Similar too is the recent interest expressed by the Tatas and others to create housing for the poor in Mumbai.
Micro Credit appears to be pro-poor in form but in content it is actually anti-poor to the core. The adverse clauses of the loan agreement are carefully kept hidden in a ‘sugar-coated’ loan package. The ‘ever-trusted’ media censors certain pertinent information in fear of full disclosure of the evils of Micro Credit. The penniless poor listens to no reason but gracefully accepts the loan offer to avail the ‘cash inflow’ and solve the present crisis temporarily. The taste of its bitterness becomes palpable only when the installments fall due.
Micro-credit borrowers come from different walks of life. They are street hawkers, artisans, rickshaw or cart-pullers, weavers, blacksmiths, fishermen or women tailors, cobblers, milk-men or maid and others. Working from dawn to dusk they produce and earn as much as possible in order to meet the loan obligation. The repayment schedule casts a shadow upon the household activities of the borrowers. The spouse, the old parents and even the children of the borrower join hands to extend support to the borrower to speed up production. The siblings do all the domestic chores. They stop going to school. They forget their childhood. The pressure of duty forces them to grow older than their age. The borrowers do not engage paid labourers from outside the family. The surplus thus created by utilising their own labour power is appropriated by the micro-credit operator in the name of interest included in the instalment dues. The big firms appoint managers to keep a watch on the work of the labourers and introduce incentive plans to raise their efficiency level but no such measures are to be adopted by the micro-credit-supported ventures. Here the labour power of the borrowers and dependents of their families are voluntarily engaged without any hired surveillance. Provisions of the Factory Act relating to safety and the health of the workers, restrictions of employment of women and children, payment of minimum wages, bonus, overtime wage, holidays are alien to them. The surplus created by exploiting the labour power of the borrowers and their family dependents by the worst primitive means is apportioned by the micro-credit operators in the name of interest included in the instalment.
This is what Jerry Rao, exponent of financing ‘nano’ houses in Mumbai has to state about the super high returns from financing loans to the poor:
But, if we get it right and build and sell the project in 12-18 months, then the return on equity will be in the 30-40% range. It is actually quite an attractive place to be in.