India lives in its villages, said the Father of our Nation, Mahatma Gandhi. But in the recent past, if one were to observe, India Inc. has been living out of the villages. Never before in this country, has so much focus, thrust or impetus been given to rural development. Rural outreach and financial inclusion are the buzz words today and if you are not in this business then there is no fizz! All the stakeholders – the government, banks and financial institutions, non-government organisations, regulators, academicians and private entities – are well poised to bring about inclusive growth through rural outreach and financial inclusion initiatives and programmes. But are we ready to reach across to the rural poor? Are we really “including the excluded” in our endeavour to “reach the unreached”?
Digital Inclusion Aids Inclusive Growth
Information and Communication Technologies (ICT) have brought about a paradigm shift in addressing the challenges of rural outreach and to bring about inclusive growth. ICT is a tool to improve productivity,delivery of support systems such as micro finance and micro insurance, create awareness on healthcare and provide digital diagnostics, agro services, education, employment, digitising land records, pension distribution, public distribution system, drinking water supply management, women empowerment, etc. It has clearly helped to bring about a tangible improvement in the overall scheme of upliftment of the rural poor.
Today, the scope of ICT is such that it can be used as a tool to integrate social welfare, women and child development, health and family welfare, elementary education and planning and statistics related endeavours of the government. This will help programmes aimed at preventing child marriages, child labour, female foeticide, increasing awareness on birth control, providing proper health care for pregnant women, under and malnourished children and also ensuring proper birth and death records in the rural areas.
The success of NREGA has been possible only because of the role of technology in bringing about a high degree of transparency into the entire process. The Instant Money Order (iMO) service is another successful example. The smart card-enabled facilitating mechanism now available in post offices in every state capital enables money transfer between two resident individuals of India. Besides saving time with regard to clearing of outstation cheques, iMO also helps those in rural areas who do not have a bank account.
The challenges are plenty in “reaching the unreached”; but then there are solutions too! Firstly, we must understand at the grassroots level what is required in today’s scenario? A farmer needs vital information to achieve better agricultural produce and a better bargain while selling the produce. If he is able to get these at his doorstep, in his vernacular language and above all at an affordable cost, his job is done! The farmer is willing to pay a nominal charge for this! Here the challenge is to reach out to the farmer in a manner that does not require him to be tech-savvy and comes at an affordable cost.
Employment of Rural Poor
Investments in ICT alone by itself cannot alleviate poverty or improve economic standards unless the rural poor are made to participate in the opportunities that ICT will offer. Creating awareness especially amongst the rural youth, e-Education and nurturing entrepreneurial skills will have to be the key focus areas of any rural outreach agenda. Creating employment opportunities is one thing. But enabling or empowering the unemployed or the employable in rural India should be a focus area especially when they design a programme under public private partnership mode. The e-education programmes should be a prudent mix of education and vocational training so that it enables the rural youth to be employable in his/her village itself. The government’s increased impetus in encouraging Self Help Groups (SHGs) and the formation of Common Service Centres (CSCs) under the NeGP are but a step forward in bringing about inclusive growth. There is also a need for a more transparent public sector accountability system especially in creating public-private partnerships. For, ultimately, implementation is where everything stops. A little introspection suggests that while the government expects and insists that the private sector participant is accountable in achieving the objectives of the very exercise called rural outreach, it should also be read in conjunction with the fact that for a private entity, earning profits cannot be removed from the agenda.
Enabling or empowering the unemployed or the employable in rural India should be a focus area especially when a programme is being designed in public-private partnership mode.
For the private entity, all roads should lead to profits, leave alone the quantum of profits. Having said this, what emanates out of the introspection of the existing system is that there aren’t adequate avenues for cheaper funding resources for the private entities to avail. However, in this case, even the word “plenty” means “insufficient”.
Banking on Banks
The role of banks as a significant stakeholder in the rural outreach exercise cannot be undermined. The use of biometric cards, the Business Facilitator (BF) and Business Correspon-dent (BC) models, are but steps in the right direction in facilitating inclusion of the rural customers. Here I would like to share my views on the BC model.
In the current scenario, those who are eligible to be engaged as a BF or a BC by a bank are not able to build a sustainable business model for themselves and so a majority of them are bleeding. Technology and creation of the necessary IT infrastructure is often blamed for their plight. Whereas in reality, I am of the opinion that it is only technology and IT infrastructure that can help create a sustainable business model for the BCs. Initially when they get engaged as a BC most of them presume that fetching as many no-frills accounts to the bank would suffice their role as a BC and in the process they would achieve their ROI. On the contrary, with just accounts opened and no transactions happening, the entire exercise becomes futile. With only the role of a BC as their sole activity, with the fees/charges that the banks agree to pay the BCs and with the consistent need for the BC to provide IT infrastructure, the business does not have a positive yield. My suggestion to these BCs is that they should increase the basket of services that they could offer to rural India on the sidelines of being a BC, then the same business model starts looking brighter and with little effort from the BC’s part, the model turns positive. These services are rural-specific services like agro-services, facilitating utility payment services, micro insurance, e-ticketing of railways and bus, telecom services, etc.
A new and emerging type of commerce viz., s-commerce through which all these services can be aggregated and commoditised could provide them the much needed viability. When the offering has a decent spread, the risk of depending on a singular source for revenue also gets spread and together it makes for a viable proposition. The reach is also much wider and deeper as a cross-section of society will be serviced. The regulator’s approach also has been largely protective and it would do a world of good for the eco-system if it could soften the interest rates and allow banks to partner with private entities and NBFCs who possess the necessary IT infrastructure and a sustainable business model to facilitate the bank’s rural outreach programmes.
There is no doubt that innovative and yet cost-effective ICT is available today. These can be optimally harnessed to achieve inclusive growth in our rural outreach endeavour. What we need to understand is that inclusion is not about deciding things for people but it is about giving people a choice and, importantly, empowering them to decide for themselves.
In this direction, technology is not a bottleneck but an enabler. An effective delivery mechanism aided by support services like infrastructure and product innovation, appropriate regulatory and policy framework, a participatory eco-system and, above all, a strong will are the roadmap for successful financial inclusion.
Over 70 per cent of the country’s population lives in about 600,000 villages. This is ‘Incredible India’ and that’s the opportunity it beholds. Though the road less travelled and with miles to go… are we out there to reach across to the rural poor? The answer is a confident YES!