FDI in Retail: Who is Thinking of Farmers ?

Ever since government came up with the document for discussion on FDI in multi-brand retail trade, most debates in media have veered round business, business players, effect of one business format over another and infrastructures required to make business more profitable. The debate no doubt will continue in days to come. But the farmers, original producers of foods and food products which constitute bulk of retail business, and who should be the focal point of discussions, are sadly missed out.

Though the DIPP document on its part does submit that farmers will be benefited, the argument nonetheless appears too blurred to be convincing. Further, the document is based on the premise that our ‘production (farmers’) system’ is ready to cope up with increased quantitative and qualitative demands of food products which FDI in retails is expected to generate. The fact is – it is not. It will also not be prudent to think that efficient supply chain and increased demand will infuse vigor into an already weak and sagging production system. It would rather be sensible to include farmers and existing farming system in discussions. Strong and efficient farming system is must for the success of mega-retail business in India.

Where do we stand today? According to a NSSO study, 40 percent of farmers have lost interest in agriculture. The household income from agriculture has been reducing. Eighty percent of total 12 crore farm holdings own only 20 percent land. Not only is the average land holding of Indian farmers too small, they are ‘fragmented’ too. Overall per holding agriculture productivity in our country is lower than almost all the countries mentioned in the DIPP’s document. So who all are going to benefit by the efficient back-end operations and improved infrastructure of business? Certainly not the aam Indian farmers! Instead there would be further land consolidation in favor of the already rich and resourceful farmers making room for the expanding gap between the rich and poor farmers to expand further.

It is no secret that when small and marginal farmers change their cropping pattern from cereal or staple food-based crops to high value crops (in which retailers would be interested), the quality of their nutrient intake deteriorates as they become dependent on the market for their staple food.

National Commission on Farmers has reported about the almost stagnant and decline in productivity of our farmlands. In the last ten years credit to agriculture sector has gone up by 200 percent and fertilizer subsidy by 300 percent. Yet, the productivity of rice, wheat, and pulses has almost remained constant. Now when area under cultivation is shrinking because of urbanization and industrial growth, intensive and commercial farming on limited land will have its own toll on the productivity of lands.

All efforts notwithstanding almost 60 percent arable land with no irrigation facility are dependent on rain. Increasing fluctuation in rainfall, depleting ground water level, lower and improper fertilizer usage, are issues of great concern. Rural infrastructure is another area of worry. One cannot drive high speed air-conditioned trucks carrying fresh perishable foods on roads inapt even for bullock-carts. Villages lack dependable power-supply.

“Farming is the riskiest profession” said M. S. Swaminathan, an eminent agriculture scientist. In spite of being an agricultural country our farmers are not insulated from hosts of risks. Existing insurance system is either out of reach for them or too complicated to be relied upon. Arrival of retails in a big way will certainly make farming riskier. Meeting customers’ will make farming more resource intensive farming. We need to learn lessons from the innumerable incidents of suicides by farmers being reported from across the country.

Contract farming, projected as the ‘panacea’ for many of problems the Indian farmers are facing, is yet to pass the test of time as anticipated. Instances are galore of one party blaming the other of dishonoring the contract. Though, theoretically it presents a win-win situation both for the farmers and private players, it’s implementation at the field level has been very tricky and in many cases farmers have been found on the losing side.

It is high time we appreciate ground realities and make farmers focus of our discussions as we have been making big retail waalas like, Wal-mart, Carrefour, Tesco, and unorganized retailers like mom & pop stores. The need of the hour is to first work on the ‘root’ of the business before thinking of strengthening the ‘shoot’ and expecting colorful flowers and fruits to blossom. There are still many loose ends which need to be tightened at the very early stage of the supply chain, i.e., the production stage. A word is enough to the wise. Believing that foreign investments will do all these will be like dwarf’s leap for the moon.

Still waiting for monsoon in Odisha, India ....
 
Niraj
 
Do you want to know what Hindu BusinessLine says about the subject...click here

Farewell to Microfinance ???

I found a very interesting article in Economic Times of 12th August with heading “Goodbye, Microfinance”. The article forecasts the end of microfinance. The beginning of the article “ Microfinance is slated to join the ranks of flint stones, the crossbow, gas lamps, the pigeon post, and floppy disk – all excellent in their own time but rendered obsolete by the march of technology” – appears very impressive journalistic piece. The author also tries to explain the reasons for that.

The article is both apt and timely when nation is discussing subjects like, inclusive finance, pro-poor banking, banking with and banking for bottom of pyramid. However, it does reflect how differently people read and understand microfinance.
The comparison of microfinance with crossbows and floppy disk is like comparing potato with humanity when you not only fail to understand commonality but you try to bring a concept parallel to the product of a concept.
There is a difference between microfinance and microfinance institutions. The concept or the practice of microfinance is as old as the development of economic practices in society, and today we are just trying to adopt it in present context. Even during the pre-colonial period microfinance was in practices when kings used to provide supports to their people, postpone, or waive off taxes when it was required.

