Micro Finance and Poverty Eradication in India

Abstract

The poverty eradication has been the primary concern of the State and its planners since long time. These poverty alleviation efforts through State drivencredit supply schemes producedonly sub optimal results. In order to get effective use of these programmes, sufficient arrangements shall be made for provision and delivery of credit to the rural poor. The failure of the formal credit institutions in meeting the credit requirements of rural poor has been the major reason for innovations in micro finance. The most complex problem in rural credit delivery system is serving small loans and making available the credit to the unreached and uncared so far, that too, an adequate amount at the right time with minimum documentation requirements. In this direction, a non –formal agency for credit supply to the poor, in the name of Self –Help Group (SHG) could emerge as a promising partner to the formal credit system. Thus, the SHGs formed as instruments for the socio –economic development of the rural people. It shows that access and efficient provision of microcredit can enable the poor to smooth their consumption, better manage their risks better, gradually build their assets, develop their micro enterprises, enhance their income earning capacity and enjoy an improved quality of life. Microfinance services can also contribute to the improvement of resource allocation, promotion of markets, and adoption of better technology; thus,Microfinance helps to promote economic growth and development.