KARACHI, Sept 10: Social scientist and economist Anwar Rashid expressed concern over the financial institutions’ and the government policy makers’ neglect of the economic informal sector which was creating 73 per cent of employment and providing a solid economic base and supply chain to the formal sector.

Anwar Rashid of the Orangi Pilot Project expressed his concern while speaking on “The Informal Sector of Economy: Micro-Credits” at the Pakistan People’s Party’s Secretariat.

He was of the view that the informal sector was fighting for its survival, while the policy makers and the banks were only catering to the demands of the rich corporate groups who were making from 30 per cent to 80 per cent declared profits.

Citing examples, Mr Rashid said that the Banarsi Silk weavers in Pakistan, who once dominated the gulf market, had faced large scale closures because Indian government had given all out support to its own Banarsi Silk informal sector while the Pakistani government created impediments. In this context, he also referred to removal of all subsidies on agricultural inputs which had raised the cost of production, while the banks had written off billions of loans to the wealthiest during the last five years.

He said that farmers were forced to borrow money from private money lenders at 10 per cent per month interest rate and sell their produce at much less than the support prices announced by the government. Banks were giving loans only to large borrowers and denying any credits to the small farmers because small credits entailed increased operational costs, he said and proposed that even if banks charged higher markups from small borrowers to cover extra operational costs, a credit programme for small farmers and other small borrowers would free them from the stranglehold of private money lenders.

Paying tributes to renowned social scientist Dr Akhtar Hameed Khan, Mr Rashid said that Dr Khan always taught to trust the poor and get their trust in return. He said that the default rate in the micro-credit programme being run at the Orangi Pilot Project had been less than three per cent. A criterion according to the conditions prevailing in an area should be evolved by broad consultation to support the ongoing small businesses with micro-credits, he said.

However, he said that the objectives of fast growth could only be realized when there was economic democracy.

Nisar Ahmad Khuhro, in his presidential remarks, maintained that no economic progress was possible unless the real creators of national wealth, those who worked in farms and factories had access and control of national resources.

He said that the trickle down economic model propagated by the exploiters had never worked in the past and could never work in the future.