In recent years, microfinance has become an important intervention as a tool for rural development and poverty alleviation. In India, many microfinance institutions including Non-Governmental Organizations (NGOs), Non-Bank Financial Institutions (NBFIs) and government agencies had intensively intervened. Innovation of group-based microfinance, especially Self-help Groups (SHGs), Grameen Joint Liability Groups (JLGs), Mutually Aided Cooperative Societies (MACS) etc., which replaced the physical collateral with moral and social collateral for micro-loans, had probably led to speed up the microfinance programs in India. The giant step of the National Bank for Agriculture and Rural Development (NABARD) on SHG-Bank Linkage Program is really praiseworthy which was later considered as one of the biggest microfinance interventions in the world. Also, the enactment of the MACS Act by the Government of Andhra Pradesh was a revolution in India (Panda, 2009). Microfinance was defined in the International Year of Microcredit, 2005, as loans, savings, insurances, transfer services and other financial products for low-income clients; and Consultative Group to Assist the Poor (CGAP) defined microfinance as the supply of loans, savings and other basic financial services to the poor. Broadly, these definitions explain microfinance as the financial products and services provided to the poor and unbankables. Since the microfinance interventions are carried out involving solidarity groups like SHG, JLG, etc., they are often referred to as group-based microfinance. SHGs are either registered or unregistered groups of people who are economically homogenous; and the members are basically small and marginal farmers, landless agricultural laborers, rural artisans and petty rural traders who voluntarily come together to save small amounts regularly on mutual help basis (Swain and Nayak, 2008). According to Reserve Bank of India, SHGs may be registered or unregistered group of people, mostly micro-entrepreneurs having homogeneity in their socioeconomic background, who join hands together to contribute regular savings to a common fund and meet their emergency needs on mutual help basis. The peer pressure and collective wisdom ensures credit use and timely repayments. The peer pressure and collective wisdom substitutes the collateral for loans. The JLG model was the innovation of Prof. Muhammad Yunus. This model stemmed from the Grameen Bank of Bangladesh (Hussain, 1998). The JLG is a group of five to seven members, broadly developed, organized and nurtured by an intermediary. Most of the JLGs in India have five members. JLGs do not have compulsory savings before availing credits. The main motto of JLGs is to access credits along with other financial products like insurances etc. Like SHGs, the JLGs also work on peer pressure and moral collateral to avail financial products. Since the peer pressure develops collective responsibility and social capital among the members, it reduces the possibility of wilful defaults (Panda, 2009). Many researchers conducted impact assessment studies on group-based microfinance programs. Some of the researchers concluded a positive impact of microfinance on the socioeconomic development (Tripathy, 2006; Sundarapandian, 2006; and Pandian and Eswaran, 2002) in India and across the world (Hiatt and Woodworth, 2006). At the same time, some other researches found that the microfinance interventions had little impact on the socioeconomic development of people (Kabeer, 2005). Kabeer (2001) found a negative impact of microfinance in Bangladesh. So the positive impact of microfinance cannot be generalized and universally accepted. In this perspective, the present study tries to measure the impact of microfinance on income, expenditure patterns, savings, employment, literacy and migration of people from an undeveloped district from an underdeveloped state of India.
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