Discontent in UPA over micro finance bill

NEW DELHI: Minister of State for Commerce Jairam Ramesh has shot off another letter to a Parliamentary panel expressing his opposition to Micro Finance Bill, which he said would stunt the growth of the small lending institutions.

"I have written to the Standing Committee on Finance to which the Bill has been referred to, opposing it on the ground that it would not be a balanced law," Ramesh said in his interaction with Self Help Groups (SHGs) under the aegis of Society for Promotion of Wastelands Development.

Ramesh, who has been airing his dissent on various policies of the UPA government, said there were too many lacunae in the Bill and it did not give role to the market mechanism, which itself could regulate the sector.

According to estimates, there are over 800 Micro Finance Institutions operating in India in various forms - trusts, societies, cooperatives and Non Banking Finance Companies.

The Bill, which was introduced by Finance Minister P Chidambaram, seeks to control small micro-credit institutions through the National Bank for Agriculture and Rural Development (Nabard) requiring them to meet stringent accounting standards.

Recently the MoS Commerce had written to Prime Minister Manmohan Singh expressing his displeasure over the Commerce Ministry's proposal, approved by his senior colleague Kamal Nath, to reduce the customs duty on agriculture products under FTA with ASEAN.

Ramesh also criticised attempts in the Congress party to take away freedom given to the self help groups and cooperative societies under the Mutually Aided Cooperatives Societies Act (MACS), which was introduced in Andhra Pradesh by Telugu Desam founder and former Chief Minister N T Ramarao.

He expressed satisfaction that such attempts have been foiled by the Andhra Pradesh High Court. Over 29,000 village organisations affiliated to different federations are registered under the Act.

"The MACS is a great institution for it eliminates both political and bureaucratic control over cooperatives," he said. Ramesh also commended former Andhra opposition leader N Chandrababu Naidu for his contribution to the self help groups.

"I have to acknowledge tremendous contributions that Naidu later (after NTR) made to the growth of SHG movement in the state," he added.

Earlier in his address, he said though self help groups were doing a good job but they cannot take over the role to be played by the governments.