Abraham George - Uncovering the Truth Behind Poverty

What do we want our government to do for us?

2011-12-18T16:56:00.007-05:00

I have had little or no interest in Indian politics of the past several decades. Regardless of the party in power, my focus has always been on policies and the nature of governance. I had hoped that India’s young democracy would gradually mature over time in the right direction, but sadly enough, what I see are several serious and disturbing fundamental problems that undermine the hope for a free, just and prosperous society.

The Hazare movement against corruption in government has elevated public concern about the corrosive nature of governance in the country. Unfortunately, even if this protest yields passage of legislation by the parliament to appoint a body to investigate serious corruption by politicians and government officials, it is unlikely to bring about the much needed reforms. However, in this age of street protests in many oppressive countries, it is refreshing to see that the Indian public is directly demanding some level of honesty and accountability on the part of powerful politicians and officials.

There is little hope, and history has vividly demonstrated, that governments are capable of reforming from within. This blog cannot do justice to describing adequately what would bring about the desired change. Instead, I would like to mention very briefly what we as citizens would probably like our governments to do for us.

There is no doubt that we want our government to serve all its citizens. Individuals and private organizations pursue their self-interest and are unlikely to concern themselves with our common interests. It is the shared interests of all people that we expect our government to look after.

In my opinion, the government’s role must be confined to assuring security and liberty, justice and equity, and providing basic public services and creating an environment for vibrant and fair economic activity. When governments extend themselves into other functions, such as running businesses and trying to direct markets, they also introduce unwanted regulations and licenses that give officials and politicians the power and opportunity to profit from misuse of public funds and to take bribes. Until the citizens of a country restrict their government to those desired functions described above, there will be only limited, if any, positive results from protests against corruption.

Let me briefly and broadly elaborate the rightful functions of government. Security and liberty relate to protecting against external threats, and preventing crimes and internal instability without compromising individual freedom and rights as offered by the constitution of the country. Justice, both legal and social, assure equality and opportunity regardless of gender, caste, religion and sexual orientation, and the ability to seek and obtain remedy against wrongful acts by individuals, organizations and governments. Equity is important in assuring fairness and human rights – the ability to avail basic services such as education, livable housing and healthcare, and protection from poverty.

Government may involve itself directly or indirectly in offering affordable public services such as roads, water supply and electricity. At times, the government may fund private initiatives, such as basic research, that could lead to innovation and comparative advantage for the country in certain sectors of the industry. Finally, monetary, fiscal and regulatory policies as well as international agreements must be designed to promote private business activities that conform to essential public considerations such as environmental safety, competitive business practices, and consumer protection.

Unfortunately, governments at both central and state levels in India play a much wider role with excessive powers. It has resulted in inefficiencies that hinder economic growth and prosperity, loss of freedoms and individual rights, corruption and injustice. Until such time government’s role is properly redefined and confined to what is essential to meet the collective needs of its people, the nation will not be able to achieve its dream of a fair, just and prosperous society.

Why do we need police in India?

2011-12-09T14:19:00.009-05:00

Police in India execute several valuable functions to safeguard the powers of the state and its authorities. This law and order organ of the government serves fairly well the interests of those who are in power: police guard police stations and government buildings, including residences of senior officials and politicians; blocks roads and ensure the smooth travel of ministers and dignitaries; control crowds especially where politicians attend functions; and take part in state ceremonial occasions. I suppose all these are essential for the protection of those who rule its citizens.

How does police help ordinary citizens? They say police prevent crime and catch criminals. I do not have statistics on the number of criminals caught in the act of or before they could commit crime. But the idea that one could call police to investigate a crime is probably comforting. Even better, if one would indicate who is suspected and give the police sufficient money, they would probably catch the alleged criminal.

When I hear stories involving the police, I often wonder whether ordinary citizens can rely on the police for protection or to seek justice. My concern was raised recently when my lawyer told me very candidly that the police are only for the highest bidder. If one is prepared to pay bribes, the police will do anything for you, he said. Those who can afford to dish out sufficient money for the police can also have anyone, innocent or otherwise, charged of crime and put in jail. The converse is also true in most instances; with power and money, one can get any charge dismissed. It is not surprising that not many rich folks in India have any complaints against the police. After all, they have their own "private police," while maintaining "good" contacts with the public police.

Recently I was made aware of a situation involving the police. An employee of an organization was taken to the police station on charges of assaulting someone else – a false charge. This employee was told by the police inspector that he would be set free of all charges if he would bring certain amount of money allegedly borrowed by his brother-in-law. When the employee refused, the police filed charges for criminal assault of a money lender and for participating in cheating and fraud. No evidence was produced except for the complaint filed by the money lender. It was very obvious that the police were bought over by this money lender. FIR (First Investigative Report) was prepared by the police based on false charges and the employee was arrested and put in jail.

The family of the employee pleaded with the police inspector who responded with demand for a considerable sum of money for the release the employee – something the family could not afford.

The next morning, Saturday, the police were required by law to file the charge sheet with the magistrate in court. The family sought bail but the magistrate could not take up the matter until the defendant appeared in court – to be brought by the police. The inspector deliberately delayed bringing the defendant to court until 4.45 PM, just when the judge was getting ready to leave for home. The state prosecutor simply disappeared and the judge declined to hear the bail application at that late hour without the presence of the prosecutor. The employee was returned to jail for the next three nights and days.

The police had included a “non-bailable” charge against the employee for which only with the consent of the state prosecutor he could avail bail. The prosecutor demanded money for himself and for “others.” The family borrowed what was needed and delivered it before the hearing on Tuesday. The judge and the prosecutor both had no objection to releasing the employee on bail.

Outraged at the injustice and insult, the employee and his lawyer met with a senior police official overseeing the station that caused the arrest. The senior officer comforted the employee by admitting that injustice was done in this matter, but he would need several lakhs of rupees to remove his name from the charge sheet that was being prepared for the court. No promise was made to take any action against the police inspector.

Consider this situation. A private money lender who is essentially a loan shark bought over the police to arrest and detain an innocent person, and no one in authority was willing to consider the absence of any evidence. Now the police officer at the senior level demands money to remove the charge against this innocent person, knowing full well that his subordinates had unjustly arrested and jailed him.

The police inspector had warned this employee that serious harm would occur to him and his family if he took any action against anyone. I am sure the police are capable of delivering on this warning.

In summary, when the legal system is corrupt and justice is elusive, what rights and protection do ordinary citizens have? This incident could not have been an exception but the general practice. If the guardians of justice conduct themselves like criminals without fear of consequence, then there is no hope of justice for ordinary citizens.

The Mirage of Middle Class Disillusionment

2011-10-30T08:50:00.017-05:00

In a New York Times article of October 30, 2011 entitled Protests Awaken a Goliath in India, it is pointed out that recent anti-corruption protests have stirred India's middle class which has benefited most from growth, but remained disengaged from the political system. While this could be interpreted as a favorable development if indeed millions of them join the Hazare movement or take steps to protest against corruption at all levels.

The middle class often bribes government officials to get their needs met, whether it is for admission to a government college, obtain a license, or transact a real estate deal without heavy tax burden. They cannot, however, afford to pay big bribes as the rich and the companies do to win bids and get special favors. After all, politicians and senior government officials have raised their price for bribes from lakhs of rupees to crores, and even hundreds of crores.

Are the poor troubled by the deep rooted corruption in India? Most poor people cannot afford to pay bribes, and even if they somehow manage to do, it is usually for their small entitlements such as ration card or caste certificate. I suppose low level bureaucrats involved in corrupt practices are kinder not to demand more than a few hundred rupees. It appears that poor people are indifferent to corruption in India and are often fatalistic about it.

I recall reading a quote in a newspaper several years ago from a poor man on the street when he was asked to give his reaction to the arrest of a senior official for allegedly taking tens of lakhs of rupees in bribe and subsequently being caught. The poor man said, “He must have done something good in his last life to make so much money.” After all, everyone usually expected the government official to go free after a superficial investigation and filing of low level charges.

In India, what usually counts is the opinion and influence of the rich and the powerful. But now, it appears that the middle class is slowly waking up. The poor continues to sleep long.

The rich and the powerful also may not care much about corruption. They have the money to make money, even if that involves dishing out large sums in bribes. They are in an exclusive club, and there is no need for them to complain. Greed, arrogance and denial are matched only by self-interest and hypocrisy.

How many people in India are in the rich and middle classes? According to an April 2010 McKinsey Global Institute report, 30 million households, or around 150 million people in India belong to the middle class. By 2030, this number is expected to increase to 600 million, if economic growth continues at the present 6-9% rate.

The rich – those who can afford considerable luxuries such as good cars, modern apartments and vacations -- are presently estimated to be around 10-20 million people. This number could reach 50 million by 2030. The super rich are in the thousands.

India’s population of 1.2 billion is expected to cross 1.6 billion by 2030. That would then leave over 1 billion people in the poor to lower middle class category. If the past is any indication of future behavior, these masses can be expected to remain silent about corruption in India. As some of those presently in the middle-class move up, they too are likely to become part of the “silent class.”

So much for the anti-corruption movement in India! When we measure economic success in terms of GDP growth and the increasing size of the middle class, who cares about corruption and equitable progress?

Lessons from “Occupy Wall Street” movement for India

2011-10-09T12:35:00.006-05:00

In the past three weeks or so, what started as a protest by few young people against abusive practices by financial institutions in the U.S. has grown into a large movement across many major cities. The Occupy Wall Street (OWS) movement is demanding social rights and justice for most Americans – 99% of the population – who they say are oppressed by the rich and the powerful 1%.

OWS movement points out the wide disparity in income and wealth between the few rich and the rest of the nation. They believe that it was the financial institutions in the U.S. that caused the global financial melt-down and the deep economic recession in the U.S. Yet these same institutions are using their political influence to prevent any regulatory legislation being enacted by the U.S. Congress that would curtail the practices they were engaged in . Further, they point out that those executives who were responsible for these financial institutions and their harmful practices have not been brought to justice.

If these allegations are true, then we are talking about corruption and unfair use of financial power by the corporate sector to influence policy and to continue practices that unfairly benefit them at the expense of the rest of the country. If recent opinion polls are correct, a majority of Americans agree with this assertion, and believe that these powerful companies who were beneficiaries of government bail-out with tax dollars should be held more accountable for their actions.

What is different about the OWS movement is that it is the first time the general public has risen up against the private sector. In most countries including India, widespread protests have always been against the government. The assumption in those cases is that it is the government officials who are corrupt, and the private sector simply plays to that for their own benefit.

In India, in the past few months, the Hazare movement gained strength from public discontent over corruption in government. Surprisingly, political leaders of the country tried to discredit the movement, arguing that the anti-corruption movement was demanding certain changes in government practices that only the parliament has the power to decide. True, it is the parliament that makes laws, but their members are not independent of the will and wishes of the people. A country that was born from the non-violent struggle led by Mahatma Gandhi for a just cause was told by its leaders that the peaceful protest against corruption was unconstitutional and hence, their leader Hazare was arrested.

It is hard to be truthful about corruption, but let us try. In India, corruption is at all levels of the society, and it has been in existence for a long time. What is different now from before is that corruption has increased dramatically over the years, and the money involved is far greater. For example, a State minister would, as a general practice, demand 10-20% of a public works project for road construction for Rs. 500 crores, and the private contractor would arrange to deliver it in “black” money – cash. I wonder how so much money, and often more, can be taken in cash and delivered to someone in person!

Are our political leaders and investigative agencies unaware of these common practices? Are the courts incapable of prosecuting such cases? The answers to both questions are a resounding “no.” Yet, very little is done to end these terrible practices.

Corruption in India is simply a reflection of how the society lives every day. Corruption is an accepted fact of life. The rich have very little incentive to end it, as they unfairly benefit from it. Their power of money can buy anything and everyone, including courts. Justice is the same as power.

Most politicians and bureaucrats are what they are because many citizens are what they are -- corrupt. The people have empowered their rulers to do what they want without accountability. As a result, the very rich – the 1% minority – is able to get richer unfairly at the expense of others.

For this system to continue, the rich have to appear as benevolent to the poor. Hence, many donate small amounts for social causes. Some start Corporate Social Responsibility departments in their companies while engaging in serious corruptive practices. This game is smartly played.

So, the lesson from OWS movement is this. Corruption will remain as long as the private sector, mainly large companies, is allowed to continue benefitting from it. Simply asking politicians and bureaucrats to be accountable and transparent might help a little, but they will find other ways to circumvent the new laws, if ever enacted, to reduce corruption. What is needed is a movement against those who cause corruption in the first place.

India must create strong, independent press free of religious leaders and politicians. Courts must be brought under scrutiny. All major private sector dealings with the government must be investigated without curtailing business activity.

Every individual who holds important government or private position must be required by the revenue department to disclose his or her wealth, income, and sources of income . Their immediate family members should be required to do the same. They need to explain how their financial figures and sources have changed over each year. The investigative agencies need to monitor them without harassing anyone, and bring about accountability through just prosecution of illegal activities.

