Linkage between Microfinance Participation and Securing Employment through MGNREGP

Abstract

In this paper, the relationship is assessed between participation in microfinance program under SGSY scheme through forming Self-Help Groups and getting employment through Mahatma Gandhi National Rural Employment Guarantee Program (MGNREGP). Using Tobit Model with endogenous covariate method, it was established that participation in microfinance program operating through joint liability credit contract helps the rural households, mainly the women, to generate more social capital than the non-participant households. Participation in the microfinance program ultimately helps them to get more information about different developmental programs like MGNREGP initiated by the Government. Hence, it was observed that microfinance participant member households got more number of man-days of employment through MGNREGP than the non-member households. It was also established that households with higher average monthly income and less dependency ratio were less prone to demand employment under MGNREGP.