Dr. Kuldip Maity

The issue with any buzz is its tendency to get far too generalised with time. Once generalisation takes place, an illusion turns into reality. The issue with pollution and environmental concerns are precisely these. People now are coming round to the view that it’s the industry as a whole that’s responsible for killing the environment.

Is it true? The answer is both yes and no. Industry per se is not the culprit, but it is the wanton destruction of nature as an easy way to raise productivity that inflicts the harm. All the studies that have deeply studied the issue have come up with the same conclusions – compromising on protective measures to cut costs has remained the single most important issue in this regard.

Various agencies of the United Nations have looked into the issue from various aspects to evolve a solution set. What’s now part of common sense has been borne out by all the studies without exception. A careless emission of effluents is a major cause. While there are measures available to cut down the impact to benign, the owners tend to take the shortest cut and leave the nature to sort out the issue on their behalf in the name of cost optimisation.

The studies have repeatedly pointed out practices that at one point of time were seen as tolerable glitches are now, in hindsight, being seen as blunders. For example the practice of littering an open field with toxic chemical containers to save on closed safe warehousing facility. Spilt chemicals inflict enormous damages to the ecology, including us. But for long it has not been taken care of. Persuasion failed and legislative actions were needed to compel the owner to comply with the requirements to protect the environment.

Another culprit is the mining and the mineral exploration firms. Despite the availability of technologies owners tend to cut corners at the cost of environment little realising that the backlash of the harm would spare none.

The working papers of the various global bodies have, therefore, stressed on putting continuous monitoring mechanism in place. In India, we now have Green Rating of industries. Each unit is scored on the basis of a set of predetermined parameters that are sector specific. We also now have in place environment impact analysis of industries. All these assessments are geared toward assessing the compliance and implications in terms of their carbon footprint.

At the onset I said that the answer to the question of environmental impact of industry was not an unequivocal yes. I said so because it’s not the industry but the attitude and the ways industry is managed that inflict the arm. The blame therefore rests at the door of the management and not the industry per se. The answer to improving carbon footprint may therefore lie in creating greater awareness about and commitment to preserving the environment amongst the management.

The gap between skill and delivery requirement is probably one of the more pressing issues that keeps dodging the corporates. The issue arises from the inability of a company to deploy an HR dynamics that efficiently dovetails the needed skill with the overall current and future requirements from the same role.

More often than not, the divergence occurs at the level of communication and understanding. At the corporate level, while searching for the right candidate, the needs tend to be inadequately articulated. This generally leads to creation of a grossly inflated expectation in the minds of the candidates or an expectation that is grossly less than what the job offers in terms of engagement and prospects.

Let us take an example. A company needed an information technology lead. The company, however, was not in the business of technology. While creating the job description it was done in a manner that sent an impression in recruitment market as if the company was looking for a decision level lead that would be at par with the CEO of the business and would enjoy a similar degree of authority.

The applications came in. The HR was happy to see the CVs. They were happy because they felt that
a) Such high level CVs were an endorsement of the company’s reputation in the job market.
b) Such high skills were eager to be part of the company and deliver.

Nobody in the HR, however, retraced their steps to check what was there in the job profile that evinced the highly rated responses.

Post the interview the person who was selected had a huge experience and global market experience. Having had worked as lead in various multinational technology companies he was aware of the frontline developments in the industry that he had worked in. But he had no experience in working in a company that needed IT as a support vertical and didn’t have IT as a mainline business.

The salary offered was more than the candidate had expected as were the perks. So he joined. The honeymoon period was over soon. And the problem started. He had never worked with so few staff with such limited skills. He soon realised that he was actually expected go down to the floor and work with nuts and bolts so to say. The job actually needed junior level supervisory skill and not strategic intervention at the policy level that he had been used to.

Disenchantment followed and he put in his papers within three months of joining.

Here, like in all other cases, is a case as is encountered often of the inability of a company to understand its own requirement. That can result from various levels of messed up inter departmental skill requirement exchanges. But the end result is the same. In this case the company spent a lot of money on a resource that it didn’t actually need. On the other hand, it also created a possibility of damaging the brand of the company in the job market.

To wrap it up, inability to describe the job clearly while recruiting creates a number of problems that are absolutely avoidable. A botched job description not only leads to right guy in the wrong place, it also jeopardises the team spirit. The result is always detrimental to a company’s productivity.

While the country keeps worrying about the banking sector in India, the micro-finance industry and its perils, pitfalls or achievements tend to be brushed under the carpet.

But if we take into account the delivery that the industry is executing, it is doing a ginormous service in the country’s fight against poverty. While in the general framework of things, people are busy taking stock of nuts and bolts of every sector’s performance in the economy, the achievements of this particular segment hardly finds any reference.

At the cost of repetition, let us revisit the reason this segment was given a special mandate. MFIs received their legal sanction for creating entrepreneurial capacities among the masses. The goal was to create sustainable economic dynamics to break the vicious circle of poverty and create the virtuous cycle of increasing prosperity.

