MORAL HAZARD

In India importance is given to education of children and government has taken considerable efforts in this regards. Tamilnadu is one of the states where the standard of education in government schools is improving. The awareness among the people to educate their children also  has increased. Though incidences  of child labour, still exists its on declining trend. The future of India lies in the hands of youth. The children of today are youths of tomorrow. It is important that they get educated properly. Market demand based education has to be replaced by value based education. Education which does not inculcate morality is a waste. It is sad to note that our social structure is moving towards a bad culture. Consumption of alcohol, tobacco products and drugs are in increasing trend.

The educational standard in government schools have no doubt increased. But with respect to moral behaviour of children, the rules ands regulations laid by Private schools and stress given by them for moral discipline is ensuring that the children are good, at least during their school going years. But on the contrary, what is happening in rural schools is of big concern

Once I happened to have a chat with a woman who owns a petti shop in a village called Palamedu, Madurai district, Tamilnadu, India. She complained that lot of school children are coming to her petti shop demanding for Pan and Gutkha products (Gutka is a preparation of crushed areca nut (also called betel nut), tobacco, catechu, paraffin, lime and sweet or savory flavorings. It is manufactured in India and exported to a few other countries. A mild stimulant, it is sold across India in small, individual-sized packets that cost between 1 and 6 rupees apiece. It is consumed much like chewing tobacco, and like chewing tobacco it is considered responsible for oral cancer and other severe negative health effects.)

When I talked to few other persons, more shocking news came. As the cost of the Gutkha ( sold in different brands) is only few rupees and since it can be consumed (chewed) easily than cigarettes without other knowledge, school children are getting used to it. Even before going to school in the morning, they purchase Gutkha pockets and go to school. Since the children do not know much about the ill effects and since they are lured by the mild kick it provides, the consumption is on increasing trend.

In Tamiladu sale of such tobacco products is banned. But the ban just remains in paper. It is being sold openly in most of the shops. Yet another women in palamedu said she used to sell 100 boxes of Gutkha every day, most of them being purchase by school students. And this is not the case only with Palamedu. Consumption of gutkha is a common scenario almost among children of all schools in Tamilnadu.

I made a visit to few schools and got more startling revelations. Even girl students have started having the taste of gutkha. Worst the students have invented more innovative ways to get themselves intoxicated. The whitener used for corrections in typed papers and the solution used to fix punctures in cycle tubes are used by school children. The students used to apply whitener in their hand kerchief and inhale the smell, even while sitting in the class room. And with respect to the puncture fixing solution, students used to carry it in their pant pockets along with sachets of water (mineral water is sold in sachets for few rupees). The students after emptying the water pocket, used to put few drops of that puncture fixing solution in the water sachet and start inhaling it. And they used to do it in groups. Worse it happens within the premises of the school itself.   And this is spreading to many schools.

The government school teachers could not intervene to these matters beyond some extent. They need the support of the parents too.

1. Can such students make a better future generation?
2. Why our society is becoming so addicted to alcohol, tobacco and drugs?
3. Free flow of alcohol is in villages since government itself sells it. The children know very well that their father will drink and smoke (in some case even mother). How can we expect morality in such children?
4. Why Gutkha and other paan products are sold freely in all shops even if a ban exists?
5. Recently supreme court has ordered that Gutkha should not be packed in plastic sachets from March, 2011. Is this a real problem compared to consumption of gutkha itself. It will just increase the cost of consumption to the end user and that all.
6. Why the persons selling gutkha do not refuse to sell it to children?
7. Why the Tamilnadu education department has not initiated any action in this regard?
8. What is the responsibility of parents in this regard?
9. How many parents know that their children are used to gutkha? It can be easily identified from the oral smell.
10.  Why not the government rules give severe non- bail able punishment to those who sell gutkha despite ban?
11. Why government is not willing to put a total ban on production of gutkha itself?
12. What will be health expenditure in rural families in due course? Will they not be in increasing trend and pull the families to poverty?
13. What will be the productivity of future youth addicted to alcohol and tobacco products? Will it not decrease?
14. Will this not have a indirect impact on Indian economy?
15. How long Indian Youth will be seen as cheap labour by foreign investors? What will happen if they come to know about their decreasing productivity?
16. Are we heading towards development or towards a total moral collapse?
17. Will everything change? Can common people like us have the ability to put forth some positive change?

