LEAD STORY
G
andhiji's 149th birth anniversary was celebrated this
year on 2nd October. Among the many facets of his
life that will be highlighted in the coming months,
as India prepares to celebrate his 150th birth anniversary in
style, one thing stands out for me. His decades’ long, sustained
promotion of khadi, leather, and other village enterprises to
improve the livelihoods of millions of poor Indians living in
villages. A century later, this is still critical to India's progress.
Gandhiji believed in free markets as a way to transform
India. He did not expect the government to provide a "dole" to
all. He advocated that the poorest could spin on their charkhas,
and sell the yarn. This yarn would then be converted into
clothes and garments. He believed that all could, hence earn
something to supplement their meager earnings on the farm.
In this, he especially exhorted women and the youth to spin
every day. He backed this by creating Khadi bhandars to sell
handspun clothes and an All-India Spinners Association to
support spinning and charkha.
For the poorest, charkhas were not that cheap. Spinners
also needed working capital to buy cotton and slivers.
Weavers of cloth would also need money to buy yarn and
to then stock the cloth or garments before they were sold.
He would have only insisted that perhaps one women in each
group should have been from what he described as Harijans-
-or Dalits. His belief in a strong organization would have
let him accept that a group of women borrowers would be a
good fi rst step in organizing individuals to work collectively,
leading to future capabilities for bigger struggles like swaraj.
Gandhiji would have required some convincing about
the interest rates that microfi nance comes with. But I believe
he would have accepted it; not because of the lack of an
alternative such as bank fi nance, or because moneylenders
charged more (against which he often railed). But because
Gandhiji was rational and commercial in his outlook. He
understood fi nance - bills, hundis, banks accounts, insurance
- all were part of his daily job as a commercial lawyer. He
would have understood that microfi nance companies have
higher costs of funds - and he would certainly have lobbied
with banks to lower their refi nance rates to microfi nance
companies.
Gandhiji created large nationwide institutions that
employed many people - the Congress Party, AISA, etc. In
many of these, he used to argue that those who worked for
them deserved a reasonable salary and not just be volunteers.
Gandhiji would have welcomed one part of the microfi nance model that was not common during his
time - the concept of joint liability by a group of women borrowers. He would have only insisted that
perhaps one women in each group should have been from what he described as Harijans – or Dalits.
Gandhiji never answered where exactly would all this money
come from to fi nance tens of millions of charkhas, spinners,
weavers, and sellers of clothes. For there was no answer
during his time. Banks would never have lent against the
collateral of a charkha, because they never had branches
in rural India--they still don't have too many, and are still
unwilling to fi nance, such small loans. Gandhiji believed that
individual savings would pay for the cost of the charkha and
the working capital.
Here is where microfi nance comes in. If it had been
invented in 1918, rather than in 1978, it would have been
the ideal method to convenient fi nance and thus dramatically
expand the reach of the khadi movement. Lending to poor
people. Check. Lending for small investments. Check.
Lending against collateral. Check. Lending to women. Check.
Lending in rural areas. Check.
Gandhiji would have welcomed one part of the
microfi nance model that was not common during his time -
the concept of joint liability by a group of women borrowers.
This logic of "feet on street" would have convinced him that
microfi nance operating costs had to be reimbursed; and that
can only come through borrowers' interest, since there is
no other income. Of course Gandhiji would have asked for
donations to subsidize some of these costs.
Once convinced that the availability of convenient and
aff ordable microfi nance was an essential ingredient to faster
use of charkhas and the entire handloom business, Gandhiji
would surely have brushed aside objections. Rather he
would have found ways to integrate fi nance, production,
and sales in more and more villages to benefi t many more
poor Indians and thus advance his objective of economic
independence for all.
*Harsh Shrivastava is the CEO, Microfi nance Institutions
Network (MFIN). He has also been nominated by the
Government of India to be an Independent Director on the
Board of MUDRA (Micro Units Development & Refi nance
Agency Limited).
Extraordinary and Plenipotentiary Diplomatist • Vol 6 • Issue 10 • Oct-Nov 2018, Noida • 37