Sustainable Livelihoods or Debt Traps - Future Direction of Quality of Life of Microfinance Borrowers in Darjeeling and Jalpaiguri Tea Gardens

Abstract

The rise of microfinance is lauded for its potential to uplift underserved communities, promising to stabilise household incomes, empower women, and broaden access to vital services. While numerous studies support its outreach to marginalised populations, concerns have emerged regarding its impact. Though intended to aid those in poverty, microfinance sometimes exposes borrowers to the risk of falling into debt traps. Our study aims to assess whether microfinance improves the Quality of Life (QoL) of borrowers and if this improvement is sustainable. Focusing on tea garden workers in Darjeeling and Jalpaiguri, we analyse data from 150 participants. While initially enhancing living standards, microfinance’s effect on long-term poverty alleviation is complex, akin to a double-edged sword: it aids in escaping poverty but can also escalate debt burdens. While microfinance provides crucial credit access to the poor, the ease of access to borrowing, particularly for non-productive purposes, raises concerns about entrapment in debt cycles. Balancing its benefits and risks is vital to ensuring sustained effectiveness in poverty reduction.

Keywords: Microfinance, Tea Garden Workers, Poverty, Living Standards, Debt Trap

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