India’s development through microfinance institutions and loans

Abstract

India gained independence in 1947, and as I write this article, we are in the 78th year of Independence. But India’s per capita income is at around just Rs 1.72 lakh in 2022-23. As per the UN’s HDI index 2023-2024 report, India is ranked among the bottom-most nations at 134th position out of 193 countries. Keeping in mind our target of becoming ‘Vikshit Bharat’ by 2047, I would like to outline one key policy measure that could go a long way in achieving that target. India’s development through strengthening of Microfinance institutions and loans The modern microfinance institutions and loans came into prominence after the establishment of Grameen Bank in Bangladesh by Muhammad Yunus in 1976. For his pioneering work, he was awarded the Nobel Peace Prize in 2006. Microfinance loans are one of the essential tools to ensure the development of the last mile. This model of Microfinance institutions, if extensively implemented and penetrated across the length and breadth of India, has potential to pull millions of people out of poverty in the next 15 to 20 years. Despite the presence of many microfinance institutions, penetration of microfinance loans in India is really low, which is a great cause of concern.