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1.1 Impact evaluation of Spandana's microcredit programme 5
Objective and methodology This study uses a randomized design to evaluate the impacts of
Spandana's 6 microfinance programme on income, consumption, usage of financial services,
asset ownership, scale of business and its profitability, and intra-household decision-making
among their clients in Hyderabad 7 . A baseline survey was conducted in treatment and control
slums and a follow-up survey will be administered after the completion of at least one loan
cycle.
Preliminary results from the baseline survey 8
Some important
questions the
study seeks to
answer include:
how effectively
does a rainfall
insurance
programme
reduce
vulnerability of
poor
households
How does
financial
literacy
influence the
decision to
purchase
insurance How
will it affect
local risksharing
Will
policy-holders
undertake more
projects with a
higher return
(such as sowing
more crops)
Will there be
any effect on
the local price
of goods, or on
wage rates
With an average family size of five and an average monthly expenditure of Rs 5,000, respondents
were poor, but not ultra-poor: close to 50% of the respondents were earning under $2 a day
but only 6 percent were earning below $1 a day. Businesses were very prevalent in these slums.
However, these businesses had little specialized skills 9 , and tended be small, with little capital,
little assets and few employees 10 .
The loan indebtedness figures indicate that about two thirds of the sample had at least one
loan 11 . Almost half of these loans came from money lenders, while few were provided by commercial
banks and almost no MFI loan was available at the time 12 . Among those households who did
not have a loan, more than half said that they wanted one but could not obtain one. Loans
were rarely taken for business expansion: a number of loans were used towards health related
expenses. marriages, consumption purposes and for construction and renovation of houses 13 .
It was also found that a third of the households had a savings account and while every fourth
household had a life insurance policy, almost none had health insurance. Yet it was found that
60 percent of the households who had a sick member had to borrow to pay for the treatment
(which was on average Rs 7,500) 14 .
Where expansion opportunities appeared possible for these small businesses, they had not
been exploited. Although a loan of Rs 10,000 is probably not sufficient for expansion,
microfinance might help them expand by "forcing" them to channel additional revenues into
expansion (rather than on "wasted" expenditures).
1.2 Impact evaluation of weather insurance,
with SEWA, Gujarat 15
Objective and methodology A natural disaster, such as drought or excessive rain, can cause
crop failure, leading to substantial hardship manifested in reduced consumption, lower
productivity, lower income, distress sales, and borrowing from moneylenders at high rates.
The objective of this study is to evaluate the impact of providing rainfall insurance on
reducing such vulnerabilities faced by poor agricultural households, and on improving their
livelihoods. Some important questions the study seeks to answer include: how effectively does
a rainfall insurance programme reduce vulnerability of poor households How does financial
literacy influence the decision to purchase insurance How will it affect local risk-sharing
Will policy-holders undertake more projects with a higher return (such as sowing more crops)
Will there be any effect on the local price of goods, or on wage rates
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CMF will assist SEWA and ICICI Lombard in developing the product, and SEWA will offer rainfall
insurance in a group of villages across three districts in Gujarat 16 . The Centre will measure and