Jobless growth will not help Rural India: Expert

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Bangalore, Jun 3: 'Jobless growth' the Indian economy presently experiencing, in the wake of ushering in of global economy in the country, is mere waste when it comes to empowering the rural community, Initiative for Development Foundation (IDF) President N K Thingalaya said today.

Speaking at a workshop on 'Role and Responsibilities of NGOs as Business Facilitators and Business Correspondents' organised by IDF, he said the banking sector should work towards 'voiceless growth' to help financial inclusion of rural masses and very little had been achieved so far.

The rural mass in India was voiceless and banking sector should do much better in giving voice to these people. Unless this section of the poopulation achieve financial growth, the success story of economic growth would be very short lived, he said.

The areas like jobless growth, ruthless, future less growth Bootless and voiceless growth will not help the village community.

"What is the use if the GDP grow at nine per cent and the farmer remain ignored. Even today money lender rules the rural economy, he said.

Dr Thingalaya, the former Syndicate Bank CMD, said according to 1991 census the private money lender lent 17 per cent of loans in the villages and this during the last year had gone up to 29.6 per cent. According to a survey, more than 51.4 per cent of farmer households were financially excluded from both formal and informal financial sources. Among the non cultivator households nearly 80 per cent did not have access to credit and were living on marginal conditions.

RBI Regional Director Devaki Muthukrishnan said in spite of the impressive branch network, the banking system in India had not been able to reach a vast segment of population, mainly in the rural areas, and provide them with basic banking services. This had led to the RBI emphasise on the importance of financial inclusion.

One of the major factors affecting the outreach of banking sector was the cost of expanding the branch network and increasing number of people manning a branch. With the focus on cost reduction and improving profit, banks tend to shy away rural areas, she said.

Even if bank branches were existing in rural areas, distance from branch, branch timings, cumbersome documentation and procedures, unsuitable products, staff attitude were common reasons for financial exclusion, the RBI official said.

A RBI research on rural banking had revealed that over 58 per cent of the rural households did not have a bank account and only 21 per cent had access to credit from a formal source, she said.

"Over 70 per cent of marginal farmers have no deposit account and 87 per cent have no formal credit facility. Reports have shown that dependence on low-income households on informal sources like local money lenders, chit funds was as high as 78 per cent. The interest rates were generally higher up to ten per cent per month," she said.

The business Correspondent and Business Facilitator Model proposed by the RBI if implemented properly could work wonders in rural economy and accelerate the process of financial inclusion in rural India.

RBI had allowed the banks to use intermediaries such as NGOs, SHGs, Micro Finance Institutions, Civil Society Organisations and even private entities like corporate entities in providing banking and financial services in rural areas, she added.


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