Have you heard of Srabani Bera? I will not be surprised if your response were, “Srabani who!” So let’s hear Srabani’s story first. Like many other families like hers, Srabani’s husband had to migrate to distant Bengaluru to earn a living.

Such migration always tends to be fraught with pain, pain of separation from immediate family. More often than not, the families suffer more due to the absence of an able male support. Kids miss their fathers, wives their husbands.

Why did Srabani’s husband migrate? This is a non-starter as we all know what does poverty and lack of opportunities to escape the vicious grip of penury do.

Srabani was artistically inclined and she wanted her husband back home but she didn’t know how. Could she have done something with her natural inclination and monetise it?

The help came in the form of microloans. Srabani has set up her own artefacts making unit. She is expecting to scale it up big enough to support the entire family so that her husband will not need to work away from home.

Srabani is an example of what grit and right kind of help may achieve for the person concerned. Everybody has some skill. How one puts that to use differentiates that person from the rest. Srabani by turning her artistic inclination into an earning source for the family is showing others how to ride over the economic bumps.

Srabanis of this world are the actual influencers in the nation’s quest for rural uplift. This is a dynamics that needs reiteration. Why do the poor remain poor? That’s the question that keeps dodging us and has been dodging us ever since we won our freedom.

Subsidy, in the initial days of struggle with development, was thought of as a way of helping the poor out of their predicament. But for decades, the subsidy route failed to yield sustainable gains. The key word in development is sustainable. But the subsidy route proved to be non-sustainable. The idea of empowerment by providing micro capital through the microfinance route started catching up from the seventies.

The foundation of the idea lay in accepting the natural entrepreneurial spirit that is inhered in the poor. Life for them means innovating to survive on a daily basis. What if this spirit was harnessed as the springboard for putting the poor on prosperity cycle? By turning into micro entrepreneurs, Srabanis of this world not only defines a route for self-transformation, they also act as the model for others to follow. They are the real heroes of new India by paving a sustainable development path.




Not all persons are equal. Neither are our financial needs. Yet all of us need banking services – from the very basic to the more complicated commercial needs.

For a migrant labour living outside there is a need to send money back home to his family. He needs a bank to keep his money and send across to his family. The family also needs an account to receive the money. The basic purpose here is send and receive money.

Previously, the same service used to be delivered through the postal department. The instrument of transfer then was money order. With the evolution of the banking services and with the availability of modern technology this mode though exists has transmuted into eMO or electronic money order. One can still send money orders but they have to be between Rs1000 and Rs50000. But it cannot be sent from any post to any post office unlike previously.

However, for those with remittance needs, a savings account ought to be the preferred route, be that in bank or post offices for the simple reason that one doesn’t need to keep cash at home in excess of need anymore. The same account can also serve the needs of a piggy bank and to deposit and transfer there is no need to visit banks anymore as all the basic needs can be satisfied by pushing a few buttons on the mobile.

But banks cannot survive on the remittances alone. And as we start going up the ladder our financial needs also expand. Loans, the primary earning instrument for the banks – they take money from us as savings and lend the same out against higher interest with the difference remaining as their primary source of income, are our second most important needs with the growth in income.

As we climb the ladder of prosperity we need to own houses, cars or even loans for other consumptions. This society survives on credit. We spend now only to make it up from our expected future stream of income. We also save alongside to cover the needs that may arise in future and may need to be covered not through loans but with own assets. The banks are the primary destination for our rising and spreading financial needs.

We need to remember that the bouquet of services that we now get from banks has not been there always. For example, banks are now selling insurance. But this was something that we couldn’t even imagine a few years back. Neither could we think of buying mutual funds, which incidentally are also of very recent (recent as in few decades of existence if we discount UTI products) origin, directly online within a specific bank’s online operational environment.

The same is true for banks’ engagement spectrum with businesses of various hues. From basic current account related operations, overdrafts or LCs to consortium lending and many other services, banks engagement spectrum with the business entities is no longer just a handful. It’s a huge spread.

While the banks have grown in response to the ever spreading needs of the customers, the regulators have also been facing challenges to anticipate the needs and place control mechanism in place lest events should overbear the legal bounds of operations.

It has long been in discussion whether banks can have similar focus for all types of customers or different formats of banks catering to different needs of the pyramid. But this is a different discussion.




The huge rural spread of Indian market has always remained a dream research area for corporates as well as academic researchers. Ever since Professor Prahlad theorised on base of the pyramid – that largely refers to the rural segment of India given the characteristics – rural market has remained the buzz. The corporates have also played with different marketing strategy to penetrate the market to grab the share. However, the reverse, i.e. marketing the rural products in the urban and global market has yet to take the spurt that it so deserves.

The major struggle for the corporate marketing teams has been to overcome the local logistics support. Various innovative ways have already been developed to address the issue. The result has been a phenomenal growth in the rural consumer expenditure.

All the consumer dipsticks are pointing out the trading up of the rural consumers. The organised consumer spend in the rural sector is projected to reach a whopping $100 billion by 2025 or even before – a figure that one could never think of even a few years back.

A Credit Suisse study looked into the reasons behind this transformed consumer preference for branded products in the rural market. The likely reason for such a trading up, the study finds, is the increasing industrialisation in rural areas. It finds 75 per cent of the new factories located in the rural areas.

Such industry proximity tends to spurt a transformation in the consumer behaviour as it brings in its wake an urban connect that the areas lacked hitherto. Penetration of televisions also plays its role through saturated marketing through ads and at the same time providing access to the products through innovative sales and marketing strategies. The growth has been so huge as to have already eclipsed the growth rate of urban consumer demand for branded products.