But enterprise requires capital and knowledge of deployment of funds. For that there was a need to create access to finance for the people who found even daily survival a struggle. Not only that, there was also the need to create a system that would impart the knowledge to deploy the capital for productive use by the masses. In short, this was the idea of financial inclusion.

To create this space MFIs were created as the instrument of delivery. The entire structure was properly formalised around only at the end of 2011. Since then the MFIs have been making steady inroads into the mandated space.

It has just been a little over seven years now. And despite there being less than stellar performance from the other financial industry sector, MFIs have returned a growth rate of 21.9 per cent in total number of accounts in FY2019 with the number being 9.33 crore. The lead was of course taken by the NBFC-MFIs. They accounted for a gross loan outstanding of Rs 68,868 crore which is 36.8 per cent of the total micro-credit universe. There has been more. The aggregated GLP of the NBFC-MFIs stood at Rs 68,207 crore, a 47 per cent Y-O-Y growth.

This spread also raised the requirement of staff and gave a boost to employment in the sector. And there has been a total growth of 34 per cent at 1,04,973 people.

Loan disbursement also grew by 28 per cent and 44 per cent in loan amount disbursed. The NBFC-MFIs to sustain this growth also needed capital infusion to keep up with the growth in the volume of business. The equity infusion in this segment got a boost of 42 per cent at Rs 14,206 crore. The figures stand testimony to the dedication and faithful execution of the mandate that the sector is delivering. But there are yet miles to go before the industry can rest on its laurels.

The kick for those in microfinance operations lies in watching the customers ride the cycles of prosperity. As you all know, the movement is focused on empowering women as the agents of development.

Why the women? At the cost of repetition, let us revisit the tenet. It's generally seen that women are the ones who hold the family together. At the base of the pyramid leaving below the line of poverty, the women are even more deprived. While the male gets the best, the women are necessarily left with the crumbs.

With the men being the earning members, therefore, they need the strength, therefore, they get the best that is available while the children get the second best. The women necessarily get whatever that's left after feeding the brood.

The entire strategy of alleviating poverty, therefore, is focused on women. The upscaling model finds its rationale in women being the main binder in the household. With them holding the family together they are taken as the foundation for the model to alleviate poverty.

Studies show that women are the savers and the providers in the worst of time. Yet, they suffer the double deprivation. One that naturally results from poverty and the other is the result of their sex that is largely referred to as gender discrimination in the literature.

In a situation of this nature, if the women are made financially empowered, they will act as the agents of sustainable development. They will not only act as the agents of prosperity from their micro enterprises for their families, but the model will also generate employments directly and indirectly thereby releasing a growth momentum in the environment. They will create sustainability by empowering the next generation through sending the kids to school which may otherwise not happen.

The tendency in a male-dominated society is to get the daughters married off early and induct the male children in the jobs so that the cash flow gets a boost. With empowered mothers, such debilitating trend gets bucked creating multi-faceted societal benefits. They even are breaking the job stereotypes to prove the extent development is hindered by sex discrimination.

Let us take the case of Anjali Mandal. If we talk about machine shops we hardly think of a woman as a leader. In the case of lathe shops, it's an even more no-no. Yet Anjali has fought the stereotype to set up her own lathe shop by operating one herself.

She started with one machine and mustered the strength and skill to run it. Anjali worked her way up to the second one. With two electric machines under the roof and the skill to run them, she doesn't need to wield the stick to manage the staff. With support from VFS, she is planning further growth by installing a third machine.

The point that is here to note Anjali is just an example and not an exception. Women are deemed less capable, even if there are proofs to the contrary. However, Anjalis of this world prove that we need to keep working at it and empower all Anjalis to demolish gender discrimination once and for all for a better future.

The Royal Swedish Academy of Sciences awarded the Sveriges Riksbank Prize in Economic Sciences in memory of Alfred Nobel for the year 2019 to Abhijit Vinayak Banerjee, Esther Dufflo and Michael Kremmer. With this award, the issue of poverty has come into sharper focus in global discussion forums.

To us in India, and more importantly to those of us who are committed to microfinance movement, this award has a special significance. The award also adds to the, in an extended sense, a special place for the microfinance movement as it did when Mohammad Yunus won it.

The question, therefore, that we need to answer now is why. The works of the three emphatically point out that the issues related to poverty are not homogeneous and, therefore, cannot be addressed through a uniform intervention. The aspirations vary across groups and individuals.

To prove their point they borrowed a widely used scientific method called randomised control trial or RCT and used it in the field. In order to isolate the outcome of a specific intervention method, they selected two groups of people with similar characteristics. They used the intervention in one group while leaving the other group function under usual conditions. The difference in the outcome between the two groups was impact output of the intervention.

