Roadmap for Answer Writing 1. Introduction Define the context: Explain the growing role of supermarkets in India’s retail landscape and their impact on agriculture. Fact: India’s retail industry is expected to grow from US$ 779 billion in 2019 to US$ 1.8 trillion by ...
Model Answer Introduction Microfinance institutions (MFIs) play a vital role in India's development by providing financial services to underserved populations. However, several challenges hinder their widespread adoption. Addressing these issues is crucial for enhancing their impact. Challenges HindRead more
Model Answer
Introduction
Microfinance institutions (MFIs) play a vital role in India’s development by providing financial services to underserved populations. However, several challenges hinder their widespread adoption. Addressing these issues is crucial for enhancing their impact.
Challenges Hindering Adoption
- Lack of Financial Literacy
India’s financial literacy stands at just 24%, making it difficult for many to access and utilize microfinance services (Global Financial Literacy Excellence Centre). This low awareness hampers MFIs’ outreach and growth, as potential beneficiaries are unaware of the benefits and availability of these services. - High Outreach Costs
MFI outreach in India is only 8%, significantly lower than Bangladesh’s 65%. The high logistical costs and field force expenses make it difficult for MFIs to extend their services to rural and remote areas. These costs limit the scalability of MFIs across India. - High Interest Rates
MFIs charge interest rates ranging from 12% to 30%, which is much higher than commercial banks’ rates (8-12%). This disparity restricts the financial viability of MFIs and discourages potential borrowers from engaging with them. - Overdependence on Commercial Banks
Around 80% of MFI funding comes from private commercial banks, which charge higher interest rates and provide short-term loans. This overreliance on the banking system affects MFIs’ ability to offer affordable services. - Limited Product Offerings
Most MFIs in India primarily offer credit services, while microfinance encompasses a wide range of products like savings, insurance, and money transfers. The narrow focus limits the appeal and adoption of microfinance services among a broader population.
Conclusion
To address these challenges, MFIs need enhanced transparency in lending rates, diversified product offerings, and improved financial literacy. Additionally, digitization efforts could reduce operational costs, enabling more efficient service delivery and broadening microfinance adoption.
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Model Answer Introduction Supermarkets have become a significant part of India’s retail market. The country’s retail industry is growing rapidly, with projections showing an increase from US$ 779 billion in 2019 to over US$ 1.8 trillion by 2030 (Kearney Research). As this shift continues, questionsRead more
Model Answer
Introduction
Supermarkets have become a significant part of India’s retail market. The country’s retail industry is growing rapidly, with projections showing an increase from US$ 779 billion in 2019 to over US$ 1.8 trillion by 2030 (Kearney Research). As this shift continues, questions arise about how supermarkets impact small farmers’ income, particularly in terms of reducing intermediaries in the agricultural supply chain.
Supermarkets and Small Farmers’ Income
Positives:
Negatives
- Market Power of Supermarkets: Supermarkets are large buyers with significant bargaining power. This can sometimes result in downward pressure on prices, reducing the income of small farmers, especially if supermarkets push for lower prices.
- Dependence on a Few Buyers: Small farmers may become reliant on a limited number of buyers, like supermarkets, which can make them vulnerable to price fluctuations or changes in supermarket demands.
- Supply Chain Costs: To meet the quality standards set by supermarkets, farmers often need to invest in better farming practices, technology, or infrastructure. These additional costs can squeeze the farmers’ profits.
- Preference for Uniform Produce: Supermarkets often prefer standardized, uniform products, which may not match the diversity of crops grown by small farmers. This could limit the market opportunities for farmers producing non-standardized goods.
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