Tuesday, 17 June 2014

Inclusion Of Internal Migrants In India

Photo Source:UNESCO
Free movement is a fundamental right of the citizens of India and internal movements are not restricted. The Constitution states: “All citizens shall have the right (...) to move freely throughout the territory of India; to reside and settle in any part of the territory of India
- Article 19(1) (d) and Article 19(1) (e), Part III, Fundamental Rights, The Constitution of India, 1950.
Approximately three out of every ten Indians are internal migrants! Despite this, internal migration has been accorded very low priority by the government, and existing policies of the Indian state have failed in providing legal or social protection to this vulnerable group.
National Sample Survey Office (2007–08) states that around 28.5 per cent of the 1.2 billion people in India are internal migrants (Census 2011). According to the UNDP Human Development Report (2009), the number of internal migrants (740 million) is nearly four times the number of international migrants (214 million).
As per NSSO (2007-08), around 80 per cent of total internal migrants are women. 91.3 per cent of women in rural areas and 60.8 per cent of women in urban areas cite marriage to be the most prominent reason for migration. However, researchers believe that the macro data reports do not capture the complete picture and miss the actual reasons for migration. About 30 per cent of internal migrants in India belong to the youth category (15-29 years age group).    
 Urbanization and Migration:
India’s urban population has increased from about 286 million in 2001 to 377 million in 2011, and is expected to increase to 600 million by 2030. This increase migration to urban areas is largely due to an increase in female migration (38.2 %in 199341.8 % in 1999-2000 45.6 % in 2007-08). The main reason driving this migration is expectations of “better employment opportunities.”
The report on Social Inclusion of Internal Migrants in India, UNESCO (http://unesdoc.unesco.org/images/0022/002237/223702e.pdf) highlights two developments in the evolution of urban centres that absorb the increasing migrant population.

Firstly, influx of people from varied regions poses a socio-economic and environmental challenge to cities. The outcomes are growth of second tier cities rapid urbanisation and the greater challenge to absorb the migrant population that eventually translates into increased poverty and inequality levels.

Secondly, focus of policy making changes from “welfarism to rights based approach” with the goal to ensure that basic services are accessible to all.
The loose definition of migration and the largely ignored concerns that it poses renders the design and delivery of their social inclusion undefined and hence, ineffective.
                                              Internal Migration: Myths and Realities
Despite its contribution, internal migration still suffers from several ill conceived notions. Highlighted below are some myths related to internal migrants that are countered with important realities:
  • Myth: Burden on destination cities vs. Reality: Forms cheap labor and thereby contributes to GDP
  • Myth Steal local jobs vs.Reality: Migrants typically provide essential services which the locals might not want to engage in
  • Myth: Migration can be stopped vs. Reality: Migration and urbanisation are integral part of economic and social development.
  • Myth: Inhospitable cities are best deterrents to internal migration vs. Reality: Harsh cities merely increase risks and costs of migration, reducing its development potential
  • Myth: Women migrate only for marriage vs. Reality: Women's labour migration and economic contribution
10 Key Areas for Inclusion of Internal Migrants
Migrants lack documentary proof of identity and local residence due to which they are excluded from access to legal rights, public services and social protection programmes (subsidised food, housing and banking services). In response to this, the Unique Identification (Aadhar) programme was created to combat the issue of registration.
A report on  Political Inclusion of Seasonal Migrant Workers in India: Perceptions, Realities and Challenges reveals that many migrants are unable to exercise their franchise because they have to travel in search of work and some return to their villages to exercise their franchise, because of this, they exercise limited political agency.
The Right of Citizens for Time Bound Delivery of Goods and Services and Redressal of their Grievances Bill, 2011 – could ensure a mechanism of accountability of public authorities. It would enable a citizen to file a complaint related to non-functioning of public authorities, violation of a law, policy or scheme or any grievance related to citizens charters, and offending officers could be penalized.
Migrants are mostly employed in the informal economy, devoid of social security and fair market, often working as construction workers, agricultural labourers,  vendors, etc. There are few Central Labour Laws for regulating conditions of work, but they remain undelivered.
As migrants are predominantly engaged in the informal sector, migrants have no protection under labour laws. Government’s safety measures remain unimplemented, and minimum wages are not delivered. 
Poor literacy levels and no awareness act as an impediment in claiming rights and entitlements.
The current discourse on migration has failed to adequately address gender-specific migration experiences. The design of the Census and NSSO data surveys should be amended to better capture the actual reasons of migration. Women migrants, especially those in lower-end informal sector occupations, remain invisible and discriminated against in the workforce.
In order to access subsidised grain and other supplies under the PDS scheme, beneficiaries must present a ration card that is given to them at their usual place of residence and is not transferrable. Such clauses imply that migrants are unable to access the PDS system at destination.
The National Food Security Bill 2011 passed this year aims to guarantee food and nutritional security in India, recognized that:  “The migrants and their families shall be able to claim their entitlements under this Act, at the place where they currently reside.”
Migrants face difficulties in accessing housing and other basic amenities. They often live in urban slums, facing constant threats of displacement and eviction from government officials. Shelter solutions show little appreciation for the needs of seasonal migrants.
  • Affordable rental housing to affordable private housing, with an eventual policy shift towards provision of de facto residential rights and housing
  • In-situ upgradation of existing slum dwellings could be a first step towards ensuring basic services for migrants living in slums
  • Employers and contractors also need to play a role in securing shelter for migrant workers, and experiments with dormitory accommodation provided by employers (as undertaken in China0
Seasonal migrants often take their children along when they migrate, which negatively impacts their regular schooling. This is one of the reasons for high dropout rates in schools in many states. This further breeds inter-generational transmission of poverty.
Despite the Child Labour (Prohibitions & Regulation) Act, 1986, children work for long hours as unregistered workers often in harmful industries on piece rate basis

