(Mint)
(Mint)

How microcredit can help Swachh Bharat

In two districts of Maharashtra microcredit loans for sanitation helped toilet construction, finds new study

By providing subsidies for toilet construction across India, the Swachh Bharat Mission (SBM) has helped improve rural sanitation - but new research suggests that it could’ve had a greater impact if it had been supplemented with micro-credit. In a new World Bank study, Britta Augsburg and others show how small loans helped both SBM beneficiary and non-SBM households build more toilets.

They measured the impact of a micro-finance loan product for sanitation, which was launched by a large micro-finance institution (MFI) simultaneously with the start of SBM implementation in Nanded and Latur, two backward districts in Maharastra. Using administrative household data from the SBM dashboard, MFI data and their own survey data, the authors were able to examine how sanitation loans affected toilet construction.

The study found that both households eligible and ineligible for SBM subsidy took up the loans of up to 15,000. Of the ineligible households, more than 20% took up the loan and they were very likely to complete toilet construction (toilet conversion rate was as high as 86%). Even for those households receiving the SBM subsidy, the loan acted as a ‘bridge’ fund to complete toilet construction. Since SBM subsidies are only disbursed after toilet construction and don’t exceed 12,000, the MFI loan provided important supplementary funding. Yet, less than 50% of the eligible households who availed the loan actually built a new toilet. The authors suggest that this is because of delays in SBM subsidy disbursement which also meant repaying loans became more expensive with time.

According to the authors, their findings highlight the benefits of adopting an integrated financial model for large scale public health programmes and they suggest governments should incentivize MFIs to provide loans that supplement government programmes.

Also read: Can Micro-Credit Support Public Health Subsidy Programs?

Snap Fact features new and interesting reads from the world of research

Close