Thursday, November 18, 2010

Collapse of Micro-Credit in India

New York Times bring us the sad story of the collapse of Micro-Credit in India. Apparently politicians encouraged people to default.

It is sad that this is happening. The industrious poor can often lift themselves out of poverty, with just a little bit of help. The daily vagaries of poverty can set people back [car troubles, sick days] despite their best efforts. Either a strong network or available credit is necessary to meet the cashflow demands. In a transitional economy [industrializing, marketizing, etc.], where the social networks are weak and in flux, credit availability is even more important.

Micro-Credit is a hope to by-pass traditional loan sharks in providing cheap credit to the poor. [the industrious ones.] That the micro-banks are now meeting political resistance is just sad. Some of them are perhaps becoming payday lender with higher rates, prompting this movement.

The chaotic beast that is Indian politics and bureaucracy continues to perplex.

h/t Global Guerrillas

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