Indebtedness and Financial Inclusion: The Alarming Outcome of Commercial Microfinance in India

Debt may be good but not the state of indebtedness! It has both qualitative and quantitative implications. Propensity to debt, especially “indebtedness” is a matter of concern. Impact of indebtedness varies both in degrees and dimensions. The state of being in debt (indebtedness) covers both personal and behavioural finance and is blended with positive and negative outcomes. On the positive side, people with easy access to debt have higher chances for financial wellness, provided the money is used for productive gain. The negative outcomes are desertion, distress and depression of the indebted consumers. Many a times, such incidence results in forced migration as observed in the cases of absconding. The extreme end of indebtedness leads to suicidal tendencies often culminating at self-killing! Such unpleasant incident potentially affect the present as well the future of a person. Sometimes the shock of indebtedness cascade down to a couple of generations. Therefore, provision of debt must be preceded by sound financial education, especially among the poor and ignorant consumers. Credit service providers to the poor cannot simply rely on “disclaimers”. They have to go the extra mile in ensuring that, all their clientele have sufficient financial education and are therefore capable of making matured and informed decisions. However, in the present context, the Industry looks widely commercialized, and therefore, such amenable services is a distant reality though not an impossible dream!