Kuldip Maity

How would history remember 2020? For the losses suffered or the how the pandemic put our civilisation under the microscope? Going by the experience the answer could be both.

The global lockdown put us inside our home. Days, then, were marked by the rising number of deaths and ‘contagion’ jumped right back into our daily vocabulary. People searched for parallel in fiction and those that came close to the reality started getting hailed as being astute.

While we, the ordinary, learnt to find merit in living an austere life and mask and sanitiser took up pride of place on our shelves, there were others who went cracking, finding solutions to the challenge thrown at us by the coronavirus. From healthcare to communication, the pandemic while claiming lives, also forced us to take a relook at what we had missed in life.

Besides life, the most important victim has of course been the marketplace. But the need to survive has always been a powerful motivator for innovation. While the physical production requirements remained a challenge for a few months, all other services found a way through the net.

New edutechs took up the challenge of taking the schools to the students’ doorsteps, and the use of internet spread like wildfire. Social media transcended its basic use into an economic connector even for those who didn’t know how the technology worked. Even the local corner stores took up home services in a way that would have been impossible to even dream of in the pre-COVID days.

The production system quickly transformed itself into meeting the challenges of the days. India started producing ventilators in hundreds and hospitals started learning new ways of coping with the demand. The government healthcare systems, castigated for long as being negligent, started scoring brownie points. A gain that would serve the society even after COVID, provided we remembered what it means to be without an efficient healthcare system.

And then the vaccine! History doesn’t remember any such effective response in such a short period of time. While the healthcare response would be the pinnacle in our fight against the pandemic, the innovations for easing our daily lives must take the second place. Of the top 100 innovations listed by The Time magazine during 2020, the majority has come up spurred by the needs highlighted by the during the pandemic. For example, Caitin Daleart and Maria Rabinovich have invented an app that makes accessing emergency help easy to access. You don’t have to search for an ambulance number anymore. It would automatically access the nearest facility. Those who have tried to access ambulance during the lockdown would understand why The Time has given it a prize of place on its pages.

And the civilisation survived! So I would say, the history would mark the 2020 as a year in which a virus raged the world in an unprecedented manner. But more than that it would take note of how the people fought back the menace with grit and knowledge, by acquiring the new and dredging the existing; how the civilisation again bonded with the nature, and how they collaborated to resurrect the old values and learnt anew the meaning of the world being one.

On this note, I wish a very happy and prosperous New Year to all of you. Stay safe and stay true to yourself.

I always believe while urban India may be the face of India, the heart lies in our villages. We can experience the core of India's culture and life only if we go deep into the rural parts. But, unfortunately, penetration of organized banking and other financial services in these areas is still low, leading to poverty and poor financial inclusion.

And this is where microfinance comes in to play. Our mandate has always been to go deep into rural India, supporting aspiring women entrepreneurs who do not get credit from the traditional banking channels. The last few years, we have driven the agenda of financial inclusion and tried to get everyone to open bank accounts and transact through them.

But the task has not been easy. Digital communication has helped eliminate many of the major challenges of last-mile delivery. However, one should not imagine that digitalization would solve all problems in the last-mile delivery of financial services.

Firstly, let us look at the purchasing power of the population we address. Those who live right at the bottom of the financial pyramid hardly have the excess funds to purchase a smartphone and incur the recurring costs of internet services. While we must admit that the cost of such services has drastically come down, there still are many for whom food and clothing take precedence.

Let us come to education and gender neutrality. Poor women have always been less likely than poor men to have a formal bank account. While the situation of rural India has been improving, we still have a long way to go. Significant barriers remain for poor rural women with low literacy rates to use digital services. Our field force has to do some handholding for these women.

So microfinance companies, which invest in information technology and training to help the women use smartphones, will be an essential conduit in reaching financial services to the remotest rural areas.

Being an Aatmanirbhar Bharat or self-reliant India is a dream that will put the country in a significant position in the global market if we can implement it. And we can make this come true only when we have business prosperity across the economic pyramid, especially among those who are at the bottom. They have lots of entrepreneurial energy, but no access to affordable finance.