Lot of questions comes to my mind. My heart longs to initiate a fight.  It would have been initiated by know, if I am not transferred from field work to the present research work. My organization offers such a scope in the field and the women force can be used to bring at least a small change. Of course the mountain cannot be moved. But few rocks can be blasted. And everybody join hands the entire mountain can be brought to dust. 

ONE HUNDRED INDIAN RUPEES

One hundred Indian rupees is almost equivalent to two American dollars. And for the upper class Indian's it is no money. And for the politicians, who could make a loss of more than Rs1.70 lakh crore to the government through 2G spectrum scam, I wonder what it means to them. But it means a lot to poor people. To the rural poor in India, it is a hard earned money. They could even have good food for two days (and even more) with that money. As a part of my job, we used to encourage woman to save and organize them into self help groups (SHGs). The savings, is expected to meet their future needs. As a institutional process, we used to review the amount of savings done my members of SHG pertaining to a federation/federations. The number of members saved and total savings and non savers will be reviewed. They are reviewed merely as statistical figures. The amount of savings for e.g may range from Rs2.50 to Rs3.50 lakhs/month (each member saving on an average normally will be Rs100).

The woman members who started their savings from Rs10, now even save Rs200/month/member which is of course rare and most of them save Rs100/ in the present condition. Savings below this too exists based on the context.

To save Rs100 hundred, a woman member and her family has to earn sufficient income to meet the domestic needs of the family, repay the depts, she has borrowed from the SHG and from outsiders for emergency purposes and the additional demands that may rise from time to time. It is a common sight in the rural Tamilnadu that 80 % of men are addicted to alchohol. The majority of the income earned by the male member, goes to the wine shops run by the government. And the income is also not permanent. A really poor family has to struggle hard to save even Rs100/-. The effort of the woman in this respect has to be lauded. The money which they save has the smell of their poverty, hard work, pains and sufferings, commitment towards their children and husband and above all the passion to live.

The money which is saved, through hard means, is expected to give returns in future. I have  seen in my experience that, the money which is saved so, did not serve the purpose to some poor women. We can say the percentage of this is negligible. But considering from the view point of the member, it means lot to them. The money they save is rotated as credit in the SHG along with the credit borrowed from Banks/external agencies. If the credit goes bad due to unforeseen circumstances, importance is given to repay the bank loan to maintain the goodwill with the banks, so that they will continue to provide credit. Ultimately it may happen that one member/few members savings will be in the hands of few other members, who are not going to repay. The members who have excess loan, may either be in a position that they could not repay or they may default willfully. Whatever may be the case the honest member gets affected. It happened so in one SHG that a member had more than Rs10000/- as savings and she continued to save Rs100/month. She had no credit in her name. She was planning to get credit for her daughters marriage and so she continued to wait. But the repayment of the loan by other members very bad and the bank loan was in overdue for longer period. However, the SHG conducted meeting  every month and only 30 % of the members will attend and repay. The others wont repay even if visit was made to their individual houses. Then the day came when the member (a muslim woman) found a bride groom for her daughter and she requested for a loan of Rs30000/. The SHG was not in a position to give loan. She and her husband started pressurizing the federation for loan. We said it is impossible to give loan due to improper functioning of the group. Then they insisted that at least their savings to be returned back. The bank loan was already in default. Whatever the money collected in the SHG was sent to loan as per standard procedure. And even if this is relaxed, the money collected in the SHG was hardly Rs2000/month and so the member has to wait for five or more months to get her entire savings.