It is true that in recent past microfinance, in its more formal and adapted form, has gained momentum. However, contrary to the point put by author that reasons (like, non availability of credit, very high rate of interest) which helped in microfinance are losing out. The opposite is true. Not more than 20% of poor who are below poverty line have any access to any formal credit system. And if consider the cases of poor states like, Orissa, Bihar, Jharkhand, Chhattisgarh, UP, etc. this number will further be lower. A simple addition of number of active bank accounts and number of customers different micro-finance institutions claim (in spite of fact that many of the borrowers are served by more than one MFIs in ‘good business’ areas) will give the number who are still in credit dark areas. To expect that government owned institutions will be able to lighten those dark areas even in coming ten years will be like expecting moon to come on the earth.
Although improvements in communication facilities, power situations, telecom and other infrastructures create a conducive conditions for overall development; however, to expect that it will have proportional impact on financial inclusion as well ,will not be correct. Our past experiences have proven that most of the benefits of such developments have been cornered by those who are rich and powerful and by those people are, of course, not the target for the microfinance.
Microfinance goes much beyond the micro-credit and it also includes micro-insurance, micro-enterprise development and strengthening. In one phrase...It is ‘financial capacity of building’ people, which is one of the pre-requisites of overall empowerment of the community. What to talk about rural areas, even in infrastructure rich urban areas our success rate is very low on all the above constituents of microfinance. We need microfinance in urban areas as much as in rural areas.
RBI initiative like, requesting banks to involve banking correspondents (BC) is basically meant to strengthen microfinance and not to replace it.
Frankly, microfinance has mainly to do with the amount, ticket size, number and volume of business, and infrastructure and technological innovations are only facilitative. Even if we have all the infrastructures and technology in place we will need microfinance. Yes, it is possible that its delivery system may get changed and streamlined. Microfinance remains the need of the time and it will continue to grow stronger and stronger.

Keep sharing...
Niraj

If you want to read full article of Economic Times follow the link: http://economictimes.indiatimes.com/opinion/columnists/t-k-arun/Goodbye-microfinance/articleshow/6296631.cms

Agri-Tourism: New Destinations with Novel Opportunities

As one approaches Darjeeling one finds lush green gardens of famous Darjeeling tea on both sides of the road. Picturesque beauty of tea gardens and colourful workers are so fascinating that one invariably stops to see those gardens and workers working. Tourists like to be dressed as in the traditional attire of hills having a basket on back hanging from the forehead. Tourists savor watching plucking of tea leaves and further processing of tea-leaves. If given the opportunity to be the part of leaf plucking operations, tourists do it with great joy. One can notice long queues of tourists’ taxis parked near such locations where one can live through all the experiences in one go. This explains the potential of agri-tourism in India.


With more than 5 million foreign tourists visiting India and more than 600 million Indian tourists making inland tour the scope of Agri-tourism is huge. It is well known fact that tourists visit India to experience the Indian culture which is basically ‘agrarian’. Cohesive existence of myriads of cultures and religions, multiple colorful and bright festivals, natural diversity, are some major attraction for the foreign tourists. And, agri-tourism offers most of these in one go.

Tourists enjoy driving on difficult and rugged terrain to see and experience the hardworking life of common farmers. Tourists take pleasure in milking cow, ploughing field with bullocks, and feeding cows, fetching water out from a deep well, and weeding vegetable field. To see how the cabbage and potato, important ingredients of burger, are cultivated can be equally if not more satisfying than eating a burger. Sleeping under the open sky with fruit trees around and refreshing cool breeze may be just as pleasing as sleeping in five star deluxe suites. A bullock cart ride sometimes provides more pleasure that a chauffer driven luxury car. Separating chaff from rice is as fascinating as solving a Rubik’s cube. In agri-tourism, tourists not only get the glee of scenic and serene ambiance of the village but also learn lifestyle, culture, and religion of farmers. It provides opportunities to visitor to participate in farmers’ daily lives and get satisfaction of living the life of millions of farmers of the inconceivable India who produce food for billions of people. Truly, experiencing agriculture is experiencing the core culture of India, not just one profession.

India is most suited destination of agri-tourism. It has diverse agro-climatic conditions suitable for growing different types of crops, fruits, vegetables, and trees. Most of the domestic animals are reared on millions of individual farms. Farmers are simple and hospitable. Indian villages and farms offer unique experiences. Visit to a farmhouse in Kashmir valley to be acquainted with the cultivation of saffron, and to feed and shear sheep; visiting a grape farmhouse in Maharashtra to see its cultivation, harvesting, and in-house preparation in wines; organic cultivation of wild turmeric by aboriginals in Kandhamal hills of Orissa are the subjects which will interest many of the tourists particularly those who are urban and are from developed country. Visiting a village in Khera district of Gujarat to know and participate in milk production, collection, and its processing, is some thing for which both international and inland tourists will always be ready to pay. We just need to develop such theme based tourism and market accordingly.

What all will meet agriculture tourists expectations? Something to see…like crops in field, agricultural practices in progress, and if the tourists have opportunity to have hands on those practices, tourists are enthralled. Banana tourism in Ecuador gives opportunity to tourists to visit farms, see the crop operations, like harvesting, transportation from field to place of value addition, and tourists enjoys seeing the process and walking along the farm workers. Farm workers are expected to be like tourists guides who can explain what, why, and how of all the practices and can also answer all related queries of tourists. Tourists would be happy in doing something on their own which gives them a visible result or a feeling of accomplishment. Churning curd to get the ghee or butter milk, and shearing sheep are few such experiences which gives an metropolitan tourists more value of their money. Addition of some difficult tasks like, climbing on a palm, ploughing the field with the help of bullocks, walking on hilly terrain, or transplanting rice in muddy fields are challenges which tourists like. And in the end when they return home with local made handicrafts, homemade wines and jams, or self harvested fruits and vegetables as mementoes they find their tour successful and fulfilling.

