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In the past, MYRADA has focused
on improving the efficiency of credit Delivery systems, trying
to make them more responsive to the needs of the poor. Our efforts
were directed towards trying to persuade and pressurise banks and
cooperative societies to advance credit
to the poorer sections of the rural population, and to do so in
time. To facilitate this
transfer we often made deposits in these banks and cooperative
societies, which worked as incentives or as risk and collateral
coverage. As far as cooperative societies were
concerned, our efforts also included increasing the membership to
cover more numbers of
poor families and motivating the Management to increase the
representation of the
poorer people on their Boards. Training was given to Society staff;
in addition, often
infrastructure like godowns and offices were also provided. The
constant contact that
MYRADA staff maintained with these financial institutions helped to
move resources, though
the issue of timely credit with regard to agriculture continued to
be a problem and often
MYRADA advanced loans that were later reimbursed. Similarly, MYRADA
also assisted the staff
of these institutions in making recoveries, often providing vehicles
and accompanying the bank
and cooperatives' staff to the villages to make recoveries in kind. Thus `extension' for credit and
related services was encouraged to penetrate further into the
rural areas.
However, in many cases the solutions were not permanent and in
some cases they did not address
the problem at all. The issue of timely agricultural credit
continued to pose a problem;
MYRADA could not hope to cover all needy farmers with direct
advances and further,
what would happen when we pulled out of the area? Secondly, banks
advanced credit to the
poorer farmers for programmes that they determined were
viable irrespective of
whether the borrower felt that way or not. The calculation of
viability frequently
failed to take into account the preferences, resources and skills of
the family taking the
loan. Some schemes were predetermined and could not be modified or
changed to meet the real
needs of the borrower. Small, short duration loans for business
activities were not
forthcoming. On the whole, others made decisions for the people even
when they received the
money. The patronage system continued. Thirdly, it was absolutely
out of the question to
approach the bank for small loans to meet urgent consumption loans
like a sickness in the
family. These and other such problems (bureaucratic procedures being
the last but not the
least of them), continued to distance the poorer people from the
formal credit
institutions and accounted for the continued relevance and
popularity of the moneylender
in every village.
If commercial banks were governed by policies that were
formulated at the national level over
which individual bank branches operating in remote villages had no
control, the cooperative
society was certainly envisaged to be a different kind of an
institution. It was a
concept born out of optimism and faith in human nature. It was
conceived of as the most representative
form of people's organisation. It was an institution owned and
governed by its members.
It was highly localised. Its by-laws could be framed to permit a
wide range of activities
to be taken up to meet the specific needs of its members. With
Government support it was
possible for the Society to control and administer fairly sizeable
resources with which to
meet the needs of members. It could engage in business activities
and earn profits that
were exempted from taxation. It could distribute these profits among
members as an incentive to
cooperate more and benefit further. Its management could be changed
by members whenever it posed a threat to efficiency; its by-laws
could be changed by
members whenever they felt their needs had changed. Conceptually,
the cooperative society
could not be faulted. Yet, almost all the societies that we came in contact with in our project
areas were either defunct, or on the verge of becoming defunct,
or kept alive with artificial props.
The money lenders were exploitative because they were motivated
by personal gain; the banks
had limitations on account of structure and policy. But what
accounted for the failure
of the cooperative society?
From our long and close association with cooperative societies we
were able to isolate some factors
which we felt had contributed to the present situation.
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Cooperative Societies were made up of
socio-economically heterogeneous
groups of people. Big
farmers and landless labourers could both be members of the same society. Not surprisingly, the
socio-economic relationships that existed between members
in their day-to-day lives were carried over into society meetings
also. The needs of a
casual labourer are different from the needs of a big farmer. But under conditions of
inequality, the poor often have to give in to the powerful. The economic barrier and the caste
barrier were too strong for all the people to function
together as a composite unit. The society was not "socially
viable"; it was not
homogeneous.
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Cooperative Societies had a
membership that was too large for effective communication.
Meetings were attended only by a fraction of the members; discussions
were limited to a further fraction of those who attended. Most
people were not even
aware of what it meant to be a member of a cooperative.
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On account of the large size
decision making was delegated to a small group of members; they represented
the other members. This group became even
more powerful and often
took decisions favourable only to itself, ignoring the needs of the vast majority. Further,
representation of poorer farmers on the Board did not automatically
ensure that they participated effectively at meetings to see that benefits actually reached the
poor.
