Social capital has been shown to be important for strengthening democracy and promoting development, but relatively little is known about how social capital grows, especially over the short to medium term. To help identify the nature and sources of growth in social capital, I constructed a panel data set for 61 villages in India, including repeat interviews (in 1997 and 2004) with more than 1,700 respondents. Considerable changes in social capital have occurred over this seven-year period. Factors such as faith in government institutions, relative modernization, relative need, and social stratification do not help explain these changes. Organizations promoted by outsiders have also not helped. Social capital is socially generated through the internal efforts of community groups. Villagers' self-initiated organizations and local leadership have helped grow social capital, along with locally formulated rules and lower economic inequality in the initial period.