ISLAMIC MICROFINANCE: HOW WILL IT HELPINDIA IN POVERTY REDUCTION (original) (raw)

Poverty in world is still a major issue even in this day and age. The population of people living below the poverty line in world is astonishing and the problem is not going away. Poverty is general scarcity or the state of one who lacks a certain amount of material possessions or money. It is a multifaceted concept, which includes social, economic, and political elements. Poverty alleviation remains the most important challenge before policy makers in the world that is characterized by high and rising poverty levels. The purpose of this paper is to demonstrate the potential of Islamic Microfinance as an alternative tool for poverty alleviation. While poverty is a common problem faced by all countries, the efforts and actions has not reached the purpose yet. Still, it calls more attention from majority of government and development oriented organization to alleviate it in an effective and comprehensive approach. We focus on basic tenants of the Islamic ethical system and treat the Islamic ethos as an ideal, through which socioeconomic policies dealing with poverty elimination are assessed. Islam views society as a unified equity in which individual freedom and human dignity is supreme although subject to the axiom of responsibility. In Islamic perspective, poverty is not just viewed from material aspect but also moral/spiritual, thus, any poverty alleviation strategy should reflect on both aspects. It might be argued that while conventional approach on poverty left the importance of committing to moral/spiritual, Islamic approach has more attention on that aspect. Islamic microfinance, having a unique feature compare to the conventional counterpart, offers apotential solution to poverty alleviation.

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