Luckily the group had Rs1.00 lakh subsidy which is not credited to the group, since the duration for availing subsidy was not yet met. Even when the subsidy is given, it will get adjusted against bank loan and however the group was in a position to get at least Rs20000/. Keeping this in mind, I gave a promise that Rs10000/ savings will be returned during next group meetings, to be held two weeks before their daughters marriage. I went to Bank, explained the situation of the group and asked the subsidy amount to be adjusted against the loan. After much persuasion, the concerned Branch Manager agreed. But  due to procedural delay the amount was not credited until next month. The day of the group meeting came and I was left in an embarrassing situation. However I made up my mind to give my personal money, knowing that I can get back the money for sure, but after sometime. In the group meeting, however I did not say that I will give my personal money. I said that I will try to arrange the money from Bank within a week. But I called the muslim woman and her husband seperatly and gave them the money. They got surprised. They invited me for their daughters marriage, for which I am not able to go due to some official work.  I never went to the SHG again. However the subsidy money came before the subsequent group meeting. The Muslim woman and her husband, came to my house and handed over the money in person without even asking.

What if subsidy facility is not available to the group? Would I have been so generous even then to give the money? I think that I would have done that. Of course I could not help all such members but, the trust the member had on the SHG and the cause for which money is asked moved me. Later I happened to go to their house. It was a small house and I was surprised to see many people in the house. And I learned that they lived as joint family. Occasionally I used to meet the members husband on my way to my office and he always stops to speak with me.

Again, there are many such women who have great trust in the concept and who is honest. The money they save is really hard earned one. Many of them are aged. I still do not know any answer for this question. Why the money which is hard earned by honest people, doesn’t stay with them or benefit them when they needed it most? At the same time, how could money stays with dishonest people, who did not toil but used his cunningness to earn such money?

I respect more the hundred rupees in the hand of honest people, than crores in the hands of dishonest. That, hundred rupee really is invaluable. 

DOG'S LIFE

I am living in a residential area in outskirts of the Madurai city, Tamilnadu, India. It’s in the Alanganallur road (rural road) and 10 kms from Periyar Bus stand. The residential area is named as Vishaal Nagar-2 and is near a village called Pasingapuram. When I occupied the house two years ago, mine was the only house in the street. Early morning the sun rise will be clearly visible from the eastern window. The entrance of my house is on the northern side and there is no obstracle for me to view the beauty of Small hillocks –Manjamalai and Sirumalai hills at the farthest distant. Now few houses have come, obstructing the view. I could no more see the sunrise from my house. However, I could still see the hills. A neighbor came before 15 months to occupy his new house, in the southern side of my house. He is Mr. Chandrasekar a wholesale vegetable merchant, living with his wife and a son aged around 25 years (youngest of his two sons). The youngest son was called Mani ( Manigandaprabu is his full name) His eldest son was working abroad and he got married recently. And another neighbor occupied a corner house in the southern entrance of the street(opposite house further down the street) . The owner of that house is working as railway ticket examiner. His wife is a school teacher and he has two college going girls. He is a Christian named Mr.Pious. He and his family are fond of pet animals. They have two dogs; have love birds, a parrot and three hens.

Actually Mr.Pious bought 5 chicks from a roadside vendor. Two died and three remains. He and his family takes at most care from feeding to veterinary services and the three has grown really well. And they were of pure white color. Seeing the quality of the birds no one can say that, it was bought from a road side vendor. The two dogs also were maintained with great love and care. They were never tied and used to wander freely inside his house. The dogs are very obedient too. Whenever I see them, they will be very clean. There is no disturbance to neighbors’ from the dogs since they seldom bark (only when they see strangers).

Mani, son of Mr.Chandrasekar who is living adjacent to my house is a college drop out. Occasionally he helps his father in his business. Sitting idle made him to think and he wished to rear Dogs for commercial purpose. The place he chose for housing them is his own house. One day he came home with a good puppy (he said it is a puppy which is just two months old, but its height was that of an aged local dog). He named it Sophie. He built a small kennel for sophie in the car parking area. The puppy had long legs and a wonderful soft skin. It was full brown in color, very active and playful. It was obedient to some extent. Suddenly he brought home another dog, a white Labrador. Soon many dogs got tied around is house and there were six dogs of varying sizes and breeds. Only Sophie enjoyed the facility of Kennel and the other Dogs used to look at it with Jealousy.  Initially Mr.Mani took care of them well. He used to take them for a walk, give them beef which he himself cook in the vacant land adjacent to my house and also give occasional medicines. Kids in the neighborhood used to visit this street to see the variety of dogs. Even a dog was of the size of a calf. Everything seems to go on well, but only for two months. Mani also had the idea of making the dogs participate in dog fair held in the city. Unfortunately it didn’t materialize for reasons known only to him. He used to boast about the dogs, how obedient they were, how they listened to his commands, how they are rare and maintained that nobody in the city had such a breed as Sophie. He used to speak as if he has more than a decade of experiance with dogs.

