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Millions of Defaults Threaten Microfinance's Future in India

The pandemic sparked a jump in defaults, and now the industry's vast reach looks like a liability.

People at the Lajpat Nagar market in New Delhi.
People at the Lajpat Nagar market in New Delhi.Photographer: Prashanth Vishwanathan/Bloomberg

In February 2020, unaware the coronavirus pandemic was about to wipe out her livelihood, Arpita Das borrowed $2,300 to buy materials and equipment for her family fishing business in West Bengal, India. A few weeks later, demand for her prawns collapsed, leaving her unable to make the $180 monthly repayments to two microlenders.

The 33-year-old mother of two, who’d never missed a payment since she started borrowing three years earlier, is now living off the vegetables and grains she grows on a plot of land outside the home she shares with her husband and his parents. With the whole family out of work, they’re unlikely to have any income unless she can borrow $1,400 for this year’s prawn harvest.