By Devinder Sharma
25 Nov 2009
Micro-finance is a highly profitable business. No wonder Micro-finance institutions are competing with each other to extract their pound of flesh while 'helping the poor women'.
Poverty has literally become a big and organised business. If you are educated, and looking for a profitable business enterprise, and more so if you are a non-resident Indian and want to translocate to India and still make millions, micro-finance offers you the right avenue.
There can be no better business opportunity than starting a micro-finance institution with assured returns and 100 per cent loan recovery. You can even think of trading on the stock exchange after a couple of years. And still more importantly, you can hold your head high and claim that you are helping the poor to come out of the poverty trap. You don't have to feel ashamed and morally guilty. The elite in the society have knowingly (or unknowingly) given you a license to loot.
The unprecedented growth in micro-finance tells us that modern-day Shylocks are everywhere, looking at every possible opportunity to make profits from poverty. Rich countries become rich at the cost of the poor countries. Rich people in any society (of course there are exceptions) also follow the same path. Micro-finance is a classic example.
I am sure if Shakespeare were alive today, he would have easily penned down a sequel to his great classic Merchant of Venice.
We agree that micro-finance institutions are the game changers. They have shifted the game from the hands of the villains of the story, the sahukars or moneylenders, to a sophisticatedly organised class of neo-moneylenders. These are not the usual banias but a highly educated class of people who use all sophisticated skills to rob the poor. And they have done it remarkably well.
It is all in the name of empowering the poor. I have often asked academicians how you justify the exorbitant rate of interest the micro-finance institutions extract from the poorest of the poor. The answer I get is that at least it empowers the poor. At 24 per cent rate of interest if the micro-finance can empower the poorest of the poor I wonder why do we have to keep the rate of interest for the urbanites, whether it is for housing, for car, or for any other business activity, as low as 6 to 8 per cent.
If the poor can be empowered with a 24 per cent rate of interest, how come the resourceful people in the cities/towns need a much lower interest rate to get empowered? If the poor in the villages can make a business enterprise even after paying a 20-24 per cent rate of interest, why do people in the cities find it difficult to do so? Or is it that we need a different yardstick (and in this case it happens to be the interest rate on your borrowing) to empower the poor and the not-so-poor? In other words, since the poor have no voice, some of us (and that includes banks) have joined hands to exploit the poor in the name of development.
I think these are difficult questions that we in the cities simply try to ignore or brush aside for the simple reason that we are in a way or so the real beneficiary of this criminal exploitation.
Isn't it shocking that a poorest of the poor woman in a village, who may be only surviving on the NREGA promise of 100 days assured employment (not getting more than Rs 60 a day), has to pay a 24 per cent rate of interest if she borrows money to buy a goat, and the rich in the cities can get interest-free loans or loans with a minimal rate of interest for buying a BMW car?
I am sure if that poorest of the poor woman were to get a loan for buying a goat at a minimal rate of interest (say 4 per cent or even 7 per cent that we give to farmers) she would also be driving a car, at least a Tata Nano, at the end of the year. Also, I don't understand the logic of providing micro-finance to the poorest of the poor women with a high rate of interest of 20 to 24 per cent (on an average) whereas her husband (if he happens to be a farmer) gets crop loan at 7 per cent.
If the farmers cannot survive (and there are 600 million farmers in India, including their families) with a higher rate of interest, I wonder how do we expect his wife (who is part of the self-help groups) to pay out at the rate of 24 per cent?
Nevertheless, the micro-finance business has grown manifold. India Microfinance Report 2009 tells us that the portfolio of the micro-finance institutions has grown by 97 per cent, and number of beneficiaries has also gone up by 60 per cent. More than 150 million are already borrowing from Micro-finance institutions. What the report however does not tell us, but is quite apparent, is that this organised group of money-lenders is now beginning to take over the unorganised villains of the game -- the sahukars or the traditional money lenders.