But it will not happen on its own. It requires niche marketing. It needs to be planned, publicized, and managed. The farm houses needs to be developed so that it serves the tourists’ purpose of being able to see most of things within small distance. Farms could be thematic. And theme may be based on a local festival, season, or some times on popular food like, pizza or burger. For example, a farm house based on the theme of a festival will have all the crops, fruits, vegetables or sometimes livestock which are any way related with the festival. The pizza farm is very popular in west where one part of farm house is dedicated to the circular arrangement of all the crops and animals in pie shaped wedges of chilli, pepper, garlic, wheat, onion, tomato plants depicting various ingredients of pizza. Display of old farm machineries, utensils, bird houses, grain storage structures etc. attracts tourists. Arranging tourists’ visits during the local festivals adds more spices for the tourists.

Marketing and management of agri-tourism entail specialized skills. Joint efforts of all stakeholders like, farmers, local village and district administrations, agriculture department, tourism department is must for the success of such ventures. Easy accessibility, comfortable stay, cleanliness, quality food, security, medical facilities are few pre-requisites for any tourism venture. Development of basic facilities for tourists can be undertaken either at the community level or at the individual farmer level. It is good that our harvesting seasons and festivals coincide with the tourists’ season when more than 70% of foreign tourists lands in India. However, it needs to be communicated and marketed well among tourists.

It is a win-win game for all the players. Tourists get all the fun and understanding by paying very less, get a pollution free environment and chemical free diets, get a crowd free peaceful break from their works. Farmers get some extra money from their main occupation with small investments of their time and their easily available local resources, others get work in village themselves, tour operators get new destinations and new clients, …and hitherto unknown villagers and farmers get recognition of their village and profession. It only requires concerted public private partnership to make it happen. When Rs. 40,000 crores already planned to be spent in this financial year under NREGS only, funds at the village level are no longer a constraint. There are many more government sponsored schemes which can be pulled together to develop infrastructure, manpower, and market for agri-tourism.

‘Incredible India’ campaign is showing its results and the number of foreign tourists arriving India has gone up to more that 5 million in 2008 adding more than 11700 million US$ in our foreign exchange . Number of domestic tourists has also increased with average rate of more than 10% per annum in last five years. Ministry of Food Processing Industries has planned to invest in agriculture production and processing to increase India’s share in global food trade from 1.5% to 3.0 % by 2015, which in turn will help agri-tourism to offer more to tourists. Agri-tourism needs to be integrated with overall tourism strategy of the states.

A beginning has already been made. Increasing number of farm houses offering the service of farm tourism and many more enthusiastic farmers willing to join the bandwagon auger well for the agri-tourism in India. A gentle push in this direction will open many new destinations with exciting experiences at very low cost for the tourists both from abroad and from our own country.

Why don't you experience and enjoy it..

Niraj


Want to know, what Hindu Businessline says about:  click here  

Bottom Up Approach of CSR

Recently, in a panel discussion on ‘Corporate Social Responsibility (CSR)’ in Delhi organised by International Funding Agency,  speakers after speakers went on reiterating corporation’s responsibility to be socially responsible. Speakers kept on highlighting that products, production process, and marketing strategies of all corporations need to be socially, economically, and environmentally "acceptable". Suddenly, almost taking the discussion head-on, one of the participants stood and said “it is accepted that business houses, being the part of larger social system, need to be concerned about the implications of their business for the society, but we also appreciate that corporations exist for profit, and make profit by serving member of the society. Corporations will be socially responsible only when it adds in their profits, and also the social system recognises and rewards their socially responsible behaviors. So, the ultimate movers of CSR are consumers and not corporations”. He further added “unfortunately, each one of us is trying to pass the buck to corporations without even acknowledging that we too are responsible for corporations’ behaviors”. For the moment there was a silence, and when discussions resumed, it has changed tone and tenor. After all, there were reasons in his statement.


Consumers, the major driver of any business, have been found lacking in their response towards the efforts of making CSR a reality. Consumers have failed to encumber or even resist the consumption of socially detrimental products and services. Consumers tend to enjoy everything without considering its after and side-effects of thoughtless consumption. Consumers, by and large, are either ignorant or pretend to be unaware of the ultimate price they have to pay, and consequences society has to face. Can’t consumers be socially conscious, and responsible? Can’t they use only those products and services which are socially desirable? Why can’t they prefer those companies having better track-record of business?

These questions clearly are pertinent and make a case of bottom-up implementation of CSR? Consumers, being the most powerful and central to any business should be conscious of their own roles and lead the movement towards CSR. It is natural that if the CSR becomes consumer driven it will be become part of the corporate management system. Today, corporations are the inventing mechanisms to ‘project’ themselves as socially responsible. Civil society and NGOs have been tetchy against corporations for their ‘only profit’ oriented business. Business magazines have been evaluating corporations based on their own parameters of CSR and writing for and against corporate behaviors. Academia has been studying various organizations to find out the most appropriate business strategies which will help in developing the most suitable definition of CSR. Today all concerned with corporations (with obvious exception of corporation themselves), hold corporations if not solely, then primarily responsible for CSR. And, consumers are not in consideration at all. Unfortunately, in spite of being the most potent players in business, consumers continue to be cold towards their own expected social responsibilities, “consumers’ social responsibility”. Consumers’ priority, and decision making process are too short sighted and self-centered.

