Tag Archives: Social Protection

Stories of households in poverty [4]: Household of Mathiben Garwal at Kankari Dungari village, district Dahod, Gujarat

Some time ago I studied some households living in multi-dimensional poverty conditions in various states. I spent a considerable amount of time with all the members of the families, and accompanied working members to their places of work. I tried to understand their desperate livelihood strategies, their external environment, their needs for financial services, and their access to social protection. I am sharing some selected stories here.

Fourth of such stories relates to the household of Mathiben Garwal. Mathiben does not know her age, but suggests on persistent inquiry that she may be about 40 years of age. She lives with her husband, Savjibhai, three daughters, aged 16, 13 and nine years, and two sons, aged 20 and five years. She has one more daughter who is married and lives in another village.

 Human capital

Mathiben and her husband are illiterate. Their elder son studied up to third standard and now migrates to Vadodara for work. Younger one is not admitted in the school so far. Daughters never went to school at all.

Dwelling and assets

Mathiben’s family lives in a house made of mud and bricks. It does not have a toilet but has an electricity connection with two plug points. They have bulbs but no fan; have some basic kitchen utensils and six wooden cots. They do not have a cycle, radio or a television. Mathiben cooks on a clay chulha (stove) with firewood collected by her and the children during the day.

Her household has agricultural land but neither she nor her husband knows its exact measurement. She points out this is the land you see[1]. Records show that she has six bighas of land. Her husband’s elder brother expired some year back without getting married so Savjibhai inherited his share also. Their entire land is at a higher level with low soil depth due to continued water and wind erosion. There is no means of irrigation and they grow only maize during monsoon. Earlier when Mathiben was also migrating with her husband they did not have any livestock but they acquired a buffalo when she stopped migrating. They do not have bullocks and hire bullocks from neighbours to till their land.

Livelihood strategies

As the agriculture is rain-fed and there is no other work in the village, Savjibhai migrates to Vadodara to work as unskilled wage laborer on construction sites along with his elder son. His son is also unskilled and seeks casual employment at Vadodara. They remain in Vadodara as long as they keep getting work. Duration of their stay at Vadodara can extend up to five-six months. Sometimes they have to come back in fifteen days only. They however make sure to be present at the time of sowing and harvesting their fields. Mathiben also used to accompany her husband earlier but does not do so any longer, as her health does not permit her to undertake strenuous work in Vadodara. She looks after the agriculture in absence of her husband, tends to the cow and collects firewood with the help of her children. Her husband and the son get INR 100 to INR 120 per day depending upon their bargaining situation. After a month of stay they are able to bring home about INR 1,500 to 2,000 as they get work for about fifteen days on an average in a normal month and have to spend on their food while staying at Vadodara.

Stay at Vadodara is treacherous. I visited their make-shift colony at Vadodara which is on an open space belonging to the Municipal Corporation of Vadodara. Hundreds of tribal families migrating from different villages share that space with about 25 families from Kankari Dungari village. The adult members leave for work or in search of work during the day, while their children play in the dirt and garbage of the colony. Elder children also look after their younger siblings, feed them during the day and collect firewood from far away places for cooking. None of these children goes to school which is anyway neither feasible nor possible in the given conditions.

All the families live in a small patch of land enclosed by polythene and jute sheets.  Even the roofs do not have any hard material.  The entire structure is supported by the wooden sticks. The structure is obviously not suitable for a human habitation in any weather. There is a municipal water connection for one building under construction on one side of their colony, which is used by all the families staying there to meet their drinking, bathing and cleaning needs. The colony does not have any toilet or bathroom facilities and the inhabitants use one corner of the land plot for these purposes, which makes the entire place even more inhabitable. Women have to finish off their morning routine while it is still dark. They also have to take bath hiding themselves behind their houses in the open.

None of the families staying in the area has been issued ration cards and they have to depend on the local shop keepers for procuring their daily provisions. They do not avail of medical facilities at government hospitals, as according to them whenever they tried to do that, they were made to run around from pillar to post, and did not get any medicine even after wasting much of their time. They go to the private clinics when they fall sick and have to spend a large part of their earnings on their healthcare. Their unhygienic living conditions appear to be one of the major reasons for their falling sick.

Food security and vulnerability

As their agricultural land produces only one crop, it does not meet the food requirements of the household. According to Mathiben that is precisely the reason why her husband migrates along with her son. Maize produced at the field suffices for the household food grain requirements for about eight months. Sometimes when there is an emergency they have to sell maize after harvesting and purchase later at more than double the price. Mathiben had to resort to selling maize recently when her younger son got sick. She did not have money and her husband and the elder son were in Vadodara. She had to spend about INR 2,000 on his treatment.

As two members of the household migrate to earn and the family has access to the subsidized Public Distribution System (PDS) food, there has been no episode of hunger in recent past.

Other consumptions and expenditures

Agricultural land only produces maize and hence Mathiben needs to purchase other provisions such as lentils, vegetables, cooking oil, sugar, salt, and spices from the market. She buys smaller quantities of the provisions at the village itself. For larger quantities she travels to Limkheda paying INR 7 as one-way fare.

They buy clothes for children and themselves during the marriage season and spend about INR 2,000 at a time. The major expense is however on chandlo, which is about INR 10,000 every year. Other expenses include buying shoes, soap, hair oil, tobacco and alcohol. They did not report any substantial expenditure on entertainment although the elder son gets to watch some movies in Vadodara.

 Significant events and income shocks

Mathiben’s household did not experience any major income shock in the recent years. She managed the marriage of her daughter without having to borrow money from outside.

Financial needs

Whenever the father and the son come back from Vadodara, they have cash and for want of any suitable savings mechanism they keep it at home. Their expenditures are generally small and frequent, excepting on medical care and purchasing food grains in bulk. Practice of keeping cash at home thus addresses their liquidity requirements but is very risky at the same time, as the nature of construction of their house does not make it a safe place for stashing cash. Being illiterate, the formal savings mechanisms, especially the banks, intimidate them. Even if they overcome their inhibitions and deposit money in the banks, high frequency of their transactions will entail significant loss of their working hours. They therefore need a savings mechanism where they can frequently deposit and withdraw small sums without having to waste their working hours.

