Microfinance, Poverty Alleviation, and Improving Food Security: Implications for India

Publication Date: 31 Dec 2001
Published by: OSU Rural Finance Program
Document Type: Paper (PDF)

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Can the experience of self-help groups in India be improved?

Poverty reduction implies employment creation, redistribution of assets from the rich to the poor and improvement of the access to financial services for the poor households. The microfinance industry is redesigning its products and services in order to empower the most disadvantaged people and make them more economically and socially active

This paper attempts to:

• Understand the role of finance in development;
• Discuss the relationship between financial services and food security by pointing out three channels through which access to credit may affect food security;
• Improved income generation;
• Changes in household assets and liabilities
• Consumption smoothing.

• Describe the role played by microfinance in India, particularly the experience of self-help group banks.

• They should pursue all the three pathways above indicated in order to make poor households more food secure
• savings and insurance services should be emphasised;
• The interest rates and the use of subsidies require to be adjusted;
• A regular evaluation of the strengths and weaknesses of self-help groups is strongly recommended.