The government is working on a microfinance bill to help create an appropriate environment for the provision of such services. The draft legislation is likely to be introduced in the forthcoming budget session of Parliament

Microcredit must reach the poor, building their capacity to absorb higher credit, and also ensure greater availability of credit for small enterprises, said Indian Prime Minister Manmohan Singh, announcing the government's intention to introduce legislation that would create a friendly policy environment for microfinance services.

"We will try to facilitate varied models of delivering microfinance services, to make them grow at a faster pace," Singh said on January 18 while inaugurating the three-day South Asian Policy Conference On Home-Based Workers, organised by the Self-Employed Women's Association (SEWA) and the United Nations Development Fund for Women (UNIFEM), in New Delhi.

"Microfinance has become an important instrument in reaching credit to the poor and to tiny enterprises. These must reach the poor in far greater numbers and build their capacities to absorb higher amounts of credit," the prime minister said.

"Our challenge is to ensure that the benefits of economic growth and development translate into productive employment for all, including women," he added.

Stating that women's empowerment should be a major objective of social, political and economic policy in South Asia, Singh said the key to people's empowerment was education and the assurance of gainful employment.

It is estimated that there are around 50 million home-based workers in South Asia, and most of them are women. In India, 57% of all women workers are home-based. "The large number of home-based workers also reflects the fact that small units and enterprises are still the norm in the countries of South Asia, with 86% of workers in the manufacturing sector still working in small or household enterprises," the prime minister pointed out.

Referring to the Kathmandu Declaration of 2003, he said it highlighted the need for a national policy on home-based workers in each country, and asked the SAARC summit to address their problems.

The declaration identified certain areas in which the deprivations faced by home-based workers need to be addressed. These include their "invisibility," social protection, skill-building, technology development, marketing skills, credit availability and, finally, effective organisation and political participation.

Stating that the government remained committed to the objective of women's empowerment, as no civilised society or developing economy could ignore this goal, Singh said: "The key to the empowerment of all people is education and the assurance of gainful employment. Our challenge is to ensure that the benefits of economic growth and development translate into productive employment for all, including women."

"We find that women are more likely to be at the lower end of the production ladder. Most of our working women are, in fact, in the informal economy. Perhaps there is, in our societies, a cultural bias for women to be in home-based work," the prime minister observed.

He added that child labour was another major area of concern in the home-based workers' sector. Children assisting their families in home-based work learn useful skills and can also make a little extra money. However, the concern was that this often becomes the child's main activity. As the Indian economy grows at above 8%, almost 75 million poor households continue to remain outside the reach of financial services, not to mention social security and livelihood opportunities. Of these, 60 million are in rural areas, half of them landless, and two-thirds illiterate.

Since the early 1990s, microfinance has been able to reach a considerable segment of this population, largely because of the linkage between NABARD, self-help groups and banks. As on March 2006, there were 2.2 million self-help groups covering 32.98 million poor households. A cumulative disbursement of Rs 11,398 crore has been achieved, with a growth rate of 51% in priority states. In addition, microfinance institutions reached out to 7.3 million households with Rs 2,070 crore. But the annual demand for microfinance services is estimated to be somewhere between Rs 75,000 crore and Rs 100,000 crore.

Source: The Hindu, January 19, 2007
Indo-Asian News Service, January 19, 2007
The Indian Express, January 18, 2007