Soon the problem came. The entire family used to have frequent visitors. The vistors will come and stay for one or two days and leave. They also used to lock their house and leave for few days to their relative’s house. Mr.Mani will also go along with them, leaving the dogs behind. He alone will return on morning and evening to feed the dogs. The dogs will be kept tied around his house in open, without proper housing facility. The dogs, since they were not taken for a walk used to “Pee” in the place where they are tied. They will also bark in high decimals throughout the night.  One day Mrs.Chandrasekar bought a small goat and it was also tied in one corner of the house. She used to take the goat for grazing.   

One day, when the entire family was out as usual, one of the dogs untied itself and started roaming around the entire residential locality. There were six streets in our locality fenced by a barbed wire with one entrance near the first street. Ours was the sixth street. Two security persons will be available at the gate. The dog started chasing the local dogs that used to roam in the area. Worse, the dog after completing his visit came back and started biting the neck of the goat which was tied in the house.

My wife heard a strange sound, of course from the goat. She guessed something was wrong and went outside and saw that terrible scene. My wife never like dogs and was afraid of the dogs owned by my neighbor. She came to me and said what’s happening. I went out and took hold of the rope around the dog carefully and tied it in one of the poles. Then I examined the neck of the goat. It was bleeding profusely. My wife came along with my five year old kid to see the goat. She took pity for the goat and wished to offer some vegetables for the goat. My kid got very interested by the idea and came back with whatever vegetables she can get hold off from the fridge. However, the goat did not eat anything. Suddenly my kid started plucking the grass grown near by and gave it to the goat. The goat started eating it happily.

When the family returned from their short trip, my wife went and told Mrs.Chandrasekar what happened. She got annoyed and started scolding his son. Then they consulted a veterinarian and gave some antibiotic dose to the goat. Few days later they sold the goat.

The dogs due to poor maintenance continued to Pee in the area where they are tied. Soon the house got surrounded by dogs Pee. Then they also started Peeing in the entire road during their occasional morning walk.

Mr.Chandrasekar and his family got used to the stench of the pee, and lived with it. Occasionaly Mani used to clean it. Manual scavenging is considered as a bad social phenomenon. Mani became a manual scavenger, for the sake of his beloved Dogs. But he did not do this routinely, but only after a certain quantity is dumped by the dogs around his house.

Mani also had female Dogs. And when they were in heat, he used to bring Male dogs from outside for mating. And there will be a curious crowd of his friends to watch them mate. One day morning I came out of my home (busy hurrying for office and school) with my wife and kid. And the first sight we saw was the mating of dogs, watched by Mani and his friends. My wife got angry and kept murmuring about this, sitting in the pillion of by bike throughout our ride.

Another day morning I came out of the house and saw one of my sandals  gone missing. I immediately guessed what would have happened. Any one of the dogs would have taken it. I searched around my house and later went to terrace. From my terrace I looked at the terrace of Mr.Mani’s house. There at last I found my sandals lying. I collected it and lodged a complaint with Mrs.Chandrasekhar. On another day my kids slippers was found torn to pieces.  Yet another day my kid came laughing and said to me that “ Dad, a dog just came and spit on your shoes” and the incident seemed as a joke for her.

