Thursday, 24th August, 2017

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Economist takes 6-yr-old son to court over "microloan" default

30, Oct 2010 By Simon

Chennai. A 6 year old will go to court today charged with defaulting on a loan from his father. Krishna Venugopal, 38, a professor of economics from Chennai, has asked a local court to send his son, Vijay, to the “naughty corner” for twenty minutes for having failed to pay back the principal as well as interest on the 50 rupees loan he took from his father.

The filial relationship between the father and son turned into financial one when Venugopal, following a zealous reading of one of Mohammed Yunus’ books, decided to give his son Rs.50 per week as “microcredit” at 18% interest. Normally known as pocket money, Venugopal termed this amount as the “official development assistance” package offered to his son Vijay.

Vijay’s first “loan” of Rs.50 was granted two months ago for the purchase of some colored pencils, which was deemed “a productive investment” by his creditor. But since then Vijay has been unable to earn revenue from his drawings of the family dog, which were dismissed as “having sentimental value only” by Venugopal.

Consequently his debt has spiraled and the 6 year old has resorted to bonded labor to repay the debt to his father. In the past month he has been forced to walk the dog fifteen times a day (at Rs.5 per walk), fan his father during load shedding and even mark some of his father’s pupils’ papers, which has at least given him the opportunity to utilize his red pencil.

Microfinance
Through such simple diagrams, Krishna Venugopal has been trying to teach simple economic concepts to his son that could help his drawings find a market, but of no use till now

“I refuse to give handouts,” said Venugopal, defending himself, “look at Africa! I’ll be damned if I’m going to finance his consumption smoothing.” His son should have “invested the funds productively”, he claimed, “It is not my fault that Vijay lacks the entrepreneurial spirit. He gets that from his mother. She couldn’t sell fish to a Bengali,” he concluded.

The defense, the mother of the accused, claims that Venugopal did not carry out due diligence before granting the loan.

However, the prosecution denies this, claiming that he advised his son to use his newly purchased “assets” to produce Diwali cards to sell to neighbors. Faking News asked what would happen if all 150 children under that age of 10 in his colony did the same.

“Well, there would be a short term supply surplus,” he admitted, “but people… um…er… like cards… so, the market would find a solution. Creative destruction… more competition… more effort! The market would decide.” He then pointed out that Vijay is well used to a “domestic market system”. Since 2004 Rs.3 has been taken out of his weekly pocket money to cover the cost of the Cesarean section. “Always an awkward child,” he added.

Vijay’s debt has plunged his sibling into a “credit access crisis”. His father insisted on a group lending model, which means that Vijay’s 5 year old sister, Divya, will not be “loaned” any pocket money until Vijay’s debt is repaid. “Such a shame! Vijay’s recklessness has created a ‘missing market’ for credit. We had higher hopes for her too,” said Venugopal, “her drawing is much better, but at this rate she won’t get credit until 2050.”

“He always brings his work home with him,” said the defense, “my children are my children, I don’t care what he says, they are not our ‘human capital’ and I don’t care what our ‘household productivity’ is and I don’t know why he says it’s 34.56%! Well, I’ve got ‘assets’ too, a broom for one, and he’s going to get it round the head if he drags Vijay to the court again.”

Faking News called the Chennai Court to ask for access to the proceedings, but we were told that no court room had been booked. “Is this that Venugopal chap?” the receptionist asked, “He just brings the kid here to make him cry. Last week he brought that boy here because he wouldn’t ‘declare his assets’… something about hiding chocolate in his room.”