Another news report tells us that SKS Micro-finance is charging approximately 24 per cent rate of interest in Orissa, Karnataka and Andhra Pradesh; in southern India, Equitas Micro-finance is seeking 21-28 per cent interest rate and Basix Microfinance is providing small loans at 18-24 per cent interest rate. There are numerous other players, and they all rake in money. Sewa in Gujarat and the Grameen Bank in Bangladesh too thrive on a similarly high rate of interest.
It is time we put all of them under a scanner. The society cannot turn a blind eye to this organised loot of poor and helpless.
We often hear success stories of women who borrowed and the transformation it has brought to their lives. I don't deny this. But perhaps what we don't want to know is that even when the private money lenders (the class we hate) were lending at 24 to 36 per cent or more, there were also success stories. The business of money lending wouldn't have succeeded all these decades and centuries if it was not helping those who borrowed.
People went on borrowing from the money lenders or sahukars because they needed the money (even if it came with a very high interest rate), and it must have and still is making a difference to them otherwise the entire business of moneylending would have collapsed and become unsustainable. All that micro-finance institutions are doing now is to replace that class of moneylenders. Micro-finance institutions are also extracting their pound of flesh. The sahukars were using their own capital for lending and therefore charging a very high interest of 36 per cent or above. The micro-finance institutions use the bank finances (or donors money) and therefore charge a little less at 20-24 per cent.
The sahukars or money lenders were lending individually and therefore charged a higher rate of interest to cover up the risk. The micro-finance institutions go in for group lending, and that too to women, the most vulnerable section of the society, and therefore have their risk covered, and still charge 24 per rate of interest. In the process the banks (no wonder, they find it the most lucrative business) and the micro-finance institutions literally make a killing from robbing the poorest of the poor.
If the sahukars are guilty of a crime, so are the micro-finance institutions.
Showing posts with label urban poverty. Show all posts
Showing posts with label urban poverty. Show all posts
Tuesday, January 12, 2010
Not so green legacy
By Sudhirendar Sharma
06 Oct 2009
While Dr Norman Borlaug is revered for his contribution in bringing Green Revolution to India, one can't ignore the deterioration of the plant ecology and destruction to the environment due to excess chemical inputs used to increase yield.
Age could never deter either his passion or determination. Till he lost to cancer on September 12, at the age of 95, Nobel Laureate Norman Borlaug was relentlessly fighting his arch enemy, the rust fungus, which had engaged him since he had first landed in Mexico in 1944 to breed shorter, straighter, stronger wheat that were to liberate the world from hunger over the next decades. His brilliance of pulling India out of 'ship-to-mouth' existence is history.
The rust fungus that had helped him achieve 'more than anyone else in the 20th century' did not allow him to rest, reappearing as dreadful Ug99 in 2000, a strain of black stem rust that threatens to wipe out much of the worldwide wheat crops as it spreads from its base in eastern Africa. Since farmers everywhere have grown rust-resistant wheat, the fungus has evolved to take advantage of its genetic uniformity, and almost no wheat crops anywhere are resistant to it.
Borlaug could foresee the threat posed by the new stem rust, making a global food crisis imminent should the governments fail to implement any rescue mission. His greatest worry was that not only was the pace of research lagging behind the speed with which the winds were blowing away the fungus, having already recorded its presence in Iran, but that the dreadful rust could erase the footprints of his green triumph in India.
The stem rust, one of the three rusts that afflict wheat plant, has been longer in existence than the bread wheat - that is only about 10,000 years old. Borlaug's painstaking work on breeding rust-resistant wheat was erroneously construed as putting the dreadful fungus to "sleep". Ug99 is the result of fungus-at-work, evolving into a potent variant that can devastate the wheat plant with deadly reddish blisters within two weeks. The genetic uniformity of wheat, engineered by Borlaug's pioneering work, has been handy for the new rust to do the damage it is capable of.