And then came the marriage for Mr.Chandrasekhar’s eldest son. He flew back from America for the marriage. The Bride was from Palani, a town where a famous Murugan temple is there. The marriage was planned to be held in Palani. The reception was planned after marriage in the residence of Mr.Chandrasekar. The family felt only then, that they should keep their home clean. The house was white washed. The surroundings were cleaned using sanitary liquids. Even Sophies kennel was cleaned (hope for the first time). The family also felt that the dogs may cause trouble to the relatives who come for marriage. So Mani was asked to dispose the Dogs at whatever rate they were demanded. It was a surprise to me and my wife when all the dogs got vanished suddenly. We asked Mrs.Chandrasekhar what happened to the dogs. She said all dogs except Sophie were either sold or gifted. She also added that his son made a huge loss in the business. Sophie was sent to a common dog care center and supposed to return, a week after marriage.

Me and my wife did not go for the Marriage and planned to attend the reception which is held in the house of Mr.Chandrasekar. The reception was planned in the evening by 7.00 pm. We purchased a gift and were ready to go to their house. Friends and relatives of Mr.Chandrasekar also started arriving. Suddenly the power went off and the entire area fell into darkness. It is a common scenario in Tamilnadu, India that electricity goes off suddenly without any warning. Also there is a announced power cut that exists for 2 hours daily. This is due to shortage of power, which has become a huge problem for every one recently. The family was careless enough that they are not prepared for such a sudden power shutdown. Mr.Mani was sent to hire a generator, but he took his own time. So the function commenced without light. The bride and bridegroom where inside the house. The friends and relatives could see only their shadowy figures due to darkness. Then someone gave the idea that chairs can be put outside the house and the bride and bridge groom can sit in them, so that every body who comes have somewhat better sight of the newly married couple. And it happened that, the Kennel of Sophie was removed suddenly and the chairs for the couple were laid there. I and my wife couldn’t control our laugh. The place which was once stenching with Sophies excreta’s, now was turned to a place where the reception ceremony was held. We however managed our laugh and converted it into a smile and gave the couple a present. I have to accept that the bride was very beautiful indeed. My wife who never used to speak about others beauty, also accepted that the bride was beautiful.

The eldest son left to America within a week of marriage along with his wife. I hoped Sophie will return but there was no sign of it. I asked Mani and he replied that Sophie died at the common care facility. He blamed them for Sophies death. And I Know pretty well who was responsible for Sophies death. It was Mani. When Sophie was there, I noticed that it grew at a rapid speed irrespective of the least care provided to it.  I also saw that it had a unusual lump in one of its leg and it found difficult to walk because of that. A good dog was let to die because of improper care.

We were peaceful for a fortnight without any barking sounds and the stench of dogs excreta’s. Suddenly Mr.Mani again came with another dog, this time a Pomeranian. Pomeranian is a dog which is a home lover and likes to roan freely. It is not a ferocious dog but a friendly dog. But this dog also was kept tied in the front of the house. Soon another Pomeranian also came for its company. And this time, their barking was so continuous that it disturbed our sleep. Again Mani came with an ugliest dog I have ever seen. The color and very sight of it was very awkward. I don’t know what breed it belonged too. Later he also bought home a Labrador, which was brownish white in color. Two weeks ago the Labrador gave birth to ten cute kids. Yesterday I saw Mr.Mani taking the Labrador and the ugliest dog. The Labrador was housed along with its puppies in a Kennel, which was again erected in the car shed. However I could not see any enthusiasm in Mani’s face. He became dull than before. This can be attributed not to birth of puppies, but to other external reasons like his unemployment, love failure (do any girls love him? Of course He has a good personality). The name “Mani” is a very common name in households of Tamilnadu. Male children were named Mani. It is also a common practice to name their dogs as ‘Mani”. One of out every 10 dogs is  named “Mani” in rural Tamilnadu.

Whenever I see the puppies, Sophies fate comes to my mind. Hope at least these puppies lead a good life.  I also feel pity for Mani. Hope that he should try his hands in some other business.

SHG Movement- Banking for Poor or Banking on Poor?

