BANGALORE: Who is more efficient? A small vendor who pays an interest on loans ranging from 120 to 180 per cent a month to a money lender, or a big businessman who pays a mere 4 to 7 per cent interest to financial institutions?
P. Muralidhar Rao, Founder and Patron of the New Delhi-based Swadeshi Jagaran Foundation, raised this question at a seminar on “Promotion of Micro-enterprise Development in Karnataka — Issues and Challenges,” organised by the Centre for Bharatiya Marketing Development,” here on Wednesday.
Mr. Rao said that vendors and rural artisans paid a heavy interest to moneylenders, unlike big businessmen and industrialists. Also, they faced several other problems.
Small vendors in New Delhi and Bangalore would get a credit of Rs. 90 in the morning and return it with an interest of Rs. 10 to moneylenders in the evening. They were dubbed as “inefficient” and “non-modern.” The interest they paid worked out to 333 per cent a month and 4,000 per cent a year. But the main players had paid only an annual interest of 4 to 7 per cent, he said.
Mr. Rao said such people should get loans from banks, particularly when the open market economy had wealthy players running retail market chains.
“This discriminating service system should end,” he said, adding that small vendors were not able to face the giants in the market. The Government and non-governmental organisations (NGOs) should help them, he said.
Institutions should identify as stakeholders caste- , community- or occupation-based organisations. For example, financial assistance could be given to those recommended by the carpenters’ association. Marketing intervention where the thrust was on building brands would also help, he said.
D.B. Gore, Chief General Manager, NABARD, Bangalore, said the bank was assisting bidri workers in Bidar district and another cluster near Mysore. Over one lakh self-help groups were functioning in the State for more than three years. As many as 60,000 of them had got second loans from banks indicating that they were trustworthy, he said.
Financial institutions and NGOs should look for new micro- enterprises and help them.
For instance, vanilla growers in Uttara Kannada, who were hit by price fluctuation, had found a novel way of marketing the produce by selling packs of four or five vanilla pods to households, he said.
L.V. Saptharishi, former Director-General (Anti-Dumping), Department of Commerce, Government of India and co-chairman of New-Delhi based Confederation of NGOs of Rural India criticised the change in the concept of special economic zones which were originally meant only for export-oriented units.
Laws had expanded the scope even for real estate development, he said.