They also need to borrow money at regular intervals for various purposes. What was however remarkable is that the villagers do not want to talk about their debts. They also do not view their debt in totality. Debt does not seem to be an independent entity but appears to be subordinated to its purpose. Inquiring about debt in itself generally evokes a negative response. It is only when the question is about the amount of debt for a particular purpose; the amount of debt is revealed but is limited to that particular purpose. Unless one exhausts all the purposes, the situation of indebtedness is not understood totally. Indebtedness situation of a household starts becoming clear only after the first interview, and its fuller assessment requires at least two to three subsequent interviews. Loans may be taken against some collateral or without collateral. Lending rates for collaterized loans range from 36% to 60% per annum, while there were instances of some non-collaterized loans attracting an interest rate of 150% per annum. At least one instance was reported with an interest of 25% per month on a loan amount of INR 2,000 availed for medical purposes.

The most important purpose for obtaining a loan is a medical condition followed by meeting the expenses on chandlo[2], agricultural investments and the expenses on life-cycle events such as marriages and deaths. Mathiben’s household spends about INR 10,000 on chandlo every year. Whenever they do not have cash to pay chandlo, they borrow it from outside. Mathiben had borrowed INR 1,500 just before my first visit to her household to pay for chandlo, which was organised by her immediate neighbor to construct his house. She however did not need to borrow any money for the marriage of her daughter and it was managed with the amount of chandlo and the dowry her daughter received. She normally borrows money from the shopkeepers at Limkheda. Responding to a question as to why she does not borrow from a bank, she mentioned that banks give loans against the jewellery as collateral and she does not have jewellery to offer to the banks. She also felt that obtaining a loan from a bank is a big hassle and the banks make people run around. Their situation may however immensely improve if they have an access to a reliable and reasonably priced credit mechanism.

The earning members of the household travel far for their work and are also engaged in employments not providing them with any security. They therefore need to be insured against accidents and death. The household also needs suitable insurance services providing coverage to their health and assets. As Mathiben’s husband and son migrate out of their village, they need reliable remittance services so that they do not have to personally come back to the village for delivering money to her.

Access to financial services and microfinance

A self help group (SHG) was earlier functioning in the village that had membership in her locality. She was however not a member of the SHG as according to her, only old women were made members. She further mentions that the SHG could not function for a long time as its leaders took away the savings of the members. All its activities were controlled by Mohanbhai[3], husband of the president, as he was the only one who was educated (till class 7). The SHG received a subsidized loan for buying a grain grinder which was installed at the president’s house. She promised to serve the members at half the usual rate but did not keep her promise.

Savjibhai was persuaded in 2002 by an agent of life insurnace corporation (LIC) at Vadodara to purchase a life insurance policy carrying a premium of INR 900 per annum. He deposited the amount for two years but did not continue it as he could not arrange for the premium amount timely. In the process he lost out INR 1,800 in addition to the insurance cover. Whenever he and his son have spare money at Vadodara, they keep it with their employers as it is not safe to keep it at their place in Vadodara. They get it back when coming back to their village. Sometimes they lose their money (they remember losing it on three occasions earlier, when the employers refused to accept that the money was kept with them) but keep following the same mechanism for want of any alternative[4]. They do not explore the option of saving their money in a bank at Vadodara as they feel that no bank will open their account at Vadodara. On probing deeper, Savjibhai admits that he would not want to open an account at Vadodara as he does not know and trust anybody there other than his employers. Being illiterate, he can only transact with people who he trusts and not on the basis of some pieces of paper. Savjibhai is however willing to put his savings in a bank if it is available in his village and the product suits his requirements. He feels comfortable with the post-office as he knows the postal personnel in the neighboring village Dantia. He however wants either the post-office to readjust its working hours or collect his savings at his doorstep.

Social protection programmes available to the household

Mathiben’s household has been issued an Antyodaya ration card. She is accordingly entitled to receive 16.7 kg wheat flour and 16 kg rice on payment of INR 86. According to her, she only gets 5 kg of rice. Moreover, the wheat flour she gets most often smells foul and is infested with insects. She feeds it to her buffalo. She has an option of buying 3 to 4 pouches of edible oil but is able to procure only 1 or 2 pouches, as she does not have enough money to buy it at one go. One pouch costs her INR 45 at the PDS shop, while it costs about INR 90 in the open market.

Mathiben, her husband and her son have been issued job cards under national rural employment guarantee program (MGNREGA) but they had got no employment till the time of my last visit to her household. Four items of work were sanctioned in the village under the programme and were ongoing during my visit to the village but they all related to digging wells at private fields. The concerned field-owners themselves decide who to be employed for work. They therefore usually employ people from their own households and their neighbors. Mathiben mentions that ‘the employment goes to the family members only; who will call us’. She is not aware of the provisions of guaranteed employment under the program.

Additional financial needs generated by social protection programmes

Mathiben is not able to procure her entitled quantity of edible oil for want of money and she has to buy the additional quantity at almost double rate from the open market. Thus she needs access to small credit to be able to claim her entitlement in totality.

 Leveraging on their social capital to meet financial needs

Mathiben could marry off her daughter without having to borrow money from outside with the help of chandlo amount she received from her community members and the dowry she received from the groom’s family. She is also not unduly bothered about arranging the money for the marriages of her other children unlike her counterparts in UP. Institution of chandlo thus takes care of the financial needs for the lifecycle events concerning her household.

[1] Most households in tribal villages of Dahod district live near or inside their fields.

[2] Chandlo: a community financial institution in tribal areas of Gujarat.

Life-cycle events such as marriages and deaths entail large amounts of expenditure but in most cases it gets managed with the money collected through a custom called chandlo vidhi. Chandlo is monetary contribution that relatives and other community members make towards the expenditure a household is incurring on a funeral, marriage, or other social occasions. Although such a custom is prevalent in other parts of India, but it is always at a much smaller scale. Here, the contribution may be as high as INR 15,000 on a single occasion.