I am told by some of my friends that this article might offend the same constituency that I am seeking support from for Shanti Bhavan. I respect that observation, but I also feel that it is not a good enough reason for me not to speak out. After all, not every wealthy person or corporation is corrupt. I am sure those who see fairness will stand in the support of a just cause.

How to destroy a good private educational system

2011-09-17T04:30:00.003-05:00

Everyone would agree that the secret to imparting good education is committed and qualified teachers who motivate children to learn well. Of the 120 million children attending schools in India, government schools have 73% of the total enrollment in 80% of all schools in the country. With much of the burden of the nation’s education on government schools, it is undoubtedly essential that these schools also have good teachers. But the question is how should the government attract, keep and motivate committed and qualified teachers.

Most rural schools currently have few teachers, often as low as two, for the five elementary classes, and many of them are periodically absent from school or are not motivated or qualified to teach. It is well-known that rural education is deplorable: only 15% of the children reach high school and barely 7% graduate. Even fewer children go on to study in colleges.

There are many reasons for the dismal performance of government schools, but lack of sufficient funding is not one of the main factors. In fact, governments have allotted considerable sums of money to infrastructure improvement, books and supplies, teachers and administrators. Much of that money is siphoned off by government officials and politicians for their personal enrichment. What is left is still a considerably large amount which can be put to good use.

Recognizing the need to attract teachers, governments have introduced several incentives: high salaries, benefits, retirement pensions, and job security. Even more attractive for teaching in government schools is the many holidays and long vacations that can be availed. Daily class sessions are fairly relaxed with little or no supervision, and frequent absence from school is tolerated. Government teachers usually conduct paid tuition classes during off-hours on most days, bringing in even further income for themselves.

With all these attractions, why should anyone want to teach in a private school? The answer is: there is no good reason unless the individual is motivated to work hard to benefit students. If one is looking for a good financial package and leisurely work environment, government school teaching is a far superior choice. Most private schools that charge reasonable fees which are affordable to middle and lower classes cannot compete with the tangibles and intangibles that go with government school teaching. Tax payers are generously taking care of government teachers while private schools that offer superior quality education are unable to afford similar packages for their teachers. Only elite international schools catering to the highly rich can offer superior compensation packages.

The result is a steady migration of good teachers from private schools to government schools. This transfer process will only accelerate in the years to come as state governments build and operate more government schools. Private schools are scrambling to hire teachers, mostly new graduates, and keep and train them for a few years until the government hires them away without advance notice in the middle of the academic year. Consequently, private schools depend greatly on inexperienced teachers and often do without sufficient number of teachers until the next recruitment period for new graduates starts.

I am reminded of the economic truism that says “taxation is one of the most efficient and accepted ways of transferring wealth from the most productive segment of the society (private individuals and entrepreneurs) to one of the least productive segments, namely government and its projects. Instead of training and recruiting large numbers of college graduates aspiring to enter the educational field, and offering them salaries and benefits comparable to the private sector, the government is currently embarked on destroying what has so far been the bright spot in education. In the longer run, there will be a lower proportion of good private schools – mostly those catering to the rich (and paying high compensation and benefits to teachers) -- and more government schools offering sub-standard education.

What a way to kill the goose that lays the golden egg!

The true face of corporate social responsibility

2011-08-30T04:08:00.012-05:00

I have been critical of companies projecting themselves as socially concerned institutions by each creating a corporate social responsibility (CSR) department within their organization. Lately, CSR activities have received considerable publicity, helping companies to present themselves to the public as benevolent institutions concerned about social issues such as poverty alleviation, environmental protection and energy conservation.

In my several prior articles I have pointed out that CSR initiatives are simply marginal activities for a company, with little or no serious attention given to them by senior management. These activities take mainly two forms – funding NGOs for education, healthcare, arts and other social initiatives, and running their own projects that are being projected as contributing to social good.

The focus of CSR has mostly been on the positive publicity that could be obtained for the company and its top managers. The hypocrisy of the claims being made by many institutions is visible when these activities are carefully scrutinized for what they really are: who are the beneficiaries; how much of the co-funding is obtained from governments; what is the relative contribution toward CSR activities when compared to the company’s revenues and profits; and what are the real motivations for embarking on CSR projects.

Late Nobel Prize recipient in economics, Professor Milton Friedman, pointed out in an article in the New York Times magazine as early as 1970 that CSR functions are nothing more than “window dressing,” and companies can only be expected to make profits for their shareholders. Lately, two economists, Michael E. Porter and Mark R. Kramer, have been attempting to paint a different face to CSR through a concept they have defined by the word “shared-value.” They argue that companies may try to maximize their profits while opportunistically undertaking socially good ventures as part of their mainstream activities.

For example, GE is credited with helping consumers conserve energy by introducing products that require less electricity. Similarly, many major companies are credited with introducing consumer products such as toothpaste and soap at low prices that are affordable to some of the poor people.

By the same token, companies such as Wal-mart and Nike claim that they generate hundreds of thousands of new jobs, employing previously unskilled labor, in poor countries. New companies are springing up every other day offering technologies to harness solar and wind energy more efficiently, and to burn coal with less carbon pollution. All these industries offer products that serve social good, and yet their main focus is on generating revenues and profits. It is not difficult to argue that they all fit within the concept of shared-value.

Companies enter into business ventures with the goal of generating profits. If those ventures are addressing some of the pressing needs of the society, they are even better. However, even if a product is not recognized as having socially redeeming values, as it might be in the case of expensive cosmetics, it might still meet the needs and desires of some individuals. Further, companies engaged in creating and selling such products employ people, generating income for many families.

I am of the opinion that any discussion of social responsibility and shared values in the context of corporate goals is of very little practical use. Companies operate in areas of their competence and compete with each other to succeed financially to reward their investors. If there is a market opportunity to make profits in an area, whether it has direct social benefit or not, there will be investors and entrepreneurs who would want to exploit it. There is no need to set aside opportunities with superior risk-return tradeoff in favor of what might be called shared-value investments with lower probable returns and higher risks.

After all, investors haven’t asked their top managers to spend time or money on social projects that are unlikely to add value to the financial goals of the company. When investors and employees personally make money, they can decide for themselves what they want to contribute, and how they want those contributions to be best utilized. That is the model followed by true benefactors like Bill Gates and Ted Turner who first earned money for themselves, and then decided to spend a great part of it for social good. Companies that are privately held by few individuals also fall within this model.

Companies must recognize that it is in their long term interest to win the support of communities where they operate. Repressive local norms in compensation and treatment of labor must be replaced with fair practices that assist the poor in adequately caring for their families. Market forces of supply and demand and competition for gaining a dedicated labor force and loyal customers are powerful factors in motivating good behavior on the part of corporations.

These and other issues can be addressed through effective enforcement of laws and regulations concerning minimum wages, worker safety and benefits, prevention of non-competitive practices, and environmental protection. Governments must play their rightful role to promote responsible action on the part of companies, and leave the rest to market forces. Companies, on the other hand, should be expected to focus on rewarding their investors while operating in an ethically and legally correct fashion.

Let investors first make money fairly and then decide what their individual preferences are toward social contributions. This individual responsibility toward society cannot be delegated to faceless corporate entities.

Straight talk about microfinance

2010-12-22T06:45:00.004-05:00

In recent months, some truthful information on how micro-lending is impacting recipients of loans have appeared in several published sources including the New York Times. Now it is reported that many borrowers in the State of Andhra Pradesh in India are refusing to repay their previous borrowings, mainly as a result of the high interest charged and their inability to meet the obligations. There are reports of threatening tactics used by lenders to collect on outstanding loans, and of suicides by a number of borrowers.

For the past seven years, I have been writing about the working of microfinance, and pointing out, contrary to claims by micro-lenders and the general perception on the part of donors, that such lending has not been benefitting the poor (see my previous blogs herein, my articles in professional journals, and my book, India Untouched: The Forgotten Face of Rural Poverty). Let me further answer the central question as follows.

Proponents of microfinance have been claiming that micro-lending is helping the poor get out of poverty. Who are the recipients of microloans, and are they truly benefitting?

According to the World Bank narrow definition for poverty, those earning less than $1.20 per day are considered poor. For a family of 4, this implies a family income of $4.80 per day, or $144 per month. This works out to Rs. 6,400 per month in India. Once again, interpolating World Bank statistics for 2008, there are no less than 60% of the families (around 700 million people in India alone) living below this income level. Most of them are either illiterate, or with very little education or skills to start and run a business. Great majorities of the poor people live and work in rural areas and rural towns as laborers and unskilled employees in farms, factories and small businesses. At best, some of them can be expected to engage in family-run activities such as maintaining one or two cows, few hen or goats, provided they receive sufficient capital to start such activity.

Take the case of a poor family trying to maintain 50 hens to support themselves. It would require no less than Rs. 25,000 ($550) in initial capital to build the necessary infrastructure to keep the hens safely from predators and thieves, and to feed the chicks during the initial 6 months until they are mature enough to lay eggs. This size of capital, if borrowed, would place substantial financial burden on the borrower, especially if the interest is 24-36% annual rate as commonly charged by micro-lenders in India (note: usually microloans are for much smaller amounts).

What would this small poultry farm bring in financial return? At today’s price for eggs, and assuming that the hen are of good breed laying 200 eggs a year, the average annual revenue would be Rs. 40,000 (around $850). After deducting the cost of feed and vaccinations to prevent diseases, the annual profit could be around Rs. 28,000 ($600), not including the wages forgone by the family. This works out to Rs. 2,300 ($50) per month. At monthly interest of 2.5% on Rs. 25,000 initial loan, interest payment alone would be Rs. 625 ($14) per month. 12 monthly repayment of principal would be Rs. 2,083 ($46). These financing costs leave the family with negative cash-flow. This business is not financially feasible as structured.

By engaging in such businesses with no personal capital and high interest loans, and by losing income from gainful employment elsewhere, the borrower gets into deeper financial trouble. I have pointed out in earlier articles of this situation for practically every poor family that ventures into business. Unless the starting capital and some initial months of financial support are provided free, the family cannot engage in even small businesses.

Recognizing the above reality, micro-lenders prefer to lend to those with incomes above the poverty level and those already engaged in businesses. These people are not poor as claimed by microfinance firms.

Small businesses run by lower income people cannot usually obtain conventional loans, and they could be helped with micro-loans. However, even they would find it very hard to repay loans at the high interest rates currently charged by microfinance firms. The concept of micro-lending might be meaningful to small businesses if the cost of borrowing can be brought down substantially. But it is no poverty alleviation activity.

The author of this blog runs several social projects in South India.

Finally the word is getting out about what microfinance is all about?

2010-11-10T05:15:00.004-05:00

For the past 7 years or more, I have been speaking out and writing a number of articles and blogs on the misleading impression being created by microfinance firms on their alleged contributions to poverty reduction (see my December 2006 blog entitled “Social Entrepreneurship as Poverty Solution”). I have pointed out that microfinance loans are rarely made to the poor (those falling below $2 per day – the broader World Bank definition for poverty), the interest rate charged is often exorbitant, only a small proportion of poor borrowers with other support mechanisms are able to start and sustain any new business with such loans, the collection practices are unethical, if not illegal, and often these loans cause recipients to fall into greater indebtedness. I have been discouraged by my inability to convince others on my observations, as more and more powerful institutions including the World Bank, the United Nations, and hedge fund/private equity firms joined forces with many of the micro-lending institutions. Recently, one Indian microfinance firm executed an IPO yielding tens of millions of dollars to its founders and one of its financial backers.

However, in the past few months, we are seeing some truth trickling out about microfinance. One such article by Milford Bateman on the Andhra Pradesh Microfinance Crisis in South India dated November 8, 2010 appeared in the online service www.Indiamicrofinance.com. To quote the opening paragraph of the article: “What is happening in AP today is an economic, social and humanitarian disaster. Mounting individual indebtedness in the poorest communities (largely thanks to the ease in obtaining multiple loans), artificially inflated and distorted local economies (many inflated into nothing more than giant bazaars and permanent street sales), spectacular levels of profiteering by the CEOs and key private investors attached to the main MFIs, increasingly aggressive loan recovery techniques, and growing numbers of reports claiming multiple cases of suicide that apparently directly followed on from such aggressive loan recovery techniques (see Microfinance Focus Serp Report ).” I don’t need to explain this further.

MFIs have succeeded in convincing many investors and donors that they are social entrepreneurs helping to reduce poverty. By redefining the “bottom of the pyramid” to include those earning up to $10 per day (almost 90% of India’s population), loans made to small business in the middle income range are classified as loans to the poor. Many small businesses are unable to obtain bank loans, and hence, they are desperate enough to pay 24% or higher interest rates from MFIs. It appears that MFIs are able to lend at far higher interest rates than those charged by commercial banks – double the rate or more --, and use pressure tactics to accomplish loan repayment rates of 99% that they claim.

Let me conclude by pointing out that there is no easy way to reduce poverty. There are no shortcuts. It is simply unrealistic to expect uneducated poor women to start and sustain business with $100-$200. Interest rates over 24%, and in some cases close to 100%, charged by MFIs make it simply impossible for anyone to repay without falling into greater indebtedness.

