Financial inclusion and poverty alleviation: an alternative state-led microfinance model of Kudumbashree in Kerala, India
The study examines the microfinance and microenterprise model of Kudumbashree, the state poverty eradication mission of Kerala, and its impact on poverty alleviation in the state of Kerala in India. Kudumbashree's method of identification of the poor is seen to be superior to the conventional head count ratio as it captures the multidimensional characteristics of poverty leading to lesser chances of exclusion of vulnerable families. The microenterprise-linked microfinance model of Kudumbashree has established itself as an effective model linking the state, community, and financial organizations, differentiating itself from other NABARD-led self-help group (SHG) programmes or the Grameena model of microfinance institutions in the country. The fundamental idea of local economic development on which the microenterprise business is built is, however, not free from limitations. Heavy reliance on local markets for procuring inputs and selling outputs makes the products less competitive, questioning the sustainability of a business-led model in the absence of state subsidy in the longer run.Ajit, D., Sunil, R. and Raman, K.R. (2008) ‘Microcredit and repayment rates: a case study of Kudumbashree microenterprise program in Kerala’, paper presented in Conference on Money and Finance, 18-19 January 2008, IGIDR Mumbai.
Cohen, M. and Sebstad, J. (2000) Microfinance Risk Management and Poverty, project report submitted to AIMS, Washington, DC: USAID.
Dreze, J. and Sen, A. (1989) Hunger and Public Action, Oxford: Oxford University Press.
Gangaopadhyay, K. and Singh, K. (2013) ‘Extent of poverty in India: a different dimension’, Economic and Political Weekly 48(6): 75-83.
Heller, P., Harilal, K.N. and Chaudhuri, S. (2007) ‘Building local democracy: evaluating the impact of decentralisation in Kerala, India’, World Development 35(4): 626-48.
Justino, P. (2006) ‘The impact of collective action on economic development; empirical evidence from Kerala, India’, World Development 34(7): 1254-70.
Kadiyala, S. (2004) ‘Scaling up Kudumbashree: collective action for poverty alleviation and women's empowerment’, FCND discussion paper 180, Washington, DC: Food Consumption and Nutrition Division, International Food and Policy Research Institute.
Kerala Poverty Eradication Mission (n.d) Kudumbashree and Livelihood Development, Tiruvanathapuram, Kerala: State Poverty Eradication Mission.
Kerala State Planning Board (2012) Economic Review Report 2012, Government of Kerala.
Kudumbashree (2009) Kudumbashree Annual Administration Report, 2008-09 [pdf], <www.kudumbashree.org/sites/all/themes/kudumbashree/archives/5_AnnualReportFinal2008-2009.pdf≯ [accessed 10 June 2014]. www.kudumbashree.org/sites/all/themes/kudumbashree/archives/5_AnnualReportFinal2008-2009.pdf
Kudumbashree (2013) End of the Rainbow-Saga of Kudumbashree [pdf], <www.kudumbashree.org/sites/all/themes/kudumbashree/images/publications/16-endofrainbowsaga.pdf≯ [accessed 4 July 2013]. www.kudumbashree.org/sites/all/themes/kudumbashree/images/publications/16-endofrainbowsaga.pdf
NSSO, Ministry of Statistics and Program Implementation (2011) ‘64th round of surveys’, <http://mospi.nic.in/Mospi_New/site/inner.aspx?status=4&menu_id=119≯ [accessed 13 November 2014]. Rath, N. (2011) ‘Measurement of poverty: in retrospect and prospect’, Economic and Political Weekly 46(42): 40-3. http://mospi.nic.in/Mospi_New/site/inner.aspx?status=4&menu_id=119
Reserve Bank of India (2011) Report of the Sub-committee of the Central Board of Directors of the Reserve Bank of India to Study Issues and Concerns in the MFI Sector, Mumbai: RBI.
Shashi, C.M. (2010) ‘The make-buy decision in marketing financial services for poverty alleviation’, Journal of Financial Services Marketing 15(4): 296-308.
Shetty, N.K. (2008) ‘Microfinance for microenterprise development: an inquiry for a new paradigm’, Icfai Journal of Financial Economics 6(1): 88-98.
Subramanian, S. (2011) ‘The poverty line: getting it wrong again’, Economic and Political Weekly 46(48): 37-42.
Williams, G., Thampi, B.V., Narayana, D., Nandigama, S. and Bhattacharyya, D. (2011) ‘Performing participatory citizenship: politics and power in Kerala's Kudumbashree Programme’, Journal of Development Studies 47(8): 1261-80.
Woller, G. (2002) ‘From market failure to marketing failure: market orientation as the key to deep outreach in microfinance’, Journal of International Development 14(3): 305-24.