Unfortunately, however, the reverse has yet to show an inspirational growth rate. Rural products are not getting upscaled to the desired extent. Processing of local products keeping global quality standard remains an issue. As a result, the agrarian and the local artefacts, despite having a huge potential for being a craze on the global market are failing to realise the potential.

The authorities are now aware of it. The tag of food safety authority’s certification is becoming popular and people are demanding products with FSSA tag before putting their money into it. Unfortunately in the global market our products have repeatedly shown up in bad lights due to the presence of various contaminants. Being aware of the issue, the regulatory authorities have sharpened their vigil. It would take time to reverse the trend but it will happen with the awareness about quality also percolating down to the base of the pyramid.

Seized of the issues, the Centre has initiated steps to better organise, market and awareness programmes to create a demand for our rural products that could upscale the entire base of the Indian market. It is expected that by 2025, the rural market will not only surpass our expectations about consumer demand, it will also provide a similarly encouraging trend in marketing its products.




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.




Add ‘em’ before power and you have a goal that would change the face of the earth. The question “how”, however, is the challenge. There was a time when it was thought that by taking from the rich and giving to the poor would help alleviate poverty. In the name of subsidy it was actually a dole the structure of which struggled with the concept of empowerment.

It would be wrong to say that policy makers were not aware of the need to make the poor literate and create a path of self-sustaining development. But the form or the strategies that were thought of kept defying effective achievement of the goal of poverty alleviation. Again it would be wrong to say that it was totally fruitless. But the speed of achievement was too slow to create the thrust to bust the vicious cycle of poverty and turn it into virtuous cycle of prosperity.

However, Muhammad Yunus, for the first time, applied the generally accepted tenet that the poor are inherently enterprising into real time actionable strategy. Subsequently, he also showed the world that the model that he proposed was not only actionable, but also scalable and sustainable.

He thought of a very simple experiment. It involved handing out a little sum of money to a group of women near the Chittagong University where he was a professor of Economics. The women used to make stuff from bamboo and were hugely exploited by the market. With this money as capital they started their own business without depending on exploitative structure of raising funds to run a business that kept them perennially indebted and in bondage. Riding the prosperity curve was just a dream. But with access to unfettered capital they could generate surplus for productive consumption.

The concept of micro credit, as it’s known now, essentially focuses on a few principles. It recognises the role of women in the dynamics of development. Women set a lot of store by bringing up their children and creating opportunities for them – the core tenet in sustainability. Women understand the merit of health and, being traditionally exploited, set a greater store by empowerment than the menfolk. Yunus, therefore, chose the women as his focus of work with microcredit with remarkable success.

Subsequently, the microfinance model that we see today with endorsed claims of success is the output of what Yunus had started in Bangladesh. Here microfinance companies are the agents for creating micro enterprises across the length and breadth of the country. This act is not a charity, neither the beneficiaries are recipients of dole.

Microfinance companies create access and awareness about funds. It’s not a process of charity. So there is a responsibility to stay productive in the entire chain of operations. The lender has the responsibility to empower through handholding so that the loan given out doesn’t turn into an NPA. The customer has the onus of being productive else she will not be able to generate the surplus required to pay back the loan and retain enough to run the family. Given this dynamics, the microfinance route is changing the country’s greatest weakness into its greatest power by busting the vicious cycle of poverty and replacing it with a virtuous cycle of prosperity.




If climate were to be a line, weather would be a dot in it. To most of us, climate change is all about global warming and its impact. The understanding is not wrong but is not comprehensive. Because, in real terms, when we refer to climate we refer to the long-term trend of weather. And weather is not about just cutting down of tree and carbon emission. It is all about temperature, rains, draught, sunshine or the lack of it, cloud cover and all that. Carbon emission is just part of the havoc being wrought on our own habitat, that is Earth.

When we refer to disaster in the context of climate change we, therefore, need to refer to a very wide gamut of risks like thoughtless creation of dams or ground water lifting for agriculture along with the one resulting from carbon emission.

The dams were thought of as a way of protecting agriculture from the vagaries of rains and ensuring an increased productivity of land. Add to that pesticides and chemical fertilisers and you have today’s one cause of breaching bio-diversity and increased salinity downstream of dams. Not only that, it has had its impact on the ground water recharge as well.

Chemical fertilisers and pesticides created havoc with every living organism. It killed beneficial insects, birds and impacted gene structure of living organisms in the ecological chain. Dams took away the strength of current in the river water leading to choking of streams through siltation. When the water surged, river beds couldn’t accommodate the increased volume of water, leading to floods that were not ordained by Nature.

We lifted water from the underground that are all connected through layers of porous earth. They couldn’t find their natural replenishment from water reservoirs on the surface at the same rate we were lifting water for agriculture. It affected the forest. In addition to our hunger for trees to create new habitats or furniture, we also contributed to depletion of natural resources that directly or indirectly are the conditions of our life.

This is the way we raised water salinity threatening our life support reservoir of sweet water. We contributed to raising the carbon footprint by increased use of everything that is a carbon contributor creating risks of disaster like global warming, rising of sea level, unpredictable rain cycles, tsunamis at a regular frequency wiping off habitations, earthquakes and of course polar melting. All of these are wrecking havocs and raising the risks of greater disaster. That’s why when we talk about climate risk, we are also talking about disaster risk. We are doing so because the Earth can live without us, but we cannot live without the Nature that gave us our birth. And that is the risk we are talking about when we are talking about climate.




This is a question that has bugged discussions on economic movements for ages and there is no clear answer to it. Because competitions does kill jobs and it does create jobs. Sounds contradictory? It does but it’s true nonetheless.

Think about the artisans of the pre industrial revolution era. They were the dominant manufacturing force in the world. An artisan could be identified from his product as each product embodied skill of the artisan concerned. People would travel far and wide in search of an excellent product and search out the artisan whose skill was considered the best in the market in that specific product.

