“Micro-Finance as an anti-poverty vaccine, is aimed at asset creation and income security of the rural poor in India”. Evaluate the role of the Self Help Groups in achieving the twin objectives along with empowering women in rural India. (UPSC IAS Mains 2020 General Studies Paper – 2)
Micro-Finance provides financial services to those who are not served by the conventional formal financial institutions. In rural India, where the credit market has been traditionally dominated by moneylenders, micro-finance becomes important to serve the credit requirement of poor and end the vicious cycle of debt trap through promoting income-generating activities.
Micro-Finance: An Anti-poverty Vaccine
- Microfinance services contribute to the improvement of resource allocation, promotion of markets, and adoption of better technology; thus, microfinance helps to promote economic growth and development.
- It assists the communities of the economically excluded to achieve a greater level of asset creation and income security at the household and community level.
- It aims to dispense access to the capital to small entrepreneurs.
- To promote Micro-Finance, the government launched initiatives like NABARD, MUDRA loans, etc. MUDRA provides refinance support to Banks/NBFCs for lending to micro units having loan requirements up to 10 lakh Rs.
Self-Help Groups (SHGs) and Micro-Finance
- SHGs are informal associations of people who choose to come together to find ways to improve their living conditions. In the last few decades, SHGs have emerged as the most effective mechanism for delivery of microfinance services to the poor in general and women in particular.
- The Genesis of SHG in India can be traced to the formation of Self-Employed Women’s Association (SEWA) in 1972.
- The income-generating and asset creating activities supported by SHGs include piggery farming, ginger cultivation, small business, handicraft and weaving, etc.
- They have a multiplier effect in improving women’s socio-economic condition and enhancing their self-esteem.
- For instance, Kudumbashree SHG of Kerala has created a three-tier community network which is run by Community Development Societies (CDSs) of poor women.
- One of the successful enterprises of Kudumbashree is Café Kudumbashree, which includes all women-run cafes as well as catering services.
- Kudumbashree women run more than 30,000 enterprises and have an annual turnover of 1090 million Rs.
For equitable and sustainable development in rural India, financial inclusion supported by MFIs plays an important role. It strengthens India’s ability to post fast economic growth with a focus on reducing poverty and empowering women.
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