Despite India,primarily through two models, that of, Joint

Despite rapid economic growth in India, a large number of households remain tobe excluded from its development story: India accounts for the largest number ofpeople living below the poverty line, with 30 percent of its population living onless than $2 per day (World Bank, 2013). In Tamil Nadu, 11% of the population,or approximately 8.26 million households, live below the poverty line.1 Manypoor households live in rural areas, where self-employment is often the only wayto diversify household revenues that rely mostly on agriculture. In this context,microfinance organizations aim to support such entrepreneurs to create or growbusinesses by providing financial intermediation to low-income individuals whodo not have access to conventional finance. Over the last four decades, themicrofinance movement has evolved drastically by being one of the key playersin the sector, providing a range of financial services to low income householdsand thereby promoting the national agenda of financial inclusion.The microfinance movement has grown rapidly in India, especially South India,primarily through two models, that of, Joint Liability Group (JLG) and the SelfHelp Group (SHG) model. This study focuses on the SHG based microfinancemodel wherein women are formed into groups and provided with training andbusiness loans as a poverty alleviation strategy to improve their social andeconomic well-being. The self-help group (SHG) movement began in 1980s as aninitiative by several NGO’s that aimed to mobilize and organize rural poor intoself-help groups. However, the program gained momentum in 1992, when aNational Bank for Agriculture and Rural Development (NABARD) initiativelinked a small number of SHGs with banks under the Self-Help Group BankLinkage Program (SBLP) so as to provide access to financial services. Todaythere are 7.9 million savings linked SHGs with a total savings of Rs. 137 billion asof March 2016.2 SHGs in its evolved form are seen as more than just a conduit forcredit- they also act as a delivery mechanism for various other services rangingfrom entrepreneurial training, livelihood promotion activity and communitydevelopment programs.Given the large focus on financial inclusion in India and the important resourcesthat the stakeholders in the sector are providing to promote access to financialservices through the SHG movement, the question of its impact on thebeneficiaries is crucial. Yet, very little about the impact of SHG program on thesocio-economic conditions of these households is known. There is plethora ofanecdotal evidence, but very few rigorous evaluations that assess the impact of a1 https://www.rbi.org.in/scripts/PublicationsView.aspx?id=166032 Inclusive Finance India Report 2016, Access Development ServicesSHG based microfinance model on the overall well-being of low incomehouseholds in terms of effects on household’s investment capacity andconsumption.ObjectiveThis study investigates the impact of an SHG-based microfinance andentrepreneurship training program provided by Tamil Nadu-based NGO, Hand inHand India on the financial conditions of rural women. Under this program,women form savings groups and borrow from HIH for business activity.Using a randomized design, the project studies the impacts of combined access tofinancial services and business training in three districts of Tamil Nadu on a wideset of socio-economic outcomes such as consumption, savings and borrowings,business creation, profits and vulnerability to shocks. The randomized design ofthis impact evaluation will help answer the following questions:• Is micro-credit effective? Does it help poor households improve financially?• To what extent is the program effective and how do impacts differ for differentsegments of the population, in particular the poorest and those without abusiness?Literature