Who would not want to listen to  the distinguished likes of Nachiket Mor, Dr. Swaminathan Aiyer and Vijay Mahajan, even if it meant  dragging oneself out of bed on the wee hours of Delhi's coldest Sunday morning? I couldn't resist missing the Second Annual India Conference organized by London Business School on the theme "Exploring Business Opportunities in Rural India".  Well, given that it was something to do with rural, I wasn't expecting the gathering to be dressed in the best of business suits. Luckily I was not dressed way out of place. I could manage to hide in the corner and focus on more important things. 

Let me begin with kudos to LBS students for their commendable effort in putting together this conference, especially given that they had to conceive, plan and organize the event sitting in UK. After conducting one such event (Social Responsibility Conclave at ISB), I can imagine and vouch for the amount of efforts that would have gone into this event management. The theme could also have not been more appropriate given the unprecedented interest from all sectors of society in rural economy.

Nachiket Mor was at his usual best in the opening key note setting the stage for subsequent sessions. Though he spoke more from ICICI Foundation's initiatives end, the strategies outlined - strengthening the rural delivery channels and creation of operating business models - seemed relevant to anyone interested in rural business. Touching upon the potential of and risks involved in Microfinance, he compared Grameen model with that of Compartamos (refer to my earlier post). While he was all praise for Grameen model, he cautioned on the commercial model of Compartamos, for in the shareholder's interest, it is virtually impossible to reduce the already exorbitant interest rates charged to the borrower. He said the irrational interest rates that Compartamos could charge was due to the illiquid immature market in Mexico.

He then went on to explain how some of the innovative rural products such as weather insurance which was pioneered along with Basix, as a better alternative to crop insurance, failed for the simple reason that there were not many weather stations close to the farmer's village. In a place where the local weather information was fed from a nearest weather station that was a 100 km away, why would a farmer pay for the premium? The post-analysis showed that in order for this product to make any inroads, a whooping 50,000 additional weather stations were required in the country. Nachiket also made a case for listing India's rainfall index, like that of other countries, in the international market. Moving from the financial products front, he later talked about the need for operating business models such as Fab India and Indonesia's Ramayana stores and networked enterprises such as Rural BPO and Rural tourism in the rural space. 

Taking on questions from the attendees, he mentioned the reason for proliferating ATMs in India. It was interesting to know that though the per transaction cost in a ATM model was much higher than a Teller model for the bank, it was the option that many banks embraced to get around the branch licensing restrictions. He ended his energetic talk on a note that he personally did not believe that market per se was not the panacea for reaching rural poor. 
The next speaker Dr. Swaminathan Aiyer, in a typical journalist kurta, started off saying he was asked to fill in the shoes of Tata Sons' JJ Irani just last night. He wondered why one assumes a journalist, owing to their apparent instant wisdom, is always assumed to be able to talk any topic. What was surprising was he had managed to put in a carefully thought out presentation with  3 relevant preconditions for rural economy to take off - Infrastructure & Connectivity, Capital, and Education and Skills development.

Talking about rurbanization, he went on to explain how due to lack of infrastructural support, an Indian village with 10,000 population was still called rural while an American village with 800 population was considered urban. Tamilnadu, the most urbanized state in the country (44% urban), owes credit to its unparalleled connectivity. He noted from his observation how once he could only cite a couple of tea shops on Delhi-Dehradun roadway when there was no highway. When he recently heard of a 8 crore worth robbery on the same highway, he said, on an albeit lighter note, on how this was indeed a sign of prosperity owing to good connectivity.

He then cited his shocking experience at Dhaka where he was trying to find if microfinance was the panacea to poverty. It is ironical to note that all the recipients of the microfinance were better-off, but in larger picture, the village was not any better-off. There were only limited entrepreneurial opportunities that were viable in a village. Well, it is unrealistic to expect to every microfinance borrower to open a tea shop in the village. He also cited how a woman due to social dis-empowerment has hardly seen a customer and hence cannot think of anything but buying a buffalo, in some cases goats, for livelihood. He ended stressing on the need for expanding the total available business space in the rural India.  

The syntactical oversights ('manks' in the place of 'banks') on and plain template of his Powerpoint presentation was evidence of how short a notice he was given to address the gathering. Anyways, who would complain after such an informational talk that drew lessons from his personal experiences. After all 'Swaminomics' would not have carved a niche and emerged from no where!

To be continued.. (check next post)

~ Santosh

03/27/2011 19:24

life is in reality only a dream


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