Poverty is the basic factor for undevelopment. The development of a nation depends upon three powerful factors such as TECHNOLOGY, CAPITAL AND HUMAN POWER.

Absolute poverty the number or proportion below poverty line and relative poverty which compares those at the bottom of economic ladder with others at the top, are important poverty dimensions. The statistical association of the absolute and relative levels of poverty has strong bearing on the levels of development itself. During the early days, the level of income was low and GDP growth meager. Economic reforms are essential to reduce absolute poverty, but the concern is about rising relative poverty. The expected growth of 7-8% over the next decade will help contain absolute poverty to the minimum, but it is expected accentuate relative poverty. Poverty line defines extreme poverty but 70% of India is below the $2 per day definition of poverty. To achieve a sustained 8% rate of growth, poverty in India has to be eliminated. The poverty can be removed with the help of intellectual thinking. In India, the majority of people live in rural area. The income of rural population should be increased. The increased levels of rural income will definitely achieve prosperity. The rural people income can be increased with a strong financial support from the government, corporate sector, non government organizations, banking institutions, cooperative banks, non banking finance companies and micro finance institutions.

Micro finance has emerged as an important tool to alleviate poverty and bring economic prosperity to the rural economy. It is a vital source of credit for poor households, which are generally neglected by the mainstream financial institutions because of the perceived high risk in rural microfinance transactions. Micro finance institutions (MFI) have emerged to fill this gap by providing the necessary financial services to the poor and helpless people to start small and viable enterprises thereby enhancing their economic standing in the society. The micro finance industry is evolving rapidly and mainstream financial institutions like banks and other nongovernmental organizations are making progressive forays into the microfinance market.

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