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What Works Best for the Poor in Rural India

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  • Atul Mehta
  • Joysankar Bhattacharya

Abstract

Financial sector development serves poor directly through poverty-lending approach or financial systems approach. Robinson (2001) questions the appropriateness of poverty-lending approach for the extremely poor and supports the financial systems approach for providing a poverty alleviation toolbox to serve the poor at various levels. The present study attempts to assess the effectiveness of the two lending approaches and comments on the appropriateness of the same for the poor and the poorest of the poor in rural India using state-wise annual data from 1999–2000 to 2011–2012. We conduct a panel data analysis for a sample of 15 major Indian states and provide an empirical evidence for the effect of various poverty alleviation tools on the poor and the poorest of the poor in rural India. The study partially supports the use of tools suggested by Robinson.

Suggested Citation

  • Atul Mehta & Joysankar Bhattacharya, 2017. "What Works Best for the Poor in Rural India," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 18(2), pages 230-245, September.
    • Handle: RePEc:sae:soueco:v:18:y:2017:i:2:p:230-245
    DOI: 10.1177/1391561417713131
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    More about this item

    Keywords

    Financial sector development; poverty; inequality; bank credit; microcredit; economic growth;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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