Why microfinance remains in the priority sector?
When 45.5 crore of India's population lives on `55 a day (as per World Bank report), levitra it is only appropriate that RBI retains the priority sector status of MFIs. MFIs are here with an aim of providing sustainable livelihood activities to the poor and thereby eradicating poverty. We realized that it was not just low income and consumption that define poverty; there are social barriers like caste, seek gender, status, disability etc. too, which cannot be estimated. It's here that MFIs can play a crucial role through its business model based on Sangams. During sangam meetings, people come in unison sans any barriers, with a sole aim of uplifting their living environment.
Retaining priority sector status can also be attributed to the fact that microfinance is considered as responsible finance and not just mere money lending. Factors like Accountability and Responsibility counts high in case of MFI programs. It's true that India spends more on programs for the poor than most other developing countries i.e., 2% of GDP. This is three times higher than what China is spending. But due to faulty administration, most programs failed to meet the purpose. Even though the Mahatma Gandhi National Rural Employment Guarantee Program (MGNREGP) is a landmark achievement, we all know how negatively it has affected the output of small farmers who are finding it difficult to get labourers on time.
The flourishing of small and medium enterprises is another reason that justifies the priority sector status to MFIs. Availability of funds on time is very important for the survival of SMEs, which contribute 45% to the national GDP. Marketing facilities offered by social microfinance organizations like ESAF give international exposure to the products of small and micro entrepreneurs. That's why whether it is in food processing, agro-industry, gems and jewellery, engineering, textile and readymade garments, electrical and electronics, meat products, leather goods, handicrafts , animal husbandry, toy making …you name it…and we have a success story to showcase…