The problem of poverty is complicated and solutions are mostly longer term and multi-dimensional. Micro-lending as practiced today does not contribute to poverty reduction.

Dr. Abraham George is the Founder of Shanti Bhavan School (www.shantibhavanonline.org), a world-class institution for children from socially and economically deprived families, and the Indian Institute of Journalism & New Media, in India.

Why is India’s Educational System Failing to Bring about Economic Equity?

2010-08-07T01:09:00.001-05:00

While India continues to churn out millions of graduates from high schools and colleges each year, only a small fraction of these students receive a high-quality education and graduate equipped with the necessary skills to be employed in well-paying jobs. India’s educational system which remains under considerable government control and essentially closed off from global competition caters to few students who attend good institutions, while all others attend mediocre, sub-standard schools and colleges. It is under these circumstances that India’s economic inequity and caste barriers thrive, and the country loses an opportunity to provide its students the innovative, high-quality education needed to compete in a global market.

For decades missionaries have run several high-quality schools in India charging reasonable fees, now supplemented by hundreds of elite international schools for those who can afford them. These schools feed India’s few top colleges, such as the Indian Institutes of Technology, the Indian Institutes of Management, and other reputable technical institutions. The great majority of high school graduates, especially those from the deplorable rural schools, attend sub-standard colleges run or financially supported by the government, or other private institutions that offer low-quality education.

Unlike the industrial sector, which has been greatly privatized and has opened up to global competition, the educational sector remains under considerable government control. While a number of colleges are run by private individuals and organizations and, in many cases by politicians and influential individuals, most treat this activity as a highly profitable business. On the other hand, government-run or aided colleges offer low-quality education resulting in graduates who lack the knowledge-base or skills required for obtaining more responsible jobs.

Instead of opening up the educational sector to improve its quality, the government constantly attempts to control it for political gain by appearing as the provider of essential services. However, those who have the power and influence to circumvent the rules are able to run private institutions that may not adhere to government regulations. Students from “low caste” communities are not provided the opportunity to go to quality schools, and hence cannot get admission to good colleges on merit. Some of them are given admission to higher-quality colleges based on quotas set by the government in the name of “social justice.” Despite their inability to improve the quality of education in government colleges that charge low fees and offer subsidies for students from poor families, official regulatory agencies attempt to implement rigid standards and requirements on private colleges to ensure uniformity in the educational system. These restrictions in turn hinder the ability of private colleges to offer progressive and innovative programs in keeping with the evolving needs of a global economy.

For example, consider the work of the government agency All India Council for Technical Education (AICTE), which approves the operation of all technical and management colleges in India. AICTE sets rigid guidelines on everything from land requirement for college campus, classroom size, number of students allowed, size of physical library and requirements for computer facilities to the amount of money that must be set aside in the name of AICTE, with interest earned on such deposits to be credited to the Council. Accreditation by AICTE is required within the initial two years of operation, after which the college must abide by government-approved curriculum and operational requirements. Under the pretext of protecting the interests of students, AICTE imposes bureaucratic and outdated academic requirements that do not permit sufficient flexibility for the institution to offer quality programs.

AICTE operates under the assumption that it knows best what is needed in every field of study, and that, unless it micro-manages the entire process, no academic institution will do a good job in meeting the required standard. It appears that the quality of education that it attempts to ensure across all colleges is nothing more than mediocre. This perspective fails to appreciate the evolving techniques in teaching, research, and learning, such as: virtual instead of or in addition to physical libraries that provide a wealth of current information on developments in every field; instant search and access to proprietary databases and archives, remote learning and live on-line interactive classes; video conferencing with experts and guest lecturers; virtual computer rooms with the use of Wi-Fi communications and notebooks; practical experience achieved through internships at companies and research laboratories; collaborative learning through academic social networks, and exchange programs with foreign colleges; video participation in complex tasks such as medical surgeries; field work through community services; and many more. The government forces every academic institution to adhere to conventional ways of teaching and learning, which in turn limits the progress of higher education in India.

A proposed bill on the entry of foreign academic institutions into India is presently (July 2010) being debated in the Indian parliament. According to the ministry responsible for crafting the bill, it is designed to “prevent exploitation of Indian students by foreign colleges.” In its present form, the bill calls for an increase in corpus funds to be set aside by the foreign university from Rs. 5 crores ($1.10 million) presently to Rs. 50 crores ($11 million) when the bill becomes law. Repatriation of profits will not be permitted, and the college must meet AICTE regulations. These rules prohibit foreign institutions from entering India, thereby protecting inferior-quality institutions in the country from foreign competition.

Unfortunately, this and similar interventions by the government create serious obstacles to improving the quality of education for India’s student population. The country doesn’t seem to have learnt the important lesson of openness when it comes to education: only through competition and innovation will the educational system improve. In that event, employers would choose colleges to recruit from that offer graduates who can meet their job needs; most students would join only those colleges that are able to market them when they graduate. In other words, a competitive marketplace will demand better-trained students, and consequently, colleges will be forced to compete on quality.

Instead of acting as a catalyst in advancing the quality of education at all levels, and financially assisting economically disadvantaged students, the government’s current policies protect inferior-quality institutions and establish mediocrity as a leveler for all others. At a time when India shows great promise from its recent economic progress, the direction of its education policies does not favor much benefit to the poor and fails to keep pace with the growing needs of the country in a competitive global economy.

Dr. Abraham George is the Founder of Shanti Bhavan School (www.shantibhavanonline.org), a world-class institution for children from socially and economically deprived families, and the Indian Institute of Journalism & New Media, in India.

When will the truth about microloans be known?

2010-04-15T17:45:00.013-05:00

Finally, in the April 13, 2010 New York Times article entitled Banks Making Big Profits From Tiny Loans, micro-loan lending practices in several South American countries were revealed to the dismay of many believers. With the World Bank and several well-known donor organizations supporting micro-loan lenders, the general perception has been that it is one of the most effective ways of making capital available to the poor to start businesses and come out of poverty. So much has been written about the virtues of micro-credit that the general public is led to believe that it might be the long-sought panacea for poverty alleviation.

The New York Times article made it known that most micro-loans in South America charge annual interest rates in excess of 75%, with the global average rate around 37%. Even well-known micro-loan donors like Kiva has been funding loans that charge over 80%. Yet, they all make claims that borrowers are mostly poor people, and they succeed in starting and sustaining businesses. Further, they assert that poor people are highly credit worthy and over 99% of the borrowers repay the loans in full. Gaining support from financial institutions, international agencies and even major donors, the for-profit microcredit industry has built up a fairly large business in billions of dollars on the backs of those just above the poverty level and very small businesses. Even major media organizations such as the New York Times have been touting the virtue of micro-loans in their editorials as well as with examples of spectacular success stories among a small number of recipients of micro-loans.

Even those claiming more reasonable interest rates – say, around 2% per month – are not telling the truth. It is common practice in India to make micro-credit available at a monthly charge of 2-3% on the original principal, without making any adjustment for declining balances. For example, a borrower of $100 in equivalent rupees is given $88 initially at the start of the loan, deducting $10 toward initial principal repayment and $2 in interest. In each successive month for the next 9 months, repayment of $12 is required -- $10 toward principal and $2 toward interest. This micro-loan is usually described as a 2% interest loan for 10 months, or at an annual rate of 24%, when in fact the effective rate is 51.30%.

For the past seven years or more, I have been writing articles and blogs (http://www.abrahamgeorge.blogspot.com/) pointing out that micro-loans are not what they are made out to be. In this brief note, let me simply restate three observations I have repeatedly made in the past:

a) Most micro-loans are made to those above the internationally defined poverty level of $2 per day.

b) Most micro-loans to small businesses and individuals charge exorbitantly high interest rates, and these loans do not result it sustainable businesses. In a majority of cases, these loans end up forcing the borrower to seek even higher interest loans from local money lenders to make repayments.

c) Many micro-credit lenders use unethical and illegal practices to pressurize borrowers to make repayments.

In conclusion, micro-credit as practiced today does not directly address poverty, and in many cases, results in creating greater indebtedness on the part of borrowers.

I have written extensively on the above observations and conclusions in my previously published papers, and hence, I end this one without further elaboration.

Please visit us at www.shantibhavanonline.org and www.tgfworld.org

A Better Way to Achieve Equity in Education

2010-03-21T21:44:00.003-05:00

With well over 700 million people living in rural areas of India, a great majority of the nation’s children are enrolled in government schools. So much has been written about the deplorable quality of education offered by most of these schools attended primarily by children from poor families. Over 75% of the population in India earn less than $2 per day, and their children do not have the financial means to attend better quality private schools. Consequently, there is now a two-tier system of education in India – better quality education for those who can afford private schools, and poor quality education for all others.

During the past several decades, Central and State governments had launched many initiatives to improve their rural schools. These programs have increased enrolments to well over 90% at primary and secondary levels, and more girls attend schools. Literacy rates have risen significantly. But there is very little improvement in the quality of education offered. Only a small percentage of the children attending governments schools are well prepared to pursue higher education in colleges that offer quality programs. A great majority of high school graduates who seek higher education enroll in government colleges that do not offer good instruction. The result is that most students graduating from schools and colleges in India are not prepared to meet the employment needs of industries for today’s global marketplace.

Instead of trying to improve the quality of education offered by government schools and colleges, the authorities seem to be more interested in leveling the playing field through mediocrity, if not substandard quality. In the name of social justice and equity, government regulations and practices make operation of private schools difficult. If some of the proposed rules go into effect, even those private schools that do not receive government assistance will be required to admit students who have not demonstrated satisfactory academic performance to be able to keep up with the higher academic standard of those institutions. Further, without the ability to charge sufficient fees for study, these private schools cannot afford good teachers and offer a good program. The net result is that private schools will also lower their standard.

The injustice of the achievement gap between the children of the poor and the rich must be closed. The question is how? Nothing is gained by enacting rules that would de facto result in lowering the quality of education offered by private schools. Instead, the focus must entirely be on improving government schools where children from poor families attend.

I believe deeply in social justice and equity. It must be achieved by sensible and positive measures. In this case, the government should be the catalyst in improving all schools. It must play direct and indirect roles in achieving such an outcome.

Of course, there are many factors that influence student learning and achievement. Of all those factors, the most important one is teachers. I know from my personal experience running Shanti Bhavan that effective teachers – those who not only have the highest expectations of their students, but also have the desire and the ability to help them achieve those expectations – are the most important ingredient in this undertaking.

Until such time the nation finds a way to adequately train and motivate teachers and hold them accountable, the education gap will remain. I pray that the government will be wise enough not to attempt to close that gap by lowering achievement among the few who can afford to join quality institutions. By improving the quality of education offered by all schools and colleges, both private and government-run, there will be millions more young adults each year having the required educational background to seek skilled jobs. There is no superior strategy than this to achieve higher productivity from the workforce to create far greater national wealth.

Written by Dr. Abraham M. George

Please visit us at www.shantibhavanonline.org and www.tgfworld.org

India’s Bureaucratic Albatross

2010-02-21T17:08:00.004-05:00

I am glad to see today (February 22, 2010) a blog by Tavleen Singh entitled India’s bureaucratic albatross in which he describes his frustrations and observations in his dealings with the bureaucracy in government departments in Delhi. As one who returned to India in 1995 after 30 years in the U.S. , and now having dealt with both rural and urban government officials at the state level, you can imagine what I have been going through to accomplish anything that needs government approval or assistance. I have described my experiences in India Untouched: The Forgotten Face of Rural Poverty and subsequent blogs. It is my conviction that the root of poverty in India is set in bad governance – inefficiency, bad planning, terrible procedures and systems, corruption and favoritism. Use of modern technology might speed up some work, but unless bad attitude, lack of accountability and arrogance of power can be offset by the power of the people, there is no hope. When senior officials and politicians are only interested in maintaining their power at any cost, and are able to do so, nothing good will happen.

I started a journalism college – the best in India today (see www.iijnm.org) – to train young people to investigate and write about these and other ills in India. Unfortunately, editors, senior managers, and owners are unwilling to write about government practices beyond superficial reporting on some scandal that is of political interest. The media is also part of the problem – their reluctance to reveal the truth about ourselves.

By Dr. Abraham George. Please visit us at www.shantibhavanonline.org and www.tgfworld.org

Shanti Bhavan to accept Haitian orphans

2010-01-17T13:39:00.003-05:00

As you all know, the people of Haiti are now suffering terribly as a result of the earthquake just three days ago. Many countries, organizations and individuals are trying to help these desperate people in different ways. We too must do what we can at this critical juncture.

Shanti Bhavan was founded 15 years ago on the simple principle of universal humanity - that we are all part of one large family - and we must come to the aid of others in times of need. It is only consistent with the teachings of some of India's great figures such as Ashoka the Great as early as 250 BC, Rabindranath Tagore, Swami Vivekananta and Mahatma Gandhi, as well as numerous Western philosophers.

Shanti Bhavan has considerable experience in caring for orphans and children of single parent families who have been victims of social and economic disadvantage. We know the importance of a loving home, personal attention and quality education to realize the full potential of each child. Our commitment is not constrained by race, gender, social background or nationality.

