ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Sandeep TambeSubscribe to Sandeep Tambe

How Does Government Microfinance Impact the Rural Poor?

While microfinance companies have been studied and there is a growing consensus that they exclude the poorest, the impact of government microfinance programmes is relatively less understood. The National Rural Livelihoods Mission, which aims to reduce rural poverty by organising women into self-help groups, building capacity and providing access to microcredit is evaluated through a survey of 2,615 households in five districts of Madhya Pradesh. The focus is on four key questions. Who benefits and who gets left out? What is the pattern of household investment priorities? Is sustainable asset accumulation happening? What should be the exit strategy? It is found that the NRLM benefited the poor, while the very poor are struggling to repay the loans and getting left behind in poverty.

Decentralising Accountability

Ensuring good governance while devolving the 3Fs— functions, funds and functionaries—is a formidable challenge. An action research conducted in Sikkim from 2010 to 2016 focused on four questions: where is the corruption, what are the different types of corruption, how much is the quantum, and how do we reduce it effectively? A set of anti-corruption tools was integrated in the programme delivery, and corruption practices were broadly grouped into “easy to prevent,” “difficult to prevent but easy to detect,” and “difficult to prevent and detect.” By applying this strategy, we found that the corruption level dropped more than three times from 1.74% to 0.55%, and the savings from sanctioned cost rose to 20% (₹30.16 crore). This reduction was achieved despite weak enforcement, highlighting that a dynamic anti-corruption strategy that increases the probability of being caught can significantly reduce corruption by decentralising accountability.
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