For common consumers, the mantra seems to have changed from “ needs based consumption” to “products based consumption”. Today consumers, regardless of their income, have comparatively increased hunger for consumption. They want to own or use everything at lower cost in least time. Proliferation of plastic goods and so called Chinese goods in the market are evidence of such changed behavior. Awareness about the enormous hidden cost of participation in the mad race of ‘owning everything by paying something or almost nothing’ seems missing. When individual consumer is not bothered about the social impact of his / her own behavior, then talking about CSR of corporation is like duplicity.

Although, it is undisputable that corporations have their social responsibilities, continuous focus by all the stakeholders on CSR has literally turned the spotlight of responsibilities on business houses. Though this no way undermines the contributions of civil society, NGOs, government, and consumers, few would disagree that those collectively responsible for creating the desired environment for CSR have failed. Even investors and potential employees are still making ‘rational’ decisions which are based on ‘maximum return on minimum investments’. Shareholders wait for ‘dividend’ from companies and not reports on their ‘socially desirable performances’.

Can consumers really push corporations towards ‘Corporate Social Responsibility’? Yes, they can. For, they have the most powerful weapon built in their purchasing power. Consumers have the freedom to prefer or ignore a product or products of a given producer. If consumers behave responsibly corporations will be compelled to fall in line. No doubt, CSR (consumers’ social responsibility) will affect CSR (corporate social responsibility).

Understandably, it is difficult for consumers to change their behaviors as these are dependent on not only consumers’ attitude, awareness, and their socio- economic status but also on market related factors. Expecting consumers to be highly involved and evaluative in every purchase is not practical. Furthermore, the concept of CSR is too complex and evaluating corporations’ behaviors is not an easy task for common consumers. So, how can we make consumers socially responsible? First, consumers must appreciate importance of own consumption behavior and the impact of their behavior on society. Corporations are required to be more forthcoming about their business practices. Media, which are both omnipresent and omnipotent, need to inform consumers about the businesses of corporations and their impacts on society. NGOs besides playing the role ‘watchdogs’ by collecting and analyzing information about various business and educating consumers. Government too has to play the roles of regulator, and also of facilitator to save common consumers. However, the master key remains in the hands of all powerful consumers. If consumers take their stand and make it clear to the corporations, corporate social responsibility will become priority for all the corporations. And this in fact, will be the most viable and sustainable way of promoting CSR, i.e. bottom up approach of CSR.

I hope you enjoyed reading...

Niraj

CSR Communication: An Intoxicating Brand Building Instrument

“Generating employability” was the title of an article which had appeared in Economic Times under the section with heading ‘Philanthropy’ (6th June, 10; Kolkata Edition). It was an interesting journalistic piece. The title suggested that it is an article which is about a philanthropist or a development organization which is creating employment for those who really deserve and can not get. But once you have gone through the article you will find the story is about a multinational corporation which is a well known BPO in India, but also has “business interest in philanthropy”.

Not only the write up of the article is engaging, but the context too is timely. It talks about a campaign by the employees of Genpact to clean the surroundings of Qutub Minar in New Delhi. The context in the article (Commonwealth Games) makes the initiative apt and worth appreciating. The excitement and satisfaction (of their philanthropic works) among the employee are quite natural and expected to be with them for some time. I am sure, all those employee who participated in the event will keep their photographs with gloves, black bags, and pitchforks in hands on their office table, or will upload on their social networks sites to show that we do care for the society. The same event would be on the website of the company. These are understandable and employee and the corporation deserve these, at least.

But what is more interesting to find that this article has done a great favor to the company by adding in their “brand value”. I am sure, no advertisement would have done so for the company. Quotations of the company representative have very intelligently but gently conveyed the message which any company like Genpact would like to convey and which will help their further building their brands. It certainly establishes that “CSR Communication” works for the companies.

The mails by the inspired employees indicate the higher motivation and high self esteem of the employees. And, company going to reap the benefit of this without spending any extra penny. If company wants, it can keep the motivation alive for considerable period. What a gain ? It is a tacit, indirect, and powerful tool in the hands of corporate managers to achieve more by spending less.

However, it is true that corporations need to do something which is worth considering for CSR communication. And it does require skills of planning and executing such efforts /events, and more so communicating to stakeholders so that returns are very high, both tangible and intangible.

One can, indeed argue whether such actions are enough to be considered as a CSR related activity but the article (CSR Communication) has certainly done more to the company than what company might have expected from the campaign.