  • The multiplication of seasonal hostels to promote the retention of children in schools in source areas
  • The establishment of worksite schools at the destination with systems to transfer enrolment, attendance at and credits to formal schools, and bridge courses and remedial education for return migrant children
  • Establishing peripatetic educational volunteers who can move with the migrating families, initiating strategies for tracking children by issuing migratory cards, and making the school calendar flexible to accommodate migrant children, including in local government schools in both rural and urban areas,
Migrants are exposed to health risks including HIV, malaria and tuberculosis, and occupational health hazards such as respiratory problems, lung dseases, allergies, kidney and malnutrition.

Migrants are unable to access banking facilities since they do not have the necessary documentation to fulfil the Know Your Customer (KYC) requirements of banks, including proof of identity and proof of address. Suggestions
  • Linking migrants to branchless banking and business correspondents along with incorporating flexibility in bank procedures
  • Target banking services in geographical areas with high out-migration
                                                Prepared by Ashwin Varghese and Mahima Malik

Thursday, 12 June 2014

Railways in Northeast India: Local Resistance to Policy Initiatives

Photo source: IBN Live
Northeast India’s connectivity to rest of the country and to its five neighbouring countries has remained a most challenging policy concern in post-colonial India. The scanty connectivity network has heavily constrained the inflow of India’s development outcomes in the region, has denied the entry of many modern institutions, and thus kept the region at the periphery of India’s modernity. Railway for example which was established in this far flung region by the colonial rulers solely for their own economic interest has hardly seen any further expansion in post-colonial period. For almost four decades after independence, the issues of internal conflicts and security have largely dominated Northeast policy frame. The reshaping of such policy domain catering to the needs of development started only in 1990s with India’s Look East Policy. Thus at policy level building and improving all kinds of connectivity became the most important agenda for establishing intra-state, inter-state and cross-border accessibilities. This policy initiative later found a concrete base in the year 2008, when India’s outgoing Prime Minister Dr. Manmohan Singh had visited the region and promised development with extensive infrastructure base. In the same year the historic vision document of North Eastern Region 2020 was formulated by incorporating the voices of mammoth 40,000 people of the region to bring a policy roadmap for region’s development. Connectivity was placed as foremost policy issue, and expansion of railway net was promised by the government to facilitate economic boost through the movement and mobility of people and product.

