The government is considering the launch of micro-credit programme which would provide easy loans to rural households, helping them out of poverty. The government is taking this new step towards reducing the poverty in the rural areas. According to the Socio-Economic and Caste Census, 8.5 Crore poor households are been taken into the view for this plan to be worked within 2019. This time, the main influence is about providing credit to the households. In this scheme, in the next 3 to 5 years, each family is given a loan of up to one lakh rupees as well as concessional interest rate.
“We have simplified the process for accessing loans… We are getting into the details of livelihood each house can undertake so that the money can be lent accordingly,” rural development secretary Amarjeet Sinha said.
By 2019, an amount of Rs 60,000 crore per year would be linked to nearly 8.5 crore households that were identified poor in the Socio Economic and Caste Census. By doing this, the government wishes to lessen their reliance on local moneylenders and microfinance companies, since these lenders charge high-interest rates as compared to the rate of 11% charged by banks.
A memorandum of understanding has been signed between the rural development ministry and the agriculture and animal husbandry ministry, which would ease the loan process to such households for activities including killing and setting up of poultry farms and goat sheds.
“We want to create diversified livelihood opportunities by providing loans which will help households utilise their resources and skills,” Sinha added.
The government has got its criteria properly planned. Its emphasis is:
- Reduce Rural Dependence On Local Lenders And Other Finance Companies: The government wants the local households to get their burden decreased by subvention (lending to households by the government). The government wants the banks to double their lending to Rs 60,000 crore per year for the betterment of household creation for the rural people. The main criteria behind this are to reduce the influence of local money lenders and microfinance companies over the rural households because these firms charge high-interest rates which later becomes a burden for the borrowers.
- Lending Activities To The Household: A memorandum of understanding between Rural Development Ministry and Agriculture & Animal Husbandry Ministry, in which working activities are to lend to the households including poultry farms or goat shedding.
- Providing Interest Subvention: The Rural Development Ministry is planning to provide 3% interest subsidy on 7% interest on loans which will make the borrowers pay effective interest rate at 4%.
- Other Collaborations for Expansion: The government has collaborated with National Dairy Development Board for better market linkage for dairy activities. The government is getting itself linked with different lending models in the states for credit reach, like SHG (self-help group) Tamil Nadu’s Panchayat Level Federation and Telangana’s Stree Nidhi Cooperative which are helpful lending groups. The rural credit by such help groups has raised 40% in 2015-16 to Rs 30,000 crore. The total credit lend by these firms from 2011 is about Rs 70,000 crore in order to support the villages to lift them up for nonfarm jobs.
This new scheme will reduce the burden of interest on the borrower and their quality of life will increases