Chandlo seems to be the community’s response to a deficient financial-especially savings and credit-infrastructure, based on trust and mutual dependence. It harnesses the social capital of the localized tribal community to facilitate all its members to adequately celebrate social occasions. In effect, it works as a savings mechanism to be encashed at the time of need for a lump sum. If some households do not have a social occasion for about five-six years, they organize a chandlo with some other purpose, mostly construction or upgradation of their house, to recover the money they contributed as chandlo to other households.

 It has, however, started getting oppressive now with conditionalities such as the recipient having to pay double of the amount she received for her chandlo, to the chandlo– organizing household. Such amounts over a period of time become very large and many households have to resort to borrowings to be able to give chandlo. At least five relatively better off respondents reported that they migrate to earn money to be able to pay chandlo. If it was not for chandlo, they would never migrate. Continuously increasing amounts of chandlo also raises the levels of expenditure incurred on their life-cycle events. Some resistance seems to be building up against the oppressive forms of chandlo.

[3] He has since expired. Interestingly, nobody in the village was willing to speak about the SHG and Mathiben was the first person to provide some information that was corroborated by the others in subsequent interviews. The closure of the SHG seems to have generated substantial amount of suspicion and distrust within the otherwise largely closely-knit village community, and they do not wish to acknowledge or talk about it.

[4] They are vulnerable to be cheated in other ways too. They are illiterate and save different amounts irregularly. In case of taking their money back after four-five months, it would be difficult to accurately calculate their total savings. A dishonest employer may be tempted to take advantage of this situation.


Stories of households in poverty [3]: Household of Meena Devi at Barakheda village, district Kanpur Dehat, Uttar Pradesh

Some time ago I studied some households living in multi-dimensional poverty conditions in various states. I spent a considerable amount of time with all the members of the families, and accompanied working members to their places of work. I tried to understand their desperate livelihood strategies, their external environment, their needs for financial services, and their access to social protection. I am sharing some selected stories here.

Third of such stories relates to the household of Meena Devi, 47, who lives with her husband Mulchand, 50, and seven children. Sons are 26, 13 and 10 years old, while daughters are of 27, 20, 18 and 14 years. Only the eldest daughter is married. However, she remains sick and has been left by her in-laws at Meena’s place. Meena belongs to Katheriya, one of the Scheduled Castes.

Human capital development

As Meena was born and brought up at a town, Kanpur, she has studied until eighth standard and is the one of the most educated women in the village. In fact, none of the village women of her age and above is literate. She wants to educate her children properly but is unable to do that for want of money. Two younger sons and the youngest daughter currently go to the government school in the neighboring village. The villagers are not happy with the quality of education at the school and if they could afford, they would like to send their children to the private school located about 3.5 km from the village. Her daughter, currently in eighth standard could not recite multiplication table beyond five and could not read her Hindi textbook properly. None of her other children has studied beyond eighth standard. Nobody in her next generation has developed or appears to be developing their human capital sufficiently to rise beyond poverty despite the fact that she is one of the most educated women in the village.

Dwelling and assets

Meena’s family lives in a ramshackled one-room mud house. They have very basic utensils, mostly made of aluminium as they are the cheapest. They cook on a clay chulha (stove) with firewood collected by the children during the day. The house does not have an electricity connection or a toilet. They have four wooden cots in the name of furniture. Her husband owns a bicycle which he uses for commuting to his workplace.

Her father-in-law owns five bighas of ancestral land. He has five sons including Meena’s husband. They do not own any means to till the land and have to hire a tractor for the purpose. Hiring a tractor costs INR 300 a bigha. If they have money, they cultivate the land, otherwise it remains barren. Credit is not easily available and that is why the entire patch of land was left barren during Rabi harvesting season immediately preceding my visit. Moreover, productivity of the land has gone down over the years due to indiscriminate use of high-yielding variety of seeds, irrigation, chemical fertilizers and pesticides in the area. The land now needs more fertilizers and water to maintain its productivity. There is never enough money available at the household level to apply fertilizers to the field even when they are able to manage the money for tilling and seeds. Whenever there is yield from the fields, it is distributed among all his sons equally.

Her family used to have a cow but it died about one and a half years back due to diarrhea. She was also keeping goats and had two goats and a he-goat. They all died about six months back again due to diarrhea. They spent about INR 300 in their treatment but they could not be saved. She has now stopped keeping livestock.

Livelihood strategies

Her husband works in a gas plant at Panaki, about 15 km from the village. He was hired through a contractor and gets INR 80 per day for week days. He is not paid for weekly offs and has no security on the job. He is not covered under any labor regulations and represents the massively growing tribe of informalized workers in the formal sector of economy. He commutes to his workplace on his bicycle and has developed various ailments including swelling in his testicles. The doctors are suggesting for an operation but she does not want him to be operated at a government hospital. She and the other villagers feel that the patients are not cared for in the government hospitals. She does not know the expenditure involved with such operations at a private hospital but estimates it to be somewhere between INR 10,000 and INR 15,000. In spite of being hard-pressed for money, people do not want to take risk with their health for obvious reasons, and prefer private hospitals and the doctors over the government ones. They feel that if they have money or connections, they will be treated well at government hospitals. Private doctors behave much better with them and are more responsive to their queries and concerns. It evokes a feeling of trust among them and they think that they are treated better at private facilities. Most respondents’ initial remarks on the issue always centered on them not being cared well in government hospitals and not on not being treated well. Not being treated well always comes during detailed discussions.

Meena is however scared for him as he is very weak and may not be able to cope well with the operation. Arranging for that kind of money is a major issue as they do not have any access to the cheap credit. Moreover, after the operation, he will not be able to ride the bicycle for at least six months, according to the doctors. That would effectively cost him his job and that the family can hardly afford, especially when they need money in lump sums to get their children married.

Her elder son also goes to nearby towns of Panaki, Kalyanpur and Kanpur in search of work, as there is no employment opportunity in or around the village, and agricultural land is also not available on sharecropping. Meena is concerned for him as she feels that he is very naive and gets cheated while receiving his wages. He is also unable to negotiate for higher wages. He never gets more than 10 to 12 days of work and never earns more than INR 1,000 a month. Her other sons and daughters also work as agricultural laborers during harvesting season that gives them food grains to last two to three months every year. The younger ones collect 70 to 80 kg of potatoes from different fields. Traditionally, after harvesting the potatoes, the landowners allow others to come to their fields and take away the leftovers.

