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Thesis SUBMITTED TO THE UNIVERSITY OF LUCKNOW FOR THE DEGREE OF Doctor of Philosophy IN ECONOMICS Under the Supervision of By DEPARTMENT OF ECONOMICS UNIVERSITY OF LUCKNOW DEPARTMENT OF ECONOMICS UNIVERSITY OF LUCKNOW LUCKNOW 226 007 (INDIA) 2015 Ajay Kumar Verma Prof. M. K. Agarwal
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Thesis
SUBMITTED TO THE
UNIVERSITY OF LUCKNOW
FOR THE DEGREE OF
Doctor of PhilosophyIN
ECONOMICS
Under the Supervision of
By
DEPARTMENT OF ECONOMICSUNIVERSITY OF LUCKNOW
DEPARTMENT OF ECONOMICS
UNIVERSITY OF LUCKNOW
LUCKNOW 226 007 (INDIA)
2015
Ajay Kumar Verma
Prof. M. K. Agarwal
CERTIFICATE
This is to certify that thesis entitled “Role of Microfinance In Poverty
Alleviation and Employment Generation: A Case Study of Bahraich District of Uttar
Pradesh” submitted for the award of the Degree of Doctor of Philosophy in
Economics, to the University Lucknow, Lucknow is an original record of bonafide
research work, carried out by Ajay Kumar Verma, under my supervision and guidance.
This is candidate’s own work and I recommend that the thesis be forwarded to
the examiners for evaluation.
Date:
Prof. Manoj Kumar Agarwal
Department of Economics
University of Lucknow,
Lucknow-226 007 (India)
Prof. Manoj Kumar Agarwal Supervisor
DECLARATION
This thesis entitled “Role of Microfinance In Poverty Alleviation and
Employment Generation: A Case Study of Bahraich District of Uttar Pradesh”
embodies my original work for submission to the Department of Economics,
University of Lucknow is for Ph.D. Degree. Further, I declare that this work, either
in part or in full, has not been submitted to any other university for the award of any
other degree. Any contribution made to the research by colleagues, with whom I have
worked at, during my candidature, is fully acknowledged.
I also declare that the intellectual content of this thesis is the product of my
own work, except to the extent that assistance from other in the presentation and
linguistic expression is acknowledged.
Date:
Ajay Kumar Verma
Department of Economics
University of Lucknow,
Lucknow - 226007
Preface
In recent decades microfinance has been playing an important role in the
poverty alleviation and employment generation around the world, in India and also in
Uttar Pradesh in some way. Ensuring timely and adequate finance to the needy
persons in rural areas to upgrade their standard of living conditions in general and
linking the rural, low income groups to various financial services is the
greatest challenge before the Indian Government. Credit may go to Prof. Mohammad
Yunus for introducing the Microfinance Programme, which has not only created hope
in the eyes of the poor people, but has also provided government a new policy to
overcome the severe problems of the economy i.e. unemployment and poverty.
Microfinance has become much successful in reducing poverty and increasing
employment in developing nations. Microfinance, as the term itself explains, has
capacity of having small funding or financing activities. This financing structure is
basically required by small farmers, poor, households, small businessmen and cottage
industries in order to carry on their day to day business activities. Microfinance refers
to the whole range of financial services for the poor people, including- loan, savings,
credit, money transfer, insurance, pension and other financial innovations aimed at
serving the very poor. In the development paradigm, microfinance has evolved a need
based policy and programmes to cater the neglected group of society especially
women, poor, rural and deprived sections, etc.
The basic idea of microfinance is to provide access to financial services
including credit which enables the entrepreneur to start and continue his
microenterprise that will allow him to break out of poverty. The concept has gained
lot of significance and momentum, both theoretically and practically during last few
decades. It is regarded as tool for economic development which is designed to spread
financial support and assist the low income group people to work their way out of
poverty, deprivation, starvation, and other financial problems.
The story of the Indian Microfinance is associated with both governmental
and non-governmental organisation (NGO) initiatives that took place in the mid-
1980s and early1990s. It incorporated lessons from the microfinance movement in
Bangladesh and similar participatory development programmes in India. The Self-
help group (SHG)-bank linkage programme of the National Bank for Agriculture and
Rural Development (NABARD) accelerated the growth of the microfinance
movement in India in the latter half of the 1990s. Now the SHG-bank linkage
programme is one of the largest microfinance programmes in the world.
Bahraich district was selected for the study because it is one of the most
backward districts in terms of illiteracy, monthly income, employment and other
social reforms in Uttar Pradesh. Therefore, this district is very suitable for studying
the microfinance and its impact on poverty and unemployment.
The present study attempts to highlight some important aspects like role
of microfinance to increase income, expenditure, self-employment opportunity,
empowerment to the people and reduced economic dependency. On the other hand,
microfinance increases investment and productive capacity in the production and
development of small and medium scale enterprises. The study is an empirical
investigation of the importance of microfinance in poverty alleviation and
employment generation in Bahraich district of Uttar Pradesh. The present study is
expected to make an important contribution in the field of economic development by
filling the gap in literature on the subject at the State level.
Acknowledgement
This study has been possible only with the support of many individuals and
department. With the usual disclaimer, I would like to extend my words of
gratitude to a few of many that rendered me support directly or indirectly during
my study. I am extremely grateful and deeply indebted to my supervisor and guide
Prof. Manoj Kumar Agarwal, a research and development–oriented academician
and Professor, Department of Economics, University of Lucknow, Lucknow for his
generous guidance, valuable suggestions and unswerving support throughout my
study. My supervisor provided me mature guidance, encouragement and related
support I needed to complete the study. I feel privileged to have worked under
him.
With a profound sense of gratitude I would like to mention Prof. Arvind
Awasthi (Head), Prof. Harsha Mohan, Prof. Arvind Mohan, Prof. Vinod Singh,
Prof. A. K. Bajpai, Prof. Rakesh Kumar and Dr. Ashok Kumar Khithal for their
valuable suggestions, guidelines to me. I also record my gratitude to the staff of
Library and Computer centre of the Department of Economics, University of
Lucknow, for their cooperation in all the manners. I express my heartfelt gratitude
towards Dr. Arun Arora, for helping me in Statistical data analysis and providing
moral support and timely advice. I am deeply thankful to Dr. Sandeep Kumar
Baliyan, Senior Project Fellow, Center for Excellence Scheme, Department of
Economics, University of Lucknow for his generous guidance, valuable suggestions
and unswerving support throughout my study.
I am grateful to the staff of NABARD regional office staff, Sri Sant Pal
Verma (Arth and Shankhiya Adhikary, district Bahraich), Tagor Library of the
Lucknow University, Dr. Sudhir Nigam in Yojana Bhawan and Microfinance
beneficiaries respondents of the selected villages for their kind cooperation and
support in collecting secondary and field data for the study. I wish to record my
gratefulness to my Mother Smt. Radha Devi and Father Sri Teeka Ram Verma for
educating me and family members. My special thank to Raj Kumar Verma.
Last but not the least I would like to thank the non-teaching staff of the
Department for their invaluable help and cooperation. I sincerely thank all these
friends for the lovely and very useful time we had together in the Department
during my research period.
Ajay Kumar Verma Ph.D. Scholar
Department of Economics, University of Lucknow, Lucknow - 226007
CONTENTS
Certificate
Declaration
Preface
Acknowledgement
List of Tables
List of Figures
List of Abbreviations
1. Introduction Review of Literature And Methodology 1-38
Introduction
1.1 Poverty: Concepts and Measures
1
2
1.2 Unemployment Concepts and Measures 4
1.3 What is Finance? 6
1.4. Microfinance and Macrofinance: 6
1.5 Origin and Growth of Microfinance 9
1.6 Models of Microfinance Services 10
1.7 Self Help Group (SHG) 13
1.8. Kisan Credit Card (KCC) scheme and Agriculture Development 16
1.9. Microfinance and Financial Inclusion 17
1.10. Benefits of Microfinance 18
1.11. Players in the Microfinance Industry 18
1.12. Microfinance in India 19
1.13. Literature Review 20
1.14. Scope of the Study 36
1.15 Objectives of the Study 36
1.16. Hypotheses of the Study 37
1.17. Chapter Scheme of the Study 37
2. Socio - Economic Development of Uttar Pradesh 39-70
Introduction
2.1 General Profile of Uttar Pradesh
39
39
2.2 Profile of Social Development in Uttar Pradesh 42
2.3 Human Development in Uttar Pradesh 43
2.4 Demographic change in Uttar Pradesh 46
2.5 Educational Development in Uttar Pradesh 53
2.6 Economic development profile of Uttar Pradesh 56
2.7. Agriculture Development in Uttar Pradesh 59
2.8 Industrial Development profile of Uttar Pradesh 63
2.9 Poverty and unemployment in Uttar Pradesh 65
2.10. Status of Unemployment in Uttar Pradesh 67
2.11 Regional Disparities in Uttar Pradesh 68
2.12 Conclusion 69
3. Development Profile of Bahraich District 71-97
Introduction
3.1 Geographical Area of Bahraich District
71
74
3.2 Rainfall and Temperature in Bahraich 74
3.3. The comparative Development Profile of Bahraich in Uttar Pradesh 74
3.4 Demographic Profile of Bahraich District 89
3.5 Social Development Profile in Bahraich District 93
3.6 Economic Development and Occupational Distribution in Bahraich
District
94
3.7 Educational Development Profile in Bahraich District 95
3.8 Conclusion 96
4. General Features of The People and Pattern of Microfinance
Availability
98-142
Introduction
4.1 Methodology and Sample Design
98
98
4.2 Sample of Primary Data Collection of the Study 98
4.3 General and Household Information of the Respondents 100
4.4 Demography and other Particulars of Household Members 104
4.5 Pattern of Microfinance Availability 108
4.6. Major Occupation of the Respondents 110
4.7. Direct Availability of Microfinance 112
4.8. Microfinance through Self- Help Groups (SHGs) 119
4.9. Microfinance through Kisan Credit Card (KCC) 132
4.10. Conclusion 139
5. Nature of Activities under the Microfinance and their Impact on
Poverty and Unemployment
143-176
Introduction
5.1. Status of Microfinance in Bahraich District
143
144
5.2. Poverty: Concept and Measures 145
5.3. Unemployment: Concepts and Measures 146
5.4. Microfinance and its impact on Poverty and Unemployment 146
5.5 Impact of direct microfinance on Poverty and Unemployment 147
5.6 Benefits and activities of Microfinance through Self-Help Groups (SHGs) 157
5.7 Microfinance through KCC and its impact on poverty and unemployment 167
5.8 Conclusion 173
6. Conclusion and Policy Suggestion 177-190
Introduction
6.1 Socio-economic Development of Uttar Pradesh
177
178
6.2. Development Profile of Bahraich District 179
6.3. The Socio – Economic Profile of Respondents 181
6.4. Major Occupations of Respondents 182
6.5. Benefits and Activities of Direct Microfinance 182
6.6. The Benefits and Activities of Microfinance through Self-Help Groups
(SHGs)
183
6.7. The Benefits and Activities of Kisan Credit Card (KCC) Scheme 185
6.8. Impact on Employment Income and Savings 186
6.9. Suggested Measures and Policy Recommendation 188
6.10. Limitation of the Study 190
7. Interview Schedule i-vii
8. Bibliography viii-xx
LIST OF TABLES
Table
No.
Title Page
No.
2.1 Progress of Human development in Uttar Pradesh (Based on
UPHDR II Methodology)
44
2.2 The Value and Rank of Human Development index for various
States in India, 1991 and 2001.
45
2.3 The position of Uttar Pradesh in some demographic indicators
(2005)
46
2.4 Population size and its growth rate in Uttar Pradesh and India
since 1901 to 2011
47
2.5 Population density in Uttar Pradesh and India 48
2.6 Sex ratio of Uttar Pradesh and India 49
2.7 Population distribution according to age groups in Uttar Pradesh
(per cent)
50
2.8 Classified village and cities in Uttar Pradesh, 2001 51
2.9 Religion wise population distribution in Uttar Pradesh and India -
2001
52
2.10 Region wise demographic and other distribution in Uttar Pradesh
(2011)
53
2.11 Literacy rate of Uttar Pradesh in India 54
2.12 Literacy Rate of Uttar Pradesh and India 55
2.13 Economic region wise literacy rate in the Uttar Pradesh 56
2.14 Net State Income position of Uttar Pradesh and India 57
2.15 Sector wise Contribution of state income in Uttar Pradesh, at
current price (in per cent)
58
2.16 Per capita State Income and National Income 59
2.17 Major crops production in Uttar Pradesh (in thousand million
tons)
60
2.18 Average productivity for major crops in Uttar Pradesh and India 61
2.19 Workforce participation in Uttar Pradesh (per cent) 62
2.20 The Value of Industrial Output in Uttar Pradesh (Rs. crore) 63
2.21 Industrial growth rates during five year plan in Uttar Pradesh 65
2.22 Size of poverty in Uttar Pradesh and in India 66
2.23 Unemployment position in Uttar Pradesh and India 67
2.24 Various development indicators among the economic region in
Uttar Pradesh
69
3.1 District Arranged According to value of HDI, 2005 76
3.2 Districts arranged according to per capita income in Uttar Pradesh 79
3.3 Area of Bahraich district in Uttar Pradesh 80
3.4 Population density of in Uttar Pradesh (Persons per km2) 81
3.5 District wise Sex ratio in Uttar Pradesh 82
3.6 Status of Urban population ratio of Bahraich district in Uttar
Pradesh.
84
3.7 District wise Literacy rate in Uttar Pradesh (2011) 85
3.8 Status of Main workers in Total population of Bahraich district in
Uttar Pradesh (2001)
87
3.9 District wise Agricultural workers in Total main workers in Uttar
Pradesh
88
3.10 Area and population distribution in Bahraich district 90
3.11 Decadal growth rate of Population in Bahraich district 92
3.12 Religion wise Population Distribution in Bahraich District-2001 93
3.13 Total scheduled caste and scheduled tribe population in Bahraich
district
94
3.14 The Occupational Distribution of population in Bahraich District 94
3.15 Development block-wise literacy rate in the Bahraich district 96
4.1 Tehsil wise distribution of respondents 99
4.2 Distribution of subject according to living place 99
4.3 Age wise distribution of respondents 100
4.4 Gender wise distribution of respondents 101
4.5 Religion wise respondent distributions 101
4.6 Category wise respondent distributions in Bahraich district 102
4.7(a) House ownership and house type of respondents 102
4.7(b) Availability of electricity, Telephone/Mobile and source of
Drinking water
103
4.8 Respondent Education Level in Bahraich district 104
4.9 Average family size of respondent 105
4.10 Numbers of educated family members of respondents 106
4.11 Monthly incomes of respondent 107
4.12(a) Having bank account 107
4.12(b) Frequency of bank transaction 108
4.13 Major occupations of respondents in Bahraich district. 110
4.14 Initial Investment in Occupation Setup 113
4.15(a) Source of funding of Direct Microfinance 114
4.15(b)
4.16
Loan availed for occupational purpose
Number of times borrowed
114
115
4.17 Amount borrowed (in Rs.) 115
4.18 Main sources of direct microfinance 116
4.19 Rate of interest (per annum) 117
4.20 Repayment period of direct microfinance 117
4.21 Per member monthly savings 122
4.22 Amount obtained as assistance 123
4.23 Year when assistance was received 124
4.24 Main occupation started by SHGs and its members 124
4.25 Place where money of SHG is kept 125
4.26 Self Help Group members borrowing from SHG 126
4.27 Category of SHG members 127
4.28 Year since the respondents are holding KCC 133
4.29 Number of times money withdrawn in a year 134
4.30 Credit limit of Kisan credit cards 135
4.31 Total amount withdrawn by the KCC holders 136
4.32 Utilization/benefits of KCC money 136
4.33 Repayment of KCC by beneficiaries 137
4.34 Source/Bank issuing KCC 138
5.1(a)
5.1(b)
Sources of direct microfinance
Loan availed for occupational purpose
148
148
5.2 Number of times borrowed 149
5.3 Amount borrowed by respondents in Rs. 149
5.4 Usefulness of direct microfinance 150
5.5 Usefulness of the direct microfinance 150
5.6 Effect of direct microfinance on production/business 152
5.7 Increase monthly income of respondents 153
5.8 Number of members engaged on the occupation 154
5.9 Per member monthly savings 158
5.10 Main occupation started by SHGs members 158
5.11 Activity-wise Use of SHG Savings and Loans 160
5.12 SHG help monthly income increase of respondents 162
5.13 Year wise analysis from which Respondent having the KCC 168
5.14 Credit limit of KCCs 168
5.15 Number of times money withdrawn in a year 169
5.16 Total amount withdrawn by KCC 170
5.17 Utilization/benefits of kisan credit card 170
5.18 Increment in monthly income of the respondents 171
5.19 KCC employing no. of persons 172
LIST OF FIGURES
Figure No. Title Page No.
1.1 Nature and Functions of SHGs operating in India 15
LIST OF MAP
Map No. Title Page No.
1
District-wise map of Uttar Pradesh 40
2 Map of District Bahraich 73
LIST OF ABBREVIATION
ADB Asian Development Bank
ALF Apex Level Federation
ANOVA Analysis of Variance
AP Andhra Pradesh
APL Above Poverty Line
BASIX Bharatiya Samrudhi Investment and Consultancy Service
BDOs Block Development Offices
BIRD Banker’s Institute of Rural Development
BPL Blow Poverty Line
BRAC Bangladesh Rehabilitation Assistance Committee
BRI Bank Rakyat Indonesia
BOI Bank of India
CAGR Compounded Annual Growth Rate
CBs Commercial Banks
CBI Central Bank of India
CFSF Credit and Financial Services Fund
CDP Community Development Programme
CGAP Consultative Group to Assist the Poor
CMF Centre for Micro Finance
DIC District Information Centre
DRDA District Rural Development Agency
DSMS District Supply and Marketing Society
DSW Department of Social Welfare
DSWO District Social Welfare Office
DWCRA Development of Women and Children’s in Rural Areas
DWO District Welfare Office
EAS Employment Assurance Scheme
FCs Farmer Clubs
FINCA Foundation for International Community Assistance
FWP Food for Work Programme
HDFC Housing Development Financial Corporation
HHs Households
ICDs Integrated Child Development Scheme
ICECD International Centre for Entrepreneurship and Carrier Development
ICICI Industrial Credit and Investment Corporation of India
IGAS Income Generation Activities
IRDP Integrated Rural Development Programme
IS Informal Sector
JLG Joint Liability Group
JSBY Jan Shree Bima Yojana
LAB Local Area Bank
LIC Life Insurance Corporation of India
MCFI Micro Credit Foundation of India
M-CRIL Micro-Credit Ratings International Limited
MDC Microfinance Development Council
MDM Mid Day Meal
MFDEF Microfinance Development and Equity Fund
MF Micro Finance
MFIS Microfinance Institutions
MFOS Micro-Financing Organisations
MT Million Tonnes
MWS Million Wells Scheme
MYRADA Mysore Resettlement and Development Agency
NABARD National Bank for Agriculture and Rural Development
NACS Notified Area Councils
NAR North Eastern Region
NBFCS Non Banking Financial Companies
NBFIS Non Banking Financial Intermediaries
NE North East
NGOS Non Government Organisation
NMEW National Mission for Empowerment of Women
NPA Non Performing Assets
NPOS Non Profit Organisations
NSS National Service Scheme
NSSO National Sample Survey Organisation
OBC Other Backward Caste
PACS Primary Agricultural Cooperative Societies
PFRDA Pension Fund Regulatory and Development Authority
PLF Primary Level Federation
PLR Prime Lending Rate
PRADHAN Professional Assistance for Development Action
PS Priority Sector
RBI Reserve Bank of India
RGVN Rashtriya Gramin Vikas Nidhi
RMK Rashtriya Mahila Kosh
ROSCA Rotating Savings and Credit Association
RRBS Regional Rural Banks
SBI State Bank of India
SBLP SHG Bank Linkage Programme
SC Schedule Caste
SERPS Society for Elimination of Rural Poverty
SEWA Self Employment Women Association
SEZS Special Economic Zones
SGSY Swarna Jayanti Gram Swarozgar Yojana
SHARE Share Microfinance Limited
SHG Self Help Group
SHPI Self Help Promoting Institutions
SIDBI Small Industrial Development Bank of India
SITRA Supply of Improved Tool Kit to Rural Artisans
SKS Swayam Krishi Sangram
SLF Secondary Level Federation
STS Schedule Tribes
TRYSEM Training For Rural Youth for Self Employment
UN United Nation
UNDP United Nations Development Programme
UTS Union Territories
VAS Voluntary Associations
VWS Village Welfare Society
VDO Voluntary Development Organization
WCD Women and Child Development
Chapter One
Introduction Review of Literature and Methodology
CHAPTER ONE
INTRODUCTION: LITERATURE REVIEW AND
METHODOLOGY
Introduction:
India is a low income developing country. There is no doubt that nearly one-
fourth of its population lives in poverty and also there is problem of unemployment.
Poverty is not only acute but is also a chronic malady in India. At the same time there
exist unutilised natural resources. Some basic characteristics of the Indian economy
may be described below. Indian economy is marred by the existence of low per capita
Income. The per capita income of an Indian in 2009 was US $1180. Barring a few
countries, the per capita income of the Indian people is the lowest in the world.
During 1960-80, developing economies grew at a faster rate than the Indian economy,
but during 1990-2009, Indian economy has grown at a faster rate than other
developing economies.
Some other characteristics of Indian economy are a very high proportion of
working population has engaged in agriculture, high level of birth rate, labour is an
abundant factor and consequently, it is very difficult to provide gainful employment
to the entire working population. The other characteristic of Indian economy is low
living standard of the average Indian. They fail to get a balance diet and this manifest
in India in the low calorie intake and low level of consumption of protein. In 1999 the
average intake of food was only 2496 as compared to over 3400 calories per day in
most of the developed countries. This is slightly above the minimum intake for
sustaining life estimated at 2100 calories. Since nearly 28 per cent of the population in
India lived below the poverty line in 2004-05, it is very doubtful whether the poor
gets a minimum intake of even 2100 calories. Another factor that has an important
bearing on the health of the people is that in India cereals predominate, but is contrast,
the diet in the developed countries is rich in content because it includes fruits, fish,
meat, butter and sugar. The protein intake is nearly less than half of the level
prevalent in developed countries.
All of these problems have also found in Uttar Pradesh. Because, Uttar
Pradesh is also facing the problems of poverty, unemployment, low income, low level
of living standard and poor quality of human capital. In recent decades microfinance
has played important role in the alleviation of above problems in the world, India and
2
also in Uttar Pradesh. In this study we will discuss the role of microfinance in poverty
alleviation and employment generation in Uttar Pradesh. For this study we will use
primary and secondary data of various government department and various literatures.
In this chapter we describe about the microfinance and provide some methodology
that how to serve poor people and discuss that how this can play a key role in poverty
alleviation and employment generation in the developing economy like Uttar Pradesh.
We can also describe various review of literature, which describe the success and
actual role of microfinance in poverty alleviation and employment generation in India
and other developing countries.
Microfinance has become much successful in reduce poverty and increase
employment in developing nations Microfinance was first initiated in Bangladesh in
1976 with the promise of provide credit to the poor without collateral, alleviating
poverty and unleashing human creativity and endeavour of the poor people. In Sri
Lanka, the thrift and credit movement was reviewed and revised in 1978 by Dr. P. A.
Kiriwandeniya under the name “SANSA”. This institution has created a high social
impact in reducing rural indebtness and poverty from 1978 to 2003 and it has been
successful in raising the living standards of the rural people of Sri Lanka.
1.1 Poverty: Concepts and Measures
Poverty and unemployment issues have been the subject of discussion for many
developed and under developed countries. Often poverty is described as the enemy of
mankind and it is thought to be the gross violation of our civilization. The history of
mankind demonstrates that poverty is nothing but a curse, not only for the individual
who is poor, but for remainder of the community, nation and global society at large. It
compels people to think that famine, misery and deprivation are natural curse of life,
and the poor people are not entitles for living a better lives. In the seminal work on
poverty and famines, Nobel Laureate Professor Amartya Sen evaluated the causation
of starvation and famines and proposed the entitlement approach as an alternative
method for understanding poverty (Sen, 1983).
In his another book entitled „Development as Freedom‟, Professor Amartya Sen
(1999) explains how in a world of unprecedented increase in overall opulence,
millions of people living in the Third World still lack freedom. Even if poor people
are not technically slaves, they are denied elementary freedoms and remain
imprisoned in one way or another by economic poverty, social deprivation, political
3
tyranny or cultural authoritarianism (Sen, 1999). By incorporating individual freedom
as a social commitment into his analysis Professor Amartya Sen allows economics
once again, as it did during the time of Adam Smith, to address the social basis of
individual well-being and freedom. Accordingly, the main purpose of economic
development and growth is to spread freedom and its endless „charms' to those un-free
global citizens who are currently living in poverty.
Unfortunately, the poverty has become the common feature for the majority of the
world‟s population. The notion of poverty varies from one country to another country.
For comparisons, in 1985 the World Bank set a poverty line of US $ 1 a day per
person at purchasing power parity (PPP). Now World Bank sets a poverty line of US
$ 1.25 and 2 US $ a day per person. According to this measure around 30 per cent of
world populations are living below poverty line. In other words, around 1.3 billion of
global populations earn less than US $ 1.25 a day; while another 2 billion are only a
little better off. Furthermore, almost 50 per cent of the world population over 3 billion
live on less than US $ 2.50 a day; while 80 per cent of world population live below
US $ 10 a day (World Bank, 2008). Shaha (2012) reported that the GDP of 41 poor
countries is less than the wealth of the world‟s 7 richest people; 1 billion people
entered the 21st century unable to read a book or sign their names; less than one per
cent of what the world spent every year on weapons was needed to put every child
into school by the year 2000 and yet it didn‟t happen; 1 in 2 children (1 billion) live in
poverty; 640 million live without adequate shelter; 400 million have no access to safe
water; 270 million have no access to health services; 10.6 million die before they
reach the age of 5, which is around 30,000 children per day.
Poverty is a socio-economic phenomenon in which a section of the society unable
to fulfil even its basic necessities of life. In general, those who are unable to fulfil
their minimum nutritional needs due to lack of income considered to be poor. Poverty
could be relative (He has two cars and I only one…sic…) as well as absolute (I don‟t
have enough to have even one square meal). In developing countries like India,
relative poverty is not taken to be a cause of concern but absolute poverty.
The discourse on poverty largely revolves around the notion of a poverty line: a
critical threshold of income, consumption, or the generally, access to goods and
services below which the individuals are declared to be poor (Ray, 2002). To
determine poverty line based on nutritional requirements, the minimum physical
quantities of cereals, pulses, milk, butter, etc. are determined for a subsistence level
4
and then using price quotations, the physical quantities are converted into monetary
terms. Aggregating these monetary terms for various physical quantities of
commodities, the poverty line is thereby drawn. People whose income is below
poverty line are said to be poor. The most common measure of poverty is the Head-
Count ratio, defined as the percentage of population living below the poverty line.
The pioneering work by Prof. Amartya Sen and Prof. Martha Nussbaum put
forward another way of analysing the poverty. They identified it as a lack of
capabilities and freedoms. The conceptual foundations of the Capability Approach
can be found in Sen‟s critique of traditional welfare economics, which typically
conflate well-being with either opulence (income, commodity command) or utility
(happiness, desire fulfilment). Sen makes a distinction between commodities, human
functioning/capability and utility.
The World Bank (1996), in its analysis of the root causes of poverty, presented
following enumeration of the causes of poverty:
a) Inadequate access to employment opportunities (i.e., unemployment);
b) Inadequate physical assets, such as land and capital, and minimal access by the
poor to credit, even on a small scale;
c) Inadequate access to markets where the poor can sell goods and services;
d) Inadequate access to the means of supporting rural development in poor
regions;
e) Low endowment of human capital;
f) Destruction of natural resource as leading to environmental degradation and
reduced Productivity;
g) Inadequate access to assistance for those living at the margin and those
victimized by transitory poverty;
h) Lack of participation, failure to draw the poor into the design of development
program.
1.2. Unemployment: Concepts and Measures
Although unemployment is just one of main causes of poverty, yet
unemployment contributes to poverty, because there is direct relationship between
unemployment and poverty. Accordingly, high level of unemployment prolonged is
as bad as poverty and corruption, which warrants immediate attention; as policies and
5
programs of both public and private sectors that help curb unemployment would
ultimately help reduce poverty.
However, macroeconomics, unemployment is understood from many angles as
there are various types and dimensions of unemployment. The definition of
unemployment also varies from contemporary measures. Disguised or hidden
unemployment figures are not record in most cases. The causes of unemployment are
understood and explained using demand-supply models in macroeconomics text
books. Appropriate policy measures are carried out routinely by most nations to check
and balance their short-term policy effects and long-term goals.
Unemployment estimates in India is that a person working 8 hours a day for 273 days
of the year is regards as employed on a standard person year basis of the
recommendations of the committee of experts on unemployment estimates set up by
the Planning Commission. Three estimates of unemployment were generated in the
27th
round of NSSO.
(i) Chronic unemployment or ‘usual principal status employment’ is
measured in number of persons i.e., persons who remained unemployed for a major
part of the year. This measure is more appropriate to those in search of regular
employment (e.g., educated and skilled persons) who may not accept casual work.
This is also referred to as „open unemployment‟.
(ii) Weekly status unemployment (measured in number of persons), i.e., persons
who did not find even an hour of work during the survey week.
(iii) Daily status unemployment (measured in person days or person years), i.e.,
person years, i.e., persons who did not find work on a day or some days during the
survey week.
Economic development in the sense of rise in real GNP and per capita real income is
by itself will not be enough in India and Uttar Pradesh unless we remove
unemployment and underemployment also. This economic growth reduces constraint
on poor people access to education, health care, and credit, leading to more equal
opportunities (World Bank 2001). Finance or credit is regard as basic tool for poverty
alleviation which generally occurs through informal financing agencies because poor
people lack security (assets) against loan. Before proceeding for insight of
microfinance and its impacts, it is necessary to understand the meaning and sources of
finance or credit.
6
1.3 What is Finance?
Finance is simply defined as the management of money or funds management. In
ordinary parlance finance does not deal only with money but also with the market.
Academically “finance is regards that branch of economics which deals with the
resource allocation, investment, acquisition and management.” Today finance is
regards as a family of business activities which includes the organization, marketing,
and management of cash, instruments, assets, liabilities and risk. Finance is to be
both, art as well as science. Art is relation to product development and science is
measurement. The financial system consists of both public and private interest and the
market that serves them. It pools capital from individual and institutional investors
who transfer money directly or through intermediaries to other individuals, firms and
government which accrue resources and transact business.
The “Economy” is a social institution that organises the society production,
consumption and distribution of goods and services, all of these needs finance. These
financial needs are fulfilled by financial and non financial institutions through
financial market, which carry on transfer of funds from lenders to ultimate borrowers.
The financial market helps in raising capital, transfers the risk, transfer of liquidity
and facilitates international trade. The suppliers in the financial market are both in
organized and unorganized form due to differences in control and regulations. The
borrowers in the financial market consist of individual, municipalities, state and
central government and public corporations. The term finance can be further broadly
classified as:
Microfinance
Macrofinance
1.4. Microfinance and Macrofinance:
Microfinance and Macrofinance are two broad aspects of finance. The
differences between the two terms are basically due to the differences in volume, size,
structure, repayment schedule, rate of interest and needs. Microfinance as the term
itself explains has capacity of having small funding or financing activities. This
financing structure is basically required by small farmers, poor, households, small
businessman and cottage industries in order to carry on their day to day business
activities. On the other hand macrofinance includes larger things in its gamut and has
wide variety of instruments as compared to microfinance. This macrofinance facility
7
is basically by large businessmen, companies, firms, governments, etc. This
difference in financing is due to differences in need and demand of different sections
of society.
Microfinance is a provision of broad range of financial services such as
deposits, loans payment services, money transfer and insurance to poor, low income
households and their microenterprises. Microfinance refers to the whole range of
financial services for the poor people, including- loan, savings, credit, money transfer,
insurance, pension and other financial innovation aimed at serving the very poor. In
the development paradigm, microfinance has evolved a need based policy and
programmes to cater the neglected group of society especially women, poor, rural and
deprived sections etc. The basic idea of microfinance is to provide access to financial
services including credit which enables the entrepreneur to start and continue his
microenterprise that will allow him to break out of poverty. The concept has gained
lot of significance and momentum, both theoretically and practically during last few
decades. It is regarded as tool for economic development which is designed to spread
financial support and assist the low income group people to work their way out of
poverty, deprivation, starvation, and other financial problems.
Microfinance is viewed particularly as a means of contributing to the process of
poverty reducing and empowerment by enhancing women‟s productive role in
enabling them to challenge inequalities within and between households. The
programme has been derived to meet the basic objectives of:
The survival needs of the poor by enabling to have access to credit for both
consumption and productive activities.
To empower the poor and marginalized by expanding the opportunity for
participating in income generating activities and undertake social activities,
aiming at removing poverty and socio-economic development.
Microfinance means the provision of thrift, credit and other financial services
and products of very small amount to the poor in rural, semi- urban or urban areas for
enabling them to raise their income level and improve their living standards. Usually
the loan size would be below Rs. 50,000 or so. Microfinance is a process of lending
micro or small sums of money. Many developing and underdeveloped countries, lack
of resources, capital, skill and knowledge. Microfinance not only helps to prevent the
country from drowning into the poverty but also brings individual development of
poor. Microfinance includes both micro-credit and micro-saving.
8
The terms micro-credit and microfinance are used as synonyms. The term
microfinance is perceived to be a paradigm shift in the quality of delivery of finance
to micro entrepreneurs. The old paradigm of microfinance envisaged providing credit
to poor people basically residing in poor and semi urban areas at subsidized rate of
interest through public or governmental financial institutions, while the new continues
to target the rural and urban poor households, with emphasis on women borrowers,
provision of finance for assets creation on principles of “borrower known best”
(Kaladhar, 1997)1.
The CGAP, World Bank defines “microfinance as an instrument which offers
poor people to access basic financial services such as loans, saving, money transfer
services and micro insurance.” Poor people need a diverse range of financial services
in order to run their business, build assets, smooth consumption and manage risk. In
India, microfinance has spread its gamut very fastly and shown an appreciating result
in depriving poverty. As the major player of microfinance in India, NABARD has
also given a working definition: “microfinance is a provision of thrift, credit and other
financial services and products in very small amount to the poor in the rural, semi-
urban areas enable them to raise their income level and living standard.” The task
force has further emphasized that microfinance will not cover only consumption and
production loans but will also include other credit needs like saving, insurance,
housing and shelter improvement etc.
Otero,2
states “microfinance creates access to productive capital, human capital
addressed through educational and vocational training, and social capital build
through creating representatives, local organization building, building, promoting
democratic system, and strengthening human right, enabling poor to move out of
poverty. Microfinance enables poor self employed people to create productive capital,
to protect the capital they have, to deal with risk and avoid the destruction of capital.
It attempts to build assets and create wealth among people who lack them. It has been
regarded as liquidity tool for very poor people, who help them in strengthening their
consumption pattern and reduce their level of vulnerability”. Asian Development
Bank (ADB) has also given the explanatory definition of microfinance as “the broad
1 Kaladhar K. (1997), Microfinance in India – Design, Structure and Governance”, Economic and
Political Weekly, Oct – 18, pp. 2687-2706.
2 Otero M. and Rhyne E. (1994), “Financial Services for Micro enterprises Principles and Institutions,
IT Publications, London, pp.302.
9
range of financial services such as deposits, loans, payment services, money transfer
to poor and lower income households and micro-enterprises” to- overcome out of
poverty and deprivation. These services are provided through formal, semi-formal,
and informal institutions
Robinson (2001)3 states, “microfinance refers to small scale financial services
for both credit and deposits that are provided to people, who operate small and micro-
enterprises, where goods are produced, recycled, repaired, traded, provide services,
work for wages or commission, gain income from renting out small amount of loan,
vehicles, draft animals or machinery and tools, and to other individual and local group
in developing countries in both rural and urban areas”.
1.5 Origin and Growth of Microfinance
Microfinance is not a recent development; it is as old as our communities. The
microfinance has been observed to be present in every society or country but through
different names and mostly through informal sector. Saving and credit groups have
been operated for centuries include the “susus” of Ghana, “chit fund” in India,
“tandas” in Mexico, “arisan” in Indonesia, “cheetu” in Sri Lanka, “pasanuku” in
Bolivia, as well as numerous saving clubs and burial societies found all over the
world.
The earlier and longer lived micro credit organization providing small loans to
rural poor with no collateral was the Irish loan fund system formed in 1720 by the
nationalist Jonathan Swift using peer monetizing to enforce the repayment in weekly
instalment of initially interest free loans. In 1980 various types of larger and more
formal saving and credit institutions began to emerge in Europe organized primarily
among the rural and urban poor. These institutions were called as people‟s bank,
credit unions and savings credit co-operatives. The origin of finance in Germany was
traced back to the first thrift society which was established in Hamburg in 1978 and
the first communal saving fund in 1801. Raiffeisen and Schulze- Delitzsch reinvented
the wheel of microfinance creating rural saving and credit co-operatives in rural areas
with the help of some contribution of wealthy people. He established the first Rural
Credit Association in Heddesdorf in 1864.
3 Robinson S. Marguerite (2001), The Microfinance Revolution: Sustainable Finance for the poor –
Lessons from Indonesia, Washington D. C., World Bank.
10
Prof. Mohammad Yunus is popularly known as father of micro-credit system
for his research project in 1979 when Bangladesh was badly hit by famine. During
this period with the visit of the Jobra village of Bangladesh Yunus encountered the
problems of poor women who were forced to sell their products at very low prices due
to clutches of poverty. He extended a small loan to poor which has been rejected by
bank due to lack of collateral security against loan. Ultimately in 1976, Yunus
obtained loan from bank after signing as a guarantee and lend the borrowed amount to
the poor as an initiation of project Grameen Bank. In 1979 Bangladesh central bank
began providing financial support to the project. This credit scheme for poor was
successfully implemented in Tangail district and was then extended to other districts
of Bangladesh. In 1983 Grameen Bank was given the status of an independent bank
by a special ordinance of Bangladesh government. This experimental programme in
Bangladesh, Brazil and few other countries extending tiny loans to group of poor
women to invest in micro business has attracted the business of all other countries of
world. The United Nations General Assembly designated 2005 the International Year
of Micro Credit.
In 1972, the Self Employment Women Association (SEWA) was registered as
a trade union in Gujarat, with the main objective of “strengthening its members
bargaining power to improve income and employment as an access to social security”.
In 1973, due to lack of access to financial services, the members of SEWA have
established a bank of their own named Mahila SEWA Cooperative Bank, with capital
share contribution of 4000 women members. Since then this Bank has been providing
banking services to poor, illiterate, self-employed women‟s with around 30,000 active
clients (Jaysheela, Shriprasad & Dinesha, 2009). In India, the credit of microfinance
development goes none other than NABARD for its action project on “saving and
credit management of self help group” of Mysore Resettlement and Development
Agency (MYRADA). NABARD launched a pilot project with support of RBI to
provide micro-credit by linking SHG with banks in 1991-92. This is regarded as
formal emergence of microfinance movement in India.
1.6 Models of Microfinance Services
India is a home of the largest microfinance system in the world. There are
several models of delivering microfinance services. Some of the important and largely
practiced delivering models are:
11
ASSOCIATION MODEL
Under this model “the target community initiates and forms an association, which
carries out various microfinance activities. This model of delivering services is also
known as group model”. Association or group is composed of youth, men, women
formed on socio-religious-cultural issues. The association model turns to a legal entity
in many countries and our Indian SHG model is stemmed from this model.
COMMUNITY BANKING MODEL
This model treats whole community as one unit. The community banking is a
formal or semi-formal institution through which microfinance services are provided to
the members. The community banks are initiated and capacitated by intermediaries
like NGO and other organizations who engaged in capacity building of the
community members to make them expert in performing various financial activities of
bank.
CO-OPERATIVE MODEL
The co-operative model is an autonomous association of people who are the members
of cooperatives. These members are united voluntarily to meet their socio-economic
and cultural needs. It is a democratic member controlled institution. This includes
member financing and saving activities. These financial cooperatives have the
characteristics of self generating capital, self governed, middle and lower income
group clients with financial services.
CREDIT UNION MODEL
The credit union is a formal financial institution formed by a particular group,
institution or organization with a motive of saving their money together and rented
to members with a democratically pre determined rate of interest. The credit union
model is based on two major facts i.e. self help and member driven nature. Credit
unions are known as “not for profit financial cooperatives” or “saving and loan
cooperatives” as this model works on principle of co-operatives.
INDIVIDUAL BANKING MODEL
This is a straight forward credit lending model where micro loans are given
directly to the borrower. This model does not include formation of group or
generating to ensure payment.
GRAMEEN JOINT LIABILITY GROUP MODELS
This model was derived from grass root level organization Grameen bank,
Bangladesh. Under this system, the bank unit itself with field manager and bank
12
workers, covers areas of about 15-20 villages. The field manager with assistant visits
the village in order to develop acquaintance for working. Group of five perspective
borrowers are formed in the first stage in which only two of them are eligible for and
receive a loan. Only when the first two borrowers repay the principal with the interest
over fifty weeks, the other member becomes eligible for loan. This restriction helps in
maintaining clear records and responsibility to serve as collateral on loan.
SHG MODEL
Self help group model dominates microfinance in India. Under this model, group
of 10-20 members are formed basically from same gender or caste, to resolve various
socio-economic and other issues. The SHG encourages saving among members and
use pooled resource to meet the emergent needs of their members. After maturity of 6
months to 1 year the group becomes collateral for loan. These groups are either
supported by government, NGOs, MFIs or other formal and informal agencies. This
model gives scope to the members of SHG to participating in decision making
process, with four standing pillars of “self help is the best help”, “unity is strength”,
“united we stand and divided we fall” and finally “we can make our own bank”. The
group members use collective wisdom and peer pressure to ensure proper end use of
credit and timely repayment thereof.
VLLAGE BANKING MODEL
This model was developed by FINCA International. The “village banks” are
formed by 25- 30 low income individuals, primarily women‟s from villages. These
banks perform community based thrift and credit association with a motive to
improve the socio-economic and living standard of the members through promotion
of self employment activities. This model is operative at micro level village based
bank, which pooled the initial fund from external sources. No financial collateral is
required against the loan as they are backed by moral and social collaterals. Market
rate of interest is charged from members with the guarantee of repayment.
ROTATING SAVING AND CREDIT ASSOCIATION (ROSCA)
Rotating saving and credit association is a type of democratic association formed
by 5-50 members for making a regular cyclical contribution to a common fund.
Further this fund is again relented to the member in each cycle in the form of loan.
Outside financial agencies are not allowed to involve in ROSCA and all
organizational activities are carried by members. The major differentiation and the
13
major fault of this model are of having implicit interest rate with level of defaulters,
fraud and dropouts.
KISAN CREDIT CARD MODEL
Kisan credit card scheme was launched in 1998-99 by NABARD. KCC also
provides microfinance facility to poor farmers for agriculture purpose. The scheme
has been launched to provide timely and adequate credit support to the farmers for
their production needs in a flexible and cost effective manner. In order to increase the
production and productivity of agriculture sector, there is an urgent need of making
loans and advances by different periods. It is an innovative scheme. It facilitates short
term credit to farmers. The scheme has gained popularity among the cultivators.
1.7. Self Help Group (SHG)
Self help group (SHG) is a homogeneous group of poor, women, user etc.
which are voluntary and are formed for the common interest of their development.
The SHG stands on the principle of “for the people, and of the people”. It is a small
economically homogeneous and affinity group of rural people who voluntarily agrees
to contribute to common fund which will be lend to the members as per the decision
of group, which work for groups solidarity, self and group awareness, social and
economic empowerment in the way of democratic functioning. NABARD (1995),
defines “SHG‟s as the homogeneous group of rural poor voluntarily governed, to save
whatever the amount they can conveniently save out of their earning and mutually
agrees to contribute save out of their earning and mutually agrees to contribute to a
common fund to lend to the members for meeting their productive and emergency,
consumptive credit needs”. The group members use collective wisdom and peer
pressure to ensure proper end use credit and time repayment. The SHG has average
size of 15 members from a homogeneous class, but not more than 20 members
(NABARD, Mumbai). The group meets together for addressing their common
problems and makes voluntary thrift on regular basis and thus reported money is
pooled to make small interest bearing loan to their members.
This process helps the members to imbibe the essentials of financial
intermediation including prioritization of their need, setting terms and conditions,
account keeping, gradually built financial discipline among them. Once the group
learns to handle resources of size which is much beyond of their capacity, banks are
encouraged to advance loans to the group in certain multiples of their accumulated
savings. The individual member can also apply for credit facilities; however there are
certain norms and procedures which he must satisfy. Apart from financial support at
the time of need, the group also provides social security to its members. It creates a
14
platform for sharing experiences, collective knowledge, solving problems and
resources mobilization.
1.7.1. Objective of SHGs:
The major objectives of SHGs are to reducing poverty, generating self
employment and women empowered. The self-help groups promote small savings
among its members. The self-help group provides savings mechanism, which suits the
needs of the members. It also provides a cost effective delivery mechanism for small
credit to its members. The SHGs significantly contribute to the empowerment of poor.
The SHGs are the platform or forum to the members to come together for emergency
disaster, social reasons and economic support to each other have ease of conversation,
social interaction and economic interactions. The major objectives of SHGs are to
save their income, avail the loan from the common fund to the group, create
confidence and capabilities of the members, help the members by collective decision
making, motive the members by taking up of the social responsibilities to discuss the
women related issues dowry, health related like HIV/AIDS etc. Jaysheela (2009)
pointed out certain specific objectives of SHGs:
To encourage the rural poor to form groups for having a common platform for
sharing different views on their common challenges.
To encourage rural poor for promoting their economic status by utilizing the skills
and knowledge acquired through training.
To impart technical and scientific knowledge to the members for capacity building
as well as to undertake various income generating activities in group or
individually.
To inculcate saving and credit habits among the member of the group for creating
a common fund through weekly small savings to meet the future needs.
To establish linkages between SHGs of poor and banks.
To generate awareness about various affairs relating to socio-economic, health,
cultural, political and legal matters.
To train them for maintaining various records properly viz., resolution book,
ledger book and cash book.
To promote and establish networking among the existing SHGs, and
To encourage their participation in various development programs so as to
enhance the process of social and economic development in a greater way.
1.7.2. Nature and Functions of SHG:
The SHG works on the principal of “self-employment and poverty alleviation”
for its members. Every SHG has their goals and objectives. The members through
participatory action tries to performed the basic functions of SHG. The basic nature
and functions of SHGs is presented in figure 1.1.
15
Fig. 1.1 Nature and Functions of SHGs operating in India
Some of the basic features of the SHGs have promoted by NGOs and banks in
various part of country. One of the important features observed is the homogeneity in
the group in terms of social and economic status. Some of the features might vary
from one SHG to another promoted by various NGOs, Banks, etc. However, what the
figure shows holds true for most of the SHGs.
Consumption
1. Nutrition
2. Health
Investment
1. On-farm
2. Off-farm
3. Education
Social
obligation
Cleaning of old
debts
Increased employment, income saving and
empowerment
Loan to
member
Community
Action
Action
Common
investment
Promoter
(NGOs, Banks etc)
Self-help groups
(10 to 20 members)
- Access to credit
- Training to members
- Technical guidance
raining to members
16
1.7.3. SHGs–Bank Linkage: An Overview
The Self Help Group is regarded as the brain child of GRAMIN BANK of
Bangladesh, which was founded by Prof. Mohammad Yunus of Chittagong University
in the year 1975. The financial reforms in India began with SHG-bank linkage
programme of NABARD. The SHG in India usually consists of 10 to 20 members
with similar socio-economic background. SHG concept is not new to India, it always
existed but through different names like Nidhis and Chit Fund. NABARD in 1989
started SHG-BANK linkage programme as an action research project by financing Rs.
10 lakh to MYRADA as seed money for experimenting credit management group. In
1992, NABARD initiated a pilot project with partnership of Banks and NGOs for
providing Bank-linkage to 500 SHGs. This project laid down the foundation stone of
SHG-BANK linkage programme in India. The reason for rapid expansion and
popularization of SHG-BANK linkage programme is-
The informal lenders are exploitative, usurious and dysfunctional, and the poor
wanted to get rid of these exploitation.
Institutional credit failed to serve the rural poor effectively because of lack of
collateral and extra precautionary attitude towards lending rural poor.
