Press Esc to close
Thursday 29 June 2017
News updated at 9:25 PM IST

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

Photo Gallery
Protesters gather outside the Trump International Hotel in Washington, Wednesday, June 28, 2017...

Protesters gather outside the Trump International Hotel in Washington, Wednesday, June 28, 2017...

Ring-tailed lemurs (Lemur catta) receive ice cream to cool down in the Gyongyos Zoo in Gyongyos...

Ring-tailed lemurs (Lemur catta) receive ice cream to cool down in the Gyongyos Zoo in Gyongyos...

Topy, a 5-year-old Poodle, is groomed during the Thailand International Dog Show in Bangkok...

Topy, a 5-year-old Poodle, is groomed during the Thailand International Dog Show in Bangkok...

A male traditional dancer prays for a successful performance during the Bali Arts Festival in Bali..

A male traditional dancer prays for a successful performance during the Bali Arts Festival in Bali..

Multi- teraain Electric bikes launched by Fueladream in Bengaluru on Thursday.

Multi- teraain Electric bikes launched by Fueladream in Bengaluru on Thursday.

Cricket legend Sachin Tendulkar and President of BMW India Vikram Pawah at the launch of the BMW 5..

Cricket legend Sachin Tendulkar and President of BMW India Vikram Pawah at the launch of the BMW 5..

Artists, in traditional Kinnauri attire, take a selfie break during a function...

Artists, in traditional Kinnauri attire, take a selfie break during a function...

Textile shops in Kolkata closed for the third day on Thursday as traders protest against...

Textile shops in Kolkata closed for the third day on Thursday as traders protest against...

Monsoon clouds gather over the Kunye River in Birbhum district of West Bengal on Thursday.

Monsoon clouds gather over the Kunye River in Birbhum district of West Bengal on Thursday.

Students at the Space Exhibition at District Science Centre in Kalaburgi on Wednesday.

Students at the Space Exhibition at District Science Centre in Kalaburgi on Wednesday.

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.