Nitin Gadkari, minister of Micro, Small and Medium Enterprises, has lauded the role of MSMEs in the country’s fight against the COVID-19 pandemic, particularly when it came to producing personal protective equipment (PPE) kits and sanitizers. The MSME sector rose to the challenge so well that India, which had a negligible production of PPEs, now has a surplus and exports both PPEs and sanitizers. Smriti Irani, the textiles minister, praised the MSME sector for the same reason.

The MSMEs showed that, with the proper support, the sector could ramp up production sharply and aim for the world market. With digital commerce getting popular by the day, reaching out to customers in other countries is no longer a dream for micro and small enterprises.

However, access to capital might remain a challenge: the micro-entrepreneurs continue to lack the financial muscle to provide the collateral, and the conventional channels of finance may not be able to trudge the last mile in rural India.

Microfinance companies such as VFS have been operating through a successful model of giving smaller enterprises easy ways of accessing funds for businesses. The social collateral model has proven its worth in removing the financial obstacles to growth and enabling entrepreneurial potentials to play out.

Let us also not forget how MFIs support the financial acumen of women entrepreneurs, helping them manage extra revenue streams that create personal prosperity apart from sparking business growth.

I am very optimistic that the combination of digital commerce (powering sales), and microfinance (providing easy access to capital) will play a key role in our Aatmanirbhar journey, not only for self-sustenance but also for export.

“May my children have an abundance of milk and rice”, says the loosely-translated verse from the Bangla narrative poem Annada Mangal by Bharatchandra Ray. This blessing is what the boatman seeks when Devi Annapurna wants to pay him for ferrying her across the river. A metaphor for the prosperity of children during those times.

Every interaction with VFS customers, the micro-entrepreneurs who are trying to make their dreams a reality, reminds me of this verse.

As you will have read in my earlier blogs, VFS customers share the same hopes—a better standard of living for the family and education for the children.

There might have been various situations that stole the opportunity of proper school education. A few might have been married off early in life, while for others, it might have been the sheer lack of awareness or social pressure. But once they are on track out of poverty, their topmost priority seems to ensure that the next generation goes to school and college.

What is even more encouraging is the fact that the dream is devoid of gender bias. The entrepreneur mother Manju welcomes her daughter’s help in finishing an assignment when she is down with stomach ache, but she makes it clear that she will not have her daughter as an assistant till she completes her graduation. There will be no repeat of the story of her life, where she could not study beyond Class 8.

It is encouraging to see how VFS customers realize that long-term prosperity does not mean just increased income, but also the education of the next generation.

I have mentioned it multiple times that the primary mandate of microfinance is to provide access to finance to the unemployed or low-income individuals or groups who otherwise would have no other access to financial services. This means that we generate self-employment opportunities for those who never had access to capital to make their entrepreneurial dreams a reality.

But what we fail to highlight regularly is the extent of indirect employment the microfinance industry creates through our borrowers.

Our internal sample survey indicates that for every new business opportunity that we create for an aspiring entrepreneur, other than those engaged from immediate family, an average of three individuals get employed from those at the bottom of the financial pyramid. As our customers grow their business we expect this number to grow further, but even as it stands today the indirect employment created through our customers looks considerable.

What was not possible to capture through our survey was the employment created beyond the immediate micro-organisation that our borrowers have set up. For example, a JLG which might be producing artifacts and other items of handicrafts would need someone in logistics to deliver it to the customer. It will not be uncommon if we find a logistics provider setting up shop in such a hub, employing local candidates to do the job - a job that would not have been there had the microfinance borrowers not started their business.

While the quantum of such employment creation through microfinance will be extremely difficult to measure, I feel the levels in which jobs creation happens are:
• Direct employees of Microfinance organization
• Entrepreneurs who borrow from microfinance companies, sometimes including family
• Those who get employed in such micro-enterprises
• Those recruited to provide ancillary services to such micro-enterprises

With digital commerce getting more popular by the day, expanding the market for our customers, such ancillary job creation is also expected to grow further, creating more employment.

It gives me great pride to be able to contribute to so many lives and families who have been overburdened with financial challenges for so long. Handholding towards prosperity has been a dream long nurtured by our society, to be fulfilled by us.