Zeller, M. and Meyer, R.L. (2002) ‘Improving the performance of microfinance: financial sustainability, outreach and impact’, in M. Zeller and R.L. Meyer (eds), The Triangle of Microfinance: Financial Sustainability, Outreach and Impact, Baltimore, MD: The Johns Hopkins University Press.
Kudumbashree official website, <www.kudumbashree.org≯ [accessed 18 September 2013]. www.kudumbashree.org
Local Self Government Department, Government of Kerala, <http://lsg.kerala.gov.in/en/LSGDDept_en.php≯ [accessed 12 July 2014]. http://lsg.kerala.gov.in/en/LSGDDept_en.php
Ajit, D., Sunil, R. and Raman, K.R. (2008) ‘Microcredit and repayment rates: a case study of Kudumbashree microenterprise program in Kerala’, paper presented in Conference on Money and Finance, 18-19 January 2008, IGIDR Mumbai.
Cohen, M. and Sebstad, J. (2000) Microfinance Risk Management and Poverty, project report submitted to AIMS, Washington, DC: USAID.
Dreze, J. and Sen, A. (1989) Hunger and Public Action, Oxford: Oxford University Press.
Gangaopadhyay, K. and Singh, K. (2013) ‘Extent of poverty in India: a different dimension’, Economic and Political Weekly 48(6): 75-83.
Heller, P., Harilal, K.N. and Chaudhuri, S. (2007) ‘Building local democracy: evaluating the impact of decentralisation in Kerala, India’, World Development 35(4): 626-48.
Justino, P. (2006) ‘The impact of collective action on economic development; empirical evidence from Kerala, India’, World Development 34(7): 1254-70.
Kadiyala, S. (2004) ‘Scaling up Kudumbashree: collective action for poverty alleviation and women's empowerment’, FCND discussion paper 180, Washington, DC: Food Consumption and Nutrition Division, International Food and Policy Research Institute.
Kerala Poverty Eradication Mission (n.d) Kudumbashree and Livelihood Development, Tiruvanathapuram, Kerala: State Poverty Eradication Mission.
Kerala State Planning Board (2012) Economic Review Report 2012, Government of Kerala.
Kudumbashree (2009) Kudumbashree Annual Administration Report, 2008-09 [pdf], <www.kudumbashree.org/sites/all/themes/kudumbashree/archives/5_AnnualReportFinal2008-2009.pdf≯ [accessed 10 June 2014]. www.kudumbashree.org/sites/all/themes/kudumbashree/archives/5_AnnualReportFinal2008-2009.pdf
Kudumbashree (2013) End of the Rainbow-Saga of Kudumbashree [pdf], <www.kudumbashree.org/sites/all/themes/kudumbashree/images/publications/16-endofrainbowsaga.pdf≯ [accessed 4 July 2013]. www.kudumbashree.org/sites/all/themes/kudumbashree/images/publications/16-endofrainbowsaga.pdf
NSSO, Ministry of Statistics and Program Implementation (2011) ‘64th round of surveys’, <http://mospi.nic.in/Mospi_New/site/inner.aspx?status=4&menu_id=119≯ [accessed 13 November 2014]. Rath, N. (2011) ‘Measurement of poverty: in retrospect and prospect’, Economic and Political Weekly 46(42): 40-3. http://mospi.nic.in/Mospi_New/site/inner.aspx?status=4&menu_id=119
Reserve Bank of India (2011) Report of the Sub-committee of the Central Board of Directors of the Reserve Bank of India to Study Issues and Concerns in the MFI Sector, Mumbai: RBI.
Shashi, C.M. (2010) ‘The make-buy decision in marketing financial services for poverty alleviation’, Journal of Financial Services Marketing 15(4): 296-308.
Shetty, N.K. (2008) ‘Microfinance for microenterprise development: an inquiry for a new paradigm’, Icfai Journal of Financial Economics 6(1): 88-98.
Subramanian, S. (2011) ‘The poverty line: getting it wrong again’, Economic and Political Weekly 46(48): 37-42.
Williams, G., Thampi, B.V., Narayana, D., Nandigama, S. and Bhattacharyya, D. (2011) ‘Performing participatory citizenship: politics and power in Kerala's Kudumbashree Programme’, Journal of Development Studies 47(8): 1261-80.
Woller, G. (2002) ‘From market failure to marketing failure: market orientation as the key to deep outreach in microfinance’, Journal of International Development 14(3): 305-24.
Zeller, M. and Meyer, R.L. (2002) ‘Improving the performance of microfinance: financial sustainability, outreach and impact’, in M. Zeller and R.L. Meyer (eds), The Triangle of Microfinance: Financial Sustainability, Outreach and Impact, Baltimore, MD: The Johns Hopkins University Press.
