Tuesday, May 20, 2008
Wednesday, April 2, 2008
Facts & Updates
Fast Facts
Urbanization in India
Most Urbanized States: Tamil Nadu 43.9%; Maharashtra 42.4%; Gujarat 37.4%
3 out of world's 21 mega cities: Mumbai (19 mill); Delhi (15 mill); Kolkata (14 mill)
Large Cities: 23 in 1991; 40 in 2007
Urban Pop.: 25% of 850 mill in 1992; 28% of 1,050 mill in 2007.
Estimated Urban Pop. by 2017: 500 mill
% of Urban Residents who are Poor: About 25%
Slum Population: About 41 million in 2001
Estimated Slum Pop. by 2017: 69 mill
•The 74th Constitutional Amendment has given a significant role to both rural and urban local bodies in terms of empowerment and expanding their normal functions to include poverty alleviation. In this regard, all the urban local bodies have to focus on micro finance at the grass root level
Urbanization in India
Most Urbanized States: Tamil Nadu 43.9%; Maharashtra 42.4%; Gujarat 37.4%
3 out of world's 21 mega cities: Mumbai (19 mill); Delhi (15 mill); Kolkata (14 mill)
Large Cities: 23 in 1991; 40 in 2007
Urban Pop.: 25% of 850 mill in 1992; 28% of 1,050 mill in 2007.
Estimated Urban Pop. by 2017: 500 mill
% of Urban Residents who are Poor: About 25%
Slum Population: About 41 million in 2001
Estimated Slum Pop. by 2017: 69 mill
•The 74th Constitutional Amendment has given a significant role to both rural and urban local bodies in terms of empowerment and expanding their normal functions to include poverty alleviation. In this regard, all the urban local bodies have to focus on micro finance at the grass root level
Understanding Urban Microfinance
The cities in India are projecting immense development with sky scrapers, fancy flyovers, massive shopping malls and multiplexes. But what is co-existing is urban poverty, poverty of employment, poverty of shelter, poverty of basic necessities and poverty of access to basic infrastructure like electricity, water, drainage and sanitation
As the number of migrants increase, so does the index of poverty. The poor do manage to find some work, but it is either not regular or in the unregulated sector with no guarantee of minimum wages and number of working hours. Unsecured employment or no employment force the urban poor to eke out a living somehow. Some of them take to crimes, but a majority of them work in factories or homes or do some petty trading. The skilled ones manage to get employed somehow, but the large majority of unskilled people forces work in the unorganized sector. Some are even forced to driven to begging, prostitution or peddling drugs in the hope of getting easy money. Poverty is an accepted situation. Today urban poverty has been globally recognized as a problem area and the Millennium Development Goals adopted by the UN and accepted by India includes the alleviation of urban poverty as one of the primary goals.
The idea of microfinance was mooted sometime in 1992, when attention was focused on the experience of other developing countries, where such micro finance was already introduced. National Bank for Agriculture, Reconstruction and Development (NABARD) took the lead in this direction. Micro finance works through the operation of Self Help Groups (SHG), which are a group of fifteen odd women living in the same neighborhood. These women work and generate small savings, which are invested in the common pool from which loans can be availed of. All the members agree on the rate of interest and the number of installments. Where savings generated are substantial, they are invested in a bank deposit, against which banks advance loan to the SHG, which in turn can advance it to the members. The SHG is required to keep proper books of accounts and all the transactions relating to individual members. Interested NGOs help these SHGs in regard to extension, mobilization and keeping proper books of accounts. The SHGs have to meet periodically to discuss their mutual needs and interests. The financial institutions deal with the SHGS and not with the individual beneficiaries and therefore the cost of transactions is less.
A World Bank report suggests that 95% of the members do not default in repayment and the effort s of these SHGs need to be lauded. In small ways these groups have mobilized savings and employed it on economic activities, which are earning steady rate of returns. The sustainability of these micro finance institutions depends upon the zeal of the members to save more and employ the funds in profit generation. While microfinance is growing as an institution it has not yet been able to fill the huge gap between poverty and sustainable economic activity. Urban poverty, in absolute terms, is far too huge for micro finance to make a sizeable dent. Moreover, it is pointed out by critics that funds obtained from micro credit are often employed on domestic necessities, such as marriage or cost of hospitalization and not on profit generating activity. Hence it can at best be a community lending activity without an adequate rate of return or an agent of profit generation. But, it is accepted that micro finance is still in its nascent stages in India and given the right fillip, can metamorphose into a bigger activity.
It is interesting to note that a majority of the members of SHGs are women. It is these poor and illiterate women who are making a difference for the micro economy
As the number of migrants increase, so does the index of poverty. The poor do manage to find some work, but it is either not regular or in the unregulated sector with no guarantee of minimum wages and number of working hours. Unsecured employment or no employment force the urban poor to eke out a living somehow. Some of them take to crimes, but a majority of them work in factories or homes or do some petty trading. The skilled ones manage to get employed somehow, but the large majority of unskilled people forces work in the unorganized sector. Some are even forced to driven to begging, prostitution or peddling drugs in the hope of getting easy money. Poverty is an accepted situation. Today urban poverty has been globally recognized as a problem area and the Millennium Development Goals adopted by the UN and accepted by India includes the alleviation of urban poverty as one of the primary goals.
The idea of microfinance was mooted sometime in 1992, when attention was focused on the experience of other developing countries, where such micro finance was already introduced. National Bank for Agriculture, Reconstruction and Development (NABARD) took the lead in this direction. Micro finance works through the operation of Self Help Groups (SHG), which are a group of fifteen odd women living in the same neighborhood. These women work and generate small savings, which are invested in the common pool from which loans can be availed of. All the members agree on the rate of interest and the number of installments. Where savings generated are substantial, they are invested in a bank deposit, against which banks advance loan to the SHG, which in turn can advance it to the members. The SHG is required to keep proper books of accounts and all the transactions relating to individual members. Interested NGOs help these SHGs in regard to extension, mobilization and keeping proper books of accounts. The SHGs have to meet periodically to discuss their mutual needs and interests. The financial institutions deal with the SHGS and not with the individual beneficiaries and therefore the cost of transactions is less.
A World Bank report suggests that 95% of the members do not default in repayment and the effort s of these SHGs need to be lauded. In small ways these groups have mobilized savings and employed it on economic activities, which are earning steady rate of returns. The sustainability of these micro finance institutions depends upon the zeal of the members to save more and employ the funds in profit generation. While microfinance is growing as an institution it has not yet been able to fill the huge gap between poverty and sustainable economic activity. Urban poverty, in absolute terms, is far too huge for micro finance to make a sizeable dent. Moreover, it is pointed out by critics that funds obtained from micro credit are often employed on domestic necessities, such as marriage or cost of hospitalization and not on profit generating activity. Hence it can at best be a community lending activity without an adequate rate of return or an agent of profit generation. But, it is accepted that micro finance is still in its nascent stages in India and given the right fillip, can metamorphose into a bigger activity.
It is interesting to note that a majority of the members of SHGs are women. It is these poor and illiterate women who are making a difference for the micro economy
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