Resolute and uncompromising in the pursuit of his conviction, Borlaug's agricultural philosophy was rooted in fighting hunger at any cost and with any technology. Such was his faith in the technology that he developed and promoted, that agricultural scientists refused to see the flip side, which was becoming evident through the deterioration of the plant ecology and destruction to the environment. Oblivious to such concerns, Borlaug honed in on increasing yields.
In their recently published book Enough - largely a Borlaug hagiography - Roger Thurow and Scott Kilman argue that his tireless effort to boost grain yields did result in a flood of cheap grain but not without the problems that won't be easily solved. In India, site of his greatest putative triumph, the legacy is even more mixed. In less than 40 years after Borlaug's Nobel work, the water table in the country's green revolution arena has gone down drastically due to irrigation projects, farmers are in severe economic crisis, and cancer rates, seemingly related to agrichemical use, are tragically high.
Borlaug's obsession with chemical fertilizer and pesticides was obvious, his celebrated 'dwarf' varieties would not grow without plenty of water and lots of synthetic nitrogen, and facing serious pest pressure, would require heavy pesticide doses. No wonder, he considered Rachel Carson an evil spirit and reacted to her monumental work The Silent Spring as 'coming from one who did not want to eradicate hunger'. The delayed entry of green revolution into Africa was partly Borlaug's own doing.
All solutions engender more problems but it's scary to imagine what the world would have been without what Borlaug's science started. For him, the complexities of poverty and hunger could be reduced to a single problem: not enough food. From there, the answer was simple: grow as much as possible, using whatever technology available. However, riding on the phenomenal success of his efforts, Borlaug did ignore the cumulative impact of generating high yields to his own peril. For him, the complexities of poverty and hunger could be reduced to a single problem: not enough food. From there, the answer was simple: grow as much as possible, using whatever technology available.
Thurow and Kilman convincingly argue that Borlaug's main intent was to 'help poor farmers,' that smallholders remained in a state of severe crisis for more than a generation slipped his attention. No wonder, rural migration, urban poverty and malnutrition remain stubbornly persistent - both in India as well as in Mexico. The so-called 'immigrant crisis' in the United States is better viewed as an unresolved agrarian crisis in Mexico.
In the later part of his distinguished career, Borlaug faced severe criticism. While famines may have become history, hunger persists in its diverse manifestations. Critics contend that the vast majority of increases in grain yields didn't feed hungry people - it went to feed livestock to make meat in the rich world. Without doubt, self-sufficiency in food grains has been achieved at the cost of being perilously dependent on inputs (seeds, fertilizers and pesticides) from transnational corporations. Borlaug's blindness to political dynamics - his refusal to consider the power relations at work in the countries whose hungry he set out to save - undermined his legacy.
The point isn't that Norman Borlaug is a villain and that crop yields don't matter; rather, it is that boosting yield alone can't solve hunger problems in any but the most fleeting way. Farmers' economic well-being; biodiversity; ecology; local knowledge, buy-in, and food traditions --all these things matter too.
06 Oct 2009
While Dr Norman Borlaug is revered for his contribution in bringing Green Revolution to India, one can't ignore the deterioration of the plant ecology and destruction to the environment due to excess chemical inputs used to increase yield.
Age could never deter either his passion or determination. Till he lost to cancer on September 12, at the age of 95, Nobel Laureate Norman Borlaug was relentlessly fighting his arch enemy, the rust fungus, which had engaged him since he had first landed in Mexico in 1944 to breed shorter, straighter, stronger wheat that were to liberate the world from hunger over the next decades. His brilliance of pulling India out of 'ship-to-mouth' existence is history.
The rust fungus that had helped him achieve 'more than anyone else in the 20th century' did not allow him to rest, reappearing as dreadful Ug99 in 2000, a strain of black stem rust that threatens to wipe out much of the worldwide wheat crops as it spreads from its base in eastern Africa. Since farmers everywhere have grown rust-resistant wheat, the fungus has evolved to take advantage of its genetic uniformity, and almost no wheat crops anywhere are resistant to it.
