In the run up to the elections there were a couple of newspaper articles mentioning that the Election Commission in Andhra Pradesh had frozen SHG bank accounts to prevent political parties from infusing money. Political parties are known to distribute liquour, cash and durable goods like television and radio sets to garner votes and derive electoral dividends. This election saw them keeping step with the rural population. SHGs are a significant vote bank and political parties can reap several votes by influencing them.
Bank accounts, biometric readers and smart cards have been hailed as the means to prevent middlemen from appropriating wages (from NREGS and other schemes, SHG loans, etc). This was perhaps the first time that bank accounts were used to channelise illicit flow of funds. So while we have been preoccupied with preventing leakages and ensuring benefits reach the end-beneficiary, have we given enough consideration to inflows?
2 comments:
Very interesting post. A fellow microfinance researcher recently pointed out to me that there are distressing signs that SHGs may be following the same downward path towards political abuse and corruption that Primary Agricultural Cooperative Societies (PACS) have already trod. When it was first set up the cooperative banking system in India was relatively free from corruption. Later, attracted by the cooperative system's strong rural network, the central and state governments began using PACs for delivery of government benefits (e.g. -- by encouraging PACs run fair price shops). Not long after, PACs became virtually synonymous with graft. Similarly, government officials in some states are now using SHGs to deliver benefits such as payments from NREGA or the National Old Age Pension. To date it seems like SHGs have managed to remain quite a bit cleaner than PACs but power does corrupt. In this context, stories like this seem all the more worrying.
I find it fascinating that politicians can transfer funds so quickly into SHG accounts. The main complaint I heard from SHG participants, although I only met with a few SHG groups in Andhra Pradesh, was that banks took too long to provide new loans after repayment (often more than one year).
Interesting that politicians can transfer amounts upward of Rs. 50,000 (~USD $1000) within days while state banks sometimes do not process loans for months.
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