By Claire Cain Miller (’06), Forbes
November 11, 2006

Microcredit is booming in India, but the loans don’t often pull people out of poverty.

In the K.R. Puram slum in Bangalore, India, a group of 15 women gather in a small, muggy living room. The electricity comes and goes, turning the fan and the single bare lightbulb on and off. Flies buzz around the room, and children run in and out.

The women have borrowed $330 and meet weekly to make repayments. The loans were meant to serve as capital for them to start small businesses and, eventually, lift themselves out of poverty. But the women say the loans haven’t turned into new income. Sitting in a circle on the floor, some sound sad and others angry. One woman has started selling firewood, but others haven’t started businesses at all. Instead, they say, the money helped them pay for urgent expenses, such as their children’s school fees.

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[NOTE: This story came out of the Spring 2006 Covering India course taught by Carolyn Wakeman and The Hindu's Parvathi Menon]