Waiting for Rain.....
Niraj

you can read the article by following the link: http://lite.epaper.timesofindia.com/getpage.aspx?pageid=7&pagesize=&edid=ETKM&edlabel=ETKM&mydateHid=06-06-2010&pubname=Economic+Times+-+Kolkata&edname=Kolkata&publabel=ET

B2B: Changing Landscape of an Indian Village

I came to my native village in Bihar to enjoy summer vacation in true rural setting. To my pleasant surprise, the village has changed a lot since I last visited in 2004 summer. Changes are not only physical, i.e., approach road (from district hqrs to village) has become metallic, roads inside the villages are brick soled, and you can really experience electricity in villages etc., but there are other changes which are more important than those physical changes. Villagers are happier, more confident, and proud of their occupations. Although, economy is still agriculture oriented but many of the villagers have now other sources of income. Few of them are government servant, few have their small business in nearby market, and few have their children or relative working in cities. All these have made villagers a bit richer, have added into the confidence of the villagers about their financial security, and have given many options to villagers to spend. Proximity to the urban centres, penetration of media in the village houses, and frequent visits to the relatives working in cities to villages or villagers visits to cities have transformed a conservative villagers into aspiring consumers. Now villagers flaunt their Boleroes (a sturdy sports utility van) and not their bullock carts, show their mobiles phones and not radios, move on mobikes and not on bicycles, use Dove shampoo and not lifebuoy soap …….. i.e., village has undergone major change, i.e., Bullock cart to Bolero (B2B).


It is also true that caste difference and caste based class-differentiations are still prevalent. There are still poor people who have to struggle for meet their basic needs of food, clothes, and shelter. But effect of consumerism was palpable among such group of people as well. At least their thinking and aspirations reflected the impact of ‘development’. Such changes reminded me a book by T. K. Bhatia where author has categorized Indian consumers in three categories, namely, business, bike, and bullock cart. He further classified the business categories as super rich and rich. Second category has again interesting classification of motorbike (upper middle class) and bike/ cycle (lower middle class).

What is more interesting to notice that now in the villages one can notice only a continuum and not clear categories, and the rural population seems to be moving upward. Another interesting change one can observe in the behavior of villagers is that as they move up in the continuum their behavior tends to reflect increasing level of consumerism. Consumerism appears to be directly correlated with the income of the villagers also, which hitherto was the characteristics of urban population. The philosophy of simple living seemed to have been replaced by fast life with maximum consumption. Younger generations, irrespective of their family income, are interested in consuming and owning goods which their parents have not even thought of. I had heard of villagers taking personal loan from relatives or friends to buy lands or for social or religious functions but now villages are taking loans to buy durables and also goods of regular usage from banks. Only a decade ago for we villagers collective identity and community status were of prime importance but now I realized individuality and self status have overshadowed those values.

Electronic media has not only penetrated the village but has also been able to influence the lifestyle and purchase decisions of the villagers. Soap operas are popular among villagers particularly among women. Women are aware of names of different brands of the cosmetics and toiletry products and influencing the decisions of their male counterparts. The afternoon discussions among the women are on the subjects related to soap operas and the products of daily usage. I was surprised to see when village women demanded used branded spices and grocery products which were earlier home made.

Market too is now quite changed and responsive. All major brands are available in rural stores. Although the market and retail format are still same but customers have wide range of products and different brands of same product to buy from. Although actual purchases are still being made by male members but now they either ask for a branded product or ask many questions before they actually purchase and new product / brand. Certainly rural market has been changing from push to pull.

It is right that in last ten years we have lost some age old traditions and values but at the same time new groups of customers have emerged and market has further empowered them. Consumerism has affected the villagers both way, but majority of changes are certainly positive and welcome.

Enjoy your summer...as rain is knocking..
Niraj

What A News ?

Lending Rates in Microfinance
I was reading a news item in Economic Times about a Kolkata based MFI " Bandhan". It has slashed the lending rate to 19.1% from 24% that too on reducing rate. This is the news which will create a lot of discussions among the MFIs and also among the people like us who have interest in rural development.
Although the newspaper said that "it could spark off a rate war among the MFIs", but I don't see happening so. There are many reasons for that.
However, there are many positives about it, and we must see them first -

• The MFI has come out openly about the their lending rate.
• This may force others to declare abot their lending rates.
• This has also made clear that what is the rate the open market expects to be charged by MFIs.
• If lending rate is not comparable to what Bandhan has quoted (for which I am sure, most of the MFIs are not even closer to) the MFI will try to reach closer.
• Justifications by other MFIs likes, - lower rate is not possible because of smaller amounts to be given to larger number of people, reaching to borrowers is tough and costly, follow up and collection costs lot of resources, there is palpable risk associated with it, MFIs can't be expected to be very efficient because of objectives, type of clients they serve, and the type of service they are in, can not be accepted in the light of what Bandhan has declared.

Concerted efforts, dedication, and professionalism can make "development" cheaper. The team led by Chandrasekhar Ghosh, MD, Bandhan has proven that. This is true that financial institutions like banks are lending money to these MFIs on >12% , so reducing the operational cost to that level is commendable. Many MFIs and financial institutions like, SIDBI has already praised the move.
Why will many MFIs not fall in line ?

• There is no such strong demand from from clientele (consumers) side. Although, it is quite understandable.
• Most of the organisations are working at smaller units and one's actual lending rate is not known to other.
• Even if higher lending rates are known, so what ...?
• There is no system / authority in place to take cognizance of such practices ?
• MFIs own network or self -management body (although there is a network headed by Vijay Mahajan) is ineffective.
• Most of the MFIs (particularly those who have entered late in the "market") are being run as commercial organisation and not as a development organisation. It is important to mention that development organisation too can make profit (only to extent it is required to sustain or grow).