Public policies which aimed at dismantling the informal credit system and lending
group without offering alternative source of institutional credit.
Rural poor have lack of option, so they immediately accepted the formal system of
SHG-Bank linkage.
The members of SHG basically belong to homogeneous socio-economic
background which provided platform to SHG-BANK linkage movements.
1.8. Kisan Credit Card (KCC) scheme and Agriculture Development
Kisan credit card (KCC) is a key product for enhancing growth in agriculture
system. The kisan credit card scheme was introduced in 1998-99 and this model
scheme was formulated by NABARD. The scheme has been launched to provide
timely and adequate credit support to the farmers for their production needs in a
flexible and cost effective manner. In order to increase the production and
productivity of agriculture sector, there is an urgent need of making loans and
advances by different periods. It is an innovative scheme. It facilitates short term
credit to farmers. The scheme has gained popularity among the cultivators. The
17
scheme has been implemented by 27 commercial Banks, 378 co-operative Banks and
196 regional rural banks (RRBs) throughout the country.
Objectives of the scheme
1. To provide insurance coverage and financial support to the farmers in the
event of failure of crops as a result of natural calamities, pests and diseases.
2. To encourage farmers to adopt progressive farming practices, high value
inputs and higher technology in agriculture.
3. To help stabilise farm income, particularity in disaster years.
Advantage of Kisan Credit Card scheme
A- Farmers level
1. Access to adequate and timely credit to farmers.
2. Full year credit requirement of the borrower taken care of.
3. Flexibility to draw cash and buy inputs.
4. Assured availability of credit at any time enabling reduced interest burden
for the farmer.
5. Sanction of the facility for three years subject to annual review and
satisfactory operations and provision for enhancement.
B. Bank level
1. Minimum paper work and simplification of documentation for drawl of
funds from the bank.
2. Improvement in recycling of funds and better recovery of loans.
3. Reduction in transaction cost to the banks.
1.9. Microfinance and Financial Inclusion
The concept of microfinance can best be described by the title of F. A. J.
Bauman‟s book “Small, Short and Unsecured” (1990). It is for providing poor
families with very small loans (microcredit) to help them engage in productive
activities or grow their tiny business. Over time, microfinance has come to include a
border range of services, credit, savings and insurance, etc. A success indicator in
microfinance lies in a credit-plus approach, where the focus has not only been on
providing credit, but to integrate it with other developmental activities. Today
microfinance is very much in the agenda of public policy and it has been increasingly
used as a vehicle for reaching the otherwise unreachable poor in the country.
18
Despites its several positive contribution, microfinance in India did not
produce miracles. The realization of the fact that, despite the introduction of
microfinance, there has not been any major upsurge in credit off-take, prompted the
search for new strategies of credit dispensation, leading to the new concept of
„financial inclusion‟. More precisely, microfinance is a sub-set of the wider agenda of
financial inclusion.
With the announcement of a series of measures by the Reserve bank of India
in its credit policy for 2006-07, the term „financial inclusion‟ got enhanced currency
in the Indian financial circles. The policy advocated an active role for the convener
banks of the State Level Bankers Committee (SLBCs) in all states, and they were
given the responsibility of reaching 100 per cent financial inclusion in at least one
district in their area of operation. The essentially means, enhancing the coverage of
banks, enhancing the coverage of banks accounts on a campaign mode, even by
multiplying the number of no-frills accounts.
1.10. Benefits of Microfinance
Microfinance provides financial support for which person they do not starting
production process due to lack of capital. Here we describe some benefits of
microfinance.
1. Saving mobilised by the poor.
2. Access to the required amount of appropriate credit by the poor.
3. Matching the demand and supply of credit structure and opening of new
market for financial intermediaries.
4. Reduction in transaction cost for both lenders and borrowers.
5. Tremendous improvement in recoveries.
6. Heralding a new realisation of subsidy- less and corruption- less credit and
7. Remarkable empowerment of poor women.
1.11. Players in the Microfinance Industry
The main players in the microfinance industry are described below-
1- Clients: The client means beneficiaries of MF and its related schemes. In this sense
the client of microfinance is individual savers, lender, self-help group members and
farmers. Thus clients start some occupation with the help of microfinance and
increase employment and increase income and also increase their socio-economic
status.
19
2- Microfinance Institution (MFIs)
The last 15 years saw the entry of various types of microfinance institutions in
the rural credit sector. Most of these MFIs are based on the Grameen Bank model of
Bangladesh. MFIs in India register themselves either as societies, trusts, non-banking
financial companies (NBFCs) or local area banks (LABs) and are governed by their
respective rules and regulations.
3 – The Apex Institution:
NABARD as a natural level apex institution has been playing a pro-active role
in addressing important issues of the rural economy. However, in the current global
economic scenario, time is ripe for NABARD to review its strategies and policies
with regard to rural employment from basic agriculture facilities. To coordinate and
synchronize the functioning of institutional agencies, NABARD was setup in 1982 as
a refinance and apex institution. Commercial banks have surpassed the cooperative
banks in providing rural credit in the recent past. Some new schemes as the kisan
credit card, self-help groups (SHGs) bank linkage programme have been devised to
make rural credit more accessible to farmers. With the gradual increase in rural
incomes and agriculture exports the next few years would witness a substantial
increase in the demands for rural credit.
1.12. Microfinance in India
First of official interest in informal group lending in India took shape during
1996-97 when National Bank for Agriculture and Rural development (NABARD)
supported and funded an action research project on „ Savings and Credit Management
of Self-Help Groups‟ of Mysore Resettlement and Development Agency (MYRADA)
in 1988-89, NABARD, undertook a survey of 43 non-governmental organisation
(NGOs) spread over 11 states in India to study the functioning of SHGs and
possibilities of collaboration between the banks and SHGs in the mobilisation of rural
savings and improving the delivery of credit to the poor.
The story of the Indian Microfinance was associated with both governmental
and non-governmental (NGO) initiatives that took place in the mid 1980s and early
1990s. It incorporated lessons from the microfinance movement in Bangladesh and
similar participatory development programmes in India. The Self-help groups
(SHGs)-bank linkage programme of the National Bank for Agriculture and Rural
Development (NABARD) accelerate the growth of the microfinance movement in
20
India in the latter half of 1990s. Now the SHG-bank linkage programme is one of the
largest microfinance programmes in the world.
In India, microfinance has enabled the poor to have a greater access to
financial services, particularly credit. It has achieved several social development
objectives like gender sensitisation, empowerment and poverty alleviation by
diversifying their livelihoods and especially contributed largely towards raising their
incomes. It has also allowed the poor to accumulate assets and has contributed
towards their security. Further, microfinance has also had a very significant social
impact. In areas with sound microfinance programmes, the quality of life of the poor
has improved significantly.
1.13. Literature Review
1.13.1. Microfinance – An Overview
Gaur4
(2010) defined Microfinance as a set of financial activities provided to
poor masses, which basically incorporates loans, savings, deposits, insurance, transfer
services etc. He regarded microfinance as a promising strategy for financial inclusion
in India. The author tries to clarify the concept of micro-credit, its impact and
weaknesses. As the per cent share of total rural credit, microfinance sector holds 0.68
per cent in 2001 and 6.27 per cent in 2006. The microfinance has shown positive
impact on reduction of poverty and improving socio-economic life of members
through children‟s education, food security and nutritive diet but on the other hand
due to high interest on the part of MFIs poor performance of banking system,
exclusion of the poorest among poor, abuse of recovery practices retards its further
development and growth. Therefore, the author suggested adoption of anticipatory
and proactive measures to remove lacuna of the system.
Panigrahi and Shobhit5
(2008) defined microfinance as a system that provides
small loans to poor entrepreneurs in specific to small scale self employed cottage and
home based businesses which becomes the newest silver bullet for alleviating poverty.
The tremendous growth of microfinance occurs in India, due to the loopholes in
Indian banking industry. They pointed that the potential of microfinance is more in
4 Gaur G. (2010) “Micro Credit –Rural Orientation” eds. Ahmed, Bhagat and Sigaiah in “Microfinance
in India- Issues and Challenges” DVS Publisher, Guwahati, pp. 247-257.
5 Panigrahi A. Ad Shobit 2008, “Microfinance for Poverty Reduction in India eds. Lazar D and
Palanichamy P. in microfinance and Poverty Eradication- Indian and Global Experiences” New
Century Publication, New Delhi, pp. 34-42.
21
India as compared to other part of world due to availability of 7.5 crore poor and their
demand for small loans. Further they stated different sources of funding to MFIs in
India. The presence of keys problems in rural financing like lack of credit, low saving
capacity and prevalence of usurious money lenders provides scope to microfinance
development. They suggested sustainable working of both MFIs and rural bank
branches to cover the gap of credit accessibility and make microfinance successful.
Mamum and Fontaine6
(2008) defined Microfinance as an instrument to impel
the money lender out of business and to bridge the gap created by rural, cooperatives
and commercial banks. It is a collection of banking practices build to provide small
loans and accepting saving deposits. The authors pointed out the commercial bank
negligence towards the poorer with a well excuse of high transaction cost, lack of
collateral and geographic isolation. According to them, Microfinance enables the self-
employed people to create productive capital along with protecting existing one which
helps them to build assets and hold wealth. Further, they compared two approaches of
Microfinance i.e. Institutionalist and welfarist. The former rejects the subsidy concept
in alleviating poverty while the latter supports subsidized interest rate for immediate
improvement of economic safety. The major objectives of MFOs following welfarist
is to remove poverty and of Institutionalist as financial deepening. Further they
discussed about the key challenges in accessing the performance of MFOs like
outreach of poor, institutional financial sufficiency impact of Microfinance in poverty
alleviation and empowering women.
Kamdar7
(2007) defined Microfinance as an instrument which provides
financial services to those whose income is small and unstable but their needs are
sudden. Microcredit movement resulted in empowerment of women by bringing both
social and economic changes. The reports of CRECER, BRAC, SEWA shows that the
members invested their increased income on children‟s education followed by
consumption leading towards better socio-economic life but the slums of Mumbai
show totally opposite scenario of no long term fundamental change in the lives of
borrower as well as children‟s education. She stated that not all micro investment
6 Mamum A. And Fontaine (2008), “Microfinance: An overview”eds. Lazar D and Palanichamy P. In
“Microfinance and Poverty Eradication- Indian and Global Experiences” New Century Publication,
New Delhi, pp. 42-48
7 Kamdar S. (2007) “Microfinance in India issues and challenges” eds. Kamdar S. In “Microfinance
Self employment and poverty alleviation” Himalaya Publishing House, Mumbai, pp. 14-52.
* Indonesia, Cambodia, Nepal, India Philippines and Bangladesh
22
produces favourable result because of natural calamities, lack of skill knowledge and
investment in low return activities. Further the different models of delivering Micro-
financial services, its advantages loopholes, impact and problems of high credit cost
and reason behind it (tiny transaction) has been discussed. As the sources of funding
concern in different countries* the informal sector charges 24 to 72 per cent annually
whereas the formal source charge 10 to 29 per cent rate of interest. The MFIs charges
18 to 80 per cent over different countries. The author regarded Microfinance as a
programme to alleviate measured poverty and to achieve this challenge she
emphasized strengthening SHGs movement through creating capacity building,
reducing transaction cost, diversifying portfolios, and opening up access to financial
market to clients.
Lazar and palanichamy8
(2008) found that the variety of microfinance
organization exists in government as well as non-government sector and among them
leading national financial institutions (NABARD, SIDBI, RMK) played a significant
role in making micro credit a real movement in India. The major limitation
highlighted by the authors is the operation of these organizations within a limited
geographical area as compared to several NGOs (PRADHAN, ICECD, MYRADA,
and SEWA) which have been successful in replicating their experience in other parts
of the country. The study further shows that the share of different models in credit
delivery and growth of SHGs- bank linkage programme. Their study reveals even of
vast expansion of formal credit system in India, the need of small loans of poor yet
not been covered due to high transaction cost, low recovery, and loan waiver
programmes which leads to institutional detachment with lending to small borrowers.
Khanka9 (2010) found out that even after 50 years of planning and
implementation of various poverty alleviation programmes, 26.1 per cent of total
population still lives below poverty line (census 2001). He pointed the problem of
rural finance in India, defects in banking systems and failure in recovery. The major
problems of poor people financing of large number in existence, demand for small
sums of money, perception of risk and lack of collateral. The microfinance emerged
8 Lazar D. and palanichamy
P. (2008), “Growth of Microfinance in India” Eds. Lazar D. and
Palanichamy P. In “Microfinance and Poverty Eradication- Indian and Global experiences” New
Century Publication, New Delhi, pp-1-12
9 Khanka S. (2010), “Microfinance in India, from Evolution to Revolution” eds. Ahmed J. Bhagat D.
and Singaiah G. in “Microfinance in India- Issues and Challenges”, DVS publishers, Guwahati, pp. 3-
14.
23
as the effective tool towards all their problems. With the support of several MF
institutions like Sa-Dhan, SHARE, SKS, BASIX, MYRADA, PRADAN, India is
growing rapidly towards its main objective of financial inclusion (Mahajan 2005:
4416-4419). Due to lack of flexibility of MFI‟s, the people still prefer to approach
money lenders, problems of regulation and supervision, higher interest rate on the part
of MFI are certain challenge which created barriers against financial inclusion. In
order to overcome these problems Khanka emphasized on code of conduct, clean
rules and regulations, awareness among SHG, NGO‟s, MFI‟s and formation of
national level organization with its unit at state level. He regarded microfinance as an
effective tool for poverty alleviation in our country.
1.13.2 SHGs and Bank Linkage: Growth and Performance
Ramanathan10
(2008) defined SHGs as the small, economically homogeneous
affinity group of 10 to 20 poor persons coming together to save small amount
regularly by mutually agreeing to contribute to a common fund in meeting their
emergency needs with collective decision making to resolve conflicts through mutual
decision making to resolve conflict through mutual decision to get collateral free
loans on terms decided by group at market driven rates. NABARD acts as major
player as propagator and facilitator by providing conductive policy environment,
training, capacity building and extending financial support for the growth of SHGs
linkage program. With the pilot program in 1992 by linking 500 SHGs, the NABARD
has created an unforgettable history by linking 29, 24,973 SHGs in 2006-2007. The
author made a comparative study on SHGs, credit linkage by different reasons
between 2000-01 to 2006-07, he found that the share of southern states was initially
high but later it declined and all other reasons showed impressive growth. As per the
impact of Microfinance on poverty reduction, the author made study on reports of
NABARD and MYRDA, and found the income, savings children education, maternal
health, communication skills and standard of living has improved after joining the
group. As per issues and challenges concern, there is uneven distribution of credit
linkage i.e. 52 per cent holds by southern regions. Further there exists problem of
capacity building low bank loan per SHG member, lack of micro insurance products,
problems created by federations, and lack of technology for financial inclusion. In
10
Ramanathan A. (2008), “Linkage Between SHGs and Banks in India” eds. Lazar D and Palanichamy
P. in Microfinance and Poverty Eradication- Indian and Global Experiences” New Century
Publications, New Delhi, pp. 123-131.
24
order to overcome these issues, author has highlighted the role of banks towards
inclusive economic growth and reorientation of surplus manpower.
Karmakar11
(2002), stated that SHGs as an approach towards alleviation of
poverty. According to him poor people hold tentative and uncertain behaviour while,
the group membership helps in removing this rough edge behaviour pattern. SHGs
work on the principle of cooperation and mutual help which tries to fulfil the
individual member‟s financial and social requirements.
Majumdar12
(2009) highlighted evolution, growth and impact of micro credit
in India. He defined micro credit as specific loans to the poor and credit needs of
clients, while Microfinance as broader range of financial services which create wider
range of opportunities to the poorest spectrum of society. In spite of great economic
revolution and rapid strides in the knowledge sector, India remains home of largest
population of poor‟s in the world. He differentiates between burden of micro credit
and credit through informal sources. He stated different models through which SHGs
are controlled and supervised, and share of different banks participation in
Microfinance activities till 2004. The biggest challenge of Micro credit programme is
simultaneous development of investment potential of the borrower along with
securing the long term sustainability of the programme which could be achieved
through greater degree of efficiency, honest supervision and redoubled efforts on part
of MF suppliers and government agencies.
Somanath13
(2009) described of origin, growth and sustainability of SHG-bank
linkage programme in India. He addressed SHG-Bank programme as a unique process
of empowering the poor and enabling them to control direction of own development
by identifying their felt needs. He further highlights the structural advantage of
Microfinance for SHG-Bank linkage both on part of lender and borrower through
lower transaction cost, hassle-free loans, long-term repayment, peer monitoring,
independence in decision making, and avoidance of agents. He regarded saving as a
regular affair in a good group and internal saving mobilization is the core of Self help
group. These savings amount varies in different groups depending upon the income,
11
Karmakar K. (2002) “Self Help Concept” in “Rural Credit and SHGs – Microfinance Needs and
Concept in India” Sage Publications, New Delhi, pp. 209-215.
12 Majumdar K. (2009), “Microcredit in India” The Indian Journal of Economics, Part-I, vol-LXXXX,
No: 356 July pp. 109-119.
13 Somanath V. (2009) “Self Help Group and Bank Linkages” eds. Somnath in Microfinance
Redefining the Future Excel Books, New Delhi, pp. 123-140.
25
health and financial status of member households. The Bank-linkage programme
requires long-term sustainability in order to transform Microfinance into
microenterprise and the problem of profitability of banks in future hinders this
sustainability factor. Therefore, in order to overcome this problem, development of
ownership of bank linkage programme by banks, strengthening of MIS and proper
monitoring is required.
Natrajan14
(2008) defined Microfinance as the miniscule but potentially
significant and effective credit delivery system which seeks to achieve the broad
range and multifaceted objectives i.e. meeting the credit needs of poor. The major
objective of Microfinance is to build up mutual trust and confidence between bankers
and rural poor and to evolve supplementary strategy for meeting the credit need of the
poor by strengthening technical, administrative capabilities of formal credit
institutions and combing formal credit system. Among the category wise loan
sanction under microcredit in Shivaganga District, the agriculture and allied activities
constitute significant share 35.82 per cent followed by small scale industries (5.03)
and retail trade (4.21) per cent whereas education and industrial estate constitute
minimal share. As per year wise assistance agriculture and allied activities got priority
while small operations, road and water transport has loosen its significance. The
analysis of recovery of sanctioned loan by different banks over the period of five
years (1999-2004) shows Indian Bank leads with 75.6 per cent followed by SBI 69.8
and Canara Bank 68.8, whereas CBI and Syndicate Bank shown least recovery (20.4
and 27.4 per cent) respectively. By overall recovery position seems to be good in all
banks. Therefore, he regarded microfinance not only a good business proposition but
also addressed as the largest social agent of poverty alleviation.
1.13.3 Impact of SHG Bank Linkage Programme
Tripathy15
(2006) stated the factors behind the failure of formal financial
institution as inadequate supply of credit, poor recovery demand-supply gap, improper
identification of beneficiaries and unhealthy competition from informal credit
agencies. He explained different models of SHGs-Bank linkage programme for
14
Natrajan P. (2008) “Microfinance- A Case Study of Shivaganga District” eds. Lazar D. and
Palanichamy P. in “Microfinance and Poverty Eradication- Indian and Global Experiences” New
Century Publications, New Delhi, pp. 534-529
15 Tripathy S. (2006), “ Rural Financing of SHGs” eds. Sahoo R. and Tripathy S. in “Self Help Groups
and Women Empowerment” Anmol Publications Pvt. Ltd., New Delhi, pp. 27-31.
26
attaining credit needs of the poor women by combining flexibility, sensitivity and
responsiveness and regarded mutual trust and confidence between banker and rural
women as a major factor in encouraging banking services in rural areas. Further, he
suggested promotion of literacy programme, proper record maintenance of member‟s
cash matter and government intervention as major factor required for further growth
of SHGs.
Malaisamy16
(2010) stated the reason behind disempowerment of people in
India is due to unequal distribution of benefits from economic growth and
development. He made comparison between the members of SHG (75 per cent) and
members of co-operative (25 per cent) out of 120 samples from three villages made
through simple random sampling. The study found all samples of the co-operative
societies are engaged in crop-enterprise whereas in SHG only 41.11 per cent of
samples are engaged in crop-enterprise and rest of 58.88 per cent of members have
undertaken diversified business such as Milch enterprise and petty shop. It has been
found that the co-operatives member enjoyed higher amount of loan in comparison to
the SHGs, as a matter of interest rate concerned the beneficiaries of SHG was paid
more interest as compared to co-operatives which holds other cost including interest
rate like travelling cost, documentation cost, unaccounted payment and interest on
share capital. The beneficiaries of SHG are more regular (78 out of 90) in repayment
of loans as compared to co-operatives (12 out of 30). Therefore, in order to overcome
the problem of high interest rate on part of SHG and high regular repayment on part
of co-operatives, SHG routed distribution of subsidy is recommended which will
reduce over dues arises due to high interest rate.
Ramesh17
(2009) highlighted that the worst condition of physically challenged
persons especially focusing rural India. The rural disabled were at disadvantage
position when compared their access to resources, employment opportunities and
rehabilitation. Further they were regarded as most neglected, marginalized,
uneducated and untrained and burden on family. They were ignored by government
due to low agenda of governance with the problems of providing food, shelter and
health care.
16
Malaisamy A. (2010), “Repayment Capacity in SHGs Vs Co-operatives” eds. Kainth G. in
“Managing Rural Finance in India” Concept Publishing Company Pvt. Ltd. New Delhi.
17 Ramesh K. (2009), “The Role of Microfinance in Rehabilitation of Physically Challenged Persons
and Inclusive Governance” eds. Bagchi K. In “Microfinance and Rural development- A Critical
Review” Abhjeet Publications Delhi, pp. 351-365.
27
Vandra18
(2009) regarded that micro credit programme as an instrument to
meet the requirement of rural development. The study focused on the growth of
microfinance in India which in the beginning was slow but today it attracts the
attention of whole world due to liberal refinance and successful repayment
performance of SHGs. The microfinance programme in India through extended its
positive impact on different sectors of economy like increased employment potentials,
co-operation, literacy, empowerment of women, higher standard of living, saving, self
sufficiency, decision making and support to emerging small entrepreneur have
somehow change the lives of rural people to certain extend. For further growth and
overall rural development the government, NGOs with bankers should work together
and formulate new norms, provide subsidy, appoint good banking officials, simple
administration procedure and extend the amount of loan.
Variyani19
(2009) defined Microfinance as provision of thrift, credit and other
financial services and products of very small account to the poor for enabling them to
raise their income level and improve living standard. The microfinance programme in
India was associated with SGSY, NABARD, and RMK has emerged as world‟s
largest financial programme in terms of outreach with 7.8 million households‟
accessed credit through 17085 branches of formal banking system. She highlight the
loopholes in MFIs operation and delivering services in India consisting high interest
rate due to commercialization and desire of high profit. Even the SBLP does not
provide facilities like forward and backward linkage, skills, technologies and working
capital which create problems for this microenterprise to survive in global
competition market.
Sowani20
(2009) analysed that the 87 per cent of poor households were without
access to any formal credit and 70.4 per cent of poor did not have any deposit
account. This big gap cannot be bridged alone by Indian Banking industry and
therefore the need of microfinance emerges. He define “Microfinance as a term which
is normally associated with a very small loan with no collateral to the borrower both
from rural and urban areas for income generating through market based self
18
Vandara D. (2009) “Microfinance and Rural Development” eds. Bagchi K. In “Microfinance and
Rural Development- A Critical Review” Abhjeet Publications Delhi, pp. 194-205.
19 Variyani R. (2009) “Microfinance and Poverty Reduction” eds. Bagchi K. in “Microfinance and
rural Development- A Critical Review” Abhjeet Publications Delhi, pp. 178-184.
20 Sowani S. (2009) “Microfinance and Rural Development” eds. Bagchi K. In “Microfinance and
Rural Development- A Critical Review” Abhjeet Publications Delhi, pp. 57-77.
28
employment under terms and condition of promoting agencies.” Microfinance
programme is not only a mean to access saving and credit but also a tool to reach
millions of people worldwide by bringing terms together regularly in organized group.
Further, it helps in bringing gender equality and women empowerment through
women ability to earn income, participation in family affairs, and well of family with
wider social and political empowerment.
Jasmine21
(2008), studied on topic SHG and poverty alleviation in
Ramanathapuram district of Tamil Nadu. Various NGOs work on SHGs nourishment
and growth in the District, but among them only TRMM and SMSSS are major
players and have greater share in membership. The author defines the role of
Microcredit in promoting SHG members socio-economic lives and as a measure to
remove poverty through increased income. Therefore in order to overcome the
problems agricultural sector and growth of SHGs the measures like market linkage for
members, formation of state level empowered committee for selection of NGOs and
uniformity in all Microfinance schemes of different departments.
Sudalaimuthu and Kumar22
(2008) analyzed the SHGs formation, functions
and socio-economic status of members before and after joining the group. The study
was based on secondary and primary data of 150 samples with limited study area of
Coimbatore district. The average income of members of SHG has increased by 56.4
per cent whereas the average expenditure has increased by 41 per cent. In response to
reason for formation of group by members, low rate of interest occupies initial
position followed by poverty alleviation and additional income. As motivational
factors the NGOs occupies largest share and government officials and others least.
The major benefits members of SHGs received credit facility, participation in public
affair while better socio-economic status and leadership quality holds minor.
Therefore, the authors have suggested government intervention in providing training,
involvement of educated members, marketing facility and fixation of prices for their
products.
21
J asmine A. (2008) “SHGs and Poverty Alleviation in Ramanthpuram District” eds. Lazar D and
Palnichamy P. in “Microfinance and Poverty Eradication- Indian and Global Experience” New
Century Publications, New Delhi, pp. 569-580.
22 Sudalaimuthu S. and Kumar P. (2008), Economic Status of Members of SHGs in Coimbatore
District of Tamil Nadu eds. Lazar D and Palnichamy P. in “Microfinance and Poverty Eradication-
Indian and Global Experience” New Century Publications, New Delhi, pp. 559-568.
29
1.13.4 Microfinance and Poverty Alleviation and Employment
Generation
In recent days microfinance is playing very effective role in poverty
alleviation and employment generation in the developing countries. Several studies
are given here-
Singh23
(2009) made a study on „Microfinance for Rural Women
Empowerment‟ and stated the concept of rural women has been underestimated and
discriminated against all walks of life despite of their substantial contribution towards
households and national economy. He further pointed out the reports of UN
commission stating the poor diet and weak health of women despite of producing 30
per cent of all food commodities consumed. According to the author Microfinance has
achieved a prominent place in empowering the women not only by helping in gaining
power but also by giving opportunities to control their own lives through accessing
resource, self confidence, respect and bargaining power. He regarded microfinance as
different from poverty alleviations programmes as it adopts formation of organization
and enterprises at grass root levels which enhances the women to uplift their social
and economic status through increased income and confidence.
Sahoo24
(2006) in his study on Women Self Help Groups- Innovations in
financing the poor stated banking services as an important tool not only in alleviating
poverty but also for optimizing growth of national economy. His study was based
upon 10 SHGs members of Dhurusia Gram Panchayat in Athagarh block of Cuttack
District of Orissa. The purpose of the study was to find the manner of mobilization of
thrift, credit and significance of rural credit in empowering the women of Orissa. The
study found improved socio-economic condition of members after undertaking
productive activities with support of group. The SHGs members have improved their
living standard through regular saving, utilization of local resources for self income
generation. The author suggested training, guidance, adequate credit support, simple
documentation, and marketing facility for their further growth.
23
Singh (2009) “Micro-Finance for Rural Women Empowerment” eds. Thakur A. And Sharma P. in
“Microcredit and Rural Development” Deep and Deep Publications Pvt. Ltd. New Delhi, pp-456-464.
24 Sahoo R. (2006), “Women Self Help Groups- Innovations in Financing the Poor” eds. Sahoo R. and
Tripathy S. in “Self Help Groups and Women Empowerment” Anmol Publications Pvt. Ltd. New
Delhi, pp- 13-26.
30
Panda and Panda25
(2009) made a study on Levels of living of Tribal Self Help
groups promoted under watershed programme in KBK districts of Orissa. Due to
Microfinance support there is increase in plantation and horticulture crops. The
households under lower income groups during pre-SHG period have improved to
higher income groups. Moreover, the mean per capita per day consumption of cereals
and pulses have increased during post- SHGs period. Further improvement over asset
holding, standard of living, saving and financial matter has also been observed.
Therefore the author has suggested implementation and framing of long term self
employment poverty alleviation programmes throughout the poverty trapped districts
for socio-economic improvement of tribals.
Manimoran26
(2004) made a study on Self Help Groups and Rural Women
Entrepreneurs and stated several ways through which students are suffering like
economic status, credit social importance, freedom and moreover self
interdependence. He advocated microfinance as the only solution to poverty
alleviation and empowerment of women. It can effectively be achieved through
community participation of poor women.
Sabanna, Bulla, Kamble and Parapur27
(2009) made a study on SHGs and
Women Empowerment: A study of Hyderabad region in Karnataka and stated
performance of family role by women acts as a major cause of their backwardness in
all dimensions. They made study of 217 samples promoted by both government as
well as donor agencies in Hyderabad-Karnataka regions in order to find women
economic and social status. The study shows on an aggregate as caste wise
membership concern 21.20 per cent members belong to minority category while 47.93
per cent members are from upper caste while Raichur district (48.45 per cent) is
having greater share of total upper caste members and Koppala district holds lower
share. The SC/ST membership is high in Koppala district while Raichur holds lower
share.
25
Panda B. And Panda R. (2009), Level of Living of Tribal Self Help groups Promoted Under
Watershed programme in KBK Districts of Orissa” eds. Thakur A. And Sharma P. in “Microfinance
and Rural Development” Deep and Deep Publications Pvt. Ltd. New Delhi, pp- 289-308.
26 Manimoran M. (2004) “Self Help Groups and Rural Women Enterpreneurship” eds. John S.,
Jayabalan R. and Krishnamurthy S. in “Rural Women Entrepreneurship”, Discovery Publishing
House. New Delhi. pp-249-252.
27 Sabanna T., Bulla B., Kamble U. and Porapur T. (2009), “SHGs and Women Empowerment” eds.
Thakur A. and Sharma P. in “Microcredit and Rural Development” Deep Publications Pvt. Ltd. New
Delhi, pp- 268-280.
31
As the improvement in income level concern 52.07 per cent sample having
monthly income upto Rs. 1000 while only 7.83 per cent members having monthly
income of Rs. 5001 and above which shows the success of reducing poverty to
certain extent. Moreover, cent per cent samples are literate with 53.46 per cent
members had education upto primary level followed by secondary (36.60 per cent),
pre-university (5.07) and under graduate (3.69 per cent). Further they suggested
focusing of government agencies and NGOs to capture the poorest women‟s
especially women‟s of deprived classes and provide opportunities to build self-
employment by linking them with formal financial system.
Pandian and Eswaran28
(2004) made a study on Microenterprises and Rural
Women and defines micro credit programme as extent of small loans to poor women
for self employment projects that generate income allowing them to care for
themselves and their families. Microfinance helps them to start up microenterprises
which in turn support in creation of self employment earn livelihood and hence
uplifting of family living standard.
Khare29
(2009) made a study on Self Help Groups: A vehicle for Women
Empowerment, Experiences of Madhya Pradesh and stated the major cause of poverty
as a lack of capital. The author regarded Women as a central theme of Microfinance
system and Women Empowerment is only solution to poverty, unemployment and
inequality. In order to evaluate and analyze the status, impact and role of SHGs, the
case study of few SHGs and secondary data with special emphasis on gender aspects
of Madhya Pradesh has been made by dividing it into different regions*. The study
found the group are either purely men or women, whereas very rare cases of mixed
exists due to cultural norms and trends but on an aggregate of all regions 87.80 per
cent of SHGs are women oriented. Moreover, region II holds 100 per cent female
SHG members. As per activity wise classification of SHGs is concerned 29.26 per
28
Pandian P. and Eswaran R. (2004), “Micro Enterprises and Rural Women”, eds. John S., Jeyabalan
R. and Krishnamurthy S. in “Rural Women Entrepreneurship”, Discovery Publishing House, New
Delhi, pp. 68-76.
29 Khare M. (2009), “Self Help Groups: A Vehicle for Women Empowerment, experiences of Madhya
Pradesh” eds. Thakur A. and Sharma P. in “Microcredit and Rural Development” Deep Publications
Pvt. Ltd. New Delhi, pp. 11-26.
*Region I- Jabalpur and Rewa,
Region II- Bhopal and Sagar,
Region III- Indore, Ujjain and Gwalior.
32
cent of SHGs are in saving stage and 23.57 per cent of SHGs is in saving, credit,
social activity and production stage, whereas 10.56 per cent of SHGs are just formed
and 3.25 per cent are closed or in fraud stage on an aggregate. Region III shows
better position among all three regions in every aspect. Moreover, the study shows
male family members have higher degree of control over loan estimated, absent of
women mobility and access of credit to women leads to more schooling of girls. In
order to overcome the issues the author suggested technical training, gender issues,
greater commitment, flexible repayment schedule and inter group trading.
Kumar30
(2012) made study on capacity building through women group and
defined capacity building as the assistance that is provided to entities, usually
societies in developing countries, which have a need to develop certain skill or
competence, or for general upgrading of performance ability. Capacity building not
only enhances the ability and skills at individual level but also helps to realize their
full potential.
Kaur31
(2009) defines Microfinance as an offshoot of Microcredit which
includes support services along with loan components. The author made study on
origin and growth of Microfinance in India making comparison between growth of
SHG in different regions and uneven distribution. Microfinance is regarded as the
better mechanism to reduce poverty and bringing improvement in social and
economic status of poor. The author highlights the activities undertaken by women
after joining SHG in southern regions such as shop making, book binding, running
canteen, catering units, vegetable selling, tea stall, fancy stores, floor mill, beverages
selling, snack and fruit stalls etc. while in northern regions women‟s are involved in
stitching embroidery work, phulkari, making sewian, poultry, dairy farming, making
hand fan etc. For further empowerment of women she emphasized implementation of
proper policies, rules and regulations for better utilization of loans, regulated rate of
interest, and repayment pattern.
30
Kumar S. (2012), “Capacity Building Through Women Groups” Journal of Rural Development, Vol-
31, No. 2 April-June, pp. 235-243.
31 Kaur H. (2009), “Microfinance and Women Empowerment” eds. Bagchi K. in “Microfinance and
Rural Development- A Critical Review” Abhijeet Publications, Delhi, pp. 136-151.
33
Parvin32
(2009) made a study on Self Help Groups and women Empowerment-
a conceptual perspective and defined empowerment as a process whereby the
powerless gain a greater share of control of resources and decision making. Power is
exercised in social, economic and political relations between individual and groups
and women in general while poor women particularly are powerless because of no
control over resources as decision making. The major components which are required
for women empowerment are economic independence, knowledge and awareness,
participation, self image and autonomy. Moreover, women access to credit in rural
areas is restricted due to problems like collateral, cultural distance between house and
banks, inflexibility in quantum and purpose of credit, high transaction cost, Banking
hours, exploitation by intermediaries and denial of credit to credit women due to
defaults made by male member of family.
Krishnamurthy33
(2004) made a study on topic “Sustainability of Self Help
Groups- An Analysis” and stated SHGs as a new lease of life for the women in
villages for social and economic empowerment by observing the current progress. In
order to get answer about the sustainability of SHGs in future the study of 75 SHGs
members from Bodinayakanaur Block in Theni District of Tamil Nadu has been made
on the basis of attitude scale constituting women status in household, equal access
over resources, women status in community, cultural and social barriers, access to
financial resources, income, self reliance, awareness of health and education and
leadership skills. On the basis of parameters, the study shows 57 per cent of the
members are fully satisfied with the operational performance of SHGs and will
continue their membership in respective SHGs, while 43 per cent members are fully
satisfied and their sustainability in their respective SHGs are in doubt. In order to
overcome these loopholes, he suggested Government agencies and NGOs or
promoting agencies to access the attitude of members on regular basis which will help
in identifying their problems and suggesting measures.
32
Parvin M. (2009), “Self Help Groups and Women Empowerment: A Conceptual Perspective” eds.
Bagchi K. in “Microfinance and Rural Development- A Critical Review” Abhijeet Publications, Delhi,
pp. 92-109.
33 Krishnamurthy S. (2004), “Sustainability of Self Help Groups – An Analysis” eds. John S.,
Jeyabalan R. and Krishnamurthy S. in “Rural Women Entrepreneurship” Discovery Publishing House,
New Delhi, pp. 115-118.
34
Rasure34
(2009) in his study on Microfinance: A tool for Women
Empowerment stated “SHG provides a permanent forum for articulating the needs of
member and contributing their perspective to rural development.” He highlighted the
growth of SHG-Bank linkages all over India with emphasizing the performance of
Commercial Banks, Co-operative Banks and RRBs. Further he highlighted the
situation of uncovered groups as backward and disempowered mainly those women‟s
who have not been provided any form of credit and who are not part of any group.
Therefore, the author suggested different promoting agencies to extend their helping
hand to the excluded population for rapid socio-economic development.
Biswajit35
(2011) made study on “Gender and Development; SHGs Women
Workers and Entrepreneurs” and defined microfinance as a multi-dimensional in its
approach and cowers social, political and economic aspects. The author pointed out
those SHGs members to improve their livelihoods and alleviate poverty and diminish
vulnerability through the microfinance induced income generation activities.
Raj Kutty 1997 and Puhazhendhi and Satyasai (2000) have pointed out that
compared to direct lending programmes; microfinance approach is more successful
with respect to reaching the poor, attaching socio-economic well being of the
participants etc. Microfinance increases self employment opportunity to poor people
then increasing income and employment.
1.13.5 Issues and Challenges:
Sarvaiya36
(2009) studied on topic microfinance Opportunities and Challenges
and classified MFIs into categories Mainstream MFI (NABARD, SIDBI, HDFC and
RRBs) and Alternative MFIs (NGOs, NBFCs). He defined four segments of demand
for Microcredit in rural areas, as seasonal employed of consumption credit, self
employed of working capital credit, small cum medium farmers and traders of
commercial business credit, and women‟s of both consumption and productive credit.
Women‟s are regarded as the best credit utilise, because they mostly spend their profit
for benefit of children‟s by making increment which helps in breaking generational
34
Rasure K. (2009), “Microfinance- A Tool for Women Empowerment” eds. Thakur A. and Sharma P.
in “Microcredit and Rural Development” Deep and Deep Publication Pvt. Ltd, New Delhi, pp. 325-
340.
35 Biswajit C. and sangeeta K. (2011), “Gender and Development: SHG‟s, Women workers and
Entrepreneurs”, Journal of Economic and social Development Vol. VII, No. 2, Dec. 2011 pp. 84-97.
36 Sarvaiya (2009), “Microfinance – Opportunities and Challenges” eds. Bagchi K. in “Microfinance
and Rural Development” Abhijeet Publication, Delhi, pp- 152-164.
35
cycle of poverty. As a matter of safety and security the supply of insurance services to
the poor has increased substantially over 1990‟s due to existence of low premium
schemes covering death, accident, natural calamities and loss of asset, but the usage is
limited because of low awareness among the poor‟s. The author stated major reasons
behind failure of microfinance institutions like problem in placing certain programme
with differed policies and cost structure, unfavourable local circumstances,
institutional junctures, problem of alternative MFIs, inappropriate legal forms, lack of
commercial orientation and accountability. In order to overcome these shortcomings
the establishment of new monitoring and model should be developed by MFIs,
improvement in regulation, and non interference of government in administration and
policies of MFIs have been suggested.
Jerinabi and Kanniammal37
through Microcredit – an anti poverty tool tries to
explain the basic characteristic and degree of poverty alleviation through microcredit
to the beneficiaries. From the study of three Panchayats (Anamalai, Karamadai, and
Periyanaickken) consisting 202 women samples found that 45 per cent sample earned
Rs. 1000 to 2000 per month. Majority of women 41 per cent are engaged in food
related items business. In addition to group loan members have also employed their
own capital in business. As the matter of profit concern, 56 per cent women have
earned below Rs. 500 per month from their enterprises. Microcredit only helps the
poor beneficiaries to gain extra income and move out of poverty but failed to work for
economic deprivation of very poor and destitute because of inappropriate credit
distribution. The broader target of Microcredit schemes with training and capacity
building should be adopted to overcome these deficiencies.
Pathak and Pant38
(2008), made study on Microfinance a case study of Jaunpur
District in order to analyze the socio-economic impact of microfinance on poverty
alleviation. He further highlights the impact of SGSY programme on poverty
alleviation in Ramnagar block. The study found 74 per cent of samples have not
received any kind of training. The author has divided the samples into Treatment
group (SHGs under SGSY) and comparison group was higher than comparisons
37
Jerinabi U. and Kanniammal K. (2008), “Microcredit: An Anti Poverty Tool” eds. Lazar d and
Palanichamy P. in “Microfinance and Poverty Eradication- Indian and Global Experiences” New
Century Publications, New Delhi, pp- 232-242.
38 Pathak D. and Pant S. (2008), “ Microfinance: A case study of Jaunpur District” eds. Lazar D and
Palanichamy P. in Microfinance and Poverty Eradication – Indian and Global Experiences” New
Century Publications, New Delhi, pp. 469-491.
36
group. Moreover the treatment group enjoys better quality of life due to improved
shelter and housing. But major finding of study shows that SGSY has not contributed
significant change in the level of income. Therefore, the author suggested public
accountability in working schemes, transparency and interference of village level
organization (through NSS and college students), and organization of training
programmes.
1.14. Scope of the Study:
The study is restricted to only one state of India viz. Uttar Pradesh. It is 5th
(240928 sq.km) largest state in area and 1st (19.96 crore) largest population. Amongst
all Indian states, Uttar Pradesh 1st position of population living below poverty line. In
India, the average percentage of population living below poverty line is 21.80, where
as in Uttar Pradesh the average percentage of population living below poverty line is
25.5. The study focuses to cover the poverty alleviation and employment generation
through Microfinance. The condition of people in the state has improving. The gap
between male-female ratios of literacy in Uttar Pradesh is very high. The appreciable
change has been noticed in living standard of people residing in rural areas. As per the
census 2001, the maternal mortality rate in Uttar Pradesh has been recorded average
as 517 in the state, which is higher than the national average of 301. Moreover the
infant mortality rate is also high in Uttar Pradesh (73) compared to national average
(58). Various studies found that SHGs occupied prominent place both in removing
poverty as well as increasing employment. The studies of Microfinance, SHGs and
KCC of Uttar Pradesh will provide a broad view about the performance of various
SHGs under different promoting institutions and its impact o socio-economic life and
activities of people. Accordingly the present study is an attempt in this direction.
1.15 Objectives of the Study:
The study will focus on to examine following objectives:
a) To find out whether poor people has access over formal sources of credit
supply.
b) To find out the socio-economic status of Uttar Pradesh, and know the impact
of microfinance on poor people.
c) To find out the development profile of Bahraich district and comparative
status of Bahraich district in Uttar Pradesh.
37
d) To find out the various sources of microfinance and pattern of microfinance
availability in the study area.
e) To examine the need for finance in their economic activities and therefore
economic upliftment,
f) to examine benefits derived by people engaged in microfinance activities,
1.16. Hypotheses of the Study:
The study tried to examine the following hypotheses:
(i) Poor and marginalized groups of people generally do not get credit facilities
from formal banking sectors,
(ii) Poor people need finance to improve their economic condition and engage in
meaningful work.
(iii) Microfinance and Self-Help Groups have been helpful in providing
employment to some member of the families.
(iv) People engaged in microfinance have also been able to generate resources
which are helpful in future growth of their economic status besides getting
away from poverty.
1.17. Chapter Scheme of the Study:
Chapter 1: This chapter will provide overview about the background, concept,
introduction and values of microfinance. Further it focuses on various models of
delivering Micro-Financial services worldwide and models adopted in India. The
chapter also shows concept of SHG- its origin, nature, scope and functions, Bank-
linkage, models of delivering financial and non financial support and benefit and
activities of kisan credit card. This chapter incorporates a brief review of literature to
capture the finding and observations of major studies, views and opinions of several
authors, policy makers and experts in the field of microfinance. On the basis of
available literature the whole section is divided into 5 sections i.e. Microfinance: an
Overview, SHG – Bank linkage growth and performance, Impact of SHG – Bank
linkage programme, Microfinance and Poverty Alleviation and Employment
Generation. The chapter highlights the scope, objectives of present studies and
hypothesis to be examined. Moreover, it shows the whole chapterisation plans of
study.
Chapter 2: This chapter gives a description about the socio-economic development of
Uttar Pradesh. Further special attention has been made to highlight the status of
38
human development, demographic development, educational development,
agricultural and industrial development profile and problems of poverty,
unemployment and regional disparities in Uttar Pradesh. This section also highlights
that in present actual status of Uttar Pradesh in India. After knowing this, easily
describe the role of microfinance in poverty alleviation and employment generation in
Uttar Pradesh.
Chapter 3: This chapter gives a description about development profile of Bahraich
district. This section gives an overview of Bahraich district along with geographical
area, rainfall and temperature and comparative development profile of Bahraich
district to other district in Uttar Pradesh. This chapter also discusses the demographic
development, social development, human development, occupational distribution and
educational development profile of Bahraich district.
Chapter 4: This chapter tries to explain the general features of the people, and pattern
of microfinance availability. It discusses the general and household information of
respondents, demographic and other particular of household members, pattern of
microfinance availability and major occupation of respondents. This chapter also give
a description the availability of microfinance three types- direct microfinance,
microfinance through Self- Help Groups and microfinance through Kisan Credit Card.
Chapter 5: This chapter tries to explain the nature of activities under the
microfinance and their impact on poverty and unemployment. In which the benefits
and activities of direct microfinance, benefits and activities of microfinance through
Self- Help Groups and the benefits and activities of microfinance through Kisan
Credit Cards has been discussed. Further special attention has been made to highlight
the concept, objective, values and functions of microfinance in rural areas in Bahraich
district of Uttar Pradesh. Further special attention has been made to highlight the
direct microfinance impact on poverty and unemployment, microfinance through Self-
Help Groups impact on poverty and unemployment and microfinance through Kisan
Credit Card impact on poverty and unemployment in Bahraich district of Uttar
Pradesh.
Chapter 6: This chapter briefly discusses the key finding and recommendations
emerging from the study. Besides highlighting the significant contribution of the
study in the field of microfinance, limitations of the study and scope for further
research have also been deliberated in this chapter.
Chapter Two
Socio - Economic Development of Uttar
Pradesh
CHAPTER TWO
SOCIO-ECONOMIC DEVELOPMENT OF UTTAR PRADESH
Introduction:
India is one of the oldest civilisations in the world with the Kalidas comic
variety with rich cultural heritage. It has been the last more than 60 years of
independence. India has become self sufficient in agricultural production and is now
the Tenth Industrialised Country in the World and the sixth nation to have gone into
outer space to conquer nature for the benefit of people. It covers the area of
32,87,263 sq. Km. extending from the Snow- covered Himalayan heights to the
tropical rain forests in the South. It is the 7th
largest country in area and 2nd
largest
country in population. India accounts for a meagre 2.4 per cent of world surface area
of 135.79 million sq. Km. yet it supports and sustains a whopping 16.7 per cent of the
world population.
India is the union of States and comprised of 29 States and 7 Union territories.
Uttar Pradesh is one of them and its heartland of India and its enriched by Ganga,
Yamuna Rivers and plain area and some part of plateau of Bundelkhand. Uttar
Pradesh is the largest State in India. Uttar Pradesh accounts for a meagre 7.33 per cent
of Indian surface area and 16.5 per cent of population share. Uttar Pradesh played key
role in the Independence movement. The State has found new name on 26 January
1950 and before this its name was United Province. In this Chapter we have describe
the Socio –economic features of Uttar Pradesh to understand the context of Bahraich
district in the following Chapters. Uttar Pradesh occupies the first place in India, in
cereal production, milk production, animal wealth, sugarcane production, sugar
production, potato production, rail line strength and the branch of commercial banks
and post office.
2.1. General Profile of Uttar Pradesh:
Uttar Pradesh is often described as the “Hindi speaking Heartland” of India.
The State has a population of 19.96 crore as per 2011 census and a geographical area
of 2.41 Lakh sq. Km. Nearly 80 per cent population of Uttar Pradesh resides in rural
area spread over 97942 inhabited villages. The State is organized into 72 districts, 312
tehsils and 821 development blocks. It is divided into four economic regions –
40
Western region, Central region, Eastern region and Bundelkhand region. The first
three regions are the parts of Gangetic Plains while Bundelkhand forms part of
Southern Plateau. Thus Uttar Pradesh has good amount of the human resource and
natural resource; this is very helpful in its socio-economic development. Uttar Pradesh
is the heartland of India, and touches eight states and one union territory, as shown in
the Map-1.
