MP asks UN for $35 million aid for project

The Madhya Pradesh government has decided to create a federation for a micro-finance project for more than 400,000 self-help groups (SHGs) in the state, to seek $35 million assistance from the United Nations' develpoment agency, International Fund for Agriculture Development (IFAD).

According to government sources, the IFAD has only "informally" agreed to sanction the amount.

At present, only 1,000 SHGs, with a turnover of Rs 80 crore, have the capacity to supply nutrition supplements to the Anganwadi kendras in the state. The SHGs' corpus created by various departments stands at Rs 100 crore.

A linkage with banks would also be established to ensure micro credit and skill development activities. The Centre had earlier asked the state government to create a revolving fund for the state SHGs.

The government also planned to form a state-level federation for the women SHGs, said Archana Chitnis, minister for woman and child welfare. The project aims at empowering SHGs, linkages with finance and development schemes, social empowerment and cooperation and project management.

The fund will contribute 60 per cent, 10 per cent bank loans, and 10 per cent contribution each from the Union and the state governments. The IFAD has linked 9,500 SHGs with banks in Maharashtra.

"The IFAD has agreed to an informal sanction of $35 million and a project report is being sent to them. The funding would be available for 10 years," said S R Mohanti, commissioner, women and child welfare department. The project would be implemented by dividing the entire state into few clusters.

A Swashakti project of SHGs is run in cooperation with the World Bank and the IFAD at a cost of Rs 29.41 crore. The funding agency has, however, sanctioned Rs 15.25 crore so far. The project involves women manufacturing papad, pickle, shellac items, vegetables and even dam construction at a small level.

BJP's Vice-President Venkaiah Naidu had earlier floated an idea of creating a revolving fund for SHGs to bring the commoner to the mainstream of development. The IFAD provides an interest-free loan and functions mainly in the tribal areas.

The loan is repaid in 40 years, while a project takes 8-10 years to complete.