The following is a response from my friend Murthy Sudhakar, (who
does not usually address me as c-da:-)), whom I blind copied in on
some of these discussions, because he has spent a number of
years studying these issues in rural South India, and has been
attempting to make a difference with his InfraSys enterprise, with
some small but fine successes.
Highlighting mine.
cm
Dear C-da:
Thanks for including me in this discourse. Let me offer you some of my thoughtsshare them as you see fit. I had read Sudhirender article earlier and he seems to have highlighted many problems with this industry in India (and perhaps in other poorer countries). In making my points let use cut and paste.
The Moderator wrote: It questions the rationale of Microcredit which lays a debt trap through micro-enterprise development as a substitute for meaningful economic development and fundamental changes in the economic policies. It does appear to take one's attention away from finding real answers to the very real problem of poverty.
Thanks for including me in this discourse. Let me offer you some of my thoughtsshare them as you see fit. I had read Sudhirender article earlier and he seems to have highlighted many problems with this industry in India (and perhaps in other poorer countries). In making my points let use cut and paste.
The Moderator wrote: It questions the rationale of Microcredit which lays a debt trap through micro-enterprise development as a substitute for meaningful economic development and fundamental changes in the economic policies. It does appear to take one's attention away from finding real answers to the very real problem of poverty.
The moderator is right except.It is unclear to me what % of
the money lent actually goes to micro enterprise and what goes to
consumer goods, medical treatment and other squeezes of life of the
poor. I do believe the cover/pretext is micro enterprise and this
is always what is highlighted. A debt trap it certainly is!
Sudhirendar Sharma writes: Further, there are no businesses that can generate profit after paying an interest of 24-36 per cent on capital investment.
Sudhirendar Sharma writes: Further, there are no businesses that can generate profit after paying an interest of 24-36 per cent on capital investment.
This is indeed true even for urban industries. Only the desperate
will borrow at this rate for an enterprise. Please recognize that
most loans from MFIs are a flat interest rate and not on the unpaid
balance.
Sudhirendar Sharma writes: As poor take control of their destiny through soft loans, it becomes convenient for the government and the commercial banks to absolve themselves of their primary responsibility towards the poor.
C-da writes; If private profiteers and NGOs are doing the Govt's job, would you not want to know what the govt. is there for to begin with
Sudhirendar Sharma writes: As poor take control of their destiny through soft loans, it becomes convenient for the government and the commercial banks to absolve themselves of their primary responsibility towards the poor.
C-da writes; If private profiteers and NGOs are doing the Govt's job, would you not want to know what the govt. is there for to begin with
This is significant: As we know the philanthropy
industry/racket is a huge industry. In the name of charity this
industry thrives. Behind ALL charity is some guilt an embarrassment
that something is deeply wrong; that some amongst us suffer
(structurally) and some of us who do not, are partly responsible for
the state of affairs. This collective guilt makes us be
"charitable" with our check books.. .and this is the fodder for the
charity industry. Every rupee/dollar spent on charity reduces the
coffers of the government (tax deduction) and also tends to absolve
the government (which is us) of its(our) constitutional, ethical,
moral or economic "responsibility towards the poor."
Sudhirendar Sharma writes: MFI pay little attention to the core concerns of the poor. For them the critical concern is to sustain services against emerging odds.
Sudhirendar Sharma writes: MFI pay little attention to the core concerns of the poor. For them the critical concern is to sustain services against emerging odds.
He is right again.. when you loan to the large #s that the MFIs
do, the primary concern will become the process and not the intent.
The process is the disbursement and the collection of money. This
supersedes the more important purpose of such loans the intent:
improving lives/ micro enterprise etc.
Sudhirendar Sharma writes: Far from helping people generate wealth, easy credit is being used to encourage primary producers at the farm to become secondary distributors for consumer products.
Sudhirendar Sharma writes: Far from helping people generate wealth, easy credit is being used to encourage primary producers at the farm to become secondary distributors for consumer products.
This is probably the most significant point he makes. Just
like the easy access of credit cards to students and even the poor in
the US (with exorbitant interest rates and annual fees and the minimum
payment required) micro credits for the rural poor ignores Primary
production and its related linkages. It is only through primary
production by the poor can asset/ wealth building occur. But this
requires a Policy Level Change and that mean the government ( a
reminder- this is us) The Hindustan Lever's Shakti Amma scheme to
distribute their products in the rural areas or Amway's MLMs do
little for asset building. If I am allowed to plug - this is where
infraSys
<http://www.infrasys.biz/>www.infrasys.biz differs from
Micro Credit/ Finance.
Umesh Sharma writes: It shows that to make micro-credit effective
the illiterate or naive farmers must become astute and worldly wise.
Who will help them?
It is my humble opinion, based on interaction with them that
the farmers while they maybe illiterate they are not as naive as we
have been led to believe. They are more aware and conscious
of the structural problems of the nation's policies and deficiencies
that most of the urban middle class. They see through the preferential
treatment that major industries get (eminent domain of land for
industries, subsidies for corporations etc).
Umesh Sharma writes: then the same logic can work for stopping road travel and sea travel etc --becos people do die in traffic and travel accidents.
Umesh Sharma writes: then the same logic can work for stopping road travel and sea travel etc --becos people do die in traffic and travel accidents.
The comparison (to the ills of micro credit) that would make the
point would be the following: not stopping road and travel
entirelybut the removal of stop signs speed limits , signals and all
safety measures and regulations for the safety of travel.
Enough for now
anbudan
Enough for now
anbudan
sudhakar
infraSys
a company investing in rural India...for a change.
www.infrasys.biz
_______________________________________________ assam mailing list [email protected] http://assamnet.org/mailman/listinfo/assam_assamnet.org
