An Average Ravichandran

In 1951, the Times of India commissioned cartoonist R.K. Laxman to illustrate the common man's reactions to current events in a daily comic strip, "You Said It". The comic strip had an extremely successful run and more than 60 years in, has given us one of the nation's most endearing mascots — an always bewildered, balding, dhoti-clad householder — often seen peeking into meeting rooms from behind half-closed doors or eavesdropping on conversations, his face buried in a newspaper.

It turns out, unifying the common characteristics, reactions, aspirations and troubles of a majority of the nation and presenting them in a single persona was a good idea. It was an amusing caricature but it was also a powerful image that would be frequently referenced for many decades to come. Another example of this is the idea of an Indian "aam aadmi" — a phrase that, when coined, resonated so widely that it won a national election. Just as popular are the terms "an average Joe", "plain Jane" and many others worldwide. However, most profiles of the common man or aam aadmi are often created based on popular perception, rendering them possibly biased and inaccurate. 

Who is Chennai's "average Joe"?

Being a true-blue CMF-er, I find it difficult to settle for an ill-informed or biased sketch of the aam aadmi. Further, I am spoilt by my love for large, unbiased samples and very long surveys, so I've decided to use one such large dataset from a Yale-CMF study to create a profile of Chennai's own "average Joe". What is his name, how old is he, how big is his family, what's in his home and what's on his mind?

In a series of thematic posts, I hope to integrate relevant findings from various sections of a Yale-CMF survey and present an accurate picture of the life of the average family in Chennai — where they live, how they earn their bread (their idlis?), manage their money and engage with the community.

The Tamilnadu Socioeconomic Mobility Survey

As mentioned earlier, this analysis will use data from the Yale-CMF Tamilnadu Socioeconomic Mobility Survey. The survey collected data from 5000 urban households (in addition to 5000 rural households), of whom 1075 households reside in the city of Chennai. The large sample was randomly selected from a thorough listing of all enumeration blocks (which were also randomly selected). As we like to say at CMF — the more randomness the better — so rest assured, we anticipate that our estimates from this sample will be representative of Chennai city.

The panel survey was extremely detailed and collected information on a wide range of topics including housing conditions, livelihood, expenditure, finance, education, health and migration. I hope to leverage the breadth of the dataset and keep the analysis itself simple — restricted to the estimation of medians in most cases. Stringing together information on how the median household measures on a variety of metrics, I hope to paint a picture of how the average household in Chennai gets by. Needless to say, this is policy relevant because, as they say, the mark of a great city is how it treats its ordinary people and not the special ones.

Meet the Ravichandrans

We found that the median household size in Chennai is 4, usually consisting of a middle-aged head of the household, his spouse and their 2 children. Let's give them names and flesh out more details.

The median age of the head of the household in our Chennai sample is 46 and from the data that we collected, the most common name for boys born in that decade was Ravi, Ravikumar or Ravichandran. Likewise, the median age of his spouse is 39 and the most common name for women her age is Lakshmi (named after the Goddess of wealth). So there you have it: Chennai’s “average Joe” is Ravichandran, 46 and the “average Jane” is Lakshmi, 39.

Ravichandran and Lakshmi married in 1990, at which time Ravichandran was 26 and Lakshmi barely 20 years old. Our data shows that the median Chennai family waits for a little more than a year to plan their first child and accordingly, Lakshmi was 22 when their first child was born. Now, they have two children — a boy and a girl. Similar to how we renamed “average Joe” and “average Jane” based on the most popular names for their generation in our sample, we found that the average children are Vignesh, 16 years of age and Ramya, 14.

When we realized they were living as a nuclear family, naturally we were curious about their extended family and where they lived. In our survey we inquired about all non-coresident parents and siblings of both the household head and his spouse. We found that, on an average, both parents of the household head (in our case, Ravichandran’s) were deceased while Lakshmi was likely to have one living parent, usually her mother. Further, the data revealed that Lakshmi’s mother likely resides in Chennai too, perhaps with Lakshmi’s brother’s family, as is the social custom.

In our survey we asked a lot of questions about Ravichandran and Lakshmi's relationship with their extended family and if they've helped each other out in times of need. As we expected, there are a lot of complex financial and non-financial exchanges that take place between relatives and I'll save the details for another post.

