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Financial Status of Rural Poor: A Study in Udaipur District

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  • Parhi Smita
  • Sriram M S

Abstract

The paper discusses the findings of a primary survey carried out in one village in Udaipur District of Rajasthan. The objectives of the study were to understand the financial flows of the rural poor and to have an insight into their financial status. Data was collected from 36 households classified as below-poverty-line on various aspects through a questionnaire. The findings indicate that the overall levels of indebtedness of these poor families are not alarming, as they have sufficient assets. The poor borrow from various sources to meet their needs. The most striking finding was that the poor resort to borrowing from the local money lender even for asset purchase, while they stash away their savings in earthen pots. Both these indicate the failure of the financial institutions in capitalizing on a small market opportunity. Most of the borrowings particularly for social consumption come from relatives – the poor seem to be juggling around with loans that cost heavily along with some interest free informal loans to manage their liquidity. The findings also support the possibility of differential pricing of loan products using social controls on end use monitoring – this is evidenced by the controls exercised by relatives in funding social consumption beyond certain limits. On the savings it was possible to conclude that the poor look for security more than liquidity and returns as an attribute. This study re-confirms the earlier findings that health related expenses are one of the major causes of indebtedness amongst the poor.

Suggested Citation

  • Parhi Smita & Sriram M S, 2004. "Financial Status of Rural Poor: A Study in Udaipur District," IIMA Working Papers WP2004-02-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
  • Handle: RePEc:iim:iimawp:wp01795
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    References listed on IDEAS

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    1. Sriram M S, 2002. "Information Asymmetry and Trust: A Framework for Studying Micro-Finance in India," IIMA Working Papers WP2002-09-02, Indian Institute of Management Ahmedabad, Research and Publication Department.
    2. Krishna, Anirudh, 2001. "Moving from the Stock of Social Capital to the Flow of Benefits: The Role of Agency," World Development, Elsevier, vol. 29(6), pages 925-943, June.
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    Cited by:

    1. Suparna Chakraborty, 2014. "Laws, attitudes and financial inclusion of women: A cross-country investigation," Economics Bulletin, AccessEcon, vol. 34(1), pages 333-353.
    2. B.S. Suran & D. Narayana, 2009. "The Deluge of debt: Under-standing the financial needs of poor households," Centre for Development Studies, Trivendrum Working Papers 412, Centre for Development Studies, Trivendrum, India.
    3. Varsha P. S. & Gayathri Reddy K. & Sudheendra Rao L. N. & Amit Kumar, 2019. "Impact of self-help groups, capacity building measures and perceived tension on women empowerment- an empirical study," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 9(3), pages 65-87, March.
    4. Dhananjay Bapat & Biswa Nath Bhattacharyay, 2016. "Determinants of Financial Inclusion of Urban Poor in India: An Empirical Analysis," CESifo Working Paper Series 6096, CESifo.
    5. B. S. Suran & Narayana D, 2009. "The Deluge of Debt: Understanding the Financial Needs of Poor Households," Working Papers id:2260, eSocialSciences.
    6. Meenu, 2014. "Clustering Customers on the Basis of Their Perceptions of Microfinancing by Banks," Paradigm, , vol. 18(1), pages 21-34, June.

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