Meena’s parental house is at Kanpur and she stayed there before her marriage. Her father passed away and her brothers left her mother alone. She got her hand fractured and Meena had to stay with her to look after her. As they needed money, Meena started to look for some work based on the basic skills of midwifery and massaging the new mothers and their children that she had acquired as part of the customs of her caste. As she continues to get some work she is staying with her mother at Kanpur. She is living at Kanpur since October 2008 and normally gets work in the neighborhood, but sometimes needs to go to faraway places also. This way she earns about INR 1,000 to 1,500 per month. Her children and her husband continue to live at the village. She comes to the village for about two-three days in each month to meet her immediate family.

Food security and vulnerability

She has a below poverty line (BPL) ration card entitling her the public distribution system (PDS) food grains (wheat and rice) to meet the requirement of her household for about fifteen days through a payment of INR 205. For the remaining days, they buy it from the market whenever they have money. However, it is never bought at one go due to other necessary expenses on bathing and washing soaps, oil, spices etc. staking their claims on the household income. Food normally consists of potato curry with either rice or chapattis. They sometimes cook green vegetables, when Meena comes back from Kanpur with some money. Lentils, they feel, have become costly and are cooked very rarely, while it invariably used to be part of traditional Indian diet of the poor not very long ago. She had last cooked lentils about one and a half months preceding her first interview and had not cooked non-vegetarian food for more than a year.  There are at least seven to ten days in a month for six to seven months in a year when they do not have anything to eat with chapattis and eat chapattis with salt. Before she shifted to Kanpur, there were times when she did not have any food at home at all and had to sleep hungry for three to four days at a stretch. There has been no episode of hunger for last one year. The diet is however chronically protein deficient and must be very detrimental to the health of growing children. They never had milk to drink; only milk they have is with tea. They purchase 250 ml milk for INR 5 every day to make tea for entire household. Ghee (purified butter) or butter is out of question.

Other consumptions

Clothes for the children are made once in two years in such a way that half of them get it in one year during Diwali and the other half during next Diwali (October/November). Her husband also gets his clothes once in two-three years. She has never purchased a saree after marriage and manages with the sarees she gets[1] during social functions at her household or her parental household. She had got six sarees during her daughter’s marriage.

They have to buy food grains, vegetables, salt, spices, sugar, tea leaves, cooking oil, soaps on a regular basis. The quantity of purchase depends on the availability of money. She and her husband chew tobacco and that also entails expenditure.

Financial transactions: Significant events and income shocks

One of her younger daughters fell sick about ten years back and they had to spend about INR 3,000 on her treatment. They borrowed money from her uncle without interest. That amount has since been repaid. They had to incur major expenditure three years later for the marriage of her eldest daughter that cost them about INR 25,000. As they were unable to give dowry and gave only five utensils as symbolic dowry, they could not search for an employed boy. They still needed to spend towards various customs and the feast for the villagers. She borrowed INR 20,000, out of which INR 5,000 were borrowed at the rate of 120% interest per annum, INR 7,000 at 60% per annum, and remaining 5,000 were borrowed from her SHG at 24% per annum. She could manage to borrow INR 3,000 without interest. She is repaying the interest bearing loans first but has not been able to repay it totally. An amount of INR 10,000 of the marriage loan is still outstanding.

Her daughter is however not treated well at her in-laws’ place. According to her, whenever she goes there, she comes back ill and Meena’s family has to spend money on her treatment. She has got a five year-old son. When she was pregnant, she became very sick and was sent to Meena’s house. Meena had to spend INR 2,000 in her treatment, out of which INR 500 were provided by Meena’s brother.  Now she is pregnant again and has again been sent to Meena’s place. She has now developed asthma and a valve of her heart has got shrunk. She is admitted in a private hospital at Kanpur and an amount of INR 7,000 is already spent on her, including an amount of INR 2,500 that Meena had saved for the marriage of her second daughter. Remaining amount she borrowed at Kanpur on the goodwill of her mother as she has already exhausted her channels of informal credit.

She does not know how she will manage the money to marry off her other children, some of whom are of marriageable age and others are fast approaching that age.

Financial needs

Meena’s household requires money to meet their regular consumption needs, provide for the contingencies- particularly those related to health, build some productive assets as the household currently does not own any productive asset other than the small patch of land that it shares with other four households, and for the marriage of their six children. Moreover, they live in a house that barely provides them with shelter and is dangerous as it may collapse during monsoons. They therefore further require funds to reconstruct their house. Some of the required funds they can generate by saving regularly over a period of time as the household has at least three sources of cash inflow in addition to casual agricultural work by children. They thus require a savings mechanism that is not only reliable but also has provisions for smaller but frequent transactions. Moreover, it should not impinge on their working hours as that would amount to reduction of their incomes. Some needs, especially those related to the life-cycle events however cannot be met by savings alone. They therefore need reasonably priced credit to avoid chronic indebtedness. In addition, they require frequent access to smaller credit for their agricultural investments, to meet their emergency medical expenses, and smoothen their consumption during the periods of lean incomes.

Expenses on health related issues are major constraints on their finances. A part of it, especially that related to major expenses requiring hospitalization may be better managed with provision of reliable and broad-spectrum health insurance. Meena’s husband could very well get his testicles operated without spending much from the household kitty, if the household was covered under health insurance. It would have also ensured that he is operated at a competent hospital rather than at any hospital in order to save some money. Moreover, the household could have avoided much of her daughter’s hospital expenses if she was covered under health insurance.

It is also essential for them to be covered under insurance provisions for whatever productive assets they happen to own. Their cow would have fetched INR 10,000-12,000 before it died. Its death reduced the value of household assets by such a big amount at one stroke. Moreover, the household lost a productive asset as sale of its milk was contributing to the household income. Similarly death of goats further impoverished the household.

