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Inclusive growth via SHGs & telcos …A KUMAR & R PRASAD
THE government has rightly chosen more inclusive and faster growth as the goal of the Eleventh Plan. However, with the current pace and pattern of development, it is evident that even achieving the Common Minimum Programme targets will be a distant reality for India. Though total literacy rate has increased from 52% in 1991 to 66% in 2001, 46% of women and 39% of all adults are illiterate. Similarly, while expectation of life at birth is 63.9 (male) and 66.9 (female), 17% of our population are not likely to survive up to 40 years. This article proposes a new approach to inclusive growth utilising the success story of telecom on the one hand and microcredit on the other.
The movement for financial inclusion has been one of the real hopes for inclusive growth. The poor and the excluded have successfully organised themselves into 25 lakh self-help groups (SHGs). At an average of 12 members per SHG, and an average family size of five members, the total population touched by SHGs is of the order of 15 crore. Most of these SHGs are registered with specific names and possess a bank account. They have established systems of viable monthly financial management that include routine deposits and rules for inter-loaning and repayment.
Yet there are several challenges in the growth of SHGs. The SHGs lack connectivity at block, district and state level for large scale impact. The proportion of SHGs engaged in viable commercial activity is low compared to the SHGs engaged in non-viable or consumption-oriented activity. Of the SHGs engaged in commerce, the proportion engaged in off-farm activities is low. And the working of the SHGs does not directly offer enough scope for social empowerment of the marginalised.
Mobile telecom has been a major success story of the post-liberalisation period with a revenue CAGR of 90% over the last five years. Yet while the penetration of cellular services is 60% in urban areas, it is only 6% in rural areas. Accessing the excluded geographies and social groups is the next frontier for the growth of telecom.
SHGs provide a fertile channel for expanding the reach of telcos. As a group, they represent a level of credibility and financial strength that individual members do not possess. If telcos create mass customised services for their needs, they can access a vast market, which currently does not have mobile access. One can assume that every member of the SHG and their families will come under the ambit of mobile services through this step.
The resultant scale would make telecom infrastructure and customisation viable. The per-subscriber overheads would reduce as densely populated areas of the country are covered. The mobile could become the defining channel of marketing and development communication.
Simultaneously, telecom access can directly promote the commercial activity of the SHGs through reducing intermediation in their supply chain, providing market information, customer access, and mobile banking. This could be the trigger to make livelihood initiatives of the SHGs viable. Moreover, access to a mobile phone can bring about many changes beyond the promotion of livelihoods. These include empowerment through access to and utilisation of basic services like education, health, finance, right to information, and good governance. A point to note is that the representation and power of women in SHGs is very high and migration is low. Therefore, the welfare of SHGs would translate into the welfare of families, as the uplift of women and of non-migrant populations has been shown to translate into higher family welfare.
Enabling the penetration of mobile services in SHGs would require some enabling policy changes, including changing the law requiring a cell subscriber to provide identity proof. Currently, the forms of identity accepted are the election card, driving licence, residence proof, land line phone connection, and passport. The majority of the members of SHGs do not possess any of these. This legal obstacle increases cost of ownership as the excluded have to pay to acquire papers or rely on others for service. The policy should be changed to allow the president and secretary of the SHG to get a connection without identity.
The experience of Gramin Bank and Gramin Phone in Bangladesh has proved that telecom penetration and SHG growth create synergies that result in the accelerated growth of both. In India, the impact is likely to be greater as our SHGs are multidimensional with a focus that extends beyond thrift and credit to social mobilisation, livelihoods, and development.
If we unlock the synergies, then telcos and SHGs working in tandem could usher in a era of inclusive growth.
(Avanish Kumar & Rohit Prasad are professors at MDI, Gurgaon)  G U EST CO LU M N
• SHGs provide a fertile channel for expanding the reach of telcos
• Telecom penetration and SHG growth create synergies that result in the accelerated growth of both • If we unlock the synergies, then telcos and SHGs working in tandem could usher in a era of inclusive growth
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