In the next post we'll peek into Lakshmi and Ravichandran's home and take a look at how many rooms they have, what consumer appliances they own and whether they received the free TV and mixer/grinder that the government promised. I hope they don't mind us snooping around :) 

The Other Tragedy at Uttarakhand

The Uttarakhand floods is the worst hit disaster that all of us know of! Unfortunately, we only know what media shows us- Modi Vs Gandhi ; who is better at brewing political advantage out of such a tragedy; stories of pilgrims’ pain , their anger, survivors’ stories, rescue operation ...we know quite a bit! What we do not know is the fate of Shiva who does numerous odd jobs in Uttarakhand during yatra season to earn money or the fate of Rama who relies on subsistence farming during cropping season and stocks his produce for the entire year.

Yatra or pilgrimage season is the only main source of annual income for Shiva’s household. He carries children and old people, he runs a roadside tea stall, he sells chips, biscuits, and he works in hotels- he does everything to ensure maximum earnings so he can sustain his family for the entire year. Rama, on the other hand, has nothing to do with pilgrims and tourists. He is a local farmer. He has a small agricultural land along with some farm animals. He tries to grow enough crops during peak season so that he can sustain his family for the entire year by storing crops. Today, Rama’s home, land and animals have all been washed away by the flood.  

There are thousands of Shivas and Ramas in Uttarakhand who rely on seasonal agriculture and employment and manage their households for the whole year based on the income they earn during this time. Flash floods have swept away many pilgrims and tourists and many Shivas and Ramas have gone missing. Nobody knows the fate of Shiva or Rama, and possibly we will never know as nobody is looking for them either. Worse, with government's plan of mass cremation, probably their death will not even be counted. What is really heart-rending is that even if Shiva or Rama is alive today, the livelihood of his household has been deeply affected. The Government has just announced that there will be no yatra for at least two years due to destruction of roads, bridges and other infrastructure. Worse, the flood has destroyed many agricultural lands. Until the restoration of the state is over (and we do not know when), nobody knows the alternative sources of livelihoods for local people like Rama and Shiva.

There is no doubt that stranded pilgrims need to be evacuated, and should be given proper medical care. In no time, the surviving pilgrims will return home, the dead will be mourned and the media will move to another sensational story. We will hear the media, the experts and the government officials raising questions about riverside encroachment, disaster management system, weather warning system and other endless discussions but they will do what they do best- lay blame on others. However, nobody will pay any attention to the plight of Rama and Shiva, who are probably the worst affected. They have lost their loved ones, their homes, lands, crops, and most importantly, their livelihoods for an indefinite time.

With prayers for their future, I hope, the Government realizes that this ignored population requires a substantial boost at this point to sustain their livelihoods. In addition, I request all readers to show your support to Uttarakhand relief work and please encourage all to reach out to the likes of Ramas and Shivas!!

Financial Inclusion - The Challenges of Implementation

CMF's Savings Monitors Study provided me an opportunity to get a first hand feel of some of the challenges faced in implementing financial inclusion among the poorer, rural community. 

Recent research has shown that individuals across the world have trouble meeting their savings goals. In developed settings, technologies such as savings reminders and automatic retirement savings enrollments help individuals overcome these difficulties. Such technological solutions are far harder to implement for rural clients in developing countries, however. In our study we explore how existing peer networks might help individuals in these settings to mitigate psychological barriers (such as time inconsistency) and better mobilize savings. 

The Study is operational across sixty villages in five districts. A key aspect of the project is to open no frill bank accounts (renamed by RBI to Basic Savings Bank Deposit Accounts in August 2012) or post office accounts (depending on the choice of the respondent) for the saver sample that don’t already have these accounts. Since there is no single partner organisation for the study, all the Banks and Post Offices needed to be contacted prior to when we wanted to open these accounts.

Net Savers Sample across 60 villages	No of Net Savers who opted for Bank Account	No of new Bank Accounts that had to be opened	No of Net Savers who opted for Post Office Account	No of New Post Office Accounts that had to be opened
1111	680	505	431	343

                                     Table 1 : Total Sample and New Accounts to be Opened

Over 75% of the sample did not have a Bank or Post Office Account at the commencement of the Programme, over 60% of them opted to open Bank Accounts and close to 75% of these respondents did not have a Bank Account at the start.

