The word microfinance is itself new to us. We can understand this by breaking it into micro and finance. In this micro means small and finance is the financial aid. Together it is defined as the provision which provides financial aid to low income groups – people who people who come under Below Poverty Line and people who do not have a permanent job or are jobless. Farmers are most likely to be benefited by this provision. The farmers come under the seasonally unemployed group in the unemployed group. This microfinance is expected to affect the farmer’s growth substantially, making it the most active source of GDP.
Let’s look for issues which were suppressing the growth of India. One such factor was the practice of the Zamindari system. It was once hindering the growth of farmers. The Oscar nominated movie Lagaan brilliantly showcased this. It made the world aware of what was holding us back. The British were just the medium but the system was one which hindered growth.
The Zamindari Pratha was one of the older practices of India which enabled the needy and poor people to borrow money whenever they wanted on the basis of collateral interest. Practices like life forgery, treachery and corruption contributed in the use of this system as a way to suppress the poor by the wealthy Zamindars. This made the farmers work as labors in their own fields. The heavy “soot” or the interest imposed by the Zamindars compelled them to be their slaves. The Zamindars started believing that they can decide the destiny of the poor and destitute.
The entry of the British added fuel to the fire. They misused the trust placed in them by the peasants and instigated them against each other, which created barriers between the two. The British started making unreasonable trade offs with them and even interfered in their personal issues. Moreover the farmers were unable to free their belongings from the money lenders. They were cursed by the debts they had to pay. This was one of the leading causes of suicides among the farmers. Also, it reduced the overall contribution of agriculture to GDP.
21st Century India is likely to face new challenges due to the advent of microfinance. This is going to take the agriculture sector to a new level. The agriculture sector corresponds 33% of the total income providing sectors. With microfinance the growth is expected to rise. It will provide not only financial aid but also other facilities. These facilities include starting individual businesses and providing entrepreneurship abilities. The individuals are trained in setting up new business and how to handle the chaotic and crisis situations. The microfinance is especially beneficial in the empowerment of women. It provides loans to women groups and helps them in starting new ventures. It provides them financial aid. All this is expected to ameliorate the status of Indian women in the society.
Recent study has revealed that the rise in the price of the crops has indigenously led to increase in the purchasing power of the farmers. It improves their standard of living and equips them with resources so that they can purchase high yielding seeds. Microfinance was the one which instilled confidence in them and equipped them with the ability to maximize their resources. Even though microfinance is not that popular in rural areas but its contribution is evident. It was observed that there was a fall in the growth of the industrial sector which was compensated by the growth in the agriculture sector. Microfinance was introduced in this year’s budget. It needs more publicity so that the contributions from the rural areas increases and they are able to maximize resource utilization. It will also reduce the poverty in our country. Hence it will reduce the problem of unemployment. Perhaps, this provision will prove to be a major step for India to move from the group of developing countries to the bracket of developed ones.