As the earning members travel far for their work and are also engaged in employments not providing them with any security they need to be insured against accidents and death.

Access to financial services and microfinance

An NGO, Shramik Bharti, organized a self help group (SHG) in the neighboring village, Dhool, and Meena along with two other women of Barakheda joined it. The SHG required her to deposit INR 20 per month. The SHG allowed to her to borrow on two occasions; INR 1,000 to provide treatment to the youngest son and the goats, and INR 5,000 for her daughter’s wedding. Both loans carried a rate of interest of 24% per annum. She continued with the SHG for about two years. After her daughter’s wedding, she was in a bad financial shape and hence could not repay her loan timely[2] or make monthly deposits to the SHG and had to leave the group. She has however totally repaid her SHG loan. Leaders of the SHG were two Brahmin women from Dhool. She was not aware of the details of her SHG or the NGO. She was also ignorant of what was happening to her SHG savings. She however feels that SHGs are beneficial for the people as they provide an access to cheaper credit to people like her. On deeper probe, she stated that she would have been happier with better savings products and more incidents of loans with flexible repayment schedules. She also felt insulted within the SHG when she failed timely repay her loan installments. Currently she does not have any bank account or any mechanism to save her money.

Another SHG was initiated under the village self employment scheme (SGSY) at Barakheda by one Deepu Dwivedi (again a Brahmin from a neighbouring village) in 2005, consisting of one woman each from twenty households in the village, including Meena. They deposited INR 20 per month with Deepu for eleven months but started distrusting Deepu when they did not get their bank passbook. They all decided to stop their savings and asked Deepu to refund their money. Some women were able to extract a part of their money from him but seven women including Meena could not get back any amount as her husband is considered to be very docile. This incident has made the villagers skeptical and may not trust any such initiative easily in future. In addition, they were deprived of subsidized credit available under SGSY.

Agents of Life Insurance Corporation (LIC) are very active in the area, and being local they are able to convince the people to purchase life insurance policies of LIC. Moolchand, Meena’s husband, had purchased an LIC policy about ten years back when he was working at another plant. He continued to pay the insurance premia for two years, but then his contractor started troubling him and his payment became irregular. As a result, he could not deposit the subsequent premia and lost his premium amount as such policies have a lock-in period of three years. Any discontinuance of a policy before three years does not entitle the policyholder to any refund. Moreover, he was also deprived of his insurance cover.

For cattle insurance the villagers thought that the provision of such insurance is only for the cattle, which are bought on government loan or under some subsidy scheme of the government.

Social protection measures available to the household

Meena’s household has BPL ration card entitling her 20 kg of wheat, 15 kg of rice and two kg of sugar on payment of INR 205 per month, which is sufficient for about 15 days consumption of the household. However she says that in spite of the provision of monthly distribution of the food grains and sugar, the PDS shopkeeper does not distribute it every month and in collusion with Gram Pradhan (elected head of the village) sells it in black market. They get their quota of food once in two months. Her ration card though bears the entries of distribution of food grains every month. She alleges that at the time of next distribution he makes entries of the previous month and as they desperately need whatever amount of subsidized food they can get. This was independently corroborated in almost all the interviews in the village, but there was no consensus for how many months in a year the shopkeeper black markets the subsidized provisions. The shopkeeper however denied these allegations

Her household is also supported to construct a latrine under total sanitation campaign and they were given construction material worth INR 1,500. It was however not enough to construct a roof and provide doors to the structure and hence is not usable. Needless to say, they were all falling apart because of disuse. As material was not enough, the structure also has only one brick deep foundation. The soak pit is also very small with a depth of one foot. With such small soak pits, the latrines may not be of much use even after their full construction. According to her, she would have preferred completing the construction and using it if the amount of shortfall was available to her as cheap credit.

During my visit an inner street was being laid in the village under national rural employment guarantee program (MGNREGA) and her son was engaged to work as a laborer. She was happy that he was getting work in the village itself and did not have to go out of the village. No woman was however employed for the work.

Additional financial needs generated by social protection programmes

In spite of the PDS shopkeeper’s allegedly dishonest ways, she acknowledges the role subsidized food towards food security of her household. This however creates a demand of INR 205 on the day of distribution. Sometimes when they do not have that amount and cannot arrange for it, they have to forego their entitlement of the subsidized food. This used to happen very often when she was not working at Kanpur. She feels that she would be much better off if she has an access to smaller loans for shorter durations. . This way she would also be in a position to complete the construction of latrine that may reduce her medical bills in addition to huge inconvenience of going out to defecate in the open. Such loans would enable her to utilize the subsidies available to her without burdening her much as the loans would be small and for shorter durations. That is precisely the reason that she cannot access such loans through informal channels as interest income against such loans would be small and unremunerative for the lenders.

Leveraging on their social capital to meet financial needs

Meena strongly feels that the extended family-based social protection systems have considerably weakened over the years. The extended family helps only when a household has capability of earning money. She says if she goes to ask for even one kg of flour, she has to listen to the other person’s taunts.

Their social capital networks however are useful in meeting the expenses especially on marriages. Everybody attending the marriage is required to contribute a small sum, sometimes as little as INR five, while bigger amount is expected from near relatives. Such contribution builds up to be a substantial amount as 200-300 people normally attend a marriage.

[1] As a part of ensuring clothing security to women, there is a custom, called bhaat, according to which their brother would get a saree for them at social functions, especially during marriages either at their in-laws’ place or at their parental household.

[2] As other loans through informal sources carried higher rates of interest, she chose to repay them first.

Stories of households in poverty [2]: Champaben Palas at Andhari village, district Dahod, Gujarat

Some time ago I studied some households living in multi-dimensional poverty conditions in various states. I spent a considerable amount of time with all the members of the families, and accompanied working members to their places of work. I tried to understand their desperate livelihood strategies, their external environment, their needs for financial services, and their access to social protection. I am sharing some selected stories here. The names mentioned here have been changed to protect their anonymity despite their express consent for using their names.

Second of such stories relates to the household of Champaben of Dahod district at Gujarat. Champaben does not know her age but she may be about 35 years of age, based on the estimates of her neighbours. She lives with her husband Ramanbhai and two sons aged 14 and 10 years. She belongs to Bhil tribe, an ST community.

