Micro Finance – An Innovative Tool for Inclusive Growth in India

While there is a strong feeling around that globalisation is tapering there are also serious concerns about continuing marginalisation of sections of population in India. Millennium Development Goals, Human Rights Advocacy, Economic Empowerment and Inclusive Growth have, therefore, become watch (catch?) words today. Ever since Independence, India has considered that financial route is the safest one for a broad-based growth. The fast growth banking in general and that of rural banks, co-operatives and Self Help Groups (SHGs) should be seen in this context. To achieve the goal of inclusive growth micro-finance was introduced to meet small financial needs of the people with small means. It is a tool that can develop entrepreneurial activities, employment, economic growth, social cohesion, financial sustainability, eradicate poverty and promote human development. However, poverty is a huge and complex problem, and microfinance itself should grow from “transferring resources” to “transforming resources”. It has to be freed from the ongoing controversies of interest rates as well as from the problems of uneven spread etc and help SHGs take up “social intermediation” in the next phase.In this paper we discuss – (i) the opportunities and challenges faced by microfinance institutions in mobilising resources and enabling individuals and communities to overcome hurdles for more participative and productive growth; and (ii) the need for fostering new collaboration between institutions and people for good governance