[Assam] Local production vs Micro-credit

Fri Oct 6 15:26:19 PDT 2006

Sudhakar-da,

  Thank you for your comments and good work. One has to believe in what one has chosen to do and do it. Thats what your organization is doing. Well begun is half done.

  Best Wishes.

  Umesh

MurthySudhakar <musu-infrasys at sbcglobal.net> wrote:

    v\:* {behavior:url(#default#VML);}  o\:* {behavior:url(#default#VML);}  w\:* {behavior:url(#default#VML);}  .shape {behavior:url(#default#VML);}        st1\:*{behavior:url(#default#ieooui) }                Dear Umesh:

  Thank you for the visit to the site and what you have cleverly picked up
yes I have tried my best to distance myself from MFIs.

  My (and Sudhirendars Sharmas) basic critique of MFIs (in general) is they do not promise betterment of primary production. In all infraSys projects we attempt to enhance primary production or activity with some indirect linkages to such production or local life and economy. 

  Sudhirendar Sharma writes: Far from helping people generate wealth, easy credit is being used to encourage primary producers at the farm to become secondary distributors for consumer products.

  This is probably the most significant point he makes. Just like the easy access of credit cards to students and even the poor in the US (with exorbitant interest rates and annual fees and the minimum payment required) micro credits for the rural poor ignores Primary production and its related linkages. It is only through primary production by the poor can asset/ wealth building occur. But this requires a Policy Level Change and that means the government (a reminder- this is us) The Hindustan Lever's Shakti Amma scheme to distribute their products in the rural areas or Amway's MLM do little for asset building.

  Nanbudan

      Sudhakar-da
  infraSys
  a company investing in rural India...for a change.
  www.infrasys.biz

  -----Original Message-----
From: umesh sharma [mailto:jaipurschool at yahoo.com] 
Sent: Sunday, October 01, 2006 9:31 AM
To: MurthySudhakar
Subject: Re: thank you 06-1001

    Sudhakar-da,

    It seems you are doing good work -in a different way (as for profit) but seem against the idea of micro-finance (as per your website)  .

    Best Wishes.

    Thanks and Regards.

    Umesh 

MurthySudhakar <musu-infrasys at sbcglobal.net> wrote:

      Dear Mr. Umesh Sharma:

    Thank you for your mail, your kind words and the links to Ms. Sinha. I was aware of the bank and her when the bank was first formed. Good to know they are doing well. Time permitting please visit the website linked below and perhaps a project can and will evolve from all this in Assam, a state I am quite fond of. Please stay in touch and I hope we will meet.

    anbudan

        sudhakar

    infraSys

    a company investing in rural India...for a change.

    www.infrasys.biz

    -----Original Message-----
From: umesh sharma [mailto:jaipurschool at yahoo.com] 
Sent: Saturday, September 30, 2006 11:32 AM
To: Chan Mahanta; assam at assamnet.org
Cc: MurthySudhakar
Subject: Re: [Assam] Death by Micro Credit-2 - 06-0930

        C-da,

      Excellent analysis by your friend Sudhakar-da !!

      I may add that I have myself taken loans of interest rate up to 24% whose total amount is atleast four times my entire assets (mainly from my grandfather's property). I am taking a risk -like the farmers --it is a calculated risk. So far my business plan is working -- I have a loan of about $45,000 (Rs 22 Lacs) -and right now I am inside the Vancouver Intl Airport having cleared the US Immigration and likely to start work earning $25,000 per annum salary (Before Tax). 

      That was my plan -although very humble compared to six firgure (in USD) salaries many in India aspeire for when they try to come to US .

      I made an investment -and it seems my risk might be worth it (risk including ill health, refusal of work visa or no employment at all).

      However, most farmers -or loan takers --take loans for consumer purposes -like buying a car -just top go to parties occasionaly (in India) -which is a dead end investment -for most.

      Regards  and Thanks to all for your help in making my plan work.

    Umesh Sharma

    PS: At Harvard I did meet a Micro-credit whiz from India  (Chetna Sinha ) in Nagpur who was invited to Yale and Harvard to show how she was self -lessly making micro-credit work with her non profit
5121 Lackawanna ST
College Park, MD 20740 USA

Current temp. address: 5649 Yalta Place , Vancouver, Canada

1-202-215-4328 [Cell Phone]
Canada # (607) 221-9433

Ed.M. - International Education Policy
Harvard Graduate School of Education,
Harvard University,
Class of 2005

weblog: http://jaipurschool.bihu.in/

      ----- Original Message ----
From: Chan Mahanta <cmahanta at charter.net>
To: assam at assamnet.org
Cc: MurthySudhakar <musu-infrasys at sbcglobal.net>
Sent: Saturday, 30 September, 2006 9:01:41 AM
Subject: Re: [Assam] Death by Micro Credit-2 - 06-0930

      The following is a response from my friend Murthy Sudhakar, (who does not usually address me as c-da:-)), whom I blind copied in on some of these discussions, because he has spent a number of  years studying these issues in rural South India, and has been attempting to make a difference with his InfraSys enterprise, with some small but fine successes.

