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Microfinance is the finance to the poor people who takes the financial access to the banking institution. It helps to the poor in fulfilling their family needs, business needs and emergency needs. Labour productivity is directly related with quantity and quality of products. In the microfinance, various programmes were launched to generate earning, upgrade skills, create employment, develop financial literacy, socio- economic independency and e- learning such as SJSY, LEDP and so on. Role of micro finance continuously increases as number of SHGs has increased from 102.43 lakh in 2019- 20 to 118.93 lakh in 2021- 22. SHGs are getting funds from banks and they lent to SHG’s members at a very low rate according to their credit requirement under the SHG- Bank linkage model and members use these funds according to their needs. During covid19, entire economy was adversely affected and mostly daily wage earners or poor people and workers under unorganized sector were adversely affected. During covid19 pandemic, SHGs encountered new business opportunities such as making masks at large scale to serve the society and earn income, for this purpose, groups got the funds though microfinance scheme. Microfinance puts the positive impact on the socio- economic condition of the weaker sections. This helps in increasing productivity.

Study aims to know about labour contribution in the Indian economy and how can productivity be measured and improved through the various initiatives and policy formation by Government of India and state governments.

This paper also focuses on comparative study of the factors affecting employment conditions in the economy and it threw the light on performance of various sectors of the economy i.e. primary sectors, secondary sectors and service sectors. It provides the conceptual knowledge regarding microfinance schemes and impact of productivity on microfinance and over all Indian economy.

Journal “Employment and inequality outcomes in India” by Amitabh kundu and P.C. Mohanan throws a light on variations in social structures and composition in India, Indian growth was much satisfactory such as, increment of growth in the employment sector, even India could not successful to transform the growth in to development. The weighted measures of inequality in India (per capita) showed rising trend till 2004- 05. Poverty was declined during the period from 1972- 73 to 2004- 05 both in rural and urban areas. Monthly consumption expenditure has shown rising trend especially in urban areas than in rural areas. Poverty level is generally higher in small town or rural areas than in the medium towns or urban areas.

 Journal paper “Employment Potential in Indian Agriculture: An Econometric Investigation” described the employment and output level in agricultural sector. This report Indicated that the share of agricultural output declined continuously from 36.4% in 1983- 84 to 30.01 during 1993- 94 and 14.2% in 2009- 10, in terms of employment, share has also down from almost 68% in 1983- 84 to 64% in 1993- 94 and further fell to 51.8% in 2004- 05 labour productivity also got poor from 1983- 1994 and 1983 to 2009- 10 but since 2004- 05 to 2009- 10 labour productivity was greatest with 4.77%. The employment was influenced by capital and technology. Public investment fell down from 68.3% in 1993- 94 to 18.8% during 2009- 10. The private investment’s shares in total agricultural investment had increased from 53% in 1983 to 83% in 1999- 2000 and reached 71% in 2009- 10 .

Annual Report 2015- 16 by Ministry of labour and employment throws the light on labour productivity. It showed the increasing trend from the year 2000 to 2013. It was 3% during 2000- 2005 and 6.7% annual growth rate was achieved during the year 2005- 2013. This report helped to know about the government efforts to take initiatives for the purpose of spreading the knowledge about productivity and its impact on the output etc. NPC undertakes training program in the area of management services; energy efficiency, industrial engineering, economic services, human resource development and industrial pollution control and also provides consultancy services in both formal and informal sectors of the economy. This report showed that India achieved highest annual growth rate of 5.6% during 2000- 2013 among 20 countries.

CSE Working paper “Understanding the performance of India’s Manufacturing sector: Evidence from Firm Level Data” studied about industrial performance to the period of 2014- 15 and employment trends and distribution of employment in different type of industries. In this report, I knew the production (GVA) showed rising trend of 9.5% per annum. The growth of the employment and workers relatively lower than growth in the GVA that was 4.5% p.a. combined impact of both led labour productivity with rising trend of 4.6% p.a.

 Employment rate in the chemical, chemical product industry (up to 13%) and motor vehicle industry showed excellent growth (5.43%). The rising trend is shown in the total employment in capital intensive industry than that of labour intensive industry.

Some other important facts have also been noticed that like smaller firms were paying higher wages than larger firms and younger firms provide higher employment growth. 

Method of Study:  Descriptive and analytical

Unit of the Study: Indian economy as a whole and industrial study

Sources of data collection: Secondary.

Relationship between Microfinance and workers’ Productivity:

It refers to term that measures rate of producing the goods by a worker. If the worker has acquired skills and experience, then he/ she can add the production at faster rate through the help capital and technology. Under microfinance service sector, various expert personals are required to perform various kind of job like employees in SHGs, NGOs and Banks being linked with SHGs. These employees may be bank sakhee, head of SHGs and employees belonging with the finance, marketing and producing or service providing activities in the SHGs and NGOs. When these personals are trained skill fully then their productivity is enhanced and better services can be provided to the clients at a reasonable cost. Migration of labour contributes the expansion of the production and employment and this leads the improvement in the productivity of labour, trade and commercial activities.

Factors affecting labour productivity: 

Labour productivity is affected by various causes like standard of living, family structures, social customs, earning capacity, workers’ interest towards the specific jobs and working environment, skills, knowledge and experiences relating to the performance of jobs. Labour productivity is mostly high till 1997 in the most of the industrial sectors. Growth rates of almost all heavy- industry sectors such as a chemical, rubber, machinery and transport are above total manufacturing, while most of the traditional sectors were below the average. Capital output ratio was not good as capital output ratio continuously increased it means more capital was employed to produce per unit to produce single output.         

Impacts on Labour productivity due to micro finance:

Microfinance helps to the poor in getting funds to fulfill their life related basic needs like, food, cloth, housing, education and health. Apart from this, microfinance sector provides an opportunities for business related activities, for employment generation and other skill development related program.

 In this way, various programmes were launched to upgrade skills of the SHG members i.e. Micro Enterprise Development Programme (MEDP); to provide livelihood opportunities to SHG members i.e. Livelihood & enterprise development programme (LEDP). The RBI established a Reserve Bank Innovation hub (RBIH) to facilitate and develop innovation, novel ideas, techniques or methods across the financial sector by utilizing latest technology. To enable SHG financially strong, NABARD launched action research project through Mysore Resettlement and Development Agency (MYRDA) in 1987 to know the reasons of this inequality. The business model for JLG promotion schemes has been extended to scheduled private sector and Small Finance Banks (SFBs) in 2021- 22.

NABARD has sanctioned a cumulative grant assistance of Rs. 255.81 crore to Joint Liability Groups promoting institution (JLGPIs) for promoting 12.77 lakh JLGs as on 31^st March 2022 and 91 MOU have been signed with the banks. LEDP has covered 1.06 lakh SHG members (under FIF) till 31^st March 2022. Under both FIF and WSHG Development Fund, the cumulative number of trainees was 1.83 lakh as on 31^st March 2022.

1. Amitabh kundu (Jawahar lal University), P.C. Mohanan (Indian Statistical Services), “ employment and inequality outcomes in India

2. Deepak Kumar Behra, “Employment potential in Indian Agriculture: An economic investigation,” vol. - 2016- Applied Econometrics and international development.

3. Annual Report 2015- 16 on productivity.

4. Understanding the performance of india’s manufacturing sector : evidence from Firm level data

5. Bulent Unel, productivity trends in India’s manufacturing sectors in the last two decades, January 2003.

6. Status of microfinance in India 2021- 22

7. Study report,’ present and potential contribution of microfinance to India’s economy released on this day (before 4 March 2022) prepared by MFIN & NCAER