Microfinance can be leveraged to address health care expenditure for the poor

Indian microfinance institutions (MFI) currently serve 71 million rural poor. Pairing financial services with access to life saving health interventions such as health financing, telemedicine and other innovations has tremendous potential. But it requires further commitment and resources to reach scale. An international development organisation, Freedom from Hunger notes in a report on `Integrated Health and Microfinance in India: Harnessing the strengths of two sectors to improve health and alleviate poverty’. The report was recently released along with the Microcredit Summit Campaign and the Indian Institute of Public Health, Gandhinagar.

The report demonstrates how microfinance can be further leveraged to provide a powerful tool to address one of India’s persistent barriers to the economic advancement of the poor: ill health caused by lack of access to health services.

Surveys of the sector in India conducted in 2009 show that of 134 MFI in India, approximately 25 per cent provides some type of health services to clients. The report also presents the findings from a more recent study of the same MFIs, outlining the range and frequency of different health needs being addressed and the type of interventions being made. The new data shows that, together, these MFIs are reaching some 3.8 million clients with health protection services, with the potential to reach many more.

“This is welcome news against the background of the last two years of political turmoil surrounding microfinance in India. The image of microfinance has suffered considerable damage and the sector has seen a profound political backlash, the result of over-indebtedness resulting from high-growth microfinance run amok,” noted the report.

The report is part of an on-going health and microfinance alliance effort to promote dialogue and encourage further exploration of and support for multi-sectoral approaches that integrate microfinance and health. Research indicates that this low-cost, sustainable strategy shows tremendous potential for improving both the health and financial status of India’s poor and marginalised population.

India’s poor suffer a disproportion burden of health care expenditures. An estimated 35 million Indian’s are growing more deeply improvised each year because of out-of-pocket medical expenses. They are often just one illness away from losing everything and for microfinance clients’ sickness is often the main reason underlying failure to repay loans and the collapse of promising micro-businesses.

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