Three key railway projects were identified by UPA II as ‘critical’ for the region. Such projects also include the first rail connectivity in two most remote Northeastern states, Meghalaya and Arunachal Pradesh with new broad gauge lines in Dudhnoi-Mendipathar and Harmuti-Naharlagun. Both these projects were actually initiated long ago in 1990s with emergence of Look East Policy, but were heavily disrupted for various issues like law and order problems and more importantly for strong local resistance. Dudhnoi-Mendipathar and Harmati-Naharlagun, each 20-km lines in the Garo Hills of Meghalaya and in Arunachal Pradesh initiated with the costs of about Rs 180 crore and Rs 407 crores respectively, which were later revised.

Finally one such visionary project has been completed and with Harmati-Naharlagun rail line being open, far eastern landlocked Arunachal Pradesh is placed in the railway map of India. Such railway line at last makes Arunachal accessible to rest of India and opens up multiple avenues and opportunities for the state, primarily in terms of economic development. The people of Arunachal so far have been struggling to survive through various dangerous means and through both legal and illegal cross-border economic activities, as it was cut-off from rest of India. But before all such expectations are being met, the local youths of the state have resisted vehemently to stop this railway service. It is interesting that at macro level, people of Northeast deeply feel that connectivity is seential to make the region vibrant and self-reliant, and the voices of 40,000 people reflecting in the vision document endorse it firmly. But when such vision is translated into reality, the local xenophobia resurfaces with all forces and vehement protests by the youth population not to make such connectivity functional. The youths are apprehensive of large scale infiltration and influx from rest of India and illegal immigration from neighbouring nations. Thus they demand for proper implementation of Inner Line Pass. The same is the situation in Meghalaya. The issue of Inner Line Pass has also created internal conflicts and violence, and destabilized Meghalaya once again in the year 2013. Such reaction and resistance to such positive policy initiative show that the region is still stuck to the dual issues of identity and migration.

Does such inward looking mindset reiterate that people of Northeast are not yet ready for embracing the idea of development? Can issue of xenophobia any longer delay the solution for of human poverty, livelihood opportunities and economic growth in the region? Even if the region has to tap its unexplored potentials for indigenous growth of economy, the support of modern institutions are essential as economy cannot grow in isolation. Unless its regional economy becomes prosperous enough to provide opportunities to its youths, they would continue to migrate to rest of India and the irony of the situation continues. At regional level Northeasterns are intolerant against the outsiders and migrants, and at national level, many of the innocent Northeasterns become victims of violence and racism.

Connectivity and people-to-people contacts can bridge such cultural gaps, lack of understanding and intolerance. An open Northeast frontier through such policy ventures will allow to create space for interaction and tolerance and will be beneficial for all the stakeholders in the long run for peace and stability. In today’s global inter-connected world, no place can grow in pristine isolation, rather a cooperative and integrated development is need of the hour. Let North-East Frontier Railway and state governments have dialogues with local youths to find solution and make such huge investment on railway connectivity justifiable both economically and strategically.   
Rakhee Bhattacharya


Monday, 9 June 2014

Finance Gap Affecting Growth of Women-Owned Enterprises: IFC study

Financial inclusion is considered to be instrumental in empowering women as advancing credit to women, who own businesses, improves their economic stature and independence across the globe. In the Indian context, encouraging greater access to financial services becomes more relevant given the various degrees of socio-economic discrimination  women are subjected to in their daily lives. The following article discusses the findings of a report titled Micro, Small, and Medium Enterprise Finance: Improving Access to Finance for Women-owned Businesses in India’ (Report) published on March 11, 2014 by the International Finance Corporation. The research report focuses on the opportunities, challenges, and way forward to improving access to finance for women-owned businesses in India.
In India, there are around 3.01 million women-owned businesses which account for about 10 percent of the total micro, small and medium enterprises (MSME). They collectively contribute around 3.09 percent of the total industrial output and employ over 8 million people.

As data reveals, 97.2 percent of women-owned businesses fall under the micro industries category. This concentration of industries indicates reduced growth capacities and opportunities these companies caused due to the huge gap in the demand and supply of financial services to the same.

