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Unit 17: Role of Microfinance in Rural India

17.3 Rural India and Microfinance Notes

Micro financing has become important since the possibility of a sub 1,000 mobile handset has
been ruled out in the near future. Rural India can generally afford handsets in the price range of
1,500-2,000.
To succeed in India, agri-business must empower the farmer by making agriculture profitable,
not by expropriating him foe this particular purpose the farmer should be funded for their basic
and small needs.

Microfinance is expected to play a significant role in poverty alleviation and development. The
need, therefore, is to share experiences and materials which will help not only in understanding
successes and failures but also provide knowledge and guidelines to strengthen and expand
Microfinance programmes.
The development process through a typical Microfinance intervention can be understood with
the help of the Figure 17.1 the ultimate aim is to attain social and economic empowerment.
Successful intervention is therefore, dependent on how each of these stages has been carefully
dealt with and also the capabilities of the implementing organizations in achieving the final
goal, e.g., if credit delivery takes place without consolidation of SHGs, it may have problems of
self-sustainability and recovery. A number of schemes under banks, central and state governments
offer direct credit to potential individuals without forcing them to join SHGs. Compilation and
classification of the communication materials in the directory is done based on this development
process.

Figure 17.1: Development Process through Microfinance

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