Press Esc to close

AP Indiramma housing scheme exposing poor to unscrupulous MFIs

Last updated: 01 November, 2010
Warangal/Hyderabad, Nov 1, (PTI): 13:06 IST

The dream of owning a house turned into a curse for 30-year-old K Ramesh, a daily wage earner of Venkatadripet village in Warangal district of Andhra Pradesh when he succumbed to coercive measures of Micro Finance Institutions, which are facing severe backlash.

He borrowed Rs 10,000 from an MFI and could only complete the foundation work of the house. But as pressure mounted from the lender for repayment of the loan, a harassed Ramesh hung himself to death last week.

"Clearing the weekly instalments had become too much to bear for Ramesh because of the exorbitant interest rate of over 48 per cent," his relatives said. Although Ramesh had obtained loan in the name of purchasing a buffalo, he instead used the money for taking up the construction of his dream house. Now he has left a debt burden of over Rs 10,000 on his 25-year-old wife, excluding the interest component, ending up as one of the sad sagas of the ongoing MFI atrocities in AP leading to spate of suicides.

Apart from Ramesh, there are many such people across the state who are still suffering the effects of a micro loan. The much-hyped and ambitious Indiramma Housing Scheme under which the state government promised a permanent roof over every poor family's head is indeed coming to the haunt the hapless "beneficiaries" as it has literally pushed them into a debt trap.

"The vulnerability created by government policies and schemes like Indiramma housing have helped the unscrupulous MFIs to openly exploit the hapless poor, particularly in rural areas," CPM politburo member and MP Brinda Karat pointed out.

"One of the reasons people borrowed money from MFIs was to complete the houses they were allotted under the Indiramma scheme. It has in fact become a double blow as on one hand they had to repay the loan obtained from a bank and on the other the MFIs on the same house," project director of a District Rural Development Agency, which is now the nodal agency for the registration of MFIs.

While the unit cost of a Indiramma house has been fixed at Rs 55,000, the state government provided Rs 25,000 as subsidy and Rs 30,000 was arranged through banks as a loan.

"The unit cost fixed by the government was never sufficient to complete the house because of the escalating prices of materials as well as labour. Hence, the beneficiaries were forced to borrow more money from other sources, including the MFIs," the official noted.

Many cases of debt-ridden beneficiaries of Indiramma housing scheme are seeing the light now after the authorities started probing into the MFIs activities and also the sufferings of the borrowers.

"We have reports from districts like Nalgonda, Visakhapatnam, Kurnool, Guntur, Chittoor, Khammam, Anantapur, Vizianagaram and Srikakulam where most of the Indiramma beneficiaries are caught in the MFI debt trap. We are assessing the cases and trying to help these people out by providing alternative credit at cheaper interest rate," a top official of the Rural Development Department said.

Go to Top

Most trending stories
Photo Gallery
Girls taking selfie in front of Gateway of India replica, it is made by Institute of Baking...

Girls taking selfie in front of Gateway of India replica, it is made by Institute of Baking...

Commissioning of Scorpene Class Submarine INS Kalvari at the Naval Dockyard in Mumbai...

Commissioning of Scorpene Class Submarine INS Kalvari at the Naval Dockyard in Mumbai...

Prime Minister Narendra Modi shows his finger marked with indelible ink, as he leaves...

Prime Minister Narendra Modi shows his finger marked with indelible ink, as he leaves...

Congress president-elect Rahul Gandhi meets with the families of fishermen affected by Cyclone...

Congress president-elect Rahul Gandhi meets with the families of fishermen affected by Cyclone...

Uttar Pradesh Chief Minister Yogi Adityanath and Samajwadi Party leader Azam Khan on their way...

Uttar Pradesh Chief Minister Yogi Adityanath and Samajwadi Party leader Azam Khan on their way...

An Indian army paratrooper jumps from a plane carrying an Indian national flag...

An Indian army paratrooper jumps from a plane carrying an Indian national flag...

Women waiting in a queue to cast their votes during the second phase of Assembly elections...

Women waiting in a queue to cast their votes during the second phase of Assembly elections...

Indian Youth Congress workers shout slogans while being detained by the police during a protest...

Indian Youth Congress workers shout slogans while being detained by the police during a protest...

Ghulam Nabi Azad, Derek O'Brien, Anand Sharma, Mallikarjun Kharge, Farooq Abdullah and others...

Ghulam Nabi Azad, Derek O'Brien, Anand Sharma, Mallikarjun Kharge, Farooq Abdullah and others...

Pope Francis receives a credential letter from Sibi George, new Ambassador of India to Holy See...

Pope Francis receives a credential letter from Sibi George, new Ambassador of India to Holy See...

Like us on Facebook

Copyright 2017, The Printers (Mysore) Private Ltd., 75, M.G Road, Post Box 5331, Bengaluru - 560001
Tel: +91 (80) 25880000 Fax No. +91 (80) 25880523
Powered by Yodasoft Technologies Pvt. Ltd.