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How Livelihood Diversification and Institutional Credit Help to Improve Household Well-Being in India?


  • Zeeshan

    (Department of Economics and Finance, Birla Institute of Technology and Science (BITS), Pilani, Pilani Campus, Rajasthan, India.)

  • Md. Riyazuddin Khan

    (Department of Geography, Bhim Rao Ambedkar College, University of Delhi, New Delhi, India.)

  • Geetilaxmi Mohapatra

    (Department of Economics and Finance, Birla Institute of Technology and Science (BITS), Pilani, Pilani Campus, Rajasthan, India.)

  • Arun Kumar Giri

    (Department of Economics and Finance, Birla Institute of Technology and Science (BITS), Pilani, Pilani Campus, Rajasthan, India.)


Using nationally representative data from the India Human Development Survey (IHDS) collected in 2011-12, this study examined the impact of livelihood diversification and accessibility to institutional credit on the monthly per capita consumption expenditure (MPCE) of households. The data provided information about 42,152 households, and our study focused on only the households that had taken a loan from any source, thus reducing the sample size to 22,630 households. The estimate suggested that, if a household had taken a loan from a formal source, then it was likely to have a higher MPCE by approximately 24.68 percent on average. We also found that households whose main source of income belonged to the secondary sector had a negative and insignificant coefficient while the coefficient of the tertiary sector suggested that they had about a 29 percent higher MPCE compared to those households who belonged to the primary sector. The results also suggested that Hindus had a higher consumption compared to Muslims. However, Christians and Sikhs had about 36 percent and 23 percent higher consumption, respectively, than Hindus. The study also found that households belong to lower social groups (OBC, SC, and ST) had lower consumption compared to households that belonged to the general category of the caste system.

Suggested Citation

  • Zeeshan & Md. Riyazuddin Khan & Geetilaxmi Mohapatra & Arun Kumar Giri, 2019. "How Livelihood Diversification and Institutional Credit Help to Improve Household Well-Being in India?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 9(10), pages 1200-1210, October.
  • Handle: RePEc:asi:aeafrj:2019:p:1200-1210

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    References listed on IDEAS

    1. Shoji, Masahiro & Aoyagi, Keitaro & Kasahara, Ryuji & Sawada, Yasuyuki & Ueyama, Mika, 2012. "Social Capital Formation and Credit Access: Evidence from Sri Lanka," World Development, Elsevier, vol. 40(12), pages 2522-2536.
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    More about this item


    Livelihood diversification; Non-Farm business; Credit sources; Credit purposes; Household well-being; India.;
    All these keywords.

    JEL classification:

    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being


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