Kochi, Feb 2: Union Finance Minister P Chidambaram today stressed the need to combine high growth rate with financial inclusion to make the Indian economy truly strong and powerful. Inaugurating the 'Janasree Micro Credit Summit-2008' here, he said that for the first time in the country's history, the economy has been averaging an 8.8 per cent growth rate for the past three years.
''However, economic growth is not an end in itself. It is necessary but not sufficient. The benefit of the growth has to encompass a larger number of people and reach those at the bottom of the pyramid,'' he added. Describing the banking system as the heartbeat of the economy, the Minister pointed out that the 50,000-odd bank branches in the country did not cover nearly 50 per cent of the country's 110 crore population, especially those living in the 700,000 villages.
Mr Chidambaram said the UPA Government intended to widen the net of financial inclusion through microfinance and microcredit by involving self help groups and NGOs. The RBI has permitted self help groups, NGOs, post offices and other civil organisations to act as intermediaries in financial services, he said.
A 'Micro Finance Sector Development and Regulation Bill' was pending in Parliament to regulate 'not-for-profit organisations'. Once the Bill was passed, the microfinance and credit system will gain greater legitimacy and move forward, he added.
With the involvement of self-help groups and NGOs, the reach of the banking system will be multiplied, Mr Chidambaram said. As of now, there were three million self-help groups in the country, to which banks had given Rs 80,000 crore in credit since the beginning of the microcredit system in the country in the early 1990s.
Almost 90 per cent of the members of these groups were women and the average repayment rate was 95 per cent, he observed.
Mr Chidambaram noted that the 'Janasree Mission', started in Kerala an year ago, had registered 30,000 'sangams' (groups) and was targeting to take the number to 50,000, covering one million people, by the end of this financial year.
Describing it as one of the largest microfinance organisations in the country, he said the banks will be advised to credit-link all the 30,000 organisations at the earliest.
Earlier, Leader of the Opposition in the Kerala Assembly Oommen Chandy dismissed as ''baseless and wrong'' allegations that the 'Janasree Mission' had been started as a rival to the 'Kudumbasree' project of the State Government.
While the highly successful 'Kudumbasree' project covered only women below the poverty line, the 'Janasree Mission' covered both the sexes and included those above the poverty line also, he said.