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

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Exploring Possibilities

Despite substantial efforts and a vast network of rural banks, the rural poor still have very little access to formal finance, and informal lending remains strong. Over the past decade new microfinance approaches designed to deliver finance to the poor have emerged and some have shown promise. However, empirical assessments of their reach or impact are still relatively few. Drawing on a recent rural access to finance survey of 6,000 households conducted by the authors, we empirically analyse the reach of the most dominant microfinance initiative, the SHG-bank linkage model. Based on this and international experience, the paper draws lessons for exploiting the potential of microfinance in India, outlines areas of concern for government policy towards this important sector, and suggests ways to scale up access to finance for the poor.

The Transforming World of Indian Microfinance

Upscaling the provision of microfinance on the strength of its performance, measured primarily in terms of the repayment rates and financial sustainability indicators of a handful of microfinance institutions and without a serious reconsideration of certain vital development issues, may prove in the long-run to be an imprudent development strategy. Any effort at upscaling thus needs to be viewed with caution as it could actually lead to increased failures and credit indiscipline in the field. In the meanwhile, globally there is a visible trend of the commercialisation of microfinance, with NGOs transforming themselves into regulated financial institutions or non-banking financial companies and commercial banks entering the business of microfinance.

Microfinance and the State

Since the early 1990s, there have been many significant state initiatives in the institutional and policy spheres to facilitate access to financial services by more poverty-stricken groups. This article reviews the performance of formal institutional channels of microfinance and discusses the emergence of new forms of collaboration in the delivery of microfinance services. However, some persistent issues in regulatory policies and institutional arrangements need to be dealt with so as to help the state leverage the resources available for the poor, effectively and in a sustainable manner.

Access, Use and Contribution of Microfinance in India

Microfinance is making a significant contribution to both the savings and borrowings of the poor in the country. The main use of microcredit is for direct investment. While the presence of microfinance has increased the borrowing options for the poorer clients, it seems not (yet) to have significantly affected the terms and conditions of different informal credit providers.

Role of Religion in Fertility Decline

The fertility of Muslims, which was about 10 per cent higher than that of Hindus before independence, is now 25 to 30 per cent higher than the Hindu rate, and the difference according to religion is larger than the difference between the forward and depressed Hindu castes and tribes. This paper subjects the micro data from the National Family Health Surveys to a multivariate analysis to assess the contribution of socio-economic factors to the fertility differential by religion. It also explores the possible reasons for the large, residual effect of religion on fertility, and causes for the religious disparities in socio-economic conditions. The paper concludes with an assessment of the implications of the current demographic trends for the future population sizes of the two religious groups.

Hindu-Muslim Fertility Differentials

Although a Hindu-Muslim differential in fertility has persisted in India, it is no more than one child, and even this gap is not likely to endure as fertility among Muslims declines with increasing levels of eduation and standards of living. While the lower level of contraceptive use among Muslims is the most important factor responsible for the fertility differentials, the use of contraceptives has increased faster among Muslims in recent times. However, the relatively higher fertility among Muslims cannot be understood independent of its socio-economic and political contexts.

Muslim-Hindu Fertility Differences

This paper examines Muslim-Hindu differences in the desire for an additional child and the use of contraceptives. It uses data from the National Family Health Survey carried out in 1998-99 and employs multivariate and multilevel regression models in data analysis. Results show that Muslim-Hindu differences in the desire for additional children and use of contraceptives are pervasive across India and almost invariant across states and districts. This is consistent with the findings from our analysis of data from the first NFHS in 1992-93. However, Muslim-Hindu differences have narrowed between 1992-93 and 1998-99. It is thus argued that Muslim-Hindu fertility behaviour seems to be moving towards convergence. The pervasiveness of Muslim-Hindu differences in reproductive behaviour calls for complementary ?global explanations?.

District Level Fertility Estimates for Hindus and Muslims

This paper provides estimates of crude birth rates and total fertility rates for Hindus and Muslims for 594 districts of India, and assesses the state and district level differentials across the country. It reconfirms that there is a regional variation in fertility in India, with higher fertility in the north than in the southern and western parts, irrespective of religious affiliation. However, unless we understand the regional as well as the undocumented cross-national migration of Muslims, the picture of higher population growth rates among Muslims, reported in the 2001 Census, is likely to persist in the future, in spite of the moderate decline in their fertility.

Saffron Demography, Common Wisdom, Aspirations and Uneven Governmentalities

?Saffron Demography? has been instrumental in perpetuating myths relating to claimed differences between Hindu and Muslim populations. This paper examines this by now ?common wisdom? in the light of contemporary demographic reality in India. Based on extensive research in a western Uttar Pradesh district, it argues that the scale of Hindu-Muslim demographic differences has been exaggerated, and that the explanations provided for these differences are equally pernicious. Instead, it attempts an understanding of these ?causes? leading to differences in fertility through an analysis of the kind of governmentality seen in post-independence India and argues for new policy initiatives that avoid the punitive victim-blaming approach that has thus far been the norm.

Accelerated Decline in Fertility in India since the 1980s

This study finds that fertility among Muslims follows nearly the same pace of transition as that of Hindus, particularly when an accelerated decline in fertility in the country is taking place. Based on the experience both from the west and other developing countries, there is no reason to believe that fertility transition will stall once the process sets in. Therefore, the scepticism about fertility transition among Indian Muslims is unwarranted. The paper also analyses the proximate determinants of fertility among Hindus and Muslims as against the socio-economic differentials as causes for the differences in reproductive behaviour.

Population Growth, Fertility, and Religion in India

This paper first addresses the issue of religious differentials in population growth in India and then examines differentials in fertility. Analysis of data from the second National Family Health Survey shows that differences in fertility, especially between Hindus and Muslims, are not explained by differences in socio-economic characteristics, as argued by many observers. This is true of differentials in contraceptive practice as well. However, the differences appear to be a passing phase in the process of fertility transition. Since all religious communities in India have experienced substantial fertility declines and contraceptive practice has been well accepted, it is expected that fertility levels among communities would converge over time.

Religion, Literacy, and the Female-to-Male Ratio

This paper proposes a new explanation for religious differences in fertility in India by incorporating the issue of gender bias into the debate. It reports the results from an econometric investigation of the factors influencing the sex ratio at birth and among currently living children, by religion and by caste, for a sample of over 10,000 women. The investigation paid particular attention to religion and caste by subdividing the sample into Hindu, Muslim and dalit women who had all terminated their fertility. It enquired whether the effect of different variables on the sex ratio varied according to the religion and caste of the women. The econometric analysis found that a husband being literate served to raise the sex ratio ? both at birth and of currently living children ? but that the effect of husbands? literacy was stronger for Muslims and dalits than it was for Hindus. In other words, while the illiteracy of husbands exacerbated ?son preference? (and its obverse, ?daughter aversion?), the preference for sons (and the aversion to daughters) exercised a stronger hold on Hindu families than it did on Muslim and dalit families.


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