Impact of Microfinance on Socio Economic Development of Poor in Uttarakhand

Abstract

There has been unanimity in the literature that the poor have inadequate access to credit from the formal financial sector. This is because the sector rates the poor as risky borrowers on account of their lack of suitable collateral. This has, therefore, provided the rationale for the policy stance of promoting the microfinance sector to enhance increased access to credit by the poor. Microfinance is expected to alleviate poverty through increased household incomes. newlineThere is no unanimity on the impact of microfinance on the welfare of poor households. While some argue that microfinance has a positive and significant impact on welfare outcomes, others argue that there is no significant positive impact and that at times the impact is adverse. This study seeks to contribute to this debate. It does this through investigation of the impact of microfinance on household socioeconomic factors. newlineA structured questionnaire was prepared through which the data was collected from SHG members. The Impact of microfinance through SHGs will be studied by comparing premembership and postmembership situations. The primary data on various parameters like assets, investments, borrowings, consumption pattern, income and other social conditions will be collected from SHGs Members through a structured questionnaire. newline newlineThe following study provides some vision on enhancing the programmes in order to reduce the poverty. This study supports the existing literature and found a positive impact on improving the livelihood of the members of the programme, expenditure, income, quality of living conditions and education. Finally the study tried to find some of the challenges which are being faced commonly in India while running these programmes. newline newline