Rural credit and self help groups

Why have I inflicted one more book about rural credit on an unsuspecting audience? An explanation is needed! Having worked as an officer in vari ous banks for over 22 years, I have come to respect our rural people who comprise the heartland of India. It is they who have constantly defied all odds to feed us all, assimilating new technologies and systems over the years.

From time immemorial, it is the urban dweller who has had access to the seats of power and utilised the wealth of rural India to build cities and towns and monuments. This deprivation continues even today with the powerful and the mighty continuing to rule in favour of the urban elite, ignoring the real problems of India's poverty. Today, rural credit is good for ritual speeches, some peripheral reports and studied neglect. The sad truth is that rural India is being served by an unhealthy credit delivery system and that institutional credit meets only about 12 per cent of the annual credit requirements of the farm sector. The rural non-farm sector also suffers from neglect and lip-service.

As if by rote or ritual, every few months, speeches can be heard stating that the rural credit delivery system needs to be revamped. But as there is no one who wishes to commit political suicide, very little is done. Over 35 per cent of the people below the poverty line (constitute about 50 per cent of the population) are untouched by the various credit schemes and government programmes! India can never attain its rightful place in the world's economy, unless we ensure that the genuine credit requirements of the rural economy are met. But with a poor resource base and lack of political will in diverting crucial financial resources for creation of an adequate economic infrastructure, rural India continues to suffer from of ficial apathy and perennial lack of funds. We tend to ignore the fact that the largest private sector investment is in the agricultural sector!

To break the grinding cycle of rural poverty, we need to ensure that a chance is given to micro-entrepreneurs and potential micro-entrepreneurs; or else, in a market-driven economy, the rural poor will not have any chance to secure their rightful place. This book seeks to examine the state of the rural credit system and study the micro-finance needs of the rural poor. It offers the solution of Self-help Groups (SHGs) to enable the rural poor to aim for economic empowerment and a right to live with dignity! These SHGS offer the easiest and most economical method of enabling the rural poor to contribute their mite to the rural economy. The rural poor do not deserve to be marginalised forever. Hence this book!