Access to Credit Markets by Micro- Enterprises/Entrepreneurs:Field-level Evidences from Odisha

This paper assesses the demand as well as supply side causes for the persisting inadequacy of credit and continuing dependence of micro-enterprises on informal channels for meeting their financial needs. A primary survey of 813 micro entrepreneurs (ME) was conducted in four districts of Odisha. The research design followed a simultaneous use of quantitative and qualitative research methods. The choice of districts was purposive and within each district, the selection of rural/semiurban and urban sample was also purposive in order to ensure that adequate number of samples were covered. The study finds that, on the demand side, nearly 78% of surveyed ME expressed the need for finance for their micro-enterprises, with the average amount required being close to Rs. 90,815. The main purpose was to procure raw material ( including ‘ saleable’ goods for trading enterprises). Only 28% of the surveyed ME expressed the need for financing household expenditure for consumption as the main purpose, and education, health, housing, and social purposes as other purposes, with the stated average need being Rs. 65,541. The study reveals that the formal sources accounted for around 60% in terms of both number of loans received and the amount financed.