Human capital

Champa and her husband are illiterate. They do not have any skill marketable in the employment market. Champa also suffers from bad health and is not able to perform manual labour. Their elder son stopped going to the school after passing class seven about a year ago, and has joined unskilled labour force seeking work at Andhari or at the nearby town, Limkheda. It may not be very long before he starts migrating to support his family. The younger one is studying in class five, and is continuing his studies primarily because the village has a school and he is receiving government scholarship available for the SC and ST children.

 Dwelling and assets

Their house is in dilapidated condition. It does not have a toilet or an electricity connection. They have four wooden cots and a few basic aluminium and steel utensils in the house. Champa cooks on a clay chulha (stove) with firewood collected by her and the children during the day. The household has five bighas of agricultural land[1]. Out of it, one bigha is rain-fed and is not suitable for growing paddy. They can only have one crop on this field and grow maize during monsoon. The other four bighas are irrigated and they can cultivate two crops viz. paddy and maize. They can also grow lentils and vegetables on this land. All of four bighas are however mortgaged to raise some money for her treatment. They have a milch cow.

Livelihood strategies

The household has mortgaged four bighas of agricultural land for raising some credit, and is engaged in cultivating maize in one bigha of the land remaining with them. It suffices to meet the household’s food requirements for three to four months. Champa’s husband was earlier migrating to Vadodara but has stopped it for last three years, as Champa is not keeping well. Along with his son, he looks for the casual work in and around the village when not engaged in cultivating the field. They also go to Limkheda in search of work. Champa cannot do much work so she works on the field, and when there is no work on the field she collects grass from the fields in monsoon and sells it at Limkheda. She also looks after the cow.

Food security and vulnerability

Their staple diet is maize chapattis and vegetable curry. They are not able to grow lentils on their remaining field as there is no means of irrigation and they cannot cultivate anything in the winter and summer seasons. As the lentils are very costly, they buy it in smaller quantities and get to eat it only on special occasions or when they have sufficient money. They afford to have non-vegetarian meals even more rarely, with one such meal in three-four months. Milk of the cow is only sufficient for making tea. The household has however not suffered from hunger in the recent past partly due to their entitlement to the PDS food.

 Other consumptions and expenditures

Champa and her husband have not bought clothes for themselves for last three years after he stopped migrating. As they have a school-going son, it requires them to buy books and stationery costing about INR 300 every year. The clothes for the children are procured with the amounts of their scholarship that is available to all the children belonging to ST and SC families (elder son also received the scholarship until last year). Major routine expense is on chandlo, but as their financial condition is not good they avoid making large payments for chandlo. They have to still spend at least INR 3,000 on it every year.

Significant events and income shocks

Champa has developed some heart problem, and keeps having fever and pain in her chest for last four years. She gets herself treated at a private hospital. She has already spent about INR 30,000 on her treatment. Whenever she goes to the hospital the doctors inject a bottle of glucose in her body, give her medicines, and charge about INR 600. She becomes better but starts feeling pain and fever again after about 20 days which is followed by similar treatment. Each round of pain and fever leaves her weaker; she gets bouts of dizziness and frequently suffers from nausea. According to her, even her husband has got tired of all this. Her treatment appears to be addressing the symptoms without diagnosing the disease. But that seems to be in the interest of the private hospital at the cost of her well-being, which also has serious economic implications for her household. She does not want to go to a government hospital, as she and the people like her, being illiterate, do not understand their procedures at the government hospitals and much of their time is wasted there on unnecessary things. Such practices delay the treatment and patients suffer. Moreover, the people attending to the patients lose their working hours and thus their wages.

She had to borrow INR 5,000, 4,500, 5,500, 3,000, and 3,000 on different occasions for her treatment by mortgaging her land during last four years. Her sickness prevents her husband from migrating and earning better incomes. Her long sickness has also turned away her well-wishers. They no longer come forward to help her when she has shortage of food and other provisions. Her household gets provisions only when her husband has work and brings home his wages. Her son does not get much work as he looks young and weak, and the people in need of casual labor are not convinced of employing him.

Financial needs

Champa’s household requires money to meet her medical expenses, reconstruct their house, meet their regular consumption needs including the expenditure on chandlo, and to provide for other contingencies. Some of the required funds can be generated by saving a part of the wages of her husband and her son, whenever they get work. They thus require a savings mechanism that is not only reliable but also has provisions for smaller but frequent transactions. It should also have provisions to conduct transactions outside their working hours. All of their financial needs, however, cannot be met by savings alone and they require frequent access to smaller but reasonably priced credit for their agricultural investments, to meet Champa’s medical expenses and other emergency needs, and smoothen their consumption during the periods of lean incomes.

Champa’s husband needs to be insured as he is the only earning member as of now and if something happens to him, Champa will also be deprived of her medical treatment. His daily wage casual employment does not provide him with any security. Health insurance is equally important, as, in addition to reduce their health expenses, it will facilitate their treatments at more competent hospitals. They also need to insure their cow, the only productive asset other than their agricultural land.

 Access to financial services and microfinance

Champa does not have access to any formal financial service or microfinance. This explains why she had to mortgage four bighas of her land to borrow small sums of INR 3,000 to 5,500 on five different occasions. Mortgaging of the land has further limited her capacity to repay her loans. She is now finding it difficult to access loans through informal mechanisms as well, as she does not have any collateral to offer and the lenders who offer costlier loans without collateral are apprehensive of her repayment capacity. She had to therefore cajole her niece to lend her INR 2,000 just before my final visit to her household, as she was not getting the money from any other source and she had to show herself to the doctor.

