Poverty, Microcredit and Mahatma Gandhi: Lessons for Donors

In the context of rising income disparities in the world, this paper draws on Gandhian thoughts to suggest solutions. The author states that most donor assisted development initiatives, particularly those pertaining to micro credit, have met moderate success only:

• Most programs depend heavily on subsidies and are unsustainable;
• Repayment rates in many initiatives may not be correctly reported;
• Poor may not be able to afford sustainable interest rates on these initiatives.

Finally, based on Gandhian thoughts, the author suggests certain ways to help the poor:

• Put purchasing power in the hands of the poor through wage employment and self employment;
• Promote technologies which can tap the skill sets of the poor;
• Encourage skill up-gradation of the poor through technical education;
• Create adequate safety nets for the poor by involving the rich in poverty alleviation projects.

In context of microfinance, the author suggests that donors should support micro-enterprises which can provide wage employment to the very poor, instead of spending all resources on microfinance which assumes self-employment.