SUFFiciENcy EcONOMy ANd GRASSROOtS DEvElOPMENt

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282 The Meaning of Sufficiency Economy International Conference purchasing power sufficient to procure a collection of basic items of consumption deemed to constitute ‘basic’ or ‘minimum’ collection, but also elementary education for all children up to 14 years of age; minimum public health facilities integrated with family planning and nutrition for children; protected water supply; amenities for landless labour and slum improvement in larger towns; and rural roads and rural electrification. The idea of direct, targeted poverty alleviation programmes quickly took root and gained widespread acceptance across the entire political spectrum. Governments, at the centre and in the states, have since viewed with each other in increasing allocations and devising new schemes (or the same schemes under different names) under this rubric. Along with the number and variety of schemes, financial allocations have also increased progressively. Motivations were of course not as high minded as the slogans made out. In this juncture, the evolution of microfinance plays a significant role. Microfinance, which includes micro savings, is gradually emerging as one of the most effective strategies to alleviate poverty. It can effectively generate employment and sustain the income of the households by giving them opportunities of work. Although micro credit institutions are effective weapons in the war against rural poverty they alone cannot neutralise non physical symptoms of poverty which deprive the poor of a full social existence. Since 1970s, developing countries, including India, have increasingly focused on micro credit to facilitate the access of poor households to financial services like credit, savings, insurance etc. As the rural population in India, forming about twothird of her total population is still dependent on agriculture, there is a crying need for timely and adequate availability of funds for agricultural and rural finance is a must for improving the lot and income of the poor. Some Facts Related to Demand-Supply of Micro-Finance There is a vast unmet gap in the provisions of financial services to the poor. A very little segment of the poor people is being served by the formal financial system for micro-credit. Majority of the poor population depends on informal financial system for their credit needs. Let us look at some facts. According to the World Development Report (2000), 1.8 billion people live in extreme poverty, subsisting on less than US $ 1 a day and almost half of the world population (2.8 billion) live on less than US $ 2 a day. South Asia is the home to half of the world’s poor families. In African countries, women account for more than 60 per cent of the agriculture labour force and contribute up to the 80 per cent of the total food production, yet receive less than 10 per cent of the credit provided to small farmers.
The Meaning of Sufficiency Economy International Conference 283 In India, various estimates put the requirements of micro credit at Rs. 150 billion to Rs. 500 billion per year. As against these estimates, bank advances to weaker section aggregated about Rs. 100 billion per year and SHGs are estimated to provide about 1 billion per year. About 36 per cent of the rural households are outside the fold of institutional credit. The post-nationalization period in the banking sector, circa 1969, witnessed a substantial amount of resources being earmarked towards meeting the credit needs of the poor. There were several objectives for the bank nationalization strategy including expanding the outreach of financial services to neglected sectors (Singh, 2005). As a result of this strategy, the banking network underwent an expansion phase without comparable in the world. Credit came to be recognized as a remedy for many of the ills of the poverty. There spawned several pro-poor financial services, support by both the State and Central governments, which included credit packages and programs customized to the perceived needs of the poor. While the objectives were laudable and substantial progress was achieved, credit flow to the poor, and especially to poor women, remained low. This led to initiatives that were institution driven that attempted to converge the existing strengths of rural banking infrastructure and leverage this to better serve the poor. The pioneering efforts at this were made by National Bank for Agriculture and Rural Development (NABARD), which was given the tasks of framing appropriate policy for rural credit, provision of technical assistance backed liquidity support to banks, supervision of rural credit institutions and other development initiatives. In the early 1980s, the GOI launched the Integrated Rural Development Program (IRDP), a large poverty alleviation credit program, which provided government subsidized credit through banks to the poor. It was aimed that the poor would be able to use the inexpensive credit to finance themselves over the poverty line. Also during this time, NABARD conducted a series of research studies independently and in association with MYRADA, a leading non-governmental organization (NGO) from Southern India, which showed that despite having a wide network of rural bank branches servicing the rural poor, a very large number of the poorest of the poor continued to remain outside the fold of the formal banking system. These studies also showed that the existing banking policies, systems and procedures, and deposit and loan products were perhaps not well suited to meet the most immediate needs of the poor. It also appeared that what the poor really needed was better access to these services and products, rather than cheap subsidized credit. Against this background, a need was felt for alternative policies, systems and procedures, savings and loan products, other complementary services, and new delivery mechanisms, which would fulfill the requirements of the poorest, especially of the women members of such households. The emphasis therefore was on improving the access of the poor to microfinance rather than just micro-credit. To answer the need for microfinance from the poor, the past 25 years has seen a variety of microfinance programs promoted by the government and NGOs. Some of these programs have failed and the learning experience from them have been used
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SUFFiciENcy EcONOMy ANd GRASSROOtS DEvElOPMENt

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