Understanding the Role of Micro-Finance in Inclusive Growth & Financial Inclusion

Abstract

Development of the Indian economy is correlated with development and growth of its human assets. Economy like India where population growth rate is 1.3% annually and an estimated 29.8% of Indians live below the country’s national poverty line in 2010 finding an ultimate solution for growth of manpower is absolutely a difficult task. As a problem solver Micro finance (mf) in India has played an important role in this regard. It has in lot of ways facilitated India to achieve a target of reduction in inequality of income and wealth which has led to growth and development of financially weaker section of economy. Some growth generating factors have been analysed in this paper during 2007-2012(study period) to scrutinize important dimensions of growth of poor human asset of India impacting economic growth of India. It is observed from the results of above analysis that Financial Support, Knowledge Support and Effective Planning & Implementation Support are the main factors affecting growth of micro poor in India. The results of poor growth model (PGM) reveal that Financial Support, Knowledge Support and Effective Planning & Implementation Support variables exhibit a positive relationship (pull factors) with incremental savings of unreached weaker section of society.
Keywords: Micro finance, Micro poor, Poor growth model, Financial support, Knowledge support, Effective planning & Implementation support.