economic opportunities for their advancement identified by mostly female community activists specifically hired for this purpose. At the same time, existing SHGs set up under earlier initiatives were encouraged to convert to SHGs under this program.

A typical program SHG consists of 10-15 members who meet regularly to discuss social issues and activities, deposit a small thrift payment into a joint account, and make decisions on loans. Loans come from four sources: commercial bank, internal saving, grants provided by the program under a “community investment fund” (CIF), and other line departments. To cater to the needs of the poor, the earlier focus on micro-credit was expanded to include in-kind credit for food, provision of insurance, and empowerment of the most marginalized. Since 2002, the program started to support the federated SHG structure at the village level that gradually took over the distribution of subsidized foodgrain under the public distribution scheme from private operators who had failed to make it available to intended beneficiaries.<sup>3</sup> In addition to improving access to food and risk-coping, this offered a way to attract new members. Furthermore, providing grain as an in-kind credit was expected to help in establishing a discipline of periodic meeting attendance, saving, and (re)payment.

# **2.3 Data sources and descriptive statistics**

We use a survey conducted simultaneously in DPIP and RPRP areas from February to June of 2004. Districts were chosen to represent all the state’s macro-regions. Villages were randomly selected in these districts, and then households in these villages with weights applied based on their poverty status from the census of PIP.<sup>4</sup> The household questionnaire which was complemented by questionnaires at group, village, and mandal levels, consisted of male and female parts administered separately -and as far as possible simultaneously- to the main male or female person in the household, normally the head and spouse.<sup>5</sup> This yielded useable information on 2,516 households from 250 revenue villages in DPIP districts, and 3,824 households from 409 revenue villages in RPRP districts. This was complemented by census information from the PIP exercise on education and access to assets at the village level, responses from a village schedule and an SHG questionnaire that was administered to 1,239 randomly selected program SHGs in DPIP areas. To interpret these figures, note that the survey followed on a major drought.<sup>6</sup>

> 3 Widespread leakages and mis-targeting associated with the public distribution system are well documented (Kochar 2005) and to the extent that they were able to overcome such inefficiencies in program administration, VOs could actually generate modest resources from implementing this program.

> 4 Sample districts are Anantapur, Adilabad and Srikakulam for DPIP and Kadapa, Warangal, Nalgonda, Nellore, and Visakhapatnam for RPRP. 5 For example, information on health, consumption, and female empowerment, among others, was obtained from the female while information on agricultural production was obtained from the male. The survey also included SHG, VO and MS questionnaires which are not used here.

> 6 Data by the Indian Institute of Tropical Meteorology at <u>http://www.tropmet.res.in/</u> suggest that, for two of the three seasons preceding the survey, i.e. the 2003/4 rabi (Nov. 2003 - Feb. 2004) and the 2003 summer crop (March 2003-May 2003) rainfall in AP had been less than half of the historical long-term (1871-2005) average.

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