 Study Findings

From our experience, opening of the Post Office Accounts was much easier. It was the opening of Bank Accounts which posed the real challenge. We wanted the Bank Managers’ support  in opening these accounts and requested them to give us the account opening forms in advance so that we could fill in these forms in the village (to save time) and then bring the respondents to the bank for the final signature. We wanted the Bank Managers’ co-operation in assisting us to quickly open these accounts and issue passbooks. As part of the participation fee, an initial deposit of Rs 50 would be put into the no frill account and also other expenses associated with opening the account would be borne by the project. Given below are some of the key findings pertaining to opening Bank Accounts.

(i) Mixed response from Bank Managers

While some of the Bank Managers were co-operative & supportive, a lot of the others were not very accommodative and were hesitant initially to offer their support & co-operation.

On one of the very first visits to a Bank in Kolar, the Bank Manager agreed to co-operate with us almost immediately and told us he would give us the bank forms in advance. He mentioned that it would take around 5 days to open the accounts. The passbooks also would, in most cases be given on the same day as the account was opened. On mentioning to the Branch Manager, the other villages close by in which we would have to open these accounts as well, he mentioned that the concept of “service area” was very important and all the banks followed it very carefully. They would open no frill accounts only if the village came under their service area.

Quite a few of the other Bank Managers asked a lot of repeated questions about our organisation inspite of giving them a good introduction of what it is our organisation does and what our project was about. The first question by many was “Is this an MFI?” inspite of making it clear to them that we are strictly not one. After going through things again they would ask “But why a no frill account Madam? Why Not a Normal Savings Bank Account?” After telling them again that, we can open only no frill accounts and not a regular savings account with an initial deposit of Rs 500, many would say “But Rs 50 is too less to put as an initial deposit, why can’t you put Rs 100 or Rs 200? As part of the Central Bank’s Policy we have already opened no frill accounts for all people in villages who come under our service area, I’m sure you won’t find anyone Madam”. I would then tell them that we have Bank Account Information from a previously done survey and there are several people in our sample who don’t have one and want one.  After reassuring them then they would say “Ok then, we will give the account opening forms to your surveyors in advance Madam. But please bring the people in groups of 5 across 3-4 days. As you can see we are short on staff here and we have a lot of customers. Yes, and regarding passbooks which you mentioned that might take some time, because it has to come from our head office and we are usually short on them”. 

(ii) Characteristics of the existing process

Concept of the Lead Bank strongly felt in some districts while not so much in the others. In some districts, Banks were not willing to open no frill accounts for villages even if they were very close to the Bank just because it didn’t come under their service area.

On meeting a Branch Manager in Kolar and requesting his support in opening the accounts, he mentioned, “Yes, this village does come under our service area but I can’t do anything until I get the Lead Bank’s permission. The Lead Bank supervises all the activities of the Bank in this district and I wouldn’t want to do anything without the Lead Bank Manager’s permission.” On meeting the Lead Bank Manager he clearly mentioned he was not willing to give us any approval or sanction. After a lot of back and forth the Bank Manager at the local bank agreed and we got the Bank Accounts opened. It was very evident that in Kolar the concept of “service area” was very strong.  Even if a village is very close to the Bank and the respondents want to go there, the banks are not willing to open these accounts (particularly no frill accounts). In Tumkur however things seemed more flexible.  The Branch Managers were not strictly bound by the concept of “service area” and were more accommodative to open these no frill accounts for villages that were close to the Bank even if it did not come under their service area.

(iii) Documentation and Logistics Challenges faced by respondents

While getting the Banks to agree and co-operate, was one part of the issue, actually getting these accounts opened and organising the logistics was another equally important aspect. Some of the respondents did not have even the basic ID Proofs that were required and hence dropped out from the experiment. Some of them didn’t have a proper residential proof for which we had to get the Village Headman to issue a letter which would sometimes take longer than expected. Organising a village photographer to take the pictures, filling up the forms, photocopying the documents, getting the witness signatures and taking the respondents to the bank when sometimes there was not good transport facility involved a lot of co-ordination and planning.

