Economies of NWFP value addition and microfinance: impact on forest dwellers' livelihoods in Madhya Pradesh and Andhra Pradesh

Non-Wood Forest Products (NWFPs) play a major role in creating livelihoods for forest dwellers (FDs). FDs generally find it difficult to obtain finance to support their livelihoods and have to depend on pre-harvest trading of NWFPs even though it is exploitative and leads to sale without any value addition. Alternately they have to borrow from traders at high interest rates because they do not have access to formal financial institutions. Provisions for creating access to microfinance will enable FDs to undertake NWFPs value additions and save them from exploitation by moneylenders and traders. The path to sustainable economic development of forest dwellers includes innovative approaches to natural resource conservation, management and utilization. This paper studies the economic impact of NWFP value additions such as storage, processing, adoption of appropriate technology, distribution and packaging. In addition, the amount of microfinance required for employing such value addition activities is assessed.