An Impact Study of Micro Finance System on the Enterpreneurial Development of Andhra Pradesh, India

Abstract

Poverty and unemployment are the twin problems faced by the developing countries. According to the Planning Commission more than one third of India's total population i.e. 320 million live below the poverty line (BPL).Policy makers in India have realized the need for generating employment opportunities at a large scale to bring millions of population above the poverty line. As nearly 70 percent of the population live in rural areas and many of them suffer owing to seasonal unemployment, underemployment and disguised unemployment, the Government brought out a number of schemes with an aim to generate employment. The development planners realize the need for transition from income generation to self-employment and from self-employment to entrepreneurship development. Todaymicrofinance forms a part ofalmost all development intervention targeted at poverty alleviation. TheNew micro finance approaches have emerged in India involving the provision of thrift, credit and other financial services and products, with the aim to raise income levels and improve living standards.The micro finance programmes and institutions have become increasingly important components of strategies to reduce poverty or promote Micro and Small Enterprise Development (MSED). One of the most important micro finance approaches, pioneered by Non-Governmental Organizations (NGOs) is to create links between Commercial Banks (CBs) and NGOs and informal local groups. Micro finance through Self Help Groups (SHGs) is propagated as an alternative system of credit delivery for the poor. This paper attempts to give a comprehensive overview of all aspects of micro finance in India in general and Andhra Pradeshin particular regarding the different institutions involved in its promotion, the different modes of delivery, its weakness and the challenges etc. This study mainly focuses on the impact of micro finance system on the entrepreneurial development of Andhra Pradesh.