Articles
Indian Microfinance Helps Bring More People Into The Rising Middle Class
by Mikael Nigrin managerIndian Microfinance Helps Bring More People Into The Rising Middle Class
The Indian subcontinent is an exotic success story, home to some of the largest business process outsourcing companies in the world, some of the best technical colleges in Asia, and at least 69 billionaires. But while business journals hail the success of India Inc., there’s still another story to be told.
Microfinance in India is catching on—there are plenty of people in local villages who want to take advantage of it, and perhaps even more importantly, there are plenty of people in the monied class who are willing to fund it. Microfinance works especially well in India because of the way retail works. Although we always hear of big multinational chains wanting to move into the Indian market, the majority of retail is still informal—that is, most shops are very small, specialized, and run by family members. Unlike in the U.S., where you need an expensive storefront and tens of thousands of dollars’ worth of inventory, somebody in India can launch a small, informal retail shop with a relatively small amount of money. That start-up capital can easily be provided with microfinance.
Take the case of a young jewelry maker named Gulab, who has a talent for putting together beautiful necklaces. Never having finished high school, she was sent to work by her parents early on in a bidi factory, rolling the small, hand-rolled cigarettes in a tiny factory for less than a hundred rupees a day, to help support her family. The factory was actually one small room in the upstairs portion of an apartment building in Kolkata, where some twenty young people labored for ten hours a day in the stifling heat, with just one ancient electric fan to cool the entire room.
When the boss wasn’t looking one day, she started folding the cigarette papers into elaborate shapes and chaining them together into necklaces. She was caught, and was beaten for her trouble—but the necklace was a thing of beauty. She had a talent and an eye for design. She never made jewelry out of the cigarette papers again, but whenever she could get her hands on a few beads, she would save them in a tin box, and when it was full, she would beg her mother for a spool of thread, and string them together in wonderful patterns. One day she got up enough courage to offer one of her necklaces to a tourist that was wandering through the village, and she was presented with two American dollars—almost a full day’s wages at the bidi factory! She was uneducated, but smart enough to know where her future would be, if only she could get enough money to invest in some beads and a small push cart. When she heard of a microfinance opportunity from some of the village elders, she got some help in applying, and was fortunate enough to be able to make her plea in person and show her talent with some attractive hand-made jewelry. With an initial microfinance investment of 4,500 rupees – about US$100 – she was able to get everything she needed. She was able to pay back the loan in just a few months, and today is enjoying her new life as a jewelry vendor. And she’s set a new goal for herself—she wants to save up for a motorbike!
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About Mikael Nigrin 
manager
907 connections, 3 recommendations, 1,873 honor points.Joined APSense since, March 7th, 2010, From manglaralto, Ecuador.
Created on Dec 31st 1969 18:00. Viewed 0 times.