Muhamad Yunus has shown a new way to the world. Organizing poor into small groups and providing Micro credit to them. It is perceived to have a dual advantage

·  Poor had access to formal source of credit and thereby it can enable their overall development

·  The lending institutions on other had, found a new source for lending which increased their income

“Together they are Rich” is the quote of Muhamad Yunus regarding poor. And he and his Organization Grameen Bank, were awarded with Noble price for the concept of lending to poor by forming them as a group. No doubt the concept is unique and the system can ensure formal credit to so far unreached population- the rural and urban poor. But how far it is effective in reducing their poverty is a million dollar question. If the partys involved in promoting this concept act without any vested interest and soley in the interest of overall development of poor, then it will produce a miracle. What happens in practise actually? I hereby try to give a view, with my direct grassroot knowledge.

Moved by this concept, Developed countries encouraged Yunus with funding; the hidden agenda being is dumping more credit to developing countries. They also encouraged this concept to be followed in other developing countries.

In India NABARD piloted the SHG program and since then the SHG has gained momentum. Tremendous growth has been achieved in the past two decades with respect to SHGs. The question is whether the purpose has been met?

There are Many SHG organizations in India promoted by NGOs and the Government. The success has attracted considerable attention of development practitioners, funding agencies, policy makers, corporate bodies and politicians. And each of these parties has their own vested interests.

There are two ways by which micro credit is directed to the poor people- through MFIs and through SHGs. Both has gained momentum in India. While MFIs are registered as a Non Banking Financial Institutions, the federated body of the SHGs were registered under societies act or Indian Trust act. For both, women are the easy target.

MFI sources its fund from commercial banks and also uses its own fund for providing micro credit to people. The MFIs do direct lending to groups formed by them. SHGs on the other hands are linked directly with the banks by the promoting institution (NGO/Federated Body/Government)

Many stalwarts like Spandana, Share, Ujjivan, SKS,  L & T etc. are in the business of Microfinance through MFI model. Here their motive is clear. Though they take about inclusive finance, they use poor people to increase their income. The exorbitant rate of interest charged by MFIs, are a proof of it. The MFIs justify that the high rate of transactional cost and the risk involved necessitates such high interest to be charged by them. If so, then what is the difference between borrowing from local money lender or through a formal MFI?

With respect to SHGs, we can console ourselves that it inculcates savings habit among the women members. Also the bank is financing them directly and hence they get loans at a interest rate of around 12 %/annum. In some states, this was again subsidized by the government to 4 % i.e the government will return the extra interest charged by the banks to SHGs. This is a welcome sign. Ever thing seems to be green so far. But the truth is different. With respect to Tamilnadu, the concept is highly politicized. The SHGs were formed by Mahalir Thittam, which has a aim of federating them at Panchayat, Block, District and State level. In a rush to show growth the task was entrusted to NGOs- which again falls into two categories- Mathi NGOs and Non Mathi NGO. Due to internal competition,  NGOs used to lure few or most of members of one SHG formed by a different NGO. Hence a single woman may be a member or two or three SHGs. And there is no system on the part of Government to ensure it. The real problem will crop up, if these SHGs are made a part of Panchayat Level Federation. The number of SHGs, which the Government boasts that they have formed in the shortest period, will reduce drastically. The Ruling party also used the Revolving Fund subsidy concept to lure women to form SHGs. The NGOs which formed the SHGs will also talk only about the subsidy and not about the real benefits of SHG. The life span of such SHGs will definitely, l be short and this puts a question on sustainability of the SHG movement.

As I have worked in grass root, I present here how the SHGs operate in practical sense. The NGO which is entrusted to the task of promoting SHGs will approach the poor women and say that they are from such and such NGO, and if they form SHG, the NGO will mobilize revolving fund assistance from government. The loan amount is Rs60000 and the subsidy portion is Rs10000/. After forming SHG, the NGO will inform the SHG to come for the grading process facilitated by the Mahalir thittam officials. In a day (half a day actually) more than 100 SHGs will be graded by the Mahalir Thittam Officials. There will be no time for the officials to go through complete details. Also it is not necessary for them. Their role is to give revolving fund assistance to maximum groups to meet the target. There are cases were one woman exists as a member in two or more SHGs and  also in groups formed by MFIs. The total credit borrowed by such a member, will definitely beyond the repayment capacity of the member. Once the grading process is over, The RF subsidy will be forwarded to the bank and the bank will lend the SHG.

