(Your columnist was invited to deliver the Inaugural Address at the National Workshop on Enabling Provisions of Co-operative Acts in context of Financial Inclusion and Microfinance (Solutions Exchange -UNDP India ) at Bhopal on 26/27 . Extracts from the text are being published in this edition of AgriMatters. The remaining portion will be published next week.)
I am delighted to be here today for this seminar and I am honoured that the organizers have requested me to inaugurate the seminar and deliver the keynote address. Co-operatives, the co-operative form of social institutions, and organized efforts of people to engage themselves in mutual and self help have always been themes that are very close to my heart, and I have always felt that not enough attention has been given by civil society, media, academia and government to the structure and design of these organizations.
Therefore this initiative by the Micro Finance Community Solutions Exchange of the UNDP is a welcome first step. Till very recently, organizations like the UN were not expected to get into the nitty gritty of ‘solutions’, and were best known for diplomatic finesse and long winded statements which meant nothing. This workshop however has a precise statement of the problem at hand. They want us to look at co-operative Acts in the country , and see how the SHG movement and the various initiatives in micro finance can be mainstreamed in the co-op agenda.
Indeed there are many such positive examples which hold stand out as beacons of hope – but the issue is why are they not getting replicated at the scale at which many of us would want. Whether or not the recent amendments to the co-op acts were the ‘spur’ to the growth of micro finance and SHG movement can only be determined by a comprehensive study and discussion with the stakeholders, I can place on record that as a member of the study team organized by CECI, the team members led by the Shashi Rajagopalan felt that while laws are important, they only remove the shackles which prevent people from exercising their fundamental rights : they cannot bring about the transformation of livelihoods or economies which is the condition precedent for any process of general empowerment.
Friends, there are certain interesting conventions to which every seminar and workshop must adhere. One of these is that there has to be an Inauguration and a Keynote address to set the ball rolling before the technical sessions can focus on the specific themes. It also allows the organizers to have the photo-opportunity sessions with the media and facilitate the draft of the statutory press release. However, on a more serious note, it also helps to place issues in perspective, besides thanking the organizers for getting an eclectic group of people to discuss one particular theme or a set of related issues over a specific time frame. Of the two tasks, the latter is easier, clearer and direct. The Microfinance Community Solutions Exchange of UNDP have brought all of here and given us a clear mandate to discuss. The organizers also expect us to come out with definitive set of ‘workable solutions’ , or if that is not an appropriate word, ‘leads’. Let me say that I would exhort the participants to make an honest effort in this direction, and not get carried away in their own micro areas of concern and specialization. conferences in India do tend to get too discursive and meandering, which may not be bad if it were an academic conference , and we had all the time in the world to arrive at a consensus.
This reminds me of my experience at two conferences in the peoples Republic of China. Although many of finer points must have been lost in translation- it was clear that the organizing committee had all the solutions – the Resource Persons were expected to find the ‘questions’ to the solutions which they had!
However, here we have a set of ‘questions’, but the possibility of solutions is virtually infinite. It is therefore important to place issues in perspective. When we talk of Financial Inclusion and Microfinance , we are talking about the un-banked sectors of India’s economy : the one hundred and thirty million marginal and small holders of land, and an equal number of landless workers. The NREGA and the Rural Development Ministry have taken the lead in getting hundreds of thousands new bank accounts opened over the last year, and NABARD and the Agriculture Ministry have been trying to universalize the Kisan Credit Card for over a decade now. The success of these efforts would go a long way in achieving the twin objectives of Financial Inclusion and Microfinance – because the two are closely intertwined – those who will be brought under the ambit of Financial Inclusion need relatively small, but more frequent loan portfolios which can well be covered under Microfinance. The formal banking structure- commercial and co-op sector included- cannot undertake this task. Nor can the work of successful Community based organizations be replicated on a nation wide scale. It is precisely for this reason that there is need to see if the Self Help group movement can be integrated with the network of Primary Agricultural Societies, which have to widest possible reach in the country, and deliver about half the agricultural credit in many states in the country.
This however calls for a restructuring of the way in which thrift and savings are organized at the primary level, and also the way small borrowers meet their financing requirements – both for consumption and production purposes. Over the next two days, this is a theme that can be discussed at length, and there are examples from Uttarakhand, Karnataka and West Bengal which illustrate how this can be accomplished. However if there was a conducive legal regime to facilitate these linkages, the positive examples would probably be many times higher. It is in this context that the conference will discuss the changes in co-op legislation that are required for an India that is fast transforming itself from a ‘control’ economy to one in which entrepreneurial ability commands a premium.