Microfinance in Forest Conservation: Empowering Tribal Communities through Sustainable Livelihoods and Protecting Forest Rights

Abstract

Tribal communities in India depend substantially on forest resources for subsistence and income, while forests remain important for ecological stability and local livelihoods. This study examines the institutional performance and policy relevance of microfinance- and Self-Help Group (SHG)-linked forest-based livelihood initiatives, with particular reference to the Van Dhan Yojana. Using secondary data from TRIFED, government publications, and selected scholarly sources, the paper analyses fund allocation, operational status, and state-level variation in Van Dhan Vikas Kendras (VDVKs) as of 28 February 2025. The descriptive findings indicate that Minor Forest Produce (MFP) remains an important source of livelihood for forest-dependent communities and that SHG-based value addition may improve income opportunities and market participation. State-level comparisons show considerable variation in implementation, suggesting that institutional capacity and governance play an important role in programme performance. Pearson correlation analysis for states with complete data shows a moderate positive but statistically non-significant association between tribal population concentration and operational VDVKs (r = 0.586, p = 0.127; n = 8). Comparative discussion of community forestry experiences in Nepal, Guatemala, and the Philippines further highlights the relevance of local participation, tenure arrangements, and financial support in shaping forest-based development strategies. The study concludes that microfinance and community-based organisations have policy potential to support forest-based livelihoods, but stronger primary and causal evidence is needed to assess their direct effects on forest conservation and forest-rights outcomes.