Kudumbashree official website, <www.kudumbashree.org≯ [accessed 18 September 2013]. www.kudumbashree.org
Local Self Government Department, Government of Kerala, <http://lsg.kerala.gov.in/en/LSGDDept_en.php≯ [accessed 12 July 2014]. http://lsg.kerala.gov.in/en/LSGDDept_en.php
Ajit, D., Sunil, R. and Raman, K.R. (2008) ‘Microcredit and repayment rates: a case study of Kudumbashree microenterprise program in Kerala’, paper presented in Conference on Money and Finance, 18-19 January 2008, IGIDR Mumbai.
Cohen, M. and Sebstad, J. (2000) Microfinance Risk Management and Poverty, project report submitted to AIMS, Washington, DC: USAID.
Dreze, J. and Sen, A. (1989) Hunger and Public Action, Oxford: Oxford University Press.
Gangaopadhyay, K. and Singh, K. (2013) ‘Extent of poverty in India: a different dimension’, Economic and Political Weekly 48(6): 75-83.
Heller, P., Harilal, K.N. and Chaudhuri, S. (2007) ‘Building local democracy: evaluating the impact of decentralisation in Kerala, India’, World Development 35(4): 626-48.
Justino, P. (2006) ‘The impact of collective action on economic development; empirical evidence from Kerala, India’, World Development 34(7): 1254-70.
Kadiyala, S. (2004) ‘Scaling up Kudumbashree: collective action for poverty alleviation and women's empowerment’, FCND discussion paper 180, Washington, DC: Food Consumption and Nutrition Division, International Food and Policy Research Institute.
Kerala Poverty Eradication Mission (n.d) Kudumbashree and Livelihood Development, Tiruvanathapuram, Kerala: State Poverty Eradication Mission.
Kerala State Planning Board (2012) Economic Review Report 2012, Government of Kerala.
Kudumbashree (2009) Kudumbashree Annual Administration Report, 2008-09 [pdf], <www.kudumbashree.org/sites/all/themes/kudumbashree/archives/5_AnnualReportFinal2008-2009.pdf≯ [accessed 10 June 2014]. www.kudumbashree.org/sites/all/themes/kudumbashree/archives/5_AnnualReportFinal2008-2009.pdf
Kudumbashree (2013) End of the Rainbow-Saga of Kudumbashree [pdf], <www.kudumbashree.org/sites/all/themes/kudumbashree/images/publications/16-endofrainbowsaga.pdf≯ [accessed 4 July 2013]. www.kudumbashree.org/sites/all/themes/kudumbashree/images/publications/16-endofrainbowsaga.pdf
NSSO, Ministry of Statistics and Program Implementation (2011) ‘64th round of surveys’, <http://mospi.nic.in/Mospi_New/site/inner.aspx?status=4&menu_id=119≯ [accessed 13 November 2014]. Rath, N. (2011) ‘Measurement of poverty: in retrospect and prospect’, Economic and Political Weekly 46(42): 40-3. http://mospi.nic.in/Mospi_New/site/inner.aspx?status=4&menu_id=119
Reserve Bank of India (2011) Report of the Sub-committee of the Central Board of Directors of the Reserve Bank of India to Study Issues and Concerns in the MFI Sector, Mumbai: RBI.
Shashi, C.M. (2010) ‘The make-buy decision in marketing financial services for poverty alleviation’, Journal of Financial Services Marketing 15(4): 296-308.
Shetty, N.K. (2008) ‘Microfinance for microenterprise development: an inquiry for a new paradigm’, Icfai Journal of Financial Economics 6(1): 88-98.
Subramanian, S. (2011) ‘The poverty line: getting it wrong again’, Economic and Political Weekly 46(48): 37-42.
Williams, G., Thampi, B.V., Narayana, D., Nandigama, S. and Bhattacharyya, D. (2011) ‘Performing participatory citizenship: politics and power in Kerala's Kudumbashree Programme’, Journal of Development Studies 47(8): 1261-80.
Woller, G. (2002) ‘From market failure to marketing failure: market orientation as the key to deep outreach in microfinance’, Journal of International Development 14(3): 305-24.
Zeller, M. and Meyer, R.L. (2002) ‘Improving the performance of microfinance: financial sustainability, outreach and impact’, in M. Zeller and R.L. Meyer (eds), The Triangle of Microfinance: Financial Sustainability, Outreach and Impact, Baltimore, MD: The Johns Hopkins University Press.