Map 1: District-wise map of Uttar Pradesh
The map shows that Uttar Pradesh touches 8 States, one union territory and
international boundary with Nepal. The northern boundary of the Uttar Pradesh is
with the Uttarakhand state. The north-west boundary of Uttar Pradesh is with the
41
states of Himachal Pradesh, Haryana, Rajasthan and Union territory of Delhi. The
southern boundary of Uttar Pradesh is with the state of Madhya Pradesh, South-east
boundary is with the state of Chhattisgarh and Jharkhand, and eastern boundary is
with the state of Bihar.
2.1(A) Physical Status of Uttar Pradesh:
Now Northern Boundary of Uttar Pradesh touches with the international
boundary of Nepal and the State of Uttrakhand Shivalik range; Western and South-
west boundary touches Haryana, Delhi and Rajasthan and the Southern boundary with
Madhya Pradesh and Eastern boundary with Bihar. Naturally, the State boundary has
extensive range – Northern side Shivalik range of Himalaya, Western, South-West
and Southern side Yamuna Rivers and Vindhyachal range and Eastern side Ganduk
Rivers. Thus the natural and political boundary of Uttar Pradesh has various states and
one country. This is very helpful to communicate to each other because by the help of
transport facility they meet and share their goals and development strategy of
education, health and infrastructure development, and this is also helping socio-
economic development of Uttar Pradesh.
2.1(B) Climate of Uttar Pradesh:
Generally all of three climate seasons are found in Uttar Pradesh – winter
season (October–February), hot or summer season (March – June) and Rainy or
Mansoon season (July–September). In Uttar Pradesh, during the summer seasons
temperature reaches 45 Degree centigrade and in Winter season general temperature
in plain area is 12.5 to 17.5 degree centigrade while the lowest could be 3- 4 degree
centigrade. This is better to provide congenial environment for agricultural and other
economic activities. The climate of Uttar Pradesh is very well and people enjoyed all
climates in every calendar year and this is very helpful in economic development.
2.1(C) Forest Resources of Uttar Pradesh:
The forest area of Uttar Pradesh is very low, and this is also low on national
standard. After the creation of Uttarakhand in November 2000, the forest area of Uttar
Pradesh has declined. Before the creation of Uttrakhand Forest area was 33,994 sq.
Km. which was 11.54 per cent of total Geographical area. But now the Forest area of
Uttar Pradesh is only 10,751 sq. Km. which is 4.46 per cent under Forest area in total
geographical area, which is under forest, and suffered extensive environmental
42
degradation. The low forest resource has increased climatic problems like drought,
floods etc. This is reducing agricultural and other productivity in the state economy.
The State is, however, rich in the surface and ground water resources. Over the
three- fourth of the sown area in the State is irrigated, mostly through tube-wells.
Uttar Pradesh also has a fairly large canal network. It is being debated whether
exploitations of this resource are reached at very high level in Uttar Pradesh in
agriculture production with the help of these resources, Uttar Pradesh is the major
agriculture producing state in India. Thus Uttar Pradesh is well endowed in climate,
soil and water resources, and this helping in increasing agricultural and other
production.
2.1(D) Mineral Resources:
Land is the most important resource of Uttar Pradesh. But the State is also
enriched in some minerals as well. In the Uttar Pradesh major minerals are find Lime
stone, Magneside, Sofostone, Copper, Zipsum, Glass-sand, Marbel, Urenieum etc.
The southern districts of Uttar Pradesh are known as mineral districts. These districts
are Agra, Lalitpur, Jhansi, Hameerpur, Banda, Allahabad, Mirzapur and Sonbhadra.
These minerals are provides raw materials for Industrial production and development,
but Uttar Pradesh is not self-sufficient in the minerals well.
2.2. Profile of Social Development in Uttar Pradesh:
Uttar Pradesh has been the cradle of Indian civilization. Since time
immemorial people belonging to diverse ethnic, religious and social groups have been
coming to this region and settling here. In the social development we discuss the
religion and social groups of Uttar Pradesh. According to 2001 census, 80.6 per cent
of the State Population was Hindu. Muslims formed 18.5 per cent of population. The
remaining 0.9 per cent of population consisted of other religious minorities like –
Sikhs, Boudhs, Jain and Christian. The profile of social development we describe the
share of Scheduled cast (SCs) and Scheduled tribe (STs) population of Uttar Pradesh.
In Uttar Pradesh Scheduled castes (SCs) formed 21.15 per cent of the State‟s
Population. The Proportion of the Scheduled Tribes (STs) residing in the State is
negligible at 0.06 per cent in 2001 census.
43
There are sharp differences in the level of Human development prevailing
among the different Social and religious groups in the State. The socio-economic
status of Muslims, Other Backward classes and Scheduled castes is lower as
compared to that of the higher castes. The high proportion of the population belonging
to the socially and economically depressed sections has profound implications for the
policy and the status of human development in Uttar Pradesh.
2.3. Human Development in Uttar Pradesh:
Now a day Human Capital and Human Resource development are given high
priority in the world. Human Development is more frequently used a development
indicator of any country. The Human Development measure has been developed by
United Nation Development Programme (UNDP), and the HDI concept was
developed by Mahbul-ul-Haq. Indian Government and also Uttar Pradesh
Government focus on improving human development and also reduce inter personal
inequality.
2.3.1 Human Development measures:
Human development measures are based on the average achievement in three
basic dimensions of human development. These are –
A long and healthy life as measured by the life expectancy at birth.
Knowledge as measured the adult literacy rate and the combined primary,
secondary and tertiary gross enrolment ratio.
A decent standard of living as measured by GDP per capita.
Besides the above dimensions some other dimensions like the socio economic
status of Women, Governance and inclusive growth strategies are also now being
debated. The value of the Human Development is between 0 and 1. The status of
Human Development in Uttar Pradesh continues to be far from satisfactory even after
more than six decades of development planning aimed at social and economic
upliftment of the people. The absolute value of HDI in Uttar Pradesh has been
improving over time. But its relative performance leaves much to be desired. Because
the value of human development of Uttar Pradesh has been improving but its HDI
rank does not improve. All the indices of human development (HDI, GDI and
44
Deprivation index) have shown an improvement over the year, Table 2.1 shown that
the progress of human development in Uttar Pradesh.
Table 2.1: Progress of Human development in Uttar Pradesh (Based on UPHDR
II Methodology)
Index Year
(Actual Value) Improvement in per cent
1999 2001 2005 1999-2001 2001-05
HDI 0.4249 0.5442 0.5709 28.08 4.90
GDI NA 0.4910 0.5277 NA 7.47
Deprivation Index 65.12 54.53 NA -16.26 NA
Source: Human Development Report Uttar Pradesh, 2008
In the table 2.1 shows that the value of HDI improvement during the period
1999-2001 has been at the higher rate. In 1999 in Uttar Pradesh the value of HDI was
0.4249 which improved to 0.5442 in 2001 and 0.5709 in 2005. Uttar Pradesh during
1999-2001 the value of HDI has improved 28.08 per cent and during 2001 to 2005 it
improved only 4.90 per cent. A shaper increase in literacy and a decline in IMR have
contributed to these trends. This is shown that in this period in Uttar Pradesh
improvement has been recorded for life expectancy (medical facility), knowledge and
purchasing power of people. In terms of UNDPs HDR criterion, Uttar Pradesh can be
said to have moved into the category of medium human development (HDI between
0.50 and 0.80) in 2001, from the category of low human development (value of HDI
below 0.50) .But the state has still a long way to go to active full human development.
The Gender development index during 2001-2005 has also improved by 7.47 per cent
and the deprivation index has declined by 16.26 per cent during 1991-2001.
2.3.2. Human Development in Uttar Pradesh:
Human Development has comparative profile for all states in India. This
shows that some states are in high human development category like; Kerala, Punjab,
Tamil Nadu etc. On the other hand, some states are bottom position as like; Madhya
Pradesh, Uttar Pradesh, Assam and Bihar. This shows those regional disparities in
human development and other development indicators. Here Uttar Pradesh is not at
satisfactory level because it is at the bottom level. This is shows that Uttar Pradesh is
a low human development category state. The table 2.2 shows that a marginal
improvement from the 14th
position that Uttar Pradesh occupied in 1991. Kerala,
Punjab, Tamil Nadu and Maharashtra are the four top ranking states in terms of
45
human development index both in 1991 and 2001. Thus Uttar Pradesh has been
poorly performing state in India according to the value of human development.
Table 2.2: The Value and Rank of Human Development index for various States
in India, 1991 and 2001.
States
1991 2001
Value Rank Value Rank
Kerala 0.591 1 0.638 1
Punjab 0.475 2 0.537 2
Tamil Nadu 0.466 3 0.531 3
Maharashtra 0.452 4 0.523 4
Haryana 0.443 5 0.509 5
Gujarat 0.431 6 0.479 6
Karnataka 0.412 7 0.478 7
West Bengal 0.404 8 0.472 8
Rajasthan 0.347 11 0.424 9
Andhra Pradesh 0.377 9 0.416 10
Orissa 0.345 12 0.404 11
Madhya Pradesh 0.328 13 0.394 12
Uttar Pradesh 0.314 14 0.388 13
Assam 0.348 10 0.386 14
Bihar 0.308 15 0.367 15
All India 0.381 0.472
Source: Human Development Reports 2006 Uttar Pradesh.
In the table 2.2 shows the state wise human development in India. Kerala is
the highest human development index in 1991 and 2001, but Punjab, Tamil Nadu and
Maharashtra are respectively 2nd
, 3rd
and 4th
position in human development index
during 1991 and in 2001. The human development position of Uttar Pradesh in 1991
was 14th
rank (HDI value is 0.314) and in 2001, 13th
rank (HDI value is 0.388). Uttar
Pradesh improved its rank from 14th
position in 1991 to 13th
position in 2001. The
value of Human development in Uttar Pradesh shows only marginal improvement. It
continues to languish at a low level of human development and its lowest cluster of
states, along with Bihar, Madhya Pradesh, Rajasthan, and Orissa. On the other hand
some states are high human development position in the country and also better
improving their value of HDI. According to the above description we can say that the
human development index of the state and national level have continued to improve.
Table 2.3 shows some demographic indicators which affect human development.
46
Table 2.3: The position of Uttar Pradesh in some demographic indicators (2005)
Sl.
No.
Indicators Units
Uttar
Pradesh
India
1 Birth rate Per 1000 population 30.4 23.8
2 Death rate Per 1000 population 8.7 7.6
3 Infant mortality rate(IMR) Per 1000 birth 73 58
4 Maternal mortality rate
(MMR) Per 1 Lakh birth 517 301
5 Total fertility rate (TFR) No. Of child 4.4 2.9
6 Couple protection rate per cent 43.6 56.3
7 Institutional Birth per cent 22.0 40.7
8 Delivery by trained person per cent 29.2 48.7
Source: Uttar Pradesh ka Arthik Vikas by Dr. M. K. Agarwal.
The table 2.3 shows that the birth rate of Uttar Pradesh is 30.4 per one
thousand populations and death rate 8.7 per thousand populations while in India birth
rate is 23.8 and death rate 7.6 per thousand populations in 2005. This table shows that
Uttar Pradesh is below the national level because here high population growth and
low medical facilities. The Infant Mortality Rate (IMR) of Uttar Pradesh is 73 on per
thousand live births, and the Maternal Mortality Rate (MMR) 517 in per lakh birth
and Total Fertility Rate (TFR) 4.4 on per female. At all India level IMR is 58, MMR
is 301 and TFR 2.9. These indicators also show that Uttar Pradesh is in backward
position in comparison to the national level demographic indictors. The birth rate in
Uttar Pradesh is 30.4, which in India is 23.8. The death rate of Uttar Pradesh is 8.7 on
per thousand populations while in India only 7.6. Thus all of these development
indicators show that Uttar Pradesh is backward position.
2.4 Demographic change in Uttar Pradesh:
Uttar Pradesh is the most populous state in India. One – sixth of world‟s
population lives in India and one-sixth of India‟s population lives in Uttar Pradesh.
Only four other countries of the world namely- China, U.S.A, Indonesia, and Brazil
have a population higher than that of Uttar Pradesh. Thus, Uttar Pradesh has enriched
in demographic terms, which also affected its development process.
2.4(a) Population size and its growth rate in Uttar Pradesh:
Uttar Pradesh is very enriching in the human resource. These human resources
are using as working population and a very important tools of economic development.
According to 2011 census report, Uttar Pradesh population has been 19.95 crore,
which is the 16.48 per cent of India‟s population. Uttar Pradesh population and
India‟s population and its growth rate have been shown in the Table 2.4 since 1901.
47
Table 2.4: Population size and its growth rate in Uttar Pradesh and India since
1901 to 2011
Census
Year
Uttar
Pradesh
(in Lakh)
India (in
Lakh)
Share of
U.P. in
India (per
cent)
Decadal Growth rate (per
cent)
U.P. India
1901 486 2384 20.39 - -
1911 482 2521 19.12 (-)0.97 (+)5.75
1921 467 2513 18.58 (-)3.08 (-)0.31
1931 498 2790 17.85 (+)6.66 (+)11.0
1941 565 3187 17.73 (+)13.57 (+)14.22
1951 632 3611 17.50 (+)11.82 (+)13.31
1961 737 4392 16.78 (+)16.66 (+)21.51
1971 883 5482 16.10 (+)19.78 (+)24.80
1981 1109 6833 16.18 (+)25.49 (+)24.64
1991 1391 8463 16.44 (+)25.48 (+)23.85
2001 1662* 10286 16.16* (+)25.80 (+)21.34
2011 1995* 12101 16.48* (+)20.09 (+)17.64
Note- *excluding Uttrakhand
Source: Human development Report 2008, Uttar Pradesh and Census of India data
2011.
Thus by looking at table 2.4 one can find the population size and its growth
rate in Uttar Pradesh and India. This table shows different stage of population growth
in Uttar Pradesh. In 1901 population of Uttar Pradesh was 486 lakh and Indian
population was 2384 lakh. In 1901 Uttar Pradesh has 20.39 per cent of Indian
population. In 1951 the population of Uttar Pradesh has become 632 lakh and Indian
population has been 3611 lakh. In 1951 Uttar Pradesh shared 17.50 per cent of Indian
population. In census 2001 the population of Uttar Pradesh was 1662 lakh and Indian
population size was 10286 lakh. In 2001 Uttar Pradesh shared 16.16 per cent of Indian
population. As per 2011 census data population of Uttar Pradesh is 1995 lakh and
Indian population is 12101 lakh and Uttar Pradesh shared 16.48 per cent population of
India. The population in Uttar Pradesh increased from 4.86 crore in 1901 to 19.95
crore in 2011. On other hand Indian population increased in same years from 23.84
crore to 121.01 crore. Thus in the given time period Uttar Pradesh population become
4.1 times and Indian population become 5.07 times.
The population growth rate of Uttar Pradesh shows that initial decade‟s
population growth has been negative and thereafter it has been positively growing.
After 1951 population has been growing rapidly but after 2001 the growth rate
declined. Population growth of Uttar Pradesh has been lower in comparison to India
upto 1971. But after 1971, population growth of Uttar Pradesh has become higher in
48
comparison to India‟s population growth rate. The 2011 census data shows that in
2001 decadal growth rate of population in Uttar Pradesh was 25.80 per cent, but in
2011 decadal growth rate declined to 20.09 per cent. Thus we can say that in this
decade population growth rate in Uttar Pradesh has also been showing moderated
tendency.
2.4(b) Population density and sex ratio of Uttar Pradesh:
The term of population density implies that the „average number of persons
living per square km‟. After 1931 population density of Uttar Pradesh has increased
because in 1901 population density was 165 which increased to the 215 in 1951 and
then it rapidly increased 908 persons living per square km in 2011 due to rapid
population growth. On the other hand population density of India in 2011 is 382
person livings per square km. Thus population density of Uttar Pradesh is more than
double of India‟s population density. This increasing population density is the result
of high population growth in Uttar Pradesh and also in India. The table 2.5 shows the
population density of Uttar Pradesh and India from 1901 to 2011.
Table 2.5: Population density in Uttar Pradesh and India
Year
India
Population density
(per square km. population)
Uttar Pradesh
Population density
(per square km. population)
1901 77 165
1911 82 164
1921 81 159
1931 90 169
1941 103 192
1951 117 215
1961 142 251
1971 177 300
1981 216 377
1991 267 548
2001 325 690
2011 382 828
Source: Census of India data 2011 and Sankhiya dairy Uttar Pradesh 2012.
The population density of Uttar Pradesh remained always higher than India.
This population density can describe the high population pressure on land in Uttar
Pradesh and this has affected socio-economic development of the state. The high
population pressure increases the problems of malnutrition, unemployment, poverty
and providing education facility and better care of health facility and infrastructure.
49
Thus we can say that population pressure disturbs the development process of Uttar
Pradesh.
2.4(c) Sex Ratio of Uttar Pradesh:
Sex ratio means the average number of female per thousand of male
population. In general condition sex ratio is balanced, but malnutrition, poverty and
social evils are the main causes for making the sex ratio unfavourable for women.
Due to such reasons the sex ratio has declined and became unfavourable to female
population and this has increased many evils, corruptions and other problems. Uttar
Pradesh is also facing many problems where the main causes are unfavourable sex
ratio.
Table 2.6 shows that in 1901 maximum sex ratio was maximum 942 female at
per thousand male populations. In 1951 it was 908 and 1971 came down to minimum
level 876 and then it has increased somewhat in 2001 (898), and in 2011 (908 female
per thousand male population). Thus this table shows that in the state sex ratio is
always unfavourable to female. The table 2.6 shows the Sex ratio (number of female
per 1000 male population) averages and 0-6 year sex ratio in Uttar Pradesh and in
India.
Table 2.6: Sex ratio of Uttar Pradesh and India
Year Uttar Pradesh India
Sex Ratio of whole
age groups
Sex ratio (0-
6 Year)
Sex Ratio of whole
age groups
Sex Ratio
(0-6 year)
1901 942 - 972 -
1911 916 - 964 -
1921 908 - 955 -
1931 903 - 950 -
1941 907 - 945 -
1951 908 - 946 -
1961 907 - 941 976
1971 876 923 930 964
1981 882 935 934 962
1991 876 927 927 945
2001 898 916 933 927
2011 908 899 940 914
Source- Uttar Pradesh ki Arthik samiksha 2010-2011
The above table has shown the maximum sex ratio in 1901 census, for both
Uttar Pradesh and in India. In 1951 sex ratio declined to 908 female per thousand
male in Uttar Pradesh and 946 in India. In 1981 sex ratio again declined to 882 in
Uttar Pradesh and 934 in India. 2011 census data shows that the sex ratio has some
50
marginal improvement, as it rose to 908 in Uttar Pradesh and 940 in India. Thus
according to above table, the sex ratio of 0-6 year age groups population is better than
average sex ratio in previous decade in Uttar Pradesh and India. After 1991 we see the
sex ratio of 0-6 year age group also declined in Uttar Pradesh and India. So we can
say that with economic development and medical facility increases, sex ratio declined
in the Uttar Pradesh and in India.
2.4(d) Age composition or work force in Uttar Pradesh:
Age composition is helpful in determining the proportion of labour force in the
total population. Table 2.7 shows that the total population of Uttar Pradesh has been
divided into three age groups: 0-14 year age group are only consumable or dependent
population. The 15-59 year age group population plays main role in production and
also consumption. The population age groups of 60 year and above physically weak
and they are clubbed with consumable class population. Uttar Pradesh and also India
are enriched in working and youngest population. In the present in the world India
and also Uttar Pradesh are in leading position in the youngest population share in total
population. Because here the highest share of youngest and the working population.
So “India is the country of Young.” The main benefit of this youth population is they
can play the leading role in socio-economic development in the present and future
development in Uttar Pradesh and in India.
Table 2.7: Population distribution according to age groups in Uttar Pradesh (per
cent)
Age group 2001* 1991
Male Female Person Male Female Person
0-14 40.9 40.8 40.9 40.0 40.6 40.3
15-59 51.5 51.9 51.7 52.0 52.3 52.2
60 & above 7.5 7.4 7.5 8.0 7.0 7.6
Total 100.0 100.0 100.0 100.0 100.0 100.0
Note * - Uttrakhand was carved out from Uttar Pradesh.
Source: Sankhiya Diary Uttar Pradesh-2012, 2010 and 2006.
The above table shows that in 2001, 40.9 per cent population was in the age
group of 0-14 years. This shows that unproductive population burden also increased.
51.7 per cent or more than half of the population belonged to productive age-group
which is better for development process. However, the population 7.5 per cent was
elder population. In the increasing share of the elderly population is due to better
living and health infrastructure. On the other hand the working age group population
51
play leading role in socio-economic development and youth population play leading
role in future development of the economy.
2.4(e) Rural and Urban population distribution in Uttar Pradesh:
Economic development is generally associated with the growth of
Urbanization. But this thought does not completely hold in Uttar Pradesh and India,
because there development process has continued and most of the population still live
in rural areas. According to 2001 census report 20.8 per cent population lived in urban
areas and 79.2 per cent population lived in rural area in Uttar Pradesh. On the other
hand in India 27.8 per cent population was Urban and 72.2 per cent population lived
in rural areas. According to 2011 census the percentage of urban population has
increases in the Uttar Pradesh. Because according to 2011 census report, in Uttar
Pradesh 22.28 per cent population lived in urban areas and 77.72 per cent population
was living in rural areas. In India 31.16 per cent population is living in urban areas
and 68.84 per cent population living in rural areas. Thus, Uttar Pradesh urban
population ratio is lower than national average and also some other states in India.
In the economic development urbanization plays key role, because in education,
health and other infrastructure development, urban sector plays leading role. After
education, health and infrastructure development the socio-economic development
start in the economy. Uttar Pradesh is having low urbanization as compared to other
states like Gujarat, Maharashtra, Kerala, Tamil Nadu, Karnataka and also
Uttarrakhand. In table 2.8 we show the status of rural and urban population in Uttar
Pradesh.
Table 2.8: Classified village and cities in Uttar Pradesh, 2001
Population
distribution
Village City and city group
Number per cent of total
rural population Number
per cent of total
urban population
Less than 200 9096 0.65 - -
200-499 16879 4.57 - -
500-999 25614 14.26 - -
1000-1999 27217 29.31 1 0.01
2000-4999 16573 36.96 11 0.14
5000-9999 2266 11.26 133 3.04
10000-19,999 279 2.62 258 10.52
20,000-49,999 16 0.29 181 15.40
50,000-99,999 1 0.08 51 9.88
More than 1 Lakh - - 54 61.20
Total 97942 100.0 689 100.0
Source: Sankhkeya Diary Uttar Pradesh. 2010 and 2012
52
Thus, according to 2001 census report 97,942 total villages were in Uttar
Pradesh, and major population was living in medium size villages. The total number
of city and city group of Uttar Pradesh were 689 in 2001, and major urban population
are living in big cities. In the big cities 61.20 per cent of total urban population is
living, and the medium size village, 36.96 per cent of total rural population was
residing. Thus we can says that major diversification can be found in Uttar Pradesh,
because major rural population is living in small and medium size villages but major
urban population is living in big cities.
2.4(f) Religion wise population distribution in Uttar Pradesh
Uttar Pradesh resides the broad religious communities like India. In Uttar
Pradesh major religious communities are Hindu, Muslim, Christian, Sikh, Baudh and
Jain. Thus, we can say that all religious community people are found in India and also
in Uttar Pradesh. So India and Uttar Pradesh shows diversity and cultural integration.
Table 2.9 shows the religion wise population distribution in Uttar Pradesh and India.
Table 2.9: Religion wise population distribution in Uttar Pradesh and India -
2001
Main religious community Percentage of Total Population
Uttar Pradesh India
Hindu 80.6 80.5
Muslim 18.5 13.4
Christian 0.1 2.3
Sikh 0.4 1.9
Baudh 0.2 0.8
Jain 0.1 0.4
Other non classified 0.0 0.6
Total 100.0 100.0
Source: Sankhakeya diary Uttar Pradesh 2010.
According to the above table, the largest share of Hindu population can be
seen in both Uttar Pradesh and India. According to 2001 census report it is 80.6 per
cent in Uttar Pradesh and 80.5 per cent in India. Then the second largest share is
formed by the Muslim population which is 18.5 per cent in total population in Uttar
Pradesh, while in India it is 13.4 per cent. The other major religious communities are
Christian (0.1 per cent), Sikh (0.4), Baudh (0.2 per cent) and Jain (0.1). On the other
hand, in India these religious communities are begger which are Christian (2.3 per
cent), Sikh (1.9 per cent), Baudh (0.8 per cent) and Jain (0.4).
53
2.4(g) The Region wise main demographic distribution in Uttar
Pradesh
The region wise demographic data also shows that the diversity is found in
Uttar Pradesh. The four regions of Uttar Pradesh are Western, Eastern, central and
Bundelkhand. The region wise demographic distribution of Uttar Pradesh is shown in
table 2.10 where we show region wise demographic and other development
indicators.
Table 2.10: Region wise demographic and other distribution in Uttar Pradesh
(2011)
Economic
region Total
Population
(In Lakh)
Population
share per
cent
Geographical
area in
Thousand sq.
Km. ( per cent
share)
Population
density
(person per
sq. Km.)
Sex
Ratio
1 Eastern 798 40.0 86 (35.6) 929 949
2 Western 742 37.2 80 (33.2) 937 879
3 Central 359 18.0 46 (19.0) 680 888
4 Bundelkhand 97 4.8 29 (12.2) 328 876
Uttar Pradesh 1996 100.0 241 (100.0) 828 908
Source- Uttar Pradesh ki Arthik Samiksha 2010-2011
The Eastern region is well endowed in population resource geographical area
and sex ratio, because in this region in 2011 census data shows the population shares
40.0 per cent of state population, 35.6 per cent geographical area and sex ratio is 949
female per thousand male population. Population density in Eastern region is the
second highest after the Western region the third position taken by Central region and
Bundelkhand region in the last. The Western region is the second in population size,
area and sex ratio. The Central region is at the third position in population, area and
sex ratio, and Bundelkhand region have the forth position in all indicators (population,
area, density and sex ratio). Thus, we can say regional inequality exists in Uttar
Pradesh.
2.5. Educational Development in Uttar Pradesh:
Human capital formation and quality of population depend on human skills.
For this literacy of population is a first stage. Before independence, there was lack of
any positive effort to increase literacy rate. So, in 1951 literacy rate of Uttar Pradesh
was only 12 per cent, in which female literacy was only 4 per cent.
54
2.5(a) Literacy rate in Uttar Pradesh and India:
In India varying literacy rate could be found because some States are very
high in terms of literacy rate and some state are having poor literacy rate. The literacy
rate of Uttar Pradesh has been below the national average. Table 2.11 shows the State
wise literacy rate in India.
Table 2.11: Literacy rate of Uttar Pradesh in India
Sl.
No.
State 2001 2011
Person Male Female Person Male Female
1 Kerala 90.9 94.2 87.7 93.91 96.02 91.98
2 Himachal Pradesh 76.5 85.3 67.4 83.78 90.83 76.60
3 Maharashtra 76.9 86.0 67.0 82.91 89.82 75.48
4 Tamil Nadu 73.5 82.4 64.4 80.33 86.81 73.86
5 Uttarakhand 71.6 83.3 59.6 79.63 88.33 70.70
6 Gujarat 69.1 79.7 57.8 79.31 87.23 70.73
7 West Bengal 68.6 77.0 59.6 77.08 82.67 71.16
8 Punjab 69.7 75.2 63.4 76.68 81.48 71.34
9 Hariyana 67.9 78.5 55.7 76.64 85.38 66.77
10 Karnataka 66.6 76.1 56.9 75.60 82.85 68.17
11 Meghalaya 62.6 65.4 59.6 75.48 77.17 73.78
12 Orissa 63.1 75.3 50.5 73.45 82.40 64.36
13 Assam 63.3 71.3 54.6 73.18 78.81 67.27
14 Chhattisgarh 64.7 77.4 51.9 71.04 81.45 60.59
15 Madhya Pradesh 63.7 76.1 50.3 70.63 80.53 60.02
16 Uttar Pradesh 56.3 68.8 42.2 69.72 79.24 59.26
17 Andhra Pradesh 60.5 70.3 50.4 67.66 75.56 59.74
18 Jharkhand 53.6 67.3 38.9 67.63 78.45 56.21
19 Rajasthan 60.4 75.7 43.9 67.06 80.51 52.66
20 Arunachal
Pradesh 54.3 63.8 43.5 66.95 73.69 59.57
21 Bihar 47.0 59.7 33.1 63.82 73.39 53.33
India 64.8 75.3 53.7 74.04 82.14 65.46
Source: Uttar Pradesh ki arthik samikshia 2010-2011
The above table shows that in the India the highest literacy rate has been in
Kerala because this is at the first position in 2011 and 2001. The second position is
occupied by Himachal Pradesh, third position Maharashtra, fourth position Tamil
Nadu and at the fifth position of Uttarakhand state. According to 2011 census data in
India last four States are Jharkhand (18th
rank), Rajasthan (19th
rank), Arunachal
Pradesh (20th
rank) and Bihar (21th
rank) in India. Thus Kerala is at the top position
and Bihar is at the bottom position in the literacy rate. Uttar Pradesh has 69.72 per
cent literacy rate in which male literacy is 79.24 per cent and female literacy 59.26
per cent its rank among the states is 16. The gap of literacy rate between Kerala and
55
Uttar Pradesh is 24.19 per cent, in the male literacy gap is 16.78 per cent and female
literacy this gap is 35.74 per cent. Thus we can say that each census year literacy rate
of Uttar Pradesh has been increasing but still Uttar Pradesh is also in the low literacy
club.
Table 2.12 shows that in 1951 literacy rate in Uttar Pradesh was only 12.02 per cent in
which male literacy rate was 19.17 and female literacy rate was 4.07 per cent. On the
other hand, the literacy rate of India was 27.2 per cent for male and 8.9 per cent for
female, and the total was 18.3 per cent. Thus it was at low level. But literacy rate has
continued to improve later. In 1981 literacy rate of Uttar Pradesh was 32.65 per cent.
In same year India‟s literacy was 41.4 per cent. We see that from 1951 to 1981 male
literacy increased more than the female literacy. But after 1981 male and female both
literacy rates increased. In 2011, literacy rate of Uttar Pradesh is 69.72 per cent in
which male literacy 79.24 per cent and female literacy is 59.72 per cent. On the other
hand India‟s literacy in 2011 is 74.04 per cent in which male literacy 82.14 per cent
and female literacy 65.46 per cent. Thus both Uttar Pradesh and India‟s literacy have
increased much faster. But currently, literacy rate in Uttar Pradesh is below the
National average. Table 2.12 shows the literacy rate in Uttar Pradesh and India.
Table 2.12: Literacy Rate of Uttar Pradesh and India
Year Uttar Pradesh India
Male Female Persons Male Female Persons
1951* 19.17 4.07 12.02 27.2 8.9 18.3
1961* 32.08 8.36 20.87 40.4 15.3 28.3
1971* 35.01 11.23 23.99 46.0 22.0 34.5
1981 46.65 16.74 32.65 56.5 29.5 43.7
1991 54.82 24.37 40.71 64.1 39.3 52.2
2001 68.80 42.20 56.30 75.80 52.10 64.83
2011 79.24 59.26 69.72 82.14 65.46 74.04
Source: Census of India data 2011.
Note:-Literacy rate for 1951, 1961, and 1971 related to population aged 5 year and above.
The literacy rates for the year 1981 and 1991 and onward related to the population aged 7
years and above.
2.5(b) Economic Region wise literacy in Uttar Pradesh
Uttar Pradesh is divided in the four economic regions which are- Western,
Eastern, Central and Bundelkhand. The socio-economic development of one region is
56
different from the other region. So, the region-wise literacy rate is also different in
Uttar Pradesh. In table 2.13 we show the region-wise literacy in Uttar Pradesh.
Table- 2.13 Economic region wise literacy rate in the Uttar Pradesh
Sl.
No.
Economic
region Literacy Rate in 2001 Literacy Rate in 2011
Person Male Female Person Male Female
1 Bundelkhand 59.3 73.1 43.1 70.69 81.39 58.44
2 Central 57.6 68.1 45.5 70.50 78.30 61.68
3 Western 57.4 68.8 44.0 69.35 78.14 59.36
4 Eastern 54.3 68.6 39.1 69.59 80.47 58.20
Uttar Pradesh 56.3 68.8 42.2 69.72 79.24 59.26
India 64.8 75.3 53.7 74.04 82.14 65.46
Source- Uttar Pradesh Ki Arthik Samiksha 2010-2011
The above table shows that the highest literacy rate was found in Bundelkhand
region in 2001 and 2011. The Central region is at the second position, Eastern region
is third position and Western region is at the fourth position in the literacy rate in
2011. In the female literacy rate the Central region is the first, Western region is the
second, Bundelkhand region is third and Eastern region is at the fourth position. Thus,
we can say that region wise literacy position is different by with marginal difference.
2.6 Economic development profile of Uttar Pradesh:
Broadly we divide occupations into three types Agriculture, Animal
husbandry, Forestry and fishery are collectively known as „Primary activities. They
are primary because their products are essential or vital for human existence. They are
carried on with the help of nature mainly. Manufacturing industries, both small and
large scale, are known as ‘Secondary activities’, Mining is sometimes included under
secondary activities but properly speaking, it is a primary activity. Transport,
Communications, Banking, Finance and other services are „Tertiary activities’,
which help the primary and secondary activities.
2.6(a) Net Income position of Uttar Pradesh and India:
Net income means the value of total output produced within one year in the
economy and it excludes depreciation cost. The total output includes the value of
agricultural outputs, industrial outputs and tertiary sector outputs. There are the direct
relationship between state economic activity and State Gross Domestic Product
(GDP), because state economic activity increases then state GDP also increases. State
income and per capita income is the major development indicator of state in an
economic view. State GDP means the value of final output (goods and services)
57
produced within one year and within its geographical boundary. Thus, state income
describes the economic status of the state. The state income at constant price is real
income because it does not include price increase. Table 2.14 shows the state income
at current prices and constant prices and also shows share of the state income in the
national income of India.
Table 2.14: Net State Income position of Uttar Pradesh and India
Year
Net State Income at
current price (Rs.
Crore)
Net State Income at
constant price (at 2004-
05) (Rs. Crore)
per cent share of Net
State Income in Net
National Product
Uttar
Pradesh
India Uttar
Pradesh India
At
current
Price
At
constant
price
2004-05 231037 2629198 231037 2629198 8.8 8.8
2005-06 258648 2999792 244477 2878410 8.6 8.5
2006-07 296497 3500396 263763 3150904 8.5 8.4
2007-08 335829 4076352 280679 3454264 8.2 8.1
2008-09 391224 4685873 300286 3669890 8.3 8.2
2009-10 458162 5439557 321387 3946540 8.4 8.1
Source: Uttar Pradesh ki Arthik Sammiksa 2010-2011
The table 2.14 shows that in 2004-05, state income was Rs. 231037 crore and
national income was Rs. 2629198 crore at current prices. The share of State in the
national product was 8.8 per cent in 2004-05. The state‟s share in the national product
got further lower in 2009-10 at 8.4 per cent with marginal improvement at current
price over the producing years. The share of Uttar Pradesh in the National product
was the lowest in 2007-08 at 8.2 per cent. Thus, we can say that if the share of Uttar
Pradesh in the national product has declined it means some other states are better
performing as compared to Uttar Pradesh. This data also describes Uttar Pradesh is
performing poorly when compared to some other Indian states and the national
economy as such.
Agriculture has been the main occupation in Uttar Pradesh. The largest share
of population is dependent on the agriculture, on both direct and indirect forms. But
the share of the agriculture in the state income has been gradually declined over the
years showing sign of development. The tertiary and secondary sectors shares
continue to increase. Table 2.15 shows that in 1960-61, Primary sector share was 60.2
per cent and secondary sector share was 11.1 per cent and tertiary sector share 28.7
per cent in the state income. This ratio was changed due to development of Uttar
Pradesh. In 1990-91, primary, secondary and tertiary sector shares were 42.6 per cent,
58
20.8 per cent and 36.6 per cent in the state income. In 2000-01 these shares changed
to 37.6 per cent, 18.0 per cent and 44.4 per cent in state income. In 2009-10 the state
income contribution of primary sector was 30.1 per cent where secondary sectors,
share became 22.2 per cent and tertiary sector contribution increased to 47.7 per cent.
The table shows that after independence share of primary sector has continued to
decline. The secondary sector has been growing slowly and the tertiary sector has
been growing rapidly in Uttar Pradesh as compare to previous year. The table 2.15
shows the sector wise contribution of state income of Uttar Pradesh at current price.
Table 2.15: Sector wise Contribution of state income in Uttar Pradesh, at current
price (in per cent)
Year Primary sector Secondary sector Tertiary sector Total
1960-61 60.2 11.1 28.7 100.0
1970-71 60.3 14.9 24.8 100.0
1980-81 52.3 15.3 32.4 100.0
1990-91 42.6 20.8 36.6 100.0
2000-01 37.6 18.0 44.4 100.0
2005-06 31.5 21.5 47.0 100.0
2009-10 30.0 21.4 48.5 100.0
2010-11* 29.3 21.1 49.6 100.0
2011-12+ 30.5 20.5 49.1 100.0
*Revised Estimates, +Advance Estimates
Source: Sankhkiya diary Uttar Pradesh, 2006, 2010 and 2012
Thus, the above table describes that primary sector was been the major sector
in the state economy because its contribution was more than 60 per cent initially.
However, gradually the primary sector‟s role has declined in the state income but the
population dependency did not decline. The secondary sector contribution has
increased with slow growth rate and the tertiary sector contribution has increased with
high growth rate. In the present the tertiary sector is now the major contributor and
primary sector is the next contributor in the state income while the secondary or the
industrial sector has been showing stagnation as its share has remained unchanged for
last several years. However, the pattern of structural transformation of the state
income of Uttar Pradesh has been taking place as slow pace.
2.6(b) Per Capita State Income and National Income:
The per capita state income means average income of the people in the state
and per capita national income means average income of the people in the country.
The per capita state income in Uttar Pradesh is half as compared to the national
average; it means the per capita income of the other states is more than Uttar Pradesh.
59
The income at current price is calculated by present value of production while in
constant price income shows the real income because it does not including inflation.
Table 2.16 shows the per capita state income and national income at current and
constant prices.
Table 2.16: Per capita State Income and National Income
(At current and constant price)
Year
Per Capita Income at current
price (Rs.)
Per Capita income at constant price
(2004-05)
Uttar
Pradesh India
Difference
(3-2)
Uttar
Pradesh India
Difference
(6-5)
2004-05* 12950 24143 11193 12950 24143 11193
2005-06* 14222 27123 12901 13443 26025 12582
2006-07* 15998 31198 15200 14232 28083 13851
2007-08* 17786 35820 18034 14866 30354 15488
2008-09* 20342 40605 20263 15613 31801 16188
2009-10+ 23395 46492 23097 16411 33731 17320
* Final Estimates, + Advance Estimates
Source: Uttar Pradesh ki Arthik samikshia 2010-2011
The above table shows that in 2004-05 per capita state income was Rs. 12950.
The difference shows that in 2004-05 state per capita income was Rs. 11193 lower
than the national average. In 2008-09 the per capita income of Uttar Pradesh was Rs.
20342 at current price and it was half the national average. In 2009-10 the per capita
income of Uttar Pradesh is Rs. 23395 at current price and this was also half of the
national average. Thus the above table shows that per capita income of Uttar Pradesh
has been lower than half of the national average. This brings out the low per capita
income of Uttar Pradesh as compared to the most other states in India. On the other
hand this table shows in lower economic growth in Uttar Pradesh as compared to the
growth performance of the national economy.
2.7. Agriculture Development in Uttar Pradesh:
The economy of Uttar Pradesh is dominated by agriculture, which employs
about two third of the total work force and contributes one fourth of the state income.
The average size of holdings is only 0.86 Hectare, while 75.4 per cent of holdings are
below one Hectare. Uttar Pradesh is the largest food grain producer state in India. In
Uttar Pradesh the major food grain production is Rice, Wheat, Chickpea and pigeon
pea. Sugarcane is the major commercial crop of the state, largely concentrated in the
western and central regions of the state. Uttar Pradesh is also a major producer of
vegetables, fruits and potato. In table 2.17 we can show the status of agriculture
production in Uttar Pradesh.
60
Table 2.17 Major crops production in Uttar Pradesh (in thousand million tons)
Crops 2001-02 2007-08 2008-09
2009-10
2010-11
(A). Food grain 44135 43032 47382 44664 48192
Cereal 41759 41405 45297 42759 46176
1.Rice 12856 11884 13047 11794 12334
2.Wheat 25498 26312 28977 27777 30487
3.Barley 592 366 414 371 409
4.Jwar 309 193 211 193 207
5.Bazra 968 1411 1397 1516 1562
6.Maize 1517 1231 1244 1101 1169
7.Other cereal 19 8 7 6 8
(B). Pulses 2376 1627 2085 1906 2017
8.Urad 178 249 249 229 344
9.Moong 30 31 34 31 56
10.Arhar 456 325 298 220 301
11. Gram 817 406 638 504 542
12.Other pulses 895 616 866 922 774
(C). Oilseeds 725 762 836 808 893
13.Rapeseed 574 627 701 681 703
14.groundnuts 90 57 64 58 86
15.other oilseeds 61 78 71 69 104
(D). Other crops
16.Sugarcane 117982 118736 111034 118958 116878
17.Potato 9583 11513 10635 12850 12780
18.Tobacco 137 123 138 144 127
19.Cotton 1 1 1 1 1
20.Sanai 2 1 1 * 1
Note: *no production
Source: Sankhiya diary Uttar Pradesh 2006, 2010 and 2012
The average yields of major crops in the state are considerably lower than
those in the agriculturally developed states like Punjab and Haryana. A number of
factors are responsible for low productivity and slow growth of agriculture in the
state, the most important factor being the very small size of holdings in the state and
low investment in the farm sector of Uttar Pradesh.
2.7(a) The average productivity for major crops in Uttar Pradesh
and India
The average productivity means per hectare production. Uttar Pradesh is a
major agriculture producing state in India because the climate, land and Ganga –
Yamuna plain area help in production and productivity. In the total production, Uttar
Pradesh is the highest agricultural producing state in the India. In some crops the
productivity of Uttar Pradesh is higher than national average. Table 2.18 shows the
average productivity for major crops in Uttar Pradesh and India.
61
Table 2.18: Average productivity for major crops in Uttar Pradesh and India
(Kg. Per ha.)
Major Crops Uttar Pradesh India
2008-09 2009-10 2008-09 2009-10
Wheat 2997 2854 2907 2830
Rice 2177 2096 2178 2130
Potato 20546 24792 18810 N.A.
Sugar Cane 52467 59153 64553 66099
Source: Uttar Pradesh Ki Aarthik Samikhsa 2010-2011.
The above table shows that the Wheat productivity in Uttar Pradesh 2997 kg.
in 2008-09 and 2854 kg. per hectare in 2009-10. On the other hand in India wheat
productivity was 2907 kg. in 2008-09 and 2830 kg. per hectare in 2009-10. Thus the
average productivity of Wheat in country is lower than Uttar Pradesh. The
productivity of Rice was 2177 Kg. in 2008-09 and 2096 Kg. per hectare in 2009-10 in
Uttar Pradesh. But in India the Rice productivity have 2907 Kg. per hectare in 2008-
09 and 2130 Kg. per hectare in 2009-10. Productivity of rice is lower than Uttar
Pradesh. According to above table the national productivity of Wheat, Rice and Potato
is lower than in Uttar Pradesh, but the productivity of Sugar Cane is higher as
compared to Uttar Pradesh.
2.7(b) Major Constraint’s inhibiting Agriculture growth:
The Agriculture production of Uttar Pradesh has increased during planning
period and much benefit is received from the „Green Revolution‟. The Green
revolution has increased agriculture production and productivity in Uttar Pradesh.
After Green revolution Uttar Pradesh has become food self-sufficient and also it is
included in the club of food grain exporting states. But the agriculture productivity of
some major crops has been lower than some of the states. Because the Rice, Wheat,
Barley and some other crops productivity in Punjab and Haryana is higher than in
Uttar Pradesh. I describe some major constraints which are inhibiting agriculture
growth and productivity in Uttar Pradesh.
Small and fragmented size of land holdings.
Lack of proper management and maintenance of surface irrigation systems for
reaping the benefit of maximum potential.
Decline of public investment in agriculture.
Inadequate research and development.
Underdevelopment of credit flow and institutional finance.
Inadequate participation of private sector in the commercialization of
agricultural sector.
62
Around three-fourth cropped area in the state is irrigated. Private tube-wells
are the major source of irrigation, followed by canals. However the cropping intensity
in the state is only 154 per cent, much lower as compared to the states like Punjab and
Haryana, which have a cropping intensity of 192 per cent and 173 per cent
respectively. Agriculture in the state showed dynamism during the Seventies and
Eighties in the wake of green revolution. However, since the early Nineties the
performance of the agriculture sector in the state has been rather poor as reflected by
the declining growth rates of the production and productivity for all crops. Sharp year
to year fluctuation in food grain output and total agricultural produce has also been
observed in the state indicting the dependence of agriculture on monsoons despite the
fact that a high proportion of cultivated area in Uttar Pradesh is irrigated.
2.7(c) Workforce Participation in Uttar Pradesh:
Earlier the highest workforce was dependent on the agricultural in Uttar
Pradesh. In present time also the highest workforce participation in agriculture is
shown in table 2.19.
Table 2.19: Workforce participation in Uttar Pradesh (per cent)
SI.
No.
Items Number of Workers (Lakh)
percentage of
workers
1991 2001 1991 2001
1 Cultivators 206.87 221.68 53.2 41.1
2 Agriculture labour 76.09 134.01 19.6 24.8
3 Household Industry workers 9.73 30.31 2.5 5.7
4 Other workers 96.12 153.84 24.7 28.5
Total 388.81 539.84 100.0 100.0
Source: Uttar Pradesh ki artthik samiksha 2005-06 and 2010-2011
The table 2.19 has shown that in 1991 cultivators were 53.2 per cent but in
2001 the share declined and it became 41.1 per cent. Agriculture labour was 19.6 per
cent in 1991 which increased in 2001 to 24.8 per cent. The household industry
workers position also increased in 2001, because in 1991 it was only 2.5 per cent and
in 2001 its share is 5.7 per cent. The other worker position in 1991 was 4.7 per cent
which in 2001 became 28.5 per cent. Thus the share of cultivators declined but the
other sector workers shares increased due to improvement of state economy.
However, the increasing share of farm labour is a cause for worry and this also
reflects upon poor state of agriculture and non-agriculture in Uttar Pradesh.
63
2.8 Industrial Development profile of Uttar Pradesh:
In recent years, Uttar Pradesh has witnessed significant growth and structural
change in the factory sector of industries. The modern sector of industries, such as
Chemical and Engineering have experienced relatively faster growth than the
traditional industries such as sugar and textiles. The industrial and service sector
investment policy of Uttar Pradesh announced in 2004 emphasized the expansion of
agro- based, chemical- based and information technology based industries.
Uttar Pradesh has a large base of small scale industries (SSI). According to
third census of (SSI), there were 17.08 lakh small scale enterprises in the state, out of
which 9.5 per cent were reported to be registered. Around two-third of these units are
located in rural areas. The gross fixed investment in small scale industries was
Rs.17,289 crore and their gross output is estimated at Rs.27,423 crore. Despite the
significant increase in industrial production during the plain period, the state still
lacks the requisite level of industrialisation. Industrial growth rate which was recorded
at 8.6 per cent during the late eighties declined to 3 per cent during the early nineties.
Growth rate of industries was 6.5 per cent per annum during the tenth plan. The value
of Industrial Output of various industries in Uttar Pradesh is shown in table-2.20.
