Study of funding for sustainable development and role of ICTs in developmental activities

Abstract

Rural poverty in India is a widespread and complex phenomenon and it cannot be alleviated just by one all-encompassing approach. Asian countries have been successful in many experiments to alleviate poverty in village clusters. These experiments involved improvements in micro-level planning, effective supply of credit to the poor by micro-finance organisations (MFO), improved management of government run poverty eradication programs and efforts by NGOs in building self-help networks amongst the rural poor. Micro-credit has become a major tool of development and is increasingly being looked upon as an important channel to mitigate the problems arising out of poverty among the rural poor. It has the capability of delivering outreach, impact and sustainability. By delivering financial services at a scale, and by appropriate mechanisms, micro-credit can reach poor people. By providing credit to poor people for starting micro-enterprises, it can help in impacting reduction of poverty. And by providing loans rather than grants, the MFO can become sustainable by recycling resources. The formal financial sector may achieve financial sustainability but has poor outreach to its clients. Traditional efforts by non-governmental organisations (NGOs) may reach the poor, but are often unsustainable. Good micro-finance practice combines both outreach and sustainability and is most embodied in micro-finance banks, which marries the two. But today, it is increasingly being felt that even the above framework is insufficient to extricate the full benefits of micro-finance as a tool for potential development. For this, the there is a need to go beyond just extending micro-credit and should include other micro-financial services also for micro-enterprises and entrepreneurs. These services should meet the needs of poor people, both protecting them from fluctuating incomes and other setbacks, and helping to promote their incomes and livelihoods.