LAUSR

Abstract The study assesses the impact of credit accessibility on the earnings of self-employed small businesses in India. Using unincorporated non-agricultural enterprises survey data provided by National Survey Sample Organisation (NSSO) on the Indian economy for the year 2015-16, the paper shows that access to credit augments earnings of self-employed businesses. The paper also separately shows the impact of credit availed from formal and informal lending agencies on self-employment earnings. Interestingly, we observe that both these lending agencies have a positive impact, even though the terms and conditions are not favourable in the informal market. Based on our findings we suggest for creation of informal-formal credit linkage programme akin to that of SHG bank linkage programme in which enterprises that do not possess accessibility to formal sources due to absence of collateral can also get formal credits through informal lenders at favourable terms and conditions.