Things changed drastically after the industrial revolution. Individual skills were no longer in demand and artifacts became products for niche markets. Skill became ability to crank machines for specific hours within a factory and products became distinguishable only by their labels. Artisans became factory workers and they were labelled differently. New jobs were created. Engineers were needed to maintain machines or make machines. Managers were needed to run the factory and later the business.

The whole structure of the required skill sets changed. The old skills fell by the way side. Those who couldn’t upskill themselves became unemployed. Jobs were lost and jobs were created.

But competition like never before became intense. Enterprise took up a new flavour. Those who owned factories or businesses wanted to raise their profitability by producing more by employing less. This created search for those people who were capable of improving the existing technology or creating an entirely new set of technology to produce the same product more efficiently. Automation became the buzzword. This again created the need for new skill sets making the old ones obsolete. Jobs were killed and new job opportunities were created.

With computerisation there came another wave of change and now we have machine learning and artificial intelligence. This again is creating an absolutely new paradigm making existing job profiles obsolete.

What, however, needs to be noted here is that with each paradigm shift there has been a change in the levels of prosperity. For example, a few decades ago air-conditioners were for the rich to enjoy. It’s now part of middle class life. Cars were not easy to buy or affordable even a few years back; now, it’s a matter of concern for traffic managers.

With such changes in life and globalisation, impact of change and obsolescence of old skill has started to claim more victims than we had known previously. To this extent, therefore, the task of managing the change so that it doesn’t lead to a social and political disruption has become a major challenge. And policy makers are increasingly being called upon to devise ways and means to manage the transition so that the human impact could be minimised.




This is a completely new concept that’s now coming down into use in the everyday analysis of the financial strategy to upscale the poor into sustainable prosperity cycle. A recent World Bank blog (April, 2019) clearly lays down the agenda for achievement on this score by steps.

To understand what is at stake here, we need to start with human capital development. It is accepted that focused efforts are needed to develop human capital at the grass root level. This implies that we need to work towards providing the deprived/poor section of the society with access to education and health care. Education creates skills that can be sold in the market and health provides the much needed sustainability for uninterrupted flow of earning. Once these two are made available cracking the vicious cycle of poverty becomes that much easier.

What would financial deepening do to help in this effort? This is where the aggregation of decades of actions to achieve effective alleviation of poverty comes into play. It’s now being proposed that there is a need to create a human development index across the globe. The index will provide us with a score of what a newly born would probably achieve 18 years down the calendar in terms of marketing his skill.

The entire score would depend on the opportunities that would be available to him in skilling himself and fighting off ailments. I have already discussed in my previous blogs the implications of health as an important component of fighting the curse of poverty. Here I would love to bring to you the current thoughts that are getting consolidated into policy reactions and the more and more responsibility that the financial sector is being called upon to play.

It’s being proposed now that the financial sector must deepen its effort in the global fight against poverty. As in the case of financial inclusion, wherein the sector has been tasked with creation of awareness and providing easy access to finance, here the financial sector is being tasked with providing resources for education and healthcare.

It’s now generally accepted that the governments across the globe have limited ability in fighting poverty. They can act as main agent in creation of a proper environment in which private actors play out an active role. For example, the private sector by earmarking a part of their earning (as in the case of CSR) for such efforts can contribute more than the government can.

But such effort requires intermediation of the financial sector. The financial sector by devising products, such as student loans or micro insurances can deepen the entire delivery into effective means. The role of the government would be to create intervention policy at the micro, meso and macro level. While we are familiar with the meaning of micro and macro level interventions, meso is a sociological terminology that is now finding wide use in policy sphere as well. It essentially implies patterns or interaction types specific to a group, community or organisation and their impact on various fields.

In short, what is being proposed here is that in alleviation of poverty we need to focus on creation of human capital and its development. The only way to do so is through financial deepening. In this process, financial actors are called upon to devise products and make them accessible to target groups by aggregating resources raised from various sectors of the economy.




Financial inclusion is defined by awareness about and access to financial resources. Any situation that provides focus on the creation of awareness presupposes lack of it. And, globally, it is seen that where functional literacy is very low, there is a correspondingly and even proportionally higher lack of financial awareness. In any country characterized by the problem of literacy, this problem is, therefore, really acute.

In the case of financial inclusion, it is observed that lack of literacy leads to a lack of understanding about the need for keeping and maintaining proper documentation. Without documentation, financial engagements with organized institutions are ruled out. According to a World Bank survey as part of their digital onboarding report for G20, there are about a billion people globally who lack official foundational identification. In simpler words, it means that these people do not even have an acceptable document to prove their identity.

This problem, in its extension, means that such lack of documentation becomes a critical barrier to access financial services. This problem becomes even more critical if we take into account gender inequality. Among the poor, this issue is endemic almost without exception. The women in a situation of gender inequality are almost completely disenfranchised socially, politically and economically. Their physical existence, more often than not, lacks any fundamental identification document. In short, if the existence of the menfolk on paper is tenuous, the existence of the women tend to be merely physical.

The survey says among the poorest 40 per cent about 30 per cent of the women are less likely to have an ID than men. This data by itself prove how dire the situation is. No country can progress without providing equal financial access to all bar none. But without even foundational identity documentation how can any organized financial structure solve this issue?

The answer to this question was found in digital technology. There was also another problem with the paper identification system. The traditional ID tends to easily lend itself to counterfeits and creation of fake identity. But biometric identity is unique. Therefore anyone with a biometric identification paper can uniquely identify himself and a financial institution can not only depend on that but also can use it as the person’s signature as well through instruments of transactions incorporating that ID. In one stroke, digital ID, therefore, allows the system to bypass issues of literacy in providing access to institutional finance and also, due to its extreme digital compatibility, makes it an instrument of branchless banking.

