Role of microfinance in generating income and employment for rural households in Punjab-An econometric approach

The present study was carried out to assess the impact of microfinance on the generation of income and employment of the rural households’ of Punjab. The results revealed that the proportion of rural households earning income more than `5000 per month have increased by 69.18 per cent and nearly 52 per cent of the rural households gained employment of more than 180 man days per year with access of microfinance through Self Help Groups (SHGs). The results obtained from Logit model showed that the extent of the rural households earning income more than `5000 per month is likely to be increased by 3 times with credit facility through SHGs. Similarly, the number of rural households having employment more than 180 days was likely to increase by 1.28 times with microfinance in the Punjab. Hence, it is concluded that better access of microfinance through SHGs is helpful to generate the households’ income and employment on sustainable basis in the rural area. It is suggested that an adequate amount of microfinance must be assured to participants by developing links of SHGs with banking institutions and NGOs for efficient functioning of the SHGs in Punjab.