THE IMPACT OF MICRO FINANCE ON RURAL HOUSEHOLDS AND ITS ROLE IN RURAL DEVELOPMENT AND POVERTY ALLEVIATION AN ANALYSIS OF NORTH EASTERN VILLAGES OF U.P, INDIA

Abstract

Rural development is primarily concerned with addressing the needs of the rural poor for sustainable economic development. The alleviation of rural poverty can be achieved by identifying income-generating activities and generation of employment in rural areas for socio-economic development.

The rural poor not only need loan at subsides rates but also the easy access to credit facilities like loans, savings, and micro-insurance to promote agriculture production, establish small scale industries and encourage entrepreneurship. Microfinance is expected to strengthen rural employment through generation of new business opportunities, self-employment and by encouraging wage labour and Self-help groups (SHG’s) which will reduce migration and accelerate the rural development.

The main objective of this paper is to explore the acceptability of Microfinance by the rural households and to study whether Microfinance facilitates in rural development and poverty alleviation. For which 450 respondents from the north eastern villages of U.P India was selected randomly to analyse the impact of micro finance on these respondents. And, to study the external environment which comprise of the social, economic, and political factors that are facilitating in the success of micro finance.

The need of microfinance arises because the rural India requires sources of finance for poverty alleviation, procurement of agricultural and farms input. It is a commendable effort towards Financial Inclusion. And as we all know that India is agriculture-based economy so microfinance is a tool to empower the farmers and the rural people to make agriculture profitable. Thus, in this paper an attempt has been made to explore the significance of Micro finance for the rural households of North Eastern Villages of U.P. India and the impact of the external environment on micro finance to assist in rural development and poverty alleviation.

Keywords:

Financial Inclusion, Micro Finance, Micro insurance, Rural households, Self-help group (SHG’s).