After consulting with some of you, Shanti Bhavan has decided to open its doors to the children of Haiti who have been orphaned as a result of destruction and deaths. We are offering free admission to 12 Haitian children between the ages of 4 and 6 as soon as we can obtain the necessary permission from relatives and governments. While this would only be a small gesture, I hope it would motivate other institutions to do the same to save many more precious lives.

I realize the difficulties we will face to make this happen due to governmental regulations. We will need the consent and approval of relatives and governments. I am hopeful that we can persuade all parties that what we are striving to do is in the best interest of the children. We will commit to bringing up the children without government financial support all through school and college until they are in a position to seek employment.

I am reaching out to those of you who can help us accomplish this difficult task of facilitating the transfer of 12 orphan children from Haiti to Shanti Bhavan in India. There are many steps to this process which require influential contacts with governments and coordination with relief agencies. Shanti Bhavan does not have the institutional capability to accomplish that. If you are in a position to contribute to this noble effort, please email us at shantibhavanchildren@gmail.com describing how you can be helpful; we will try to put those organizations and individuals together, where appropriate.

This is an important moment in our history. We owe our fellow humanity all our support and help at this time of great anguish and sorrow. Please help Shanti Bhavan help the children of Haiti.

Please visit us at www.shantibhavanonline.org and www.tgfworld.org

Half- truths, Lies and Poverty

2010-01-02T10:59:00.004-05:00

Since the Millennium Development Goals (MDG) were first set by the United Nations in the year 2000, much attention has been given to those pursuing the issue of poverty. Mohammed Yunis was awarded the Nobel Peace Prize in 2006 for his novel work through Grameen Bank, and Jeffrey Sachs, an influential academic at the Earth Institute in Columbia University, New York, appeared on the cover pages of major magazines describing what he considers as an effective strategy to end poverty. Even Bono, a highly acclaimed pop artist, entered the scene along with former president Bill Clinton to raise substantial money from governments for poverty programs.

Undoubtedly, these and other well-known individuals and institutions must be credited for their efforts in tackling the world’s largest and most pressing problem – poverty. But when they make assertions and projections that are either incorrect or unrealistic, the credibility and confidence of all efforts are affected. For example, Jeffrey Sachs wrote and promoted his program claiming that poverty can be brought to an end in a short period if just sufficient money can be raised to implement his ideas; Yunis asked his admirers to quickly look for a plot to bury poverty – a premature death as a result of microcredit programs worldwide. Since these pronouncements, the number of poor people in most developing countries (outside China) has in fact increased.

It is not just reputed individuals who are guilty of making these inaccurate or unrealistic claims and assertions to promote their own agenda and programs. For many years until 2008, the World Bank has been saying that poverty has steadily declined over the past two decades, implying that the programs supported by their extensive funding have contributed to this accomplishment. This claim is supported by the bank’s pre-2008 published statistics that showed a decline in poverty rate to 21.4 percent in 2005 from 25.9 percent in 1999 for all developing countries excluding China. But the bank failed to give sufficient importance to the fact that the number of people in poverty has in fact increased over the same period in most developing countries – a reflection of population increase proceeding at a faster pace than poverty decrease.

It was not just insufficient emphasis for a single statistic that was the mistake. Under pressure from many circles, the World Bank acknowledged in late 2008 higher levels of poverty than previously reported. The bank changed its view of poverty around the world by defining extreme poverty as living below $1.25 per day from $1.08 previously, adjusting for purchasing power parity. By this new yardstick, 1.4 billion people were seen to be living in extreme poverty — more than 28 percent of the population of all developing countries excluding China as of 2005. This reflects an upward revision by over 30 percent in the number of extremely poor people. Those living in extreme poverty as well as within the definition of $2 per day actually increased in India, South Asia and Sub-Sahara region between 1999 and 2005. This significant adjustment raises questions on the reliability of important statistics put out by the world’s leading poverty fighting institution.

Look at another example. For the past two decades, microfinance institutions have been claiming that they lend small amounts of money to the poor, especially women, who are able to start new businesses and come out financially successful as entrepreneurs. Many have described these for-profit ventures as the long-sought panacea to eliminate poverty. Microfinance companies have been able to attract substantial funds from philanthropic-minded investors and even major institutions such the United Nations and several developmental banks based on their claim that the loans are mostly to the poor and 99 percent of the borrowers are able to repay the loans. These assertions were not questioned adequately by even those who call themselves developmental experts, but now the truth is slowly coming out. It is increasingly clear that the recipients of loans are mostly those well above the $2 poverty level, and the high repayment rate is facilitated by their increased borrowing from local money lenders at exorbitantly high interest rates. There is very little evidence that these loans have made any noticeable impact on poverty.

In recent years, there has been considerable excitement among academicians and investors on the idea of social entrepreneurship to alleviate poverty. These institutions, many of them microfinance companies and small entrepreneurial ventures, argue that they directly serve the so-called “Bottom of the Pyramid” – those who belong to an untapped market segment wherein savvy businesses can earn attractive profit, while claiming to help the poor. Once again, as researchers started looking into these claims, it became clear that hardly any of these social enterprises directly serve people who are below $2 per day in income. Soon, the attempt to redefine the Bottom of the Pyramid started. The World Economic Forum restated this segment as those earning below $8 per day, while some others expanded the definition to include even those earning below $13 per day, yet still claiming that the poor are served. When nearly 75% of the population in countries like India and the entire sub-Saharan Africa earn less than $2 per day, these even broader definitions are including almost everyone within the poor category; only the affluent are excluded. Such misstatements and inappropriate definitions impede efforts to achieve poverty reduction.

I can go on with many more examples of assertions that are not sufficiently supported by evidence in the poverty alleviation arena. Let me conclude this critique with examples of recent projections being put out by two of the highly reputed institutions in the world. According to Global Fund and the United Nations, current efforts to reduce malaria deaths, and the billions of dollars being spent on it, will result in eliminating malaria in successive countries from 2015. This implies saving nearly 1 million lives each year –the current rate of deaths from malaria – over the coming decade or so.

But when you closely examine the available data, there is no clear evidence that the present program is eradicating malaria, though treatment programs have been more effective. In order to prevent malaria, there are only three possibilities: first, eliminate all malaria-carrying mosquitoes; second, avoid all mosquito bites; third, discover a vaccine that can protect against malaria. The other choice is to ensure effective treatment of all those who are infected so that death from malaria can be practically eliminated. The truth is that none of the above can be accomplished in the foreseeable future, let alone by 2020.

There is no initiative to eliminate all malaria carrying mosquitoes – an impossible task. The current effort, on the other hand, including those funded by the Gates Foundation, focuses mainly on offering mosquito nets for protected sleep, cost-effective treatment for those infected, and possibly finding a vaccine to prevent infection. But mosquito nets offer nothing more than a comfort time zone for a good night’s sleep, and do not have any relevance to mosquito bites inside and outside the home. Cost-effective treatment can be a big relief, but it does not reduce the incidence of malaria. As for the likely discovery of a vaccine by 2015 to protect against infection, it is far from certain that all the people in over 103 countries where malaria is prevalent can be vaccinated in five years, if not decades. In the face of these realities, it would be more prudent on the part of those combating malaria to express modest expectations.

Those are enough depressing facts. I will be remiss if I neglect to say that all these individuals and institutions that are probably guilty of not presenting accurate accounts are also the ones that are doing some of the best work toward poverty alleviation. However, it would be far more constructive if they avoided the pitfalls of half-truths and outright lies when promoting their ideas and programs.

The author is engaged in several social initiatives to alleviate poverty through The George Foundation in South India.

Please visit us at www.shantibhavanonline.org & www.tgfworld.org

Who can claim to be a social entrepreneur in poverty reduction?

2009-10-28T09:46:00.009-05:00

Today, there are many ventures claiming to be social enterprises, some with the professed goal of poverty alleviation. In the frenzy of associating with social good, many such assertions do not face enough scrutiny. Further, there isn’t sufficient clarity on who is a social entrepreneur contributing to poverty reduction as its main goal.

Social entrepreneurship is the activity of a social entrepreneur. A social entrepreneur is one who recognizes a social problem and uses business principles to organize, create, and manage a venture to bring about social change. Social entrepreneurs are usually individuals with novel solutions to society’s pressing problems. Some social entrepreneurs often work through nonprofits and citizen groups, while most are now working in the private and governmental sectors.

Whereas a business entrepreneur measures performance in terms of profits and rates of return on investment, a social entrepreneur additionally includes the impact he has on society as well – the so-called double bottom line. The main aim of a social entrepreneurship is to further social and environmental goals for a good cause. In its purest form, social entrepreneurships are non-profits that reinvest the profits generated to further the social goal. Most social enterprises are built on business models that combine a revenue-generating objective with a social-value-generating structure or component. Social entrepreneurships redefine entrepreneurship as we know by adding a social component.

One well known contemporary social entrepreneur is Muhammad Yunus who founded the Grameen Bank in Bangladesh, and who was awarded a Nobel Peace Prize in 2006. His work was built initially on the concept of offering credit to those who were unable to obtain loan from conventional sources such as banks to undertake small business ventures. Subsequently, a new microcredit industry mushroomed in developing countries, most claiming that they are able to lend money profitably to the poor to enable them to start or run small businesses. However, there is some degree of skepticism about their motive, business practices, performance, and benefit offered to the poor.

I would like to offer some clarity to this field. Social entrepreneurship can be in many areas that offer products and services to improve consumer safety, environmentally friendly choices, poverty alleviation, and other worthwhile initiatives. There is no doubt that many of these ventures are valuable to the economy and the society in general. However, the problem arises when some of these initiatives claim that they are designed to alleviate poverty as their main goal. Such claims often attract public support and investment from the philanthropic community, but they do not necessarily meet the minimum criteria for claiming as a poverty alleviation enterprise.

In my opinion, for-profit ventures that claim to be social entrepreneurships to alleviate poverty must meet at least one of the following criteria:

Employ and/or train proportionately significant number of poor people in its main business activity (e.g.: making mosquito nets, pottery, processing vegetables, etc.) instead of simply using them as cheap manual labor, such as sweepers, porters, etc.
Produce/offer essential products and/or services (healthcare, education, housing, food, clean water, etc.) to poor people (those below income of $2 per day) at affordable prices.
Make credit available to poor people at reasonable rates (no higher than twice the rate charged by banks to their credit worthy clients) for personal or business uses.
Offer technical, material and/or financial assistance to the poor to enable them to engage in family-run businesses, with returns to investors generated in the form of products produced from those activities (milk production from cows and buffalos, tailoring of items such as designer quilts and cushions that may be sold at high prices to the affluent community, etc.).

In all these cases, the social entrepreneur employs the poor in the company’s main business activity at fair wages, makes possible for poor families to engage in small entrepreneurial ventures, and/or offer essential products and/or services at affordable prices/charges. The poor must benefit directly from the activities of such social entrepreneur. It is not sufficient to argue that the poor also benefits from the trickle down impact of a regular business run by or for the higher income population to qualify as a social entrepreneur serving the poor; otherwise, every corporate entity including Wal-Mart would fit the definition of a social entrepreneur serving the poor.

Further, the cost incurred by the beneficiary for the product/service obtained must be affordable and reasonable; not to place any such constraint to qualify as a social entrepreneur serving the poor would be to accept exploitation of and extortion from the poor in the name of social good, as is the case of local money lenders who charge exorbitantly high interest rates to those who badly need loans to meet emergencies.

Investors must differentiate between those for-profit business ventures that are set up in poor areas or employ low-wage labor from other activities that are clearly designed also to improve the lives of poor people at the true “bottom of the pyramid.” Without making such a distinction, every business that operates in deprived communities or sells products and services to the poor and the not-so-poor will be termed social entrepreneurships in poverty alleviation.

Innovation of a different sort -- educating the nation

2009-10-21T16:16:00.008-05:00

The idea of Shanti Bhavan School was conceived from my personal conviction that the leaders of tomorrow must come from a well-educated population that is brought up with innovative curiosity and good values. If one hundred such schools can be created, I thought, it will over time bring about great economic prosperity for India while offering social justice for all. The ingredients for such success could very well be innovation and risk-taking, among other important attributes. But what kind of innovation?

Innovation is rarely about top science or high technology; scientific breakthroughs don’t come about every day. It is more about the power of ideas and their creative application. Often it is about leveraging existing resources, technology or science to useful purposes in an innovative way.

Few would dispute that Steve Jobs of Apple is one of the greatest innovators of our time. Coming from humble beginnings and raised by adoptive parents who could not afford much, Jobs barely completed one year of college. But he was free to do what he liked most – attending lecturers given by scientists and innovators on subjects like calligraphy. He even went to India and returned as a Buddhist. His short employment at Atari Video Game gave birth to his own idea for mouse-driven graphic interface. All the innovations that followed at Apple were not new technology in the sense of basic science or research, but application of existing technology to new ideas. It was a result of his free spirit – the ability to decide for himself without confining to prevailing conventions and rules. It is about independent thinking and originality, and the courage to plunge ahead to create products and services that even more established companies could not innovate.