To understand the issues better, let us take the baffling egg and chicken issue in development economics – do the poor save less because they have low income or do they have low income because they have no or little savings. To find an answer to this issue application of the RCT is considered highly useful.

In framing interventions to boost development the policymakers so far had to work largely on an intuitive basis. The results have, therefore, been again largely a toss-up between success and failures with huge revenue cost implications. With RCT in play, there is now a defined method to taste the success possibility of an intervention. For example, the remedial tutorial, result of RCT, is said to have benefitted millions of students in India.

When Mohammad Yunus put microfinance at the centre stage of development policy interventions, it provided an operational model for creating non-state development agencies for the alleviation of poverty. What the works of this year's Nobel laureates endorse is the effectiveness of microfinance agencies in raising the welfare level of the poor. This is where their work turns out to be a milestone, the qualifications notwithstanding.

People value what they pay for. On the other hand, in most cases, access to services or commodities that come free are generally not viewed as having the same quality as similar services or commodities that are paid for.

Take for example the case of services like healthcare that are provided free are generally availed of with a pinch of suspicion. If we can afford it we would rather pay a hefty fee and accept probably less than adequate medical services from a private facility notwithstanding studies that run counter to this belief.

This, however, is not to say that government healthcare services are always excellent or private healthcare services are always poor compared to free public medical facilities. The point here is that we have a choice when it comes to things that we pay for. But things that come free provides an option in binary. Take it or leave it.

Same is the case with schools. We tend to reject the quality of public instruction system outright as having a lower quality despite there being government schools with excellent faculty. According to the Hindustan Times, between 2010-11 and 2015-16, student enrolment in government schools across 20 Indian states fell by 13 million, while private schools acquired 17.5 million new students. This again is the result of a mind-set that the teachers in government schools will not be up to the mark and the schools are most likely to lack proper infrastructure. Although studies have shown that public institutions also have some of the best teachers as members of faculty.

The point that needs to be noted here is that nothing comes free. Public health care services are subsidised. The government pays for it from the taxes that we pay. Public instruction systems that are subsidised are again paid for from our taxes. What happens in the cases of free services and commodities is that the cost burden gets shifted from the shoulders of the beneficiary to somebody else. The issue here is that of managing the quality and restoring the faith of the people in the system.

Thus said we must bear in mind that even the common perception that air and water are free is also a misconception. For ages we thought it to be so. Now gradually due to misutilisation for generations, we are now paying the price for it. Gradually, potable water is getting scarce and we are being forced to pay a price for it. So the cost of misutilisation, because it was deemed to be available in abundance has been shifted across generations on us and we are paying for it.

Even in economic terms services like defence and law and order enforcing agencies don’t come free. The price of their maintenance is paid for out of the taxes that we pay.

The same principle operates in the commercial products and services. Certain market strategies dictate that to grab a slice of the market or to raise sales volume freebies need to be offered. But here again the extent of acceptance is a function of the acceptance of the value of the brand. However, we must bear in mind that the cost of the freebies that is informed by a marketing strategy is subsumed in the price one way or the other.

Net net, in our world, the adage that there is no free lunch holds across the board irrespective of our rejection or acceptance of a product or service. Somebody always has to pay for it.

There are many things that go unsung about women. Take for example, their habits of setting aside resources to tide over bad times. Across nations and cultures women traditionally maintain a store. That store has always been used to set aside a little of grains or money and use that as savings.

Such habits have traditionally been referred to as emulation worthy. Mothers have, for ages, insisted that the children learn the value of savings. For ages while men have been referred to as the bread earners, it actually has been the responsibility of the women to use the earning rationally. They have been the ones who fed the family and enforced discipline.

Savings are the first step and the most important step in financial discipline. If you spend all that you earn now nothing would be left for the future. That again is the first principle in creating the prosperity of a family. The buck, however, doesn’t stop here. An aggregation of good habit of saving also leads to the prosperity of a nation.

Women’s role in setting aside for the rainy day has been studied by development economists in depth. They have done so to find out ways to put it into development dynamics. And the findings have led to evolution of strategies to fight poverty.

The entire micro finance movement is based on empowering women precisely because of this. The basic tenet of the movement rests on the principle that women are the ones who are the main actors within a family to hold it together and keep it running. So if they could be empowered that would lead to breaking the vicious cycle of poverty and put the poor on the cycle of prosperity.

This would also create an overall ambience of financial discipline by creating an urge among all to save and invest. But for the savings in a piggy bank, that’s what traditionally was the practice, to get into investment channel for generating returns requires awareness. So putting the women first is not enough. The strategy needed a structure that would allow the women to borrow and along with their savings that borrowing would lead to productive investment for creation of surplus.

The focus on women therefore was to leverage their financial discipline into productive channel and make development a sustainable process. The concept of microfinance, therefore, puts women first in terms of providing them with capital and handholding them to create awareness about the productive use of money.