The economic lives of the poor

I came across this paper recently. It makes some interesting points about the daily lives of the poor in a number of countries, including India. Although not altogether surprising if you sit back and reflect on their observations, this kind of a quantitative study based on household surveys could be very useful for policy formulation. Well worth a read. Some points they make:

- The poor generally hold multiple occupations during different times. For example, during the morning, some women sell dosas, but later they do some rag-picking or daily-wage labour work. Similarly, many men work on their fields during the farming season, but otherwise they often temporarily migrate to the cities or construction sites in search of work. This generally indicates a lack of specialization in any one single profession, which makes it harder for them to find a job. This hurts their earning abilities in the long term. This also probably explains why many of the poor are "entrepreneurs", because they find it much easier to hawk vegetables and other goods than to actually find a well-paying job. One reason that can explain this lack of specialization is that the poor are unable to raise sufficient capital to run a business that would fully occupy them. So, for example, farmers may be unable to use sophisticated technologies to extend their farming season. Or, the women may be unable to convert their individual dosa businesses into a more formal and higher paying outlet.

- Most of the poor rely on informal sources of credit, which tends to much more expensive. The high interest rates seem to occur not because of high rates of default, but because of the problems in enforcement of contracts. The moneylenders or shopkeepers who give credit, have to spend much time keeping track of the expenses and making sure that the people pay back. Instead, formal sources of credit such as from self-help-groups generally help cultivate a discipline for saving and spending money, and also provide lower interest rates.

- An increase in income of the poor is not always followed by an increase in their food expenditure. Instead, they spend significant portions of their income on alcohol, tobacco, entertainment, and festivals. This is probably because they do not make the association between healthier eating and higher productivity, and also because entertainment helps them relax from the daily financial and psychological stress they undergo in search of employment. However, the penetration of television is still quite low, because it is a bulky investment and requires a consistent commitment to saving. This is probably evidence that the poor find it difficult to save money in the absence of any banking institutions or saving-groups because they tend to succumb to temptation much before they can save enough money, and also because keeping cash in boxes or under the pillow is not really secure.

In light of this study, the Pradan approach to self-help-groups seems ideal. They not only help organize the poor into groups, but they also train and educate them in how to save and spend their money. The Internal Learning System of having the women maintain dairies of their saving and expenditure also helps the Pradan volunteers to teach the women how to manage their household budgets more efficiently.

Other things that the paper highlights is that poor land-record management actually prevents farmers from combining their individual small land-holdings into larger and more productive pieces of land. And the poor quality of public education impacts their commitment to sending their children to school. Similarly, the poor quality of public healthcare actually increases their expenses because they either have to go to private practitioners, or bear with ineffective and improper treatment.

Some Ashoka Fellows from India working on ICT for development

A friend from Ashoka in India suggested the following Fellows as invitees to a conference on the use of ICT for development. I thought that I might as well post the information here. There are some ideas on ICTD projects as well.

Rabindranath, Assam: Link

Organization: Rural Volunteer Center -- Civil society model that helps people cope with frequent floods in the Bhramaputra.

Comments: Will bring insights about the problems faced by rural populations during flood season, and possible solutions. For example, what kind of rapidly-installable community radio stations and receivers be helpful to coordinate large groups of people during sudden flood situations?

Rahul Banerjee, Indore (MP): Link

Organization: Aarohi Trust -- Community building among tribals by reinforcing the local language and culture. Adopts different approaches, including community radio on the ICT side, along with written literature for books and magazines.

Comments: This is a very grassroots initiative. Will bring insights about the actual cultural processes in remote and marginalized communities, and how ICT interventions should take these factors into account.

Dipendra Manocha, Delhi: Link-1, Link-2

Organization: DAISY consortium: Develops standards and hardware/software for converting/synchronizing text and braille content into audio for visually impaired people.

Comments: Dipendra represents the DAISY consortium in India. He works on content creation in local languages, and development of a low-cost player. The work sounds very interesting from a research perspective, of coupling braille print with accompanying audio content.


Shanti Raghavan, Bangalore: Link

Organization: Enable India -- Trains physically disabled and visually impaired people in computer skills, and place them in jobs with IT companies.

Comments: They currently use commercial software for screen reading, which is quite expensive, and apparently very annoying to use for some applications. Will bring insights about various usability requirements for the blind, which could lead to interesting ideas for alternative techniques.

Pratima Joshi, Pune: Link

Organization: Shelter Associates -- Uses GIS to plot and query household data about slum dwellers for more efficient slum planning and development. Data is collected through surveys done by local slum dwellers.

Comments: They have much use for automation of data collection activities using OMR/ILR techniques, or by using PDAs. They may also help explain the exact use-case for a GIS interface on mobile devices.

Solomon Jayaprakash, Bangalore: Link-1, Link-2

Organization: LabourNet assists workers in the informal economy to search for employment in areas such as plumbing, tile-layering, painting, building construction, etc. A parallel program, Maya Organics, helps organize the informal artisan network into worker cooperatives for manufacture of toys, wooden furniture, garments, etc. LabourNet seems to be a reasonably sophisticated IT enabled initiative.

Comments: It will be interesting to know what kind of identity-verification and user-interface issues they run into, when working with people having poor educational backgrounds.

Rajiv Khandelwal, Udaipur: Link

Organization: Aajeevika Bureau -- Assists rural migrants to develop skills and find jobs in cities. Also maintains databases of migrant workers, which helps study migration patterns.

Comments: Will help gain knowledge of how they maintain photo-id cards of people, and what problems they face.

Lisa Heydlauff: Link-1, Link-2

Organization: Going to School -- Develops videos about how children in different parts of India go to school, and their diverse experiences and ambitions. Brings respect among kids for the diversity and vastness of Indian cultures.

Comments: Could be very interesting for other researchers working on education.

World Bank to give $944 mn loan to India

"The World Bank has agreed to sanction a loan of $944 million to India for strengthening rural finance system, vocational training programs and community-based water management projects."

Apparently, the WB lendings to India go up to almost $3 billion per year.

But is this something India really needs? People argue that it only complicates forex management for India because India does not need $ loans to finance local development activities. On the other hand, local Indian banks have always been skeptical of funding pro-poor programs, and the WB probably fills in the gap. What is more interesting is that the central government often lends money borrowed from the WB at higher rates of interest to local companies! Not sure if this really does any good to the Indian economy though. And apparently, the WB likes to lend to India because India is more creditworthy than Africa, and hence needed by the WB for its own survival.

To a suspicious mind, it all seems to be part of a big money generating scheme by the rich countries, in which the rest of the world is pulled into out of no choice of their own. And ironically, it is termed as pursuing a "liberal" agenda out of respect for individual freedom! How words and meanings get contorted over the years...