In India, Aadhar has provided the system with the trump card for fanning out to the remotest region with digital access to institutional finance. It has made remittances feasible and made money orders an instrument that is more a relic than a convenience. With access having been made easy by digital ID the only issue that is left to tackle in the mandate of financial inclusion is awareness. But with access becoming digitally universal, literacy is spreading more as a pull generated by access to financial system.




Millions of people in the world go to bed hungry. Yet, the amount of food that we waste could have fed all of us and would still have leftovers for the next day. It’s also said the amount of tax dodged by the rich properly deployed would have ended the global poverty twice over.

Be that as it may, the fact remains that the poor are extremely disenfranchised both in the society and of course in the market. This is to say that unlike those who are not poor, the poor lack access to both economic and social infrastructure. With no money in their pocket, schools and other socially empowering enablers are beyond their reach. The everyday market is also not accessible to them.

Given the extremely limited means that they are forced to live with, male get the first right to everything with the women being the eternal last in the right to everything. Yet they are the ones who keep the family together, create the surplus to bring up the kids and do their utmost to save the next generation from the curse of poverty.

The role of women and gender deprivation in the vicious cycle of poverty is a very well researched area now. And there is a universal acceptance of the fact that if poverty were taken as a social malady that creates extreme disenfranchisement, women bear the brunt of it.

All studies, almost without exception, are of the opinion that if we are to reach the goal of elimination of extreme poverty by 2030 as mandated by the United Nations, the women should be seen as the crucial change agents. Finding ways to enfranchise them through empowerment is the only strategy that could translate this mandate into reality.

The challenge here, therefore, is seen as two-pronged. One is the global – alleviation of poverty. The other is within the cohort of the poor and more micro in that sense which is the creation of a strategy to bridge the gender inequality, the persistence of which would run the risk of pushing back all efforts at poverty alleviation.

The studies, however, have incontrovertibly thrown up a singular strategy. Women have been empirically found to have the inalienable tendency to strive towards the creation of surplus for investment in the family’s economic growth. This is also seen as a more effective sustainable model. Therefore if the UN mandate is to be realised, women should remain in focus as the change agent in poverty alleviation.




The fact that there is a need to define boundaries of business is not a contested issue. In any civilized society, rules are needed so that no stake-holder can harm the interest of another to further its interest. A state, therefore, takes note of it and frames legal boundaries to preserve the freedom of its citizens and entities. This ensures that everybody is free to enjoy his or her freedom without infringing the freedom of another. The role of regulation in this context is purely promotional and enabling.

However, a multiplicity of regulations and far too diverse controls can also harm instead of promoting the cause of free growth. Business is one example that immediately leaps into mind. Globally, in all countries, regulation tends to grow with a crisis. No regulation can be foolproof. And there is a natural inclination to find the loopholes in any regulation to further the interest of the business. And the authorities keep trying to plug the loopholes by expanding the ambit of control.

We all understand this. Then there is the case of multiple regulatory bodies converging into controlling businesses. This necessarily tends to create confusion about the operational space of the regulatory body concerned. There are cases where the boundary of control of one body ends, control of the other starts. But between the boundaries lies a grey space that tends to be undefined in the rule-books.

Globally, such cases abound and have created disastrous consequences with markets crumbling, regulators scrambling to plug loopholes to prevent similar disasters from happening again. In every such case, while common sense cried for simpler and clear rules, the reverse has happened.

Simply translated, it means the creation of layers of licensing and compliance. While too lax a regime may lead to an anarchic market situation, too tight and layered licensing and complex compliance environment may also harm business initiative. A layered regulatory environment makes business operations expensive. It’s so because any business strategy in such an environment needs to evolve through layered bureaucracy internally. Each stage of strategy would then require checking for multiple licensing syncing.

While an older business that has grown through the process, will have an expensive but experienced bureaucracy to deal with the system, it will act as a deterrent for a new enterprise to come up. While for the former it will add to the cost of production, for the later it will add to the cost of setting up the business itself thus acting as a deterrent to the growth of business in the country concerned.

Therefore a country should strive for a simple but effective regulatory environment. An ideal environment, therefore, should be one that has zero tolerance for malpractice but is positively encouraging for growth instead of acting as a shackle.




When Chennai needed rescue trains laden with water during its recent water crisis we sat up and took notice. But public memory is short and we tend to quickly turn such crisis to a topic of mere reference in ‘chai pe charcha’. But there are nations who are taking note – especially the ones who are in dire straits with a perennially short supply of freshwater. To Israel, for example, water is part of its security issue. To Australia, during its millennium drought (1997-2009), it meant searching for a price solution to the water crisis. The Australian solution is now being referred to as a model to follow globally.

Let us now turn to a few facts. According to environmental assessments, by 2025, an estimated 1.8 billion people will live in water-scarce areas. More importantly, by that time two-third of the world population will live in water-stressed areas. And according to NASA, we are depleting freshwater faster than the ability of nature to replenish it.

Scientists, therefore, are turning to ways of processing seawater into freshwater supplies given the fact that 97.5 per cent of the water available on the earth is accounted for by the seas and currently unfit for human consumption. But that again will have an environmental impact as it would require a bump in the energy consumption. Anything that we do to raise our energy consumption will add to the carbon footprint that in turn will lead to enhanced global warming.

The civilization is already caught in a vicious cycle of the environmental crisis of destructive proportion. Take, for example, the fact that glaciers and ice caps are depositories of global freshwater supply. Sixty-eight per cent of the global freshwater comes from the ice caps and glaciers. Due to global warming, they are melting fast depleting the freshwater reservoir of the world.

