Microfinance-Alleviating Poverty
India has a billion plus population out of which 40% lives in poverty. In India, we find that many are poor because of one simple reason — 'lack of regular income'. To add to their miserable plight, over 90% of the rural poor are deep in debt. Unable and unwilling to access banks or to apply for loans, the poor turn to local moneylenders, who charge 60% to 120% interest (per annum) or even more, trapping the poor into extreme poverty. Micro-finance is a proven way to strengthen viable, small businesses, resulting in increased household income and savings, and thus, alleviating the crunch of economic poverty. Microfinance system is designed for those people who do not have access to other formal financial institutions. Micro-finance beneficiaries are often self-employed, agricultural farmers, push-cart vendors, basket weavers and household-based business entrepreneurs. The access to micro-finance would help the poor to smooth cash flow and avoid periods where access to food, clothing, shelter, or education is lost. Micro-finance loan can make it easier to manage shocks like sickness of a wage earner, theft, or natural disasters. The poor people uses such financial help to build assets like buying land, developing agriculture, improving business which gives them future security. Women participants in micro-finance programs often experience important self-empowerment.
Key Facts of Microfinance:
- The overwhelming majority of people who earn less than $1 a day, especially in the rural areas, continue to have no practical access to formal sector finance.
- Poor people need a variety of financial services, not just loans.
- By supporting women's economic participation, microfinance helps to empower women, thus promoting gender-equity and improving household well-being.
- By reducing vulnerability and increasing earnings and savings, financial services allow poor households to make the transformation from "every-day survival" to "planning for the future."
As a result of above economic development initiative, self-employed, agricultural farmers, push-cart vendors, basket weavers, many small businesses expand and become viable. As a result, poor families have enough to feed their children and send them to school. The marginalized poor develop their businesses and manage to live a decent life. This approach is very powerful in lifting communities from economic poverty, ultimately leading the community to be self-reliant and live with dignity. ESCO is supporting to poor and unprivileged people through micro- finance in collaboration with other NGOs in India. If you decide to partner with ESCO in building economically stronger communities in India, you would be helping to reach out to millions of poor people and adding on to microfinance funds for communities. These will be disbursed through various partnered NGOs in India.