You must have come across the outcome of recent meeting of Network of MFIs where many decisions were taken about the - whom to lend, how much to lend, why to lend, how much to charge, what would be recovery mechanism, maximum how many MFIs can feed one borrower... etc. But what is happening is known to every one.
However, I must appreciate the efforts of 'Bandhan', it will certainly have some impact....positive.
Summer is catching up. Hopefully, this will bring good monsoon for us and then it will be cooler..Same may happen with lending rates of MFIs.

Keep enjoying..
Niraj

Learning From Past and Present For Future....

Dear Friends,
Greetings and Congratulations from the blog of Rural Managers!
First, we take immense pride and pleasure in welcoming  'new managers in making' in the club of Rural Managers. This is a club of those who care for their 'roots (Indian Villages)'; and of those who care for the 'surroundings (Society of which we are part of). We represent professionals dealing with development, rural banking or rural-finance, agribusiness, rural marketing and many more for whom rural India is both gyaybhoomi (place to learn) and karmbhoomi (place to work). By joining the club of rural managers we dedicate ourselves to study and contribute to the sectors in more professional way.
Be clear, business and development are complementary and not competitive; and you can’t think of one without other. I am sure, at the end of two years you will not only be able to unravel the myth of “business managers don’t think of development, and development managers don’t appreciate the contribution of business”, but will also be able to learn skills of managing both simultaneously.
I also take this opportunity to welcome seniors who are back from their summer internship. I am sure you are now wiser, more professional, and closer to the reality. Build on the learnings you had...these are precious.
This blog assures you an interactive forum of discussions on meaningful subjects and appeals you to be the active partner in this noble venture. By signing in as the follower of the blog you not only join the group of elite rural managers but can also contribute to the cause for which you have decided to be a rural manager.
To start with I have invited Anuj who is one of those rural managers who have decided to dedicate themselves because of genuine interest in the sector to write for new members of our club. An engineer, worked in highly ranked IT company, did management with specialisation in rural management, currently contrtibuting to much needed health sector. I am sure, his welcome note will not only give you the importance of course but will also help you making best use of management education and institution which you have selected for yourself. He is an alumnus of XIMB so he talks about his alma mater but it is applicable for all the new members of club irrespective of institutions.
We Wish You Very rewarding Years ahear and A Very Bright Future.

With Best Wishes,
Niraj

.......................................................................

Dear Friends,

I am honoured by the fact that Prof. Niraj gave me this opportunity to welcome you all to the Rural Management program. First, let me congratulate you for choosing the path less travelled.
You stand on an important milestone in your career as well as your personal life. Because what you will experience in the coming 24 months or so will completely redefine you as an individual. XIMB as an institution is respected for moulding students to become professional managers and I truly believe in that. RM program also makes the students sensitive and it is this human aspect of the program that is the biggest differentiator it has from the rest of the courses offered anywhere in India.
XIMB is an amalgamation of cultures in the truest sense. With multiple residential programs running at the same time, the institute offers students with an opportunity to meet with the best minds in the country. We have a whole lot of faculty who are experts in their fields and believe me you are going to find it extremely difficult to find reasons to miss their sessions. Many of these ‘mentors’ come with credible industry experience, so you can count on their words of wisdom in the toughest moments in your professional life.
I have myself been through the journey and I will share my guiding light with you. One of my seniors told me – Keep your mind open. And I followed his advice. RM program is a niche course, yet I found it is so relevant to today’s business scenario that you cannot stop yourself from thinking about the possibilities that exist. Our world and our nation are in the midst of a chaos and you can hear all sorts of cries for ‘development’. RM program at XIMB gives you the space to define for yourself what ‘development’ truly means for you and for the people around you.
Let me also give you a word of caution. XIMB has a very open culture. That means that it leaves the onus on you to decide what you want to take away from it. So you may end up going back empty-handed if you do not utilize your time properly. We have all sorts of initiatives to shape your personality to become a really sensible and responsible human being and a highly competitive management professional. But it finally depends on you to what extent you are able to realize the potential in yourself.
Life at XIMB might also seem hard at times because we believe in academic rigour. One may also find oneself lost in the number of subjects one is supposed to study or the amount of assignments one is expected to deliver. Make sure that you define your purpose carefully, because that will help you sail through this maze.
Now the time for a hard-hitting fact. It is a common observation that students enter management program with a focus on ROI (return on investment). Generally this is determined only in terms of PLACEMENTS. While I personally agree that it is important to look at placements, but this consideration has to be made secondary to the learning that will take place during the next two years. You just cannot predict which job you will finally land up with. You can have high expectations and big dreams but do not make the mistake of missing the learning aspect because that is the only thing fully guaranteed at XIMB.
On the 17th day of July of 2010 you start your voyage to a successful career and I wish you good luck and hope you immensely benefit from your stay at XIMB. Keep your mind open, do not keep your ideas to yourself, seek guidance from your faculty inside and outside the classroom, make lots of friends, keep time for enjoyment, dream for a better world and believe in yourself.
Best Wishes,
Anuj Jindal
RM Program – XIMB, Class of 2010



In response to our blog, I got a very useful mail from Kiran, one of of our alumni, and I felt it worth sharing with you. I reproduce here and will be happy to get your comments..
Niraj
----
Sir,
Warm Greetings !!
I was going through your blog & I thought ,why not share some insights which could probably act as pointers for future rural managers.