Kudumbashree official website, <www.kudumbashree.org≯ [accessed 18 September 2013]. www.kudumbashree.org
Local Self Government Department, Government of Kerala, <http://lsg.kerala.gov.in/en/LSGDDept_en.php≯ [accessed 12 July 2014]. http://lsg.kerala.gov.in/en/LSGDDept_en.php
Ajit, D., Sunil, R. and Raman, K.R. (2008) ‘Microcredit and repayment rates: a case study of Kudumbashree microenterprise program in Kerala’, paper presented in Conference on Money and Finance, 18-19 January 2008, IGIDR Mumbai.
Cohen, M. and Sebstad, J. (2000) Microfinance Risk Management and Poverty, project report submitted to AIMS, Washington, DC: USAID.
Dreze, J. and Sen, A. (1989) Hunger and Public Action, Oxford: Oxford University Press.
Gangaopadhyay, K. and Singh, K. (2013) ‘Extent of poverty in India: a different dimension’, Economic and Political Weekly 48(6): 75-83.
Heller, P., Harilal, K.N. and Chaudhuri, S. (2007) ‘Building local democracy: evaluating the impact of decentralisation in Kerala, India’, World Development 35(4): 626-48.
Justino, P. (2006) ‘The impact of collective action on economic development; empirical evidence from Kerala, India’, World Development 34(7): 1254-70.
Kadiyala, S. (2004) ‘Scaling up Kudumbashree: collective action for poverty alleviation and women's empowerment’, FCND discussion paper 180, Washington, DC: Food Consumption and Nutrition Division, International Food and Policy Research Institute.
Kerala Poverty Eradication Mission (n.d) Kudumbashree and Livelihood Development, Tiruvanathapuram, Kerala: State Poverty Eradication Mission.
Kerala State Planning Board (2012) Economic Review Report 2012, Government of Kerala.
Kudumbashree (2009) Kudumbashree Annual Administration Report, 2008-09 [pdf], <www.kudumbashree.org/sites/all/themes/kudumbashree/archives/5_AnnualReportFinal2008-2009.pdf≯ [accessed 10 June 2014]. www.kudumbashree.org/sites/all/themes/kudumbashree/archives/5_AnnualReportFinal2008-2009.pdf
Kudumbashree (2013) End of the Rainbow-Saga of Kudumbashree [pdf], <www.kudumbashree.org/sites/all/themes/kudumbashree/images/publications/16-endofrainbowsaga.pdf≯ [accessed 4 July 2013]. www.kudumbashree.org/sites/all/themes/kudumbashree/images/publications/16-endofrainbowsaga.pdf
NSSO, Ministry of Statistics and Program Implementation (2011) ‘64th round of surveys’, <http://mospi.nic.in/Mospi_New/site/inner.aspx?status=4&menu_id=119≯ [accessed 13 November 2014]. Rath, N. (2011) ‘Measurement of poverty: in retrospect and prospect’, Economic and Political Weekly 46(42): 40-3. http://mospi.nic.in/Mospi_New/site/inner.aspx?status=4&menu_id=119
Reserve Bank of India (2011) Report of the Sub-committee of the Central Board of Directors of the Reserve Bank of India to Study Issues and Concerns in the MFI Sector, Mumbai: RBI.
Shashi, C.M. (2010) ‘The make-buy decision in marketing financial services for poverty alleviation’, Journal of Financial Services Marketing 15(4): 296-308.
Shetty, N.K. (2008) ‘Microfinance for microenterprise development: an inquiry for a new paradigm’, Icfai Journal of Financial Economics 6(1): 88-98.
Subramanian, S. (2011) ‘The poverty line: getting it wrong again’, Economic and Political Weekly 46(48): 37-42.
Williams, G., Thampi, B.V., Narayana, D., Nandigama, S. and Bhattacharyya, D. (2011) ‘Performing participatory citizenship: politics and power in Kerala's Kudumbashree Programme’, Journal of Development Studies 47(8): 1261-80.
Woller, G. (2002) ‘From market failure to marketing failure: market orientation as the key to deep outreach in microfinance’, Journal of International Development 14(3): 305-24.
Zeller, M. and Meyer, R.L. (2002) ‘Improving the performance of microfinance: financial sustainability, outreach and impact’, in M. Zeller and R.L. Meyer (eds), The Triangle of Microfinance: Financial Sustainability, Outreach and Impact, Baltimore, MD: The Johns Hopkins University Press.
Kudumbashree official website, <www.kudumbashree.org≯ [accessed 18 September 2013]. www.kudumbashree.org
Local Self Government Department, Government of Kerala, <http://lsg.kerala.gov.in/en/LSGDDept_en.php≯ [accessed 12 July 2014]. http://lsg.kerala.gov.in/en/LSGDDept_en.php
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