 Social protection programmes available to the household

Her household has got an Antyodaya ration card to access the PDS subsidised food. Ration cardholders in the village do not seem to be aware of their exact entitlement of subsidized food. This situation allows the PDS shop-keeper to disburse less quantities of foodstuff than those prescribed, and record larger quantities in their ration cards that the ration cardholders either cannot read or do not want to read considering it useless. According to champa, she gets five kg of rice, 10 to 15 kg of wheat flour and two kg of sugar every month on payment of INR 120. The entries on their ration card reveal that they were disbursed 17 kg of wheat flour, 16 kg of rice and 4.5 kg of sugar in July 2008, and 16 kg wheat flour, 13 kg of rice and two kg of sugar in August 2008. According to provisions in TPDS for Gujarat state, an Antyodaya cardholders is entitled to receive 16.7 kg flour (for INR 38), 16 kg rice (for INR 48), and 500 gm sugar per person in the household. Thus, Champa is receiving less than her entitled food at higher than prescribed rates. Even more interesting is the case of cooking oil. None of the villagers including Champa were aware of its provision or reported to have received it but as per their cards, they have “received” four liter of oil in July and one liter in August 2008. Earlier also, according to her ration card, one liter of cooking oil was distributed in the months of July, August, September and October 2007 respectively, which she denied to have received.

 Champa’s household also received subsidy for construction of her house under IAY in the year 2005-06. According to her, they received a total of INR 28,000 in three instalments, out of which an amount of INR 11,000 was allegedly taken away in various forms of commission even when the money was disbursed to her through a bank account.

A provision has been kept in Indira Awaas Yojana (IAY) to disburse the housing subsidy through a bank account so that the money is transferred in full to the account, and accessed in full by the recipient. This is in response to the reports of the recipients not receiving the total amount of subsidies in the cash delivery system. The bank however requires them to withdraw their money in the presence of the sarpanch and one block level government official as bank people do not “recognize” them. Such requirement creates situations similar to the cash delivery systems and the recipients have to part with a portion of their installment under a threat that if they do not do so they would not receive the next installment. Champa says, ‘We don’t understand such things, as they get money in their hands and then pass on some amount to us, mentioning that they will have to give this much to this person, that much to that person etc. When we are in bank, the sarpanch asks us to put thumb impressions on papers and then gives us some money mentioning that the remaining amount is needed to be given to officials who would not do our work without “eating” money. If the money is not given to these sahibs we would not get our next installment. We don’t even know how much is being given to whom. If we come out of the bank without paying, the sarpanch comes to our home, scolds us and threatens that we would not get our next installment if we do the same. We are tribals and illiterate so we don’t understand anything.’ Thus involving local government institutions in the delivery of social protection suffers from the structural deficiency characterizing such institutions. The institutional centrality of one person, sarpanch, within the institution of gram panchayats makes the process of delivery of social protection immensely vulnerable to misuse.

The official records suggest that she has been disbursed a total of INR 35,887 as the subsidy amount but according to her she has received only INR 17,000. There is no way to verify the veracity of her statement, and the sarpanch and the government officials predictably denied her allegations. Her allegations were however anecdotally corroborated in several interviews[2]. In any case, whatever money they received was not sufficient for the complete construction of their house. They borrowed INR 5,000 at an interest rate of 120% per annum and put in their savings worth about INR 5,000 towards constructing the house. With the available money, they were able to construct the foundation and erect the walls. As the structure was open, it collapsed during the rains.

After the collapse of the house they got it photographed by spending INR 300, approached the block office for government prescribed relief, filled up the application form for such relief, and took several rounds of block office and the house of the sarpanch, but to no avail. All this took a heavy toll on Champa’s health affecting her heart and requiring them to mortgage their fields. In addition to considerably reducing their income because of the land mortgage, her disease prevented her husband from migrating, which further worsened their economic condition.

An NGO was assigned the task to construct 44 latrines under TSC in the village, but only the toilet seats were found put in the open without walls or soak pits. One toilet seat is also kept in the field near her house. Further inquiries revealed that the NGO has already been disbursed the total budget and no further construction would take place.

 Additional financial needs generated by social protection programmes

Champa admits that if the subsidized PDS food was not available to the household, her family would have starved for at least one to two months every year. This however creates a demand of INR 120 for her household on the day of distribution every month. Sometimes when they do not have that amount and cannot arrange for it, they have to forego their entitlement of the subsidized food. Champa however tries very hard to arrange for the money on the day of distribution. Earlier she used to ask her neighbors for money but they have started avoiding her now due to her health problems and worsening economic condition of the household.

Access to cheap and adequate credit may have enabled her to construct her house completely. That would have improved her condition of living substantially and would have perhaps benefited her health. In absence of such access to credit, not only the IAY subsidy was rendered totally useless, but the household also had to pay substantial interest on INR 5,000 they borrowed and lost their savings worth INR 5,000. Similarly, they could not derive any benefit from the provisions under the TSC for want of access to small but reasonably priced credit.

 Leveraging on their social capital to meet financial needs

Champa is not worried about the expenditure she needs to incur towards the marriage of her sons in terms of the dowry and feast for the villagers. As she has been contributing chandlo to other households towards marriages and other occasions, she knows that she would get sufficient amount in the form of chandlo to be able to marry her sons off without taking recourse to borrow at a high interest rate. Her sickness has however weakened her social ties and she is not able to manage small amounts of loans without interest from her neighbors now as much as she could do earlier. She could however arrange for a loan of INR 2,000 recently from her niece to meet her medical expenditure.

[1] She does not know how much land she owns; most of the villagers do not know the measurement of their fields, they know it physically. It is like they belong to the land, rather than land belonging to them. They always come up with the quantity of seeds they require to sow the fields. In case of Champa, the land requires 25 kg of maize.

[2] Interestingly, the people who were better off than others and had managed to receive such subsidy denied having been forced to pay a cut on their subsidies. They were perhaps aware of the fact they did not deserve it and so it was fair for them to part with a portion of their ill-gotten money. Men in the other poorer houses were also hesitant in talking about such things, perhaps fearing that they would be victimised later if the concerned officials and the sarpanch came to know of their reporting it to me. Women in all cases were more forthcoming, perhaps because they are not so street smart to foresee such consequences of their revelations and also because they are perhaps more sensitive to the injustice and have not fully accepted it.


