India has experienced a remarkable growth in a number of sectors in its economy. But this has done very little in the fight against poverty in the country. If India is to reduce the poverty levels in the country, they must start with improving the microeconomic sector. Only then will the poor people get to enjoy some of the benefits derived from an increase in the country’s growth rate.
Studies show us that over fifteen million families are beneficiaries of financial products aimed at empowering the people. Microfinance in India has reduced poverty in the rural areas by an impressive forty percent.
Microfinance has been attributed to have the greatest impact on the country’s poorest population while overlooking the needs of the poor. There are people who operate in communities that are beneficiaries of microfinance and they are not qualified to benefit from the system. Such people are said to enjoy good rewards for their efforts despite not being the target group of the program. This has resulted in very intense spill over effects of micro financing. Over the years, the microfinance companies have shed off any excess responsibilities created by subsidiaries. This has led to the self sustenance of most of these financial institutions.
Despite being a very effective tool in poverty management, it has not cured India of its alarming poverty levels. The policy was sold out as a solution to all of the society’s problems which are more complex than economics. The system does not address a number of the country’s structural or economic inefficiencies. The system will yield more benefits when a well structured support policy is put in place and the economies of scale are realized.
Regulatory inhibitors have made it impossible for the poor to access quality insurance services. The loan services availed to the poor are also not favorable to them. The tools used in the assessment of impact on the clients are not adequate to provide accurate information. There is a development of new tools that try to quantify client satisfaction in an effort to eliminate this drawback.
Most of the microfinance institutions do not deal with self help groups. The self help groups have a very high success rate in the society. The institutions are greatly improving on the country’s living standards. The institutions have agreed to impose protection codes for consumers from some of the evils of the industrial world.