Despite all these efforts,
there still exists a massive lacuna between the demand for credit by
the poor households and the supply of credit by the formal financial
and social institutions. A big chunk of the credit needs of the poor
in India is serviced by the informal sector. The formal credit
available to a few is accessible at a high transaction cost, and
that too untimely. Poverty continues to be a major concern in India,
despite the reduction in poverty ratio from 55% in 1973-74 to 36% in
1993–74 with a further declined of less than 30% in 2000 – 01,
viewed in the backdrop of burgeoning population. The Bundelkhand
region of the country is no exception to this fact.
Bundelkhand region is
characterized by some of the lowest levels of per capita income and
human development in the country. Literacy levels are poor,
especially among women, and infant mortality is relatively high.
Local inhabitants subsists on rain fed single crop agriculture and
small-scale livestock production for their livelihood, with wheat,
grams and oil seeds being the predominant crops. Population density
in the region largely correlates with factors such as soil types,
natural vegetation, industrialization, and urbanization.
In rural areas, rising
population has led to the fragmentation of family land holdings.
Human pressures on the existing natural resource base are compounded
by livestock pressures: the human to cattle (or livestock) ratio is
relatively high, almost 1:1, compared with a national ratio of
1:.45. In addition, the growth of private land ownership and past
mismanagement of natural resources have led to the rapid decline of
forest cover, reducing traditional sources of fuel, fodder and food.
These factors, combined with limited rainfall and fresh water
resources, have resulted in low agricultural productivity. Many
families are no longer able to meet their subsistence needs.
Temporary and long-term migration of males from rural areas, in
search of alternative sources of livelihood, has become increasingly
common.
In response to the
inadequate credit flow to the poor from the formal financial sector,
micro-credit lending in the region, as in many other parts of the
country, started developing as an alternative track. It is perceived
as the extension of small loans to the entrepreneurs, which is too
poor to qualify for traditional bank loans. It has proven to be an
effective and popular measure in the ongoing struggle against
poverty, enabling those without access to lending institutions to
borrow and start a small business on their own.
But, with the current
explosion of interest in micro-financing, several developmental
objectives have come to be associated with it, besides those of only
‘micro’ and ‘credit’.
Development Alternatives’
experience in micro-financing reveals that defying the conventional
wisdom, women (who constitute the majority of our community-based
institutions) have proven to be excellent credit risks, with
practically zero default. It has also been observed that credit
extended to women has a larger impact in terms of increasing their
net wealth and status within the household and the community and
improving the quality of life of their children as well.
Where micro-financing leads
to the setting up or expansion of micro-enterprises, there are a
range of potential impacts that include:
|
l |
increasing women’s income levels and control over income,
leading to greater levels of economic independence |
|
l |
access to networks
and markets, giving wider experience of the world outside home,
access to information and possibilities for development of other
social and political roles |
|
l |
enhancing
perceptions of women’s contribution to the household income and
family welfare; increasing women’s participation in household
decisions about expenditure and other issues; and leading to
greater expenditure on women’s welfare |
|
l |
positive attitudinal
change pertaining to women’s role in the household and community |
Taking into
account the experiences gained during the course of social action,
it was felt that although micro-finance generates benefits for the
poor in general and women in particular, it seems to benefit that
section of the poor better that is able to use the loan more
productively. Therefore, capacity building of the community-based
institutions is of significant importance as it adds to their credit
worthiness.
Yet, there exists a gap
between the credit demand and supply, and more efforts need to be
put in to ensure that timely credit reaches the needy. There is a
felt-need to upscale the micro-finance operations so as to reach out
to the community at large and their broad spectrum of needs. In the
larger context of socio-economic development, this calls for an
enhanced qualitative participation of various stakeholders like
banks, financial institutions NGOs, government machinery, etc.
Propagation of micro-financing in the Bundelkhand region holds an
enormous potential, through networking and partners.
Efforts are being made in this direction.
All stakeholders need to believe that they may be dealing with the
disadvantaged ones, but they are good people to bank upon.