If we take into account agriculture, source of our food supply, that accounts for seventy per cent freshwater consumption we can see a disaster unfolding. Most of the water used by agriculture is pumped either from underground or from irrigation facilities sourced from rivers by interfering with their natural flow. That, in turn, interferes with the underground natural way of water recharge.

In India, the Ganga basin’s ability to recharge is depleting fast due to the increasing need for irrigation with the Ganga an important source of Agri water needs. Add to that an increase in population leading to higher demand for food and consequently increased demand for energy to pump water and the entire disaster dynamics become clear.

The issue at stake here is for us to realize that nature doesn’t work in isolation. While rains are needed for us to survive, the excessive and irregular occurrence of events like floods works negatively. Incessant floods destroy topsoil and reduce the earth’s ability to sponge water and recharge aquifers robbing us of freshwater supply. Greater carbon footprint is creating global warming that in turn is melting the glaciers and ice caps – our repository of freshwater.

Think of going through a day without water and then imagine earth dry of freshwater supply – it sounds ominous. Doesn’t it? Therefore the time has come for us to think seriously about survival. If we don’t take notice even now, we will sign the death sentence of our entire race!




The statement that AI is a threat is attributed to Jack Ma – the Chinese IT billionaire who is arguably the richest person walking the earth. His statement is interpreted to have implied that it would take away a lot of jobs. But will it? Then there is the issue of remotely controlled or self-run intelligent war machines. This part, however, may turn into reality even faster.

Let us first look into the aspect of AI as a job killer. Historically, at every stage of evolution of automation, the fear of the negative impact on the masses has also found a voice. The more recent incident that is still etched in our memory is the issue of computerization in banking operations. Then, the whole programme got stalled due to the massive opposition from the employee unions.

With the computerization, however, there has been greater absorption of employees due to the expansion of branches and business. However, it is also true that computerization and AI are not exactly the same thing. AI involves adaptive learning by machines. The fear that is doing the round is whether a day will come when artificial intelligence will supersede human intelligence. The readers who have seen Stanley Kubick’s Space Odyssey based on Arthur C Clark’s Sentinel will know what is being said here. In the film, the space ship carrying deep space explorers will take overall controls fearing reversal of the mandated mission. It’s a grim story but, nonetheless, remains a point of reference to the detractors of AI.

The point that is at stake immediately, however, is the issue of humanless war machines that will run on AI. This is a grim picture as the machines will not have emotions and will be senseless intelligent killing robots. With the world increasingly turning more and more violent this issue indeed remains a matter of serious concern, At this point, one is reminded of Isaac Asimov, the seminal science fiction writer and a noted student of science. He created the idea of three laws of robotics.

First Law
A robot may not injure a human being or, through inaction, allow a human being to come to harm.

Second Law
A robot must obey the orders given to it by human beings except where such orders would conflict with the First Law.

Third Law
A robot must protect its own existence as long as such protection does not conflict with the First or Second Laws.

The basic issue for Asimov was to create a set of principles for robotics to cover for the time when the population of robots increase to such an extent that it may overwhelm the humanity. So he thought up this law and later added another that said that robots will self destruct once they face a conflict between the laws.

But that’s in the realm of fiction. What at this stage of development and the information that is understandable for us in the non-scientific community is that an improvement in the machine operations will lead to higher productivity. However, at the same time, we are facing the danger of senseless exploitation of the same in warfare by the technologically advanced nation. This may also create a more unequal distribution of wealth. We should together apply our mind not to halt the progress of science but to avert the possible negative fall out of the same.




In my last blog, I expressed my concern about the global environmental crisis. Deforestation is, unfortunately, an androgenic cause of the impending disaster that is staring at our face.

In the beginning, it must be admitted that the actual quantification of the carbon footprint resulting from deforestation is still in the realm of approximation. But the scientific reasons behind the contribution of forests in carbon sequestering are proved beyond doubt. There is also no doubt about the extent to which trees contribute to the prevention of soil erosion – another significant cause that acts as a decelerating cause behind growth of trees. Regeneration of environment is well documented and scientifically validated.

Though some policymakers of influential nations or those nations harbouring natural real estate crucially determining the earth’s environment have started to take a different view, global warming is no longer an issue in dispute. Take for example the case of the Amazon forest. Recently, it has been reported that the gold miners have gone and killed the leaders of an Amazon tribe because they were prevented from prospecting within the habitat of the tribe concerned. The prospectors were destroying the environment that was crucial to the livelihood of the tribal.

The Guardian recently reported that the Amazon’s pristine jungle was being destroyed every day at a clearance rate equivalent to a Manhattan island. If we remember that the jungle of Amazon is known as the lung of the world it doesn’t take us long to realize the crisis we are facing.

Trees breathe out oxygen and breathe in carbon dioxide. So all the carbons that our civilization emits get naturally filtered by the trees. It doesn’t take a huge intellect to understand that if we destroy forest we will destroy the natural filter of carbon that’s inimical to our survival. We can’t breathe carbon and if the environment gets carbon-heavy we are doomed.

It just doesn’t stop here. Trees are natural dams against flood and soil erosion. It leads to the earth’s inability to hold water and therefore flooding. With the topsoil gone, the rain tends to wash sediments into rivers thereby clogging up streams of rivers – a situation that is significantly responsible for a rise in the rates of flooding being witnessed globally. In Madagascar, the rivers run red due to soil erosion.