Table 2.20: The Value of Industrial Output in Uttar Pradesh (Rs. crore)
Sl. No. Category of Industry Year
2001-02 2005-06 2006-07
1
Agriculture based industry
19185
(27.47)
27264
(27.32)
32189
(22.69)
2
Textile based
Industry
5708
(8.17)
7277
(7.29)
7859
(5.54)
3
Animal based
Industry
2290
(3.28)
3357
(3.36)
3714
(2.62)
4
Forest based
Industry
147
(0.21)
256
(0.25)
269
(0.19)
5
Minerals based industry
341
(0.49)
546
(0.54)
13974
(9.85)
6
Chemical based industry
8482
(12.14)
10673
(10.69)
11996
(8.45)
7
Engineering based
industry
12976
(18.58)
22073
(22.19)
35957
(25.35)
8 Other industries 20704
(29.65)
28339
(28.38)
25878
(25.29)
Total
69833
(100.0)
99794
(100.0)
1,41,837
(100.0)
Note - Figure in brackets is shows the percentage share in total output.
Source: Sankhkiya diary Uttar Pradesh 2010.
The table 2.20 has shown that in 2001-02 the highest industrial output value
was by agriculture based industry and then engineering based industry. The share of
64
agriculture based industry in 2001-02 was 27.32 per cent in total output, and
engineering based industry contributed 18.58 per cent. Thus other major industries in
Uttar Pradesh are chemical based industry (12.14 per cent) and textile based industry
(8.17 per cent). In 2006-07 better performance industries were Engineering based
industry (25.35 per cent) Agriculture based industry (22.69 per cent), Mineral based
industry (9.85 per cent) and Chemical based industry (8.50 per cent). This table also
shows that the actual value of these industrial outputs have increased over the years.
However such pattern does not give much optimism for industrial growth in Uttar
Pradesh.
2.8.1 Industrial Growth Rate in Uttar Pradesh during Five Year
Plans:
After independence industrial growth rate of Uttar Pradesh remained in slow
motion. During planning period, industrial growth rate of Uttar Pradesh has seen ups
and down trend as shown in table 2.21 and it shows that the industrial growth rate in
Uttar Pradesh remained in slow motion, highlighting weak industrial base in Uttar
Pradesh. From first five year plan to fourth- five year plan industrial growth rate was
around 3 per cent, wherein during the first five year plan growth rate was 2.3 per cent
and in the second five year plan growth rate was only 1.7 per cent per annum.
Fifth five year plan to seventh five year plan average industrial growth rate of
Uttar Pradesh was above 10 per cent. This is a rapid industrial growth period in Uttar
Pradesh. But this trend did not continue. During the eighth five year plan the
industrial growth rate of Uttar Pradesh was came down to 4.2 per cent per annum, and
in the ninth five year plan industrial growth rate become the worst (-) 4.3 per cent.
This growth rate is very poor in total planning period. Then during the Tenth five year
plan industrial growth rate improved to 6.6 per cent and in the Eleventh five year plan
government target to achieve 12.0 per cent industrial growth rate has fallen (0.9 per
cent) and bringing pessimism again. Thus the industrial growth scenario has been
poor and non-encouraging. This does not augur well for the growth of the economy of
Uttar Pradesh.
65
Table 2.21: Industrial growth rates during five year plan in Uttar Pradesh
Sl. No. Five year plan Duration Annual growth rate (per
cent)
1 First five year plan 1951-56 2.3
2 Second five year plan 1956-61 1.7
3 Third five year plan 1961-66 5.7
4 Three annual plan 1966-69 1.2
5 Fourth five year plan 1969-74 3.4
6 Fifth five year plan 1974-79 9.4
7 Sixth five year plan 1980-85 11.8
8 Seven five year plan 1985-90 10.9
9 Two annul plan 1990-92 1.1
10 Eight five year plan 1992-97 4.2
11 Nine five year plan 1997-02 -4.3
12 Tenth five year plan 2002-07 6.6
13 Eleven five year plan 2007-12 0.9
14 Twelfth five year plan 2012- 17 12.0*
Note: *Target
Source: Uttar Pradesh ki Arthik Samiksha 2010-2011
The above table shows that during first five year plan, annual industrial
growth rate has been 2.3 per cent and in the second five year plan it come down to 1.7
per cent, in the third five year plan annual industrial growth rate has been higher 5.7
per cent and three annual plans average growth rate was very low at 1.2 per cent. This
table shown that during the sixth plan highest industrial growth rate was achieve in
Uttar Pradesh and during the Ninth five year plan the growth rate has been the worst
as it was negative growth rate. In fact, industrial growth could not be sustained and
satisfactory in Uttar Pradesh.
2.9 Poverty and Unemployment in Uttar Pradesh:
Poverty can be defined as a social phenomenon in which a section of the
society is unable to fulfil even its basic necessities of life. When a substantial segment
of the society is deprived of the minimum level of living and continues at a bare
subsistence level, that society is said to be plagued with mass poverty. Thus, Uttar
Pradesh has a big challenge in poverty and unemployment.
In economic literature are used two types of poverty standards namely;
absolute and relative. In the absolute standard, minimum physical quantities of
cereals, pulses, milk butter etc. are determine for a subsistence level and then price
quotations convert there in to monetary terms from the physical quantities. All the
aggregate quantities included a figure expressing per capita consumer expenditure is
66
determined. The population whose level of income (or Expenditure) is below the
figure is considered to be the below poverty line.
According to the Relative standard income distribution of the population in
different income groups is estimates and comparison of the levels of living of the top
5 to 10 per cent with the bottom 5 to 10 per cent of the population reflects the Relative
standard of poverty. It could be more than this range.
2.9.1 Poverty in Uttar Pradesh:
Poverty is the big problem in Uttar Pradesh. Earlier poverty line was
determined at the national level and same was being used for the States also. But after
1993 recommendation of Lakdawala committee, poverty line was determined for the
state level. Thus, the poverty line is determined at the State for rural and urban
population. If a person‟s monthly income/expenditure falls below this level, he will be
considered to be below poverty line.
In 2004-05 rural per capita monthly expenditure was Rs. 365.84 and it was Rs.
483.26 in urban Uttar Pradesh. If a person cannot afford this level, he is clubbed in the
poor category. The national Sample survey organization (NSSO) provides estimates
for poverty. The table 2.22 shows the poverty level in Uttar Pradesh and India, since
1973-74 which is estimated generally an auinquennial basis.
Table 2.22: Size of poverty in Uttar Pradesh and in India
Estimation year Uttar Pradesh India
Rural Urban Total Rural Urban Total
1973-74 56.53 60.09 57.07 56.4 49.0 54.9
1977-78 47.60 56.23 49.05 53.1 45.2 51.3
1983 46.45 49.82 47.07 45.7 40.8 44.5
1987-88 41.10 42.96 41.96 39.1 38.2 38.9
1993-94 42.28 35.39 40.85 37.3 32.4 36.0
1999-2000 31.22 30.89 31.15 27.1 23.6 26.1
2004-05(URP Consumption basis) 33.40 30.60 32.80 28.3 25.7 27.5
2004-05(MRP Consumption basis) 25.3 26.3 25.5 21.8 21.7 21.8 Source: Uttar Pradesh ka arthik vikas by Dr. M.K. Agarwal and Indian Economy by Dutt and
Sundaram 64th revised edition in 2012.
Table 2.22 has shown that the poverty level is relatively high in Uttar Pradesh.
However, poverty level has gone down in state over time, declining from 57.07 per
cent in 1973-74 to 32.80 per cent in 2004-05. During the corresponding period
poverty ratio at the national level declined from 54.9 per cent to 23.6 per cent. Despite
the substantial decline in the poverty ratios, the absolute number of poor has remained
high in the state level. Almost 6 million people in Uttar Pradesh were living below the
67
poverty line in 2004-05 constituting over one-fifth of the total poor in country living
in the state, on the basis of the uniform recall period.
2.9.2 Factor Responsible for High Poverty Ratio in Uttar Pradesh:
Higher population growth.
Sluggish and poor quality of economic growth.
Excessive dependence on agriculture.
High degree of inequality in the distribution of income and asset and
widespread landlessness.
Low level of investment in the economic and social infrastructure.
Low literacy level.
Social deprivation.
2.10. Status of Unemployment in Uttar Pradesh:
In a developing economy unemployment is a chronic problem, and this is
shifted from generation to generation. In a developing economy structural and
invisible unemployment is more prevalent. Uttar Pradesh is also facing these types of
unemployment. The meaning of unemployment is when a person is physically fit and
he wants to do work, and he can‟t find any suitable work. In Uttar Pradesh like
developing economy poverty and unemployment are co-related to each other. Because
the main cause of poverty is unemployment. The measurement of unemployment uses
various methods, but is absolutely true that Uttar Pradesh mainly faces problems of
unemployment. In India, national and state level unemployment measure by national
sample survey organization (NSSO) in every five years on the basis of direct field
survey on door to door. The table 2.23 shows the unemployment position in Uttar
Pradesh and India.
Table 2.23: Unemployment position in Uttar Pradesh and India
(Current daily status)
NSSC Round Uttar Pradesh India
Rural Urban Rural Urban
43rd
(1987-88) 3.2 5.0 5.3 9.4
50th
(1993-94) 3.1 4.8 5.6 7.4
55th
(1999-2000) 3.6 6.2 7.2 7.7
61st(2004-05) 3.7 6.3 8.3 8.3
66th
(2009-10) - - 6.8 5.8
Source: Uttar Pradesh ka arthik vikas by Dr. M.K.Agarwal and Indian economy by
Dutt and Sundaram.
68
Data provided in the table 2.23 reveal that unemployment rates are traditionally
higher in urban areas than in rural areas. The unemployment rate was 3.2 per cent in
1987-88 in rural areas, and the urban employment rate was 5.0 per cent (CDS basis).
There was marginal decline in 1993-94 in as it came down to 3.1 per cent of rural area
and 4.8 per cent of urban in Uttar Pradesh. Then unemployment rate increased,
because in 2004-05 in rural areas unemployment rate became 3.7 per cent and in
urban area it‟s went up to 6.3 per cent.
On the other hand, in India rural unemployment rate in 1987-88 was 5.3 per
cent but the urban unemployment rate was of the order of 9.4 per cent, significantly
higher. After 1993-94 the period liberalisation, rural unemployment rate increased to
8.3 per cent while urban unemployment marginally declined to 8.3 per cent during
1993-94 to 2004-05. High level of unemployment in the urban areas could be
explained by a larger proportion of organised sector unemployment which forced
people to either remain in employment or unemployed since the chances for getting
engaged in low productive activities are relatively fewer. As against this the rural
areas indicate higher level of disguised unemployment. Thus in Uttar Pradesh rural
areas have disguised and seasonal unemployment, while urban areas mainly reflect
educated and open unemployment.
2.11 Regional Disparities in Uttar Pradesh:
Uttar Pradesh is the fourth largest state in India in terms of geographical area.
There exist many socio- economic disparities. Uttar Pradesh is economically clubbed
into four, economic region- Western, Central, Eastern and Bundelkhand region. The
western region is comprised of 30 districts, central region has 11 districts, the eastern
region has 27 districts and bundelkhand region belonged to 7 districts. It appears that
the western and central regions are economically better developed, while eastern and
bundelkhand regions are backward in terms of all development indicators. Table 2.24
shows that the regional disparities in various development indicators.
69
Table 2.24: Various development indicators among the economic region in Uttar
Pradesh
Sl.
No.
Development
Indictors Eastern Western Central Bundelkhand
Uttar
Pradesh
1 Population (in lakh) 666.1 612.1 301.6 82.3 1662.0
2 Area (sq. Km.) 85845 79834 45834 29418 240928
3
Population density (per
sq. Km.) (2011)
929
937
680
328
828
4 Sex ratio 946 862 879 864 898
5
Decadal growth rate in
population (1991-
2001) (per cent)
percentage of
25.58
26.55
26.29
25.57
25.91
6
Urban population in
total population.
11.78
28.25
25.11
22.46
20.78
7
Scheduled caste
population in total
population (per cent)
21.15
18.17
26.10
25.14
21.15
8.
percentage share of
state population 40.10 36.80 18.10 5.00 100.0
9 Total literacy rate 54.27 57.36 57.58 59.30 56.27
10 Female literacy rate 39.13 43.96 45.42 43.11 42.22
11 Average size of family 6.8 6.5 5.9 6.1 6.5
Source: Sankhikiya diary 2010 and 2012 Uttar Pradesh
Thus, table 2.24 shows that regional diversities prevail in Uttar Pradesh, 2001
census report shows that highest population was in eastern region and it was followed
by western region. The highest population density is 776 people living per sq. Km. in
the Eastern region and the lowest population density is 280 people per sq. Km. in
Bundelkhand region. The highest sex ratio is also in the eastern region which is 946
female on 1000 male population and the lowest sex ratio is in Western region (862).
The highest decadal growth rate of population is in Western region and it is followed
by Eastern region.
2.12. Conclusion:
In conclusion we can say that Uttar Pradesh is the state of “variety and unity,”
because here varied socio-economic, cultural and religious characteristics are found as
in India. Uttar Pradesh has 7.33 per cent geographical area of India. It is the fourth
largest state after- Rajasthan, Madhya Pradesh and Maharashtra in terms of area. But
it is the most populated state in the country; its share in population is 16.49 per cent.
If Uttar Pradesh is considered as a country, it will be the fifth largest country in
population after- China, India, U.S.A and Indonesia. The socio-economic
development of Uttar Pradesh is similar with other states in India.
70
Uttar Pradesh touches natural and political boundary with mountain, river
and various states and one country (Nepal). In Uttar Pradesh, all seasonal crops (Rabi,
Khreef and Jayad) are found and this is providing congenial environment for
agricultural and other economic activities. On the other hand, after creation of
Uttrakhand the forest area of Uttar Pradesh has declined, but the state is enriched in
surface and ground water resources. In Uttar Pradesh some mineral resources are also
found.
Uttar Pradesh has been cradle of Indian civilization because all religious
communities and all social groups‟ are found here, but the large difference in the
human development between different religious communities and social groups is also
found. In terms of state wise value of human development, Uttar Pradesh has the 13th
position out of the 15 states in India. This shows low human development as
compared to some other states. Uttar Pradesh is the highest populated state in India
and also there is high population growth in comparison to national average. In Uttar
Pradesh maximum population is youth, and it may be major instrument of present and
future development. The growth rate of urbanization is also good for economic
development in Uttar Pradesh. Bulk of the population of Uttar Pradesh is living in
rural areas. After independence the literacy rate has improved but this is below the
national average and also that of many states.
In the economic analysis, the economic activities are divided in three parts-
Primary, Secondary and Tertiary activities. The tertiary activities help for primary and
secondary activities. In pre-development era agriculture was the main occupation
because the largest share of population was dependent on agriculture and it was the
major contributor in the state income. In the state income the agriculture share has
continued to decline with the development of tertiary and secondary sectors. However
the population dependency on agriculture cannot decline and this is posing challenge
to economic development in Uttar Pradesh. In the recent years Uttar Pradesh has
witnessed significant growth and structural changes in the modern industries. After
independence and during planning period industrial growth rate has slow motion in
comparison to other states. During planning period industrial growth has ups and
down trends in the states. In Uttar Pradesh poverty and unemployment are major
problems because one third of population is poor and sizeable youth population is
unemployed. Thus in Uttar Pradesh, low development and slow growth rate are the
main causes of poverty and unemployment.
Chapter Three
Development Profile of Bahraich District
CHAPTER THREE
DEVELOPMENT PROFILE OF BAHRAICH DISTRICT
Introduction:
Bahraich district is situated in the northern part of Devipatan division in Uttar
Pradesh. Its geographical position is (280
4’ to 270
4’) north latitude and (810
65’ to
830 0’) eastern longitude. According to census 2001 the area of Bahraich district was
5020 sq. km. which is 35.29 per cent of Devipatan division. District Bahraich has an
international border with Nepal on the northern part, District Barabanki and Sitapur
are in south, Kheri in west and Gonda and Srawasti are in eastern side of district
Bahraich. Northern part of the district is Tarai region which is covered by the dense
natural forest. Sarjoo, Ghaghra, Kaudiyala and Garuwa are the ever flowing rivers of
the district Bahraich. The soil of district Bahraich is fertile. Domat, Matiyar, Balui
and light Domat are the types of soils in the district. Due to fertile nature of land
greenery is spread throughout the district.
There are many mythological facts about the great historical value of district
Bahraich. It was famous as the capital of god Brahma, the maker of universe. It was
also known as part of Gandharva forest. Even today north east area of several hundred
square kms of the district is covered by the forest. It is said that Brahmaji developed
this forest covered area as the place of worship for Rishi's and Sadhus. Therefore this
place comes to be known as Brahmaich. According to some other historians in
middle age this place was the capital of ''Bhar '' dynasty. Therefore it was called as
Bahraich.
District Bahraich has enriched with the natural resource such as – Fertile land,
Himalayan Rivers and Forest resources. The major Himalayan rivers - Sharda, Saryu,
Rapti and Ghaghra are flowing through the Bahraich district. Besides this,
Katraniyaghat Wild Life Sanctuary is also found in the district. The Himalayan rivers
provide fertile soil and irrigation facility in the district and its neighbourhood. This
district has better position in the agriculture production and natural resources in Uttar
Pradesh. The Kateraniyaghat Wild Life Sanctuary is providing a secure and natural
habitat to wild animals and also providing woods, timber, fodder and a wide range of
non-wood products. This is the natural habitat for bio-diversity and repository of
72
genetic wealth, and playing the important role in environmental and economic
sustainability.
District Bahraich is divided in 4 Tehasils and 14 Development Blocks. Four
Tehsils are –Nanpara, Mahasi, Bahraich, and Kaisergang. Nanpara Tehasil is largest
in both terms like area and population. In Uttar Pradesh according to census 2011
Nanpara Tehsil has the second largest population, after Varansi Tehsil. In the district
14 Development Blocks are Mihinpurwa, Nawabganj, Balaha, Shivpur, Rishiya,
Chittaura, Mahsi, Tazwapur, Fakharpur, Huzurpur, Kaisergang, Zarwal, Payagpur and
Visesherganj.
In spite of these resources this is an economically and industrially backward
district in Uttar Pradesh. Agriculture is the main occupation of Bahraich district and
most of the people are living on agriculture. Their agricultural production process is
based on largely traditional technology. Here most of the areas get submerged in flood
during Kharif crops season. In the Bahraich district agricultural productivity is also
low. Bahraich district is backward in terms of road, transportation, industrial
development, human development, and social development. High level of poverty,
low per capita income, and low literacy rate, lack of better schools, colleges and
health care centres are also some features of Bahraich.
In the Bahraich district major Agricultural crops are- Food grains , cash and
horticulture crops .The major food grain crops are- Rice, Wheat, Barely, Maize and
Pulses like –Lentil, Phaselies mungdel (Urad) and Pigeon pea. The major cash crops
are –Sugarcane, Mentha oil and Vegetable crops and the Horticulture crops are-
Mango, Guava and Banana. Thus district Bahraich is enriched in the agriculture
production and producing Ravi, Kharif and Zayad crops.
In this chapter we shall provide development profile of Bahraich district. We
shall also describe the comparative development profile of Bahraich district with
other districts in Uttar Pradesh.
73
74
3.1 Geographical Area of Bahraich District:
District Bahraich is the enriched geographical area. The total area is 5020
square km in 2001, after separation of Shrawasti district. The percentage share of area
of Bahraich district has been 2.08 per cent of land area of Uttar Pradesh, and the
population distribution has been 1.63 percent of Uttar Pradesh. There is 67.1 percent
cultivated land area, 14.0 percent land under Forest area, 12 per cent land remains
Barren land and 6.9 per cent land area is under other uses. Bahraich is situated in tarai
area belt of fertile Land in Uttar Pradesh.
The climate of Bahraich District is divided in three – winter season, summer
season and Mansoon season. There is winter season from October to February,
summer season from March to June and monsoon season is from July to September.
In the summer season temperature goes to above 40 degree centigrade and on the
other season temperature remains normal. Thus district Bahraich represents Uttar
Pradesh in case of climate having all type of seasons.
3.2 Rainfall and Temperature in Bahraich:
The Rainfall position in Bahraich district is better than other districts in Uttar
Pradesh. Thus in Uttar Pradesh rainfall position of Bahraich district is 2nd
after Kheri.
The actual rainfall position of Kheri district is 1324 mm in 2009 calendar year. In
Bahraich district actual rainf all is 1201 mm in 2009 calendar year.
The highest temperature of Bahraich district was 42.7 centigrade and the lowest
temperature was 5.0 centigrade during the Agriculture year 2007-08. Thus Bahraich
district is enriched in land resources, rainfall and forest resources. In this way the
climate of the district is good for agricultural production and better environment.
3.3. The comparative Development Profile of Bahraich in Uttar
Pradesh:
In the comparative development profile we can describe the actual
development status of Bahraich district in Uttar Pradesh. According to this
comparative description, we describe the inter-district variance in the various
development indicators and the actual development position of Bahraich district in
Uttar Pradesh. Bahraich district is known as backward district in Uttar Pradesh,
because here is lack of industry, road, railway, education and health related
infrastructure. In Uttar Pradesh, some districts are high in industry, road, railway,
education and health infrastructure, some districts have medium category and some
75
districts have low category in these infrastructure. Thus district Bahraich is regarded
as low category district in the infrastructure development. We can now describe the
comparative development profile of Bahraich district in Uttar Pradesh.
3.3 (a) Human Development of Bahraich in Uttar Pradesh
(b) Per Capita Income of Bahraich in Uttar Pradesh
(c) Geographical area of Bahraich in Uttar Pradesh
(d) Population density of Bahraich in Uttar Pradesh
(e) Sex ratio of Bahraich in Uttar Pradesh
(f) Urban population ratio in Bahraich in Uttar Pradesh
(g) Literacy rate in Bahraich in Uttar Pradesh
(h) Percentage of main workers in total population in Bahraich of Uttar Pradesh
(i) Percentage of main agricultural workers in total main workers in Bahraich of
Uttar Pradesh.
3.3 (a) Human Development of Bahraich in Uttar Pradesh
Now Human Development indicators are accepted as development indicators
in any society. The Human Development measure has been developed by United
Nation Development Programme (UNDP), and the HDI concept has been developed
under the guidance of Mahbul-ul-Haq. Human Development Index (HDI) has been an
aggregate measure of progress in three dimensions- health, education and income.
The Human Development measures are based on average achievement in three basic
dimensions of human development as under:
1. A long and healthy life as measured by life expectancy at birth.
2. Knowledge as measured the Adult Literacy rate (with two third weights) and
the combined primary, secondary and tertiary gross enrolment ratio (with one
third weight).
3. A decent standard of living as measured by GDP Per Capita (PPP US $ )
Human Development Report (HDR) 2010 has been an aggregate measure of
progress in three dimensions- health, education and income. HDR in 2010 although
uses all the three dimensions but in modified manner. In this report UNDP has
modified the indicators used to measure sure progress in education and income. The
manner in which they are aggregated has been changed with regard to knowledge
dimension. This has been replaced by mean years of schooling and expected years of
76
schooling respectively. Expected years of schooling means the years of schooling that
a child can expect to receive given current enrolment ratio.
In Uttar Pradesh the value of Human Development 0.60 and above are in the
High Human Development group districts; Districts in the HDI range 0.55 to 0.59 are
in the range of Medium Human Development groups, and districts in the HDI range
0.50 to 0.54 are in low Human Development and districts in the HDI range less than
0.5 are the Very Low Human Development districts. The position of Human
Development of Bahraich district is at very low level, because its position is 2nd
from
bottom level, and the adjoining Shrawasti district in Uttar Pradesh is at the bottom.
The value of Human Development of Bahraich District was 0.440 in 2005. Its rank of
HDI in Uttar Pradesh is 69th
in 2005. This figure shows that Bahraich district is in
under development position. Table 3.1 shows the districts arranged according to value
of HDI in 2005.
Table 3.1: District Arranged According to value of HDI, 2005
High HDI Districts (Value above
0.60)
Medium HDI Districts (Value 0.55 to
0.59)
Rank District Value of HDI Rank District Value of HDI
1 G.B.Nagar 0.7017 18 Muzaffarnagar 0.5937
2 Ghaziabad 0.6566 19 Mau 0.5910
3 Kanpur 0.6506 20 Chitrakoot 0.5907
4 Lucknow 0.6477 21 Mainpuri 0.5891
5 Baghpat 0.6392 22 Chandauli 0.5876
6 Meerut 0.6300 23 Firozabad 0.5876
7 Agra 0.6215 24 Bijnor 0.5866
8 Jhansi 0.6214 25 Kannauj 0.5861
9 Saharanpur 0.6173 26 Ballia 0.5814
10 Mathura 0.6163 27 Farrukha-bad 0.5773
11 Hathras 0.6159 28 Gorakhpur 0.5759
12 Etawah 0.6090 29 Allahabad 0.5739
13 Kanpur Dehat 0.6077 30 Aligarh 0.5738
14 Auraiya 0.6074 31 J.P. Nagar 0.5722
15 Varanasi 0.6068 32 S.R.Nagar 0.5706
16 Jalaun 0.6059 33 Ghazipur 0.5702
17 Bulandshahar 0.6017 34 Mahoba 0.5690
35 Hamirpur 0.5678
36 Sonbhadr 0.5619
37 Ambedker.Nagar 0.5580
38 Jaunpur 0.5546
39 Faizabad 0.5544
40 Mirzapur 0.5534
77
Low HDI District (0.50 t0 0.54 ) Very Low HDI Districts (Below 0.50)
Rank District Value of
HDI
Rank District Value of
HDI
41 Banda 0.5456 61 Basti 0.4921
42 Kheri 0.5426 62 Rampur 0.4915
43 Deoria 0.5418 63 Mahrajganj 0.4906
44 Azamgarh 0.5414 64 Sant Kabir 0.4800
45 Unnao 0.5397 Nagar
46 Sultanpur 0.5388 65 Gonda 0.4780
47 Pilibhit 0.5372 66 Siddharth 0.4690
48 Etah 0.5361 Nagar
49 Lalitpur 0.5345 67 Badaun 0.4605
50 Fatehpur 0.5334 68 Balrampur 0.4476
51 Bareilly 0.5332 69 Bahraich 0.4404
52 Barabanki 0.5297 70 Shrawasti 0.4132
53 Pratapgarh 0.5284
54 Moradabad 0.5266
55 Raibareli 0.5230
56 Kaushambi 0.5212
57 Sitapur 0.5143
58 Shahjahanpur 0.5133
59 Hardoi 0.5103
60 Kusinagar 0.5049
Source: Human Development Report of Uttar Pradesh 2006
The above table has shown districts arranged according to value of HDI.
These districts have been divided into four categories- High HDI, Medium HDI, Low
HDI and Very Low HDI districts. Human Development indicators show actual
development of any society. In Uttar Pradesh some districts have high human
development position. Gautam Buddha Nagar is at the top position with HDI value
0.7017. Ghaziabad district with HDI value 0.6566 is at second position and Kanpur
Nagar with HDI value 0.6506 is at third position. Thus these are three districts in the
top position in Uttar Pradesh. On the other hand the three districts with the lowest
ranks are Balrampur districts- 68th
with HDI value 0.4476, Bahraich district 69th
rank
with 0.4404 HDI value and Shrawasti district 70th
rank with HDI value is 0.4132.
Thus these lower human development ranking districts are neighbours. The
difference of the highest HDI value and HDI value of Bahraich district is 0.2613.
According to the older data major features of Bahraich district are as below.
78
(1) There is low level of literacy and school enrolment ratio at primary and upper
primary level. It signifies bad infrastructure in terms of Schools, Colleges and
lack of teachers and other educational facilities.
(2) The per capita income is very low and most of the workers are engaged in
agricultural activities. The secondary and tertiary sectors are also in poor
conditions
(3) In the Bahraich district the health infrastructure is also poor. So in comparison
with other districts the life expectancy is low and maternal and infant Mortality
rates are high.
3.3 (b) Per Capita Income in Bahraich district:
Per capita income is another measure of development in the economy. In any
district the per capita income is measured as total district income divided by total
district population. In Uttar Pradesh some districts show very high per capita income,
and some districts show very low per capita income. In 2007-08, according to per
capita income at market price, Gautam Budh Nagar, Lucknow, Gaziabad and Meerut
are the top four districts in Uttar Pradesh. On the other hand, Devariya, Chitrakoot,
Pratapgarh and Shrawasti are the bottom level districts. District Bahraich is also
ranked low in terms of per capita income in Uttar Pradesh. The districts where
industry, road, transport, power (electricity), education and health facilities are well,
the per capita income is also high. On the other hand, where these are poorly
developed, the per capita income is low. In Uttar Pradesh the regional disparity exists
because some areas are well developed and the other areas are poorly developed.
Table 3.2 shows the districts arranged according to per capita income in Uttar
Pradesh.
79
Table: 3.2 Districts arranged according to per capita income in Uttar Pradesh.
Sl.
No.
District Per Capita
Income in
2009-10 in Rs.
(at current price)
Sl.
No.
District Per Capita
Income in
2009-10 in Rs.
(at current price)
1. G. B. Nagar 93095 39. Kannauj 20341
2. Baghpat 41049 40 Unnao 20284
3. Lucknow 38465 41. Banda 19907
4. Meerut 36385 42. Kanpur Dehat 19882
5. Kanpur Nagar 35026 43. Kaushambi 19846
6. Ghaziabad 34965 44. Faizabad 19100
7. Bulandshahr 34653 45. Gorakhpur 18753
8. Jhansi 32945 46. Mau 17965
9. Saharanpur 32831 47. Chandauli 17625
10. Bijnor 32451 48. Fatehpur 17051
11. Amroha 32433 49. Sant Ravidas Nagar 16707
12. Hathrash 32303 50. Hardoi 16548
13. Muzaffarnagar 31770 51. Sultanpur 16346
14. Mathura 29616 52. Mirzapur 15859
15. Barabanki 29348 53. Rae Bareli 15510
16. Pilibhit 29042 54. Balrampur 15509
17. Agra 28871 55. Ambedkar Nagar 15238
18. Moradabad 27841 56. Bahraich 15143
19. Jalaun 26772 57. Gonda 15071
20. Aligarh 26618. 58. Ghazipur 15007
21. Mahoba 26531 59. Basti 14461
22. Baaun 26412 60. Ballia 14403
23. Bareilly 25818 61. Chitrakoot 14246
24. Lalitpur 25057 62. Azamgarh 14199
25. Rampur 24581 63. Mahrajganj 14116
26. Kashganj 24071 64. Sant Kabir Nagar 13402
7. Etah 23352 65. Kushinagar 13310
28. Sonbhadra 22753 66. Pratapgarh 13236
29. Sitapur 22447 67. Jaunpur 13229
30. Farrukhabad 21993 68. Siddharth Nagar 13137
31. Auraiya 21963 69. Deoria 12134
32. Firozabad 21652 70. Shrawasti 10891
33. Kheri 21460 71. Shamli -
34. Allahabad 21368 72. Shambhal -
35. Etawah 21055 73. Hapur -
36. Mainpuri 20763 74. Amethi -
37. Shahjahanpur 20586 75. C.S.J.M. Nagar -
38. Varanasi 20390
Uttar Pradesh 23132
Source – District wise Development Indicators Uttar Pradesh – 2011.
80
3.3 (c) Geographical area of Bahraich District in Uttar Pradesh:
The geographical area of Bahraich district is full of rivers and forest. In terms
of area, Bahraich district is a medium size district in Uttar Pradesh. The table 3.3
shows area of Bahraich and other districts in Uttar Pradesh.
Table: 3.3 Area of Bahraich district in Uttar Pradesh
Sl.
No.
Name of
Districts
Geographical
Area (sq.km)
Sl.
No.
Name of Districts Geographical
Area (sq.km)
1 Kheri 7680 37 Gorakhpur 3321
2 Sonbhadra 6788 38 Chitrakoot 3164
3 Hardoi 5986 39 Kanpur nagar 3155
4 Sitapur 5743 40 Ramabai Nagar 3021
5 Allahabad 5482 41 Ballia 2981
6 Bandau 5168 42 Maharajganj 2952
7 Lalitpur 5039 43 Kushi Nagar 2906
8 Jhansi 5024 44 Siddharth Nagar 2895
9 Bahraich 5020 45 Mahoba 2884
10 Rai Bareli 4609 46 Mainpuri 2760
11 Sahahjahanpur 4575 47 Basti 2688
12 Jalaun 4565 48 Meerut 2590
13 Bijnor 4561 49 Chaundli 2541
14 Unnao 4558 50 Deoria 2538
15 Mirjapur 4521 51 Lucknow 2528
16 Banda 4460 52 Shrawasti 2458
17 Eatah 4446 53 Rampur 2367
18 Sultanpur 4436 54 Firojabad 2361
19 Barabanki 4402 55 Ambedkar Nagar 2350
20 Bulendshar 4352 56 Faizabad 2341
21 Hamirpur 4282 57 Etawah 2311
22 Fatepur 4152 58 Jyotiba Phule Nagar 2249
23 Bareilly 4120 59 Farrukhabad 2181
24 Azamgarh 4054 60 Kannauj 2093
25 Jaunpur 4038 61 Auriya 2015
26 Agara 4027 62 Mahamaya Nagar 1840
27 Muzaffar Nagar 4008 63 Kaushambi 1780
28 Gonda 4003 64 Mau 1713
29 Moradabad 3718 65 Sant Kabir Nagar 1646
30 Prtapgarh 3717 66 Varanasi 1535
31 Saharanpur 3689 67 G. B. Nagar 1442
32 Aligarh 3650 68 Baghpat 1321
33 Pilibhit 3499 69 Ghaziabad 1148
34 Ghazipur 3377 70 Sant Ravidas Nagar 1015
35 Balrampur 3349 71 Kansiram Nagar -
36 Mathura 3340 72 C.S.J.M. Nagar -
Uttar Pradesh 240928
Source: District wise Development Indicators Uttar Pradesh, 2011.
81
District Bahraich is enriched in geographical area. According to the above
table, district Kheri is the largest in Uttar Pradesh followed by Sonbhadra and Hardoi
districts. Bahraich district is the 9th
largest district in terms of area in Uttar Pradesh.
The total area of Bahraich district is 5020 sq. kms Thus district Bahraich is one of the
largest district in Uttar Pradesh.
3.3 (d) Population density of Bahraich District:
The population density plays important role in economic development of any
district. In Uttar Pradesh high population density affects development process of any
district. Bahraich district has low population density as compared to other districts in
Uttar Pradesh. In table 3.4 the population density of Bahraich and other districts in
Uttar Pradesh is shown.
Table 3.4: Population density of in Uttar Pradesh (Persons per km2)
Sl.
No.
District Density of
Population
Sl.
No.
District Density of
Population
1 Ghaziabad 3954.0 37 Mahamaya Nagar 851.0
2 Varanasi 2399.0 38 Jyotiba Phule Nagar 818.0
3 Lucknow 1815.0 39 Bijnor 808.0
4 Sant Ravidas
Nagar
1531.0 40 Kannauj 792.0
5 Meerut 1347.0 41 Sitapur 779.0
6 Gorakhpur 1336.0 42 Bulandshahr 775.0
7 G.B.Nagar 1306.0 43 Mainpuri 669.0
8 Mau 1287.0 44 Chandauli 768.0
9 Moradabad 1284.0 45 Mathura 761.0
10 Kusinagar 1226.0 46 Barabanki 740.0
11 Deoriya 1220.0 47 Rai Bareli 939.0
12 Azamgarh 1139.0 48 Kansiram Nagar 736.0
13 Jaunpur 1108.0 49 Fatepur 634.0
14 Allahabad 1087.0 50 Etah 724.0
15 Agara 1084.0 51 Badaun 718.0
16 Bareilly 1084.0 52 Shahjahanpur 684.0
17 Ballia 1081.0 53 Etawah 683.0
18 Ghazipur 1073.0 54 Hardoi 683.0
19 Faizabad 1054.0 55 Unnao 682.0
20 Sant Kabir Nagar 1041.0 56 Shrawasti 679.0
21 Firojabad 1037.0 57 Bahraich 664.0
22 Muzaffarnagar 1033.0 58 Balrampur 642.0
23 Ambedkar Nagar 1021.0 59 Ramabai Nagar 594.0
24 Aligarh 1007.0 60 Mirzapur 566.0
25 Rampur 987.0 61 Pilibhit 553.0
26 Baghpat 986.0 62 Kheri 523.0
27 Auraiya 981.0 63 Kanpur Nagar 449.0
82
Sl.
No.
District Density of
Population
Sl.
No.
District Density of
Population
28 Saharanpur 939.0 64 Banda 408.0
29 Basti 916.0 65 Jansi 398.0
30 Mahrajganj 903.0 66 Jalaun 366.0
31 Kaushambi 897.0 67 Chitrakoot 308.0
32 Siddharth Nagar 882.0 68 Mahoba 279.0
33 Farukhabad 865.0 69 Hamirpur 275.0
34 Gonda 857.0 70 Sonbhadra 270.0
35 Sultanpur 855.0 71 Lalitpur 242.0
36 Pratapgarh 854.0 72 C.S.M. Nagar -
Source: District wise Development Indicators Uttar Pradesh, 2011.
According to the table 3.4 the highest population density has been in
Ghaziabad district (3954.0 persons), and it was followed by Varanasi district (2399.0
persons) and Lucknow district (1815.0 persons) in Uttar Pradesh. The lowest
population density was recorded in Lalitpur district (242.0 persons) and it was
followed by Sonbhadra district (270.0 persons) in Uttar Pradesh. District Bahraich is
situated in the 57th
position out of 72 districts. The population density of Bahraich
district is 664.0 persons per sq. Km in 2011.
3.3 (e) Sex ratio of districts in Uttar Pradesh:
Sex ratio means ‘male-female ratio or number of females per thousand males.’
The district wise sex ratio in Uttar Pradesh shows much diversity because some
districts have better position in sex ratio but most of the districts show adverse
position in sex ratio. District Bahraich has also low sex ratio in Uttar Pradesh. In table
3.5 we can shows the sex ratio of districts in Uttar Pradesh.
Table 3.5: District wise Sex ratio in Uttar Pradesh
Sl.
No.
District Sex Ratio
(2011)
Sl.
No.
District Sex Ratio
(2011)
1. Jaunpur 1018 37. Bahraich 891
2. Azamgarh 1017 38. Pilibhit 889
3. Deoriya 1013 39. Kheri 887
4. Prtapgarh 994 40. Saharanpur 887
5. Sultanpur 978 41. Muzaffarnagar 886
6. Mau 978 42. Meerut 885
7. Ambedkar Nagar 976 43. Jhansi 885
8. Siddharth Nagar 970 44. Bareilly 883
9. Sant Kabir Nagar 969 45. Mahoba 880
10. Faizabad 961 46. Sitapur 879
11. Basti 959 47. Kanshiram Nagar 879
12. Kusinagar 955 48. Kannauj 879
13. Ghazipur 951 49. Chitrakoot 879
83
Sl.
No.
District Sex Ratio
(2011)
Sl.
No.
District Sex Ratio
(2011)
14. Sant Ravidas Nagar 950 50. Ghaziabad 878
15. Gorakhpur 944 51. Aligarh 876
16. Mahrajganj 938 52. Mainpuri 876
17. Ballia 933 53. Shrawasti 875
18. Rae Bareli 941 54. Farrukhabad 874
19. Balrampur 922 55. Mahamaya Nagar 870
20. Gonda 922 56. Firozabad 867
21. Bijnor 913 57. Etawah 867
22. Chandauli 913 58. Shahjahanpur 865
23. Sonbhadra 913 59. Jalaun 865
24. Varanasi 909 60. Auraiya 864
25. Barabanki 908 61. Etah 863
26. Jyotiba Phule Nagar 907 62. Banda 863
27. Lucknow 906 63. Ramabai Nagar 862
28. Rampur 905 64. Hamirpur 860
29. Lalitpur 905 65. Agra 859
30. Kaushambi 905 66. Badaun 859
31. Moradabad 903 67. Baghpat 858
32 Allahabad 902 68. Mathura 858
33. Unnao 901 69. Hardoi 856
34. Fatehpur 900 70. G. B. Nagar 852
35. Mirjapur 900 71. Kanpur Nagar 852
36. Bulandshahar 892 72. C. S. M. Nagar -
Uttar Pradesh 908
Source: District wise Development Indicators Uttar Pradesh, 2011.
The above table has show that in Uttar Pradesh the highest sex ratio districts
are Jaunpur, Azamgarh and Deoriya. The sex ratio of Jaunpur district is 1018,
Azamgarh is 1017 and Deoriya is 1013. These are the top districts in the sex ratio in
Uttar Pradesh, where female population is more than male population. The lowest sex
ratio districts are- Kanpur Nagar, G. B. Nagar and Hardoi. The sex ratio of Kanpur
Nagar and G. B. Nagar is 852 and in Hardoi the sex rato is 856. In sex ratio district
Bahraich has ranked on 37th
in 2011 census. The sex ratio of Bahraich district is 891
and thus district Bahraich is showing low sex ratio in Uttar Pradesh.
3.3 (f) Urban Population in Bahraich district:
Urban population ratio is very important instrument in the development of
districts. The districts with high urban population ratio are considered to be more
developed district. In Uttar Pradesh urban population ratio varies among the districts
because some districts have more urban population ratio while other districts have
very low urban population ratio. District Bahraich has very low urban population
ratio as can be seen from Table 3.6.
84
Table: 3.6 Status of Urban population ratio of Bahraich district in Uttar Pradesh.
Sl.
No.
District Percentage of
urban population
to total population
(2001)
Sl.
No.
District Percentage of
urban population
to total population
(2001)
1. Kanpur Nagar 64.10 37. Lalitpur 14.52
2. Lucknow 62.70 38. Auraiya 14.32
3. Ghaziabad 55.20 39. Mirzapur 13.54
4. Meerut 48.44 40. Faizabad 13.46
5. Agra 43.30 41. Sant Ravidas
Nagar
12.82
6. Jhansi 40.79 42. Hardoi 11.99
7. Varanasi 40.16 43. Sitapur 11.95
8. G. B. Nagar 37.39 44. Kheri 10.77
9. Bareilly 32.93 45. Chandauli 10.56
10. Moradabad 30.54 46. Fathpur 10.30
11. Firozabad 30.32 47. Bahraich 10.00
12. Aligarh 28.90 48. Chitrakoot 9.99
13. Mathura 28.30 49. Deoria 9.89
14. Sharanpur 25.81 50. Ballia 9.77
15. Muzaffarpur 25.51 51. Rae Bareli 9.54
16. Rampur 24.97 52. Barabanki 9.30
17. Jyotiba Phule
Nagar
24.56 53. Ambedkar Nagar 8.93
18. Bijnor 24.31 54. Balrampur 8.06
19. Bulandshahr 23.15 55. Ghazipur 7.68
20. Jalaun 23.41 56. Azamgarh 7.55
21. Mahoba 21.86 57. Jaunpur 7.40
22. Farrukhabad 21.75 58. Kaushambi 7.10
23. Shahjahanpur 20.63 59. Sant Kabir Nagar 7.08
24. Mahamaya
Nagar
19.80 60. Gonda 7.03
25. Baghpat 19.71 61. Ramabai Nagar 6.89
26. Gorakhpur 19.59 62. Basti 5.56
27. Mau 19.44 63. Pratapgarh 5.29
28. Sonbhadra 18.82 64. Mahrajganj 5.09
29. Badaun 18.15 65. Sultanpur 4.74
30. Pilibhit 17.88 66. Kushinagar 4.58
31. Etah 17.33 67. Siddharth Nagar 3.81
32. Kannauj 16.70 68. Shrawasti 2.84
33. Hamirpur 16.65 69. Kanshiram Nagar -
34. Banda 15.87 70. C. S. M. Nagar -
35. Unnao 15.24
36. Mainpuri 14.60
Uttar Pradesh 22.28 (2011)
Source: District wise Development Indicators Uttar Pradesh, 2011.
85
The table 3.6 shows enough variation in urban population of different districts
in Uttar Pradesh. The top three districts in the urban population ratio are Kanpur
Nagar, Lucknow and Ghaziabad. The urban population ratio in Kanpur Nagar district
is 64.10 per cent, in Lucknow district it is 62.70 per cent and in Ghaziabad district it is
55.20 per cent. The three districts with the lowest urban population ratio are-
Shrawasti, Siddharth Nagar and Kushinagar. In terms of the urban population ratio
district Bahraich ranks 47th
among 70 districts in Uttar Pradesh. The urban population
ratio of Bahraich district is 10.0 per cent. Thus in the Bahraich district, urbanization is
at very low level and this affects its socio-economic development.
3.3 (g) Literacy rate of Bahraich district in Uttar Pradesh:
Literacy rate is the main component of the quality of population. Now literacy
rate is measured for the population aged seven years and above. In Bahraich district,
very low literacy rate in comparison to other districts of Uttar Pradesh is noticed. Low
literacy also reduces socio-economic development of the district. The actual position
of Bahraich district in terms of literacy rate in Uttar Pradesh is shown in table 3.7.
Table: 3.7 District wise Literacy rate in Uttar Pradesh (2011)
Sl.
No.
District Literacy
Rate
Sl.
No.
District Literacy
Rate
1. Ghaziabad 85.00 37. Bulandshahr 70.23
2. G.B.Nagar 82.20 38. Hamirpur 70.16
3. Kanpur Nagar 81.31 39. Muzaffarnagar 70.11
4. Auraiya 80.25 40. Basti 69.69
5. Etawah 79.99 41. Aligarh 69.61
6. Lucknow 79.33 42. Agkkra 69.44
7. Mainpuri 78.26 43. Rae Bareli 69.04
8. Ramabai Nagar 77.52 44. Sant Kabir Nagar 69.01
9. Varanasi 77.05 45. Hardoi 68.89
10. Jhansi 76.37 46. Fatehpur 68.78
11. Jalaun 75.16 47. Unnao 68.29
12. Mau 75.16 48. Banda 68.11
13. Meerut 74.80 49. Kushinagar 67.66
14. Firozabad 74.60 50. Mahoba 66.94
15. Allahabad 74.41 51. Sonbhadra 66.18
16. Ambedkar Nagar 74.37 52. Chitrakoot 66.52
17. Ghazipur 74.27 53. Jyotiba Phule Nagar 65.70
18. Kannauj 74.01 54. Lalitpur 64.95
19. Chandauli 73.86 55. Mahrajganj 64.30
20. Ballia 73.82 56. Barabanki 63.76
21. Jaunpur 73.66 57. Kaushambi 63.69
86
Sl.
No.
District Literacy
Rate
Sl.
No.
District Literacy
Rate
22. Baghpat 73.54 58. Pilibhit 63.58
23. Deoria 73.53 59. Sitapur 63.38
24. Etah 73.27 60. Kheri 62.71
25. Gorakhpur 73.25 61. Kanshiram Nagar 62.30
26. Mahamaya Nagar 73.10 62. Siddharth Nagar 61.81
27. Pratapgarh 73.10 63. Shahjahanpur 61.61
28. Azamgarh 72.69 64. Gonda 61.16
29. Mathura 72.65 65. Baeilly 60.52
30. Saharanpur 72.03 66. Moradabad 58.67
31. Sultanpur 71.14 67. Rampur 55.08
32. Sant Ravidas Nagar 71.10 68. Badaun 52.91
33. Faizabad 70.63 69. Balrampur 51.76
34. Farrukhabad 70.57 70. Bahraich 51.10
35. Bijnor 70.43 71. Shrawasti 49.13
36 Mirzapur 70.38 72. C.S.J.M. Nagar ----
Bundelkhand
Region
70.69 Eastern Region 69.59
Central Region 70.50 Western Region 69.35
Uttar Pradesh 69.72 India 74.04
Source: District wise Development Indicators Uttar Pradesh, 2011.
The table 3.7 shows that the terms of literacy rate are top three districts
namely Ghaziabad, G. B. Nagar and Kanpur Nagar in Uttar Pradesh. The literacy rate
of Ghaziabad district is 85.00 per cent, G. B. Nagar 82.20 per cent and Kanpur Nagar
81.31 per cent. The bottom three districts are Shrawasti, Bahraich and Balrampur
districts. The literacy rate of Shrawasti district is 49.13 per cent, Bahraich 51.10 per
cent and Balrampur 51.76 per cent. In the Uttar Pradesh literacy position of Bahraich
district has been 70th
ranks out of 71 districts.
3.3 (h) Main workers in total population in districts of Uttar
Pradesh:
In Uttar Pradesh, districts differ widely in terms of workers as a ratio of
population. The high percentage of main workers in the total population indicates
much engagement of population in the economic activity and vice-versa. In table-3.8
the status of main workers in total population in the Bahraich and other districts of
Uttar Pradesh are shown.
87
Table 3.8: Status of Main workers in Total population of Bahraich district in
Uttar Pradesh (2001)
Sl.
No.
District Percentage of
main workers to
total population
Sl.
No.