As corruption has become inevitable in India in every field, NGO will do direct negotiation with the SHG members i.e., A charge of Rs 1000 to Rs3000/ have to be given, which is divided into three shares – The NGO, the local BDO office and the Mahalir thittam. Sometimes Bank Managers too, fall in this line. As soon the loan is sanctioned, the amount Rs3000/ has to be given. But the truth is, the SHG can get the revolving fund subsidy of Rs10000/ only after it functions for three years. When it is a SGSY subsidy for a  mature group, naturally the bribe amount is higher ( Rs20000 for Rs100000 lakh subsidy)

And whenever, there is a Minister visit to a district to show gathering and also to boast of achievements, the passbook of Loan will be given to the SHG members by his hands. The greatest comedy is sometimes they may be dummy loan cards or loan cards of loans issued even before an year i.e., If 1000 SHGs are given loan in a function more than 50 % of them will be fake. The Mahlir Thittam officials and the BDOs will be pressed to bring SHG members, who in turn will force the NGOs. The to and fro charges and transport and food arrangements of course will be taken care off.


Luckily I work in a organization which concentrates in setting systems for a sustainable SHG federation. Even with vast experience in the sector, the organization finds difficult to control problems in some federations 

I furnish another incident, where the ward counselor had their share in the subsidy. This was routed through town panchayat. The counselor directly spoke with the SHG members that Rs1000 subsidy/member exists with the panchayat and he said the amount will be given to SHGs which are willing to part with 50 %. For e.g  If the SHG has 14 members, Rs14000/ subsidy was given and the SHG has to give Rs7000/ to the ward counselor. They also spoke about this to the Bank Manager. The amount got deposited in the S/B account of the SHG and in the same day it was withdrawn from the bank without any proper resolution at SHG. Worse it happened without the knowledge of promoting NGOs. If it is Rs7000/ for one group, then estimate the income a ward counselor would have got.

And assume that, there is no such problem and the credit is fully utilized by the SHGs.  Even then do they serve the purpose? Each and every organization boasts about its SHG program and its objectives using Jargons and words of a learned person. But when we look deep, all seem to work with the same purpose and objective or at least they so. Universal lie?

Empowerment of women economically, socially and politically and hence their family and locality is the broader objective of any SHG program. SHGs are seen as a vehicle to load all the developmental programs.  There are basic fundamental questions regarding this

·  To what extent the SHG members are aware of these developmental agenda/objectives?

·  Does the literacy level of poor women at large support this?

·  Even if they are aware, how many of them are broad minded for a social cause?

·  Is there appropriate system in place to ensure it?

·  The dilution of the program is happening due to the vested interest of all the partys involved. The dilution is getting increased day by day, since everybody sees with shortsightedness aiming for their short term benefits. Is there a solution for it?

·  How long a SHG will operate?

·  How long a member of SHG will be satisfied with the services of SHG or the SHG federation?

·  Is the governance and the management structure well established?

·  Do we have a clear assessment about their need?

·  Do all the promoters have baseline particulars regarding the developmental parameters, they boast to achieve in future?     

·  Only credit is focused by all the parties interested in practical sense. The developmental objective takes a back foot. How to project the developmental objectives in front?

·  What action can, the promoting agency, federation or bank can take if the credit given to a SHG becomes default?

·  Banks lend to SHGs at 12 % rate of interest or low? At what rate the money is given to the members? Is there any interest given for savings deposited by SHGs?

·  How the credit given to members is utilized? Whether it is used for productive purpose or at least to satisfy the developmental needs like toilet construction, getting a electricity connection etc? Whether there are systems to ensure it?

·  How the profit or loss of a SHG activity is monitored? Do the poor and illiterates can prepare profit and loss statement for the SHG?

·  In what perspective we have to view the credit given to SHGs? On financial parameters or through a development eye?

·  There are cases where the SHG members lost even their savings, since the credit got into the hands of wrong members. Do the promoting institutions have a system, at least to safeguard the savings of the poor who believed them?