According to the report, the financing gap for women-owned businesses amounts to Rs. 6.37 trillion in 2012. This accounts for 73 per cent of the total requirements by MSMEs in the country.

Currently, the various funding sources for women-owned business include formal, semi-formal and informal sources. Out of these available sources, women-run enterprises, much like the general trend in the MSME sector, largely depend on informal lending sources that constitute 92 per cent of the total share of funds provided in 2012. There are 3 million women entrepreneurs in India, but only 3 per cent have access to finance from formal financial institutions.
Barriers to financial inclusion of women
The major factors that impeded financial inclusion of women entrepreneurs are as follows:
Lack of adequate collateral: Due to persisting social restrictions around inheritance and land ownership, women in India do not have ownership of property or enough assets to use them as collateral for availing loans at low interests from formal funding sources. Even when women do own legal rights to properties, the male members either get them legally transferred to themselves or exercise control over them even without legal rights or title deeds.  Therefore, poor financial literacy amongst women and lack of agency of women in terms of title deeds restricts their capacity to ensure collateral for credit.
Lack of formal loans to women:   As the report mentioned above points out that approximately 90 percent of women-owned enterprises are in the informal sector and 78 percent of them belong to the services sector. Banks traditionally identify the informal and service sectors as high risk group as interest returns remain uncertain. This is mainly because of the following reasons:
a)      lack documents and papers essential for banking services, and
b)      increased number of smaller loans shoots up the cost for the banks to administer and provide equal financial services to all.
Absence of women employees in bank: Women employees, who are believed to act as mediators enabling more women to come up to banks to avail banking services, constitute less than 20 percent of the bank’s workforce.
Apart from the afore mentioned factors, lack of financial awareness, absence of support from the male members of the family and lack of confidence to approach financial institutions act as the major barriers.

Government Response
The MSME ministry launched the government’s only financing scheme for women entrepreneurs- Trade Related Entrepreneurship Assistance and Development (TREAD)-in 2008. This is the only targeted approach on the part of the government to provide finances focusing on the MSMEs. However, as against the target of Rs. 38 million only Rs. 7.7 million were disbursed as loan amount in 2012.

The central schemes like the Prime Minister’s Rozgar Yojana, the Swarna Jayanti Shahari Rozgar Yojana and the Swarna Jayanti Gram Swarozgar Yojana currently provide funds to MSMEs. But the net contribution of these schemes is a mere 7 per cent of the total share of funds supplied to women-owned MSMEs.
Lastly, by establishing more branches of Bharatiya Mahila Banks, the government aims at catering to the banking requirements of women and promote their economic empowerment.

Although microfinance plays a key role in encouraging individual women belonging to the low income group, who require loans to run tiny enterprises, its mono-product environment, singular delivery model, lack of flexibility, and shorter-tenure loans with limited amount of credit restrict their scope to low-income women or micro entrepreneurs rather than women-owned MSMEs.

Considering the gradual rise in the number of women entrepreneurs in India, there is an urgent need to encourage banks to step up formal funding of women entrepreneurs.

Pallavi Ghosh

Tuesday, 3 June 2014

Right to Entrepreneurship and Aspirations

Photo Source: Linked in
This is in response to Professor Shamika Ravi’s article, “No monkey business” (Indian Express, May 3, 2014), wherein she says that the “general improvements in physical and financial infrastructure have contributed significantly more to the growth of entrepreneurship in India than specific targeted policies of the government”. The Congress Party promised in its 2014 Lok Sabha elections manifesto a “Right to Entrepreneurship that will protect and assist all those who seek to become entrepreneurs”. There seems to be some serious confusion in dealing with the idea of the right to entrepreneurship. The right to entrepreneurship essentially mean the broad term of institutional framework rather than taking one of its sub-sets like the “physical and financial infrastructure” which the writer seems to be taking by underestimating a whole lot of other factors in a “Business Environment” or business eco-system. Moreover, there is a fundamental difference which the writer seems to miss notoriously. The difference is the policy perspectives of distinction between fostering new entrepreneurship opportunities and supporting existing enterprises.