District Percentage of
main workers to
total population
1. Balrampur 29.82 37. Auraiya 24.17
2. Lalitpur 29.57 38. Shahjahanpur 24.16
3. Chitrakoot 29.29 39. Ramabai Nagar 24.13
4. Shrawasti 28.81 40. Saharanpur 23.90
5. Mahoba 28.80 41. Bareilly 23.84
6. Barabanki 27.09 42. Rampur 23.76
7. Bulandshahr 27.01 43. Etah 23.65
8. Banda 26.83 44. Mirzapur 23.58
9. Jhansi 26.76 45. Aligarh 23.31
10. Hardoi 26.60 46. Basti 23.19
11. Bahraich 26.58 47. Rai Bareli 23.00
12. Kheri 26.13 48. Mainpuri 22.87
13. Moradabad 26.07 49. Bijnor 22.62
14. Hamirpur 25.96 50. Agara 22.49
15. Mathura 25.94 51. Allahabad 22.42
16. Fatehpur 25.75 52. Etawah 22.30
17. G.B. Nagar 25.70 53. Firozabad 22.16
18. Sitapur 25.53 54. Mahamaya Nagar 22.11
19. Jyotiba Phule
Nagar
25.53 55. Mahrajganj 22.05
20. Unnao 25.39 56. Pilibhit 21.90
21. Muzaffarnagar 25.39 57. Ambedkar Nagar 21.82
22. Faizabad 25.27 58. Mau 21.41
23. Gonda 25.21 59. Ghazipur 21.31
24. kaushambi 25.16 60. Pratapgarh 21.19
25. Badaun 25.05 61. Sultanpur 21.12
26. Kannauj 24.99 62. Sant Kabir Nagar 20.77
27. Kanpur Nagar 24.96 63. Chandauli 20.69
28. Baghpat 24.90 64. Jaunpur 20.17
29. Lucknow 24.68 65. Sant Ravidas Nagar 20.06
30. Sonbhadra 24.61 66. Kushinagar 19.87
31. Meerut 24.59 67. Azamgarh 19.55
32. Varanasi 24.56 68. Gorakhpur 18.38
33. Jalaun 24.48 69. Ballia 18.27
34. Ghaziabad 24.31 70 Deoria 17.16
35. Farrukhabad 24.25 71. Kanshiram Nagar ---
36. Siddharth
Nagar
24.19 72. C. S. J. M. Nagar ---
Source: District wise Development Indicators Uttar Pradesh, 2011.
In this table shows the Balrampur, Lalitpur and Chitrakoot are top three
districts of main workers in terms of percentage share. In the Balrampur district main
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workers is 29.82 per cent; in Lalitpur it is 29.57 per cent and in the Chitrakoot district
it is 29.29 per cent. In the bottom levels three districts are Deoria, Ballia and
Gorakhpur. In Deoria district main workers is 17.27 per cent and its rank is 70th
, in
Ballia it is 18.38 per cent and its rank is 69th
and in Gorakhpur it is 18.38 per cent and
its rank is 68th
. In the main workers district Bahraich is in better position in Uttar
Pradesh. Its rank is 11th
out of 70 districts. In the Bahraich district main workers in
total population are 26.58 per cent.
3.3 (i) Agricultural workers in the Total main workers in Uttar
Pradesh:
There is much diversity in the percentage of main agriculture workers in total
main workers in different districts of Uttar Pradesh. In the developed districts the
ratios of agricultural workers in total main workers is low and in the underdeveloped
districts the ratios of agriculture workers is high. In the under develop districts tertiary
and secondary sectors are not much developed so agriculture is the main occupation.
Bahraich is also an underdeveloped district so the percentage of agricultural workers
is high. In the table 3.9 percentage of main agricultural worker in the total main
workers in Bahraich and other district in Uttar Pradesh is shown.
Table 3.9: District wise Agricultural workers in Total main workers in Uttar
Pradesh
Sl.
No.
District Percentage of
main agricultural
workers to total
workers (2001)
Sl.
No.
District Percentage of
main agricultural
workers to total
workers (2001)
1. Shrawasti 87.38 37. Ghazipur 67.40
2. Balrampur 84.60 38. Azamgarh 66.80
3. Siddharth Nagar 84.07 39. Jaunpur 66.60
4. Gonda 81.90 40. Rampur 66.43
5. Bahraich 81.67 41. Sonbhadra 65.75
6. Hardoi 79.68 42. Deoria 64.91
7. Chitrakoot 79.19 43. Etawah 64.85
8. Kheri 79.12 44. Ballia 63.95
9. Badaun 78.86 45. Jyotiba Phule
Nagar
63.05
10. Mahrajganj 78.57 46. Bareilly 58.18
11. Sitapur 77.98 47. Chandauli 57.55
12. Mainpuri 77.63 48. Mahamaya
Nagar
57.35
13. Basti 77.41 49. Bijnor 56.82
14. Kushinagar 77.16 50. Muzaffarnagar 56.33
15. Sant Kabir
Nagar
76.78 51. Mirjapur 56.24
89
Sl.
No.
District Percentage of
main agricultural
workers to total
workers (2001)
Sl.
No.
District Percentage of
main agricultural
workers to total
workers (2001)
16. Barabanki 76.06 52. Baghpat 55.73
17. Lalitpur 75.81 53. Jhansi 55.20
18. Banda 75.29 54. Moradabad 55.01
19. Ramabai Nagar 74.75 55. Gorakhpur 54.12
20. Kaushambi 74.47 56. Mathura 52.94
21. Kannauj 74.08 57. Bulandshahr 52.17
22. Fatehpur 73.80 58. Mau 51.87
23. Unnao 73.58 59. Saharanpur 51.66
24. Etah 73.30 60. Aligarh 51.05
25. Shahjahanpur 72.86 61. Allahabad 50.25
26. Mahoba 72.78 62. Firozabad 44.92
27. Rae Bareli 72.65 63. Agra 39.59
28. Hamirpur 72.50 64. Meerut 34.01
29. Auraiya 72.08 65. Sant Ravidas
Nagar
33.67
30. Pratapgarh 72.08 66. G. B. Nagar 32.65
31. Pilibhit 71.56 67. Lucknow 27.51
32. Sultanpur 70.43 68. Kanpur Nagar 26.07
33. Faizabad 69.87 69. Varansi 25.76
34. Jalaun 69.80 70. Ghaziabad 22.67
35. Ambedkar
Nagar
69.39 71. Kansiram Nagar - -
36. Farrukhabad 68.66 72. C.S.M. Nagar - -
Source: District wise Development Indicators Uttar Pradesh, 2011.
This table shows that the Shrawasti district, agricultural workers in the total
main workers is the highest. It is 87.38 per cent, and it is followed by Balrampur
district with 84.60 per cent and then Siddharth Nagar with 84.07 per cent. In the
Ghaziabad district the agricultural workers in total main workers is at the lowest with
22.67 per cent, followed by Varanasi district with 25.76 per cent and then Kanpur
Nagar with 26.07 per cent. Bahraich district also shows high ratio of agriculture
workers in total main workers, because its rank is 5th
out of 70 districts in Uttar
Pradesh. Thus, the Bahraich district agricultural workers in total main workers are
87.67 per cent. The high share of agricultural workers in total main workers signifies
agrarian nature of a district like Bahraich where diversification of the economy is very
low.
3.4 Demographic Profile of Bahraich District:
Human resources are important but only their numbers are not sufficient. Their
development as a resource is also needed. In this respect Bahraich is a backward
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district. In Bahraich district, according to 2001 census total population is 2708850, in
Male population 1450457 and Female population 1258393. According to 2011 census
total population is 3478257 in which the Male population 1838988 and Female
population 1639269. Here the demographic development profile of Bahraich district
after 1981 is shown in the table 3.10. The table 3.10 shows the area, population
distribution and sex ratio in Bahraich district.
Table 3.10: Area and population distribution in Bahraich district
Year Area
(sq.km.)
Male
population
Female
population
Total
population
Sex
Ratio
1981 6877.00 11,94,943 10,21,302 22,16,245 855
1991 6877.00 13,55,806 12,19,234 25,75,040 899
2001* 5020.00 14,50,457 12,58,393 27,08,850 867
2011 5020.00 18,38,988 16,39,269 34,78,257 891
Total
Rural** 4990.05 13,19,998 11,43,482 24,63,480 866
Total**
Urban 29.95 1,26,271 1,11,727 2,37,998 884
Total
2001 5020.00 14,50,457 12,58,393 27,08,850 867
Note: *In 2001 Census, separated of Shrawasti district which is the part of Bahraich
district.
Note: ** The Rural -Urban Population data has based on 2001 census.
Source: Sankhiya patrika District Bahraich, 2010 and 2012
From the above table we find that in the district population has been
increasing rapidly after 1981. In 1981 census population of the district was 22,16,245,
and this becomes 27,01,478 in 2001. The population of the district has increased
rapidly after the separation of Shrawasti district. In the district level of urbanisation is
low because in area of 29.95 square km. urban area the urban population is 1,26,271.
3.4 (i) Sex Ratio of Bahraich District:
Sex ratio means average number of female population per thousand male
populations. The sex ratio in Bahraich district is 855 female in 1000 male, according
1981 census. The sex ratio has improved in 2001 census as there were 867 Female on
1000 Male population. Thus these data show that sex ratio has improved in this time
period in the district. In 2011 census report describes that sex ratio has further
improved to 891 female on per 1000 male population.
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3.4(ii) Urban Population in Bahraich District:
In the Bahraich district urbanization is low compared to the most of other
districts in Uttar Pradesh. According to 2001 census the ratio of urban population is
only 8.79 percent of total population in Bahraich district. Thus, here is low
urbanization, and most of population lives in rural areas. So this is one of the main
causes of backwardness. Low urbanization causes the low level of Industrial growth,
low level of literacy and Health indicator as compared to other districts in Uttar
Pradesh.
3.4(iii) Density of Population in Bahraich District:
The term population density implies the average number of population living
per square km. The population density of Bahraich district is below the state average.
According to 2001 census population density of Bahraich district is 540, while in
Uttar Pradesh population density in same period is 690. According to 2011 census
report density of population in Bahraich district increased to 664 while in same year
population density of Uttar Pradesh became 828. On the other hand population
density of India is 382 in 2011 census. Thus, Uttar Pradesh and Bahraich district have
higher population density than the national level. However, population density of
Bahraich district is lower than Uttar Pradesh.
3.4(iv) Decadal Growth Rate of Population in Bahraich District:
The demographic development profile of Bahraich district is like Uttar
Pradesh, because its population growth, religion and caste wise distribution have the
similar pattern. The decadal growth rate of population in Bahraich district after 1901
is shown in Table 3.11
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Table 3.11: Decadal growth rate of Population in Bahraich district
Year Total
population
Rural
population
Decadal growth rate (%)
Total Rural Urban
1901 1049710 1006833 - - -
1911 1045775 1002533 (-) 0.4 (-) 0.4 (-)1.0
1921 1063222 1021192 12.0 2.0 3.0
1931 1134082 1088063 7.0 6.0 26.0
1941 1238095 1177436 9.0 9.0 14.0
1951 1343660 1277728 9.0 9.0 18.0
1961 1499929 1420341 12.0 11.0 11.0
1971 1726972 1624490 15.0 14.0 29.0
1981 2060032 1744955 28.0 27.0 52.0
1991 2090852 1900488 25.0 23.7 39.0
2001 2701478 2463480 29.0 29.6 25.0
2011* 3478257 3191039 28.8 29.5 20.7
1901-2001 - - 157.41 144.7 455.1
Source: Sankhiya Patrika District Bahraich 2010 &* Census 2011
This table shows that, the fast growth rate of population in Bahraich district
like other districts in Uttar Pradesh. In the period from 1901 to 1911 the district
population has decreased. After 1921 to 1961 population increased slowly and then
population increased rapidly. Thus, this table shows that during 1911 to 1921
population increased only 12 percent and in the decade 1921 to 1931 increases only 7
percent and 1931 to 1941 increase only 9 percent, and in the decade 1941 to 1951
populations increased 9 per cent. Thus, this table shows that before Independence the
population increase in the district was slow.
After 1961 population of Bahraich district increases rapidly because in decade of
1951 to 1961 population increased 12 percent, and in the decade 1961 to 1971
population increased 15 percent, and in 1971 to 1981 population increased 28 percent
and in 1981 to 1991, it increased 25 percent, and in the decade 1991 to 2001
population increased the highest 29 percent. Thus in this century population and its
growth rate in Bahraich district is shown in table 3.2. From the table it is clear that the
highest population growth was 29.2 percent during 1991 to 2001 decade.
3.4(v) Religion wise Population Distribution in Bahraich District
‘Unity in Diversity’ is found in Bahraich district as like Uttar Pradesh
and India. In this district found the various cultural and religious diversity. There are
most of the religious communities in the district like -Hindu, Muslim, Christian, Sikh,
Baudh, and Jain. In this matter Bahraich district is just like Uttar Pradesh giving place
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to all religious communities. According to 2001 Census, in this table 3.12 shown that
the religion wise population distribution in Bahraich district.
Table 3.12: Religion wise Population Distribution in Bahraich District-2001
S.NO Religious Community Total Population Total Population (%)
1 Hindu 1537177 64.56
2 Muslim 829361 34.83
3 Christian 2196 0.09
4 Sikhs 7623 0.32
5 Baudh 3296 0.14
6 Jain 899 0.04
7 Other 31 0.00
8 Not Believe any religion 489 0.02
Source: Sankhiya patricka 2010 & 2012 District Bahraich.
According to this table 3.12, the Hindu population has the largest share in
Bahraich district with 64.50 per cent in total population. The number of Hindu
population is 15, 37,177 person. But the most part of Hindu population live in rural
area. Then the second largest population in Bahraich district is Muslim population.
The Muslim population is 8,29,361 and this is 34.83 per cent of the total population.
The Urban Muslim population is 17.1 per cent on total Muslim population. Other
religion people are around 1 percent only in Bahraich district.
3.5 Social Development Profile in Bahraich District:
The Social Development profile of Bahraich district describes the Scheduled
caste and Scheduled tribe population living in Bahraich district. The Social
Development profile has shown the Social integration in Bahraich District. Table 3.13
shows total Scheduled caste and Scheduled Tribe population in Bahraich district.
Table 3.13: Total scheduled caste and scheduled tribe population in Bahraich
district
Year Scheduled caste population Schedule tribe population
Total Male Female Total Male Female
1981
1991
2001
366410
454825
405269
197807
249550
218276
168603
205275
186993
6340
39656
8610
3270
32724
4262
3070
6932
4348
Total rural 392718
211540 181178 8522 4212 4310
Total urban 11806 6311 5495 18
8
10
Total district 404524 217851 186673 8540 4220 4320
Source: Sankhikey Patrika 2010 & 2012 District Bahraich.
The above table shows that the Scheduled caste and Scheduled Tribe
population distribution in Bahraich district. This table shows that in 1981 total
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Scheduled caste population was 3,66,410 persons, which increased in 2001 to
become 4,05,269 persons. Out of this 3,92,718 persons lived in rural areas and 11,806
person lived in urban areas. On the other hand in 1981 total Scheduled Tribe
population have 6340 persons, which increased in 2001 to become 8610 persons. Out
of this 8522 persons are living in rural area and only 18 persons lived in urban area.
3.6 Economic Development and Occupational Distribution in
Bahraich District:
Broadly, we have divide occupation into three types. Agriculture, Animal
husbandry, Forestry, Fishery etc, are collectively known as primary activities. These
are primary because their product is essential or vital for human existence because
they are carried out with the help of the Nature. Manufacturing Industries like small
and large scale is known as Secondary activities. Mining is sometimes included under
secondary activities but properly speaking, it is a primary activity. Transport,
Communications Banking and Finance and Services are tertiary activities which help
the primary and secondary sectors.
In Bahraich district occupational distribution of population shows that
Agriculture is major occupation and the largest share of population depends on
agriculture. Among some of these farmers have their own land and others are working
as agricultural labour. The occupational distribution of population in Bahraich district
is shown in Table 3.14.
Table 3.14: The Occupational Distribution of population in Bahraich District
Year Cultivator Agriculture
Labour
Household
worker
Other
Worker
Total
Main
Worker
Marginal
Worker
Total
Worker
1981
577748
(56.5)
69072
(6.8)
8101
(0.8)
77218
(7.5)
732139
(71.6)
290978
(28.4)
1023117
(100.0)
1991
664576
(62.1)
136104
(12.7)
5511
(0.5)
104764
(9.8)
910955
(85.1)
160064
(14.9)
1071019
(100.0)
2001
449264
(46.8)
142497
(14.8)
16087
(1.7)
110582
(11.5)
718430
(74.8)
242176
(25.2)
960606
(100.0)
Total
Rural
446120
(49.8)
139674
(15.6)
13580
(1.5)
64099
(7.1)
663473
(74.0)
233106
(26.0)
896579
(100.0)
Total
Urban
2647
(4.4)
2074
(3.4)
2453
(4.0)
44640
(73.7)
51814
(85.5)
8789
(14.5)
60603
(100.0)
Total
Urban
District
449264
(46.8)
142497
(14.8)
16087
(1.7)
110582
(11.5)
718430
(74.8)
242176
(25.2)
960606
(100.0)
Note: Figure on Bracket is show on the Percentage Data.
Source: Sankhiya ptrica 2010 & 2012 District Bahraich.
95
It’s clear that the main occupation of Bahraich district is agriculture cultivator
and agricultural labourer. Because in the year 1981, 56.5 percent workers was
cultivator and 6.8 percent was an agricultural labour. Thus, the total percent of
cultivator and Agricultural Labour is 63.3 percent. In other words, we can say that
two-thirds of workers are directly engage in agricultural occupations. The household
worker is 0.8 percent and other worker is 7.5 percent. So here total main worker is
71.6 percent and marginal worker is 28.4 percent. It shows that marginal workers are
large in number reflecting upon poor economic conditions in Bahraich.
In 2001 total worker of Bahraich district was 960606 and in which most of them were
found to be engaged in agriculture, but its percentage has declined in comparison to
1991. The share of cultivator was 62.1 per cent and agricultural labour share was 12.7
per cent in 1991. These have become 46.8 percent and 14.8 percent respectively in
2001. This shows that workers engaged in agriculture is 61.6 percent in 2001. This
shows that the share of the farmers and farm labour is shrinking in the district while
they are shifting to other occupations.
According to this table we say that Bahraich district the development profile
is based on mainly agricultural and its allied activities. Most of the workers are
cultivators and agricultural labour. So this district is a backward district and majority
of the population lived on agriculture not withstanding some changes.
3.7 Educational Development Profile in Bahraich District:
The educational development profile of Bahraich district is not at satisfactory
level. The literacy position in Bahraich district is almost at the bottom as it ranks third
from the bottom in Uttar Pradesh. The literacy rate of Sharawasti district is the lowest
with 33.8 per cent in which male literacy is 46.7 per cent and female literacy 18.6 per
cent in 2001. Than Balrampur district comes next with a literacy rate of 34.6 per cent
in which male literacy is 45.8 per cent and 21.8 per cent of female literacy. The third
rank from the bottom is occupied by the Bahraich district where literacy rate was 35.2
per cent in which male literacy is 45.6 per cent and female literacy is 22.8 per cent in
2001. Thus literacy position of Bahraich district is given below in Table 3.15. In
Bahraich district inter district or block-wise data shows that there is not much
difference in literacy rate among the blocks. The block-wise literacy rate is shown in
table 3.15.
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Table 3.15: Development block-wise literacy rate in the Bahraich district
Sr.No Development block Literacy rate in percent (2001) 1 Mihinpurwa 30.9
2 Nawabganj 33.3
3 Balha 26.3
4 Shivpur 27.9
5 Rishiya 29.9
6 Chittaura 34.1
7 Mahsi 34.3
8 Tazawapur 32.1
9 Fakharpur 32.2
10 Hazurpur 30.3
11 Kaisarganj 37.3
12 Jarwal 34.5
13 Payagpur 43.5
14 Visesherganj 43.1
Bahraich District (Average) 35.2
Uttar Pradesh 56.3
India 64.8
Source: Sankhiky patrika district Bahraich, 2012 and Sankhiky diary Uttar Pradesh,
2010 page 227 and 230.
In Uttar Pradesh literacy rate is 56.3 per cent and in India- 64.8 per cent in 2001
census. Thus these data show that Bahraich district is backward in literacy in the
country and also the state of Uttar Pradesh.
3.8 Conclusion:
At last in conclusion we can say that Bahraich district has much resource for
development because the district is enriched in terms of geographical area, forest
resource, better climate condition, fertile land and water resources are. In the Bahraich
district sufficient agriculture land is available and producing major Food crops, Cash
and Horticulture crops. The district is enriched in Forest resource, because 14 per cent
land area under Forest area. The district has enough Rainfall. The district is also
enriched in Demographic resource. But Bahraich district has backward position
because in the district has low sex ratio, low urban population ratio, low literacy rate
and low Human Development. In the human development Bahraich district has 2nd
rank from the bottom level in the Uttar Pradesh among districts. Bahraich district has
poor Infrastructure services because Road, Railway, Industry Education and Health
Infrastructure have poor quality. Electricity supply is also inadequate.
Thus we can say that poor infrastructures and poor human development in Bahraich
district has been showing down development process. Therefore there is need to
tackle the backwardness by empowering poor and marginalized population of the
97
district. In the district, economic diversification is quite limited and under dependence
is on the primary sector. Therefore, by engaging poor and marginalized people
through microfinance now, in the following chapters, we shall be discussing about the
microfinance and its effects in Bahraich district.
Chapter Four
General Features of the People and Pattern of
Microfinance Availability
CHAPTER FOUR
GENERAL FEATURES OF THE PEOPLE AND MICROFINANCE
AVAILABILTY
Introduction:
General features of microfinance and pattern of availability is important for
assessing the role of microfinance in improve the poverty alleviation and employment
generation. With better availability of microfinance the poor people are likely to
benefit more. Microfinance programmes play significant role in poverty alleviation,
employment generation and women empowerment in developing countries. There is a
lot of possibility to develop the better applications of microfinance for the people like
in Bahraich district whose annual income is significantly low. So this can be a true
helper of poor and unskilled population. In this chapter we present the general
features of the people using the microfinance and its pattern of availability in the
Bahraich district. For this we collected primary data by sample survey method. The
sample survey was carried out using a semi-structured questionnaire, and data from
190 respondents were collected during the study.
Bahraich is one of the most backward districts in Uttar Pradesh. In the district
major problems are poverty, unemployment, illiteracy, labour migration, nutrition,
and sanitation and women empowerment. Therefore, Bahraich district can be selected
as the base district for the applicability of microfinance in alleviation of these
problems. The study includes all the four tehsils in the district. We conducted
interview for those who were using microfinance for self-employment purpose and
raising their income levels besides enhancing their living standard.
4.1 Methodology and Sample Design:
Bahraich district has been selected for the study because as compared to other
districts of the state, this district is poor and backward in terms of literacy rate,
infrastructure facility, people’s involvement and participation in different government
and institutional programmes.
4.2 Sample of Primary Data Collection of the Study:
The study is based on both secondary as well as primary data collected from
the study area. The required data is obtained from the annual report of NABARD,
99
Status of Microfinance in India, Uttar Pradesh planning department, District
Statistical Office, etc. For studying the role of Microfinance in all tehsils, a specific
schedule was prepared in order to collect primary data from the field. Keeping in view
the objectives of the study, survey technique along with personal interview method
has been employed for the collection of data. A separate schedule has been prepared
and stricticly followed for the collection of the relevant information. Primary data at
individual level has been collected during the period of October 2011 to April 2012.
Keeping in view the objectives of the study, both tabular as well as statistical test has
been used for data analysis. Tabular analysis was made on the basis of the
performance and tehsil wise. Further Regression and (Analysis of Variance) ANOVA
repeated measures has been used to access the performance of beneficiaries on the
basis of personal income, household expenditure, personal savings and personal
employment. The respondents belonged to all the four tehsils in Bahraich district.
Table 4.1: Tehsil wise distribution of respondents (N=190)
S. No. Tehsil No. of Respondent Percentage
1 Nanpara 100 52.6
2 Mahsi 32 16.8
3 Bahraich 7 3.7
4 Kaisarganj 51 26.8
Total 190 100
Source: primary survey data.
Table 4.1 shows the tehsil wise distribution of respondent. This table shows
that the majority of respondents were from Nanpara tehsil (N=100) which is 52.6
Percent of total respondents. It is followed by Kaiserganj tehsil (N=51), which is 26.8
Percent of total respondents and Mahsi tehsil (N=32), which is 16.8 Percent of total
respondents. There were only 7 (3.7 per cent) respondents from Bahraich tehsil which
is significantly poor. The above analysis shows that the respondent belongs to mainly
rural areas because most of the microfinance activity is generally found there and
some activities are found in urban areas but these respondents came mainly from the
rural areas. Therefore we focus our study in rural areas and selected for the sample.
Table 4.2 Distribution of subject according to living place (N=190)
S. No. Place of living Number of Respondent Percentage
1 Rural 189 99.5
2 Urban 01 0.5
Total 190 100
Source: Compiled by author from primary survey data.
100
The respondent distributions according to their place of residence have been shown in
Table 4.2. This can be concluded from the above table that 99.5 percent of the total
respondents belong to the rural areas.
4.3 General and Household Information of the Respondents:
The general and household information of the respondents is carried by using
the following parameters age, gender, religion, category, house ownership, house
type, electricity, Telephone/Mobile, source of drinking water and respondent’s
education level. These parameters are the primary data collected for the analysis.
4.3(a) Age of respondent:
The actual age of respondents is shown in questionnaire, and in the data
tabulation and data analysis age of respondents. We are dividing these data into three
groups of the respondent age less than 18 years, the age between 18 to 60 years and
the respondent age more than 60 years.
Table 4.3 Age wise distribution of respondents (N=190)
Sr. No. Age-group of respondents No. of respondents Percentage
1 Less than 18 years 3 1.6
2 Between 18 to 60 years 167 87.9
3 More than 60 years 20 10.5
Total 190 100
Source: Compiled by author from primary survey data.
Table 4.3 shows the age wise distributions of respondents and it can be
concluded that majority of subjects (n=167, 87.9 per cent) were having the age
between 18 to 60 years. There were (n=20, 10.5 per cent) respondents having age
above 60 years and (n=3, 1.6 per cent) below the 18 years. Thus, the majority of the
respondents are between the age group of 18-60 years engaged in microfinance for
their occupations and livelihood.
4.3(b) Gender of respondents:
Male and female both engaged in microfinance activity but the male
dominates over female. In the Bahraich district respondents are male and female
beneficiaries and non-beneficiaries of microfinance and its related activities. These
respondents are direct microfinance beneficiaries; self-help groups members and
kisan-credit card (KCC) holders. We collected data on Self-Help Groups (SHGs). The
maximum 5 members in any Self-Help Group were approached for the study.
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Table 4.4: Gender wise distribution of respondents
Sr. No. Gender of respondents No. of respondents percentage
1 Male 156 82.1
2 Female 34 17.9
Total 190 100
Source: Compiled by author from primary survey data.
Table 4.4 shows the gender wise respondent’s distribution and it can be
concluded that more than four/fifth (82.1 per cent) respondents are male. There were
only 34 (17.9 per cent) female respondents. The lesser ratio of female is observed
because in Bahraich district we find very low literacy rate, many social evils and low
awareness and the majority of female population is not doing outdoor work.
4.3(c) Religion of respondents:
In our sample survey we find that the respondents belong to Hindu and
Muslims religions. In the rural area of Bahraich district most of population belong to
the religion of Hindu followed by Muslim religion. The religion wise respondent’s
distribution is given in Table 4.5
Table 4.5: Religion wise respondent distributions
Sr. No. Religion of respondents Number of respondents Percentage
1 Hindu 139 73.2
2 Muslim 51 26.8
Total 190 100
Source: Compiled by author from primary survey data.
The Hindus comprised almost three/fourth (n=139, 73.2 per cent) of study
sample. All the remaining respondents (n=51, 26.8 per cent) were Muslims. Thus
people of both communities are engaged in microfinance and its related activity and
they make efforts to increase microfinance activities for increasing their income,
employment and socio-economic status.
4.3(d) Category wise distribution of respondent:
In Bahraich district people associated with the microfinance belong to
different categories. In the survey we find that other backward categories (OBCs)
respondents are more than other category respondents. So in the Bahraich district,
there is much involvement of other backward category people than the General and
Scheduled caste category people. The category wise respondent’s distribution is given
in Table 4.6. Table 4.6 shows the category wise distribution of the respondents and
further it can be concluded that OBC category is dominating over all other categories.
There were 23 (12.1 per cent) scheduled castes and remaining 53 (27.9 per cent)
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belong to general category. Thus this sample study of Bahraich district covers all
categories respondents which are engaged in microfinance activity for their
livelihood.
Table 4.6: Category wise respondent distributions in Bahraich district
Sr. No. Category of respondents Number of respondents Percentage
1 General 53 27.9
2 OBC 114 60.0
3 SC 23 12.1
Total 190 100
Source: Compiled by author from primary survey data.
4.3(e) House ownership and type of house of the respondent:
The House ownership of respondent shows that excluding two all other
respondents are their own houses and they stay with their relatives or friends. For the
analysis purpose the house type is categorised into four categories. These are Pucca,
Semi-Pucca, Kuchcha and Hut. The house ownership and house type of respondents
in Bahraich district is shown in Table 4.7(a).
Table 4.7(a): House ownership and house type of respondents
Sr. No. Variable(House ownership) Number of respondents Percentage
1. Own 188 98.9
2. Other 02 1.1
House Type 1. Pucca 40 21.1
2. Semi-Pucca 61 32.1
3. Kuchcha 76 40.0
4. Hut 13 6.8
Source: Compiled by author from primary survey data.
In the study we found that almost all 98.9 per cent respondents used to live in
their own houses, and while remaining 1.1 per cent used to live as tenants. The nature
of house, majority of respondents have pucca house and semi-pucca house (n=101,
53.2 per cent), because maximum respondents are living in their own pucca or semi-
pucca house. The 21.1 per cent respondents are living in pucca house and 61 (32.1 per
cent) respondent have semi-pucca house. On the other hand 76 (40.0 per cent)
respondents are living in Kuchcha house while 13 (6.8 per cent) respondents reported
that they were living in huts. This table shows that the number of pucca house is
increasing day by day in rural areas. Later I also show that microfinance is helping in
this regard. Thus, fast growing pucca house in rural area is being helped by
microfinance in Bahraich district.
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4.3 (f) Availability of Electricity, Telephone/Mobile and source of
drinking water for respondents:
In the Bahraich district electricity availability is very poor. Large numbers of
villages were not connected with the electricity till 2012. But mobile revolution is
spread to almost all the respondents. On the other hand, sources of drinking water are
Hand Pump available for the major segment of the respondents. Thus, we found very
poor infrastructure development in the Bahraich district, because road, electricity and
railways are in underdeveloped condition. This poor infrastructure also disturbs its
development process. Due to mobile revolution, it has reached to almost all the
respondents. The availability of Electricity, Telephone and source of drinking water
are shown in Table 4.7(b).
Table 4.7(b): Availability of electricity, Telephone/Mobile and source of
Drinking water
Sr. No. Variable No. of respondents Percentage
Electricity connection
1 Yes 44 23.2
2 No 146 76.8
Telephone/Mobile
1 Yes 176 94.2
2 No 11 5.8
Source of Drinking water
1 Hand Pump 190 100
Source: Compiled by author from primary survey data.
Table 4.7(b) shows that only 44 (23.2 per cent) of the respondents were having
electricity in their house, and rest 146 (76.8 per cent) respondents have no electricity
connection in their house. Thus in the Bahraich district most part of the rural area is
not connected with the electricity. Besides this rural area that connected with
electricity experience poor quality and quantity of electricity. This poor electricity
facility affects development process. Although microfinance related activity of
income and employment generation does not get much affected because primary data
shows that its activities are successful without electricity apparently.
The second part of table 4.7(b) shows the ownership of Telephone/Mobile. It
can be seen that 179 (94.2 per cent), respondents are showing availability of mobile
phone, while only 11 (5.8 per cent) respondents have no mobile phone. Thus in the
Bahraich district mobile revolution seems to be good and satisfactory. On the other
hand, all the respondents have Hand Pump as their drinking water source. Thus
availability of mobiles and hand Pumps for drinking water is perfect for the
respondents in the Bahraich district.
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4.3(g) Respondents education level in Bahraich district:
The actual education level of the respondent is presented in Table 4.8. In the
tabulation of the primary data we divide education level into four groups- Graduation
and above, up to matriculation, up to primary and illiterate. In terms of education of
the respondent and average district education level lies at the bottom level in Uttar
Pradesh. There is significant variation of the education level in the district.
Table 4.8: Respondent Education Level in Bahraich district
Sr. No. Respondent education level Number of respondents Percentage
1 Graduate & above 3 1.6
2 Matriculate 51 26.8
3 Primary 57 30.0
4 Illiterate 79 41.6
Total 190 100
Source: Compiled by author from primary survey data.
Table 4.8 shows that the maximum numbers of respondents are illiterate 79
(41.6 per cent) and only 3 (1.6 per cent) respondents are having education up to
Graduation or above. There were 51 (26.8 per cent) respondents having education up
to Matriculation and 57 (30.0 per cent) of the respondents were educated up to
primary level only. This figure is not equally distributed. People having education up
to graduation and above are from urban areas whereas people having education up to
primary level and illiterate people belong to rural areas. Therefore, we can conclude
that Bahraich district has low literacy rate. According to 2011 census report Bahraich
district has 3rd
rank in the lowest literacy rank after Shrawasti (bottom) and Balrampur
(2nd
from bottoms) district in Uttar Pradesh.
Thus these primary data are showing general and household information of the
respondents in Bahraich district. In the case study we found that microfinance
provides much support for providing education to children of the respondents. So we
can say that all of these characteristics are also applicable for other households in the
Bahraich district.
4.4 Demography and other Particulars of Household Members:
In this section we analyze the demography and other particulars of household
members of respondents in Bahraich district. Here the parameters studied are average
family size, educated members in family, monthly income of household, having bank
accounts and frequency of bank transactions. We included these parameters because
in economic development these indicators play very important role. In India from pre
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independence period these indicators are very poor. But after independence these
indicators started improving. In Uttar Pradesh these indicators are for better than in
Bahraich district because Uttar Pradesh is assigning greater significance towards these
indicators. This shows that Bahraich district has low levels of these indicators as
compared to India and Uttar Pradesh. Therefore, microfinance may play very
important role in improving these indicators, by raising the economic status of the
poor and marginalized sections in the district.
4.4(a) Average family size:
In this study we found that the actual family member of respondent and
recorded the details in the questionnaire. For tabulating the data we divide all sizes
into three groups as follows family size less than 5 members, family size between 5 to
10 members and family size more than 10 members. The family size less than 5
members showing small family, family size between 5 to 10 member is medium size
family and family size more than 10 member is big size family. The average family
members of household are medium size. In the sample survey we found that the
average family size of respondent and the other peoples family also having the same
size in the Bahraich district. In the table 4.9 we are shown the average family size of
respondents in Bahraich district.
Table 4.9: Average family size of respondent
Sr. No. Average family members Number of respondents Percentage
1 Less than 5 members 87 45.8
2 Between 5 to 10 members 98 51.6
3 More than 10 members 05 2.6
Total 190 100
Source: Compiled by author from primary survey data.
Table 4.9 shows that in the Bahraich district respondents having less than 5
members in a family are 87 (45.8 per cent). Between 5 to 10 members in family size
the respondents were 98 (51.6 per cent) and respondents having more than 10
members in family size are just 5 (2.6 per cent). Thus, the majority of the respondents
had 5 or more members in their family (n=103, 54.2 per cent). These family sizes
were like other poor and non-respondent people in the Bahraich district.
4.4(b) Education of family members of the respondents:
In this section we discuss the number of educated members in the family of
the respondents. For the tabulation of the data we grouped all data into three groups
that all family members educated, some members are educated and no one of the
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members is educated. With this data we can know education of family members of the
respondents. In the sample survey we found that respondents, who started self-
employment occupation with the help of microfinance this increases their income and
employment and at the same time increase their children’s education. Thus
microfinance is playing very important role in improving education level of the
respondents. Members of educated family members of respondents are shown in
Table 4.10.
Table 4.10: Numbers of educated family members of respondents
Sr. No. Educated family members Number of respondents Percentage
1 All 51 26.8
2 Some 91 47.9
3 None 48 25.3
Total 190 100
Source: Compiled by author from primary survey data.
Table 4.10 shows that the respondent whose all members of family are
educated are 51 (26.8 per cent) of the total respondents and number of the respondents
with some members of family educated, is 91 (47.9 per cent). Around one fourth of
the respondents did not have any one literate in the family. Thus in Bahraich district
only one quarter (26.8 per cent) of the respondents are whose all family members
were educated. There were 91 (47.9 per cent) respondents who reported some
members of their family are educated while 48 (25.3 per cent) respondents reported
no one of the family members being educated. In the case study we discuss with the
respondent about their quality of the education after using the microfinance and they
reported positively that after starting microfinance activity, they started sending their
children to schools. Thus, we can conclude that microfinance has impact on
increasing children’s education.
4.4 (c) Monthly Income of the respondents:
Monthly income of respondent means the income earned by respondent and
their family member by all sources during the entire month. For the analysis purpose
we divide the monthly income of the family of respondents into three groups.
Household income has less than Rs. 5000, between Rs. 5000 to 10000 and respondent
income more than Rs. 10000. In the case study we found that microfinance plays an
important role in increasing the income of the respondents. They reported that with
the help of microfinance income and employment both increase.
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Table 4.11 Monthly incomes of respondent
Sr. No. Monthly income (Rs.) Number of respondents Percentage
1 Less than Rs. 5000 73 38.4
2 Rs. 5000 to Rs. 10000 86 45.3
3
More than Rs. 10000 31 16.3
Total 190 100
Source: Compiled by author from primary survey data.
Table 4.11 shows that 73 (38.4 per cent) have per month income of less than
Rs. 5,000, income between Rs. 5000 to Rs. 10000 and 86 respondents (45.3 per cent)
and more than Rs. 10,000 income per month are 31 (16.3 per cent) respondents. The
majority of the respondents (n=117, 61.6 per cent) had a monthly income above Rs.
5000. There were 73 (38.4 per cent) households with monthly income less than Rs.
5000.
4.4(d) Having bank account and frequency of bank transactions:
In this section we describe the respondents having bank accounts and
frequency of the transaction. In the case study we asked respondents that if they have
bank account. They have to reply in Yes or No. Then we asked frequency of the
transaction. They replied the transaction of duration wise weekly, fortnightly,
monthly, quarterly, half-yearly and yearly. In the study we found that banks play very
effective role in development of microfinance and its related activity because by
opening a bank account they can increase their savings. After some saving collection
they would be able to get loan plus grants and may start self-employment by any
occupation. In their savings they could borrow at very easy terms and condition and
fulfil their basic needs of financial requirement. Thus, banks play very important role
in savings collection, providing loan and grants, promote self-employment occupation
and micro-credit facility to poor people. Information of having bank account and
frequency of transactions is shown in Tables 4.12 (A and B).
Table 4.12(a): Having bank account (n=190)
Sr. No. Have Bank Account No. of respondents Percentage
1 Yes 168 88.4
2 No 22 11.6
Total 190 100
Source: Compiled by author from primary survey data.
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Table 4.12: (b) Frequency of bank transaction (n=168)
Sr. No. Frequency of Bank transaction No. of respondents Percentage
1 Weekly 6 3.6
2 Fortnightly 41 24.4
3 Monthly 92 54.8
4 Quarterly 14 8.3
5 Half-Yearly 14 8.3
6 Yearly 1 0.6
Total 168 100
Source: Compiled by author from primary survey data.
Table 4.12 shows that there were 168 (88.4 per cent) respondent having bank
account and 22 (11.6 per cent) respondents or their family members had no bank
accounts. Thus majority of the respondents had bank accounts and they might get
benefit by the microfinance. However, it is still a disturbing feature that around 12
percent respondents did not have any bank account and still they were engaging in
microfinance. The frequency of bank transactions shows that the respondents making
weekly transaction are only 6 (3.6 per cent) and respondents having fortnightly
transactions were 41 (24.4 per cent). The majority was the monthly transactions with
92 (54.8 per cent) respondents; the quarterly transactions were undertaken by 14 (8.3
per cent) respondents and half yearly transaction was carried by of 14 (8.3 per cent)
respondents and one respondent had yearly transaction of bank account.
Thus, frequency of transaction was reported to be monthly by majority (54.8
per cent) of the account holder engaged in microfinance. Almost one-quarter (24.4 per
cent) of the respondents went for fortnightly bank transactions while 6 (3.6 per cent)
reported it to be on weekly basis. Quarterly and half-yearly transactions were reported
by 14 (8.3 per cent) respondents each while 1 (0.69 per cent) respondents reported it
to be on yearly basis. Thus, people associated with the microfinance and having bank
accounts went for monthly and fortnightly bank transactions. In the study we found
that most of the respondents were having bank accounts (88.4 per cent). So, we can
say that in the Bahraich district, rural areas have maximum microfinance beneficiaries
who have bank account and do the bank transaction on fortnightly and monthly basis.
4.5 Pattern of Microfinance Availability:
Although, we have achieved high growth rate, but still problems of poverty and
unemployment persists in the economy and so is the case in Uttar Pradesh. There are
various studies showing that microfinance is a possible way to reduce poverty,
increase employment opportunity and improve social justice in different parts of the
world. Microfinance has one of the most discussed subjects in the last two decades all
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over the world. It has significant impact in reducing poverty or in promoting micro
and small enterprises. For promoting this idea 30 year ago, Prof. Mohammad Younus
(associated with Grameen bank of Bangladesh) has been awarded Noble peace prize
of 2006. He was successful in reducing poverty, increasing employment with the help
of the microfinance.
Microfinance refers to the whole range of financial services for the poor people,
including savings, credit, money transfer, insurance, pension and other financial
innovations aimed at serving the very poor. Microfinance may be defined as “Small
loans given to impoverished people, especially in developing countries to help them
so that they become self-employed.” Microfinance means the provisions of thrift,
credit and other financial services and products of very small amount to the poor in
rural, semi-urban or urban areas for enabling them to raise their income level and
improve their living standards. Usually the loan size would be below Rs. 50000.
Microfinance in India is associated with governmental and non-governmental
organisations (NGOs) initiatives that took place in the mid-eighties and early nineties.
It incorporated lessons from the microfinance movement in Bangladesh and similar
participatory development programmes in India. The Self-Help Groups (SHGs) and
bank linkage programmes and also providing re-finance facility by the National Bank
for Agriculture and Rural Development (NABARD) accelerated the growth of
microfinance movement in India in latter half of the Nineties.
SHGs are presently promoted by governments, development banks and
voluntary agencies with focus on social and economic issues, mainly thrift and credit
programmes. They are also taking up issues relating to rural industries and
modernization of agriculture. SHGs are:
(i) A simple and effective method for the poor to help each other
(ii) A voluntary group of rural poor who face similar situations and Problems
(iii) Encourage small savings (thrift) among members
(iv) Provide a forum for the members to solve their problems collectively
(v) Numbers of members belongs to different age-group between 10 to 20.
After receiving credit and assistance the SHGs members started self-
employment occupation. This occupation increases income and employment of poor
SHG members. They increase consumption, socio-economic status and reduce
poverty of self help group members. Thus, by joining Self-help group, poor people
help each other and solve their problems collectively.
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Microfinance is playing significant role in Uttar Pradesh. Here microfinance is a
hope for poor. Because microfinance develops micro-enterprises like – Dairy product,
Cookcut, Horticulture and other products besides many items of local needs are
produced and tailoring, trading of vegetable and fruits etc are practiced. Thus people
may become self-employed and he/she gets increased income and production besides
support to existing work and employment. The major impact of microfinance is in
reducing poverty and unemployment. Bahraich district was selected for case study
because it is one of the most backward districts in Uttar Pradesh. Therefore, this
would be suitable case for studying role of microfinance.
4.6. Major Occupation of the Respondents:
In the case study we are discussing 190 respondents, where primary
occupation is the main occupation. Majority of the respondents are illiterate or poorly
educated with low skills. So the maximum respondents are engaged in agriculture and
related activities. But along with the main occupation, people also attempt to go for
some subsidiary occupations, where microfinance is playing very important role.
Thus, microfinance increases additional income through subsidiary occupations and
employment opportunity for poor people that may help in reducing poverty. We
describe the major and subsidiary occupations of respondents. In the sample survey
we found the major and subsidiary occupations of respondent as shown in Table 4.13.
Table 4.13: Major occupations of respondents in Bahraich district.
Sr.
No.
Major occupation No. of
respondents
Percentage
1. Agriculture only 9 4.7
2. Agriculture and other 131 68.9
(a) Animal husbandry 91 47.9
(b) Trade 9 4.7
(c) Mobile vender 0 0
(d) Labourer 6 3.2
(e) Other 15 7.9
(f) Agriculture, animal husbandry and trade 8 4.2
(g) Agriculture, animal husbandry and other 2 1.1
3. Animal husbandry only 0 0
4.
Animal husbandry with trade, mobile vending
and others
12
6.3
5. Trade only 19 10.0
6. Mobile vending only 2 1.1
7. Labourer only 9 4.7
8. Labourer and other 2 1.1
9. Other only 5 2.6
Source: Compiled by author from primary survey data.
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Table 4.13 shows that agriculture is the most common occupation in combination
(n=131, 68.9 per cent). This data shows that major population of Bahraich district is
directly engaged in the agriculture or 68.9 per cent respondents are dependent on
agriculture and its subsidiary and other related occupations. In practice 9 (4.7 per
cent) respondents are found to be engaged only in agriculture. Animal husbandry was
the next most common occupation, but it was not practiced alone (n=0) because the
respondents considered animal husbandry as a subsidiary occupation only. So a
combination of animal husbandry and agriculture (n=91, 47.9 per cent) was the most
common combination. Thus, these data show that in the Bahraich district agriculture
and animal husbandry is the major occupation. There is agriculture and trade
occupation where 9 (4.7 per cent) respondents were engaged. Here no respondent was
found to be a mobile vender with agriculture. In the common occupation of
agriculture and labourer there are 6 respondents, which is 3.2 per cent of the total
respondents. Agriculture and other occupations have 15 respondents, which is 7.9 per
cent of the total respondents. Agriculture, animal husbandry and trade have 8 (4.2 per
cent) respondents. Agriculture animal husbandry and other is only 2 (1.1 per cent) of
the total respondents.
The animal husbandry has no respondent. In the animal husbandry with trade,
mobile vending and other occupations there are 12 respondents (this is 6.3 per cent of
the total respondent). The only trade occupation has 19 respondents, which is 10 per
cent of total respondents. Only mobile vending occupation is having just 2 (1.1 per
cent) respondents. The labourer only 9 (4.7 per cent), labourer and other have only 2
(1.1 per cent) and in only other occupation 5 (2.6 per cent) respondents were
recorded. Thus, the major occupation is agriculture and with some subsidiary
occupation by the help of microfinance in the Bahraich district. This table shows that
the people engaged in the farm sector are getting tempted to take advantage of the
microfinance.
The related occupations are animal husbandry, trade, labourer and other
occupation effect the directly for the main occupation. The maximum respondents are
illiterate or primary educated and low skilled. So they generally adopt agriculture and
animal husbandry as occupation. Thus microfinance is very helpful in purchasing
agriculture inputs, animals and starting other subsidiary occupations.
In the study of Bahraich district, we found better availability of microfinance.
Beneficiaries are initiating their own occupations and they improve their business,
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increase income and thereby improve their socio economic status with the help of
microfinance. The availability of microfinance in Bahraich district can be clubbed
into three following categories.
Direct availability of microfinance,
Microfinance through Self-Help Group (SHGs), and
Availability of microfinance through Kisan Credit Card (KCC).
In this study we get the pattern of microfinance availability with the help of 190
respondents. This sample survey has been completed in all the four tehsils in Bahraich
district. In my study 62 respondents are enrolled as direct microfinance beneficiaries,
96 respondents are using microfinance through self-help groups (SHGs) and 67
respondents are using microfinance through kisan credit card (KCC). It is noted that
there were respondents who had availed more than one source of microfinance. The
detailed analysis of the availability of microfinance in the Bahraich district is
presented now.
4.7. Direct Availability of Microfinance:
Direct availability of microfinance includes- own savings, private loan,
government loan, commercial and co-operative bank loan and other types of
microfinance facilities. Other type of microfinance includes insurance, pension funds
and money transfers. In the study, we find that this type of microfinance was available
for the respondents and they start various occupations which increase their income,
reduce poverty, generate self-employment and improve their socio-economic
condition. The direct mode of microfinance is very successful because the people first
want to start occupation then manage direct microfinance for investment to improve
their business activities.
