Doctor of Leadership in Global Perspectives: Crafting Ministry in an Interconnected World

Micro-Credits: A Boon or Bane?

Written by: on February 4, 2013

Karl Polanyi’s “The Great Transformation” is a clairvoyant call for India today as capitalism wields its power promising a better future. Although still nascent in comparison to western economies, the obvious social repercussions of free market capitalism for India cannot be ignored and the country must heed politically to enhance social change before it caves under the pressure of economic slavery.   It would not be an exaggeration to say in fact that India has succumbed to such slavery, particularly rural women.  

A few social and political ramifications of the liberalisation of India’s economy are outlined below:

• “Disbanding protection for small industries increases the chances of efficient industry from the West dominating the Indian market and forcing Indian-owned industries to close. This increases the likelihood of exploitation in industry, decreases India’s autonomy in the market, and increases unemployment. This further loosens the accountability of MNCs.

• Less expenditures on pro-poor programmes result from the lessening of social expenditures by the government. Many aspects of health-care and education were also privatised well, relinquishing the control of these important social sectors to private firms rather than being controlled by the Indian people. This has widened the vast canyon between the rich and the poor in India.

• Incentives to expand enterprise and professional skills increase inequalities because industry only aims to increase profit, which is mostly achieved by exploiting wage labour, which in turn widens the gulf between the rich and poor.

• Open doors for foreign capital and agreeing to the jurisdiction of international organisations decreases the autonomy of India because their agreements involve removal of tariffs making India’s economy dependent on the West, rather than encouraging self-sufficiency. This in turn gives India less control over its economy, and loosens the accountability of MNCs.

• Decreasing concern for sustainability and the environment is caused by the increased focus on consumerism and industry rather on operating on earlier sustainable living practices that used to be part of India”

In the recent times, there is another interesting side to India’s capitalism; the NGO-isation of India that is soon becoming the ghost story of rural India.   Arundathi Roy, an Indian author explicitly states the bane of this phenomenon.

“The Privatisation of Everything has also meant the NGO-isation of Everything.  As jobs and livelihoods disappeared, NGOs have become an important source of employment, even for those who see them for what they are. And they are certainly not all bad.  Of the millions of NGOs, some do remarkable, radical work and it would be a travesty to tar all NGOs with the same brush. However, the corporate or Foundation-endowed NGOs are global finance’s way of buying into resistance movements, literally like shareholders buy shares in companies, and then try to control them from within. They sit like nodes on the central nervous system, the pathways along which global finance flows. They work like transmitters, receivers, shock absorbers, alert to every impulse, careful never to annoy the governments of their host countries. (The Ford Foundation requires the organisations it funds to sign a pledge to this effect.) Inadvertently (and sometimes advertently), they serve as listening posts, their reports and workshops and other missionary activity feeding data into an increasingly aggressive system of surveillance of increasingly hardening States. The more troubled an area, the greater the numbers of NGOs in it.

Mischievously, when the government or sections of the Corporate Press want to run a smear campaign against a genuine people’s movement, like the Narmada Bachao Andolan, or the protest against the Koodankulam nuclear reactor, they accuse these movements of being NGOs receiving “foreign funding”. They know very well that the mandate of most NGOs, in particular the well-funded ones, is to further the project of corporate globalisation, not thwart it.

Armed with their billions, these NGOs have waded into the world, turning potential revolutionaries into salaried activists, funding artists, intellectuals and filmmakers, gently luring them away from radical confrontation, ushering them in the direction of multi-culturalism, gender, community development—the discourse couched in the language of identity politics and human rights.”

 “Fired by an emotional faith in spontaneity, the common – sense attitude toward change was discarded in favor of a mystical readiness to accept the social consequences of economic improvement, whatever they might be”(Polanyi 2001, pg 35).   This perhaps best describes state of all the micro-credit initiatives of the NGOs this past decade.   The ‘market’ today, so to speak, is saturated with every NGO, every nationalized bank and the government driven by World Bank now offering micro-credits.    The Micro-Credit revolution may be in a way likened to the Industrial Revolution. 

 While it has opened the world of great economic possibilities for rural people especially women, it has compromised social development and advancement.    In the recent times, the real issues dealing with the empowerment of women, the creation of job skills, the understanding of financial literacy, etc, have taken a back seat as the micro-credit initiative is disengaged to become solely an economic thrust.  With a successful repayment rates, banks, NGO’s and the government micro-credit programs, have subjugated women to the role of ATM’s with an interest rate. 

The real purpose of the program stands thwarted as larger sharks now have taken over this seemingly lucrative market to serve their own purposes.  With the debts rising, the poor once again find themselves in dire conditions.      Initially, birthed to empower rural women and nurture entrepreneurial skills to boost the rural economy, this program has become yet another way to leverage poverty itself for the sole purpose of economic gain.  To think that this will not have further social repercussions than the already increasing number of farmers committing suicide as a result of not being able to pay back their debts, is simply ludicrous.  

The government needs to step in and regulate this so – called market of micro – credits.  Policies to protect the poor and the disadvantaged need to be revisited to ensure that social gain and transformation are prioritized.  But  will it? With the tentacles of foreign aid and development funding wrapped around its neck, can it free itself first? 


“Indian Economic Reform as an Example of Disaster Capitalism – Mainstream Weekly.” Mainstream Weekly. http://www.mainstreamweekly.net/article2310.html (accessed February 4, 2013).


Polanyi, Karl. The great transformation: the political and economic origins of our time. 2. ed. Boston: Beacon Press, 2001.


Arundhati Roy. Capitalism: A Ghost Story: Rockefeller to Mandela, Vedanta to Anna Hazare…. How long can the cardinals of corporate gospel buy up our protests?



“Indian Economic Reform as an Example of Disaster Capitalism – Mainstream Weekly.” Mainstream Weekly. http://www.mainstreamweekly.net/article2310.html (accessed February 4, 2013).

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