At present, the aspiring Indian entrepreneurs are facing acute challenges related to structural issues such as finance (credit), legal and taxation, operational/functional, infrastructure and technology diffusion. The institutional perspective of a “right” to claim a defined service from a public authority would essentially deal with its totality. In the case of promoting entrepreneurship through a rights based approach, the aspiring entrepreneurs are entitled to demand services dealing namely from starting a business to closing a business by a law which facilitates services within a specified timeframe. In other words, the aspiring entrepreneurs should be guaranteed with a legal right to claim a service from a public authority within a timeframe as immunity.

 According to the World Bank’s Easy of Doing Business Report (2014), in India, to start a business it takes 27 days vis-à-vis 16 days in South Asia and 11 days in OECD countries. In terms of number of procedures, India has 12 procedures as compared to 7 in South Asia and 5 in OECD countries. In case of India, the 12 procedures have to be approved by both Union and State governments. Significant amount of delay in processing of each of the 12 procedures would be possible and are indeed in common practices. There are also considerable costs involved in each of the procedures processing in the government. In India, the cost of per capita income for starting a business is also high at 47.3% as compared to 19.8% in South Asia and 3.6% in OECD countries.

 Further, the World Bank Report (2014) shows the exact number of procedures involved in each stage and how many days takes to complete official process: for starting a new business (12 procedures and takes 27 days), dealing with various construction permits (35 procedures and takes 168 days), getting electricity connection (7 procedures and takes 67 days), registering property (5 procedures and takes 44 days), getting institutional credit (8 procedures), paying taxes (33 times in a year), enforcing contracts (46 procedures and takes 1,420 days), resolving insolvency (minimum 4 years to close a business), etc. All of these are seriously hurting especially the poor aspiring entrepreneurs much more than others because the poor entrepreneurs lack either capital or skill or both. Particularly, getting institutional credit in right time to start a business is really a daunting task for poor entrepreneurs.

 All over the world, the micro, small and medium enterprises are promoted vibrantly by the government interventions by the approach of institutional framework. Therefore, by guaranteeing a legal right to aspiring entrepreneurs in a structured institutional framework would inevitably enable them to demand not only clearing of all the processes and procedures within a timeframe from both Union and State governments but also go beyond and facilitate legal framework to reduce huge costs involved in the starting of a business to closing a business.

 According to Dr.Pronab Sen (2014), “The Economic Censuses demonstrate the huge size and growth of entrepreneurial activity in India... the net increase in the number of non-agricultural establishments in the country is about 8 million every ten years. While admittedly many of these enterprises reflect basic survival strategies, many do not.  The past decade has shown the dynamism that is possible in this sector under the right circumstances and with the proper policies. Many of the leading corporate houses existing today belonged to the SME category at the turn of the century.” The specific targeted policies of the government had its role helping of the once tiny SMEs become big corporate houses now! The UPA’s initiatives like MSMEs Development Act, 2006 has also played a major role.

 In a recent research paper by Bandiera et.al (2012) found that the “very poor can be transformed from labourers into basic entrepreneurs and that this occupational transformation is associated with dramatic improvements in their economic lives, bringing them closer to the middle classes in their communities on measures such as wages and spending.”  Further, the study shows that the “entrepreneurship programme in Bangladesh – the Ultra Poor programme, operated by the Bangladeshi NGO BRAC. The Ultra Poor programme provides asset transfers and skills training to the poorest women in rural communities. The programme aims to move these typically asset-less and unskilled women from low-wage and seasonal jobs to the more secure, self-employment based occupations, which are the choice of middle class women in these communities.”

 The structural reforms in the informal sector are yet to be embarked in a major way to create an enabling environment for even the poorest of the poor in the country. Two-thirds of Indians, nearly 82 crore people are below 35 year of age. The time has come for the idea of right to entrepreneurship in India to really re-look its entire apparatus of the regulatory environment from the perspectives of the rights based approach to unleash the potentials of entrepreneurs of all sections of the society.