What we have tried to do at Shanti Bhavan is a little bit of imparting these strengths. When I started out creating Shanti Bhavan in 1995, most people, including some who had held high positions in government, told me that excellence among the poorest is not possible. I was told that they do not have the capacity to accomplish greatness. My contention, on the other hand, was that those who don’t have sufficient means are the ones who have that fire in the belly to succeed, if given the opportunity. After all, the past half a century of educational programs focusing on literacy and primary schooling to uplift the poor have not motivated many children from those families to even complete high school.

Today, we all can be proud of the children we have at Shanti Bhavan. They came from among the poorest families, and made academic history in India. The first two batches of children, entire classes – practically all from dalit families –scored first class in ICSE examination. Further, half of both classes passed with distinction.

Even more compelling is what these children are today – confident, creative, and bright, and yet humble and polite. They have the right values. It is the result of an academic program that encourages originality, and an environment that values open discourse and differing opinions. They may not fit the mold of young geniuses, but they have the capacity to think for themselves and the courage to act on it. I am confident they will be very successful in their lives.

The point I am making is this. If children are brought up with the spirit of freedom to go beyond what the books tell, and experiment with their own ideas, they will become the true innovators of tomorrow. Imagine what India would be like if it can unleash the potential among the hundreds of millions of people whose children presently go through a rote-learning system of education that curtails creativity and originality. If the required resources are put into creating institutions like Shanti Bhavan in every country, there will soon be many more innovative minds to make the world a better place. And what great contribution and tribute to social justice that would be!

Sure, today Shanti Bhavan is facing financial constraints that limit its ability to scale-up to achieve the original goal. But based on the accomplishments of the past 13 years, I am more convinced than ever before that this is a model that could transform India in a significant way. The lofty goal of one hundred such schools is not that distant if the already successful innovators of the country join forces to offer the opportunity for the next generation of young minds to become the innovators of tomorrow.

Abraham M. George
www.shantibhavanonline.org

The Heavy Hand of Government

2007-12-10T00:14:00.000-05:00

I returned to India in 1995 to start and run a charitable foundation (The George Foundation) without any financial assistance from governments at state and central levels. Since then, many people have asked me why I do not seek government support for our work in helping the poor. I tell them that the status of a government-funded or -assisted institution carries with it many undesirable obligations and interferences from the State. My personal belief is that private citizens must make their own contributions to social causes, and they should not be tempted by the potential for “easy” money that comes with corrupt practices.

Despite our independent status, the past 12 years have not been free of attempts by government officials to extract money from us. We have faced difficulties as a result of the political ideology of a past government that targeted any organization that was deemed to be “Christian.” Arrogance of power on the part of officials had once forced us to seek court protection to prevent damage being inflicted by the government on physical infrastructure (the sub-collector ordered digging up an access road we had improved at our own expense with local panchyat permission but without state permit). I have written extensively about this and other instances in my book, India Untouched: The Forgotten Face of Rural Poverty.

Political and bureaucratic machineries in India may not find anything unusual or wrong about the way government officials have been conducting themselves for decades. They would argue that it is their duty to safeguard the interests of the general public. In dealing with governments, citizens have very little rights or recourse to what they consider as unfair and unjust acts.

Just last month our Shanti Bhavan School received a State order from the education department requiring us to complete an extensive survey form within a short period of seven days. Principals of all schools – government funded as well as independent schools -- were required to personally attend a session at the Taluk Education Office to receive instructions on how to fill the forms, and then return within another week with completed forms. A month later, the principals were called again to enter the submitted data into computers provided at the Taluk office. The argument justifying this procedure was that the State wants to hold the Heads of all local schools personally responsible for the accuracy of the information provided. No exception to this rule would be permitted; no one else could substitute for the principal.

On the surface it sounds a justifiable demand on the part of the State. Past surveys have not been accurate and it is essential that the government is now able to collect correct data (though one has to wonder about the validity or relevance of the data being asked for). But if this goal is all that matters, I suppose that principals of schools will be spending time only filling forms submitted by the numerous agencies of the government. Failure to appear in person could result in summons, fines and even harassment. I wonder whether CEOs of private companies are also expected to appear in person at the offices of labor, environment, water, electricity and other departments of governments.

When a government department exercises its powers arrogantly, one can be certain that its top management does not value or respect others. Such officials have no place in leadership positions. The strength of a democracy lies in fair and just laws and regulations applied equally and correctly for everyone. Private individuals and institutions must be able to seek protection from unjust acts of governments, and obtain redress. Until such time this balance between the responsibilities of the State and the rights of individuals is brought about, the country will not be able to create a just society and accomplish its full potential.

Please visit us at www.tgfworld.org and www.indiauntouched.com

Insurmountable financial obstacles faced by NGOs

2007-11-28T17:17:00.000-05:00

NGOs play a major role in the global effort to reduce poverty and suffering. Traditionally, these organizations are not-for-profit, and they focus mainly in the delivery of critical services in education and healthcare. Lately, some NGOs have been engaged in projects to create livelihood for poor people through job training, assistance in starting small businesses, and direct employment. These efforts complement programs run by governments and assisted by international agencies and donors.

There is much to be said about the contribution that the NGO community has made over the past several decades. However, it is also true that, for a variety of reasons, their efforts have not brought about sustainable results on a wide scale. In this brief article, I shall offer my thoughts on why NGOs have not been sufficiently effective in poverty reduction.

1. Heavy dependence on donor funds: Practically all NGOs carry out their programs with grants from governments, international agencies and/or private donors. These funds are for specific projects within areas denoted by the donor, with disbursements usually made on an annual basis. Donors prefer to set small goals, and hence, grants are often in limited amounts for a given period. NGOs submit their proposals tailored to grant amounts, and consequently, the resources that are made available seldom meet what is needed to do a good job. When each approved project period is over, there is no assurance of continuity. Donor fatigue sets in after a few years, requiring NGOs to seek new or additional “partners.” Neither the NGO nor the beneficiaries are assured of assistance to see through the completion of projects. When funding stops, projects simply end. Results are seldom complete, permanent, or sustainable without additional assistance.

2. Misplaced focus on compliance reporting: As recipients of donor assistance, NGOs are greatly concerned about keeping the donor “happy.” Inordinate amounts of attention and time on the part of senior management at NGOs are spent on preparing reports that show compliance of grant conditions, and in preparing for the next application for grant renewal. The bureaucracy at donor institutions offers the recipient very little room for innovation or divergence from previously agreed upon terms for project execution. Often, it matters less what has been accomplished in the field, and more what is put on paper. Demonstration of success is usually a function of quantity (number of beneficiaries) as opposed to quality (sustainable outcomes).

3. Lack of institutional infrastructure to deliver services: Donor funds are mostly assigned for operating needs and seldom toward capital expenses. For example, grants may be available to purchase medicines and supplies but not for constructing medical clinics or purchasing major equipment. Similarly, an NGO might receive donations to buy books and supplies for students from poor families, but the school itself might have to operate without functional classrooms and toilets. This bias toward meeting on-going operational needs without the necessary physical infrastructure results in major inefficiencies. The long-term viability of projects depends greatly on institutions and their underlying organizational structure to deliver services efficiently on a continuing basis.

4. Inability to attract good staff: Most NGOs cannot offer a stable work environment where assurance of continued employment is not dependent on renewal of current projects. Cost overruns are commonplace, and consequently, staffing may have to be reduced during the course of the project to remain within budget. Tight financial constraints and inability to raise sufficient funds for a project force the organization to hire employees at below-market salaries or to rely on volunteers. NGOs usually refrain from offering their employees long-term compensation in the form of pensions and other benefits. The result is that NGOs usually attract less competent people than their for-profit counterparts. A quick survey of even major NGOs will show that, except for the founder and a few top managers, the remaining staff does not have adequate background or training. The absence of competent staff results in inefficiencies and failure to accomplish goals.

5. Inadequate seed capital and endowment: Often, it is one individual or a small group of people with a common vision and ideal who are responsible for establishing an NGO. They contribute their own savings or seek seed money from others to get started and carry out the mission for a year or two. In most instances, initial capital received is far less than what is needed to establish a sound base in terms of staffing and required material resources. The first project undertaken may not have been sufficiently funded. In such situations, the NGO is forced to function in a survival mode right from the very beginning of its existence. Even those NGOs who are able to overcome their initial financial constraints may still have to rely on external funding each subsequent year. Only a small number of NGOs are able to attract adequate external resources to establish an endowment fund, the return on which might cover some or all of the future operational needs. Donors seldom provide the capital as seed money or endowment funds. Unlike for-profit companies that operate with adequate initial investment, line of credit, and subsequent reserves, NGOs are forced to function with little or no certainty about future cash flows. The result of insufficient funding is serious inefficiencies and subsequent failures.

6. Absence of internally generated funds: Not-for-profit NGOs seldom generate any income of their own to meet their capital and annual operating needs. Their reliance on project funding from external sources alone makes them financially vulnerable. Very few NGOs operate within a self-supporting financial model. They are reluctant to charge fees for services provided to the poor. The general assumption is that the poor are entitled to free services or they are incapable of paying even a small portion of the costs involved. Further, most NGOs do not have the managerial skills or resources to start and run revenue generating businesses, even when poor people can be employed. Without an endowment fund or business income, NGOs perpetually function by the benevolence of donors. This is not a self-sustaining situation in the long run.

Recognizing the above financial obstacles, The George Foundation has been attempting to cover its annual operating expenses from internally generated funds. As the founder of the organization, I made the investment to meet initial capital expenses (to build Shanti Bhavan, Baldev Hospital, etc.) and most of the annual operating needs for the first 10 years. During this period, the foundation invested in several acres of farm land, most of which is being used for agriculture to employ poor people. The surplus income from farming and fee revenues from a journalism school run by the foundation are being ploughed back into its other humanitarian initiatives.

Since 2005, the foundation has been seeking donor funds to meet its capital expenses and to set up a permanent endowment fund that would cover a portion of the operating expenses. Several generous individuals – visionaries – have come forward so far to assist us. If our income generating activities also succeed, the foundation will have increasing financial resources to widen its services in the years to come.

Good work is not possible without financial stability. Donor funds will never be sufficient. A pure form of social entrepreneurship might be the best financial model for those NGOs who can tap managerial talent and sufficient “investment capital.”

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Tips on preparing high quality compost on a large scale

2007-11-13T00:49:00.000-05:00

In my last blog entitled Organic farming isn’t always easy, I promised to present our experience in preparing compost in large quantities. This is an attempt to do just that. As mentioned earlier, we have been growing over 200 acres of bananas for the past 4 years, relying mostly on compost. Our compost requirement each year has been in excess of 3,000 tons – 12-15 Kg per plant per year (other crops might require much less). It would be prohibitively expensive to purchase that much compost from commercial suppliers; further, we could not rely on their quality. We were motivated by the fact that large quantities of plant material is available within our own farm every year after harvest of bananas (banana plant is cut down after harvest at the end of 12-13 months).

Here below is a cookbook recipe style explanation on how to produce 200 tons of compost. I have used this quantity as a guide as each of our compost pits holds approximately that quantity. However, there is no restriction on the size of the pit, and all the “ingredients” may be adjusted according to the total compost produced.

We start with banana waste collected after harvest. Banana waste is one of the best plant material available as it is rich in NPK (nitrate, phosphate and potassium), especially in potassium which is usually not contained in sufficient amounts in most other plant material. Banana waste also has several micronutrients such as iron, boron, magnesium, manganese, and zinc.

Banana waste is crushed using earth-mover (JCB) bucket and brought to a central location. It is then placed on a 400-500 sq. ft area in layers of approximately 2 ft. Over each layer, a solution containing EM (Effective Micro-organisms) is poured to speed up the decomposition process. Maximum of 3 layers are placed, and the entire pile is covered with 50-60% shade net to avoid too much direct sun. The pile is maintained moist by weekly application of water.

Before we go any further, just a few words about EM, originally developed by Dr. Teruo Higa, professor of horticulture at the University of the Ryukyus in Okinawa, Japan. It is a concentration of different kinds of “good bacteria” that helps improve soil condition, converts fertilizers into digestible forms for plant absorption, and speeds up decomposition of plant material. EM can be obtained from several suppliers in India; two suppliers that I know of are Bio-India Biologicals (BIB) in Hyderabad, and Maple Organics in Dehra Dun. The concentrated form of EM is then made into SEM (Secondary EM) – also called Extended EM -- in diluted large quantities through a fermentation process. SEM is add to cow-dung solution in water and sprayed on each layer of plant material as described above.

Many suppliers of composting bacteria claim that full decomposing can take place in 45 days or less. Our experience is that banana waste, especially stem, does not compost sufficiently in less than 75 days. Even then, it needs further decomposing in a large pit along with other compost ingredients for at least another 45 days.

We use some amount of sandy soil in the preparation of compost as our land is slightly clayish. We believe that soil is a necessary media for bacteria to function effectively in producing good compost.

Here below is the list of ingredients in 200 tons of finished compost. I have indicated multiples of 15 tons as a tipper load is around that weight.

