Volume : 10, Issue : 12, DEC 2024

INDIA IN THE GLOBAL SOUTH: A RISING ECONOMIC POWER

INDIA’S APPROACH TO FINANCIAL INCLUSION: MICROFINANCE AS A KEY DRIVER OF ECONOMIC TRANSFORMATION IN THE GLOBAL SOUTH

BANWARI LAL

Abstract

India's approach to financial inclusion has become a transformative model for addressing poverty, inequality and economic growth, especially when analyzing the Global South. Central to this strategy is the role of microfinance, which has become a key driver in expanding financial services' accessibility for marginalized and underserved populations. This paper examines India’s evolving microfinance landscape, analyzing, its impact on economic transformation, poverty alleviation and the empowerment of women and rural communities. Drawing on both policy frameworks and field-based case studies, the paper explores how microfinance institutions (MFIs) have facilitated access to credit, insurance, saving and much more financial services, enabling economic participation for low-income households. It further investigates the challenges faced by the sector, including regulatory hurdles, sustainability concerns and the need for digital innovation. By comparing India’s microfinance model with those in more Global South Nations, the paper highlights the lessons learned and the potential for scaling up similar initiatives to foster inclusive development globally. The study concludes that microfinance, when coupled with supportive policies, has the potential to catalyze long-term economic transformation and reduce systemic inequalities, offering valuable insights for other emerging economies seeking to integrate their peoples into the formal financial system.

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