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Some of the
rules of the
Government also worked against the poor. Fresh lending,for
example, was only possible if 40% of the loans of the society as a
whole came back. Rich
farmers with large loans defaulted because to them it did not
matter whether they got
another loan next year or not. Poor farmers, with good repayment
records, dependent on the society for loans each year, suffered
because of curbs on
lending on account of the high rate of non- recoverable loans of
the big farmers.
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The Cooperative Movement,
though conceived of as a means to support the rural people,
was a movement that did not emerge from the people. It was
a movement that was
State sponsored and State supervised and hence, the majority of
the people could not
relate with it. It created an impression that it was an extension of the Government and the
people did not feel any sense of responsibility towards it.
Further, the societies were bound by rules so rigid that it killed
all flexibility and
voluntarism.
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Last but not the least,
cooperatives were controlled and exploited by politicians who used them as stepping
stones to power.
These, we felt were major
contributory causes to the breakdown of cooperative societies.
Mention must also be made
here of the Village Development Associations(VDAs) organised by MYRADA from around 1982
onwards in the different villages of our projects, through which
developmental programmes were channelled. Apart from others
functions VDAs also took
the responsibility for monitoring inputs and recoveries on credit
issued by the financial
institutions through MYRADA's initiatives. They consisted of members
from all strata of the
village society. The VDAs were effective for delivering and
monitoring a package of
programmes chalked out by MYRADA, the banks and the cooperatives,
but they did not provide
a system and a culture to allow the people to meet as equals,
encourage local
initiatives, manage credit and build up a common fund and a
programme in which they all
had a stake. Over a
period of time it was seen that these VDAs too were not an effective
instrument of development
mainly because of the heterogenous membership and the delegation of decision making to a small
committee usually drawn from the upper caste and class. MYRADA's
presence, while preventing the rich from receiving any benefits, did
not stop them from taking
the credit for providing resources to the poor. The patronage relationship between the rich
and the poor was thus strengthened. Further, there was no opportunity
for the weaker members to build up their skills and resources and
gain controlover their own lives.
IN SEARCH OF ALTERNATIVES
: CREDIT MANAGEMENT GROUPS
While making an earnest search for alternatives we noticed that
there were a few small groups
of women organised by one of our women staff who had been encouraged
to make weekly savings of
whatever small amounts of money they could put aside. Of their own accord they had made some rules
to discourage withdrawals until their accounts had reached
a certain size. However, sometimes there were occasions when one of
the group members needed
money urgently and needed a slightly bigger amount than what she had
managed to save. Since there was
money available in the group the other group members saw
no harm in making advances out of the fund after they had checked
out the genuineness of
the need and agreed upon a rate of interest, mode of repayment and
time frame for repayment.
Why should a fellow member approach a moneylender when her own group had the means to support
her? In the bargain, not only would her need be met without
her being caught up in the cycle of indebtedness, her group too
could expand its resource
base with the interest earned.
We felt we were on the verge of an answer. When the large
Cooperative Society on our Project
at Kadiri broke up of its own accord into 14 small groups our
ProjectOfficer tried his
best to bring them together again but realised the futility of it
when they explained to him
that they distrusted the leadership and that in any case, their
needs and interests were
too varied for them to be adequately considered and met through the
Cooperative. They
preferred to meet as small independent groups with members sharing
common concerns and a
feeling that they could trust and work with one another. There was
merit in this argument.
That year, when the agricultural season came, instead of approaching
the Cooperative for crop loans
the groups approached the MYRADA Project Office for working
capital support. They had had many meetings to calculate what their requirements were, how they
would use the money, and when and how they would repay it before
they approached MYRADA with their request. The staff were initially
uncertain but finally
decided to take the risk and advance them the money because the
agricultural season was
upon them, the moneylender was the only other option, and because
they felt that the group
deserved this chance. What they then noticed was that not only was
the money managed more
carefully there was also a far greater responsibility and commitment
from the group as a whole
towards repaying this amount, something that had never unduly bothered the people when they
were dealing with the Cooperative. Significantly, on this occasion
there was little pressure on the staff to help with decisions and
chase people for recoveries.
In studying these groups
MYRADA isolated some features common to all of them that could
explain why they were more efficient and responsible.
The new groups were
small,
homogeneous with regard to concerns, needs, and interests, fully participative
(i.e. since decisions would affect all of them, they all
participated in decision
making, instead of delegating it to a committee), voluntary
and non-political. In some
places the members belonged to different castes, in others they were
all from the same
caste; some included both men and women, others just the one or the
other; in somecases all members practiced the same occupation, in
others they differed but were of the same
economic status. But they all had the features mentioned above.
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