An important attribute of the areas that CGPL operates is that fishermen are perennially in a state of debt. Intensive research and consultations were conducted and this conclusion was drawn on the back of hard data and trends. Fishermen tend to take loans from local traders at the start of each fishing season and this loan is used to buy fishing accessories that are vital for their sustenance. To repay this loan, fishermen sell their catch to traders at a very low, non-negotiable price.
Loans are also taken by this community for sustenance during the off-season that stretches for three months. A vicious cycle is formed as traders are also indebted to whole-sellers that provide access to markets situated beyond Kutch. This cycle leads to fishermen and traders getting caught in an unequivocal debt-trap.
Microfinance can help enable the debt-stricken to smoothen their consumption, manage their risks better, build assets gradually, and develop microenterprises to enhance their income earning capacity. These factors can help fishermen and traders to boost their earning capacity and enjoy an elevated quality of life.
Based on this context and to address this need, CGPL launched the Microfinance Program. The first step in this program was to identify and collect information regarding the debt status of fishermen. After this, CGPL created four microfinance groups and set up an initial tranche of Rs 10.37 lakhs that was divided amongst these groups as seed capital. As many as 45 fishermen, connected to two traders, have used this pool to pay off their debt with traders and in return, traders have pledged that they will buy their fish at market price. Seed capital has also been created for local traders to repay their debt to bigger traders. This has created a win-win situation for everyone involved.
Any program must be evaluated for its success and after four months into this program, it was found that 54% of the loan had already been repaid. Forecasts showed that 80% of the loan taken will be repaid by the end of the fishing season, after which CGPL will provide these committees a matching share of the aggregate repaid amount which fishermen can use in the off-season for their sustenance.
The expected benefit of this program is the creation of a stable economic ecosphere that helps all stakeholders involved in the market. Fishermen can make substantially higher profits, ensuring savings as well as partial repayment of loans with the help of the Microfinance Program.