Lease - Purchase

February 1, 1975

In a given situation of graded real possibilities the best of men do not come forward to begin at the highest possibilities. They, when they respond, begin at the lowest end. That is why I always say begin from where the man is and in the measure he can respond and manage and feel secure.

For example, in Ramapuram when the State Bank came forward to lend Rs.7,000/- per individual to sink a well, there was not one application forthcoming. On the other hand the ENTIRE village applied for crop loans which averaged Rs.400/- per head. As a matter of fact, after the accomplishment of the first round, they all received well loans and successfully dug wells.

Speak to anyone about Supramental yoga and when you find him enthusiastically responding to every philosophical and yogic idea, you can see his response drifting to a local problem of his such as securing ripe plantains at the mess counter (a real report). Show a man the possibility of a nation-wide business and when he responds in TOTO, he will ask his nearest unemployed relatives to move in the matter utilizing the opportunity to the extent of a few thousand rupees. This is a daily experience for me and a proven fact in life; and that is why, among other things, I strongly suggest this LEASE - PURCHASE scheme to be attempted in a wide measure. This is an area to which a large number of entrepreneurs of small dimension can readily respond and together in volume it can be big business. And this background can very well serve as a strong foundation for all the big schemes in store.

Lease - Purchase is hire purchase in economic principle; the entrepreneur finds 25% of the investment and a financial institution sanctions the 75% hypothecating the entire plant till its principal and interest are paid off. In the Indian context, the problems that arise are (1) Govt. of India's willingness in law to secure against expropriation, (2) Govt.'s (Centre or State) willingness to guarantee to the investor the 75% against possible lapses on the part of the entrepreneur, (3) the foreign bank's willingness to expand into India's industrial development and (4) possibility to return the investment in dollars and most important of all, (5) the readiness of the Indian industrialists to avail of the opportunity.

Conditions (1) and (2) are the lookout of the Indian entrepreneur. Condition (3) is the area where one should effectively play the role of a businessman. Condition (4) can be met by producing exportable items.

The advantages of this effort are:

1. Many big industrialists (above 5 to 10 crores worth) will immediately come forward to expand their present capacities in a small way;
2. Big industrialists will come forward to venture small business in the range of Rs.25 lakhs to Rs.1 crore;
3. Many big industrialists will come forward to combine each contributing Rs.25 lakhs to pool 25 crores thereby making possible for a Rs.100 crore project;
4. Joint ventures like SPIC (26% Govt. and the rest private) implicitly make possible Govt. guarantee;
5. It is possible to moot this idea in a wide way and invite a few hundred industrialists to meet in a conference which can stimulate activity;
6. The entire scheme can always be worked through one of the Indian banks;
7. The smaller the financial involvement the higher is the percentage of the commission.