A photo-essay on rural Microfinance and Microenterprise in Rajasthan
It is getting to the end of the monsoons here in Alwar, which means the temperature of the air is just right, the sky a bright shimmering pale blue with giant cumulus clouds floating about. There is a slight smell of wood-smoke in the air, a smell that will probably stick with me and remind me of my time here. Alwar distict is not distinctly Rajasthan. Its proximity to
I am sitting under a khejri tree (Prosopis Cineraria), revered for its shade and fodder in this region. Perched on its branches, in the early afternoon one might see a common hoopie, or rather hear it. Behind me the 23 women of Akbarpur Self Help Group meet for their fortnightly meeting. The women inside of the mud walled room are filled with a new found sense of empowerment: through their small self help co-operative they have successfully found a voice and a hand to change the society they live in and with that they have earned a reason to be proud.
[Every fortnight the members of the self help group, money is collected from each member (usually 10 Rs from each member) which is adds to the corpus. Once the corpus is large enough NABARD gives out loans to members on the upto ten times the strength of the corpus. Loans are paid back at 8 percent rate of interest.]
The women of the village are part of novel scheme - the women in the picture have formed a self help microcredit group so that they can have a greater say in the welfare of their community. They meet every fortnight and collect money from each of their members on which they give out small loans - for a new buffallo or a water-pump, etc. In the 2 years the thirty or so women of this tiny village on the Alwar - Jaipur highway has a corpus of over 200,000 rupees (4500 USD)
[The group of women from the Mevat District in neighboring Haryana have driven all the way to Akbarpur to learn how to form a self help group of their own from the women at Akbarpura. For the next hour or so they had a long discussion on the mechanics of microfinancing, on how money should be saved, how loans should be dispensed, how to deal with defaulters etc. I felt I might has well have been in an office conference room in Bombay listening to suit clad MBAs rather than in village in rural rajastan in the company of very smart women in their colourful salwars.]
Microcredit—lending small sums to poor people to set up or expand small businesses—is an effective way to alleviate poverty. The poor cannot usually borrow from commercial banks, because they lack collateral. Loan sharks lend without security, but often at interest rates of 10-20% a day. Small time retailers who borrow from money lenders to buy a day’s stock often have to hand over most of their profits. Failure to repay can result in broken legs.
[Since women are the sole-stakeholders in many microcredit schemes it also sometimes leads to their economic independence and hence social empowerment - which is doubly important in places like Alwar which has an otherwise dismal record at sex equality.]
[Source : The Economist]
Microlenders try to satisfy the poor people’s need for credit less brutally. Since the 1970s, organizations, such as the Grameen Bank in
Bangladeshand Accion International in Latin America, have encouraged poor borrowers to form groups to cross-guarantee each other’s loans. In the Grameen model, one of a group of rural women takes out a microscopic loan, often as little as $25, to start a business. Only when she repays it can the next woman in the group borrow. Peer pressure makes sure that default rates are minimal.
[Microcredit works better than handouts for two reasons. First, it fosters enterprise rather than dependency. Second, a well-run microcredit scheme can be self-sustaining. Repayment rates of over 98% are common.]
If micro-insurance can be made to work, the Internet will ensure that the idea is swiftly copied which makes you think that globalisation is not just for the rich.If you have 25$s and paypall account you too could become a global financier through KIVA, an internet service that allows you to finance unique small businesses in the developing world.