The Hindu Business Line : Lacunae in Micro Finance Bill, says Jairam Ramesh

New Delhi May 5 The Minister of State for Commerce, Mr Jairam Ramesh, has expressed some apprehensions on the Micro Finance Bill pending before a standing committee that seeks to put restrictions on the small lending institutions. "I have expressed my reservation on the Bill, which has been referred to the Standing Committee on Finance, on the ground it may not be a balanced law," Mr Ramesh said here on Saturday in his interaction with self-help groups (SHGs) under the aegis of Society for Promotion of Wastelands Development.

He said there were lacunae in the Bill and it did not give role to markets, which could regulate the sector. The Bill, which was introduced by the Finance Minister, Mr P. Chidambaram, seeks to control small micro-credit institutions through the National Bank for Agriculture and Rural Development (Nabard) requiring them to meet stringent accounting standards.

Referring to the SHGs , Mr Ramesh said they symbolise empowerment of people at the grassroots level through meaningful economic engagement., Such groups had gone beyond credit in certain States such as Andhra Pradesh and assumed critical responsibilities in non-traditional realms too, the Minister said. Delivering a special lecture on the "SHG Revolution: What Next?" to mark the silver jubilee function of the Society for the Promotion of Wastelands Development (SPWD), the Minister said: "No wonder the management guru, Mr C.K. Prahalad, has become an ardent advocate, after his exposure when he saw in these SGHs, economic entities that exemplify his BOP — the Bottom of the Pyramid-paradigm".

Listing out new areas to which SHGs have branched out, he said, they have taken up marketing of commodities such as maize, neem, soyabean, coffee, lac and red gram. Last year, the value of procurement was in the region of Rs 130 crore in Andhra Pradesh alone.

Stating that the big challenge was to go beyond traditional marketing and get into value addition in meaningful way, and foster linkages with exporters and processors directly, Mr Ramesh said that as a Minister of State of Commerce, he was particularly interested in export of spices. He said that today about 25 per cent of $600 million of spice exports was accounted for by chillies that are grown predominantly in Andhra Pradesh.

He said chillies without pesticide residue command a premium in world markets. That is why, he said, one of the recent initiatives of his Ministry was to link export promotion councils (EPCs) with SHGs so that the benefits of export expansion could accrue directly to the poor where they have skills.

He said a beginning was made in leather in Tamil Nadu and in shellac in Andhra Pradesh.

The Minister said the EPCs were working with SHGs to provide design and marketing assistance, while the SHGs are responsible for production.

Other functions

Mr Ramesh said SHGs were being used to distribute old-age pensions — in 2006-07 over Rs 700 crore was distributed to around three million beneficiaries through the SHGs in Andhra Pradesh. Timely disbursement of pensions and disbursements without a "consideration" remain the hallmark of the SHG involvement, he added.

Third, the elements of a community-based food security system were being put in place, he said, adding that it consists almost entirely of a rice credit but the goal appears to be paddy purchase and milling by the SHG network at the village and mandal level itself.

Fourth, dairy interventions have begun with livestock being purchased through SHG-bank linkages with the SHG network setting up bulk milk coolers and milk procurement centres. Mr Ramesh said his own involvement was to try and ensure that links were established between the network of SHGs and the traditional National Dairy Development Board procurement network.

Mr Ramesh noted that there had been the SHG upsurge in the country with over 30 million women now being linked to banks through over 22 lakh SHGs. He said for inclusive growth, the mainstay of the 11th Plan, India needs not just globalisation as traditionally understood but actually glocalisation, which ensures that economic growth was more broad-based, equitable and sustainable than it has been the case so far.

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