Tuesday, 11 October 2011 00:44
pioneER
DEVELOPMENT DEFICIT
BY SUDARSHAN CHHOTORAY
There was a time people were running after village landlords and moneylenders in time of financial crisis or acute need of money like marriage, medical expense and education of children. Even people borrowed for the sake of daily bread.
Sometimes interests were high and unbearable and many a time people had to mortgage their land, gold ornaments, household instruments etc to borrow.
Now, Government-sponsored Self-Help Groups (SHGs) formed in villages and slums and Microfinance Institutions (MFIs) have replaced the traditional moneylenders. Even though the same old practices are still going on everywhere, the poor and the downtrodden and small traders and artisans are getting benefits from micro loans provided by the new age money lenders.
The contentious issue that still remains unresolved is rate of interest. Where as MFIs have claimed they are charging 19 to 25 per cent, allegation are galore that they are charging not less than 30 to 60 per cent even as the Government has asked them to limit interest within 28 per cent. The RBI has recommended a limit of 24per cent of interest for them.
On the contrary, studies have found that the impact of such microfinance services to the individual borrowers and community as a whole is far exceeding. There has been a boom in the small enterprises.
Borrowers are free from the clutches of money lenders and have options to choose from multiple service providers and products.
Yet another aspect of micro lending debate has been the increasing number of farmer’s suicide in Andhra Pradesh. Twenty six suicides last year got linked with MFIs only. In Odisha out of 30 cases of farmers’ suicide, at least six cases were claimed to be linked with loan burden from MFIs. During the last year, more than 53 farmers committed suicide for various reasons. Among them, 29 were from western Odisha.
More than 3,509 farmers have committed suicide in the State during the last 11 years.
Reacting to the allegations, MFI leaders charged politicians and Government for shifting responsibility as the latter has failed to provide social security measures. Farmers are more indebted to banks and Government-run cooperatives than MFIs, they contended.
Hirapur is a small and sleepy village under Begunia block in Khurdha district. Almost all in the village are rural artisans where weaving is the primary occupation. From children to old, all toil to eke out their living. Out of 120 families in the village, 110 are weavers. A few of them have power looms and a majority of them have handlooms.
Due to lack of capital investment, modern machine tools and non-availability of varieties of yarn and above all lack of support from Government agencies and banks, they find it difficult to keep going.
However, when they got access to Micro-Credit through microfinance institutions, things changed to some extent.
Shantilata Dei of the village was struggling hard to run her family of five including two daughters and a son. Though she owns a handloom to weave and prepare yarn, it was practically difficult for her to purchase raw materials. After 2009, when she joined a local Joint Liability Group (JLG) and took a loan of `7, 000, she utilised the sum to develop her unit and gradually became self sufficient in running her family. She is now earning `3,000 a month as profit after selling sarees she weaves.
Life was not a smooth-sailing affair for Khulana Nayak. There was a time Patta paintings, palm leaf paintings and writings and idol making etc were traditionally and inherently confined to the males. And women were looking after house hold chores but now the scenario has changed.
Women have cautiously treaded in the area. Thanks to the support of MFIs, the women have got the required money for purchasing raw materials. Many women like Khulana are running their families seamlessly. She joined the JLG three years ago. During the period, she, along with her daughter, has almost mastered the art of Patta.
(The writer is a senior freelance journalist)
PUBLISHED IN THE PIONEER ON 11TH OCTOBER 2011
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