Conclusions and Policy Recommendations

1. While the RBI has made the opening of no-frill accounts compulsory for Banks across India, we find that  when it comes to actual implementation, there is a resistance on the part of many Banks, which often cite procedural reasons (not in our service area, lead bank permission required, minor documentation issues) to delay and sometimes discourage opening of such accounts. This is because these accounts result in very little revenue to the Bank and entail relatively higher costs to service. The tendency for such behaviour needs to be factored into the Policy and appropriate incentives could be considered to encourage Banks to be supportive of this important initiative.
2. A lot of time is involved in actually getting the necessary documentation and putting things together. A little more relaxation in the documentation required to open accounts, and also support from the bank to open these accounts and having user friendly processes would help.
3. A large number of persons in our villages did not seem to know that they could actually go and have these no frill accounts opened. There seemed to be little awareness about what they were entitled to. Also, in some cases, women we came across seemed intimidated about a Bank and its operations. Hence targeted, effective communication in this regard could help raise awareness levels and bring about a greater consciousness among the poorer sections about their rights in this area.

The Minds Behind MOOCs

Today we present to you a guest post and infographic on MOOCs (Massive Open Online Courses) by Allison Moris. Allison Moris is currently pursuing her communications degree at University of Illinios at Urbana-Champaign.

The MOOC market is slowly beginning to emerge among Indian students. Over 3 lakh students are currently enrolled in MOOCs. The need for quality education in India is even more pressing; with current government expenditure on education totaling to only 3.8% of its GDP. However with only 3.7% of population having access to internet, the scope for MOOCs at a large scale is still a distant dream. Read further to get a global perspective on MOOCs.  

June 4th, 2013 by Allison Moris

Academia is buzzing about MOOCs. What sounds like genteel name-calling is actually a powerful new medium with potential to transform the education system. Indeed, MOOCs and mooks are simply unfortunate homophones but the former is certainly ruffling feathers because their aim is to make higher education more affordable (free, in fact). These Massive Open Online Courses picked up speed and weight like a freight train, with more than five million learners in locations spanning the whole globe. Academic heavyweights like Harvard, Stanford and MIT back the courses, giving the world of online learning a much-needed boost of credibility.

In fact, two main players in online platforms, Coursera and Udacity, were founded by Stanford professors. As tuition rates continue to skyrocket, outpacing inflation like a Greyhound racing a Chihuahua, professors have banded together in hopes of making a world where anyone can access the elusive realm of an Ivy League education. The hurdles remain: Passing rates hover in the single-digits and completing a course has yet to be recognized for college credit. However, the appeal of MOOCs for both professors and students is so powerful it just might change higher education for good.

No Country For Women!

            What is women's empowerment? And more importantly, how is a woman valued in India? A brutal gang-rape of a medical student, who gave in to her injuries a fortnight later, shook the nation last December. The incident and the events that eventually unfolded saw the whole of India vociferously protest against this hideous act. People took to streets, coffee shops, bars, offices, and social media outlets to voice their opinions. Even the most famous surfing portals were filled with phrases like strong law enforcement, death penalty and so on.

However, the front-line media as well as the discussions on public forums (or at least the ones I read) seemed to have missed one very important point. Yes, this incident was bizarre and yes, the protests were justified. But why only this incident? Is it because it happened in posh South Delhi? Is it because urban India (that most media outlets cater to) could relate so well to the incident and feared that it could have been one of them in that bus? Is it because other incidents reported in the rural parts of the country do not generate enough TRPs? I don’t know. But this incident serves as a pretext and interested readers could read some of the reflections on this topic here and here (This one particularly had a profound influence on the way I thought about this issue. It is by a rape victim, herself, who was on the December 24, 2012 episode of NDTV's We The People hosted by Barkha Dutt).

