Addressing unproductive credit consumption and beneficiary malpractices in social welfare programs for slum-dwellers: A study from India

Abstract

This study examines the credit consumption pattern of slum-dweller households under different social welfare schemes and its impact on credit escalation and cross-financing. Using a multistage sampling approach, data were collected from 585 respondents in Punjab's most congested cities with municipal corporations. Exploratory factor analysis was applied to reduce dimensions, and confirmatory factor analysis (CFA) was performed to test validity and reliability. Structural equation modeling (SEM) was used to test hypotheses. The findings reveal that unproductive loan consumption by low-income families through social welfare programs is associated with beneficiary malpractices. The assessment models developed in this study can assist the Indian government and policymakers in improving the execution and implementation of social welfare programs aimed at poverty reduction and policy formulation. This study contributes to efforts towards financial inclusion and addresses a critical topic in the context of the current governmental attention on urban low-income families. It fills a research gap on the impact of unproductive credit usage patterns on beneficiary malpractices and provides insights into the role of social welfare schemes' norms in credit consumption patterns among low-income households in urban slums. The findings have implications for policy development, program implementation, and poverty reduction strategies, highlighting the need for effective monitoring and regulation of credit utilization in social welfare programs for vulnerable populations.