The Importance of Microfinance Solutions in India Microfinance solution is the umbrella term for financial services for the poorest and most marginalised sections of the economy. It refers to small loans that are provided to individuals at the community level in order to alleviate serious issues such as hunger, poverty, rural indebtedness, access to healthcare and education etc. Following are some of the reasons why microfinance solution in India should be an integral part of the economic development story.
Microfinance has proven to be a success
After many control trials in countries across the world, microfinance and especially the graduation approach has been proven to have sustainable effects in alleviating chronic poverty in countries such as Bangladesh.
Food security due to microfinance programmes
The agriculture sector in many developing countries has been under enormous strain due to changing climate and rain patterns, unavailability of harvesting equipment, lack of adequate labour and cattle etc. This has led farmers from many countries to rural indebtedness that can, in turn, cause food insecurity. Microfinance programs can help combat this by forming a safety net for the farmers in order to ensure that one bad harvest does not lead to penury, destitution and extended periods of hunger.
Microfinance and women’s empowerment
Microcredit has also led to an improvement in the situation of women in the communities where it has been successfully implemented. Lending to women through the formation of small groups in the community not only increased women’s social positioning and sense of self-worth but also led to an increased awareness on the need of education for young girls, awareness about entrepreneurship and business enterprises, and women being educated about finance and fiscal responsibility. All these changes have a very positive trickle-down effect on the general status of women in the community.
Promotion of inclusive economic growth.
The stratification in societies has increased across developed and undeveloped countries. It has been projected that the gap between the rich and the poor, and between the urban and the rural and between agriculture and other sectors is widening at an alarming pace. Keeping in mind this scenario, and thinking about how a majority of the population in India is still engaged in agriculture, microfinance programs offer the chance to have a model of development that can be more inclusive. Thus, not only does this form a safety net for rural and marginalized communities, but it can also provide the inducement to people to begin new trade ventures, and actively participate in the economy today.
Primary Keywords: microfinance solution, microfinance solution in India LSI Keywords: financial services, graduation approach, microfinance programmes, the agriculture sector, safety net, entrepreneurship and business enterprises, food security, women’s empowerment, inclusive growth.