training programs. So that they can develop a positive attitude towards microfinance programs, and actively participate in them. These capacity building programs can help them in starting a fruitful entrepreneurial activity. (iii) They should also be provided with the operational assistance, which they require in the efficient functioning of their enterprise. Many of the respondents are women and they are not very well qualified and they find themselves incapable of running their enterprise well. (iv) Another critical assistance which is badly required is the marketing assistance to them. It is experienced that the respondents have not been able to market their product. They therefore require marketing assistance. NABARD can assist the self help groups.