Deforestation, or destruction of tree cover, has a feedback loop on the availability of food for human consumption as well. It not only destroys biodiversity, but it also takes away soil fertility as well forcing us to use more chemical fertilisers and pesticides – known to have greatly contributed to the rise in various types of diseases, including cancer – or even forcing us to claim more forest land. You take away some and then you are forced to take away more and then more of it. In the process, we kill ourselves a little and then more of us and then, ultimately, all of us. The planet will live on without us, but we will not live without the Nature we were born into.




A few weeks ago the Australian Koala Foundation declared the Koala bear as functionally extinct. With just about 80,000 left, there is not enough adult left to propagate the species. The news got wide coverage in media, but unfortunately, little notice was taken of it. The other news about the emergence of a lake on the Alps became just a matter of curiosity. But the panic button got pressed when Chennai went dry of potable water.

The crisis that has befallen us across the globe is entirely anthropogenic or, in other words, the creation of man. Why are Koalas facing extinction? Because relentless urbanisation and commercial exploitation of nature have destroyed the habitat of the Australian marsupial which essentially means that we have mindlessly destroyed natural resource that was meant to sustain us.

This story is getting repeated across the width and breadth of the globe leading to a precipitous decline of biodiversity. Unfortunately, we do not understand the meaning of an impending crisis, unless the crisis knocks on our door. The world is losing 2.6 trillion US dollar in GDP – about India’s GDP – every year because of pollution. This is happening because of sick days, medical bills and reduced agricultural outputs. By 2060 the number of pre-matured death resulting from environmental destruction is feared to exceed 9 million.

In order to rush towards more and more prosperity, we are destroying the nature that sustains the natural cycle. The USA has not only opted out of the Global conference on pollution, rubbing salt on the pollution wounds it has decided to ease environmental curbs on fossil fuels like coal mining. It has also allowed oil pipelines to be laid across a pristine area in Alaska that was considered absolutely a sacrosanct patch in the bible of environment protection.

The causes of global warming that is leading to the changes in the weather cycle are entirely our doing. The entire natural cycle is about interdependence. Trees are natural carbon sync. As we cut them down and exploit more and more fossil fuel we create rising carbon footprints that in turn lead to global warming.

What does global warming do to us? It starts by killing the weather that we are used to. Europe is getting warmer and Bengal is missing its rainy season while western India is getting swept by heavy rains. The sea level is rising and devastating storms are creating havocs more frequently than mankind had ever known. The sea level is rising threatening to inundate large chunks of land. Polar glaciers have started melting that may ultimately lead to the total extinction of polar bears and Eskimos trying to survive in higher temperature.

The economic crisis is the more imminent one. The so-called agricultural belt of the world is now threatened with lower production and land productivity because of drying up of rivers and underground water resource. The rise in temperature is also unleashing chronic diseases across species, including us the human being.

Nations in which poverty is chronic will suffer the most. From firewood to shelter, they are heavily dependent on nature. Should the weather changes their challenge to survive will be the most. With the agriculture belt nursing the maximum number of poor, it doesn’t take a huge intellect to understand the crisis. The inter-governmental panel on climate change (IPCC), 2018, has warned that we just have 12 years to reverse climate change. After that, it will be too late to do anything about it and it is feared that it will put the existence of even our race tenuous.

Its time, we care….




While grappling with the challenge of alleviating poverty, development economists have gone through the whole spectrum of conceivable instruments that could be feasibly thought of without triggering a disruption. By the seventies, however, the strain of financing poverty alleviation started to tell heavily on the government resources. Keeping in mind the fact that the nations that suffered the most from the ills of poverty were themselves poor, it was an expected outcome. It was so because most of the instruments depended upon were like doles, e.g. subsidies.

Problem with such dole dependent system is that it tends not to create capacities. Take for example the case of subsidies. Its larger application is found in food. By subsidizing food prices the government concerned tries to make it suit the pockets of the poor. The problem here is that though it takes some care of the problem of hunger, it squarely fails to create capacity and surplus that is needed to bring the poor out of their poverty.

Although the search had been going on for some time for a sustainable solution none really clicked. Then Muhammad Younus, who later won the Nobel prize for his contribution, found a possible answer in microfinance. He started experimenting with microloans for capacity creation. With his experiment, empowerment became the keyword in the fight against poverty.

As the microfinance started to deliver results, microfinance institutions as social enterprise began to spread. It slowly became apparent that it was a win-win situation for all. The microfinance institutions (MFIs) were given the right to claim a spread on the interest thereby allowing it to cover the cost and make a profit and grow.

On the other hand, the compulsion of ensuring that the customers returned the loan with interest made the MFIs hold hands of the borrowers so that they put the funds to productive use. It indeed was an interesting development. The MFIs, in search of raising profits – a commercial motive, kept expanding their operations, and with their spread more and more people started benefiting from the expansion which is the ultimate goal. This was the efficiency argument that the development pundits were looking for.

The MFIs, whatever may their regulatory structure be, are in essence financial instrument delivery organisations. As such, therefore, they need strict regulatory oversight so that they do not turn usurious and defeat the purpose for which they are set up. In 2011, the Reserve Bank of India sub-committee set up to address the issues related to MFIs submitted its report. This report defined the roadmap for the MFIs.

The microfinance operations, thus defined, created a legally endorsed framework for capacity creation that married commercial motive with social welfare. Commercial motive for the microfinance institutions and economic empowerment – social welfare – for the masses.




With financial inclusion and cashless transactions as goals set by the government, technological development is the crucial answer to the challenge posed by last mile access in India. In the creation of a comprehensive financial inclusion therefore use of technology, digital access technology in particular, could be the answer to the riddle.

The challenge for the financial institutions like microfinance institutions (MFIs) that are specially designed to deal with the masses is even more acute. Not only do they have to deal with physical access issues like roads that vanish during the monsoon, hostile terrain that can only be negotiated by hiking, they also have to face qualitative issues of various hues like, non-functional literacy and total lack of awareness. Taken together they create a formidable barrier to the functioning of the MFIs.

