Assessing the Impact of Microfinance and Self-Help Groups on Livelihood Diversification in Northern Part of West Bengal

This study examines how microfinance and Self-Help Groups (SHGs) support rural households in diversifying their livelihood. We focused our research on the Darjeeling, Jalpaiguri, and Cooch Behar districts of West Bengal, India and gathered data from 200 households. Our analysis assessed the extent to which these households diversified their income sources and examined whether microfinance access and SHG membership played a role in shaping diversification strategies. Using multiple regression analysis, we find that both microfinance access and SHG membership significantly encourage livelihood diversification. Access to microfinance provides households with the financial boost they need to invest in new income-generating activities. Simultaneously, SHGs provide access to credit, facilitate knowledge sharing, and help members develop new skills, all of which are crucial to diversifying livelihoods. We also discovered that socioeconomic factors, such as education level and land ownership, significantly influence household diversification. These findings underscore the importance of microfinance and SHGs in helping rural communities diversify their livelihoods and become more resilient.