“Creating Sustainable Entrepreneurship through Microfinance Initiatives” – A Case of Jharkhand, India

Abstract Poverty and unemployment is an important issue in developing economies. According to United Nation's Millennium Development Goals (MDG) programme, 270 million or 21.9% of India’s total population lived below poverty line (BPL) of $1.25 in 2011-2012. Large scale employment generation is one solution but the geometric progression in population growth always outpaces such attempts. Moreover, nearly 70 percent of the countries’ population lives in rural areas which suffer from seasonal unemployment, underemployment and disguised unemployment. Thus there is a realization amongst development planners that rather than employment generation emphasis should be on encouraging self-employment and entrepreneurial development. Today microfinance has become one of the most effective vehicles of building entrepreneurial capabilities and thus forms a part of almost all development intervention targeted at poverty alleviation. There are various models of microfinance deliverance, however, the current study focusses more on the Self Help Group (SHG) - Bank linkage model which is facilitated by NGOs and is one of the most successful and effective methods of credit delivery to the poor. This study critically looks into the impact of the microfinance ecosystem on building sustainable entrepreneurship and attempts to sketch a comprehensive overview of all aspects of micro finance backed development in the country in general and the state of Jharkhand in particular. It is based on a specially designed survey in selected districts in the state of Jharkhand. For effective coverage and lower cost, purposive sampling technique was used to select the microfinance institutes and a simple random sampling technique was used to select the beneficiaries. The hypothesis that, there exists a strong correlation between entrepreneurial development and microfinance initiatives is proven correct and the research concludes that microfinance institutes in developing countries like India are evident agents for stimulating development through sustainable provisioning of rural financing and entrepreneurship building. The study offers a wide range of perspective on the current status and future potential of expanding the outreach of financial services for entrepreneurial development. Keywords: Microfinance, poverty alleviation, SHG-bank linkage, entrepreneurial development, refinance, income generating activities, small and medium-scale enterprises. [*Dr.Bhaskar Bhowani: Associate Professor, Department of Financial Management, Xavier Institute of Social Service (XISS), Ranchi, Jharkhand, India.] ===========================================================================