Borlaug could foresee the threat posed by the new stem rust, making a global food crisis imminent should the governments fail to implement any rescue mission. His greatest worry was that not only was the pace of research lagging behind the speed with which the winds were blowing away the fungus, having already recorded its presence in Iran, but that the dreadful rust could erase the footprints of his green triumph in India.
The stem rust, one of the three rusts that afflict wheat plant, has been longer in existence than the bread wheat - that is only about 10,000 years old. Borlaug's painstaking work on breeding rust-resistant wheat was erroneously construed as putting the dreadful fungus to "sleep". Ug99 is the result of fungus-at-work, evolving into a potent variant that can devastate the wheat plant with deadly reddish blisters within two weeks. The genetic uniformity of wheat, engineered by Borlaug's pioneering work, has been handy for the new rust to do the damage it is capable of.
Resolute and uncompromising in the pursuit of his conviction, Borlaug's agricultural philosophy was rooted in fighting hunger at any cost and with any technology. Such was his faith in the technology that he developed and promoted, that agricultural scientists refused to see the flip side, which was becoming evident through the deterioration of the plant ecology and destruction to the environment. Oblivious to such concerns, Borlaug honed in on increasing yields.
In their recently published book Enough - largely a Borlaug hagiography - Roger Thurow and Scott Kilman argue that his tireless effort to boost grain yields did result in a flood of cheap grain but not without the problems that won't be easily solved. In India, site of his greatest putative triumph, the legacy is even more mixed. In less than 40 years after Borlaug's Nobel work, the water table in the country's green revolution arena has gone down drastically due to irrigation projects, farmers are in severe economic crisis, and cancer rates, seemingly related to agrichemical use, are tragically high.
Borlaug's obsession with chemical fertilizer and pesticides was obvious, his celebrated 'dwarf' varieties would not grow without plenty of water and lots of synthetic nitrogen, and facing serious pest pressure, would require heavy pesticide doses. No wonder, he considered Rachel Carson an evil spirit and reacted to her monumental work The Silent Spring as 'coming from one who did not want to eradicate hunger'. The delayed entry of green revolution into Africa was partly Borlaug's own doing.
All solutions engender more problems but it's scary to imagine what the world would have been without what Borlaug's science started. For him, the complexities of poverty and hunger could be reduced to a single problem: not enough food. From there, the answer was simple: grow as much as possible, using whatever technology available. However, riding on the phenomenal success of his efforts, Borlaug did ignore the cumulative impact of generating high yields to his own peril. For him, the complexities of poverty and hunger could be reduced to a single problem: not enough food. From there, the answer was simple: grow as much as possible, using whatever technology available.
Thurow and Kilman convincingly argue that Borlaug's main intent was to 'help poor farmers,' that smallholders remained in a state of severe crisis for more than a generation slipped his attention. No wonder, rural migration, urban poverty and malnutrition remain stubbornly persistent - both in India as well as in Mexico. The so-called 'immigrant crisis' in the United States is better viewed as an unresolved agrarian crisis in Mexico.
In the later part of his distinguished career, Borlaug faced severe criticism. While famines may have become history, hunger persists in its diverse manifestations. Critics contend that the vast majority of increases in grain yields didn't feed hungry people - it went to feed livestock to make meat in the rich world. Without doubt, self-sufficiency in food grains has been achieved at the cost of being perilously dependent on inputs (seeds, fertilizers and pesticides) from transnational corporations. Borlaug's blindness to political dynamics - his refusal to consider the power relations at work in the countries whose hungry he set out to save - undermined his legacy.
The point isn't that Norman Borlaug is a villain and that crop yields don't matter; rather, it is that boosting yield alone can't solve hunger problems in any but the most fleeting way. Farmers' economic well-being; biodiversity; ecology; local knowledge, buy-in, and food traditions --all these things matter too.
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