Swarnajayanti Gram Swarojgar Yojona: How Much Effective as a Safety Net?

This paper examines the success of Swarnajayanti Gram Swarojgar Yojona (SGSY), a government sponsored microfinance program in India, as a safety net. It demonstrates that the program is designed to restrict the decline of the transient poor and to uplift the chronic poor from below the poverty line. Gaps in program implementation, however, have prevented SGSY from delivering anticipated benefits to program participants.

The paper also demonstrates that none of the program participants come from the extremely poor strata. SGSY has, therefore, been unable to target the very poor. Further, a substantial portion of program benefits is appropriated by the non-poor. Policy conclusions from the study include:

• Accessible and more accountable health care facilities might be a core element for reducing poverty in the study areas;
• Microcredit should be integrated with insurance to reduce covariate risk;
• Customized financial schemes that suit the needs of the extremely poor will help to bring them into the credit net;
• Success of a targeted program depends on the identification of eligible beneficiaries;
• Existing policies in the distribution of Below Poverty Level (BPL) cards need an overhaul.