30 tons of sandy soil

60 tons of decomposed garbage waste from government-run processing factory

60 tons of banana and plant waste (partly decomposed as described above)

60 tons of cow-dung

10 tons of dry decomposed poultry waste

There will be approximately 10-15% evaporation of moisture, and hence the above quantity yields no more than 200 tons of final output.

All the above are put into a large pit in no less than 4 or 5 installments. Use the bucket of the JCB to thoroughly mix the ingredients. Water well to assure that the material remains moist. It requires 2-3 days of effort to put each installment of ingredients and to mix them. After the entire quantity is put into the pit and mixed, cover it with tarpaulin or plastic sheet. Once a month, mix and spray water to keep it moist.

In our experience, it takes approximately 2 months of decomposing in the pit for the compost to be ready. Practically all the plant material will be totally “digested” by the heat generated in the pit as a result of the composting process. The final material is fairly soft and black in color.

The required quantity of compost is put around each plant at least 6 inches away from the stem. SEM (without cow-dung) as well as nitrogen and phosphate fixing bacteria (azetobacteria and phosphobacteria) solutions are applied and covered with a thin layer of soil.

It is important that no chemical fertilizers (if needed) are applied for at least 45-60 days after the compost is put around the plant to allow healthy multiplication of good bacteria. It takes over 30 days for the compost to become digestible for plant absorption.

The above process is what we have experimented with and found successful for vigorous plant growth. This approach to compost preparation can be applied to smaller farms by using proportionately smaller quantities of ingredients. Also, plant materials other than banana waste may be used, but care must be taken to ensure that they do not create toxicity from acidity or other factors, as is the case with coconut fiber. Similarly, leaves of eucalyptus tree are not suitable for preparing compost.

The all-in cost of finished compost is estimated to be around Rs. 250 ($6.25) per ton assuming that banana waste is free. We have found the above process to be a practical methodology to produce large quantities of high quality compost in our own farm. Other agro-specialists may recommend different techniques for preparing compost; their results should be confirmed by laboratory tests of the finished product. I hope my sharing our experience with readers will help others develop their own relevant methodology.

In a subsequent blog I shall write about processing raw sewage into safe fertilizer and water for irrigation. It is based on our experience in Shanti Bhavan residential school where its sewage processing facility generates over 75,000 litres of residue water for irrigation every day.

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The Per Capita Game

2007-11-09T02:29:00.000-05:00

First the good news. Finance Minister Chidambaram stated on November 6, 2007 that the country has already exceeded a BRIC (Goldman Sachs investment bank report on Brazil, Russia, India and China) forecast of India's per capita income of $800 by 2010 and $1,149 by 2015. According to him, “we have exploded this assumption as our per capita income has already touched $1,000 this year and expect it to touch $4,000 by 2025."

Let us consider both sets of forecasts. BRIC forecast calls for a per capita income of Rs. 88 ($2.20) per day by 2010 and Rs. 126 ($3.15) by 2015. By contrast, the finance minister expects daily per capita income of Rs. 110 ($2.75) by this year and Rs. 438 ($10.95) by 2025. These forecasts compare against a daily per capita income of Rs. 82 ($2.05) estimated for 2007 (in nominal terms) in several published studies.

Per capita income should be calculated by dividing total personal income by the population. It is not calculated by dividing total output measures like GNP or GDP, which gives an exaggerated picture of per capita income. Only if a nominal (at current prices) GDP figure of $1.1 trillion and an exchange rate of Rs. 40/$ are used can one arrive at a daily per capita income of Rs. 110 ($2.75) for 2007. But that wouldn’t be correct.

Leave aside these discrepancies for a moment; after all, everyone wants to hear good news. The real question is whether the rapid rise in national per capita income is reflective of prosperity for all.

It was just two months back when India’s Central Ministry of Statistics reported that the daily per capita income of the rural population was Rs. 18.50 ($0.46) in 2005. With rural income rising no more than 5% per annum, the best estimate for 2007 is around Rs. 20.40 ($0.51). This estimate is consistent with the recent report by the National Commission for Enterprises in the Unorganized Sector (NCEUS) showing that 77% of Indians in 2004-2005 -- about 836 million people -- live on less than Rs. 20 ($0.50) a day. Obviously, there is a wide gap between the national daily per capita income figure of Rs. 110 ($2.75) estimated by the finance minister and the rural figure of Rs. 20.40 ($0.51) for 2007.

Even more troubling is the widening trend between national and rural figures. If we are to assume that rural per capita will increase by the same percentage as the change in national figure between 2007 and 2025, the gap between national and rural per capita will only widen from Rs. 90 ($2.25) in 2007 to Rs. 358 ($8.95) by 2025 – a whopping 400% increase. Undoubtedly, we have a society that does not share equitably the benefits of a growing aggregate economy.

The fact is that much of the rise in overall per capita income comes from the rapidly increasing personal income of the 34 million or so of people employed in the nation’s organized sector. These are the people who benefit most from the current economic expansion. Less than 10% of the nation’s population contribute to more than 90% of the growth in GDP and incomes.

The real test is in how the poor are benefited. With 770 million people living in the villages, and over 80% of them on less than Rs. 20 ($0.50) per day, what can we forecast about their future? All this talk about national per capita income adds up to very little when a great majority of people in the country is likely to remain below $1 per day in income even after another decade.

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Organic farming isn’t always easy

2007-11-02T09:17:00.000-05:00

Everyone is talking these days about the virtues of organically grown fruits and vegetables. Consumers are anxious to buy, even at higher prices, produce that do not contain chemicals. Agricultural experts and environmentalists argue that use of compost and herbal pesticides protect the soil from turning toxic and offer produce free of dangerous chemicals.

There is no doubt that plants and trees grow well if sufficient qualities of compost material is applied to soil periodically. It also ensures adequate moisture holding capability and avoids toxicity of soil from residues of chemical fertilizers, usually called NPK – nitrate, phosphate and potassium. Soil remains healthy with compost application, and fair crop output is assured every year.

There is no doubt that use of chemical pesticides pose danger to the environment, especially by contaminating ground water. Fruits and vegetables protected by spraying toxic chemicals may leave residues that are very harmful for human consumption. Healthy plants have the best in-built protection; use of herbal and other natural ingredients such as neem offer alternatives to the use of certain chemical pesticides.

Unfortunately, there are just too many forms of diseases and pests that attack plants and trees. They are usually soil and air borne, affecting the root system, stems, leaves and crop. For example, caterpillars and termites attack bananas and grapes in their early stages of growth. Nematodes that prevail in most soils can become a serious problem when they take hold of the root system. There are stem borers that consume and degenerate the entire plant. Funguses can spread wild after few days of rain. Different types of viruses, bacteria, fungus and parasites cause havoc to the plant and the crop. If the infected area is not properly taken care of, the problem will most likely spread to the entire field. Certain crops are more susceptible to diseases than others, and none are totally resistant.

Herbal remedies do not always arrest the problem before it spreads wide. For example, caterpillars and termites can multiply and attack a wide area in less than a week or two, and we have not found a way to prevent extensive loss without chemicals. There might be natural remedies for every situation, but they may not be fast-acting or readily available locally in sufficient quantities. Whether one likes it or not, often the needed solution may lie in the use of appropriate chemical pesticides.

The George Foundation has been growing bananas on over 200 acres for the past 4 years, and recently we have been switching over to grapes. It is one thing to use organic and herbal products on small areas, but large scale farming cannot avoid the use of some form of chemicals, especially pesticides, if the entire farm crop is not to be lost to diseases and pests. Though chemicals have their place in farming, to the maximum extent possible it is better to work with good quality compost and herbal pesticides, insecticides and repellants.

The trouble with the use of compost alone is that it is unlikely to offer high crop output that chemical fertilizers may provide in the short run. Further, all compost material may not contain sufficient quantities of micronutrients such as magnesium, boron and others, and may be deficient in potassium as required for certain types of crops. In those cases, use of chemical fertilizers and micronutrients as supplements may be required occasionally.

For example, bananas are large potassium consumers, and despite the heavy use of compost, our farm could not obtain high yield without supplementing with chemical forms of potassium, such as potassium nitrate or potassium sulphate. We have also found that the absence of certain micronutrients result in poor quality produce. We have tried to overcome these with improved quality compost, but this effort too has its limitations.

In another blog, I will try to communicate our knowledge and experience in preparing good quality compost. We have been using over 3,000 tons of compost prepared in our own farm every year. The difficulties associated with producing good compost in large quantities are a subject that every serious farmer needs to understand before embarking on totally organic cultivation.

Please visit us at www.tgfworld.org and www.indiauntouched.com

Better rural healthcare through primary health initiatives

2007-10-29T01:30:00.000-05:00

For decades, the government’s approach to meeting the health needs of the rural population in India has been one of offering mainly primary healthcare. For example, during the past half a century, India has built up a vast infrastructure of public health services by establishing one primary health centre (PHC) for every 50,000 population on the average. Undoubtedly the focus on primary and public health is the right one, but poor management, absence of committed physicians, corruption, and inadequate infrastructure, medicine and financial resources have turned them into ineffective institutions. Further, international organizations that provide much of the external funding seem to believe that a targeted approach to addressing some of the top health concerns can be successful, without worrying much about the institutions that actually deliver primary healthcare.

According to the World Health Organization (WHO), the top 10 preventable health risks are childhood and maternal underweight; unsafe sex; high blood pressure; tobacco; alcohol; unsafe water; sanitation and hygiene; high cholesterol; indoor smoke from solid fuels; iron deficiency and obesity. Our foundation’s experience in rural Tamil Nadu tells us that many of the health problems can be addressed through a comprehensive approach that deals with a) housing and sanitation needs, b) malnutrition and deficiencies in iron/folic acid and calcium among pregnant women and young children, c) worm infestation and skins ailments, and d) common infectious diseases such as viral fever, malaria and typhoid.

The George Foundation runs a rural clinic that offers healthcare and community development services to 17 surrounding villages. One aspect of our program is out-patient primary healthcare at the clinic, health education including training of birth attendants on safe delivery of babies, and holding periodic health camps in specific areas such as eye, gynecology, and heart. The clinic has its own laboratory to test for diseases such as diabetics, typhoid, malaria and HIV/AIDS. A computerized database of every patient’s health history is maintained to allow timely interventions and proper treatment.

The second part of our program is field services wherein our medical staff visits the villages every week and meets with women and children, especially high-risk pregnancy cases. The goal is to intervene well before health conditions deteriorate. Cases of malnutrition are identified, and protein-rich supplements are provided. Practically the entire population in every village is given de-worming tablets every six months, and skin ailments are treated with appropriate medication.

The third component of our health program is sanitation and safe drinking water. For the past several years, our foundation has been undertaking efforts to clean-up the area by leveling ground where water stagnation and mosquito infestation have been a problem. Latrines have been dug and drainage has been improved. Starting 2008, we are planning to drill wells to provide sufficient drinking water for the increasing population in each of the villages. 200 houses are targeted for improvement – to add adjoining latrine and ventilated kitchen to every home. Needless to say, all these require additional financial resources, and our foundation is reaching out to supporters for their contribution.

As can be seen, the main focus of all these initiatives is prevention and early intervention. Further, we are attempting to offer quality medical care for common ailments. Cases that require major interventions – less than 10% of all cases – are referred to nearby urban hospitals.

The above approach to healthcare delivery is found to be cost-effective. These programs are not very expensive. For example, to add a kitchen and latrine to a house will cost around $750 (Rs. 30,000). De-worming and protein/nutrition supplements cost around $10 (Rs. 400) per individual per year. It is the sheer large numbers of people that make these programs expensive. But we believe there are enough government and private financial resources to tap to make these programs successful. Over time, as incomes rise, patients will be able pay for most of the associated costs.

When early health interventions are undertaken and living conditions improve, the cost of long term medical care declines dramatically. Further, people do not have to needlessly suffer from preventable ailments. These initiatives do not require special expertise or high technology. It requires commitment and minimal but sufficient financial resources.

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Why quality education is so important to India’s future

2007-10-26T12:54:00.000-05:00

As of 2006, there are only 34 million people employed in India’s organized sector which comprises the country’s bureaucracy, military, and those formally employed in the private and non-profit sectors (with registered organizations). Despite this small proportion of employment in the organized sector, much of India’s economic growth is directly attributed to their contribution (such as those in IT, heavy industry, textile, etc.). It is just a few – less than 2-5% of this 34 million people -- who are highly educated and who can give India the cutting edge superiority to create a comparative advantage over other developing countries that also provide low cost labor. It is the IITs, IIMs, and other good colleges in science, engineering, medicine and research that provide the continuing flow of highly trained young scientists and managers. The same is true of other fields like architecture, law, and environment. Without them, India’s workforce will still be digging manholes.

The question that we all need to answer is a simple one: should the highly educated and trained elites of India’s information technology and industrial sectors come only from well-to-do families and communities? Should we be offering to at least a few young people from deprived communities the same opportunity, or should they remain for ever at the low ranks?

The conventional way of thinking about poverty is to get the masses out of illiteracy and offer them some education to be able to hold jobs beyond being simply unskilled labor. Undoubtedly these are necessary initiatives. But it is not possible for any student to cope with good college studies without the right background all the way through high school. There are no shortcuts. Literacy programs and emphasis on primary education can give a valuable head-start but nothing more.

