The Impact of Self-Help Groups on Rural Female Self-Employment Across Indian States and Union Territories

Self-Help Groups (SHGs) are an important component of rural development policy in India, providing women with access to savings, credit and collective networks. This study examines the association between SHG promotion and rural female self-employment across Indian States and Union Territories from 2017 to 2024. The final balanced panel contains 232 State/UT-year observations across 29 regional panels. Female self-employment is measured as the percentage of rural women aged 15 years and above classified as own-account workers or employers. Following multicollinearity checks, the Hausman specification test favoured fixed effects, while diagnostic tests identified heteroscedasticity and autocorrelation. Feasible Generalised Least Squares was subsequently used for the final estimation. SHG promotion was negatively and significantly associated with female self-employment (β = -0.707, p < 0.001), whereas rural female education had a positive and significant association (β = 1.228, p < 0.001). SGDP was also negatively associated with self-employment (β = -4.221, p < 0.001). LFPR, the wage gap and unemployment were not statistically significant. These results represent state-level associations and should not be interpreted as causal effects. The findings suggest that increasing the number of SHGs alone may be insufficient without education, financial capability and continued enterprise support.