Micro Finance in India: a State Wise Analysis

Abstract

Poverty is one of the common obstacles in achieving higher growth and enhancing the standard of living of the people in most of the low income countries. About 1.4 billion population in developing countries is living less than US $ 1.25 a day according to World Bank report. Over the years, most of the countries have been pursuing various policies and programs to eradiate poverty. Among these measures and policies most effective policy is microfinance which, in last couple of years, has been adopted by below income countries in a bid to obliterate poverty. Microfinance is not a new topic. Its history can be traced to early 1700s. but the actual credit goes to Dr. Mohammad Yunus who gave a new shape to microfinance in Bangladesh in 1972. He was also awarded with Nobel Prize in 2006 for this pioneer work. Like other low income countries, Government of India ha been implementing various schemes and programs to alleviate poverty since independence. In the line of Bangladesh microfinance model developed by Dr. Yunus, government of India has been consistently implementing this scheme to eradicate poverty since 1999. With regard to the impact of microfinance in reducing poverty in rural area, the scholars have come out with different results from their research. For this purpose secondary data is collected. The study covers the micro financing in India for the period 1994 to 2007. Then the period is divided in to two periods: period I, 1994-1999 and Period II, 2000-2007. Findings of study show that various micro financing activities and institutions have grown intensively in Southern India and many poor people mostly woman are articipating actively in micro financing activities. Further the impact of microfinance is also analysed on women empowerment and it turns out to be positive. Overall, the finance scheme are spreading all over India over the last few years.