Banking upon Agrarian Crisis: Rural Development and the Microfinance Crisis in Andhra Pradesh, India.

Within neoliberal development discourse the poor are represented as entrepreneurial subjects in potentiâ for whom integration into the circuits of finance is a key mechanism to facilitate their rise out of poverty. In both rural and urban settings, microfinance initiatives have been heralded as central to achieving this integration by providing sustainable flows of credit to groups excluded from the formal banking system. This paper examines how the 2010 microfinance crisis in Andhra Pradesh, India, reveals significant faultlines that underlie this vision. The paper argues that the crisis of microfinance in AP needs to be placed within the context of severe agrarian dislocations stemming from the impact of trade liberalisation, climate change and social policy reforms. The contradictions are most strikingly represented in increasing rural differentiation and a generalised crisis of social reproduction among landpoor farmers and landless labourers. A massive influx of microfinance - driven by private sector banking and increasingly leveraged through crossborder financial flows - found a ready clientele among various agrarian classes looking to smooth consumption and rollover debt in conditions of significant uncertainty and distress. Yet in banking on this vulnerability, microfinance institutions socialised the contradictions of rural Andhra Pradesh and have ultimately been thrown into limbo through the unleashing of political and social forces unforeseen in neoliberal narratives of agrarian change. [ABSTRACT FROM AUTHOR]