Role of Micro Finance in uplifting Indian Economy: An Analysis

Abstract

Microfinance institutions (MFIs) act as indispensable financial intermediaries, providing small loans and services to individuals excluded from mainstream banking due to socio-economic constraints. Their significance lies in empowering marginalized communities, promoting financial inclusion, and fostering opportunities for income generation and entrepreneurship. Notably, microfinance contributes significantly to poverty alleviation and gender equality, particularly in empowering women, who often constitute a substantial portion of its beneficiaries. However, the effectiveness of microfinance in India faces multifaceted challenges. This paper addresses hurdles such as exorbitant interest rates, insufficient infrastructure, and the urgent need for effective regulation to prevent the exploitation of vulnerable borrowers Overall, this paper will find out the indispensable role of microfinance in India's economic development while acknowledging the challenges hindering its full potential. Unravelling these dynamics provides policymakers, practitioners, and stakeholders with a comprehensive understanding of microfinance in the Indian context, crucial for formulating informed strategies that foster sustained growth and ensure its continued positive impact on economic development. The insights gleaned from this study are vital for shaping the trajectory of microfinance in India.