Micro-finance and growth

A study on micro-finance

                                                                                        By:Kiran Bhowmik

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icro-finance is a system which offers such assured financial help for weaker communities right at their doorstep. And it asks for only minimum financial discipline and accountability from the beneficiaries. Micro-finance ensures small loans ranging from INR (Indian Rupee) 2000 to INR (Indian Rupee) 3500 for individuals in urban and rural areas. Ten or more than ten individuals are required to form a Self Help Group (SHG).

On the other hand Lewis said that ‘growth ‘ and ‘development’ both are the synonyms of each other. For instance Arthur Lewis in his “The Theory of Economic Growth’’ writes, most often we shall refer only to ‘growth’, but occasionally for the sake of ‘variety’ to ‘progress’ or to ‘development’.

Development means economic development. According to the definition of economic development we can say economic development is a process whereby real per capita income rises over a long period. So, real per capita income may be used as an index of development. Rising per capita income index represents the fact that a country as getting better off. Admittedly, per capita income is an average. But a rising average indicates that in per capita terms there is an increase in the availability of goods and services.

Poverty is one of the terrible and greatest miseries in the world. Pangs of poverty are unbearable. According to statistics 68 percent population in India and 38 percent in the world are below the poverty line. Micro – finance has been in existence in different ways since time immemorial. It has been with goodness and cruelty. Shakespeare had narrated lucidly in ‘Merchant of Venice” about the micro - finance. There exist Kabuliwalas small pawn merchants and so many persons under various styles to help the poor in need and mostly to get immense benefit.

Professor Muhammad Yunus had shown himself to be a leader to translate visions into practiced action for the benefit of millions of people not only in Bangladesh, but also in many other countries. He was awarded the Novel Prize in 2006 for his concept of micro finance along with Garmeen Bank.

Professor Muhammad Yunus vouched for loans to the poor without any financial security with emphasis to give to women who would repay. He believed that every single individual on earth ha both the potential and the right to live a decent life having at least two meals a day. Micro – finance can eliminate poverty in the world. Democracy and social justice can be achieved by equal participation of women. Women have integrity in refunding loans and use the loan in the best way after proper calculation of risks.

The concept of micro-finance in India is growing. National Bank of Agriculture and rural development (NABARD) and other institutions along with Self Help Groups (SHGs) are working. It has been helping the poor people in a great way. But Systems need to be well structured with adequate support. People who feel the pangs of poverty should be involved. Integrity is very crucial in the operation of the system. Every woman above the age of 21 should get micro – finance of INR 10,000 to 20,000 in her personal bank account. She must have a bank account or post office account. A lot of promotional and operational expenses will be saved by this system. This system is working in Brazil. Self Help Groups can be of great help. So far successes of SHGs are acclaimed. Micro-finance is to be made a part of the curriculum in MBAs with social work and sociology programme. Protectionism does not help the poor. Real beneficiaries are rich and clever people.

Micro- finance helps the poor people to increase their income.  When the income of poor people will increase then the per capita income will also increase. When per capita real income will increases then the development also increase and vice-versa. According to the Arthur Lewis we can say growth also increase if per capita income of the poor people increase. Thus, we can say micro- finance is an engine of growth and development.

Acknowledgement

Kiran  Bhowmik.

Student of Economics Honours.

Netaji Subhas Mahavidyalaya ,Gomati(Tripura), India.

E-mail: kiran.bhowmik@yahoo.com

Mobile:08794219011.