                Going back to my initial question of women's empowerment, most researchers around the world would agree that finding a perfect way to measure it has not been devised yet. Available methods use a mix of qualitative and quantitative tools to conclude about a certain aspect of women's empowerment. For the past five months, I, along with CMF’s Livelihoods Initiative team at IFMR-Research, have been conducting a baseline study of seven of the poorest districts in central India in conjunction with a partner organization - PRADAN. While our research questionnaire looks at all the aspects that affect the livelihood of a poor household, we have also included a series of questions on women as an individual; her health and hygiene, attitude and perceptions towards herself, and her view of the institutions. Since a woman is not only a separate entity in herself but also an inseparable part of the community she resides in, we also explored her roles and responsibilities in the society which covered topics such as how free is she to access her liberties, what is her role in the community and in her household, is she aware, willing or capable to use her rights and entitlements granted by the community?

We are still analyzing data collected from this study, and hopefully, along with our partner organization PRADAN, we will be able to share results from this study soon. However, I would like to share a personal experience from the field that made me wonder about the lower bound for a woman’s place in certain segments of our society. Our questionnaire had a series of statements that disparaged women over men in some way or the other to understand how women are viewed by both men and women. We asked these questions to both men and women members of the households. I was with a surveyor when he was asking these questions to a male respondent in one of our study villages. The male respondent was surrounded by a group of men from neighboring households. To my horror, as the surveyor threw one disparaging statement after the other on how women should be seen as lower than men, all men started shouting at the top of their voice with “Agree!” chants raising their hands up in the air as if they had just been summoned to give a speech after coronation. What made me feel worse was when I saw a female sitting in one corner and listening to the questions, cover her face and walk away.

                Reflecting upon this incident, I had no choice but to reluctantly accept the fact that two thousand (or may be more) years of patriarchal notions could not be solved any time soon. However, a small step would be to realize that in the macrocosm of caste, class, and gender, women from rural areas stand at the bottom of the pyramid; incredibly vulnerable to social, political, and economic abuse. Many instances of women's rights violation from rural areas probably go unreported or ignored even when it makes it to the news media outlets. The backdrop of the Delhi incident and several other that have happened since should only serve as a lesson that cancer cannot be cured by curing parts of it; it has to be wholly removed. I have read and heard many different angles along which people have summoned acts against violation of women's rights after the Delhi incident. Few have been wholesome in their approach; others have only addressed part of the problem. I think it should start from understanding what being a woman in this part of the world really means. And since more than 70% of the women dwell in rural areas, it is imperative to make their voices heard so that any vehicle attempting to get rid of the atrocities against women does not leave without 2/3 of its passengers.

Finally, here is a report from CARE that sheds light on the issue of women's empowerment by providing examples from several cases around the world. Barring some salient deviations, it seems like our part of the world does have company in something that we should not be proud of. 

Why do Indians buy gold?

India is one of the biggest markets for gold and gold loans. Reasons for this are spread across various social, economic and cultural dimensions. According to World Gold Council, India accounts for 10% of total world gold stock, of which rural India accounts for 65% of the total gold stock. For Indians, gold is not just a commodity, but an auspicious metal that they buy for various purposes on different occasions. There has always been a high demand for gold in India, irrespective of prices. During 2001- 2012, the annual demand for gold remained relatively stable at around 700 to 900 tonnes despite constant rise in prices during the last ten years[1]. 

In a recently concluded CMF research project, we attempt to understand the characteristics and behaviors of the various stakeholders involved in the gold loan market through a survey methodology. This post highlights one of the interesting findings from our preliminary analysis of the data.  In order to gauge people’s perception about gold, we asked respondents their motive behind buying gold. Following figure provides a snapshot of the various reasons people cite for buying gold.

As observed, 31% of respondents buy gold for use during emergency situations. This is because gold loans are easily available with minimal procedural requirements. Gold is also considered as one of the most liquid assets, since it can be easily converted back to cash and hence the resale value of gold is quite high compared to other types of asset. The second most common reason for buying gold is that gold has a very high traditional value in India. This includes buying gold during festivals, marriages, etc. There are various festivals in India during which buying gold is considered auspicious. This is true especially in the case of South India where people are gripped with what we can call a ‘gold mania’.

20% of respondents save in the form of gold. This is indeed a prudent decision as the value of gold has seen an upward trend over the last few years. Therefore, Indians prefer investing and saving in the form of gold, as gold is considered to be a safe asset. Lastly, a total of 19% of the sample size cites buying gold for marriage purposes. To give you further insight on this, following is an observation from one of our field visit while administering the gold questionnaire:

Surveyor: Do you often buy gold?