Here we discuss the performance of aforesaid occupations. The significant
numbers of respondents were starting their occupation with the help of direct
availability of microfinance. The major occupations are Agriculture, animal
husbandry, trade, mobile vender and other. These occupations can bring about effects
on their socio-economic condition and reduce their poverty while providing
employment. The investments in different occupations by the respondents can be
clubbed in to five groups so that the analysis can be done properly. These groups are:
investment less than Rs. 10,000/, Rs. 10,000 to Rs. 20,000/, Rs. 20,000 to Rs. 40,000/,
Rs. 40,000 to Rs. 80,000/ and more than Rs. 80,000/. Further, initial investments in
the occupations of respondents are presented here. This initial investment may be
considered as direct availability of microfinance
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Table 4.14: Initial Investment in Occupation Setup (n=62)
Sr. No. Initial investment No. of respondent Percentage
1 Less than Rs. 10000 25 40.3
2 Rs.10000 to Rs. 20000 25 40.3
3 Rs.20000 to Rs. 40000 9 14.5
4 Rs.40000 to Rs. 80000 2 3.2
5 More than Rs. 80000 1 1.6
Source: Compiled by author from primary survey data.
Table 4.14 shows the total of 62 respondents (around one-third of all), were
normally in occupation through direct availability of microfinance. Further it can be
concluded that there is a large number of the respondents whose initial investment
was up to Rs. 20000. Respondents having initial investment less than Rs. 10000 were
25, which is 40.3 per cent of total respondents. These respondents started their
occupation with little investment or microfinance. The respondents, who invested
between Rs. 10000 to Rs. 20,000 are also 25, which 40.3 per cent. Thus the initial
investment under Rs. 20,000 is 80.6 per cent of the total respondents.
There are some respondents whose initial investment lies between Rs. 20,000
to Rs. 40,000 which 14.5 per cent of the total respondents. The initial investment lies
between Rs. 40,000 to Rs. 80,000 are only two i.e. 3.2 per cent of the total
respondents and more than Rs. 80,000 investment is only one i.e. 1.61 per cent of the
total respondent. Thus only 3 respondents i.e. 4.8 per cent of the total respondent had
initial investment above Rs. 40,000. So we can say that majority respondents have
started occupation with microfinance but these have macro level impact and better
impact on the socio-economic conditions of the respondents.
4.7(a) Source of direct microfinance funding:
In the study we found that direct microfinance beneficiaries start their
occupation by getting money from various funding sources. Poor people who wanted
to start their occupation may generate microfinance by own savings, commercial bank
loan, by relatives and friends. The direct microfinance becomes successful because
people made pre-plan in their occupation. They manage microfinance and then they
start occupation. The main impact of this occupation is that they got self-employment
so that they would be able to reduce poverty and increase their monthly income. The
source of direct microfinance funding in Bahraich district is shown in table 4.15(a).
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Table 4.15(a): Source of funding of Direct Microfinance
Sr.
No.
Source of Funding Number of
Respondents
Percentage
1. Own Savings only 11 17.7
2. Own Savings + Private loan 1 1.6
3. Private loan 27 43.5
4. Commercial Bank loan 6 9.7
5. Co-operative bank loan 7 11.3
6. Other sources (relative and friends) 10 16.1
Total 62 100.0
Source: Compiled by author from primary survey data.
Table 4.15(a) shows the number of respondents having started their
occupations with the help of direct microfinance. The maximum share of funding
source is private loan taken by either by their relatives or by their friends. The total
respondent who are using private loan as their direct finance source is 43.5 per cent of
the total respondents. There are 17.7 per cent of the total respondents using their
savings as the source of funding. There are a total of 10 (16.1 per cent) respondents
using other source of funding as their source of funding for starting business. In the
other source are included relative and friends, loan and Insurance claim. The table
4.15(b) shows that the respondent loan availed for occupational purpose.
Table 4.15(b): Loan availed for occupational purpose
S. No. Loan availed for occupational
purpose
No. of Respondents Percentage
1 Yes 48 77.4
2 No 14 22.6
Total 62 100.0
Source: Compiled by author from primary survey data.
Here we found that the 48 respondents have reported that they borrowed for
the occupational purpose. In the study we found that total 62 respondents are using
direct microfinance in their occupation besides some other purposes. Thus, 77.4 per
cent respondents are borrowing direct microfinance for occupation purpose and rest of
respondent borrowing direct microfinance and they used the money for treatment of
illness, marriage and other purposes.
4.7 (b) Number of times borrowed:
There are 48 respondents using direct microfinance for occupational purposes.
We asked question “Number of times borrowed”. In order to represent their answers
properly we grouped the answers into three groups in the tabulation. These are only
once, less than 5 times and more than 5 times. Thus, we found that respondents
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borrow on their needs but most of the respondents borrowed only once. In the study
we find that direct microfinance creates major impact in his life by increasing self-
employment opportunity, income, consumption, health care, children’s education and
socio-economic status. The table 4.16 shows that the number of times borrowed by
respondents.
Table 4.16 Number of times borrowed (n=48)
S. No. Number of times borrowed No. of Respondents Percentage
1 Once 25 52.1
2 Less than 5 times 14 29.2
3 More than 5 times 9 18.8
Total 48 100.0
Source: Compiled by author from primary survey data.
Table 4.16 shows the number of times respondent borrowed the direct
microfinance for occupational purpose. This can be concluded that only one time
borrowing was reported by 52.1 per cent of the total respondents. Total 14
respondents borrowed less than 5 times and this figure is 29.2 per cent of the total
respondents. There are 9 respondents who borrowed money more than 5 times; this
figure is 18.8 per cent of the total respondents. Therefore, we can say that direct
microfinance play very effective role in reducing poverty and increasing income and
employment in Uttar Pradesh as they may borrow as per their requirements.
4.7 (c) Amount borrowed:
In the study we find the respondent using direct microfinance for starting self-
employment and their occupation. They borrowed as per their needs. In questionnaire
we prepared our questions in this way so that the amount borrowed by the respondents
would be determined. For the tabulation of the data obtained we grouped the amount
of the money borrowed in to three groups as follows. The range of the respondents
was borrowed less than Rs. 5000, between Rs. 5000-10,000 and more than Rs.
10,000. This is represented in Table 4.17.
Table 4.17: Amount borrowed (in Rs.) (n=48)
Sr. No. Amount borrowed Number of Respondents Percentage
1 Less than 5,000 6 12.5
2 5,000 to 10,000 17 35.4
3 More than 10,000 25 52.1
Source: Compiled by author from primary survey data.
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Table 4.17 shows the amount of the direct microfinance obtained by the
respondents for occupational purpose. There was a total 25 (52.1 per cent)
respondents who borrowed a sum, more than Rs.10,000. Total 6 (12.5 per cent)
respondents borrowed a sum, less than Rs. 5,000. There are only 17 (35.4 per cent)
respondents who borrowed a sum between Rs. 5,000 to 10,000. Thus, the maximum
borrowers borrowed more than Rs. 10,000 through direct microfinance. By using this
amount they were starting self-employment and their occupation.
4.7. (d) Main Source of direct microfinance:
For the tabulation of the data of main source of direct microfinance we
grouped it into two groups institutional and non-institutional. In the study, we found
that the main source of direct microfinance is non-institutional sources because in the
rural area of Bahraich district low literacy and unawareness among the respondents is
high. So they prefer non-institutional borrowings because institutional sources need
much documents and verification although they charge low rates of interest. However,
non-institutional sources charge high interest rates. Table 4.18 shows the main source
of direct microfinance availed by the respondents.
Table 4.18: Main sources of direct microfinance (n=48)
Sr. No. Main source No. of respondents Percentage
1 Institutional 13 27.1
2 Non-institutional 35 72.9
Total 48 100.0
Source: Compiled by author from primary survey data.
Table 4.18 shows that majority of the respondents preferred the non-
institutional sources. There were 35 respondents who used non-institutional sources of
the borrowing which comes to 72.9 per cent of the total respondents. The respondents
preferring the institutional sources of the borrowing were 13 and this figure is 27.1
per cent of the total respondents.
4.7(e) Rate of interest charged:
The direct microfinance beneficiaries were borrowing at different rates of
interest. In the study we found that institutional lenders were charging same interest
rates for all the respondents but non-institutional lenders were charging different
interest rates to different respondents. For the tabulation of data we categorise the rate
of interests into four groups as follows. Interest rate charged less than 5 per cent
interest rate charged between 5 to 10 per cent and interest rate charged more than 10
per cent per annum there are cases where non-institutional sources do not charge any
interest rate.
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Table 4.19: Rate of interest (per annum)
Sr. No. Rate of Interest No. of Respondents Percentage
1 Less than 5 per cent 5 10.4
2 5 to 10 per cent 3 6.3
3 More than 10 per cent 29 60.4
4 No interest 11 22.9
Source: Compiled by author from primary survey data.
Table 4.19 shows that there were 29 respondents, those paid interest rate more
than 10 per cent p.a.. This figure is 60.4 per cent of the total respondents. There were
11 respondents who paid no interest rate for the money. This figure is 22.9 per cent of
the total respondents. There was 3 respondents who paid the interest rate between 5
per cent to 10 per cent p. a. This figure is 6.3 per cent of the total respondents. Besides
this, there were 5 respondents who paid less than 5 per cent p.a. interest rate. This
figure is 10.4 per cent of the total respondents. Therefore, we can conclude that there
are respondents who are not charged interest for the money in case they borrowed
from non-institutional sources, and who happen to close relatives and friends.
4.7(f) Repayment period:
The repayment period of direct microfinance is the maximum short period
during which all borrowed money is re-paid to the lenders including the interest if
charged. Table 4.20 shows the repayment period of direct microfinance availed by
respondents.
Table 4.20 Repayment period of direct microfinance
Sr. No. Repayment period No. of respondents Percentage
1 Less than 1 year 32 66.7
2 1 to 5 years 16 33.3
Total 48 100.0
Source: Compiled by author from primary survey data.
Table 4.20 shows majority of the respondents (66.7 percent) had a repayment
period of less than 1 year. There were 16 respondents who repaid the entire amount
between 1 to 5 years. This figure is 33.3 per cent of the total respondent considered
during the study. Thus, we can say that the availability of direct microfinance for the
people by various sources charged different rate of interests in different institutions.
In the study we found that maximum people preferred for borrowings only once and
for an amount more than Rs.10,000. The main source of microfinance is non-
institutional lenders and they are charging high interest rates or no interest if is
borrowed from close relatives and friends. By using the direct microfinance people
start self-employment and their occupation and thus their monthly income increases
and at the same time their socio economic condition improves.
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Case study 1
Name of Respondent: Mr.Kuddus Ali
Town- Imamganj,
Block- Shivpur,
Teh. – Nanpara
District- Bahraich We contacted Mr.Kuddus Ali and he reported that he started his business of
lighting the small and medium shops such as confectionaries, general stores,
vegetable shops, pan sellers and others whoever in need in his own town by providing
a connection through his own generator set for power connection in 2002. He
purchased a generator for Rs. 20,000. In this large amount 10,000 was his own
savings made previously and other 10,000 he borrowed from private money lender at
5 per cent monthly interest rate. For this facility he charges Rs. 5.00 for a single
C.F.L. on per day basis. At present he is lighting 200 C.F.L bulbs during 5:00 PM to
10:00 PM. Thus, he gets Rs.1000 per day from those. Mr. Kuddu’s all family
members are living in the nearby village and he operates his business by own. Since
Kuddu’s monthly income has gone up, he started sending his children to the English
medium school in the nearby city and bought a bike. This shows that with the
assistance of the microfinance one can generate the self-employment and at the same
time can increase the socio economic condition of the family.
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4.8. Microfinance through Self- Help Groups (SHGs):
The Self-Help Groups (SHGs) have very effective role in mobilizing
microfinance and its beneficiaries. In India SHGs are important tools of the
microfinance extension. SHG is a group of association of people formed for attaining
some common goals. These are groups which have similar identity, heritage, caste or
traditional occupations and come together for a common cause and manage resources
for the benefits of the individuals.
The SHG is a group of a generally rural poor who have volunteered to
organise themselves into a group for eradication of poverty of the individuals.
Generally SHG members come together for economic activities. They are agreeing to
save regularly and collect their savings into a common fund. The members of the
group are agreeing to use this common fund and such other funds; they may receive
as a group through a common management. Thus in India and other developing
countries people are recently taking more interest in microfinance generating via Self-
Help Groups (SHGs). During mid 1980s and early 1990s microfinance movement
started in India. This scheme was initially and formally brought by National Bank for
agriculture and Rural Development (NABARD) and later one can find accelerated
growth of microfinance in India.
The SHG-bank linkage programme initiated by National Bank for Agricultural
and Rural development (NABARD) in 1992 and it continues till the predominant
microfinance model in the country is developed. It is a proven method of financial
inclusion, providing unbanked rural poor with access for formal financial services
from the existing banking infrastructure in a cost effective and sustainable manner
with help of SHGs. SHGs comprise the members from a homogeneous class of the
poorest of the poor, coming together for addressing their common problems. They are
encouraged for making voluntary thrift on a regular basis by utilizing these pooled
resources for making small interest bearing loan for their members.
In this process, they also imbibe the essentials of financial intermediation
including prioritisation of needs, setting terms and conditions, account keeping and
financial discipline. Recognising their importance, both the Reserve Bank of India
(RBI) and NABARD have been spearheading the promotion and linkage of SHGs to
the banking system by initiating proactive policies and systems. NABARD has been
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extending refinance support to the banking system and promotional grant support to
NGOs and developing capacity building outreach of various partners.
In the study of Bahraich district we find that there is the better availability and
distribution of microfinance through Self-Help Groups (SHGs). Here we studied 96
samples of Self-Help Group (SHGs) members and prepared a questionnaire for
discussing the role of microfinance in poverty alleviation and employment generation.
My study considered all four Tehsil of the district and therefore, we now describe the
availability of microfinance through Self Help Groups (SHGs).
4.8.1. Per member monthly savings:
SHGs members are generating microfinance savings on monthly, weekly or
fortnightly basis whichever is easier. This will depend on the family and economic
condition of the member which further vary from person to person. During the study
we find that maximum numbers of the SHGs members generate savings on monthly
basis. For the tabulation of SHGs member monthly savings we categorise their
savings in to two groups as follows. First group we considered those SHGs whose
savings is less than Rs. 50 per month per member and in second group SHGs
considered those who have savings between Rs. 50 to 100 per member per month.
The SHGs savings continuously generating and they deposit these collections
in to a bank account. When a pools of savings collected then bank issue some loan
and Grants (1stgreeding) to the SHGs. This loan and grants given though refinance
facility of NABARD. Through the first greeding they fulfil all their basic needs for
starting the occupation. The SHGs are still continuously savings and made the
repayment of the first greedings. When repayment of first greeding is over bank
issued the 2nd
greeding for the further investment. By using this money they can start
occupation either on collective basis or on the individual basis by distributing the
greeding among all members. The loan and grants given to the SHGs through
NABARD through a scheme called Swarnjayanti Grameen Swarajgar Yojana
(SGSY). This scheme of NABARD is very powerful and equally successful for
generating the employment in the rural areas.
4.8.2. Swarnjayanti Gram Swarajgar Yojana (SGSY)
The Swarnjayanti Gram Swarajgar Yojana (SGSY) was introduced in April
1999 as a result of restructuring and combining the Integrated Rural Development
Programme (IRDP) and million wells scheme (MWS) into a single self-employment
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programme. This aimed to promote micro-enterprises and helping the rural poor by
Self Help Groups. This was a central sponsored scheme on cost sharing ratio of 75:25
between the centre and the respective states.
The central and state governments are implementing various development
schemes for the welfare of the weaker section of the country. The self-employment
programme of Integrated Rural Development Programme (IRDP), Training of Rural
Youth for Self Employment (TRYSEM), Development of Women and Children in
Rural Areas (DWCRA), Ganga Kalayan Yojana (GKY) And Millioneam Wells
Scheme (MWS) were all merged into a Single Self Help Employment programme
called the Swarnjayanti Gram Swarajgar Yojana (SGSY) with effect from April 1999.
The SGSY programme is the true helper of the poor people in providing opportunity
of self-employment and reduction in poverty in rural area. The SGSY programme
organised by poor people and increases saving habit in them, besides this scheme
provides loan plus grants on their saving and occupation basis. The major objectives
of the programme are as follows.
(a) Focused approach to poverty alleviation.
(b) Capitalizing advantages of group lending and
(c) Problems associated with the multiplicity of Programmes.
The SGSY scheme seeks to focus on the formation of Self Help Groups. SHGs
program implies that a holistic programme of micro-enterprises covering all aspects
of self-employment viz. organization of the rural poor into SHGs and their capacity
building, planning of activity cluster, infrastructure, build up technology, credit
marketing etc. It laid the emphasis on activity clusters based on the resources and the
occupational skills of the people and availability of market. The activities would be
taken up in suitable clusters to enable extension of appropriate facilities. The major
share of SGSY assistance will be in activity clusters.
In the study of Bahraich district a total of 96 respondents (SHG members) were
interviewed by through a structured questionnaire. With this study we were able to
know the pattern of microfinance availability because this is very helpful for knowing
the role of microfinance in the poverty alleviation and employment generation in
Uttar Pradesh. In the study we found that per member monthly saving varied person
to person. These are Rs. 20, 30, 50, 100 etc. For the tabulation we categorized these
savings in to two groups as mentioned earlier. Table 4.21 represents the monthly
savings of the members in the SHGs.
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Table 4.21: Per member monthly savings Rs. (n=96)
Sr. No. Per member monthly savings No of respondents Percentage
1 Less than Rs 50 24 25
2 Rs. 50 to 100 72 75
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 4.21 shows that there were 72 respondents whose monthly saving varied
between Rs. 50 to 100 which is 75 per cent of the total respondents. There are 24
respondents whose monthly saving was less than Rs. 50. This figure is 25 per cent of
the total respondents. The analysis also shows that majority of the respondents saved
more than Rs. 50 in a month.
These savings they deposit in the SHGs bank account and respondents can
borrow according to their needs. The respondents told that they borrowed the money
from the SHGs with very easy terms and conditions. This type of microfinance is very
effective for the poor people. On the other hand this microfinance is easily available
on easy terms and conditions. When the significant amount is collected they can
borrow the money. With this, they fulfil their basic requirements for the occupation or
for household purposes. After the repayment of first grading SHG members offered
for the second grading by the banks. Grading of SHGs includes the sum of loan plus
assistance provided by the bank. Thus, they would be able to start their occupation
either on collective basis or separately. Thus SHG members find self-employment so
that they can generate the money and thus poverty reduces and their socio economic
condition improves. In the study, we find that the entire SHGs and the SHG members
obtain the assistance from banks through Swarnjayanti Gram Swarajgar Yojana
(SGSY). Here SHG members found lump-sum 40 per cent assistance on their
sanctioned loans.
4.8.3. Obtained Assistance:
The SHG members generate savings and on the basis of the strength of their
savings and occupation banks issue loan lump-sum 40 per cent assistance only if they
repaid the previous loan properly. The poor people find the financial help to start self-
employment. In the study, respondents informed that they were receiving the
assistance via the SGSY programme. Table 4.22 shows the amount obtained from the
banks in the form of the assistance.
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Table 4.22: Amount obtained as assistance (n=96)
Sr.
No.
SHG obtained assistance No. of respondents given
information
Percentage
1 Less than Rs.50,000 6 6.3
2 Rs. 50,000 to 1,00,000 27 21.9
3 More than one lakh 69 71.9
Total 96 100.0
Source: Compiled by author from primary survey data.
SHGs obtained assistance on the basis of the number of members in the
groups. Table 4.22 shows that the majority of the (71.9 per cent) respondents reported
that SHGs obtaining assistance more than Rs. 1,00,000. A total of 27 respondents
reported that they were receiving Rs 50,000 to Rs. 1,00,000 as assistance from the
banks. This figure is 21.9 per cent of the total in the survey. There were only 6
respondents who reported that they were receiving less than Rs. 50,000 as assistance.
This is 6.3 per cent of the total respondents.
The assistance provided by the banks to the SHGs through Swarnajayanti
Grameen Swarojgar Yojana (SGSY) is based on their sanctioned loan. If the loan is
sanctioned for Rs. 2, 50,000 the assistance provided will be Rs. 1,10,000. If the loan is
sanctioned for Rs. 3,25,000 the assistance will be Rs. 1,25,000. During the study we
found that if the loan provided is Rs. 3,46,000, it includes the assistance of Rs.
1,25,000. The other SHGs find grading from the banks Rs. 4,97,000 and in this
Rs.1,25,000 was the assistance. Thus we can say that the maximum limit of assistance
is Rs. 1,25,000. This assistance amount is applicable only for the 2nd
grading because
in the study we found that most of the SHGs got first grading without assistance.
However, when they repaid this amount then bank will sanction the second grading.
This can be more correctly described by the case studies.
In the study we find that Self Help Groups and its members find assistance and
loan in a year. For the tabulation of the data we categorize the assistance on early
basis in to three groups. In first group we put those SHGs who got the assistance
before 2005. In second group, we put those SHGs who got the assistance between
year 2005 to 2010 and in the third group we put those members who got the assistance
after 2010. Table 4.23 describes the situation.
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Table 4.23: Year when assistance was received (n=96)
Sr. No. Year find assistance No. of respondents Percentage
1 Before 2005 24 25.0
2 Between 2005 to 2010 62 64.6
3 After 2010 10 10.4
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 4.23 shows that the majority of respondents received assistance in the
period 2005 to 2010. Total 62 respondents received the assistance during this period,
which is 64.6 per cent of the total respondents. There were 24 respondents who
received the assistance before 2005 and this figure is 25 per cent of the total
respondents. There were only 10 respondents who reported that they received the
assistance after 2010. This is 10.4 per cent of the total respondents. Therefore, this can
be concluded that in the Bahraich district awareness of the microfinance is found to be
more after the year 2005. After that, the enrolment is constantly increasing and effect
of this microfinance is directly governed by the respondent’s increments in the socio-
economic conditions.
4.8.4. The main occupation started:
In the study we find that better availability of microfinance is the saving of the
SHGs members and assistance is provided by the banks on the basis of their savings.
With the help of this money (saving plus assistance) they start their initial occupation.
Further this is noted that they are free to choose their occupation either on individual
basis or jointly. This depends on the members’ wish. The main occupation they were
normally engaging is listed in Table 4.24.
Table 4.24: Main occupation started by SHGs and its members
Sr. No. Main occupation started No. of respondents Percentage
1 Animal husbandry 50 52.1
2 Business/trade 40 41.7
3 Not any business started 6 6.3
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 4.24 shows that 50 respondent’s opted animal husbandry as their
primary occupation; this figure is 52.1 per cent of the total respondents in the study.
There were 40 respondents who reported that they opted, business/Trade as their
primary occupation; this figure is 41.7 per cent of the total respondents. There were
only 6 respondents who reported that they were not able to start any occupation due to
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some unexpected problems; this figure is 6.3 per cent of the total respondents who are
included in the study. Therefore, this can be concluded that there were a large
population of the Bahraich district are illiterate, unskilled, and thus they were
preferring animal husbandry as their primary occupation over other business. The
preference of animal husbandry over other business is given because they can easily
handle this occupation as this requires low and traditional skill. Through this, dairy as
an occupation can be started and with cow dung biogas can be generated in a biogas
plant and at the last they were able to find the manure for their field so that the
productivity of the small land increases.
4.8.5. Place where money of SHGs was kept:
SHG members are the real founders of microfinance. During the study we find
that SHG members mobilize money for microfinance. The SHG system can be started
with 10 to 20 as its members who are living in the same locality and have the similar
socio-economic conditions. After the formation of the group, members would have to
save the money either on monthly basis or weekly basis or on daily basis and they
have to deposit these savings in to a bank account opened by the SHG. The account is
a joint account and named as its group name. The SHG bank account can be opened
in a commercial bank, in any Regional Rural Bank (RRBs) or in co-operative bank.
This depends on the members’ wish. Normally such bank is preferred which is the
nearest to their locality so that transaction can be easily maintained.
During the study all 96 respondents reported that all savings were deposited in
to the bank account and they also reported that when a significant amount was
collected, the bank issued 1stgrading. After the successful repayment of first grading,
the bank issued 2nd
grading which includes the loan and the assistance. Therefore this
can be concluded that all SHGs transactions were made in the banks (Table 4.25).
Table 4.25: Place where money of SHG is kept (n=96)
Sr. No. Money kept in SHG No. of respondent Percentage
1 In Bank 96 100.0
Total 96 100.0
Source: Compiled by author from primary survey data.
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4.8.6. Members Borrowing through SHG:
In the study, SHG members reported that they were borrowing through Self
Help Groups, on the basis of their needs. They told that SHGs fulfil their financial
requirements because they can borrow the money with minor terms and conditions.
Table 4.26 represents the members of the SHGs who borrowed from the SHGs and
who were not borrowing from the SHGs.
Table 4.26: Self Help Group members borrowing from SHG (n=96)
Sr. No. Variable No. of respondents Percentage
1 Borrowing from SHG 89 92.7
2 Not borrowing from SHG 7 7.3
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 4.26 shows that only 7 respondents were not borrowing from the SHG
and this is only 7.3 per cent of the total respondents in the study. Thus majority were
able to get money from the SHGs to meet their small requirements largely and thus
they have not to go to Mahajan and Sahukar (Indigenous bankers) for the money.
4.8.7. Decision Making in Self Help Groups:
In the study all members of the SHGs reported that all decisions were made on
the basis of the majority with a single non transferrable vote. The Self-Help Groups
take decisions on the basis of the savings made by them, savings obtained from
primary occupations, loan sanctioned. This process is very helpful to develop the
SHG so that every member of the SHG gets satisfied.
4.8.8. Category of the Self Help Groups (SHGs) members:
The respondents reported the category from which they belonged. For the
tabulation of the data we categorize their category in to four groups. These are:
General only, General and OBC, General, SC and OBC, OBC and SC. Table 4.27
represents the category-wise distribution of the respondents.
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Table 4.27: Category of SHG members
Sr. No. Category of SHG members Number of respondents Percentage
1 General only 2 2.1
2 General and OBC 10 10.4
SC 8 8.3
3 OBC + SC 5 5.2
4 (a) OBC Only 19 19.8
(b) OBC + SC 52 54.2
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 4.27 shows that there were largest percentage of SHGs belonging to the
SC and OBC in combination and then the second largest percentage was SHGs with
category OBC only. Here in the study we found that other backward class members
alone or in combination with SC contribute the maximum proportions of the total
respondents included in the study. This data shows that all category respondents of
SHG members and they are benefited through microfinance.
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Case study 2
Mahila Self Help Group, Village- Babhni
Block-Rishiya,Tehsil-Nanpara
District-Bahraich
This Self Help Group came in to the existence in the year 2007 and it has 12
members. Smt. Seema Devi w/o Gopi is the leader of this SHG. She is talented
enough to run this group and providing excellent support and leadership to its
members. Smt. Ramapati is the cashier and Smt. Seema Devi w/o Ram kumar is
secretary of the group. In this SHG, members deposit Rs. 50 as their savings in a
month. The general information of the Group is given below.
1. This SHG was formed in 2007 and it has 12 females as its members.
2. Every member deposits Rs. 50 as their saving in a month.
3. The bank account of this SHG is in Allahabad bank Rishiya, district Bahraich.
4. For the formation of the strategy for the problems and queries related to their
occupation they meet regularly on the weekly basis.
5. The grading of this Self Help Group was Rs. 2,40,000 which included
Rs.1,10,000 as assistance and Rs. 1,30,000 as loan. The SHG distributed this
money including assistance among them and started occupation separately.
6. Each member of the group got Rs.20,000 and everyone purchased a buffalo
and started dairy farming as their primary occupation.
7. The impact of this is that every member of the group had got a buffalo and
thus started dairy occupation and thus their income and savings both
increased. Therefore, they can upgrade their life quality, children education,
medical purpose and other basic needs.
8. The main problem associated with this occupation is that if their buffalo died,
bank will not give any insurance claim. If they do not form the bada (place
where they keep their buffalo). The other problem was that they were not able
to maintain the co-ordination between them.
9. The SHG members are looking forward for some other business and they want
that government should provide some training and some skills so that other
occupation together with animal husbandry may be developed. The other
important occupations in which SHG members are taking interest are to find
129
Agarbatti making, Dhoopbati making, Mombatti making, Achar and Papad
making etc.
By studying this SHG performance, we can conclude that women can too use
the microfinance and may contribute to their family income and thus become able to
secure good position in the family. They can educate their children and thus domestic
problems associated with women can be removed from the villages gradually. The
SHG members chosen for the study were all women. All positions in the group
including the management and occupation are performed by all its women members
and every member got Rs. 2500 per month. The group member reported that after the
formation of the SHG their financial need was fulfilled. This improved their
consumption, child education, health care and thus their socio economic condition
also increases.
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Case study 3
Janta Self Help Group, Village- Phulwariya
Block – Chittaura, Tehsil- Bahraich
District – Bahraich
This SHG was formed on 25 August 2008 and 12 persons are its members. In
this group male as well female are members. Smt. Samsul Begum is group leader and
Mr. Jakir Khan is secretary. This SHG has a good track record in terms of saving
collection, debt repayment SHG work performance and monthly earnings. This SHG
is keeping all its record properly and maintain it during the meeting of the members.
The per member monthly saving of this group is Rs. 50 and the bank account of this
SHG is in Allahabad UP Grameen bank branch office Lauki, Rishiya, district
Bahraich. The first grading of SHG was Rs. 25,000 in 2009. They repaid this money
in 2010 and thus got the second greeding of Rs. 3.98 lakh in 2010. In this amount Rs.
1.20 lakh was the assistance provided by the bank.
With this money they purchased a tractor and trolly and started working for a
brick field. Every member of the group actively participated in the work. For example
if they have to carry the brick from brick field to the customer, one member drives the
tractor and others will load the trolly. Thus we can conclude that there is better co-
ordination between its members. Thus all members got the employment and every
member earns Rs. 300 per day. The leader gives Rs. 100 per day for their daily
expenses and other Rs. 200 they used for the repayment of the loan so that they would
be able to find the third grading and thus they would be able to enlarge their
occupation.
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Case Study 4
Maa Saraswati Self Help Group, Village- Devlakha
Block and Tehsil- Kaisarganj, District-Bahraich
This SHG was formed in 2010 and there were 12 persons as its member. The
members of the SHG belong to both OBC and SC. Initially they made saving of Rs.50
per month per member. The leader of this SHG is Mr. Sarbachan; Cashier is Mr. Ram
Fairee and Secretary is Mr. Suresh kumar.
The bank account of this group is in Allahabad UP Grameen bank branch
office Badrauli. The first grading obtained from the bank was Rs. 25000 on 4
November 2011. They used the first grading for the repayment of the loan so that
they became able to get the second grading. After the successful repayment they got
the second grading of Rs. 2,50,000 where Rs. 1,10000 was the assistance and Rs.
1,40,000 was loan.
With this money they opened a new shop of the fertilizer in the village. The
group members are selling the fertilizers to the other villagers and at the same time
other members other than who was on the shop worked in their field and do the
animal husbandry so that they get the additional earnings besides the fertilizer shop.
They reported that during the off season they purchased the fertilizers at a lower price
and during season they sell it at higher price so that they would be able to make more
money. The earning is distributed monthly and they would be able to get Rs. 1000 per
month per member. The meeting is held on every 2nd
date of the month and collection
of savings is done at that time only. During the meeting they also discuss the future
challenges associated to their business. They keep the record of the every meeting and
thus every member follows the rule set by them. Therefore, it can be concluded that
this SHG has better performance and since they got Rs. 1000 per month so their
financial need is somewhat fulfilled and thus their socio economic condition
increases. This is reported by other villagers who are not the part of the group and
thus this SHG motivated other villagers for the microfinance. Besides the Rs. 1000 in
which they got every month, additional profit is used for the repayment of the loan.
Thus they get another gradings from the bank for future growth of the SHG and its
members.
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4.9. Microfinance through Kisan Credit Card (KCC):
Kisan credit card is playing the key role in enhancing the productivity and
growth in agriculture usually for the small formers. The kisan credit card scheme was
launched in 1998-99. The scheme was formulated by National Bank for Agriculture
and Rural Development (NABARD). The scheme has been launched for providing
timely and adequate credit support to the farmers for their production needs in a
flexible and cost effective manner. In order to increase the production and
productivity of the agriculture sector, there is an urgent need of making loans
advances for the different periods. It is an innovative scheme with facilitates of short
term credits to the farmers. The scheme is now very popular among the cultivators.
Besides NABARD, the scheme was implemented by 27 commercial banks, 378 co-
operative banks and 196 regional rural banks (RRBs) throughout the country.
The Kisan credit card (KCC) scheme is providing microfinance facility to
small farm holders in rural areas on the basis of the area of the field registered by their
name. With KCC scheme, small farmers would now be getting free from indigenous
bankers like Landlords, Zamidars and Sahukars, etc. In pre KCC era small farm
holders were much exploited by indigenous bankers because they charged high
interest rates. It is a very useful scheme. Still there is unawareness about the terms and
conditions of the scheme. Therefore, it is required to popularize the terms and
conditions of this scheme so that more people are benefitted with this scheme. All
existing as well as new farmers are eligible for the scheme. KCC card is meeting the
production and investment needs of farmers such as purchasing the agricultural
equipment and for the construction of buildings for the storage of the cultivated
grains, allied activities viz dairy, piggery and bee-keeping etc. The farmers are using
this card for agriculture and other purpose also like girl marriage, social function, etc.
4.9.1. Objectives of the KCC scheme:
The Kisan Credit Card (KCC) scheme is a NABARD projected scheme. The
main objective of this scheme is providing financial support to farmers at very low
interest rate with easy terms and conditions. So this has improved the production,
income and socio-economic conditions of the farmers. Following are the main
objectives of the KCC:
To provide insurance coverage and financial support to the farmers in the
event of failure of crops as natural calamities, and disease.
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To encourage farmers to adopt progressive farming practices, and high value
of inputs and higher technology in agriculture.
To help and stabilise farm incomes particularly in disaster years.
To support and stimulate primarily production of food grains and oilseeds.
4.9.2. Advantages of the Kisan credit card scheme:
Following are the main advantage of the KCC scheme:
Access to adequate and timely credit to farmers.
Full years credit requirement of the borrowers and takes care of agricultural
requirement.
Minimum paper work and simplification of documentation for Issuing KCC,
and withdrawal of fund from bank with subsidised interest rate.
Flexibility to draw cash and buy agriculture inputs timely.
Assured availability of credit at any time enabling reduced interest burden on
the farmer.
Sanction of the facility for three years subject to annual review and
satisfactory operations and provision for enhancement.
In this section we present the availability of microfinance through Kisan credit
card. Now KCC is playing important role in providing microfinance to farmers for
agriculture development. The kisan credit card scheme provides institutional
microfinance. In the present study we approached 67 respondents who are kisan credit
card holders. These respondents are small farmers. In the total respondents of 190, the
percentage of KCC holder is 35.3 per cent.
4.9.3. Year from which respondents are having the KCC:
This section describes the year from which the respondents are having KCC.
For the tabulation of the data we categorize in to three groups. In first group we put
those members who are having KCC before the year 2005, in second group we put
those respondents who have KCC between the year 2005 to 2010 and in third group
we put those members who have KCC after the year 2010 as shown in Table 4.28.
Table 4.28 Year since the respondents are holding KCC
Sr. No. Years No. of respondents Percentage
1 Before 2005 2 3.0
2 2005 to 2010 59 88.1
3 After 2010 6 9.0
Total 67 100.0
Source: Compiled by author from primary survey data.
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Table 4.28 shows that there are 67 respondents having the KCC and this is
35.3 per cent of the total respondents included in the study. Majority of the
respondents have been associated with KCC between the year 2005 to 2010. There are
59 respondents out of 67 respondents who got KCC account between 2005 to 2010.
There are only two respondents getting issued KCC before 2005 and 6 respondents
have opened the KCC account after 2010.
4.9.4. Number of times respondent borrowed money from the bank:
Kisan credit card has the facility that respondents can made transaction by any
number of times in a year. Further it is also noted that they can only borrow the
money within the credit limit of sanctioned loan. The repayment of the entire amount
including the interest must be paid by the year end. After the repayment of the amount
they can use the same KCC for the next year with the same amount as was sanctioned
in the previous year. If they would not able to repaying the amount they would be
charged for the additional amount other than the loan and interest as the punishment.
For the tabulation of the data we categorize the number of transactions made in to
three groups. In first group we put those respondents who made the transaction 3
times in a year and in second group we put those respondents who made transactions
more than three times during the year and in third group we put those respondents
who made the transactions only once in a year. Table 4.29 represents the above
information.
Table 4.29: Number of times money withdrawn in a year (n=67)
Sr. No. Number of times withdrawn No of respondent Percentage
1 Only once 50 74.6
2 2 to 3 times 10 14.9
3 More than 3 times 7 10.4
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 4.29 shows, that there are 50 respondents who could withdraw money
only once during the entire year. This figure is 74.6 per cent of the total respondents
considered in the study. There are 10 respondents who had withdrawn the money
between 2 to 3 times during the entire year. This figure is 14.9 per cent of the total
respondents included in the study and there are only 7 respondents who had
withdrawn the money more than 3 times during the entire year. This is 10.4 per cent
of the total respondents. With this study we found that the maximum respondents
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were small farm holders and were largely illiterate and unskilled so that their banking
habit might be poor. Therefore, they preferred only one time withdrawal.
4.9.5. Credit limit of KCC:
In this section we discuss the KCC limit of all respondents. The KCC holders
can only withdraw the money under their credit limit. This credit limit is fixed on the
basis of the total land registered by their name at the time the KCC is issued. For the
tabulation of the data we categorize the KCC limits into three groups. In first group
we put those respondents whose KCC limit is up to Rs. 10,000 and in second group
we put respondents whose KCC limit is between the Rs. 10,000 to 25,000 and in the
third group we put those respondents whose KCC limit is more than Rs. 25,000
(Table 4.30).
Table 4.30 Credit limit of Kisan credit cards (n=67)
Sr. No. Credit limit (Rs.) No. of respondent Percentage
1 Up to Rs. 10000 2 3.0
2 10000 to 25000 20 29.9
3 More than 25000 45 67.2
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 4.30 shows that there are only 2 respondents having the credit up to Rs.
10,000. This figure is 3.0 per cent of the total respondents and there are 20
respondents whose credit limit is between Rs. 10,000 to 25,000. This is 29.9 per cent
of the total respondents and there are 45 respondents whose KCC limit is more than
Rs. 25,000. This figure is 67.2 per cent of the total respondents. Thus, big farmers
may get more benefits.
4.9.6. Amount withdrawn by respondents:
Since it depends on respondents wish that how much amount they want to
withdraw from their credit limit and also they are free, that either they withdraw the
whole amount or according to their need. Therefore, they withdraw the money in
varying amounts. For the tabulation of the data we categorize the entire information
into three groups. In the first group we put those respondents who withdraw the
money up to Rs. 10,000 and in second group we put respondents who withdraw the
money from Rs. 10,000 to 25,000 and in the third group we put those respondents
who withdraw the money more than Rs. 25,000 (Table 4.31).
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Table - 4.31 Total amount withdrawn by the KCC holders (n=67)
Sr. No. Total amount withdrawn (Rs.) No. of respondent Percentage
1 Up to 10,000 2 3.0
2 10,000 to 25,000 21 31.3
3 More than Rs. 25,000 44 65.7
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 4.31 shows that there are only 2 respondents who withdraw the amount
up to Rs. 10000 and this figure is 3.0 per cent of the total respondents. There are 21
respondents who have withdrawn the amount in the range of Rs. 10,000 to Rs. 25,000.
There are 44 respondents who withdraw more than Rs. 25,000 and this figure is 65.7
per cent of the total respondents. Thus, the farmers generally take benefits of KCC as
per their credit limits which are determined by their land holdings.
4.9.7. Utilization/Benefits obtained from the KCC money:
The KCC respondents reported that through KCC they find finance during the
entire year and thus they can use money for agricultural purposes and at the same time
they can use this money for other unforeseen expenses which save them from
sahukars who charge greater interest for the money. During the study we ask enquired
if the respondents got benefited with the KCC or not. Table 4.32 represent this
information. For the tabulation of the data we categorize the whole information in to
three groups. In the first group we put those members who are performing efficiently
and in the second group we put those members who are satisfied and in the third
group we put those members who are not satisfied with the KCC.
Table 4.32 Utilization/benefits of KCC money (n=67)
Sr. No. Utilization/benefit No. of respondent Percentage
1 More Satisfied 58 86.6
2 Less Satisfied 9 13.4
3 Dissatisfied 0 0
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 4.32 shows that there are 58 respondents who utilized the money
efficiently and they further reported that their agricultural production increased due to
the availability of the money timely and at the same time they can use this money for
the subsidiary employment and thus their monthly income increases. They also
reported that they are free to use this money for other expenses such as marriage and
other social function. There are only 9 respondents who reported that they used the
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KCC money less satisfied (13.4 per cent). Thus more than four-fifth (86.6 per cent)
found it to be more satisfied and remaining 9 (13.4 per cent) found it to be less
satisfied. None of the respondents found it to be dissatisfactory. So we can say that
Kisan Credit Card scheme is the true helper of small farmers because this scheme
solves the finance problems of small farmers. Thus, Kisan credit card scheme is very
helpful in increasing agriculture production and subsidiary employment in rural areas.
4.9.8. Repayment of KCC amount:
The repayment of KCC must be made within one year including the interest.
After the successful repayment, the KCC can be renewed and after renewing the
money can be withdrawn throughout the whole year and at the end of year entire
amount including interest again must be repaid for the next renewal. In the study we
also found that repayment should be within one year but in the worst case the relief up
to 3 years is provided by the government. If they repay within one year the interest
charge is only 4 per cent on half-yearly basis. The rest of interest is given as subsidy
by NABARD. If they are not repaying within one year 13 per cent interest is charged
on half-yearly basis because in this case there is no interest subsidy given by the
NABARD. Table 4.33 represents the total number of years during which the
repayment of the KCC is made by the respondents.
Table 4.33 Repayment of KCC by beneficiaries (n=67)
Sr. No. Repayment No. of respondent Percentage
1 Within one year 36 53.7
2 1 to 3 years 1 1.5
3 Relief by government 8 11.9
4 No payment 22 32.8
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 4.33 shows that only 36 respondents repaid the loan and interest within
one year and this is only 53.7 per cent of the total respondents. There is one
respondent reported that he repaid the entire amount between 1 to 3 year. When the
government of India launched debt relief scheme there is 8 more respondents who
repaid their entire amount and renewed their KCC. This is 11.9 per cent of the total
respondents included in the study. There are 22 respondents still not repaid the
amount and this figure is 32 per cent of the total respondents. This shows that there is
a large proportion of the KCC beneficiaries who are not repaying the loan and
interest.
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4.9.9. Source/Bank issuing KCC:
National bank for Agriculture and Rural Development (NABARD) launched
the Kisan credit card (KCC) scheme to the farmers for relieving them from borrowing
money from unorganized sector. KCC provides the money to the farmers and it is
available throughout the year. Thus with the assistance of the money obtained from
the KCC they can use it for their agricultural and for other social functions. Through
this scheme all commercial banks which are under the NABARD such as all Grameen
banks and Co-operative banks have power to issue the KCC. The amounts are
sanctioned on the basis of the land that has been registered by any individual. The
bank wise analysis of the KCC issued in the Bahraich district is shown in the Table
4.34.
Table 4.34: Source/Bank issuing KCC
Sr.
No. Source/Bank Number of respondent Percentage
1 Grameen bank 41 61.2
2 Commercial bank 26 38.8
3 Co-operative bank 0 0
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 4.34 shows that 61.2 per cent of all KCC issued in Bahraich district are
issued by Grameen banks while remaining is issued by the commercial banks. Thus
the study report shows that RRBs are issuing KCC in larger numbers than other
commercial banks. Besides these two banks there is not any respondent who received
a KCC from the co-operative banks but it can issue the KCC as well.
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Case study 5
Mr.Nanhe Sharan
Village- Devlakha, Block and Tehsil- Kaiserganj
District- Bahraich
Forty six year old Nanhe Sharan is a small farmer living in Devlakha village
of Kaisarganj tehsil in a semi pucca house with his wife (46 year old), son (26 year
old), daughter in law (25 year old) and three grandsons (6 year, 4 year and 1 year
respectively). He is educated only up to the primary level. He has 16 begha
agricultural land and two buffalos. Therefore, his main occupation is agriculture and
animal husbandry. He is also an active member of a SHG.
Nanhe Sharan has got issued a KCC of Rs. 25,000 limit from the Allahabad
U.P. Grameen Bank, branch Badrauli. He withdraws all money in the credit limit that
is Rs. 25,000 and by using this money he purchased buffalos, and also started the
agriculture of menthol oil. During the interview with us he reported that with the
assistance of the KCC, farming of menthol continuously increases because during the
beginning season it required large amount of money. For this KCC money can be
used. Besides, production other agricultural products has increased. With the buffalos
he used to sell milk and also used for their own consumption. Therefore, it can be
concluded that KCC is providing the greater assistance to the small farm holders and
by using the KCC credit amount they would be able to increase the productivity,
ultimately due to extra earning their socio economic condition increases significantly.
4.10. Conclusion:
By conducting the direct interview of the respondents by preparing important
questions related to their mode of the microfinance this can be concluded that enough
awareness of microfinance is there in the Bahraich district but it is still not enough if
compared with other districts of the Uttar Pradesh. As we know that microfinance is
used for improving the socio economic condition of those people whose income is
very low. Therefore, such people may increase their income by using the
microfinance. Microfinance has impact an illiteracy, unemployment and poverty and
women empowerment. People can have different sources of microfinance. Following
are the different mode via which one can generate the microfinance these are by
making SHGs and or by KCC or by both. The study has been carried out on 190
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samples or beneficiaries or respondents who are using microfinance for the
improvement of their socio-economic conditions. The study shows that there is a
significant improvement in the socio-economic condition of the families who are
using the microfinance.
The respondents generally belong to rural areas because most of the survey
works was conducted in rural areas. The main purpose of selecting rural areas is that it
is easy to analyse the impact of microfinance on their socio economic condition. Since
they are using the microfinance and its related activity therefore they belong to age
group of 18 to 60 years. Maximum microfinance beneficiaries are male as 82.1 per
cent of the total respondents included in the study are male and 17.9 per cent
respondent are female beneficiaries. During the study it, is found that the 73.2 per
cent of the total respondents are Hindu and rest all 26.8 per cent of total respondent
are Muslims. We further found that that all categories (General, OBC and SC/ST)
equally choosing the microfinance as a mode of increasing the socio economic
condition. Almost all respondent are living in their own house and majority of
respondents had pucca or semi-pucca house.
The electricity availability of respondent is in poor condition because
maximum villages are still not connected with electricity, but mobile phones
availability to all respondents reached in a revolutionary manner and almost all
respondents had their own mobile phones. The level of education is not up to the mark
because in survey we found that there are only 1.6 per cent of the total respondents
having graduation. 41.6 per cent of the total respondents are illiterate and 26.8 per
cent of the total respondents are educated up to matriculation and 30.0 per cent of the
total respondents are educated up to primary level.
The family size of the maximum respondents is comprised of 5 to 10
members. Most of the respondents reported that only some members of the family are
educated and only 26.8 per cent of the total respondents included in the study reported
that all members of their family are educated. Monthly income of around 45 per cent
of the respondents is between Rs. 5,000 to 10,000. There are 38.4 per cent of the total
respondent whose monthly income is less than Rs. 5,000 and 16.3 per cent of the total
respondent whose monthly income is more than Rs. 10,000.
In the study we also find that 88.4 per cent of respondent have a bank account
and most of the respondents (54.8 per cent) are making transactions on monthly basis
and only 3.6 per cent of the total respondents are making transactions on weekly
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basis. During the case studies we found that there are three type of microfinance
availability. These are:
1. Direct availability of Microfinance
2. Availability of Microfinance through SHGs
3. Availability of Microfinance through KCC.
Direct availability of microfinance includes own savings, private loan, bank
loan Co-operative bank loan, Insurance, Pension fund and loan taken from the
relatives and friends. Availability of microfinance through SHGs includes savings of
the groups; member can borrow the money from savings on the basis of their need
within the limit of their savings plus assistance provided by the banks. The loan and
grants are being facilitated by Swarnjayanti Grameen Swarojgar Yojana (SGSY).
