POVERTY AND MICRO FINANCE

1. INTRODUCTION

Poverty in India is still rampant despite an impressive economic growth. An estimated 250 million people are below the poverty line and approximately 75 per cent of them are in the rural areas. A person who is hungry, insecure and powerless is poor. Poverty is the condition of people whom we describe as “poor “.

Poverty is the shortage of common things such as food, clothing, shelter and safe drinking water, all of which determine the quality of life. It may also include the lack of access to opportunities such as education and employment which aid the escape from poverty and/or allow one to enjoy the respect of fellow citizens.
In general, poverty can be defined as a situation when people are unable to satisfy the basic needs of life. The definition and methods of measuring poverty differs from country to country. According to the definition by Planning Commission of India, poverty line is drawn with an intake of 2400 calories in rural areas and 2100 calories in urban areas. If a person is unable to get that much minimum level of calories, then he/she is considered as being below poverty line.

2. CAUSES OF POVERTY IN INDIA

• High level of dependence on primitive methods of agriculture
• High population growth rate
• High Illiteracy (about 35% of adult population)
• Regional inequalities
• Protectionist policies pursued till 1991 that prevented high foreign investment

Government has introduced a number of antipoverty programs since independence to alleviate poverty. These include various employment guarantee programmes such as National Rural Employment Programme, Rural Landless Employment Guarantee Programme etc. Recently, Government has initiated National Rural Employment Guarantee Program (NREGP). As per NREGP, the government will provide 100 days of employment per year to whosoever is willing to work. NREGP is considered as a landmark program in poverty alleviation measures.

One of the major problems with poverty alleviation programs is their implementation. Rajiv Gandhi once said that out of 100 paisa allocated for poor only 14 paisa reaches them. But in spite of their weaknesses, poverty alleviated program can be credited for their success in alleviating poverty to an extent. Greater public-private partnership and committed and efficient bureaucratic machinery is required to tackle poverty.

The World Bank estimates that 456 million Indians (42% of the total Indian population) now live under the global poverty line of $1.25 per day (PPP). This means that a third of the global poor now reside in India. However, this also represents a significant decline in poverty from 60 percent in 1981 to 42 percent in 2005, although the rupee has decreased in value since then, while the official standard of 538/356 rupees per month has remained the same. Income inequality in India (Gini coefficient: 32.5 in year 1999- 2000) is increasing. On the other hand, the Planning Commission of India uses its own criteria and has estimated that 27.5% of the population was living below the poverty line in 2004–2005, down from 51.3% in 1977–1978, and 36% in 1993-1994. The source for this was the 61st round of the National Sample Survey (NSS) and the criterion used was monthly per capita consumption expenditure below Rs. 356.35 for rural areas and Rs. 538.60 for urban areas. 75% of the poor are in rural areas, most of them are daily wagers, self-employed householders and landless labourers.

Although Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas.Between 1999 and 2008, the annualized growth rates for Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%).Poverty rates in rural Orissa (43%) and rural Bihar (41%) are among the world's most extreme.^[12]

The India State Hunger Index 2008 by the International Food Policy Research Institute. Punjab has the best nutritional situation, whereas malnutrition in Madhya Pradesh is worse than in Ethiopia or Sudan.

India has a higher rate of malnutrition among children under the age of three (46% in year 2007) than any other country in the world.

Despite significant economic progress, 1/4 of the nation's population earns less than the government-specified poverty threshold of 12 rupees per day (approximately USD $0.25). Official figures estimate that 27.5% of Indians lived below the national poverty line in 2004-2005.A 2007 report by the state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees (approximately USD $0.41) per day with most working in "informal labour sector with no job or social security, living in abject poverty.

 3. CONCEPT OF DEVELOPMENT:

Development is a process. The process has been taking place in societies since the time immemorial. Development describes the growth of humans throughout the lifespan, from conception to death. The scientific study of human development seeks to understand and explain how and why people change throughout life. This includes all aspects of human growth, including physical, emotional, intellectual, social, perceptual, and personality development.

There are several connotations about development such as

v      Development as growth

v      Development as Change

v      Development as change or transformation and

v      Development as modernization

 4. SUSTAINABLE DEVELOPMENT:

In the year 1981, the concept of sustainable development appeared for the first time. Sustainable Development means Environmental, economic and social well-being for today and tomorrow

According to classical definition given by the United Nations World Commission on Environment and Development in 1987, Development is sustainable if it “meets the needs of present without comprising the ability of future generations to meet their own needs”.

5. WHAT ARE THE MILLENNIUM DEVELOPMENT GOALS?

The Millennium Development Goals (MDGs) are eight goals to be achieved by 2015 that respond to the world's main development challenges. The MDGs are drawn from the actions and targets contained in the Millennium Declaration that was adopted by 189 nations-and signed by 147 heads of state and governments during the UN Millennium Summit in September 2000.

The eight MDGs break down into 21 quantifiable targets that are measured by 60 indicators.

       Goal 1: Eradicate extreme poverty and hunger

       Goal 2: Achieve universal primary education

       Goal 3: Promote gender equality and empower women

       Goal 4: Reduce child mortality

       Goal 5: Improve maternal health

       Goal 6: Combat HIV/AIDS, malaria and other diseases

       Goal 7: Ensure environmental sustainability

       Goal 8: Develop a Global Partnership for Development

6. MICRO FINANCE INTERVENTION FOR POVERTY ALLVIATION

Micro finance is expected to play a significant role in poverty alleviation and development. In the development paradigm, Micro finance evolved as a need based policy, Programme to cater to the so far neglected target group (women, rural, poor, deprived etc.).Its evolution is based on concern of all developing countries for Empowerment of the poor and Alleviation of Poverty. The aim of Micro finance is to empower the poor and mainstream them into development. The basic idea of micro finance is If poor are provided access to financial services, including credit, they may very well able to start or expand a micro enterprise that will allow to break out of poverty. Micro finance program may actually succeed in enabling them to crease the income level and became one of the most effective interventions for economic empowerment of poor.