Microfinancing continues to spread

This article in Businessweek tries to make the case that microfinancing in India is slowly going mainstream. For more details about the concept of Microfinancing check out the Wikipedia entry or better still go to the Grameen Foundation website. In short it's a system in which financial institutions give very small loans ($20, $100 you get the idea) to people who wouldn't normally be given loans by banks because they are too poor. This idea originated from the efforts of Dr. Muhammad Yunus to extend credit to poor women in Bangladesh. Grameen Bank, the bank he founded for this purpose continues to be the biggest microfinance institution around.

Anyway, back to the Businessweek article. According to the article mainstream banks like ICICI, HDFC, HSBC etc. have started concentrating on this sector as the urban markets are getting saturated. The good news is that this push is not being driven by lofty ambitions but rather by pure financial needs. This is good because if banks can indeed profit from microfinancing, then it will spread way more rapidly than if it were a social service initiative.

The scale of the microfinance market is so big that banks, even big ones like ICICI cannot possibly handle it on their own.

"Since 2003, ICICI has doubled the size of its rural banking activities to about $3.44 billion and has outstanding microloans of some $538 million.

FIVEFOLD GROWTH. It has set up more than 100 tie-ups with small-town lending specialists and has about 3.2 million low-income customers. HDFC hopes to follow suit. Earlier this year, it created a microfinance unit with more than 100 employees and aims to double its lending levels in rural India to $22 million."

Therein lies the potential problem. As the article states, banks are relying on 3rd party agencies to reach out to people because they simply don't have the infrastructure to do it themselves. Whether or not microfinancing will be able to make a positive difference will depend to a large extent on how closely these small agencies are monitored by the banks. Because it would be very easy for local money lenders to form an agency, keep charging exorbitant rates and maintain the depressing status quo. This is one of those places where access to information is so vital. That way the end consumer can shop around for rates and not be beholden to the local agency.

What the world thinks - does it matter?

Outlook magazine is running a series of articles and the results of a couple of opinion polls under the theme - what does the world think of India? The inevitable question ofcourse is, why does that matter? But if you can ignore that question for a while there are some good reads there. There is an interview with Amartya Sen where he makes some interesting observations which I can't resist from quoting here.

On a question referring to India's socialist past.
"... I'm not sure what you mean by India's socialist past. A country that failed to achieve the most elementary progress that most socialist countries in the world achieved easily (despite their failures in many other fields), namely universal schooling and basic education supported by the state, primary healthcare for all provided by the state, comprehensive land reforms and so on which pre-reform Russia, pre-reform China, Cuba, Vietnam and other socialist countries achieved, can hardly be described as a socialist country...."

On a reference to Indian diaspora's contribution.
"...It's also important to recognise that India's success as a functioning democracy, with a relatively free media, regular multi-party elections and a lively civil society has also helped the diaspora gain respect and acceptance abroad...."

On a reference to India's growing 'power'.
"...We have to think more critically and more fully about exactly what powers we want, in what sense, and precisely what we want to do with power. Having more power is not a virtue in itself."


There are articles from among others Dominique Lapierre, Ayaz Amir, Gurcharan Das and of all people Donatella Versace!

As for the opinion poll, it was conducted in New York, London and Beijing where people were asked various questions geared towards getting their opinion about India. Well I generally use opinion polls for entertainment purposes. They failed to correctly predict the results of both the American and the Indian elections! How the hell can they be true guages of the opinions of entire countries? So in the spirit of entertainment I am quoting 2 results from this opinion poll.

How apt are the following attributes describing Indians?

Hard-working and disciplined

91(NY) 82(Lon) 44(Beij)


Do the following things about India interest you? (Affirmative responses given below)

Hindi cinema/ Bollywood

33(NY) 30(Lon) 76(Beij)

At least the Beijing wallahs like our movies :)

Mission 2007, no really

When I first read about Mission 2007 on rediff I had a sense of deja vu. An initiative for rural development with a grand sounding name. Hasn't this been played out a million times before? Lofty ambitions, grand launches and then complete silence. But as I went through the Mission 2007 website I realized that this initiative was not being launched now. It was launched in 2004. For whatever reason rediff chose to highlight it now. Which is a bummer because we are learning about it just 1 year before it ends. But in a way its good. Now that the end of the mission is not that far off we can atleast remember to follow up and see what worked and what didn't.

Btw, for those of you too lazy to click through the links, the mission statement of this Mission is

“Achieving sustainable human security is a priority task. This will call for harmony with nature and with each other. Knowledge connectivity within and among countries will help to achieve this goal. This is why we should make 'Mission 2007: Every Village Knowledge Centre' a success.”

It's easy to be cynical about an initiative that is run out of a Govt Secretariat and I am fighting hard not to fall into that trap. After all even if this is a half-hearted Babu driven initiative it will probably touch more people than we ever can - such is the power of Govt agencies. So who am I to complain. But (you knew there was a but right :)) I couldn't help but notice that the milestone page has a list of launches and conferences instead of real statistics like how many people in how many villages have they been able to touch so far. I hope it's a cultural oversight. They have a concept of partner organizations of which there are 242 as of today. Though it's a bit late in the game we might decide to join it. If that happens there will be more reports on this topic.

Solar powered Wi-Fi

Uber tech blog GigaOm links to an article in news.com which talks about an effort to make internet access a reality in underdeveloped regions. This project named Green WiFi is being run by a couple of employees from Sun (one former and one current). They have developed a prototype with a grant from the $100 laptop project and are now getting ready for a field deployment in Uttar Pradesh.

At a very high level, enabling internet access comprises of 2 distinct challenges. Having a high bandwidth broadband backbone in place and getting people access to this backbone - the so called last mile problem. The wires that cable companies put, the phone lines that dsl providers use and the wi-fi access that hotspots provide all address the last mile problem. Simple WiFi won't be able to solve the last mile problem for Indian villages are they are usually no where near a broadband backbone. So the Green WiFi project is going to use a series of routers - each connected wirelessly through 802.11b/g (wifi) - to connect the end user to the backbone and hence the internet. Their innovation is that they are coming up with a cheap and robust solar power charged battery set in order to provide power to these routers and more importantly they are coming up with a way to do elegant degradation when the router starts running out of power.

""What we bring to the table is an intelligent charge-controller. We put the router on a diet," Pomerleau said. The controller sits between the battery and the router and regulates power to the router depending on the charge level of the battery and the amount of incoming sunlight."

Absolutely critical for this idea to succeed in Indian villages.

The pilot project in Uttar Pradesh would be able to flesh out the technical abilities and limitations of this model. But the possibility of widespread deployment would depend on how far the internet backbone is from a typical Indian village. The cost of the router has been capped at $200 (Rs. 9000). The news.com report says that the wifi router nodes can be 1kilometer apart. I am not convinced about that being true in real deployments. But anyway quibbles aside, greater the distance from the backbone more the number of routers that have to be used and more the cost. WiMax which has a longer range would be a better fit for this kind of an effort. But we won't be seeing commercial WiMax before late 2007. WiFi is already here. So if this model can bring high speed internet access to atleast those villages which are close to the backbone, that would be a great achievement.