• There is no substitute to knowledge about varied subjects & diverse topics. This is especially helpful when you are asked to illustrate concepts to interviewers. You’ll never run out of examples or cite the ones given in text book (A key point of difference).Moreover, in marathon interviews lasting around 1-1.5 hrs, only knowledge can be the saviour! This knowledge has to transcend beyond text books & probably can only be acquired by voracious readers who read anything they can lay their hands on! Nonetheless, newspapers & magazines can be a good beginning.
• It is high time students understand the difference between marketing & sales/business development. In India, mostly fresh B-School graduates get a sales or business development profile, though designation may be different depending on the stature of the company & the concerned business school. Profiles in core marketing are only handled by experienced hands & such profiles are rarely offered in campus placements. If you closely observe the PGP placements at XIMB also you’ll realize this is the truth! It is an accepted & proven fact that recruiters usually don’t prefer women (unless they prove otherwise) for such roles (More so for RM Area companies viz. Amul, Monsanto, ITC etc.)The only exception has been new age sectors like telecom & media. This fact should be clarified at the outset to students especially females, so as to avoid any undue expectations on their part.
• Knowledge can’t help if one lacks soft skills viz. voice modulation, conviction & proper body language. This is one area where RM students have to do a lot of work & this can only be possible if in group presentations, all students are asked to present & appropriate post presentation feedback is given. Sadly, some students always prefer to remain in the background and faculty members haven’t taken due care of this aspect. Deduction in grades or higher weightage to class participation component doesn’t help and it has been proved again & again.
• Very few students understand the importance of CV Value & the fault lies with the academic fraternity also for the same. One has to understand & appreciate the fact that corporates look for your achievements in the two year stint at XIMB & not what you have achieved in the past. There are numerous ways to enhance CV Value like participation in Case Study Contests, Business Plans, and Live Projects etc. Faculty members should encourage such activities & provide necessary support also for it also enhances institutes’ Brand Equity outside.
• There is an acute lack of clarity w.r.t. career choice amongst rural management students. They have failed to appreciate the fact that PGDM & PGDM-RM are two different courses & one isn’t a substitute for other or for that matter PGDM-RM students aren’t poor second cousins of the flagship course. This is reflected during placement process, when our students apply in hordes for certain companies displaying herd mentality! A company may be good and pay a good compensation, but it’ll only take people who fit in into its scheme of things. Just because it is a good choice for one, doesn’t mean it is good for all & vice-versa. Similarly, students fail to judge their own standard for there is a huge difference between interest & capability and grades certainly aren’t a determinant of one’s standard or interest in a particular sector/company. Faculty members should assist the students in making informed career choices.

Thanking in advance for a patient reading!
Regards,
Kiran Jyoti Mahasuar
Alumnus,Class of 2010 (PGDM-RM)
---------------------------------------------

C. K. Prahlad: A Development Guru

Sad and untimely demise of C. K. Prahalad, Professor, Stephen M.Ross School of Business, University of Michigan, USA is a great loss to the world of business, academics, and of course for all those poor about whom he has talked in his most popular book " The Fortune at the Bottom of the Pyramid- Eradicating Poverty through Profits". People call him a management guru, a strategy man, a business visionary....but for me he was a great "Development guru". I am among those who have not read most of his writings but have read all the edition of his above mentioned book.
The book gives us probably the most potent approach of eradicating poverty. His consideration of poor at the bottom of pyramid had many implications for the business and for the development. For him the people at the bottom of pyramid were not to be moved upward so that the pyramid either gets upside down or becomes a flat structure; but, they need to be considered for development and for building their capacity. He opined that those who are at the bottom need to be made active players in the business. For him business complements development and vice versa. This very thesis is enough to call him a " Development Guru".
The concept of inclusive growth, inclusive business, inclusive profit.... all have their root in approach suggested by Prof. Prahalad in his book. There was also criticism .....His views were considered to be extractive, exploitative, and were meant for profit . However, when it became clear that his 'Bottom of Pyramid' is not meant for making profit but for its inclusion in business processes , and once they become the part of business the empowerment is bound to come. He showed the world that empowerment does not come by charity or by the allocated fund meant for empowerment. The true empowerment comes by participation and by inclusion.

Further, the bottom of pyramid approach changed the thinking of development professionals. The paternalism (of giving away or doing things) is not the right approach because it further creates dependence and we miss the bus of true development. The examples and the cases given in the book clearly indicate that out of box creative thinking and innovative approaches, this not only provides opportunity (to those at bottom of pyramid) to use products and services which were hitherto available to only those higher in the pyramid but also, take care of underdevelopment by making corporations partner in development.
There are many more reasons to call him a "True Development Guru". We will certainly miss him.
May His Wisdom Continue to Benefit All Including Those At Bottom of The Pyramid.

Niraj

Agri-Tourism

This new concept is now picking up. During a recent training at IIM, Lucknow, one of the trainers talked about it and I got interested. I find some details on internet as well. But the questions remain...
-Is it only of academic interest or can it work..?
-Do you feel it is feasible in India ?
-If yes, has it a future in India ?

I would like to know more and more about it.

Niraj

CSR....

An interesting way of looking on CSR. Click on following link
http://epaper.timesofindia.com/Repository/ml.asp?Ref=RVRELzIwMTAvMDMvMzAjQXIwMTMwMg==&Mode=HTML&Locale=english-skin-custom
Happy Reading,
Niraj

Great ! Good Reading...

