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Poverty alleviation has remained on the agenda of policy makers throughout the world, more so in developing countries with higher incidence of poverty. The paradigm shift in understanding of poverty has evolved to include various dimensions of deprivations instead of one-dimensional income poverty. Policy makers around the world as a part of long term strategy in eradicating poverty, however, consider access to financial resources as the most important constituent of the multi-pronged strategy. Further, the various socio-political dimensions and economic dimensions of poverty are believed to interact with each other and manifest itself in an intertwined relationship. Financial inclusion is believed to encourage micro entrepreneur to take on profitable activities which in turn provide an enabling environment for him to gather access to social networks which may be beneficial to him in terms of access to raw material, marketing support and business ties. Whereas financial inclusion is believed to have a positive impact on social capital, the reverse is also true; the amount and quality of social capital provides a micro-entrepreneur with easy access to diverse sources of finance. Microfinance Institutions around the world heavily rely on group financing mechanism by leveraging on social collateral as a replacement to financial collateral in financing micro-entrepreneurs. Obviously they perceive lending to micro-entrepreneurs having rich social capital as less riskier and thus his/her social capital substitutes for the financial collateral in gaining access to credit. The present study is an attempt in this direction to understand the relationship between financial inclusion and social capital. The study attempts to evaluate the impact of access to finance on socio-political empowerment of the beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY), now known as National Rural Livelihood Mission (NRLM). Results indicate that access to finance has a positive impact on almost all the socio-political indicators of empowerment, the impact being relatively lesser for financial literacy and economic awareness