·  Is the developmental need derived from the grass root? It is the million dollar question?

·  Ultimately Banks money is used for lending. What will happen if the program takes a U turn and the repayment rate goes down?

·  Livelihood enhancement of the rural poor is the objective of almost every SHG program. Any such program should capitalize on existing resources. Do the implementing agencies have enough experience in such interventions? Any wrong steps will, result is reducing the already earned income. So far nothing remarkable is achieved in this direction, except a few cases.

·  Above all the developmental agenda of country like India seems to be fixed by developed countries and by funding agencies like World Bank. Is our Indian economic and developmental policy is in right direction?

·  Can MFIs and SHG program co- exist? Will they not lead to dumping of credit to poor and hence reduce their standard of living?

·  Is the repayment rate of SHGs boasted by Government and the development practitioners are true?

Some NGOs who were pioneer in this SHG concept and who have promoted such SHG federations, finds it as a hectic task to make them sustainable. Actually SHG Federations are said to be democratic institutions. But the promoting agencies are exercising full control over such SHG federations. These SHG federations were used as a bait to lure funds from funding agencies. For sustainability of SHG federations, the federations have no other go except to raise funds from SHG itself by way of Service charge. Alternatively, the SHG federations can lend to SHGs like MFIs and again here there is the chance of operating cost of SHG federations to escalate.

Though the above questions are there, it cannot be denied that SHGs have helped at least 20 % women to improve their standard of living.

I will give a hypothetical example of a SHG operation in Tamilnadu. The members of the SHG (12 members) save Rs100/month continuously for 10 months. They get a first loan of Rs60000/ from bank. They lend it to members at 12 % interest. In few cased it was lend to 24 %, interest of which the SHG has to pay service charge to the federation and the remaining (after other incidental expenditures) will remain as the profit of the group. For what purpose the loan is given is being documented in the minutes of the SHG. But the purpose is not true in most of the cases. What again happens in the SHG is just lending. This is the scenario in 90 % of SHGs. Only the financial needs of the members get satisfied. They pay least importance to other needs or their mind is not committed to work for a common cause. Human mentality has become so selfish in recent years. There are incidences, where SHG members refuse to pay insurance under the subsidized group insurance scheme of LIC (Rs100/year is the premium for Rs30000 claim), since the premium will not get returned to them.  Even though they were trained to understand the concept of insurance, their heart does not allow to part with Rs100 for a common cause.

The SHG concept by itself is a wonderful one. But what to do with the concept when there are various implementation hurdles. A social revolution has to take place if this program has to become a success. Until then, the persons who are involved in this business have to satisfy themselves with the short term results and with the personal benefits they derive out of it.

While writing this blog I happened to stump upon another blog written by Mr.David Booman on Micro finance crisis in Andra Pradesh (When the Indian elephants dance). The Andra Pradesh Government has passed the Microfinance ordinance bill Yesterday, much against the wishes of the MFIs operating In A.P, as well as in India. As usual, this bill said to be passed with vested interest by the Andra Pradesh government since the Government owned program Society For Elimination of Rural Poverty (Velugu groups) sees MFIs as competition. While the statement of the Government and the Media that MFIs are functioning with profit motive only and that they charge exorbitant rate of interest cannot be ruled out, whether the Government has passed the ordinance only for the benefit or poor is a question. The war between the Velugu and MFIs has taken another dimension and that’s behind the every hiss and fuss created.

As David Booman says, the ordinance is unconstitutional in the sense that it interferes in the basic right of the people (the ordinance says that a SHG member should not borrow from other sources, say another SHG promoted by MFI, then it is a crime)

http://blogs.cgdev.org/open_book/2010/11/when-indian-elephants-fight.php

Go through this blog by David Booman for additonal information
It will be clear for the readers now that Micro-finance is not banking for poor, but it is just banking on Poor. There may success here and there. But will it make poor rich or make them poorer?

The confession of an economic hit man – a book by John Perkins, while give a insight about the hidden agenda behind international funding. With respect to Micro finance also, the same agenda seems to work.