Dear Colleagues,
Its great !!!!! to see so many people joining the blog as followers. This brings added responsibilities on us. We need write more and more so that people can learn from our each others experiences, and explore themselves in answering many questions which some of us may put.
But I must tell you looking on this year's placement - I have many questions of which I do not have answers, and many observation to make which I consider worth considering.
Although I am not sure whether I will be the part of the placement team (in coming academic year) or not; but, I am sure, the success of students and also the institute depends on many factors which are under our control -
Learning from others' successes or failures is the easiest to do.
Engagement of students' community in many timely and academic discussions is other way of getting ourselves ready for future.
Going beyond the syllabus has always helped every one.
Exploiting every opportunity to learn.....seems too 'ideal' and 'most difficult' but pays most in long term.
We will continue to have discussions on such subjects.....
Once again, Welcome to the blog.... Do share, share,.......and share, because every one else wants to learn from your experiences and questions..
Niraj

------------------------------------------------------------------

Good that you have brought some important points...I will rephrase it just to emphasize.. !
Clarity of your own goal is - must. Sometimes we develop a feeling that it is too early or too late to decide the goal. Probably you are wrong. "Everyday is the first day for rest of your life" and you can make a resolution,...you can decide the goal....and start moving in that direction. Few of our alumni who are known to us, like Anirban, Inir, Jayesh, Vikash, Shikha, Jaya ....... had made their respective goal very clear during the early part of their stay in campus; I find them exactly on same path which they had thought of and had selected.
One very interesting suggestion...be sincere in class. That is the 'most important' and can make your stay in campus but also in your organisation...very comfortable.
Networking and keeping relation alive...Great ! This is the reason we have blogs. Keep blogging.

Niraj


--------------------------------------------------
This is what (excerpts) Saurabh..commented ! Thanks a lot !
1. My Gurumantra for the Juniors is that Believe in yourself and try to understand what you want. If you are clear with what you want you will surely work hard to achieve it.
2. Well for the second part-making your stay useful. I think that it is for you to decide. As per me the activities other than studies on campus are as good to learn as the classes. Do not take them lightly. Classes are to study so have a good time in class.
3. For the three questions part, Like Vikas sir I would prefer saying that their is no hard and fast rule for it. Questions can be from any aspect. Studies, Family Background, Project or any other dimension. Being confident is more important. If you are confident I am sure you can have a good time in the room in there. My whole Finals Interview was based around my Summer Internship Process.
4. But just one thing I can say is communicate with your superiors. It will really help you.
Thanks
Saurabh Singh
RM 2008-10
(for detailed comments please follow the comment link)

Dear Vikas....Greetings from XIMB and many thanks for your comments !
Few months back I read your interview on X-Post our alumni newsletter and could know about your professional growth. When I read your comments on the blog I find that with time you have really grown as a 'true professional' without leaving the your personal touch. Let me have my views on your comments...
Networking.....It is must for any professional. Probably we the managers in making and common professionals like us think that it is required for 'self' (mostly taken negatively), however, of late, I have realised that it is the expectation of 'society'. Society expects you to share your experiences, learnings, reasons for happiness and so... We all learn more from others than from books. So while you are sharing (networking) ..your attempt is not seen as selfish but is seen as the 'contribution'.
Secondly, what I found interesting....the comparison between RM and PGP. Yes, these differences are more in mind of we all. Beyond us it is XIMB, XIMB...and XIMB. However, I feel such comparison does affect our performance and affects "development of rural managers" adversely. It seems that we spent two years in campus as the 'second grade students' (PGP students are considered first grads). However, such feeling is absent from our ex-pgp students. This is my personal feeling and I would love to see the comments of other rural managers on this aspect.
However, I must reiterate, and emphasize... this is not true. I can't talk on behalf of others but general feeling (among the academic fraternity of XIMB).is that we, the RM students, are doing better or equally good (but in no case, inferior). Outside world has a lot of expectations form us (rural managers).
Your suggestion not to forget your 'root' and 'soil' is fantastic.....
Overall, it was good to see you on blog...I would be happier to see you again and again.....
With Best Wishes.......Niraj

Connecting the Links....

Fellow Rural Managers, and Rural Managers in Making.....

Your are a proud rural manager, or it is a matter of few hours when you will be donning the cap of "Rural Manager" - CONGRATULATIONS !!! I must tell you....you have a lot to cheer, and lot to feel proud of. You are the flag bearers of your great alma mater.

But, you will agree that you also have lot to share. You know, your few strokes on key-board will help someone making one's life, in being the part of organisation one has dreamt about, in making one's parents and peers proud. You have always tried and have shown the world that you are sensitive and compassionate towards need of your colleagues and friends. Then why don't you join me in making your owns happier ?

Are you ready....?????? Here are few tips....

1. Just put your one Gurumantra (in one sentence) for your own (juniors) to get maximum but meaningful out of one's about 24 month's association with your alma mater ....
2. Two ways to make stay most useful.....
3. Three qualities which a recruiter will always look for........
4. Four sentences which will make professional lives of future rural managers happier and valued by every one...
And yes, do not forget to write your batch and present profile (if you are already working).
I shall be happy if you accept my invitation and help me in creating a 'forum' from where your next, next to next....and future generations of rural managers learn and contribute for their juniors....

With Best Wishes
Niraj