Availability of the microfinance through KCC is only applicable to those persons who
had land in their names. Out of these three types of availability, microfinance
availability is better if the better coordination is maintained among all members. In
respondents are found using more than one source of microfinance.
In the study we found that members who are using the direct mode of
availability of microfinance are 32.6 per cent of the total respondents. Within all the
direct sources of the microfinance the main source is private loan contributing 43.5
per cent among all direct modes of microfinance. There are 17.7 per cent of the total
respondents who availed the direct microfinance through their own savings.
Respondents using SHG mode for generating the microfinance is 75.0 per cent
of the total respondents. When some saving collection is deposited in the bank, the
bank issued loan plus assistance under the scheme of Swarnjayanti Grameen
Swarojgar Yojana (SGSY). In the study, we find that the maximum respondents find
assistance for more than one lakh because 69 (71.9 per cent) SHG members reported
they find assistance for more than one lakh under SGSY and mostly they received
during 2005 and 2010. The SHG members pursue main occupation of animal
husbandry and then business/trade and 89 (92.7 per cent) respondents reported that
they borrow from SHGs on their needs.
In the study we find that Kisan Credit card (KCC) is the other source of
microfinance to the small farmers. With KCC, small farmers fulfil their credit
requirements and purchase timely agriculture inputs and increase their production and
income. The KCC provides insurance coverage and financial support to the farmers in
the event of failure of crops as natural calamities and disease. In the study we find
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better availability of microfinance in Bahraich district through KCC. Thus we can say
that all these types of microfinance are very helpful in making the occupations of the
stakeholders more beneficial and this helps them in pursuing the occupations with
greater commitments. This raised output and thereby income of the stakeholders by
undertaking the benefits through different sources of microfinance.
Chapter Five
Nature of Activities under the Microfinance and their
Impact on Poverty and Unemployment
CHAPTER FIVE
NATURE OF ACTIVITIES UNDER THE MICROFINANCE AND
THEIR IMPACT ON POVERTY AND UNEMPLOYMENT
Introduction:
Poverty and unemployment together are a major problem in a developing
economy like India. Therefore, the major challenge before the developing countries is
how to reduce poverty and unemployment. In order to reduce these problems policies
or approaches like microfinance emerged as effective tool. Microfinance provides
regular source of livelihood in a significant manner and thus helps in promoting the
faster and more inclusive growth. Therefore, it also helps people to motivate for
saving, credit, insurance and other financial services, so that they are able to cope up
with everyday demands more resiliently and confidently.
Microfinance interventions are well recognized as an effective tool for poverty
alleviation and employment generation and improving the socio-economic conditions
of the poor. In India too, microfinance essentially reduces poverty and increases
employment and at the same time empowers women. The impact of microfinance
programme through Self-Help Groups (SHGs) is very effective in making positive
social changes to members irrespective of the direct borrowers of the micro-credit.
Effect of microfinance is in the rural areas and women equally benefitted with the
SHGs. These groups provide considerable social protection and income opportunities
to all its members. The SHGs have acquired a prominent status in maximizing social
and financial returns. The promotion of incomes and other financial activities for the
rural poor and women are perceived as a powerful medium to resolve several socio-
economic problems such as reduction in poverty, provision of goods and services
appropriate to local needs, redistribution of income and opportunities in the
community, etc.
Microfinance is an effective tool for poverty alleviation, employment
generation and women empowerment in India and in other developing countries; this
is proved by various studies. Microfinance includes whole financial services/activities
those serve to very poor. The SHG and bank linkage programme is the largest
community based microfinance programme opted throughout the world and emerged
as a powerful instrument for financial inclusion for the poor and marginalized section
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of society. The KCC scheme is another successful scheme provided through which
credits on the basis of land registered by farmers are the banks on very easy terms and
conditions.
Microfinance provides the benefits to all sections, all sectors and all regions of
the economy though not uniformly. Therefore, the microfinance is emerging as
effective tool for promoting faster and inclusive growth and thus helps in reducing
poverty by providing a regular source of livelihood in a significant manner. The
microfinance sector in India needs massive expansion. There is need to strengthen all
the existing mechanisms of micro-credits delivery such as the self-help group (SHGs),
bank linkage programme, primary agriculture cooperative societies (PACs),
microfinance institutions (MFIs) and also bringing new agencies such as the post-
offices in the microfinance sector. However, the SHG-bank linkage programme is a
potent initiative for delivering financial services to the poor in a sustainable manner.
5.1. Status of Microfinance in Bahraich district:
Bahraich district was selected for the study because it is one of the most
backward districts in terms of illiteracy, monthly income, employment and other
social reforms in Uttar Pradesh. Therefore, this district is very suitable for studying
the microfinance and its impact on poverty and unemployment. For the tabulation of
the data we divide it in to three groups. In first group we put direct microfinance. In
second group we put microfinance through Self-Help Groups (SHGs) and in third
group we put microfinance through Kisan Credit Cards (KCC) as was done in
chapter-4. Direct Microfinance includes own savings, private loan, Government bank
loan, Cooperative bank loan, loan from relatives and friends, insurance and pension
fund. Microfinance through Self-Help Groups (SHGs) includes savings and credits of
SHG members and microfinance through KCC includes small farmers credit facility
through KCC based on the land registered in their names.
In the study we considered 190 samples and based on the structured
questionnaire we conducted direct interview of the respondents in all four Tehsils of
the district. There are 62 respondents out of 190 respondents using direct mode of
microfinance, 96 respondents using Self-Help Groups (SHGs) for the microfinance
and there are 67 respondents are using Kisan Credit Card (KCC) for the microfinance.
It is noted that there were respondents who had availed more than one source of
microfinance. Thus, we describe the level of microfinance, nature of activities under
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the microfinance in Bahraich district and its impact on poverty alleviation and
employment generation in the present chapter.
5.2. Poverty: Concept and measures:
Poverty is a socio-economic phenomenon in which a section of the society is
unable to fulfil even its basic necessities of life. In general, those people who are
unable to fulfil their minimum nutritional need due to lesser income are considered to
be poor. Poverty could either be relative or be absolute. In developing countries like
India, relative poverty is not considered a big issue but absolute poverty is a big issue
and government is spending a large amount of money and energy to tackle the
problem of poverty.
The discussion on poverty largely revolves around the notion of a poverty line:
a critical or threshold income, consumption, or the access to goods and services below
which the individuals are declared to be poor (Ray, 2002). To determine poverty line
based on nutritional or calories requirements per member per day basis, minimum
quantities of cereals, pulses, milk, butter, etc. are determined for a subsistence level.
Further, aggregating in monetary terms for various physical quantities and
commodities, the poverty line is set and it is different for rural and for urban areas.
People whose income is below poverty line are said to be poor. The most common
measure of poverty is the Head-Count ratio, defined as the percentage of population
living below the poverty line.
In 1979 Planning Commission of India defined the poverty line for the country
as a per capita consumption level which meets the average per capita daily
requirement of 2400 kcal in the rural areas and 2100 kcal in the urban areas, along
with a minimum level of non-food expenditure. This was common for all states of
India. In 1993, the Planning Commission of India set up another Task Force, under
chairmanship of Prof. Lakadwala to remove the anomaly of a common poverty line
for all states of India. The Lakadwala Committee retained the same consumption
basket of 1973 and estimated separate poverty lines for each state.
The pioneer work by Prof. Amartya Sen and Prof. Martha Nussbaum put
forward another rout for the measurement of the poverty. They identified it as a lack
of capabilities and freedoms. The conceptual foundations of the Capability Approach
can be found in Prof. Sen’s critique of traditional welfare economics, which typically
relates well-being with either opulence (income, commodity command) or utility
146
(happiness, desire fulfilment). Prof. Sen made a distinction between commodities,
human functioning/capability and utility.
5.3. Unemployment: Concepts and Measures:
Unemployment estimates in India is that a person working 8 hours a day for
273 days of the year is regarded as employed on a standard person year basis on the
recommendations of the committee of experts on unemployment estimates set up by
the Planning Commission. Three estimates of unemployment were generated in the
27th
round of NSS as given below:
(i) Chronic unemployment or ‘usual principal status employment’ is measured
in number of persons i.e., persons who remained unemployed for a major part of
the year. This measure is more appropriate to those in search of regular
employment (e.g., educated and skilled persons) who may not accept casual
work. This is also referred to as ‘open unemployment’.
(ii) Weekly status unemployment (measured in number of persons), i.e., persons
who did not find even an hour of work during the survey week.
(iii) Daily status unemployment (measured in person days or person years, i.e.,
person years), i.e., persons who did not find work on a day or some days during
the survey week.
Above description about poverty and unemployment provides a brief glimpse
about the concept. In India, Uttar Pradesh and even in Bahraich district, the situation
of poverty and unemployment remains a serious issue. Now we shall be discussing
about these and role of microfinance in mitigating these problems.
5.4. Microfinance and its Impact on Poverty and Unemployment:
Microfinance can remove or moderate poverty and unemployment essentially
because most of the studies show that microfinance is an effective tool for poverty
alleviation and employment generation in developing countries. In this study, we
make efforts to understand effect of the microfinance on the aforesaid problems in
Bahraich district. During the study we found that major impact of microfinance is
basically on those who use it in their main and subsidiary occupations like
manufacturing of pickles, dairy, grocery shops and diversification of agricultural
activities. Consequently, family income substantially increases. Apart from the
economic changes, tremendous social changes in the rural area also occur due to
increase in the income. The main effects of microfinance are listed below.
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1) Increase in income and expenditure.
2) Increase in employment and self-employment opportunity.
3) Development of small and medium scale enterprises.
4) Increase in investment and productive capacity in the production.
5) The microfinance programmes empower to the people and reduces economic
dependency.
6) Accelerated employment rate, improved average productivity of labour and
increase in real wages.
In the study of Bahraich district we are discussing the role of microfinance on the
poverty alleviation and employment generation of the respondents considered. The
respondents reported that microfinance increases their employment, income,
production and socio-economic condition. For the depth understanding of the impact
of the microfinance on the poverty and unemployment we categorize the impact in to
three groups based on the source of the microfinance.
a) Impact of direct microfinance on poverty and unemployment.
b) Impact of microfinance through Self-Help Groups on poverty and
unemployment.
c) Impact of microfinance through Kisan Credit Cards on poverty and
unemployment
5.5 Impact of Direct Microfinance on Poverty and Unemployment:
Direct mode of microfinance generation includes own savings, private loan,
government loan, commercial and co-operative bank loan, insurance, pension fund
and money transfers. Therefore, we can say that all financial activities which serve to
the poor people in very effective and meaningful manner are included here although
the quantum remains very small. Out of 190 respondents there are 62 respondents
who had mobilized the microfinance through direct mode of microfinance and 96
respondents availed the microfinance through SHGs and remaining 67 respondents
managed the microfinance through KCC. It is to be noted that share were respondents
who had availed more than one source of microfinance.
Direct microfinance beneficiaries can start the occupation or undertake
expansion with the help of direct microfinance. In my study there are 62 respondents
who are using the direct source of microfinance. We asked with the direct
microfinance beneficiaries that what the impact on poverty and unemployment is.
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They reported that with the help of microfinance their production and income
increases and family members and other workers may also employment.
5.5.1 Source of direct microfinance:
Main sources of the direct microfinance are the respondents own savings,
private loans, government banks loans (including commercial bank and regional rural
bank), co-operative bank loan, etc. The maximum respondents are poor, illiterate and
semi-skilled. So they prefer for private loans. In our study of Bahraich district 62
respondents are using direct source of the microfinance. Table 5.1(a) shows the basic
source of the direct microfinance.
Table 5.1(a): Sources of direct microfinance
Sl. No. Source of Direct Microfinance Number of Respondents Percentage
1. Own Savings only 11 17.7
2. Own Savings + Private loan 1 1.6
3. Private loan 27 43.5
4. Govt. Bank loan 6 9.7
5. Cooperative bank loan 7 11.3
6. Others (relative & friends) 10 16.1
Total 62 100.0
Source: Compiled by author from primary survey data.
Table 5.1(a) shows that maximum share in the direct source of microfinance is
of private loan and this is 43.5 per centof the total respondents who are using direct
source of the microfinance. Own saving is the second largest in the direct source of
the microfinance and is 17.7 per centof the total respondents. A total 9.7 per centof
the total respondents are taking loans from the government banks (including
commercial bank and regional rural bank). Another 11.3 per centof the respondents
are using the co-operative bank loan as the source of direct microfinance and there are
16.1 per centof the total respondents who are using some direct sources of the
microfinance.
Table 5.1(b): Loan availed for occupational purpose
S. No. Loan availed for occupational
purpose
No. of Respondents Percentage
1 Yes 48 77.4
2 No 14 22.6
Total 62 100.0
Source: Compiled by author from primary survey data.
Out of the total 62 respondents 48 respondents are using the money obtained
by the microfinance for the occupational purpose. The rest of the respondents are
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using the microfinance for other purposes like medical treatment, marriages, debt
repayment and for social ceremonies. Thus most of the respondents are using
microfinance for occupational purposes.
5.5.2 Number of times money borrowed:
Table 5.2 shows the number of times borrowed the money.
Table 5.2 Number of times borrowed (n=48)
Sl. No. No. of times Borrowed Number of Respondents Percentage
1. Once 25 52.1
2. Less than 5 times 14 29.2
3. More than 5 times 9 18.8
Total 48 100.0
Source: Compiled by author from primary survey data.
Table 5.2 shows that there are 25 respondents out of 48 respondents borrowed
the money only at once and this figure is 52.1 per cent of the total respondents using it
for occupational purposes. There are a total 14 respondents who borrowed the money
less than 5 times and this figure is 29.2 per cent of the total respondents. Remaining 9
respondents borrowed more than 5 times and this is 18.8 per cent of the total
respondents borrowing for occupational purposes. Thus, such borrowers are almost
equally split in the sense that half of such respondents are borrowing for once while
the remaining are borrowing for several times to run their occupations.
5.5.3 Amount borrowed:
The direct microfinance beneficiaries borrowed the money from the aforesaid
mode of the direct microfinance. The amount they borrowed is varied from person to
person and it totally depends on the initial amount they are in need for the starting the
occupation. For the tabulation of the data we categorize the amount borrowed in to
three groups, shows in table 5.3.
Table 5.3 Amount borrowed by respondents in Rs. (n=48)
Sl. No. Amount Borrowed Number of Respondents Percentage
1. Less than Rs.5000 6 12.5
2. Rs. 5000 to 10000 17 35.4
3. More than Rs.10000 25 52.1
Total 48 100.0
Source: Compiled by author from primary survey data.
Table 5.3 shows that there are 25 respondents out of the 48 respondents who
are borrowing more than Rs.10000 for the occupation purpose and this figure is 52.1
per cent of the total respondents included in the study while only 6 respondents out of
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48 respondents are borrowing less than Rs.5000 and this figure is 12.5 per cent of the
total respondents included in the study. There are 17 respondents who are borrowing
in between Rs.5000 to 10000 and this figure is 35.4 per cent of the total respondents
included in the study. Thus, the respondents prefer to borrow such amounts that may
be enough for their requirements. As mentioned above there are 62 respondents who
have generated the microfinance through direct mode. Table 5.4 shows the total
number of respondents who got benefitted through the direct microfinance.
Table 5.4: Usefulness of direct microfinance (n=62)
Sl. No. Usefulness Number of respondents Percentage
1 Yes 60 96.8
2 No 1 1.6
3 Can’t say 1 1.6
Total 62 100.0
Source: Compiled by author from primary survey data.
Table 5.4 shows that all 62 respondents got benefitted except the two and out
of these two one respondent says that he is not sure about its benefits. Therefore, we
can say that use of microfinance definitely increases the employment, women
empowerment and socio economic condition of the poor people. We also found that
microfinance improves poor people’s lives by contributing to improved healthcare,
children’s education and nutrition, and women empowerment. Along with increasing
their production and giving them employment, microfinance is also increasing their
income. Therefore, their monthly income increases and thus their socio economic
condition, children’s education and health of the respondents and their family member
are increase significantly. Table 5.5 shows the nature and benefits of microfinance
activities.
Table 5.5: Usefulness of the direct microfinance (n=62)
Sl.
No.
Type of usefulness Number of
respondents
Percentage
1 Increasing scale of occupation only 2 3.2
2
Increasing scale of occupation and–
(a) Getting raw material
1
1.6
(b) Increase income 27 43.5
(c) Getting raw material and increasing income 1 1.6
3 Getting raw materials and increase income 14 22.6
4 Getting inputs and increasing production 5 8.1
5 Increasing income only 1 1.6
6 Increasing income and production 8 12.9
7 Others 3 4.8
Total 62 100.0
Source: Compiled by author from primary survey data.
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Table 5.5 shows that there are 51 respondents who reported that their income
increases after making use of direct microfinance and this figure is 82.3 per cent of
the total respondents and increasing scale of production reported by 31 respondents
and this figure is 50 per cent of the total respondents considered under the study.
Therefore, we can infer that all respondents using direct microfinance are able to
increase the scale of occupation and thereby their income. So rate of production
increases and thus employment also increases.
The respondents have reported that microfinance is helpful in improving the
occupation and enlarging the scale of occupation because initially if they have some
occupation and after getting some assistance with loan they can easily find the money
for increasing the scale has been helping their occupation in the increasing scale. The
direct microfinance is a financial service of small quantity provided by financial
institutions to the poor. These financial services may include savings, credit,
insurance, leasing, money transfer, equity transaction etc, that is, any type of direct
financial service that provides to customers for meeting their normal financial needs,
life cycle, economic opportunity and emergency services with qualification that
transaction value is small and customers are poor or low income earners.
Thus, the respondents have reported that they are using microfinance mainly
for occupational purposes. So with the help of direct microfinance productions,
income and employment increases. Besides, it is also improving consumption,
nutrition, healthcare and children’s education of respondents. Microfinance increases
at local level cottage and small industries production like milk production, dhoopbatti,
agarbatti, papad and achar, etc.
5.5.4 Effect of Microfinance on Production/business:
In the study we found that the maximum impact of the microfinance is on the
production and business. Because if there is increase in production it is directly affects
the poverty by increasing income of the respondents. Therefore, we can conclude that
microfinance increases self-employment and occupation of the respondents and at the
same time consumption, health facility, living status, children’s education etc. also
improve. For the tabulation of the data we categorize the change of the respondents in
to three groups. In first group we put those respondents in whose business major
change takes place and in second group we put those respondents in whose business
average change takes place while in third group we put those respondents in whose
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business only minor change takes place. Table 5.6 shows the effect of microfinance
on business or in production.
Table 5.6: Effect of direct microfinance on production/business
Sl. No. Effect on production/business Number of respondents Percentage
1 Major change 37 63.8
2 Average change 19 32.8
3 Minor change 2 3.4
Total 58 100.0
Source: Compiled by author from primary survey data.
Table 5.6 shows there are 63.8 per cent of the total respondents are there in
whose business major change is taking place and there are 32.8 per cent of the total
respondents in whose business average change is taking place and in third group there
are only 3.4 per cent of the total respondents in whose business only minor change
takes place. Thus, majority of the respondents are benefitting largely with the help of
direct microfinance. In the rural area microfinance is increasing subsidiary
employment for illiterate, unskilled, semi-skilled and to the poor population. This is
very effective for increasing income and production, because maximum farmers are
starting animal husbandry, menthol oil, agriculture, vegetables as subsidiary
occupation with the help of the direct microfinance. After starting these types of
subsidiary occupation their rate of production increases.
5.5.5 Impact of direct of Microfinance on monthly income of
Respondents:
In the case study of Bahraich district we find that microfinance provide
separate and subsidiary occupation for the respondents and increasing in the
employment in the poor, illiterate, literate, unskilled and semi-skilled population.
Another impact is that the income of the respondent increases and due to increase in
the income there is a drastic increase in the consumption of the commodities and in
their health condition and their children’s education is. Therefore, we can conclude
that there is increase in the socio economic condition of the respondent after using the
microfinance.
The beneficiaries of direct microfinance reported that they are using the
money obtained from the microfinance in starting a new business/occupation or in
improvement of the existing business/production. Their monthly income increases but
the level of increment is not direct. It depends on their occupation, amount invested
and on the management of the money. Respondents reported that secondary
occupation such as trading, street-vending, tailoring and manufacturing achar, papad
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and agarbatti has better returns as compared to the primary occupation such as
agriculture and animal husbandry. Table 5.7 shows that monthly income of the
respondents is improving. For the tabulation of the data we categorize the all data in
to five categories. In first group we put those respondents whose monthly income
increased less than Rs. 2000 and in second group we put those respondents whose
monthly income increases between Rs. 2000 to 5000. In third group we put those
respondents whose monthly income increases between Rs. 5000 to 8000 and in fourth
group we put those respondents whose monthly income increases more than Rs. 8000
and in the last group we put those respondents who noted no change in their monthly
income.
Table 5.7: Increase monthly income of respondents
Sl. No. Increase monthly income (in Rs.) Number of respondents Percentage
1 Less than 2000 6 9.7
2 2000 to 5000 37 59.7
3 5000 to 8000 11 17.7
4 More than 8000 4 6.5
5 No change 4 6.5
Total 62 100.0
Source: Compiled by author from primary survey data.
Table 5.7 shows that there are 37 respondents whose monthly income
increased from Rs. 2000 to Rs. 5000 and this figure is 59.7 per cent of the total
respondents. There are 11 respondents who reported that their monthly income
increased at higher level from Rs. 5000 to 8000 and this figure is 17.7 per cent of the
total respondents. There are 6 respondents who reported that their monthly income
increased moderately and it was less than Rs. 2000 and this figure is 9.7 per cent of
the total respondents and there are 4 respondents who reported that their monthly
income increased much higher and it was more than Rs. 8000 and this figure is 6.5 per
cent of the total respondents. Only 4 respondents reported no change in their monthly
income due to the direct microfinance. The respondents of the third and fourth group
reported that the major occupations opted by them are generator connection given to
vegetable sellers on footpath, retailer, tailoring and buffalo based cultivation. On the
other hand respondents whose income increases less than Rs. 2000 per month, major
occupation opted are barber shop, mobile vender, agriculture and animal husbandry.
Therefore, we can say that income of the respondents, increases in significant
amount after using the direct microfinance and this increment depends on the nature
of occupation, management among the group members, performance and awareness
among the respondents and their family members. During the study, we found that
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maximum respondents are illiterate and unskilled, and thus they preferred animal
husbandry as their primary occupation. There are several respondents who opted for
the secondary occupation such as retailer, mobile vender, tailoring and lighting the
CFLs of the shopkeepers having shops on footpath on daily basis by generator. It is
further noted that increment in income is greater in secondary occupations than in
primary occupations. Thus the primary occupation has low performance as compared
to the secondary occupation.
5.5.6. Members engaged in the occupation started by Direct
Microfinance:
In this section we describe the total number of members engaged in the
occupation initiated or expanded with the direct microfinance and for this purpose we
discussed with the beneficiaries directly. Table 5.8 provides the details. For the
tabulation of the data we categorize the whole information in to three categories. In
first category we put those respondents who are only self-employed or engaged alone
and in second category we put those respondents in whose business up to three
members get employed and in the third group we put those respondents who employ
more than three people in their occupations.
Table 5.8: Number of members engaged on the occupation (n=62)
Sl. No. No. of members engaged No. of respondents Percentage
1. Only self-engaged 36 58.1
2. Up to 3 24 38.7
3. More than 3 2 3.2
Total 62 100.0
Source: Compiled by author from primary survey data.
Table 5.8 shows that 36 respondents are only self-engaged and this figure is
58.1 per cent of the total respondents whereas there are 24 respondents who employed
or engaged up to three people and this figure is 38.7 per cent of the total respondents.
There are only two respondents who employed or engaged more than three people in
their business. Thus, in the case study we found that the maximum respondents are
self employed with the help of microfinance and still it generates employment
sufficiently. Therefore, we can say that microfinance is definitely helping to the poor
people because with the help of microfinance people can start the business/occupation
and generate employment for others as well. Still, it came out clearly that besides the
self-employment, there is enough evidence suggesting that employment generation is
taking place. Here we carried out some case studies for the collection of the data of
the people who are successfully using the microfinance for the improvement of their
occupation and employment generation.
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CASE STUDY-1
Mr. Beche Lal Yadav
Village: Devraipur Tehsil: Mahsi
District: Bahraich.
Mr. Beche Lal is 60 years old living with his family. There are 7 members in
his family including wife, son, daughter in-law and 3 grandsons. He has 8 begha
agricultural land and 3 buffalos. Therefore, we can say that his main occupation is
agriculture and animal husbandry. He manages all works related to the animal
husbandry and agriculture with his family and every member of the family co-
operates. He reported that he started animal husbandry and dairy farming with the
help of money obtained from the direct microfinance and also reported that he had
generated this microfinance from various sources such as ‘ugahi loan’ (private NGO
loan), for various purposes such as for buffalo purchase, agricultural need, girl
marriage and other needs. The ugahi member has given Rs. 9000 to him without any
security. The client has been repaying Rs. 1000 per month in 10 months. The ugahi
member got money at their home and collection is received also at home. So it is
easier and available in the same locality. Thus people have not to go anywhere for the
money. Since the lender is living in the same locality there is no need for any security
paper. He further reported that he started the animal husbandry and dairy farming
occupation for three years ago and for this purpose he bought three buffalos with the
help of ugahi loan. Presently he has three buffalos and at the same time he has a
business of dairy farming with him. After starting the occupation he repaid the entire
loan and now his monthly income is Rs.8000/ per month. After monthly income
increased he started spending the money for the health and now he is more concerned
about the children education and health of the members of the family. Therefore, we
can say that microfinance increases the socio-economic condition as it is seen in the
case of Mr. Bechelal since he has been successfully showing increased income and
the same is being used to engage the family members in occupation productively and
this helps in raised the health and education of the family members.
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CASE STUDY–2
Mr. Jagan Yadav, Village: Devraipur
Tehsil and Block: Mahsi
District: Bahraich
Mr. Jagan Yadav is 45 years old and his main occupation is agriculture and animal
husbandry. In his family there are 7 members including his wife, 3 sons, one daughter
and a daughter-in-law. He has 12 begha agricultural land and 4 buffalos and dairy
farming occupation. Thus, his monthly income is good. He started dairy farming
occupation with the help of ugahi loan (direct microfinance). Every time when he
feels the requirement of money for his occupation he borrowed Rs. 10,000 and out of
Rs. 10,000 he got only Rs. 9000 because Rs.1000 was stained by lender as the first
repayment instalment. This loan he got as the ugahi loan and this all amount he has to
repay in 10 months by instalments. Therefore, we can say that with the help of ugahi
loan he got self-employment and his monthly income increases besides providing
productive engagement to his family members. Thus, due to increase in monthly
income his socio-economic condition also increases. This ugahi loan is easily
available within the same locality in which he resides. Further, he reported that his
monthly income is more than Rs. 8000 and this was made possible with the help of
direct microfinance.
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5.6 Benefits and Activities of Microfinance through Self-Help Groups
(SHGs):
The self-help groups are group of those 10 to 20 members who have the same
socio- economic status and living in the same locality. SHGs are the groups of rural
poor who have volunteered to organise themselves into a group for eradication of
poverty and increasing employment of the members. They agree to save regularly and
convert their savings into a common fund known as the Group corpus. The members
of the group agree to use this common fund either on collective basis or on individual
basis for the occupation and the profits are also divided in the same way this all is
manage by the common management. The SHGs have an effective way for generating
microfinance. By generation of the microfinance they are serving each other in the
groups.
Now in this section we present the basic structure of the SHGs and their work
culture and other associated work which are being undertaken by the SHGs members
of the Bahraich district of Uttar Pradesh on the basis of the field work during October
2011 to April 2012. Out of a total of 190 respondents, 96 respondents were engaged
in the microfinance with the self-help groups and this figure is 50.52 per cent of the
total respondents considered under study. These SHG members belong to various self-
help groups in all four tehsils of the district. For our analysis we discuss maximum
five members of each SHG because we want to cover the maximum number of SHGs.
These SHG members belong to various castes, religion and with different social
groups. All these SHG members are poor and start or expand economic activity with
the help of self-help groups.
5.6.1 Per member monthly savings:
In the Bahraich district total 190 samples were studied. In this sample 96
respondents are SHGs members. For these members we prepare a set of questionnaire
and asked all questions separately and analysed their answers. These SHG members
reported that they make monthly savings. These savings are deposited with the SHG
bank accounts. When there is a significant amount in the SHG accounts, the bank
provide credit plus assistance. This assistance is provided by bank under the SGSY
scheme. All members of the SHGs organize meeting on monthly basis and all
decisions related to the further work, report of the previous work, left amount in the
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bank and future work were discussed. The decisions are made on the basis of the
majority opinion. Table 5.9 shows the per member monthly savings.
Table 5.9: Per member monthly savings
Sl.
No.
Per member monthly saving in
Rs.
Number of
Respondents
Percentage
1. Less than Rs 50 24 25.0
2. Rs 50 to 100 72 75.0
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 5.9 shows that there are 24 respondents whose monthly saving is less
than Rs.50 and this figure is 25 per cent of the total respondents included in the study.
Remaining 72 respondent’s monthly saving is in from Rs. 50 to 100. This figure is 75
per cent of the total SHG respondents included in the study. These savings are the
basic foundation of the microfinance. Because the respondents are borrow the money
on the basis of their savings and their needs. Any bank will issue the loan and
assistance only on the basis of their initial savings. Besides the collection of the
microfinance, this increases the tendency of the savings among the poor and resource
generation for meeting their occupational and social needs.
5.6.2 The main occupation started by SHGs members:
In Bahraich district we find that respondents started occupations but they
preferred the primary occupation. Among the primary occupation they preferred
animal husbandry more because most of the respondents are illiterate and semi-
skilled. The SHGs are performing well among all modes for the purpose of the
microfinance and its use. Table 5.10 shows the main occupation chosen by the
respondents.
Table 5.10: Main occupation started by SHGs members (n= 96)
Sl. No. Main occupation started Number of Respondents Percentage
1. Animal husbandry 50 52.1
2. Business /trade 40 41.7
3. No business started 6 6.3
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 5.10 shows that there are 50 respondents out of 96 who choose animal
husbandry as their primary occupation and this figure is 52.1 per cent of the total SHG
respondents. As such, this is the maximum number of the respondents who opted for
animal husbandry as their primary occupation. There are 40 respondents opting
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business/trade as their primary occupation and this is 41.7 per cent of the total
respondents. However, there are 6 respondents who did not choose any business and
this figure is 6.3 per cent of the total SHG respondents. These respondents reported
that they are not able to start any occupation because they used all the money for
unseen events and they are left with no money for starting any business. In Bahraich
district, we found that respondents are using microfinance for reducing poverty and
successful increment in generation of the employment. Out of all modes of the
microfinance, microfinance through SHGs is very successful. By engaging in the
SHGs, the social relations and social capital are also developed among the respondent
which increases the bond among them. Thus, they all are helping one another and take
care about themselves. With SGSY scheme, the SHGs find the assistance on the basis
of their savings. SHGs are very successful in the rural areas.
5.6.3 Self-Help Groups savings and wealth usage:
The SHG members are using their savings and assistance given by the banks
through SGSY scheme for various purposes such as for starting the new occupation,
purchasing the animals, agricultural work, medical purpose, social functions,
marriages and so many other economic and social purposes. Further it is noted that
the main occupation started by the members either on collective basis or on individual
basis are animal husbandry, business and trade. The SHG members use money from
SHG also on subsidiary needs such as house making/repair, social function, medical
treatment, etc. Thus, the SHG members procure the money or credit through
microfinance from SHG on very easy terms and conditions. With this money they
meet their agricultural needs, marriage and for other social functions such as house
making/repair and medical treatment. After sometime, they go far repayment of SHG
loans. Table 5.11 provides a detailed picture on of SHG advances for detailed
purposes.
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Table 5.11: Activity-wise Use of SHG Savings and Loans
Sl. No. SHG savings and loans usage No. of respondents Percentage
1 House making/repair and
(a) Start new occupation 3 3.1
(b) Purchase of animal 1 1.0
(c) Agriculture purpose 1 1.0
2 Starting new occupation only 24 25.0
3
Starting new occupation and
(a) Purchase of animals
10
10.4
(b) Social functions 9 9.4
(c) Medical treatment 5 5.2
(d) Social function +
medical treatment
2
2.1
4 Purchase new animals only 21 21.9
5
Purchase new animals and
(a) Agriculture
2
2.1
(b) Social functions 5 5.2
(c) Medical treatment 5 5.2
(d) Others 1 1.0
(e) Agriculture + medical
treatment
1
1.0
6 Others 6 6.3
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 5.11 shows that the SHG members are saving the money and this money
is being used for some main purposes and for some subsidiary purposes. Table 5.11
also shows that there are 3 respondents who used the money for house making or
repair and this is the 3.1 per cent of the total respondents using the SHGs. The
maximum respondents of self-help groups are using SHGs wealth for starting new
occupation and this is 25 per cent of the total respondents. There are 10 respondents
using the SHG money for starting new occupation and for purchasing animals and this
is 10.4 per cent of the total respondents using the SHGs. There are 9 respondents
using the SHGs money for starting the new occupation and for social functions and
this figure is 9.4 per cent of the total respondents using the SHGs. There are 5
respondents using the SHGs money for starting new occupation and for the medical
treatment purpose and this figure are 5.2 per cent of the total respondents using the
SHGs. There are 2 respondents using the SHGs money for starting the new
occupation and for both purpose i.e. for social function and for medical treatment
purpose and this figure is 2.1 per cent of the total respondents using SHGs. There are
22 per cent respondents using SHGs money for purchasing animals only. These
respondents are engaged in animal husbandry. Therefore, by analysing the data of the
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Table 5.11 we can say that with the SHG support poor people start new occupation
and get money for various other purposes and thus they get rid from the sahukars and
mahajans.
SHGs are working on the principle of togetherness and help for the poor and
come together to pool their savings and access credit facilities to them. SHGs by
tapping social capital like trust and reciprocation helps in replacing physical
collateral, the major hurdle faced by the poor in obtaining formal credit. Then,
through the principles of joint liability and peer pressure, a SHG can ensure and
promote for loan recovery from the members. In the process, a SHG helps the poor to
establish their creditworthiness. Therefore, it is clear that all money obtained from the
savings and grants is completely utilized for the generation of the self-employment
and for the health and other household purposes which are required for living in rural
areas.
5.6.4 Functioning of SHGs:
The SHGs consists 10 to 20 members. So it is not easy to manage all without
setting the rules and regulations. Therefore, for the management of the group common
rules and regulations are set for all and all members choose a leader from the group
who can call a meeting and manage all money transactions and stored all records in
written form with them. After the meeting a common agenda is set for all and
everyone follows it. Normally the date of meeting is fixed in advance and is organised
monthly. All issues are discussed there in the meeting only. The issues which are
normally discussed are disbursement of loans, collection of savings, fines and similar
other matters.
5.6.5 Effect of the SHGs on monthly income of the respondents:
The Self-Help Group members are starting the occupation with the help of
microfinance and respondents realise increase in the monthly income. The SHGs are
playing important role in availability of microfinance to the poor people basically
living in rural areas. Due the formation of the group co-operation among the members
increases and thus social needs are also satisfied and thus their socio-economic
condition increases.
As mentioned above, due to the efforts of the SHGs monthly income of the
respondent’s increases and this is noted that this increase in income is varying from
member to member because it only depends on the nature of occupation they are
opting and their strength of the work. Table 5.12 represents the increase in monthly
162
income of the respondents. For the analysis of the data we categorize the increase in
income in to four groups. In first group we put those respondents whose monthly
income increases only from Rs.300 to 500 and in second group we put those
respondents whose monthly income increases from Rs.500 to 1000 and in third group
we put those respondents whose monthly income increases more than Rs.1000.
However, in fourth group we put those respondents whose income does not change.
Table - 5.12: SHG help monthly income increase of respondents
Sl. No. Monthly income increase (in Rs.) Number of respondents Percentage
1 300 to 500 8 8.3
2 500 to 1000 28 29.2
3 More than 1000 47 49.0
4 No change 13 13.5
Total 96 100.0
Source: Compiled by author from primary survey data.
Table 5.12 shows that there are 8 respondents who reported that their monthly
income increases only from Rs. 300 to 500 after using the microfinance from the
SHGs and this figure is 8.3 per cent of the total SHG respondent. There are 28
respondents who reported higher increment of Rs.500 to 1000 and this figure is 29.2
per cent of the total respondents included in the study. There are the largest 47
respondents who reported an increment of more than Rs.1000 in their monthly income
after the starting the occupation with money that was obtained from the SHGs and this
figure is 49 per cent of the total respondents included in the study. Besides the
increment, there are 13 respondents who toned no change in their monthly income.
No change is reported because they spent the money either for medical purpose or in
social functions such as marriages and they are waiting for the next transactions so
that they are able to start new occupation for increasing the monthly income. Thus
microfinance is very successful in increasing income and employment generation for
the poor. This study shows that there is a sharp decline in loans from money lenders.
Through credit obtained from SHGs the members are protecting their families
from various vulnerabilities and at the same time they build their economic base by
starting a new occupation and thus become able to exit from poverty. In Tamil Nadu,
it was found that nearly 14 per cent loans are used for housing purpose. In Andhra
Pradesh it was found that nearly 6 per cent of the members are utilizing their loan for
children’s education.
163
SHG members are also using quite significantly SHG loan for regular
economic activities like animal husbandry, agriculture and petty business. This is
evident from the fact that nearly 74 per cent of SHG members in Tamil Nadu invested
for creating various assets such as land, livestock. Therefore, we can conclude that
microfinance is facilitating its clients to cope with situations rather than deal with life
cycle events in a sustainable manner. The economic impacts of SHGs are more
protectoral rather than promotional in nature. This is attributed to exclusion of very
poor and the general constraints faced by poor in making use of loan for productive
investments.
Through SHG, members are improving the economic conditions but the impact of
the microfinance is not uniform because of many reasons. Besides the failure of SHGs
in some cases there are evidences of successful removal of poverty and
unemployment in Bangladesh with the help of SHG. The cases also noted there that
SHG can improve the women status and they can participate equally. Therefore, we
can conclude that SHGs are helping in generation of the microfinance and at the same
time with the availability of the microfinance SHG members can increase
employment and thus can remove their poverty. There are following main things on
which impacts are distributed.
1. SHGs members regularly save on monthly basis with their given capacity.
This saving collection is deposited in SHGs bank account. From this money
they can borrow on the basis of their needs without any terms and condition
and after the fulfilment of the needs they repaid the loan.
2. When SHGs get some savings collection, they find credit plus assistance by
bank through SGSY.
3. With the help of such savings they obtained credit plus assistance to increase
investment. This investment increases production, income and employment of
SHG members.
4. The increase in income, consumption, living standard and socio-economic
status increase and at the same time also helps in reducing poverty and also
increasing employment.
Thus we can say that with the help of SHG microfinance, development process
can be taken up for poor’s and marginalized rural areas. In this respect we present
some case studies, which show the actual benefits and activities of microfinance
through SHG. These case studies provide actual knowledge of the microfinance in
poverty alleviation and employment generation in Bahraich district.
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CASE STUDY-3
MaaLaxmi SHG, Village: Devlakha
Tehsil, Block: Kaisarganj
District:Bahraich
This self-help group was formed in 2009 and all its 12 members including
male and female both belong to Other Backward Class (OBC) and Scheduled Caste
(SC) categories. Leader of this SHG is Smt. Anju kumari; cashier is Sri Nakched Lal
and sachiv (Secretary) Sri Ram Naresh. Monthly saving of each member is Rs. 50 and
this amount is deposited in to a bank account of Allahabad U.P. Grameen Bank
branch Bardauli. This SHG is performing well because all members cooperate to each
other and all records are maintained in the written form in SHG register. The record
may be of scheme of loan by which loan is sanctioned, the assistance amount,
receiving date, interest rate, saving collection, member borrowings, amount and time
period and all such records which are required for further use in future. We all saw the
SHG register at the time when we met with the members. For example the subject
matter of the meeting held on 2 November 2009, described below in such a way that
every information, have been presented and some part of this meeting is described
below. All members of the SHG attended this meeting and every member signed the
register. Thereafter the national song was sung and then the issue of the previous
meeting was discussed and followed by the agenda and assignments were debated.
Assignment 1- All members discussed the importance of healthcare and endorsed to
healthy because health is wealth.
Assignment 2- Discuss regularly in all meetings regarding deposit, saving, instalment
by every member on monthly basis.
Assignment 3- Member Ram Naresh said that he wanted to borrow Rs. 500. After
discussion by members, Loan was given to Mr Ram Naresh.
Assignment 4- All members finalized the date of next meeting for the upcoming
month.
(Source: This line noted from SHG register and translated.)
The SHG members said that the first grading was for Rs. 25,000 and thus
members could repay this money very soon. After the repayment of first instalment,
they get 2nd
grading of Rs. 2,50,000 in which Rs. 1,10,000 was as assistance. This
loan and assistance was provided under the SGSY. The interest rate on the assistance
165
is only 16 per cent on yearly basis. With this money all members started the business
of purchase and sale of cereals, pulses and other items in the village. Doing this work
all members participated equally and replied that they were happy with their
occupation. Every member earned Rs.1000 on monthly basis and thus their monthly
income increased. The members were happy with the performance because every
member contributed Rs. 1000’ for repayment of loan amount. Now balance amount of
CCL is only Rs.12,000 and this can be repaid in next month. Thus all of its member
find self-employment and get fresh earnings.
All its members replied that after repayment of the second grading amount
they can get 3rd
grading of Rs. 2,50,000. The members of the group told me that
interest rate is charged on this assistance amount and they think that this is not fair.
Thus, with the help of microfinance through self-help groups they find enough
benefits and fulfil basic needs besides increased income and employment. All
members are happy with the performance of SHG. In the third grading, they expect to
get Rs 2,50,000 (loan + assistance) with which they further wanted to increase their
collaborative business to earn more for their betterment.
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CASE STUDY-4
Jyoti Self Help Group, Village: Ghataniyapur
Block: Tazwapur, Tehsil: Mahsi,
District: Bahraich
This SHG was formed in 2008 with 11 persons as its members living in the
same locality and they all belong to OBC and SC category. This SHG has very good
performance. In this SHG, Mr. Chandra Patti is the group leader; Mr. Mannu is
cashier and Mr. Ram Ashish is secretary and every member saves Rs. 50 on monthly
basis. The formation of this SHG is with the help of Allahabad U.P. Grameen bank,
Branch Rampurwa Chauki. In this SHG, all members are very active and creative.
The first grading of this SHG was Rs.60,000 in 2009. The members repaid this money
soon and they got the second grading of Rs. 4,97,000. They distributed this amount
among all its members and each one got around Rs. 40,000. By this money all
members purchased 2 Buffalos each and started the occupation of dairy farming. With
this monthly income of each member increased significantly and this is now Rs.1500.
In fact increased of milk production is sold to the Amul dairy (having purchase centre
in their village) at attractive price. Thus, after some time, members start repayment of
loan and now six month before the schedule they repaid the whole amount. This
shows that the co-ordination among the members is good.
One member reported that during this period his buffalo died and he got the
insurance claim for that to purchase a new buffalo. In this SHG, all members and
leader are working hard for getting the maximum returns from the occupation. Now
all members are working to receive the third grading. They now plan for an additional
business of tent-house while adding one more buffalo to the previous number. They
reported that all terms and conditions are fulfilled and the bank is ready for the third
grading. This SHG is performing well. At present the SHG amount in bank deposit is
Rs. 50,000. All members borrow money from time to time on as per their needs. This
helps in raising the income level of the respondents which helps in raising their socio-
economic profile.
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5.7 Microfinance through KCC and its Impact on Poverty and
Unemployment:
The kisan credit card (KCC) scheme was launched in the year 1998-99 with
the formulation of the model by NABARD. This scheme has been launched to
provide timely and adequate credit support to farmers for their production needs in a
flexible and cost effective manner. In order to increase the production and
productivity of agricultural sector, there is an urgent need of making loans and
advances. It is an innovative scheme in terms of credits and loans. Therefore, this
scheme is very popular among the small farm holders. This KCC scheme has been
implemented by 27 commercial banks, 378 co-operative banks and 196 regional rural
banks (RRBs) throughout the country.
KCC scheme provide microfinance for small farm holders living basically in
rural part of India, in Uttar Pradesh and also in Bahraich district. Through KCC
scheme small farm holders can become free from Landlord, Zamidar, Mahajan and
Sahukar who charged a large interest rate for small amount and for small period.
Further it is noted that KCC provides the credit for production and investment needs
of farmers such as purchase of agricultural equipment, construction of farm related
buildings, seeds, fertilizers, irrigation facility and investment in allied activities such
as dairy, piggery and bee-keeping etc. to the farmers.
During the case study we found that this KCC scheme increases agricultural
production and also for subsidiary occupations as animal husbandry, vegetables
production, etc. Besides, KCC scheme also plays important role in social needs.
Therefore, we can argue that KCC scheme is an effective mode of procuring the
microfinance. Besides, these all advantages there is an additional problem of issuing
of this KCC because bank managers are not issuing it easily and asked for a huge
commission from the beneficiaries.
In the case study of Bahraich district out of total 190 respondents, 67
respondents are using the KCC and this figure is 35.3 per cent of the total respondents
in the study. These respondents are small farm holders and they are using KCC
money as microfinance because their KCC limit is below Rs.50000. In the KCC
scheme credit limit is decided by area, total registered land of farmers. KCC credit
limit is Rs. 5000 per begha and interest rate is 7 per cent on half-yearly basis. The
farmers have to pay only 4 per cent rate of interest because 3 per cent is given by the
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NABARD as the interest subsidy. If the farmers do not repay KCC loan within one
year, interest rate is pegged up to 12 percent. Table 5.13 shows the year wise analysis
farmers having the KCC. For the tabulation of the data we categorize whole
information in to three groups.
Table 5.13: Year wise analysis from which Respondent having the KCC
Sl. No. Year since holding KCC No. of respondents Percentage
1 Before 2005 2 3.0
2 2005 to 2010 59 88.1
3 After 2010 6 9.0
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 5.13 shows that the majority of the respondents got issued the KCC
during the period 2005 to 2010. Before 2005 there were only 2 respondents having the
KCC and this is only 3.0 per cent of the total respondents, having the KCC. There are
only 6 respondents issued the KCC after the year 2010 and this figure is 9.0 per cent
of the total respondents having the KCC. There are 59 respondents holding the KCC
in between the period 2005 to 2010. This shows that the institutions like banks were
more committed for issuing the KCC during 2005-2010. Thereafter, their efforts have
been weakened. This is a matter of concern.
5.7.1 Credit limit of KCC:
Credit limits of the farmers are varying from person to person because it is
totally based on the total land registered in their name. Further, it is found that the
farmers of the Bahraich district are small farm holders. So they have only a small
credit limit. Table 5.14 represents the credit limits of the respondents. For the
tabulation of the data, we categorize whole information in to three groups. In first
group, we put those respondents whose credit limit is up to Rs.10,000 and in second
group we put those respondents whose credit limit lies in the range of Rs. 10,000 to
Rs. 25,000 and in third group we put those respondents whose credit limit is more
than Rs. 25,000.
Table 5.14: Credit limit of KCCs
Sl. No. Credit limit of KCC Number of respondents Percentage
1 Up to Rs. 10,000 2 3.0
2 Rs. 10,000 to 25,000 20 29.9
3 More than 25,000 45 67.2
Total 67 100.0
Source: Compiled by author from primary survey data.
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Table 5.14 shows that majority of respondents had credit limit more than Rs.
25,000. There are 45 respondents whose credit limit is more than Rs.25,000 and this
figure is 67.2 per cent of the total respondents having the KCC. There are only 2
respondents having the credit limit up to Rs.10,000 and this figure is only 3 per cent
of the total respondents having the KCC. There are 20 respondents having the KCC
credit limit of Rs. 10,000 to Rs. 25,000 and this figure is 29.9 per cent of the total
respondents having the KCC. This shows that there is still need for providing more
KCC benefits to very small and marginalized farmers in the district.
5.7.2 Number of times money withdrawn:
Since the need of the respondents is throughout the year, they withdraw this
KCC money many times during the entire year according to their need. Further, it is
noted that these needs are basically for agricultural inputs such as seeds, fertilizers,
insecticides; for organizing social functions; and for marriages and for other such
important occasions they required money. This amount is varied so they withdraw the
money at various times and in varying amount. Table 5.15 shows the number of times
the money is borrowed during the entire year through KCC.
Table 5.15: Number of times money withdrawn in a year (n=67)
Sl.
