| Abstract: |
In recent years, most of the countries across the globe are in a sweeping mood
to promote micro finance institutions not only as a positive rural development
intervention but also as a rural development panacea. Allured by the success
of micro credit institutions in developed countries, the developmental
economists in under developed and developing economies have increasingly
become enthusiastic in the promotion of micro credit as a rural development
intervention by tying it neatly with post-liberal development ideology. In the
Indian context, the frenzied promotional activity of the micro credit
institutions derive in part from the political slogan of ‘Garibi Hatao’ of the
Union Government in mid 70’s by the establishment of Grameen Banks which were
the offshoot of the putative success of Developmental Financial Institutions
in the West. Although the basic philosophy behind the micro credit movement is
to eradicate poverty as it stimulates the growth of micro enterprises by
developing new markets and by promoting a culture of entrepreneurship, it
involves minimal state intervention, thereby shifting the focus of attention
away from the society towards individuals. The experience of micro credit
schemes in Asia, Africa and South America describes altogether a different
story by negating this particular aspect of development intervention. This
serves the starting point of the present paper in considering micro credit as
the limiting factor of rural development intervention. No doubt, the limits
arise from the individualistic focus of the intervention. Keeping consistency
with the title of the paper, it not only explores the limitations of micro
credit as a rural development intervention through a survey of literatures but
also makes an attempt to bring to the focus the concept of rural micro finance
in which the issues of credit markets and the poor are explored. The objective
of bringing the above discussion to the forefront is to assess the potential
impact of micro finance institutions as development interventions. Finally,
attempt is made to look at the conditions which limit the effectiveness of
micro finance institutions as development interventions in different parts of
the globe including India. |