Microfinance

Micro-Finance Institutes can be a solution for Jammu and Kashmir's Poverty

Over the past two decades, unrest in Jammu and Kashmir has affected the valley people, especially the urban poor, either by displacing them from their livelihoods or leaving them without any. Their poverty levels are aggravating and seek an urgent but long-term solution. Although some organizations have started working for the development of the area, there is ample scope for microfinance institutions to help the urban poor.

According to a BPL survey of Jammu and Kashmir by the Directorate of Economics and Statistics (DES), over 2.21 lakh people fall under below urban poverty level in the state of Jammu and Kashmir. And in the district Srinagar alone, there are over 73,262 BPL population, according to DES mid-year estimates (2007-08).

The fact was that there are many organizations that are focusing on the rural parts of the state but somehow the urban areas are missing from their developmental plans. While the skilled ones manage to get employed anyhow, it was the large majority of the unskilled people who are forced to work in the unorganized sector. Many of them live in urban areas with low and unsustainable income.

Here, microfinance could play an important role in poverty alleviation. Since majority of the urban population who fall below the poverty line (BPL) have no access to basic financial services, there is always the need to create opportunities for city dwellers to augment their income and to assist them through soft and hassle-free loans.

Recently a news report in a local daily mentioned how the state has been diverting developmental funds to secure their vote banks in rural areas. It stated that under Indira Awas Yojana — the biggest housing scheme in the country aimed at providing shelter to homeless people living below the poverty line in rural areas — Rs. 25,500 in plain areas and Rs. 27,500 in hilly areas was given to beneficiaries under the previous government.

The report also alleges that most of them were workers from different political parties.

Not many organizations in the valley, either local or international, appear to be keen to focus on the urban poor. There is an existing trend, especially among the NGOs, to view poverty as purely a rural problem. Very often urban regions are sidelined by them as more ‘developed’ spaces.

Over the years, Jammu and Kashmir has seen considerable increase in urban poverty. In Srinagar, majority of the people manage their livelihood solely depending on the service sector. But owing to many reasons, the latest of them being the global economic melt down, the service sector is providing far less opportunities and forcing many to shift to the primary sector (agriculture) for their economic survival. But they don’t have the resources either – particularly land – at their disposal. Finally, they continue struggling in the declining service sector.

Another visible trend in the valley is the increasing urbanization. With the rural population continuing to arrive in the city, it is putting strain on limited resources available and triggering the urban poverty further. As a result, there are many parts of the city – particularly in the downtown areas – where every second house suffers due to unemployment, under-employment and lack of resources. To substantiate their meager income — which amounts to no more than US$1 a day — most of these households have retained their joint family structures.

Setting up a microfinance institution, which can focus on the urban poor and would identify the needy persons who have a positive bent of mind to work for themselves and for the society at large, will go a long way in helping alleviate urban poverty.

The other issue that needs to be highlighted is the gender aspect. This relates to improving the access and availability of basic amenities, and also addressing such external concerns like shelter space, transport and overall security level of the poor women, so as to enhance their standards of living and to facilitate their participation in the urban market.

This should not mean dividing the rural and urban populace, but of locating poverty beyond the conventional notions, in a wider framework. If such steps are not taken, there is a great possibility that this divide will increase and have serious repercussions in near future. To avoid such a situation the issue of urban poverty needs to be tackled seriously.

(Bilal Hussain has a Master’s degree in Finance and Control from the University of Kashmir. He has worked as a financial writer and analyst for a telecom start-up company [iLocus], and was until recently employed with the HDFC bank. He was also the sub-editor, ‘Business section’ with the leading local English daily, Greater Kashmir. His principal interests are capital markets, developmental sector and ecological economics. He can be reached at ibilalhussain@gmail.com)

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