Respondent: No

Surveyor: Any specific reason, why you don’t show much interest in buying gold?

Respondent: I have two boy children and so I don’t care! If I had a girl child, I would start accumulating gold from the minute she was born. Guess I am lucky.

The above anecdote reflects society’s attitude towards importance of gold in marriages. Low income households face extreme societal pressure to buy gold in spite of their economic barriers.  

Whether Indians are emotionally attached to accumulating/buying gold is an interesting question to investigate. Historically, Indians have expressed great emotional attachment to their gold, which is one of the primary reasons for a flourishing Indian gold-loan market. However off late, the industry has witnessed increasing defaults on gold loans, due to decrease in prices of gold.  This reflects peoples’ changing perception about gold. Indians have proved to be smart investors and consider gold as a medium to save, invest, hedge against inflation and most importantly to safeguard their future.

Therefore, in spite of Finance Minister Chidambaram’s constant plea ‘to contain uncontrolled passion for gold’ the demand for gold in India is sky high.

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[1] Report of the working group to study the issues related to gold imports and gold loans by NBFC’s, RBI 2013

Welcome to the new IFMR Research Blog!

As you can see, we’ve rebranded our blog from the Centre for Microfinance Blog to include the Centre for Development Finance (CDF), the Small Enterprise Finance Centre (SEFC) and the Centre for Microfinance (CMF) - the research centres under IFMR Research. 

In order to reintroduce our readers, IFMR Research is a premier social science research institute based in Chennai, Tamil Nadu. The institute specializes in using scientific research methods to assess issues around access to financial services and products for the urban and rural poor; contribution of public and private sector to improve investment and delivery of public goods;and development of the Small and Medium Enterprise industry to aid poverty alleviation. The primary research areas IFMR Research focuses on include, but are not limited to - financial inclusion, livelihoods, social objectives, policy and regulation, environmentally sustainable finance, infrastructure and governance, rural market insight, development metrics, and small and medium enterprise development.

The institute aims to provide academics and researchers with opportunities to conduct high quality research and to generate pertinent findings for the financial sector catering to the poor; provide practitioners and policy makers with research findings that impact the economic and social welfare of the poor; and provide our funders and donors with an opportunity to invest in evaluation of path-breaking development programs.The institute has partnered with leading academic research institutions such as MIT, Yale, Harvard, Stanford, UC Berkeley and so on; with leading national and international funding agencies and collaborators such as the World Bank, GIZ, Government of India (Ministry of Finance, National Bank for Rural Development), 3ie and so on.

The Centres comprising the IFMR Research ecosystem include:

·         Centre for Development Finance -The Centre for Development Finance (CDF)was established in 2006 and focuses on improving the delivery of public goods that contribute to inclusive social and economic opportunity in India. Specifically CDF seeks to find sustainable ways improve public and private sector investment in public infrastructure.

·         Centre for Microfinance - The Centre for Microfinance (CMF)was established in 2005 and aims to improve the accessibility and quality of financial services for the poor through rigorous research, knowledge dissemination and evidence-based policy outreach.

·         Small Enterprise Finance Centre - The Small Enterprise Finance Centre (SEFC) was established in 2006 toadvance the research and practice of SME financing and growth in India. The SEFC team seeks to study how financial markets and private market forces can foster the growth of SMEs and the role that SMEs play in the alleviation of poverty.

The IFMR Research Blog brings to you the latest reports from IFMR Researchers working within each of these Centres. Our researchers and collaborators work in diverse geographies in India, and each week we aim to bring you reports directly from the field, op-ed pieces, and preview of the cutting edge-research being conducted currently.

Also, don’t forget to “Meet Our Bloggers” and don’t forget to check out the blog for your daily dose of development economics. It must be noted that the views expressed in this blog are solely those of the authors themselves and should not be taken as representative of the views of IFMR Research.

We appreciate hearing back from our readers and encourage your comments and feedback. If there are specific questions or concerns about the content on any of the blogs, please email our Knowledge Management team at - [email protected].

We appreciate your readership!