F14-Poverty
In the cramped bylanes of Garia’s Itepanja area, residents say several women have disappeared in recent months, pushed to the brink by debt, harassment and fear. Families rarely lodge police complaints because the root of the crisis – unpaid loans – carries stigma and a looming threat of retaliation.
Namita Mondal of Balia Sahapara shows The Wire a thin, handwritten list. This is the only document issued by lenders. She had borrowed Rs 20,000 to expand her small self-employment venture. After 26 weeks, interest inflated the amount to Rs 31,200.
“I owed only Rs 4,800. The Netajinagar police called, saying if I didn’t pay in three days, they’d ‘pick me up’. Banks don’t give loans now. Only these private companies do,” Sarvani Bhuiya, another borrower, recounts harassment directly from the police.
Residents say that in many parts of Kolkata’s suburbs and rural West Bengal, almost every household is affected in some way by microfinance loans.
Microcredit was originally introduced as one of the instruments intended to support this objective by providing accessible credit to marginalised families.
The sector today is dominated by Non-Banking Financial Companies (NBFCs) and Micro-Finance Institutions (MFIs), which obtain funds from public sector banks at interest rates below 10% under the Priority Sector Lending Scheme, and then lend to borrowers, many of them poor women, at significantly higher rates.
15/11/2025
India has often talked about its success in reducing poverty. The World Bank’s new estimates say India has made big progress in cutting extreme poverty, defined by people living on less than $3 a day. These figures suggest poverty is now very low in the country. Why the poverty line is a misleading measure of progress
But if we look at how people spend their money, a different story emerges. Many families may be just above the poverty line, but their lives still look poverty-stricken. They spend most of their earnings on food and basic needs. This is why simply counting how many are below a line can be misleading.
According to this analysis, 27.4% of the population in rural areas, where the cut-off is set at Rs 2,515 per capita per month, and 23.7% in urban areas, with a cut-off of Rs 3,639 per capita per month, is below the poverty line. This contrasts sharply with the government’s claims of near-eradication of poverty and raises questions about the accuracy and intent of its statistics.https://thewire.in/economy/indians-living-in-poverty-could-be-five-times-higher-than-govt-estimates-study
This contradiction stems from methodological differences. The government’s approach of inflating older poverty lines fails to capture the rising costs of non-food essentials, such as healthcare, education and housing. In contrast, the Rangarajan method uses updated nutritional norms and a more detailed consumption basket (including essential non-food expenses), making it a more accurate reflection of current realities.
The Tendulkar committee (2009) estimated poverty based on per capita consumption expenditure, anchored in nutritional and calorie requirements. However, it faced criticism for setting poverty lines that were considered too low, potentially underestimating poverty levels.
Given the concerns about the inadequacy of the Tendulkar committee’s poverty thresholds and their inability to reflect actual living costs, the Rangarajan committee was established to revisit and propose a more comprehensive poverty estimation methodology.
by Payal Seth
02/02/2025
A recent study led by Sonalde Desai, a sociologist and professor at University of Maryland, College Park, and National Council of Applied Economic Research, challenges the notion that the relationship between people and poverty in India is linear even as the economy has grown rapidly over the last two decades. As opposed to millions of people escaping – or being lifted out of – chronic poverty over time, the study finds that people move in and out of poverty depending on life’s circumstances such as natural disasters, illness and other financial shocks. https://scroll.in/article/1077617/millions-lifted-out-of-poverty-in-india-but-many-still-lead-precarious-lives-on-the-edge
This phenomenon is called transient poverty, and it is difficult to measure because of lack of real-time data on households
Even as Indians are escaping poverty, according to Desai, they get placed on “a precarious perch where a single accident, natural disaster, or epidemic could push them back into poverty”.
Both Desai and Krishna singled out healthcare-related financial shocks as the top reason behind transient poverty in India. In 2011-’12, out-of-pocket expenditure on health drove 55 million Indians into poverty
"There are certain parts of India where there aren’t doctors, where there aren’t medical facilities,” Krishna said. This year, the government spent only about 1.2% of GDP on healthcare, according to The Lancet.
by Rohit Inani, IndiaSpend.com
12/01/2025
Lakshmina had been admitted to a hospital and had just given birth to a baby girl. The woman running the hospital asked for Rs 4,000 to discharge her. The couple did not have a single penny. Haresh requested the villagers for a loan but no one gave him any money. Helpless, he sold his son through a middleman. https://thewire.in/rights/behind-up-couple-forced-to-sell-son-for-rs-20000-an-inescapable-microfinance-debt-trap
When Haresh left farming, Lakshmina came in contact with a group of women. Microfinance companies showed her the dream of making her life better with loans. Between September and December 2023, Lakshmina and Haresh borrowed loans totalling over Rs 2 lakh from five microfinance companies. They attempted to pay instalments of one loan with the money from another loan, but in a few months all the cash was exhausted and they did not even have the money to pay the instalment.
Utkarsh Small Finance Bank lent a loan of Rs 30,000 to Lakshmina on November 18, 2023, which was to be repaid in 24 months with 25% actual interest. An instalment of Rs 740 was to be paid every fortnight. The microfinance company charged Rs 354 as processing fee, Rs 1,104 as other fees and Rs 750 as insurance fee for this loan. After deduction of these charges, she got only Rs 28,896 in hand, whereas she had to pay Rs 3,892 in 24 months including interest.
Lakshmina and Haresh have not been able to deposit amount towards this loan after April 2024.
The question arises as to why microfinance companies were giving loans to Lakshmina and Haresh, when anyone who visited their house could see their abject poverty. One microfinance company has stated Haresh’s annual income as Rs 3 lakh in its documents. If loan payments are not deposited, the borrowers are subjected to physical and mental harassment. The poor who are already financially destitute are being drained further.
In rural areas, the debt trap of microfinance companies is now firmly a death trap for the poor. Several incidents of death by suicide by people entangled in such webs of debt are coming to light. In December 2023, a woman trapped in microfinance debt died by suicide in Mishrauli village of Sevarhi area in Kushinagar district.
by Manoj Singh
17/09/2024