      Highlighting mine.

      cm

      Dear C-da:

Thanks for including me in this discourse. Let me offer you some of my thoughts©share them as you see fit. I had read Sudhirender article earlier and he seems to have highlighted many problems with this industry in India (and perhaps in other poorer countries). In making my points let use cut and paste.

The Moderator wrote: It questions the rationale of Microcredit which lays a debt trap through micro-enterprise development as a substitute for meaningful economic development and fundamental changes in the economic policies. It does appear to take one's attention away from finding real answers to the very real problem of poverty.

      The moderator is right ©except©.It is unclear to me what % of the money lent actually goes to micro enterprise and what goes to consumer goods, medical treatment and other squeezes of life of the poor. I do believe the cover/pretext is micro enterprise and this is always what is highlighted. A debt trap it certainly is!

Sudhirendar Sharma writes: Further, there are no businesses that can generate profit after paying an interest of 24-36 per cent on capital investment.

      This is indeed true even for urban industries. Only the desperate will borrow at this rate for an enterprise. Please recognize that most loans from MFIs are a flat interest rate and not on the unpaid balance.

Sudhirendar Sharma writes: As poor take control of their destiny through soft loans, it becomes convenient for the government and the commercial banks to absolve themselves of their primary responsibility towards the poor.
C-da writes; If private profiteers and NGOs are doing the Govt's job, would you not want to know what the govt. is there for to begin with

      This is significant: As we know the philanthropy industry/racket is a huge industry. In the name of charity this industry thrives. Behind ALL charity is some guilt© an embarrassment that something is deeply wrong; that some amongst us suffer (structurally) and some of us who do not, are partly responsible for the state of affairs. This collective guilt makes us be "charitable" with our check books.. .and this is the fodder for the charity industry. Every rupee/dollar spent on charity reduces the coffers of the government (tax deduction) and also tends to absolve the government (which is us) of its(our) constitutional, ethical, moral or economic "responsibility towards the poor."

Sudhirendar Sharma writes: MFI pay little attention to the core concerns of the poor. For them the critical concern is to sustain services against emerging odds.

      He is right again.. when you loan to the large #s that the MFIs do, the primary concern will become the process and not the intent. The process is the disbursement and the collection of money. This supersedes the more important purpose of such loans the intent: improving lives/ micro enterprise etc.

Sudhirendar Sharma writes: Far from helping people generate wealth, easy credit is being used to encourage primary producers at the farm to become secondary distributors for consumer products.

      This is probably the most significant point he makes. Just like the easy access of credit cards to students and even the poor in the US (with exorbitant interest rates and annual fees and the minimum payment required) micro credits for the rural poor ignores Primary production and its related linkages. It is only through primary production by the poor can asset/ wealth building occur. But this requires a Policy Level Change and that mean the government ( a reminder- this is us) The Hindustan Lever's Shakti Amma scheme to distribute their products in the rural areas or Amway's MLMs do little for asset building. If I am allowed to plug - this is where infraSys <http://www.infrasys.biz/>www.infrasys.biz differs from Micro Credit/ Finance.

      Umesh Sharma writes: It shows that to make micro-credit effective the illiterate or naive farmers must become astute and worldly wise. Who will help them?

      It is my humble opinion, based on interaction with them that the farmers while they maybe illiterate they are not as naive as we have been led to believe.  They are more aware and conscious of the structural problems of the nation's policies and deficiencies that most of the urban middle class. They see through the preferential treatment that major industries get (eminent domain of land for industries, subsidies for corporations etc).

Umesh Sharma writes: then the same logic can work for stopping road travel and sea travel etc --becos people do die in traffic and travel accidents.

      The comparison (to the ills of micro credit) that would make the point would be the following: not stopping road and travel entirely©but the removal of stop signs speed limits , signals and all safety measures and regulations for the safety of travel.

Enough©  for now

anbudan

      sudhakar

      infraSys

      a company investing in rural India...for a change.

      www.infrasys.biz

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Umesh Sharma
5121 Lackawanna ST
College Park, MD 20740 USA

Current temp. address: 5649 Yalta Place , Vancouver, Canada

1-202-215-4328 [Cell Phone]
Canada # (607) 221-9433

Ed.M. - International Education Policy
Harvard Graduate School of Education,
Harvard University,
Class of 2005

weblog: http://jaipurschool.bihu.in/

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Umesh Sharma
5121 Lackawanna ST
College Park, 
(Washington D.C. Metro Region)
MD 20740 

1-202-215-4328 [Cell Phone]

Ed.M. - International Education Policy
Harvard Graduate School of Education,
Harvard University,
Class of 2005

weblog: http://jaipurschool.bihu.in/
website: www.gse.harvard.edu

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