Maurya has discovered that in difficult times microlending is no more forgiving than macrolending. Das, in West Bengal, has come to the same grim conclusion. Ghosh covers finance for Bloomberg News in Mumbai.
Srivastava covers economics for Bloomberg News in New Delhi. Never miss a story! Stay connected and informed with Mint. Download our App Now!! It'll just take a moment. Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image. You are now subscribed to our newsletters. Premium Premium Purvanchal Expressway: km distance will be complete Panagariya said while micro-credit smoothened out consumption for those with low incomes, studies showed their effect on poverty and education was limited.
Micro-credit's role as an income-generating mechanism was "overstated", he added. On the contrary, the bank-linked self-help group SHG model was a successful Indian innovation in microfinance. Interview with Arvind Panagariya. Share Via. Search the FT Search. World Show more World.
US Show more US. Companies Show more Companies. Markets Show more Markets. Opinion Show more Opinion. According to Reserve Bank of India data, household consumer debt rose threefold from to Microlevel data show that this debt boom was not just an urban middle-class phenomenon. Long before the pandemic, consumer debt of the rural working poor was increasing much faster than income or wealth.
This debt was most often used to for living costs and sometimes to attempt to build a better life, whether by improving housing, educating children or paying for a good marriage. Debt is not necessarily bad if it can support investment. However, here it serves mostly as a substitute both for wages that are far beyond subsistence levels and for largely inadequate social protection. Thus, the core of the problem is not a model privileging private lenders that it is exploitative by design — and yet publicly subsidised.
It also is a regime of accumulation that is incapable of ensuring the social reproduction of households, as a result of both the failure of private capital to provide subsistence wages, and an inefficient state unable to provide real social protection. In the context of the pandemic, relief that came in the form of credit, especially from for-profit institutions, rather than substantive support from the state was simply an extension of this longer trend.
Data from the first quarter of shows a significant additional increase in household debt. We have shown how problematic this is and argue that rather what was needed was adequate and effectively channeled state relief as well as regulation to ensure that lenders did not exploit already vulnerable households at this time. Nithya Joseph and G. About Us. Support Us Login. Become A Supporter. Hindi Marathi Urdu. Terms Privacy About Us. How India's Financial Inclusion Infrastructure Failed During the Pandemic Despite the fact that India's financial inclusion infrastructure has a complex mix of self-help groups and small private banks offering credit to the poor, it has failed to deliver during the pandemic.
Also read: Financial Inclusion in Liberalised India — a Ringside View In India, civil society organisations first created microcredit programmes in the s, and for-profit global institutions entered by the early s. Privacy Policy. Refund Policy.
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