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Authors

R. Lilambeswara Singh

Dr. P. Venkata Rao

Abstract

In most developingcountries social protection systems are underdeveloped and generally only coveremployees with formal employment. Workers in the informal economy are left totheir own devices, or rely heavily on the support of their community. Crisesare recurrent features in the lives of the poor, often involve high expenditureand drive a poor family deeper into poverty. They are the most vulnerable onesand are the least capable of withstanding the adversaries and regain strength tonormalize. Impact of risk is compounded for the poor due to their to theirfinancial exclusion from savings, because banks find it unviable to maintainmicro-savings account. In such conditions poor people protect themselves fromrisks by taking emergency loans. By depleting savings, by selling productiveassets, by defaulting on loans and by reducing spending micro finance is themost important socioeconomic development of our times for combating poverty.With the concept of micro credit coming in picture, it had been proved thatpoor can become creditworthy if they form small groups. In the 90’s, numbersagencies involved in micro credit operations in India started adding otherfinancial securities including micro insurance to its micro credit operations.

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