New Delhi, Jan. 29 -- The Economic Survey said on Thursday that prioritising metrics which track household well-being over indicators of scale, such as the number of borrowers and total loans will strengthen the microfinance firms sector, which has been plagued by periodic stress.

It said commercial capital has played an important role in expanding the reach of India's microfinance sector. It added, however, that incentives embedded in private equity and venture capital investment structures have, in some contexts, encouraged growth-driven expansion that may not always align with long-term household welfare.

The survey called for more consistent alignment between impact objectives and investor incentives by linking exit decisions and va...