IT WAS a windfall five years ago that taught Panchali Satyavva the power of a lie. It happened one Monday afternoon in Someshwar village of Nizamabad district in Andhra Pradesh. It was raining in sheets and she had just placed a bucket under the steady trickle of water from the roof of her hut. Two men were at her door, holding umbrellas and offering her an unsolicited Rs. 5,000. They...

The government is planning a complete overhaul of the way the power sector is financed and subsidies are delivered, attempting to address a funding shortfall delaying the construction of electricity projects and worsening a chronic power deficit that threatens to sap growth in India’s energy-hungry economy.This exercise is based on a report submitted by a panel headed by Montek Singh Ahluwalia, deputy chairman of the Planning Commission, to the power...

Two months after the crisis in the microfinance industry broke out, resulting in the possibility of bank loans to the sector becoming non-performing, the government now wants to do a reality check. Last evening, the finance ministry dashed off a letter to public sector banks, Small Industries Development Bank of India and National Bank for Agriculture and Rural Development, asking them to furnish data on how much exposure they have to...

The recent crisis in the micro-finance industry, brought about by some incidents in Andhra Pradesh, has led to the development of a new concept in the Indian thinking on development — that of “responsible finance”. Responsible finance is supposed to mean financial activities by companies that make just about enough returns to stay in business and charge rates of interest on loans to the poor that are only marginally higher than what...

MICROFINANCE is an example of something that is sadly all too rare: an anti-poverty tool that usually at least breaks even. If you make small, uncollateralised business loans to groups of poor women, they almost always repay them on time. It has grown rapidly in many countries, not least Bangladesh and India. With nearly 30m clients each, these are now the world’s biggest markets for microfinance. Yet the industry has...