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Micro-finance for Development of Rural Assam

Assam was one of the most industrialized states in India in 1947 - 5th to be precise. Since independence Assam has slipped in economic growth compared to most other Indian states. In 1993-1994 Assam was ranked 13th in terms of per capita income and in 1999-2000 Assam slipped to 14th rank. In terms of yearly growth rate, Assam at present is the slowest economy amongst other Indian states at 0.78%.

New Delhi's neglect, Bangladeshi infiltration and growing insurgency in the region are amongst the major reasons the people of Assam attribute the dismal economic performance of the state since Independence. Though these may the reasons for the sluggish growth, Assam can no longer afford to play the blame game and wait for a miracle to bring a dramatic change to our economy. If there is no dramatic change in sight then what is the future of Assam? Who is going to bring a change in Assam's economic woes?

Every now and then contribution of Non-Resident Assamese (NRA) towards the growth of Assam is raised. Does the Assamese Diaspora have many entrepreneurs who are willing to come to Assam and invest under present political and infrastructure scenario? No is perhaps not a surprising answer for many. The negative answer is not because NRAs are not concerned about Assam. It is because the Assamese Diaspora does not have many, if any, business entrepreneurs. It is mainly made up of hard working technocrats. So how can this Diaspora help Assam? NRAs cannot turn Assam's fortune overnight as the Non-Resident Indians did to help India get over its forex problems in the early 1990s. However, the Assamese Diaspora can definitely contribute in a small way in making projects that can help rural Assam improve its living standard. One such project is micro finance of village entrepreneurs. Assam is predominantly an agrarian society, and any improvement in the income levels of our rural community can go a long way in slowly and steadily improving the economic situation of Assam. The model followed by Grameen bank in Bangladesh can be used with some modification to suit the Assamese condition.

The micro finance model followed by Grameen bank encourages voluntary formation of small groups of five people to provide mutual, morally binding group guarantees in lieu of the collateral required by conventional banks. At first only two members of a group are allowed to apply for a loan. Depending on their performance in repayment the next two borrowers can then apply and, subsequently, the fifth member as well. The credit is used to finance a project identified by the borrower and could be any project like weaving, bamboo work, poultry, goat fattening, mat making, etc. Intensive scrutiny of the projects, peer pressure, and easy repayment conditions insure viability of the micro finance. The bank apart from providing credit help the creditors to find market, provided them with valuable technical guidance to insure success of the scheme. The Grameen Bank micro finance project has contributed more than 1% of Bangladesh's GDP since 1994 and has resulted in substantial improvement in living standards of individuals who have availed of the service. A similar scheme if applied to Assam will definitely help our rural community a great deal.

In what way can NRAs contribute in such a micro finance project? This can be achieved by adoption of a small village by an NRA association, who will provide micro finance to villagers (specially women) based on the Grameen Bank model. This would require assistance of incorruptible figureheads, presently staying in Assam, who have experience in the banking sector as well as people who have good experience in rural development. It would also require employment of youths who will act as rural workers for such a project. The project will need to start with financial help of the parent NRA association that is adopting the village, but has to be planned in such a way that in the long term the project could sustain itself. The contribution needed to start such a project should be around US$25000 to US$35000 over a three years period.

A few NRA associations have shown interest in such a project. Proper transparency of the implementation of the scheme and regular reporting will definitely increase the faith in such a scheme. NRAs have an opportunity as well as duty to be part of such a project. They should grab the opportunity and show their love of their motherland - the beautiful Assam.

- by Afreen Rahman, New Zealand.