The microfinance segment keeps delivering from behind the curtains in achieving what the nation has set out to achieve. We want growth and we want to eradicate poverty. This segment provides the means to leverage the strength that the poor have. I am referring here to the strength that is counted in terms of their ability to add to the growth momentum that the nation is seeking.

The data on the direct impact of microfinance on generating employment and thereby reducing the incidence of poverty unfortunately remains sketchy. However, the anecdotal evidence, spread of microfinance reach and the data related to agriculture, read together, provides ample reason to believe that starting from scratch microfinance has achieved what it was mandated to achieve, which is economic empowerment.

Take for example the spread east of Bihar till the last tip of North East. Dominated by agrarian sector with related activities being the main source of livelihood for the majority of the population, it was for long caught in a low income trap. But this region has been able to initiate the process of extricating itself out of the low income trap. Alongside, the microfinance reach out has also speeded up.

The Microfinance Micrometer, the publication of the microfinance industry association, claims that the East and the North-East together still account for the largest share in the microfinance funding. With a 36 per cent share in the second quarter of the current fiscal, this region leads the nation in the microfinance activities. The development in the region also anecdotally correlates with the microfinance activities.

The process is so simple. Probably, that’s the reason it’s also elegant. All that microfinance does is to help harness the enterprise in the poor by providing fund in a manner that no other mainstream conventional financial route will take. Thus empowered financially a borrower not only creates employment for himself, by employing helping hands also sets off a chain of indirect employments. So it can be conservatively said that one unique borrower implies creation of one direct and at the least three other indirect employment.

From this one can see that microfinance units provide a beneficial impact not only on the customer, but also indirectly on others and thereby create a self-sustaining ecology of growing prosperity. This is how the industry has a positive impact by direct and indirect creation of prosperity cycle and contribution to the nation’s aspiration of creating the growth moment.