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It was sad to learn ( Business Line , April 6) that even surrounding States of AP such as Karnataka and Tamil Nadu are experiencing the heat of AP Government's actions in respect of microfinance.
The size of the portfolio of major MFIs in Karnataka has gone down by 50 per cent. The impending elections in Tamil Nadu appear to have cast a along shadow on MFIs.
Credit discipline is the first casualty of such populist measures. Once such discipline is shattered, it takes several months or years to restore the same.
The RBI would do well to step in and direct the banks to reopen their credit windows to MFIs for increasing disbursements in States other than AP. The effects of pursuing retrograde policies are reflected in the development indices. A recent survey by McKinsey reported that during 2005-10 the major States recorded the following increase in GDP: Gujarat 11.3 per cent; Haryana 11 per cent; Bihar-9.6 per cent; AP-7.4 per cent and Tamil Nadu 7.4 per cent. Bihar has overtaken AP in GDP growth. The growth rate in the Southern States was less at 7.85 per cent as compared to the national growth rate of 8.7 per cent. All the Southern States appear to be following retrograde policies which will put them back by at least ten years. The people should realise these developments and teach the rulers a lesson.
B.Vithal Rao
Hyderabad
Poverty line
This refers to “Drawing the poverty line” ( Business Line , April 7). The government should use the UID to help in the proper identification of those below the poverty line (BPL) so that the schemes launched will benefit the desired people. All the cash transfer schemes should be made through bank transactions so that the involvement of middlemen is avoided and funds will reach those they are meant for.
The RBI should mandate opening of more rural branches and should seriously undertake activity to educate the local people on the functioning of banks.
The functioning of public schemes should be updated to media regularly and displayed on Web sites so that accountability prevails.
Vedula Krishna
Visakhapatnam
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