I am afraid most people are unable to visualize the impact of professional success among those from socially and economically deprived communities. There is no great aspiration on anyone’s part for them. We need to change that mindset. That is precisely why we started Shanti Bhavan nearly 11 years ago.

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Are Special Economic Zones (SEZ) Contributing to Rural Poverty Reduction?

2007-10-23T01:55:00.000-05:00

There is plenty of talk about Special Economic Zones (SEZ) bringing about an industrial revolution in India. Introduced in the year 2005, SEZs are intended to generate new economic activity that lead to greater investment, exports and employment. Currently, India has over 800 industrial units operating in 10 or so functional SEZs, each on 50-300 acres of land. So far, investments in excess of $10 billion have been made in these zones, and new employment generated has been around 100,000 persons. Official projections call for total investments in excess of $75 billion and new employment of over 1.8 million persons by the end of 2009.

SEZs are being set up under different institutional structures – fully public, fully private or a combination. However, the most common arrangement is a public-private partnership, with government offering off-site infrastructure, fiscal incentives in the form of tax and import duty exemptions, soft loans and equity investment. Operators of SEZs include both domestic and foreign companies like Mahindra, Reliance Industries, Nokia and Motorola. Within each zone, a number of companies set up their operations in industries such as information technology, pharmaceuticals, biotechnology and textiles.

The main advantage for companies operating within an SEZ is that its operator is responsible for ensuring adequate modern infrastructure for efficient industrial activity. With fiscal incentives from the government, these companies are able to reduce their costs, both in initial investment and on-going operating costs. Companies are able to obtain sufficient land at attractive prices to set up their factories outside major metropolitan cities. Cheap labor is also readily available from nearby villages.

All these sound like a win-win situation for all parties. There is no doubt that these zones attract companies that would otherwise have set up their new operations elsewhere without the benefit of good infrastructure. It is also likely that fiscal incentives might induce larger investment. The argument in favor of offering such incentives is that the incremental investment and ensuing business activity generate benefits to the economy in excess of its costs.

The trouble lies in how the benefits from SEZs get distributed. Sure, companies stand to benefit the most from efficient infrastructure and lower taxes; incremental employment is created from greater investment and business activity. But it is not clear as to whether SEZs generate the kind of jobs that would benefit the rural population.

For example, it is reported that Infosys, a major IT company, has recently purchased 200 acres of rural land outside the city of Hosur, Tamil Nadu. Many land owners were only happy to sell their land at prices far above prevailing levels, turning them into very wealthy individuals in short order. Some of the land is fertile and the remaining barren, and those who were previously employed in agriculture now expect to be employed as industrial labor. It is unlikely that a technology firm can expect any new employee from the nearby villages for its well-paying jobs as computer programmers and specialists. Those jobs will be filled by those coming from the cities.

Poor people who comprise over 80 percent of the rural population hardly own any land beyond what is occupied by their huts/houses. Few landlords and urban investors own most of the available land that are not state property. They are the ones who are benefiting from the land purchase by SEZ operators. Even these landowners complain that they are forced to sell their land by government officials at far lower prices than what prevail in nearby cities. While arguments and protests go on, the rural poor look on hoping that their lives might somehow improve.

The impact of switching some of the rural activity into industrial production is not clear. Some economists make the point that the agricultural sector will suffer and rural lifestyle will change. May be India will be better off exporting industrial goods and services and importing agricultural products!

Rural India offers opportunities for many industries in food processing, herbal products, alternate fuels, cement and tile, lumber and pulp, meat, dairy and poultry. Investments in these can create large numbers of sustainable jobs. Unfortunately, SEZs seem to attract mostly high technology companies that cannot offer well-paying jobs to the rural population. For the foreseeable future, the rural population will not have the educational background to be trained for those jobs.

At the very least, we should expect that companies operating within SEZs do not exploit the rural population. In the name of cutting down on bureaucracy, SEZs are given considerable free hand. Hopefully these companies will employee rural workers at fair wages, and offer proper health and pension benefits. Worker safety is another major consideration, especially since the industrial environment is new to those who have previously been working in the agricultural fields. Environmental controls to prevent water and air pollution and soil contamination must be strictly implemented.

Countries like China and Brazil have established major industrial centers around their SEZs. While those centers have raised the level of employment and income for many people, the rural population is still not sufficiently benefited. Lack of adequate environmental controls has made many areas unfit for human habitation. We can only hope that India will not follow the example of those countries. Economic activity that assures adequate and fair participation of the rural sector and with concern for the environment is what will reduce poverty in India.

Please visit us at www.tgfworld.org or www.indiauntouched.com

Can We Rely on Government Surveys?

2007-09-03T13:05:00.000-05:00

Just this week the Central Ministry of Statistics, Government of India, released the results of the sample survey conducted by its National Sample Survey Organization (NSSO) for the year ending 2005. According to the survey, the following is the breakdown of the national population:

Other Backward Classes (OBCs): 40.94%
Scheduled Castes (SCs): 19.59%
Scheduled Tribes (STs): 8.63%
Other Classes: 30.80%

OBC figure of 40.94% is much less than 52% reported by Mandal Commission Report of 1981. Since this survey essentially aimed at measuring the level of consumption expenditure by different households, the caste/class breakdown may not be of much statistical significance. In fact a similar survey done is 1999-2000 had put the OBC population at about 35% and it is hardly likely that their proportion has gone up by 6% in just 5 years. This new figure is bound to become politically significant, however, given the controversy over OBC reservations in higher education and the Supreme Court’s question to the government on how it had decided on a 27% quota.

According to the survey, 91.4% of STs, 79.8% of SCs and 78.0% of OBCs were in rural areas. Conversely 8.6% of STs, 20.2% of STs and 22% of OBCs were in urban areas while 37.7% of ‘others’ lived in India’s towns and cities.

Booming economic growth reflected in the expenditure of urban India is seen in their spending -- nearly double the amount on average compared to rural areas. Per capita monthly expenditure of people living in urban areas was Rs: 1,052.36 a month ($0.85 per day) against Rs: 558.78 ($0.44) of those in rural areas. With minor exceptions, general level of spending of SCs and STs was lower than OBCs or others, while that of the OBCs in turn was lower than that of “Other Classes.”

According to NSSO survey, spending by rural STs was the lowest at Rs: 426.19 followed by rural SCs at Rs: 474.72, OBCs Rs: 556.72 and others Rs: 685.31 in a month. In Urban India STs spent Rs: 857.46, SCs Rs: 758.38, OBCs Rs: 870.93 and Others Rs: 1306.10 in a month.

Survey highlights the fact that in rural India 64.3% of the population continues to be dependent on agriculture, either through self employment in agriculture (39.4%) or as agricultural labour (24.9%). In urban India, proportion of population in regular wage/salary earning households was almost the same (42% to 42.9%) for all social groups except OBCs (34.3%).

I want to make a few observations on this survey. As this report shows, rural per capita was $0.44. This figure is fairly close to the published results of another study by a government commission last month that showed 78% of the population with daily income below $0.50. However, per capita expenditure and poverty levels are two different things. The per capita expenditure of $0.44 for rural areas appears an overestimation. It is unlikely that when the daily income for over 80% of the rural population is below $0.50, their per capita expenditure can be $0.44 per day. The George Foundation survey of 9 villages in Krishnagiri District in Tamil Nadu (close to the prosperous city of Bangalore) shows that their per capita expenditure is no more than $0.35 per day. Hopefully another study will reconcile these differences.

Mandal Commission Report of 1981 is considered by most people as one of the definitive surveys on the breakdown of castes and classes in India. It is also well known that the rate of increase in population among “lower castes” is higher than that of Other Classes – “Upper castes.” Hence, it is not likely that the OBC percentage of the population could decline from 52% to 41% over the 25 years since the Mandal Commission report was published.

The statistic showing 39.4% self-employment in agriculture and 24.9% as labor in agriculture (total of 65%) is probably erroneous. While some of the labor have a little land of their own, their main source of income is from employment at farms owned by landlords. Based on my observation, only few individuals in every village live on income from their own farms. In the two villages surrounding Shanti Bhavan, less than 10% of the people are self-employed in agriculture. The balance of 55% (65%-10%) of the rural population derives their main income from rural labor (mostly seasonal).

Given the present controversy and dispute over proposed quota for OBCs in educational institutions and in employment, there might be some incentive to reduce the percentage OBC population and increase that of Other Classes. The chances are that OBCs are at least what the Mandal Commission reported – 50% or 550 million people. Schedule Castes and Scheduled Tribes together are at least 30% or 330 million. The balance of 20% or 220 million is Other Classes. I hope we will find out the truth one day!

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“India lives in the villages” – but how?

2007-08-27T05:21:00.000-05:00

National indicators regularly published by governments and international agencies do not include any statistics on the living conditions as exemplified by the type of housing available. In my interviews with many poor village women in South India, practically everyone listed housing as their most important need -- above food, healthcare and education for their children. Without the security and comfort of a home, there is no escaping the difficulties resulting from poverty.

Adequate housing is considered by many as a fundamental human right. It is a basic necessity for all that cannot be denied in a fair and equitable society. Housing is interrelated with other aspects of life such as health and education. For example, children cannot study in a poorly lit house. Respiratory disorders among rural population in India are often the result of unfavorable housing and poor living conditions.

Present Rural Housing Situation

According to the National Family Health Survey, concluded in 2000 by the government, only 19% of the rural population lives in pucca (strong) houses, while the remaining live in kaccha (weak) and semi-pucca houses with mud walls and thatched roofs. Eighty-seven percent of the homes in the villages do not have toilet facilities. Cooking is usually done inside the house under inadequate ventilation with biomass such as dried cow-dung, fire wood, dry weeds or crop residue, exasperating the risk of tuberculosis.

Most villages have both lower and upper castes living in separate sections. People belonging to Scheduled Castes (SC) and Scheduled Tribes (ST) are required to live in an area designated for them. Those belonging to “Most Backward Classes,” “Backward Classes” and “Other Backward Classes” – as they are officially categorized -- usually live in the same area where “Other Classes (Upper Castes)” live, but they do not mix with even lower castes.

The rural poor live in huts and government supplied “houses” that are usually no more than 200 sq. ft. in floor area. Houses supplied by the government are constructed with cement blocks or bricks, the floor is of cement, and the roof is made of concrete or asbestos. Usually there is only one room in the house, but in some cases a half-wall may be built to separate out the kitchen. These houses do not have their own toilets, but common toilets are made available at some distance at one corner of the village for several families to share. More often than not, these toilets do not function nor are they maintained, doors are broken or absent, and there is limited or no access to water nearby. Hence, most people prefer to go into a wooded section or elsewhere in the village or nearby field where there is privacy.

When government builds homes for lower castes, it ensures this caste separation. In many instances, government sets up housing colonies exclusively for Scheduled Castes and Tribes, and hence, an entire new village might consist of families belonging to only those castes.

The George Foundation recently completed a field survey of two panchayats consisting of nine villages in Hosur Taluk with 986 huts and houses for a total population of 4,850 residents. The average number of people per dwelling was 4.9. Huts are very small in size, often without windows, and a narrow opening serves as the entrance.

Government supplied houses are around 190 sq. ft. in floor area which works out to 38 sq. ft. of floor space per person – just over the size of a full size bed. Every house has two small windows, a 4 sq. ft. opening each, but they are not sufficient to permit cross ventilation or cooking smoke to escape freely. Those who have domestic animals such as cows or goats usually keep them inside their houses during night.

At least a third of all houses required major repairs for leaky roofs, cracks in walls and damaged doors. None of the lower caste residents has the financial means to spend money on house repairs. While government-built houses are provided free of cost, residents are required to pay a small tax to the panchayat.

The Tamil Nadu government, for example, estimates that a typical house for the poor costs around Rs. 45,000 to build. The state allocates houses to families belonging to scheduled and depressed castes based on their economic status.

However, anyone officially classified as poor is eligible for a government grant of up to Rs. 45,000 (about $1,125) toward construction provided that the applicant owns suitable land for the house. The government offers different financial schemes through banks that permit families to borrow money at zero to low interest rates (10-12%) for purchasing or developing land, and for construction of the dwelling. It also offers grants of up to Rs. 10,000 ($250) for renovation of an existing house.

Government Housing Program is Failing

Despite the allocation of considerable funds by central and state governments, the housing program for the poor is failing for a number of reasons. The plan is ill-conceived, focusing on offering shelter as opposed to improving living conditions, and executed without sufficient thought about many inter-related considerations.

Currently, the total supply of new housing is far short of what is needed – around 100 million at the very least – if the goal is to offer adequate housing for every poor family. Bad construction and poor maintenance are causing the breakdown of houses that were built some time ago, adding to the need for substantial home improvement. The average floor space of 38 sq. ft per individual, not including the space taken by cattle kept inside the house, creates a very unhealthy indoor environment, not to mention the lack of basic necessities and the ensuing discomfort faced.

