“The popular perception is, “Microfinance” is all about livelihood generation for the poor, whereas “Financial Inclusion” is about the very basic fundamental need to connect a poor person to the financial institution. So livelihood generation is actually a step further…”
Post budget announcements, people like industrialists were calculating the impact of minor tax percentage shifts and how it will impact them in making more money, salaried class calculating how much exemption they have got and of course the journalists, who more often do not have money but it is their job to keep a tab on else’s money. It is an irony that they have to write about millions…and how the country’s economy is doing et al…is it not? Hahaha.
JoH was expecting some fiscal support for people in the middle class who have lost their jobs or whose salaries have been reduced on the pretext of global meltdown…thus facing the music of urban unemployment with rising EMIs…as the finance minister of this country exhibits ever willingness to bail out the corporates in trouble…but alas…
However, what was of interest to JoH was “Financial inclusion”, the new buzzword. This purely means that through budget GoI has proposed to reach out to the poorest of poor even in remote rural areas with financial assistance. This will be done with micro-financial opportunities like micro-credit or small loans, micro-savings, micro-insurance policies and all other micro-financial products that can be made available. Micro-credit is the extension of small loans to entrepreneurs too poor to qualify for traditional bank loans. It has proven to be an effective and popular measure in our neighboring Bangladesh. India’s learning is from Dr Yunus, the Noble Laureate from Bangladesh, who pioneered this concept of micro-finance and has established the efficacy of this.
While the entire media is focused on issues like fiscal deficit, stock market impact, reduction of excise duty on certain products, how LCD and luxury cars have become cheaper etc…typical things involving their readers and viewers, government is silently working towards making financial inclusion a reality. For this it has increased budget allocation for NREGS and Integrated Child Development Program as part of rural development plans. It is bound to take time to reach recognizable proportion considering the complex logistical labyrinth. What is of credence to this government however is the fact that through financial inclusion, it is trying to reach out to the rural poor in the right earnest. Micro-finance will be the real clincher.
The challenge however remains in implementation of such ambitious mega projects. How to reach out to people in the remotest areas by involving network of banks, gram panchayat offices, Common Service Centres (CSCs), e-Choupals and others. Another challenge is participation of state governments, without whom these projects will fail. In the first phase state governments of UP, Bengal, Jharkhand, Chattisgarh besides others attempted to derail this initiative. While such attempts may delay the implementation, these should not be a cause of worry to GoI as the recent people’s verdicts in these states have shown.
A very good indicator of government initiative is the large number of new opportunities for employment advertised by banks. In fact banks will play a crucial role in micro-financing…
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