However, things have started to turn around with a) the rapid development in the digital technology and development of various apps suitable for use in this sector, and b) the government’s initiative in linking even hostile terrain through digital connections. The government initiatives like Aadhar has made the task even easier by facilitating KYC and direct transfer of benefits.

According to MFIN data, total number of microfinance accounts increased 21.9 per cent to reach 9.33 crore. NBFCs took a lion’s share. Gross loan portfolio (GLP) reached Rs 1,87,386 crore with year on year growth of a whopping 38 per cent. The growth is ascribed to increased awareness of benefits accruing from institutional finance and of course, the ease of transaction resulting from digital technology.

In the completely paper based system, the turn around time was considerable due to the paperwork involved in the process of application and approval. In the current technologically evolved scenario, documents are getting uploaded digitally making centralized processing fast and easy. Tracking of disbursements and repayment flow has also turned easier and faster making the whole process a win-win for both the institutions and the customers.

A large number of MFIs have turned their entire disbursement process completely digital and cashless. In so far as repayment flow is concerned, the process of digitization is progressing in fits and starts, as the penetration of smart phones in the hands of the customers has yet to pick up momentum specially among the more poorer of the target segment as the hardware has yet to become affordable for them.

Be that as it may, the fact that the digital technology in the hands of the MFIs has enabled them to break through the issue of access and faster turn around of loan disbursement is undeniable. With tab based technology creation of awareness, a major component in the financial inclusion mission, has also become less dependent on the skills of MFI staff. With awareness content loaded tabs, the process of training is also becoming smoother, more homogeneous and less dependent on staff specific training skill.

Going forward and with digital platform based payment facilities, it is further expected that cash transactions would be minimised to such an extent that even where carrying cash is difficult MFIs will not be hindered from spreading their operations. This is expected to happen as the progress of digital technology has reached a stage where most of the paperwork can be done digitally and the delivery of services can also take the same route. Therefore, with such progresses in technology, it’s now just a matter of time before the MFIs get to reach the saturated coverage level in the country.




Globally, MSMEs are now getting increasingly accepted as the main driver of growth given their nimbleness and the ability to create employment. In fact, in the USA, two third of the jobs are accounted for by this segment alone. The same story holds true in their share of sectoral contribution to the total export revenue.

What is interesting to note is that the MSMEs in India are also describing the same narrative as their North American and European counterparts. According to the Indian MSME ministry’s blog, there are more than 63 million MSMEs in the country. Together they employ more than 110 million people and account for more than 45 per cent of the industrial production and 30.5 per cent of the services industry output. And they make more than 60,000 different types of products to meet market demand.

It’s now an accepted fact that any economic growth initiative demands a policy focus on this segment. The reasons are not difficult to guess. Unlike big manufacturing units, MSMEs are more evenly distributed geographically. It doesn’t take an expert knowledge in economic theory to understand that any unit size, that has the potential to find its footprint in any geographical location, will trigger more employment without requiring migration. A big unit obviously rides a totally different path in terms of employment and other external gain implication.

The question that naturally comes to mind is that why do MSMEs create more employment opportunity than a large unit making the same product? The answer lies in the way MSMEs are organized. They are more labour reliant than a large unit and, as a result, they have a bigger labour capital ratio. It means that in the MSME sector, every rupee invested creates more employment than that in large industry segment.

There is also another important factor that endears them to policy makers and entrepreneurs alike. They require lower investment threshold making them ideal for the aspirations of start-up entrepreneurs. All over the world, the challenge for the policy makers is not only to find routes for equitable distribution of income, but also for equitable distribution of capital.

With Indian economy projected to grow to $5 trillion by 2025, and make in India being a mission statement of the government in power at the Centre, MSMEs are going to be the heroes of India given their ability to generate employment opportunity and to spread capital more equitably and fight the issue of labour migration that is taking dire proportion in the country creating a number of regional imbalances.




India is at a juncture wherein it stands to be challenged by the nature to protect it. We all know that the intense debate about development notwithstanding, India is already in the big league in terms of national prosperity and the actual challenge it faces is to ensure a distribution mechanism that would help share the gains from growth with the masses.

But it also has another challenge. The trade-off between prosperity and environment. Right now, large swaths of the country have gone dry due to delayed monsoon. The changes in the monsoon cycles is blamed on the issue of global warming and like all other countries (except Bhutan which is not carbon neutral but also has turned itself into a carbon sink) we are also a net contributor to the causes of global warming.

With prosperity comes greater use of energy. With India’s dependence on fossil fuel, coal for example, for generation of electricity, carbon dioxide accounts for 60 percent of the greenhouse gas emission in our country. While development brings greater use of energy, it also brings in its wake, the need for greater infrastructural links like transport. Construction of new roads, railway lines, increased use of airplanes lead not only to greater use of fossil, it also adds to rising greenhouse gas emission.

Going beyond that need, demand for greater space for human habitation is leading to depletion of forests, biodiversity, waste management issues, ground water depletion and water resources. This also has an impact on the livelihood of the poor as they share a symbiotic relation with the nature. The poor depend on the trees for supply of firewood and various other things. But more importantly, rising quantity of non-degradable waste, at a rate that defies management, is also claiming natural resources as victims by choking up water bodies and speeding up soil erosion.

This is not to say that we need to junk our development efforts and take away the steam from the process of economic growth. What is needed, however, is initiation of a social dynamics to balance between economic development and environmental protection. This can never be done through regulations alone. Unless there is a greater awareness about the need to protect our environment as much as we are concerned about our land, we may get to retain the land without its properties that make it so precious to us.