India Post: A story of missed opportunities [Part III: Direct Benefit Transfers (DBT)]

India Post is a unique institution in many ways. The most important aspect of it is however its extensive network that has capability to deliver tangible as well as intangible goods to almost anybody residing anywhere in the country. Various social groups, particularly those difficult to be reached, can be included in the process of development while leveraging this infrastructure. Few low-income countries can boast of possessing such rich physical network capital.

An organization as old and as deeply entrenched in traditions as India Post needs to keep reinventing itself if it aspires to remain relevant in a rapidly changing political-social-economic landscape. India Post has however been exhibiting massive inertia to change at fundamental levels even in the face of some very potent opportunities during the recent years. India Post story may be one of the most remarkable post-Independence stories of missing almost all possible opportunities to become a far more effective partner in the growth and development process of India than it currently is.

In the first part of this blog story I discussed how (and why) India Post missed out on an extremely important opportunity of delivering microfinance to the financially excluded households of India despite the fact that it was almost ideally placed to do so. In the second part of the story I discussed how a historic opportunity was let go by India Post to become a hugely important public institution in rural India while facilitating transformation of rural lives and livelihoods through common service centres (CSCs). In the third part of the story I will discuss how despite having capabilities to deliver various social protection programmes India Post did not put forward its case strongly, which resulted in the concerned government agencies looking towards other entities and spend money towards creating parallel networks. It could have been avoided if India Post had offered its network for delivering such programmes. India Post’s involvement could have also avoided exclusion and inclusion errors in the programme delivery as is borne by the evidence presented below.

In view of its capabilities it is not surprising to note that the first ever experiment in India to deliver social security benefits directly to the beneficiaries through bank accounts was initiated by India Post back in the year 2003. Not many people within even India Post are aware of this fact, let alone being proud of it!

Widows living below poverty line (BPL) are entitled to monthly pension in all states of India. Contribution by state governments towards the pension varies from state to state but a major chunk of funds for the programme is provided by the central government. When I was director postal services (headquarter) for Gujarat circle, secretary, women and child development department, government of Gujarat, and I collaborated to experiment with delivering the BPL widow pension through the bank accounts in their own names. The collaboration entailed the post offices to identify and open savings accounts of all the widow beneficiaries. Before opening the accounts I offered to the state government to verify credentials of all the beneficiaries to remove inclusion errors. The verification revealed that out of 130,187 widows drawing the pension in the state as many as 10,353 did not fulfill the eligibility criteria for receiving such pensions.

After the savings accounts of the remaining beneficiaries were opened, all the state government needed to do was to provide a single cheque to the general post office at Ahmedabad for the entire amount to be disbursed along with a list containing details of all the widow beneficiaries. Money being directly credited to the widows’ accounts had obvious benefits of the women receiving full amount of their pension and having total ownership over their money. As BPL widows constituted arguably the most vulnerable social group in the state, almost none of them ever had a savings account. This exercise resulted in all of them having savings accounts in their own names. I negotiated with the state government to pay 5% of the total disbursed amount at par with the commission charged by India Post for its cash remittance services. After deleting the names of ineligible persons and thus removing inclusion errors and the resultant leakage of funds. In all, accounts for 115,000 women were opened across the state. By December 2009, the post-offices had earned revenue of INR 182.7 million through this activity, in addition to the commission earned on each of 115,000 accounts every year from the Ministry of Finance.

That Gujarat experiment of direct benefit transfers (DBT) through post office savings accounts was successful without any assistance of digital technology, which was only possible for such an extensive network as India Post. One can easily imagine the enormity of the potential of this network if it is effectively digitized.

When national rural employment guarantee programme (NREGP) was initiated, the then Andhra Pradesh (AP) postal circle offered to the AP government to replicate Gujarat widow pension DBT model to pay wages of laborers under NREGP through post office savings accounts. Postal administration in other circles also entered into agreements with their respective state governments. Banks then realized the significance of such transfers and started offering their services to various state governments. Meanwhile it was becoming difficult for managing large scale transfers for post offices without the aid of technology as NREGP was expanding rapidly. Banks in such a situation offered better services, particularly in areas where they had reasonably good presence, riding on their already existing technology platforms. Banks also made efforts to develop their business correspondent networks equipped with appropriate technology in unbanked areas. Situation is still quite fluid but the post offices are increasingly losing their ground in DBT space as they have still not been able to digitize their network.

The first step in this regard could have been to partner with one or more banks with footprints across the country. This could have been on the existing business correspondent model or some even better customized model leveraging divergent strengths of the banks and post offices. However, nothing of this sort happened despite advocacy by several external experts and a part of Postal Management, including myself, as the topmost manager-policymakers were living in their own make-believe worlds, and were driven by some irrelevant and unfounded organizational egos. They argued that they were much bigger than any bank in the country and it would be demeaning for India Post to work as their business correspondents.

The next obvious step was to ensure digitization of the entire postal network as fast as possible. As I discussed in the Part II of this blog story, India Post had an opportunity to digitize its rural network way back in 2006 when Government of India had allotted adequate funds to establish 100,000 common service centres (CSCs) under National e-Governance Plan. Another opportunity arose after the Government of India constituted Unique Identification Authority of India (UIDAI) in the year 2009. India Post could have approached the authority to become its partner and have offered its extensive network for issuing unique identity (Aadhaar) to citizens of India. The UIDAI resources could then have been used to computerize the entire rural network, and non-computerized urban network, of post offices. Post offices could then have been integral part of all the initiatives to be linked with Aadhaar including direct benefit transfers. Not only India Post did not approach UIDAI for such partnership it also scuttled all suo moto offers from UIDAI to provide digital technology to rural post offices free of cost. Postal top management based their argument to reject the offers from UIDAI on such flimsy grounds as in the situation of accepting UIDAI’s offer the ownership of technology project initiated for digitizing post office network would be appropriated by the Ministry of Finance. It is pertinent to mention here that even at the time of writing this blog India Post has still not been able to digitize its rural network under its own technology project. It has already wasted precious time and has irretrievably lost the space for DBT to other players.

In addition to losing great opportunity to make itself once again greatly relevant to the people of India and significantly improving their account books, India Post is also doing great disservice to the deprived Indian population by denying them an efficient, convenient, and cost-effective way of accessing social protection programmes.