NO.
No. of times money withdrawn in a
year
No. of
respondents Percentage
1 Only once 50 74.6
2 2 to 3 times 10 14.9
3 More than 3 times 7 10.4
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 5.15 shows that there are 50 respondents who borrowed the money only
once during the entire year and this figure is 74.6 per cent of the total respondents
using the KCC. The reason for this is that most of the respondents are illiterate and
they are frightened for many transactions. There are 10 respondents who reported that
they withdraw the KCC money usually between 2 to 3 times during the entire year
and this figure is 14.9 per cent of the total respondents having the KCC. There are
remaining 7 respondents who withdraw the KCC money more than 3 times in a year
and this figure is 10.4 per cent of the total respondents having the KCC. Thus, around
three-fourth of the respondents withdraw the money under KCC only once in a year
and this could be due to their ignorance or other reasons.
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5.7.3 Total amount withdrawn:
Since the amount of the KCC is decided on the basis of total agricultural land
registered with the respondent (present rate is Rs.5000 per begha), so the amount of
the KCC limit varied. Table 5.16 represent the total amount withdrawn by the
respondents. For the tabulation of the data we categorize the whole information in to
three categories. In first group we put those respondents who withdraw the money up
to Rs. 10,000 and in second we put those respondents who withdraw in range of Rs.
10,000 to 25,000 and in the third category we put those respondents who withdraw
more than Rs. 25,000 in all.
Table- 5.16 Total amount withdrawn by KCC
Sl. No. Total amount withdrawn Number of respondents Percentage
1 Up to 10000 2 3.0
2 10000 to 25000 21 31.3
3 More than 25000 44 65.7
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 5.16 shows that there are only 2 respondents who withdraw up to Rs.
10,000 and this figure is 3 per cent of the total respondents having the KCC. There are
21 respondents who withdrawn Rs. 10,000 to Rs. 25,000 and this figure is 31.3 per
cent of the total respondent having the KCC. There are the maximum 44 respondents
who withdraw more than Rs.25000 and this figure is 65.7 per cent of the total
respondents having the KCC. Now if we match their figures with Table 5.14 it is
derived that generally the KCC holding farmers use the maximum credit facility for
meeting their needs. This suggests that farmers are now aware to use the finance
facility to the maximum limit.
5.7.4 Utilization/benefits of KCC:
Utilization of the KCC depends on the capacity and efficiency of its members.
For knowing about the performance of the KCC, we asked the respondents about the
performance of the KCC with the group and thus they replied about it. Table 5.17
represents the performance of the KCC.
Table 5.17: Utilization/benefits of kisan credit card
Sl. No. Utilization/benefits No. of respondents Percentage
1 More satisfied 58 86.6
2 Less Satisfied 9 13.4
Total 67 100.0
Source: Compiled by author from primary survey data.
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Table 5.17 shows that there are 58 respondents who reported that the
performance of the credit obtained through the KCC is more satisfied and this figure
is 86.6 per cent of the total respondents having the KCC and there are 9 respondents
who reported that the performance is less satisfied and this figure is 13.4 per cent of
the total respondents having the KCC. Thus, none of the respondent was found to be
dissatisfied with the KCC and its usefulness.
5.7.5 Increase in monthly income:
Respondents used the KCC money as the microfinance and using this money
they started the occupation/business. Due to that business or occupation monthly
income of the respondents’ increases and this increase in monthly income is
instrumental in raising economic status of the respondent. There are 64 respondents
who reported that they used KCC money for agricultural inputs purchases, animal
purchase, starting some of other agriculture related subsidiary occupations. This is
helpful in reducing poverty and unemployment and improving socio-economic status
of the respondents with the help of KCC finance. Table 5.18 shows the average
increase in monthly income of respondents while using credit made available by the
KCC issued to them.
Table 5.18: Increment in monthly income of the respondents
Sl.
No.
Increase is income (in month)
(Rs.)
Number of
respondents
Percentage
1 upto 500 3 4.5
2 500 to 1000 11 16.4
3 1000 to 2000 21 31.3
4 2000 to 5000 19 28.4
5 More than 5000 10 14.9
6 No change 3 4.5
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 5.18 shows that there are 3 respondents whose monthly increment is
upto Rs. 500 and this figure is 4.5 per cent of the total respondents having the KCC
and there are 11 respondents whose monthly income increment is from Rs. 500 to Rs.
1000 and this figure is 16.4 per cent of the total respondents having the KCC. There
are 21 respondents whose monthly income increment is from Rs. 1000 to Rs. 2000
and this figure is 31.3 per cent of the total respondents having the KCC. There are
another 19 respondents whose monthly income increment is in the range of Rs. 2000
to Rs. 5000 and this figure is 28.4 per cent of the total respondents having the KCC
172
and there are 10 respondents whose monthly income increment is more than Rs. 5000
and this figure is 14.9 per cent of the total respondents having the KCC. Only 4.5 per
cent KCC holders are replied that monthly income have no change. Since almost all
members responded that their monthly income is increased. We can say that KCC is
serving to the small farm holders and due to increase in monthly income of the
respondents they had better access to improve their earning further besides raising
other socio-economic indicators in the households.
5.7.6 Number of persons employed in the occupation started by the
KCC money:
Since KCC money can be used for agricultural purpose as well therefore by
using KCC money people started or expanded the occupation/business and in these
occupations other people also may get employed. This increases possibility of the
employment in the locality. Table 5.19 shows the total number of the person
employed by the KCC holders.
Table 5.19 KCC employing no. of persons
Sl. No. No. of persons employing No. of respondents Percentage
1 Only oneself 38 56.7
2 1 to 3 persons 27 40.2
3 More than 3 persons 2 3.0
Total 67 100.0
Source: Compiled by author from primary survey data.
Table 5.19 shows that the 38 respondents who reported that they do not
employ any other person in their business and this figure is 56.7 per cent of the total
respondents having the KCC. There are 27 respondents who reported that they
employed 1 to 3 persons in their business and this figure is 40.2 per cent of the total.
Only two respondents reported that he employed more than 3 persons in his
occupation and this figure is only 3.0 per cent of the total having the KCC. During the
study, we discussed with the 67 respondents having the KCC and they were drawn
from all the four tehsils of Bahraich district. These respondents are small farmers and
they are using KCC money as microfinance for starting the new occupation as well as
for the improvement of the previous occupation and also for the agricultural purpose.
They all reported that by using the KCC money as the microfinance their monthly
income increases and thus their socio economic condition improved. This has also
been helpful in providing employment to others to a certain extent. Therefore, KCC is
helpful in employment generation also in the district.
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CASE STUDY-5
Mr. Mannu, Village: Tambolinpurwa
Block: Mihinpurwa, Tehsil: Nanpara
District: Bahraich
Mannu is a KCC holder and living in the Tambolinpurwa village of
Mihinpurwa block and his age is 26 year. His house is pucca house with his wife age
24 years, one son (age 5 year), one girl (age 2 year) and his mother (age 50 years).
Thus, his family has total five members. He is educated only up to primary level, and
his wife and mother both are illiterate. His children are small and they are not going to
school. He has 9 begha agricultural lands registered in his name. He got issued his
KCC in the year 2009 worth Rs. 45000. With this facility, he purchased a menthol oil
manufacturing tank and installed it in his field. During the menthol oil season, he may
earn upto Rs. 1000 per day excluding labour cost. Thus, he is using the KCC facility
prudently and making money.
Thus, with the help of menthol oil tank occupation he earned more than Rs.
8000 on monthly basis during the season. In the season of menthol oil production, he
employed 2 persons as helpers and paid them Rs. 100 per day. This additional
occupation helped income increase and also helped in employment generation.
Thereafter, he purchased agricultural land as well. He reported that KCC provides
self-employment or subsidiary employment opportunity like in his case.
5.8 Conclusion:
With the above analysis, we can say that microfinance is an effective tool for
increasing employment, reducing in poverty and women empowerment and thus their
socio-economic condition improves. Further it is found that SHGs, direct mode of
generation of microfinance and KCC are the important modes of the microfinance.
Direct microfinance includes own savings, private loan, government loan, commercial
bank loan, regional rural bank and cooperative bank loan, insurance, pension fund and
from relatives loan. During the study of Bahraich district there are 62 respondents
reported that they availed the microfinance through the direct mode and 96.8 per cent
of these respondents reported that they got benefitted. Further it is reported that the
major impact of microfinance is on their monthly income and most of the respondents
noted an increase of monthly income. Due to increment in monthly income of the
174
respondents their monthly calorie consumption, nutrition, healthcare and child
education may also increase.
This all suggests that their socio economic condition increases and at the same
time possibility of employment is increased in the locality and at the same time there
is a likely decline in the level of poverty. This is an activity of microfinance and thus
it is very helpful and successful in the rural areas of the district of Bahraich. Around
64 per cent respondents reported that direct microfinance provides the major change
in production/business. During the study 59.7 per cent respondents reported an
increment of Rs. 2000 to Rs. 5000 in the monthly income and 6.5 per cent of the
respondents reported an increment of Rs. 8000 in the monthly income. Besides these
increments, there are 6.5 per cent of the total respondents reported that there is no
change in the monthly income. Around 58 per cent reported that they are only self-
employed whereas 3.2 per cent respondents reported that they employed more than
three members in their occupation and 38.7 per cent respondents reported that they
employed up to three members in their occupations. So we can say that direct
microfinance is helpful in income and employment generation and also in reducing
the level of poverty.
Self-Help Group (SHGs) is an important instrument for microfinance and self-
employment for the poor and unemployed members living in rural areas. We found
that the main impact of SHGs is that it increases the saving tendency among its
members and deposit all savings in to a common bank account. With this its members
can borrow according to their needs and when a significant amount is deposited in the
account. Bank provides credit plus assistance on savings. The assistance given on the
saving is provided by the Swarnajayanti Grameen Swarojgar Yojana (SGSY). In the
study we found that after increment in the monthly income of its members their
consumption of calories, living standard, and socio-economic status increases. The
benefits and activities of microfinance through SHGs include house making/repair,
starting new occupation, purchase animals, agriculture inputs, social function and
medical treatment. The maximum respondents are reporting that they are using this
microfinance for starting new occupation and some other respondents reported that
they started new occupation and purchased animals, social functions, agriculture, etc.
By using this money 49.0 per cent respondent reported that there is an increment of
Rs.1000 in the monthly income.
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The Kisan Credit Card (KCC) scheme also provides microfinance facility to
small farm holders. With this microfinance farmers can easily purchase seeds,
fertilizers, irrigation facility, animals and social functions such as marriage can be
performed because money obtained from the KCC scheme is available throughout the
year within the credit limits. This scheme made small farm holders free from landlord,
zamindar and sahukar, etc. In the case of Bahraich district 67/190 (35.35 percent)
respondent used the KCC money for the improvement in the monthly income and
socio economic condition of the people and these all 67 respondents are small farm
holder farmers. Respondents reported that they availed credit of more than Rs. 25,000
in a year. The respondents used this money for agricultural purposes such as for
purchasing agriculture inputs and its related equipments, for construction of farm
related buildings and also for investment in allied activities such as for dairy farming,
piggery and bee-keeping. Almost 87 per cent respondents used the KCC money
efficiently and 31.3 per cent of the total respondents using the KCC credit reported
that their monthly income increased in from Rs.1000 to Rs.2000. More than half of
the respondents (57 percent) reported that they used all KCC money for the self-
employment and all other respondents reported that they also employed other people.
Thus microfinance is very successful in increasing employment for illiterate
and unskilled population. It is very helpful in reducing the level of poverty and
increasing the monthly income of the people living in rural areas. This study provides
a clue that out of all mode of availing the microfinance, microfinance through SHG is
more efficient and preferred by most of the respondents. Further it is also noticeable
that microfinance through SHGs develops a tendency of savings among its members
and it provides an opportunity to work in a group which further developed the social
bonding among them.
In the overall study in Bahraich district of Uttar Pradesh, we have found that
93.8 per cent respondents accept that the microfinance has played a significant role in
poverty alleviation because their income has increased by the help of microfinance.
Among those 39.6 per cent respondents have found much success in poverty because
their income increased more than Rs. 2000 per month. The 40.9 per cent respondents
have found ordinary success in poverty because their income has increased between
Rs. 1000 to 2000 per month. The 13.3 per cent respondent has found very less success
in poverty alleviation because their income increased less than Rs. 1000 per month.
After increase in income their consumption, calories intake and socio-economic status
176
increased of their family members. Thus they found better role playing microfinance
in poverty alleviation in Bahraich district of Uttar Pradesh.
In the overall study in Bahraich district, we found that 94.6 per cent
respondents have accepted that their employment level have increased by the help of
microfinance. In which 42.0 per cent respondents have much success because in their
occupation more than one family or other members have found employment. 52.6 per
cent respondents are success’s because in their occupation self engagement or a single
person find employment. By this data we can say that microfinance playing better role
in employment generation in Bahraich district of Uttar Pradesh.
Chapter Six
Conclusion and Policy Suggestion
CHAPTER SIX
CONCLUSION AND POLICY SUGGESTION
Introduction:
India is a rapidly developing country in the world. There is no doubt that
nearly one-fourth of its population lives in poverty and also suffers from the problem
of Unemployment. Poverty is not only acute but is also a chronic malady in India. At
the same time, there exist unutilised natural resources and human potentials. Some
characteristics of Indian economy are a very high proportion of the working
population has engaged in agriculture, still high level of birth rate, labour is an
abundant factor and consequently, it is very difficult to provide gainful
employment for the entire working age population. The other characteristic of Indian
economy is the low living standard of the average Indian. They fail to get a balance
diet manifests in India to the low-calorie intake and low level of consumption of
protein.
All of these problems are also found in Uttar Pradesh and it could be in
somewhat higher degree. Because Uttar Pradesh is also facing the problems of
poverty, unemployment, low income, low level of living standard and poor quality of
human capital and development. The economy of Uttar Pradesh is also a developing
economy. In recent decades, microfinance has been playing an important role in the
alleviation of the above problems in the world, in India and also in Uttar Pradesh in
some ways.
Ensuring timely and adequate finance to the needy persons in rural and urban
areas to upgrade their standard of living in general and linking the market, low-
income groups to various financial services is the greatest challenge before the Indian
economy. The poor lack credit and meeting these financial requirements through
informal sources force the poor people to live in a delicate situation than earlier.
Various studies, shows that the main reason for the people staying below the poverty
line in rural urban areas is lack of cheap finance availability during emergency to
meet the basic requirements. The situation is worse in case of poor family and women
in rural areas because the lack of investment and social barriers. Credit may be given
Prof. Mohammad Yunus for introducing the Microfinance Programme, which has not
only created hope in the eyes of the poor people, but has also provided government a
new policy to overcome the severe problems of the economy, i.e., unemployment and
poverty.
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From the available literature, it is clear that the socio-economic status of the
beneficiaries under various microfinance programmes has benefited them to a large
extent. The present study relied on the data collected from sample households to
examine the effect on the direct microfinance, SHGs members and Kisan
credit card holders. Though the programme has been successful in extending credit
facility to rural households, yet its impact on income and employment growth is still
inclusive.
The study has highlight various important aspects such as extent of financial
exclusion in Bahraich district in Uttar Pradesh, the effectiveness of microfinance
programme in bringing the poor people into the gamut of formal financial systems,
growth and performance of microfinance in Uttar Pradesh both in terms of saving as
well as credit linkage facility along with the amount of loan provided by them.
6.1 Socio-economic Development of Uttar Pradesh:
Uttar Pradesh is a state of “the variety and unity,” because here all socio-
economic, cultural and religious characteristics are found as like in India. Uttar
Pradesh has 7.33 per cent geographical area of India. It is the fourth largest state after
Rajasthan, Madhya Pradesh and Maharashtra in terms of the area. But it is the largest
populated state in the country; its share in the population is 16.49 per cent. If Uttar
Pradesh is separate to another country, it is the fifth-largest country in population after
China, India, U.S.A and Indonesia.
Uttar Pradesh touches the natural and political boundary with mountain, river
and various states and one country. In the Uttar Pradesh found all climates,
seasons (Rabi, Khreef and Jayad) and this is providing a congenial
environment for agriculture and other economic activities. On the other hand, after the
creation of Uttrakhand the forest area of Uttar Pradesh has declined, but the
state enriches in surface and ground water resources. Uttar Pradesh also
enriches in mineral resource.
Uttar Pradesh has been the cradle of Indian civilization because all
religious communities and all social groups’ population are found, but the big gap is
found in terms of human development between different social groups. In human
development Uttar Pradesh has 13th
position out of the 15 major states in India.
This shows low human development as compared major states. In Uttar Pradesh,
maximum population is youth, which could be the major instrument of the present and
future development. The growth rate of urbanization is also good for economic
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development in Uttar Pradesh. After independence, the literacy rate has improved, but
this is below the national average and also several major states.
There are three broad activities in an economy: Primary, Secondary and
Tertiary activities. The tertiary activities help primary and secondary activities. In the
early stage of economic development, agriculture was the main occupation because
the largest share of the population was dependent on agriculture and it was the major
contributor in the national income. In the state income, the agriculture share
has continued to decline with development and tertiary and secondary sectors shares
have continued to increase but the population dependency could not decline in
agriculture. In the recent years, Uttar Pradesh has witnessed significant growth and
structural change in the economy. After independence and during the planning period,
industrial growth rate has a slow motion in comparison to other states. During
planning period, industrial growth has ups and down trends in the states. In Uttar
Pradesh, poverty and unemployment are major problems because one-third of the
population are poor and sizeable numbers of youth are unemployed.
As we all know that microfinance is used for improving the socio-economic
condition of those people whose income is very low. Therefore, they can increase
their income by using the microfinance. The factors on which the impact
of microfinance is larger are illiteracy, unemployment, poverty and women
empowerment. The microfinance can be generated by them, by their own ways and
they can generate the microfinance by choosing any mode that is easy for them.
Following are the different modes via which one can generate the microfinance.
These are by making SHGs and or by KCC or by both. The study carried out by 190
samples or beneficiaries or respondents who are using microfinance for the
improvement of their socio-economic conditions. The study shows that there is a
significant improvement in the socio-economic conditions of the families who are
using the microfinance.
6.2. Development Profile of Bahraich District:
Bahraich is enriched in terms of Geographical area, Forest resource, better
climate condition, fertile land and much water resource. In the Bahraich district,
sufficient agriculture land is available and farmers produce major Food grain crops,
Cash and Horticulture crops. The district is also enriched with Forest resources
because 14 per cent land is Forest area. The district has enriched in Rainfall position
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because in the Uttar Pradesh rainfall position of Bahraich district is 2nd
after Kheeri
district.
District Bahraich has enriched with the natural resource such as – Fertile land,
Himalayan Rivers and Forest resources. The major Himalayan Rivers are found in the
Bahraich district has –Sharda, Shariou, Rapti and Ghaghra. Beside this in the
Bahraich district also found Katraniyaghat Wield Life Century. The Himalayan
Rivers are providing fertile soil and irrigation facilely in the Bahraich and his
neighbour districts. So the district has a better position in the agriculture production in
Uttar Pradesh. The Kateraniyaghat Wield Life Century has created wild animal
resources and also providing woods, timber, fodder and a wide range of non-wood
products, this is the natural habitat for bio-diversity and repository of genetic wealth,
and playing the important role in environmental and economic sustainability.
Bahraich district has backward position because in the district low Sex ratio,
low urban population ratio, low literacy rate and low Human Development are
manifested. This is an economically and industrially backward district in Uttar
Pradesh. Agriculture is the main occupation of Bahraich district. Agriculture
production process is based mainly on traditional technology. In the Bahraich district,
one can found low agricultural productivity. Bahraich district is backward in terms of
Road, Transportation, Industrial development, Human development and Social
development. In the district also found that high level of poverty, low per capita
income, and lack of better schools, college and health care centres in both terms –
absolute and relative.
In the Bahraich district, major Agricultural crops are- Food grain, cash and
Horticulture crops. The major food grain crops are- Rice, Wheat, Barely, Maize and
Pulses are Lentil, phases Mungo (Urad) and Pigeon pea. The major cash crops are
Sugarcane, Menthol oil and Vegetable crops and the Horticulture crops are- Mango,
Guava and Banana. Thus, district Bahraich has enriched in the agriculture production
and producing all, Ravi, Khrief and Zayad crops. In the human development Bahraich
district has 2nd on the bottom level in the Uttar Pradesh. In the Bahraich district also
found poor Infrastructure services because Road, Railway, Industry Education and
Health Infrastructure have poor quality.
Thus, we can say that microfinance has played a better role in poverty
alleviation and employment generation in Uttar Pradesh. For this purpose we collect
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primary data in Bahraich district of Uttar Pradesh. We briefly discuss below the actual
role of microfinance in poverty alleviation and employment generation.
Finding of the Results:-
6.3 The Socio–Economic Profile of Respondents:
The present study comprises of 190 respondents out of which 62 respondents are
using direct microfinance, 96 respondents are using microfinance through Self-
Help Groups (SHGs) and 67 respondents are using microfinance through Kisan-
Credit Cards (KCC). Some SHG members are also KCC holders.
Majority of the respondents in the study area belong to middle age group (18-60)
is 87.9 percent, followed by old age group (above 60) is 10.5 percent and young
age group (below 18 years) is 1.6 percent.
The gender of respondents shows that 82.1 percent were male and 17.9 percent
respondents are female.
The category wise distribution reflects that 60.0 percent of total
respondents belong to other backward class (OBC) followed by general category
(27.9 percent) and scheduled caste (12.1 percent) respondents. The same situation
is also found in non respondent's microfinance activity in the Bahraich district.
The religion-wise distribution of respondents shows that the majority are Hindu
(73.2 percent) and followed by Muslims is (26.8 per cent).
The House type of respondents shows that largest has been Kuchcha house (40.0
per cent) followed by Semi-Pucca (32.1 per cent) and Pucca house (21.1 per cent)
and hut is (6.8 per cent).
The electricity availability with the majority of the respondent’s is (76.8 per cent)
reported no electricity while 23.2 per cent connection. The 94.2 per cent
respondents have telephone/mobile and only 5.8 per cent have no such facility.
The educated family members of respondents the majority of some members are
educated (47.9 per cent) followed by all family member are educated (26.8 per
cent) and 25.3 per cent respondents reported none of the family members are
educated.
Educational status of respondent’s shows that 41.6 per cent are illiterate followed
by respondents having primary level education (30.0 per cent), up to matriculation
26.8 per cent and only 1.6 per cent respondents are graduates.
In the occupation of respondents, majority were in agriculture and other subsidiary
occupation (68.9 per cent), followed by trade (10 per cent), Animal husbandry
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with trade, mobile vending and others are 6.3 per cent, Agriculture only 4.7 per
cent, Labourer only 4.7 per cent, mobile vending only 1.1 per cent, Labourer and
other 1.1 per cent only.
The 68.9 per cent of total respondents in the study area have agriculture and
subsidiary occupation. In this animal husbandry is adapted on priority basis
followed by trade and Labourer.
The Majority of respondents had income from Rs. 5000 to Rs. 10,000 (45.3 per
cent) followed by less than Rs. 5000 (38.4 per cent) and the respondents having
income more than Rs. 10,000 is 16.3 per cent.
6.4 Major occupations of respondents:
The maximum respondents are engage in agriculture and some related
activities. Agriculture is the most common occupation in combination (n= 131; 68.9
per cent) but alone by only 9 (4.7 per cent) respondents. Animal husbandry is the next
most common occupation, but it has not practiced alone. A combination of animal
husbandry and agriculture (n= 91; 47.9 per cent) is most common combination among
those reporting animal husbandry to be there an occupation. Trade only (n= 19; 10 per
cent) is the most common independent occupation.
6.5 Benefits and Activities of Direct Microfinance:
Direct availability of microfinance includes- own savings, private loan,
government loan, commercial and co-operative bank loan and other types
of microfinance. Another type of microfinance includes insurance, pension funds and
money transfers. In the study, we found that this type of microfinance was
available to the respondents and they start or promote various occupations which
increase their income, reduce poverty, generate self-employment and improve their
socio-economic condition. The direct mode of microfinance is very successful
because the people first want to start an occupation then manage direct microfinance.
In the study, 62 respondents were direct microfinance beneficiaries. All the
respondents got benefited except two. In this exception, one does not analyze the
benefit and another one was not benefited.
Majority of the respondents had up to Rs 20,000/- of initial investment. There
were 14.5 per cent respondents who had initial investment between Rs 20,000 to
40,000/-. And only 4.8 per cent had the initial investment above Rs 40,000/-.
Among those who were in occupation by direct microfinance, maximum had the
private loan as the source of funding (n= 27; 43.5 per cent). A total of 17.7 per
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cent had own saving as the source of funding. There was 1.6 per cent respondents
who had own savings + private loan as the source of funding.
The increasing scale of occupation was the most common reason of microfinance
concerned to be useful. It was reported to be useful by half (50 per cent) of
respondents either alone or in combination. Getting raw material and input either
alone or in combination was the next most common reason (33.9 per cent).
The direct microfinance effect on production/business, 63.8 per cent reported
major change followed by an average change (32.8 per cent) and minor change
was reported by only 3.2 per cent respondents.
Increasing monthly income of respondents, (60.7 per cent) reported between 2000
to 5000, followed by Rs. 5000 to 8000 is by 18.0 per cent and more than Rs. 8000
reported by 6.6 per cent respondents. Only 4.9 per cent respondents reported no
change in their income.
The direct microfinance effect employment 58.1 per cent reported self-engaged
followed by up to 3 people engaged in their occupation is 38.7 per cent and more
than 3 people engaged in their occupation is only 3.2 per cent reported.
6.6 The Benefits and Activities of Microfinance through Self-Help
Groups (SHGs)
The Self-Help Groups (SHGs) have a more effective role in
generating microfinance. In India, SHGs are important tools of the
microfinance extension. SHGs are a group of association of people formed for
attaining some common goals. These are groups which have similar identity, heritage,
caste or traditional occupations and come together for a common cause and manage
resources for the benefits of the individuals.
The SHGs are a group of a poor people who have volunteered to organise
themselves into a group for eradication of poverty of the individuals. They are
agreeing to save regularly and collect their savings into a common fund. The members
of the group are agreeing to use this common fund and such other funds; they may be
received as a group through a common management. Thus, India and other
developing countries, people have recently taken more interest in generating
microfinance via Self-Help Groups (SHGs)
An SHG working on the principle of solidarity helps the poor person to come
together to pool their saving and access credit facilities in the process, an SHG
helps the poor to establish their credit worthiness.
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The main activities of self-help groups are generating per member, per month
savings and its deposit in the bank. In this pooled savings, the SHG members
borrow for their needs without any security, terms and condition. In this study, we
found the average per member monthly saving of majority of respondents (75 per
cent) between Rs. 50 to 100. 25 per cent respondents had monthly saving less than
Rs 50.
After the collection of some saving deposits, they can found credit plus assistance
through bank branch, under the scheme of Swarnjayanti Grameen Swarojgar
Yojana (SGSY). By the help of all this money they start their occupation in group-
wise collectively or separately, and then group member finds self-employment,
increase income and reducing poverty.
In the study, we found that the majority of respondents (52.1 per cent) reported
having started animal husbandry. The total of (41.7 per cent) respondents are
reported starting business/trade while (6.3 per cent) did not report starting any
occupational activity.
The maximum respondents 25.0 per cent of SHGs member has using SHG savings
wealth in the starting new occupation followed by 21.9 per cent respondents are
using SHG saving wealth in purchasing animals, and 27.1 per cent respondents
have using in subsidiary purpose items likely; social functions, medical treatment
and also house making/repair.
In the study, we found that the SHG members have starting occupation by the help
of microfinance and also using some of another purpose. Thus, microfinance can
provide new self-employment through which they can increase their income and
socio-economic status of rural poor family. On the other hand, they find finance
on their need and freedom from Mahajan, Sahukars which provide very high-
interest loan.
In the monthly income, the maximum 49.0 per cent respondents reported that their
monthly income increases more than Rs. 1000, followed by 29.2 per cent reported
between Rs. 500 to 1000, 8.3 per cent of total respondents of the study reported
monthly income increases between Rs. 300 to 500. On the other hand 13.5 per
cent respondents who did not respond to this question.
The SHGs activities increase their savings, credit, assistance and investment. This
investment increases production, income and employment of respondents. When
income increases then increase consumption, living standard, socio-economic
status and reducing poverty level.
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6.7 The Benefits and Activities of Kisan Credit Card (KCC) Scheme:
The Kisan credit card (KCC) scheme was introduced in 1998-99 and this
model scheme was formulated by NABARD. This scheme has been launched to
provide timely and adequate credit support to farmers for their production needs in a
flexible and cost effective manner. The Kisan credit card (KCC) scheme is
providing microfinance facility to small farm holders in rural areas on the basis of
their land registered in their name. With KCC scheme, small farmers would now
freedom from indigenous banker like Landlords, Zamidars and Sahukars etc. In pre-
KCC era, small farm holders much exploited by indigenous bankers because, they
charge high interest rate. It is a very useful scheme, but still there is not
awareness about the terms and condition of the scheme. Therefore, it is required to
popularize the terms and conditions of this scheme so that more people can get
benefitted with this scheme. All existing, as well as new farmers are eligible for the
scheme. KCC card is meeting the production and investment needs of farmers such as
purchasing the agricultural equipment and for the construction of buildings for the
storage of the cultivated grains, allied activities viz dairy, piggery and bee-keeping etc.
In the study, 35.3 per cent respondents have Kisan Credit Card (KCC) holder
small farmers. They using KCC money as microfinance.
The majority of respondents (88.1 per cent) had owned KCC “between” 2005 to
2010. Before 2005, only 3.0 per cent respondents are holding KCC and after 2010
the 9.0 per cent respondents have KCC.
In the credit limit of KCC, 67.2 per cent respondents have use credit limit more
than Rs. 25000/; followed by 29.9 per cent respondents have credit limit between
Rs. 10000 to 25000/ and only 3.0 per cent respondents use credit limit up to Rs.
10000/.
Almost three fourth (74.6 per cent) respondents have reported that have money
withdrawn only 1 once in a year and 14.9 per cent respondents withdrawn 2 to 3
times and 10.4 per cent respondents reported that they withdrawn more than 3
times.
In the benefits of KCC, 86.6 per cent respondents found it is efficient
utilization/benefits and remaining 13.4 per cent respondents found to be
satisfactory.
In the increasing monthly income by the help of KCC, the majority (78.1 per cent)
of respondent reported income increases more than Rs. 1000/ per month, followed
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by between Rs. 500 to 1000/ is 17.2 per cent and between Rs. 100 to 500 is 4.7 per
cent respondents.
In the employment increases by the help of KCC, the majority of respondents
(57.6 per cent) have the view that it helps in employing one person followed by 1
to 3 persons 40.9 per cent and only 1.5 per cent reporting employing more than 3
persons.
6.8 Impact of Microfinance on Employment, Income and Savings:
The employment available per month to respondents, the direct microfinance
beneficiaries majority (58.1 per cent) reported only self-engagement followed by
up to 3 family members is 38.7 per cent and only 4.9 per cent reported more than
3 family members engaged in their business.
Increase in monthly income of direct microfinance beneficiaries, in the range of
Rs 2000 to 5000/ by majority 60.7 per cent followed by 18 per cent reported an
increase to the tune of Rs. 5000 to 8000/ per month. There are 9.8 per cent
reported an increase less than Rs 2000 per month, while 4.9 per cent reported no
change in monthly income.
As the matter of change in income is concerned, the average incomes of
respondents have increased by the help of microfinance.
The Self-help groups’ members’ maximum number of respondents (55.2 per cent)
used SHG savings wealth for starting new occupations and allied expenses.
Among other activities purchasing new animals 21.9 per cent was the next most
common exclusive activity on which SHG saving were spent. None of the subjects
reported exclusive use of SHG saving wealth for house making/repair, social
functions, agriculture and medical treatment. A total of 6.3 per cent respondents
reported using SHG saving wealth for other purposes.
In the monthly income of SHGs members, the maximum 49.0 per cent
respondents reported that their monthly income increases more than Rs. 1000,
followed by 29.2 per cent reported between Rs. 500 to 1000, 8.3 per cent of total
respondents of the study reported monthly income increases between Rs. 300 to
500. On the other hand 13.5 per cent respondents, who reported did not increase
monthly income.
In the increasing monthly income by the help of KCC, the majority (78.1 per cent)
of respondent reported income increases more than Rs. 1000/ per month, followed
by between Rs. 500 to 1000/ is 17.2 per cent and between Rs. 100 to 500 is 4.7 per
cent respondents.
187
The Kisan Credit Card holder’s majority of respondents (57.6 per cent) were of
the view that it helped in employing only one more person, followed by less than
3 persons employing is 40.9 per cent. Only (1.5 per cent) respondents was the
view that it helped in employing more than three persons.
The following are the unexplored areas and need a thorough examination and
research related to the role of microfinance in poverty alleviation and employment
generation and its impacts on the livelihoods and socio-economic status of the poor
people.
All type of microfinance in the study areas are promoted either through government
agencies and NGOs. In this study can be made further to highlight the growth and
performance of microfinance on the basis of promoting agencies separately.
Keeping in view the era of competition and commercialization of financing
institutions research can be made to analyze whether microfinance has achieved its
main objective of free credit access to the people of low-income group/BPL members
or not.
In the overall case study of Bahraich district of Uttar Pradesh, we have found
that 93.8 per cent respondents accept that the microfinance has played a significant
role in poverty alleviation because their income has increased with the help
of microfinance. Among those 39.6 per cent respondents have found much success in
poverty because their income increased more than Rs. 2000 per month. The 40.9 per
cent respondents have found ordinary success in poverty because their income has
increased between Rs. 1000 to 2000 per month. The 13.3 per cent respondent has
found very less success in poverty alleviation because their income increased less than
Rs. 1000 per month. After an increase in income their consumption, calorie intake
and socio-economic status increased of their family member. Thus, we found a better
role-playing microfinance in poverty alleviation in Bahraich district of Uttar Pradesh.
In the overall case study of Bahraich district, we found that 94.6
percent respondents have accepted that their employment level have
increased with the help of microfinance. In which 42.0 per cent respondents have
much success because of their occupation more than one family or other members
have found employment. 52.6 per cent respondents are success’s because in
their occupation, self-engagement or a single person find employment. By this data,
we can says that microfinance playing a better role in employment generation in
Bahraich district of Uttar Pradesh.
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6.9 Suggestions and Policy Recommendation:
Reducing rate of interest in the direct microfinance
The direct microfinance beneficiaries reporting that the interest rate is very high,
so we suggest that if interest rate reduces the better performance of
direct microfinance in income and employment generation activities.
Regular Visit of Promoting Agencies to SHGs
Since the majority of groups was formed by the government agencies, i.e. ICDS
workers who are present almost in every village of the study area. These government
representatives should visit every group at least once in a month in order to access the
records, activity status, repayment and the problems associated with the operation of
their microenterprises. This will not only help the SHG members overcome their
group related issues but will also help the government in identifying the problems of
SHGs workers at the grass root level.
Capacity Building through training
On the basis of recommendation of promoting agencies and local authorities the
government agencies should provide occupation related training with the productive
activities of the microfinance beneficiaries should diversify from agriculture based
activities which are basically seasonal in nature to regular employment opportunities.
Further, the training should be provided by those activities which could yield higher
returns.
Increase in credit amount
It has been observed that the average loan sanctioned to each SHG member at the
tehsil level is quite low compared to the loan/credit available to the individual SHG
member at the state and national level as well. Therefore, it is necessary to increase
the credit amount available to the SHG members, resulting in an increase of
employment and income opportunity.
Increase in thrift amount
The monthly saving made by SHG members in the study area is quite low. The
majority of members save less than Rs. 100 per month. In order to have higher loan
amount and better sustainability, the monthly thrift amount need, to be increased
which is possible only the increase in income level of the SHG members.
Investment in diversified activities
It has been observed that the majority of the members were engaged in forest-based
activities which were basically seasonal in nature. Moreover, in order to avoid the
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losses and default in repayment of the loan it is necessary for part of the SHG
members it is necessary to make an investment in more than one basic activity.
Power Marketing of the Produce
The SHG members in the study area face problems related to marketing of the
produce. The study area specialized in fancy items making and plates and cups
making from sale leaves. The income of the SHG members is basically low because
these members sell their produce to local vendors or middlemen at a cheaper
rate because of lack of holding capacity, transportation and market knowledge.
Further, these local vendors resell the products in other parts of India like Uttar
Pradesh, Bihar, West Bengal and different parts of Odessa at higher prices and make
high profits. Such intermediaries may be stopped by arranging direct purchase of and
sales through government agencies or NGOs.
Regular visit of Veterinary Doctors
The animal husbandry is another major occupation in the study area. The majority of
the sample households has stated that disease and death of animals is a major
problem. In order to overcome these issues, the government should arrange visits of
veterinary doctors at least once in a month in every village.
Reducing corruption in money transactions
The most beneficiaries of microfinance are illiterate. They face the problem of
corruption in money transactions because financial institutions and intermediaries are
creating corruption. If reducing corruption and increases fare transaction much
benefits find poor people in poverty alleviation and employment generation.
Proper Planning, identification and motivation
It is observed that the real benefit does not percolate to the needy people because lack
of proper planning and identification of the problem. So it is suggested that
problematic areas and problems of the people should be identified and accordingly,
development programme should be initiated. Awareness and action plan of the
programme should be communicated to the people so that they can take interest in its
implementation. Otherwise, the lack of motivation and information about the
programme make the scheme partial failure and finally leads to wastage of time and
money. So before starting any program, people should be fully informed, motivated
and prepared for it.
Improvement of rural connectivity
Further, improvements in rural connectivity, through roads, power and telecom can
ensure greater penetration of the financial system into remote areas and provide safe
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and efficient financial services to large segments of the financially excluded and in
the areas where banking services are not easily available; there is a need to explore
other alternative avenues.
Banks are fulfiled and increase weaker section target
Banks are expected to lend at least 10 per cent of their net bank credit to weaker
sections society. The list of the beneficiaries under this group largely refers to the
poor and excluded section. Banks need to understand the market and develop products
suited to the clients. They need to develop data sets to evolve risk assessment models
for proper rating and pricing. Financial inclusion has to be viewed as a business
strategy for growth and banks need to position themselves accordingly. Banks need to
redesign their business strategies to incorporate specific plans to promote financial
inclusion of low-income group treating it both a business opportunity, as well as
corporate social responsibility.
6.10 Limitation of the study:
The study basically is based on the analysis of primary data collected from in
all 4 tehsils and further restricting the field survey of 190 beneficiaries of Bahraich
district of Uttar Pradesh. This means that the survey information may not be
penetrated very deeply below the surface. Another limitation relates to the questions
asked to the respondents on some sensitive issues like income of the respondent and
their family members, daily expenditure, assets holding, savings, etc. and the
respondents might have not true information further like any other research using
sampling method, this study is also subject to sampling error.
Interview Schedule
INTERVIEW SCHEDULE
Role of Microfinance in poverty alleviation and employment
Generation - A case study of Bahraich District of Uttar Pradesh.
(Interview schedule for Ph.D. Programme)
Interview schedule for Beneficiaries/Non-Beneficiaries in
Microfinance and its related scheme
Ajay Kumar Verma
Ph.D. Scholar
Department of Economics
University of Lucknow
Lucknow-226007
ii
Role of Microfinance in poverty alleviation and employment
Generation - a case study of Bahraich District of Uttar Pradesh.
(Interview schedule for Ph.D. Programme)
A. General Information
(i) Name of village or city.................................................................................................................
(ii) Tehsil and Block...........................................................................................................................
(iii) District...........................................................................................................................................
(iv) Place of residence: Rural ( ) Urban ( )
B. Household Information
(i) Name of Household Head.............................................................................................................
(ii) Name of respondent......................................................................................................................
(iii) Age of respondent.........................................................................................................................
(iv) Gender of respondent:
(a) Male ( ) (b) Female ( )
(v) Religion
1. Hindu ( ) 2. Muslims ( )
3. Sikh ( ) 4. Christian ( )
5. Other ( )
(vi) Category
1. General ( ) 2. O.B.C. ( )
3. S.C. ( ) 4. S.T. ( )
(vii) Relation of respondent with household head..............................................................................
(viii) Whether it is your house?
1. Own ( ) 2. Rented ( )
3. Relative/Friends ( ) 4. Other (Specify................. ( )
(ix) House is?
1. Pucca ( ) 2. Semi Pucca ( )
3. Kachcha ( ) 4. Hut ( )
(x) Electricity connection in the residence.
1. Yes ( ) 2. No ( )
(xi) Telephone/Mobile
1. Yes ( ) 2. No ( )
(xii) Source of Drinking water.
1. Hand-pump ( ) 2. Well ( )
3. Piped Supply ( ) 4. Other (Specify............... ( )
(xiii) Informant’s Education level
1. Graduation and above ( ) 2. Middle ( )
3. Primary ( ) 4. Illiterate ( )
iii
C. Demographic and other particulars of household members.
S.
No.
Name of
Member
Relation
to Head
Sex Age Marital
Status
Education Occupation Income
(i) Total income of your household (including all sources) (Rs.........................................)
(ii) Has any member of the household post-office or Bank account?
1. Yes ( ) 2. No ( )
3. May have soon ( )
(iii) If, yes, transaction of Bank account or post-office.
1. Weekly ( ) 2. Fortnightly ( )
3. Monthly ( ) 4. Quarterly ( )
5. Half-yearly ( ) 6. Yearly ( )
D. Microfinance and its impact
(i) Nature of your occupation.
1. Agriculture ( ) 2. Animal Husbandry ( )
3. Trade ( ) 4. Mobile Vendor ( )
5. Landless Labourer ( ) 6. Other (Specify.............) ( )
(i-a) If Agriculture and animal husbandry give detail
S.
No.
Nature of
Crops
Area/
Number
Production
Pattern
Quantity
Income
Average
Income
Comments
(i-b) If Business/Trading give detail?
(a) Nature....................................................................................................................
(b) Location...................................................................................................................
(c) How many members of family are engaged...........................................................
(d) Type of shop etc......................................................................................................
(e) Total income (Rs. In a month)................................................................................
iv
(i-c) If you are Landless Labourer and other small worker.
(a) Nature of works..............................................................................................................
(b) How many days of work in a month...............................................................................
(c) Location of Employment................................................................................................
(d) How many members of the family.................................................................................
(e) Total income (Rs. In a month)........................................................................................
(ii) Is the initial investment on this occupation?
1. Less than Rs. 10,000 ( ) 2. Rs. 10,000 to Rs. 20,000 ( )
3. Rs. 20,000 to Rs. 40,000 ( ) 4. Rs. 40,000 to Rs. 80,000 ( )
5. Above Rs. 80,000 ( )
(iii) For how long you are in this occupation.................................................................................
(iv) How can you mobilize the resources?
1. Own Savings ( ) 2. Private Loan ( )
3. Capital Funds ( ) 4. Other (Specify.....................) ( )
(v) Have you ever availed any loan from microfinance?
1. Yes ( ) 2. No ( )
3. Not Required ( )
(vi) If yes give detail.
(a) How many times did you borrow.................................................................................
(b) Amount (Rs.).....................................................................................................................
(c) When.................................................................................................................................
(d) Main source of finance......................................................................................................
(e) Rate of Interest..................................................................................................................
(f) Repayment period.............................................................................................................
(g) What is frequency of repayment.......................................................................................
(h) How much is it useful.......................................................................................................
(vii) Classification of microfinance.
S.No. Year Amount/
with
drawn
Source/
Bank
Rate of
Interest
Utilization Payments Comments
(viii) For what purpose this money was borrowed?
1. Consumption ( ) 2. Production ( )
3. Business ( ) 4. Other (Specify..............) ( )
v
(ix) If other than consumption what was the effect on production/business.
1. Major change ( ) 2. Average change ( )
3. Little change ( ) 4. No change ( )
5. Can not say ( )
(x) Did this increase income?
(a) If yes, how much? (Rs. Per month)....................................................................................
(b) If No, why..........................................................................................................................
(xi) How many members are engaged in your business.................................................................
(xii) Did the borrowing helped in employing more people?
1. Yes ( ) 2. No ( )
3. Can not say ( )
(xiii) If yes, give detail.
(a) Who...................................................................................................................................
(b) How many.........................................................................................................................
(c) For how long in a month...................................................................................................
(d) Their earning.....................................................................................................................
(xiv) Do you think that microfinance can be made more useful to you?
1. Yes ( ) 2. No ( )
3. Can not say ( )
(xv) If yes, which type would be useful to you?
1. Increasing the scale of occupation ( )
2. In getting raw material timely ( )
3. Increase income ( )
4. Other (Specify...............................) ( )
(xvi) Does it improve your socio-economic status?
1. Yes ( ) 2. No ( )
3. Can not say ( )
(xvii) Did you face any difficulty in getting it?
1. Yes ( ) 2. No ( )
3. Can not say ( )
(xviii) If yes, what type of problem....................................................................................................
(xix) Give your suggestion to make microfinance more successful.
1. ...........................................................................................................................................
2. ...........................................................................................................................................
3. ...........................................................................................................................................
E. Microfinance through Self-Help Groups (SHGs).
(i) Name of SHG..........................................................................................................................
(ii) Year of SHG formation............................................................................................................
(iii) Total member...........................................................................................................................
(iv) Per month/ per member saving (Rs............................................................)
(v) Any scheme for which SHG achieved assistance. Yes ( ) No ( )
(vi) If yes, give detail.
Name of scheme......................................................................................................................
Obtained assistance Rs............................................................................................................
Year.........................................................................................................................................
vi
(vii) Where is the money kept by the SHG?
1. In Bank ( ) 2. In our hand ( )
3. Other (Specify.............................) ( )
(viii) Can you borrow from the SHG?
1. Yes ( ) 2. No ( )
3. No Need ( )
(ix) Decision making in the SHG.
1. By Group Leader ( ) 2. By majority ( )
3. By Voting ( ) 4. Other (Specify......................) ( )
(x) The Category of SHG members.
1. General ( ) 2. OBC ( )
3. SC ( ) 4. ST ( )
(xi) The SHGs saving / wealth is used for
1. House making repaired ( )
2. Start new occupation ( )
3. Purchasing of animals ( )
4. Agriculture ( )
5. Marriage or other Social function ( )
6. Medical treatment ( )
7. Other (Specify........................) ( )
(xii) Through SHGs help monthly income increase by.
1. Rs. 100 to Rs. 300 ( )
2. Rs. 300 to Rs. 500 ( )
3. Rs. 500 to Rs. 1000 ( )
4. Rs. 1000 and above ( )
(xiii) Did SHG provide any training to you? Yes ( ) No ( )
(xiv) If yes, give details.
(a) Which organization provide.............................................................................................
(b) Kind of training................................................................................................................
(c) Objective of training........................................................................................................
(d) Usefulness of training......................................................................................................
F. Kisan-Credit cards and its impact.
(i) Have you any Kisan-Credit Card?
1. Yes ( ) 2. No ( )
3. No Required ( )
(ii) If yes, give detail.
(a) Year of formation............................................................................................................
(b) How many times you withdrawn money in a year.........................................................
(c) Credit Limit.....................................................................................................................
(d) Total Amount withdrawn................................................................................................
(e) Objective.........................................................................................................................
(f) Payment (time in month).................................................................................................
(iii) Utilization /Benefit.
1. ........................................................................................................................................
2. ........................................................................................................................................
3. ........................................................................................................................................
vii
If No, why.......................................................................................................................
(iv) Description of Kisan-Credit Cards.
Year Amount/
withdrawn
Source/
Bank
Utilization Payments Comments
(v) By KCC scheme did income increase.
1. Yes ( ) 2. No ( )
3. Can not say ( )
(vi) If yes, what is average monthly increase?
1. Rs.100 to Rs. 500 ( ) 2. Rs. 500 to Rs. 1000 ( )
3. Rs.1000 to Rs. 2000 ( ) 4. Rs. 2000 to Rs. 5000 ( )
5. Above Rs. 5000 ( )
(vii) Do you think that KCC is of help to employ more people?
1. Yes ( ) 2. No ( )
3. Can not say ( )
(viii) If yes, give details............................................................................................................
(ix) Do you face any difficulty?
a. Yes ( ) b. No ( )
c. Can not say ( )
(x) If yes, give detail.............................................................................................................
(xi) Give your suggestion to make KCC more useful to you.
1. .................................................................................................................................
2. .................................................................................................................................
3. .................................................................................................................................
Remarks:
1. .....................................................................................................................................................
2. .....................................................................................................................................................
3. .....................................................................................................................................................
4. .....................................................................................................................................................
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