Group Lending Scheme Operating Through Primary Agricultural Credit Society : A Critical Assessment

The basic objective of the paper is to identify the effectiveness of group lending-based microfinance program operating through Primary Agricultural Credit Societies (PACS) in improving the economic condition among the rural participants in two blocks of Hooghly district in West Bengal. For the impact study, both Difference-in-Difference and First Difference methods have been considered. With the help of longitudinal data, the methods have been applied to minimize the possibility of selection bias during the time of drawing samples. It was found from the field survey that very few marginal farmers had taken credit from their respective groups for agricultural purposes. Results reveal that there has been no significant impact of microfinance program in terms of improvement of the outcome variables among the member households, in spite of the low interest rate charged on loans, high repayment rate within the groups and small size of Self-Help Groups (SHGs). The reasons for the same are lack of skill-based training programs for the members of groups and lack of marketing facilities to promote and sell the products produced by the members of SHGs. The only positive aspect is that the members can now protect themselves from the clutches of professional moneylenders who charge exorbitant interest rates