Inscrit le: 05 Avr 2016
|Posté le: Lun 19 Juin - 20:39 (2017) Sujet du message: Reducing Poverty To Accelerate Economic Growth (The Imon's
As economic growth around the world slows down, and income inequality widens in many countries, it is imperative to identify and nurture new engines of economic growth that are both inclusive and sustainable.
India (like many countries) has two distinct financial sectors – an informal / traditional financial sector that dates back thousands of years (the writings of Manu mentions the occupation of banker) and a formal / modern financial sector. The two rarely interact.
India’s informal economy employs over 93% of its workforce.
While formal economy workers, and entrepreneurs are able to borrow money at single or relatively low double digit interest rates, the rural poor and informal economy workers and entrepreneurs typically pay interest rates that are in the triple, quadruple or far higher digits per annum! An example is the vegetable vendor in India who borrows INR 90/- in the morning and has to pay back INR 100/- (or INR 120/-) by the evening. This amounts to 11% (for INR 100/-), compounded daily, which adds up to 4,015% per annum in simple interest alone!
A single cent, compounded daily at 11% interest would earn the lender $34,904,969,039,821.86 after 365 days, or approximately twice the GDP of the United States! No wonder Albert Einstein called compound interest the most powerful force in the universe!
Interest rates this high, unfortunately, don’t lend themselves to capital formation in either the formal economy, or in the more vulnerable informal and rural economies. What if we could empower the 900 million plus people who live in India’s 650,000 villages to enhance their disposable incomes through access to affordable credit? How would this impact
- The Indian, and global, economy?
- Rural-urban migration?
- Maternal health, and infant mortality?
- Farmer suicides as a result of overwhelming debt?
- The incidence of bonded labour?
Could addressing this issue create a powerful engine of economic growth for both India, and the world?
This book seeks to answer these questions…
bound: 51 pages
publisher: Imon's Imprints (May 9, 2017)
filesize: 190 KB