For example, waste management cannot be effective without the participation of the masses in it. People need to be aware of the harm that plastic causes to the environment. There is no mechanism to effectively control plastic litter unless people participate in the process. But making them aware is not enough. Along with it we also need to create easily available and accessible disposal system for such waste so that people need not hoard them for future disposal. Ease, convenience, and access are the key words in this development strategy that strives to work in sync with the environment.

Then there is the issue of tree cover. Without getting into technicalities, it implies that we are not functionally mindful of protecting a major natural resource that acts as a shield to protect the environment. An awareness therefore in this regard is a necessary action point. The same goes for river and other water resources.

The net learning here can be summed up saying that earth doesn’t need protection, we do. Because if we don’t retain the environment that we live in the existence of our race will be at stake. This can only be done through our effort mediated by the government. We do not need to sacrifice development for protecting environment. We need to make development work for the prosperity of environment as well.

Awareness towards environment will let us live in an earth where development will help provide prosperity.




Diwali sales over the last few years have turned out to be huge hits on e-commerce platforms. Starting from refrigerators to clothes everything gets sold at a difficult to get bargain prices, so much so that we are getting to see which platform is outforming whom even in the mainstream media.

If media narrative is to be believed, with the rising ease in using digital payment apps and interfaces, the tendency to pay digitally is trumping cash payments during the festive seasons on such retail platforms. A little dated survey by Euromoney says cash transactions in the total consumer spending in India was down to 68 per cent in 2017 from 78 per cent in 2015. And there is no evidence that it has abated.

This trend is understandable in view of the rising penetration of smartphones and increasing sophistication of payment apps along with the willingness of more and more merchants to embrace the digital payment route. If sellers are willing and buyers find it convenient, the payment route will invariably be the one that both the parties prefer.

It is therefore no wonder that with more than 300 million smartphone users in the market, digital payment apps are finding easy homes to nest. All the predictive studies are also in agreement. A Boston Consulting Group (BCG) study predicts that Indian digital payment industry is likely to touch $500 billion by 2020, contributing 15 per cent to our GDP.

What, however, is of greater interest is the prediction that it is going to be dominated by micro transactions with around 50 per cent being in the category of less than Rs 100. According to a Hindu Business Line report (February 26, 2019), Indian e-commerce is poised to grow to about $1.2 trillion by 2021. The current growth rate is estimated at a CAGR of 32 per cent. And the mobile wallets are seen as an important contributing factor.

The statistics are indicative of a huge growth both in e-commerce and the use of digital payment platforms. However, we should remember that India is a very late entrant to the electronic payment systems. Banking has yet to reach out to the last mile which is a crucial link to the saturated transaction possibility of a cashless economy. Be that as it may, three trends are easily discernible, a) e-commerce is growing and catching up fast, b) digital transaction is also catching up fast, c) there is therefore a rise also in cashless transactions.

We can therefore safely say that India is fast catching up and moving towards an economy where people accept cashless transaction also as a part of life. With e-commerce platforms pushing for digital and electronic payment, emergence of platforms facilitating cross wallet transactions, even in small shops, sensing the ease of digital transactions, acceptance of electronic and digital mode in payment for transactions is on the rise. However, it’s as yet difficult to predict whether India will ever be Sweden where cash transaction has fallen to one percent of the total transaction in the economy.




The retail payments scenario is changing fast with the introduction of the electronic payments services in India. Not only that it’s also having a huge impact on black economy by creating greater audit trail on transactions.

There is believed to be a direct correlation between non-cash payment environment and corruption in any economy. The countries which rely more on non-cash payments have greater audit trail on transactions that naturally tend to limit scope for corrupt practices.

The country that comes to mind immediately in this context is Sweden which is expected to go totally cashless by 2020 and is known as the least corrupt nation on the world’s economic map. India’s traditional dependence on cash in market transactions, on the other hand, tended to provide a happy playing field for a thriving black economy as it made evasion of transaction audit easy.

Things started changing in India from 2005 when the clearing system went fully electronic. This cleared the field for creating instantaneous electronic payments and triggered the evolution of payment instruments like e-wallets, UPI and NEFT among others.

India has traditionally been recognised as a hugely cash dependent economy with retail accounting for a huge proportion of it. Things have however started to change and non-cash transactions have started to pick up after the electronic payments system was introduced in the economy. According to the World Payments Report, 2018, by Capgemini and BNP Paribas global non-cash transactions grew by 10.1 per cent to reach 482.6 billion. The growth was largely triggered by the Emerging Asia that saw a growth of 25.2 per cent adding hugely to the rise in global electronic transactions. Adoption of mobile payment by India saw a growth of 33.2 per cent in this specific area. We however need to keep in mind that this growth happened on very low base.

Keeping in mind that the demonetisation in 2016 hugely spurred the transition to digital and other electronic payment systems, we must also not lose sight of the fact that we still have a long way to go before we reach any level comparable to countries like Sweden.

We must also remember that electronic payment system, in order to be comprehensively available, needs saturation coverage of electricity and net connectivity. Then there is also the issue of cost in a country like India. POS machines, digital connections and hardware are still beyond the reach of many. And there is of course the other issue of a platform that can channel all modes of electronic payments.

However, things are improving fast. Payment infrastructure is improving by leaps and bounds. Awareness about the ease of payments through electronic mode is also rising. But more importantly the greatest push is and would be sustained by the retail network. Retailers are increasingly getting wiser about the cost of transacting in cash – both from safety and the cost perspective. Transacting electronically is less costly as it takes away the hassle of storing cash and providing changes to the customers. More and more retailers therefore are insisting on the electronic payment route which is directly adding to the surge in the adoption of electronic payment facilities by the customers.

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