The focus on offering houses as shelters has motivated the government to look for cheap construction without offering even basic necessities. Without a small separate kitchen and adequate cross ventilation, the entire house is turned into a smoke stack not suited for human habitation. The absence of an adjacent toilet with each house is inconsistent with any reasonable concept of meeting minimal human needs. Unless existing houses are extended to include a separate kitchen with proper ventilation and a small toilet, they cannot be considered as livable dwellings.

Additionally, government housing perpetuates the centuries-old practice of separation of residences based on caste. Most Indian villages still maintain clusters of houses for each caste in different sections. Houses for scheduled castes are allowed in the village only in areas designated for them, away from the homes for upper castes. Instead of trying to break down this discriminatory practice, houses being built by the government for the scheduled castes ensure this separation. Further, the government has created a number of identical structures in new areas, effectively creating “scheduled caste colonies.” It is hard to reconcile government’s official position concerning discrimination and human rights, and what it actually practices.

Housing as Part of Community Development

The housing program as currently implemented will hardly improve the living standards of the poor nor will it contribute to social justice. Before more funds are expended toward public housing, the government is well advised to reconsider its approach to the problem. In arriving at a new strategy for housing, planners must not lose sight of its other interrelated goals such as offering basic amenities, preventing diseases, and assuring social justice.

The approach to housing must shift from its current focus on offering shelter to developing healthy and integrated communities. That might imply a departure from a caste-based approach to assistance based on income levels.

Instead of replacing huts with cemented houses at the same location, a better strategy might be to develop new communities at another location close by. That would offer considerable flexibility in properly laying out the entire housing complex. These new developments may incorporate facilities for sharing water, sewage processing, bio-gas production, fruit and vegetable gardens, and small shops.

Community development will certainly call for larger initial investment than what is required for building shelters. However, the long term benefits associated with creating healthy and sustainable communities is likely to be far greater than the short term savings from building low-cost housing. An appropriate partnership between government, donors, investors and financial institutions can pave the way for financial solutions that make it possible for beneficiaries to carry some of the burden.

The above is a summary of the article in knowledge@wharton. See http://knowledge.wharton.upenn.edu/india/article.cfm?articleid=4219

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Is India’s Prosperity Trickling Down?

2007-08-17T09:26:00.000-05:00

The National Commission for Enterprises in the Unorganized Sector reported just this month on the present state of India’s unorganized and informal sectors of the economy. You can read the complete paper at http://nceus.gov.in/Executive_Summary_08082007.pdf. This is probably the most honest report of its kind published in recent years by a government commission in India. The report revealed that over 77% of the country’s population lives on less than $0.50 a day. I have written about this shocking statistic in some detail in my last entry earlier this week (see http://abrahamgeorge.blogspot.com/2007/08/truth-hurts-but-will-eventually-help.html). I want to add a few more important conclusions from this report.

As of 2005, India had a total employment of 457 million, or nearly 42% of the population. Of this, 423 million people were employed in the unorganized sector (like agriculture) and the informal sector (laborers and other non-salaried workers employed in the organized sector) combined. That leaves only 34 million people employed in the organized sector which comprises the country’s bureaucracy, military, and those formally employed in the private and non-profit sectors (with registered organizations). Despite this small proportion of employment in the organized sector, much of India’s economic growth is directly attributed to their contribution (such as those in IT, heavy industry, textile, etc.).

The prevailing expectation is that the small organized sector in India will increase its wealth and income and employ many more people. But the reality is that this has not yet happened. It is true that those employed in the organized private sector have significantly improved their standard of living, and their purchasing power is reflected in increased consumption. The trickle down effect of this wealth creation among a few has not led to any significant employment creation.

The Commission report points out that employment increased by 60 million in all sectors combined during the 5 year period 1999-2000 to 2004-2005. That is an average increase of 12 million jobs a year or approximately 1.1% of the population per annum. However, the annual rate of increase in population during the same period has been around 1.6% per annum – nearly 50% over employment creation. Moreover, a large number of new jobs have been urban, leaving behind the great majority of people living in rural areas. Even gains in the urban, organized sector are misleading; most jobs created have been in the area of informal workers who lack job security and social security benefits.

Further, incomes have also not risen much, especially for rural workers. According to the Labor Ministry, the norm should be around Rs. 66 per day. However, the report finds that 88% of the rural workers were earning less than this benchmark, and 75% below Rs. 45. It is fairly obvious that urban prosperity has not led to any significant increase in wealth and income for rural employers and employees.

These statistics are very revealing of the state of India’s economy. 1-2% of the country’s population in the private organized sector is reaping much of the fruits of the recent rapid economic growth. Increased wealth and income remain mostly within this small minority; the gap between them and the rest of the nation is widening by the day. Those who have accumulated immense wealth are in a position of power and influence to further enhance it, often without sharing much with anyone else. The economic and social system seems to be inequitably structured and in the end, most Indians are unable to partake in the benefits of the aggregate growth in the economy.

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Truth hurts, but will eventually help

2007-08-13T05:32:00.000-05:00

After many years of official pronouncements that the poverty level in India has declined to below 30%, an agency of the government has finally made it known that 77% of the country’s population lives on less than half a dollar per day (Reuters, August 10, 2007 http://www.reuters.com/article/latestCrisis/idUSDEL218894). India’s official statistics on poverty, on the other hand, gives an erroneous impression that the country is making major gains in reducing poverty.

Most people do not know that India uses a certain measurement of daily caloric intake of food as its yardstick for determining whether a person is poor or not. By the government’s reckoning, a person consuming more than $0.30 worth of food per day is not poor. Apart from the fact it is very difficult (and hence, the statistic is suspect) to ascertain how much food each person is consuming, India’s poverty statistic cannot be compared against those of other countries using the international standard of one dollar per day. Unfortunately, even the World Bank has failed to challenge India’s official statistics on poverty.

The National Commission for Enterprises in the Unorganized Sector (NCEUS) just published a report based on data from 2004-2005 that 77% of Indians -- about 836 million people -- live on less than half a dollar a day. According to the report, most of those living on below 20 rupees (50 US cents) per day are from the informal labor sector with no job or social security, living in abject poverty.

I have been questioning the official statistics for many years now (for my recent blog on this, please see http://abrahamgeorge.blogspot.com/2007_02_01_archive.html). Based on our studies in Tamil Nadu state, we have observed rural poverty in excess of 80%, if the one dollar yardstick is used. Finally the government has confirmed what we have known all along as the truth about poverty in India.

Unfortunately, the media is still grossly behind the curve. Given that 3/4ths of India’s population lives on less than 50 cents a day, it follows that 3 out of 4 news articles on India would represent them and their plight. Yet, very few pieces on India deal with this humanitarian crisis; the emphasis is on “India Shining”, the wealthy minority, while the 836 million people living in poverty are given little voice. Until we are ready to look into the mirror and see our failings, nothing will change. It is my hope that this recent revelation will herald a new change in attitude towards facing the hard facts needed to find real solutions to poverty.

If you'd like to read the report by The National Commission for Enterprises in the Unorganized Sector, it is available here: http://nceus.gov.in/Executive_Summary_08082007.pdf.

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Is Social Justice Just a Dream?

2007-07-06T23:59:00.000-05:00

“Nothing is sadder than the waning dream of integration,” wrote David Brooks in his July 6, 2007 op-ed column for the New York Times. “…But it could be the dream of integration itself is the problem. It could be that it was like the dream of early communism — a nice dream, but not fit for the way people really are…Even today, people have a powerful drive to distinguish between us and them.”

There is a lot of truth, in my opinion, to what Mr. Brooks has described in his column. People prefer those of their own kind. “Integration” is only for others.

I returned to India twelve years ago, filled with idealism – I wanted to improve the lives of poor people, to help create a fair and equal society. But now, after struggling with that goal for many years, I have begun to give up on my dream. Our foundation’s work in those years has brought about considerable prosperity to the villages around us, and yet, people live segregated lives. “Lower caste” people live in one secluded section of the village; “upper castes” do not eat together with lower castes at any function; there are separate temples for both upper and lower castes; even classrooms for small children are segregated by castes. The government asks for an individual’s caste in every official document, and the constitution doesn’t attempt to abolish the caste system.

Discrimination based on religion, caste, race, ethnic origin, gender or sexual preference is all too commonplace. People do not wish to accept their differences and treat each other with dignity. What seems to unite one group of people is their differences from another group – all in the name of common good.

But if we can learn to be tolerant enough to interact with each other, work and play together, and not harm each other, it might be good enough – there may not be a need to live together and socially interact as an integrated community! Even a limited impersonal interaction might be too much to expect.

I often ask myself whether my children and I find ourselves part of mainstream American society. I am not sure of the answer. But I don’t think it matters a great deal. Education and professional accomplishments have allowed us to deal with anyone and everyone. I can’t worry too much about other people’s personal biases and prejudices.

Maybe the trouble is that people are afraid of others who are different from them. People are afraid of losing their jobs or property, fear for their physical safety, or resent others infringing upon their faith or beliefs. These negative forces are all too powerful to allow “outsiders” inside.

I think the trick to integration is dealing with all those fears. A society that offers plenty of opportunities can negate the fear of losing money and wealth – the primary factor behind discrimination. People who conduct themselves in a disrespectful manner toward others cannot expect others to accept them. People who preach their assumed superiority in values or faith will not find others to embrace them. These are lessons that political, community and religious leaders need to teach their people.

Unfortunately, hatred is the longest running passion. Discriminatory remarks and incrimination are not often confronted in today’s society. Tolerance and acceptance of differences are rare commodities.

While I am pessimistic about the future of social equality, something deeper tells me that we should never give up on this noble goal. As for our foundation’s mission and work, we will continue to offer as many opportunities as possible to those who need it most. In doing so, we shall cultivate tolerance, focusing on “good values” as opposed to “good faiths.” Maybe over time we can make a little difference.

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Simple Solutions to the Rural Education Crisis

2007-06-29T00:44:00.000-05:00

It seems many people are trying to find innovative solutions to improving the quality of education in rural areas, especially among the poor. Since most rural children study at government-run schools, the focus of any effort to improve quality and performance must be on those institutions. Without waiting for the state government to act, NGOs can directly interact with the administrators of those schools, especially the headmasters, and village leaders to implement measures that can yield positive results. That is precisely what The George Foundation has been doing since 2004 in the 17 villages surrounding its own school, Shanti Bhavan.

Three years ago our foundation initiated a community development plan that included working with government-run schools in our area. Deverapalli Government School was the first one we took on, and within two years of starting the program, it was judged as the “best” in the district by the educational authorities. Based on this project and our Shanti Bhavan experiences, I have tried to compile what I consider as simple and low-cost measures that NGOs can take which will, in my opinion, make much of the difference we are looking for:

Hire young motivated teachers (even those who may not have teaching degrees or prior training), especially for lower grades, and give them 1 month training. In our case, we hired high school graduates from the local area as teachers and teaching assistants to complement government teachers.

Make sure that all students have the required text and note books, and teachers/classes have black boards and chalk.

Offer 1 hour after-school individual tuition to students who require special assistance.

Provide snacks for all students around 10 am, as many come to school hungry without sufficient breakfast. Government offers lunch.

Make sure that roofs are not leaking, classes have benches and desks, and toilets are functioning.

Have frequent (once a week) medical consultation for children who come to school sick. Also conduct an eye, ear and general check-up once a year.

Offer special “bonuses” to teachers if children do well in independent testing every 6 months. Let teachers know ahead of time what will be tested. No need for surprises.

These measures are relatively economical and easy to implement. Computers and libraries are lower priorities for most rural schools, though some reference books are essential. As and when financial resources permit, computers may be introduced when teachers trained in information technology can be found and electric power is reliable.

In summary, I urge everyone to figure out ways to motivate children. Make coming to school a fun event. Provide financial incentives to good teachers. Everything else will fall in place automatically.

I have copied below the response to my email on the subject from Bhamy Shenoy who has been involved with rural schools.

Extract from Mr. Shenoys email on his experience at a rural city school in Bantwal town in Karnataka State:

“I think you pretty much covered most of the essential elements. I would say with the first point you have mentioned, it should be possible to meet 90% of the needs. All others are useful and will contribute. But it is the first which is the most important.

Right now we are having an interesting experiment in our rural based town. As I wrote to you, I have been holding series of seminars for 30 students. My wife is taking classes in a government school where its strength has fallen from 250 to 35 over ten years. The reception she is getting and the level of interest shown in her classes are not matched even among college students. She had given as assignment last Friday to 7th graders to write a poem on any subject. Today when she had gone to the school, all the eight students in her class had written poems. They were not all of same standard. The important thing is that all of them had attempted. Each time she goes there for teaching, they ask her to come the next day. The difference is that she is making learning fun, she prepares before going to each class, tries to bring creativity in the students by asking them to do some activity. Can we inculcate such interest and concern in our teachers? She has found a very precocious student and we have decide to help him as much as possible by sending him to a private school in the town by giving scholarship after his graduation from this school. In fact we are even thinking of inviting him to the valedictory function at the college to distribute the certificates as a VIP.”

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Solving the Indian Puzzle of Public Services Delivery

2007-06-02T04:24:00.000-05:00

I used to play crossword puzzles, but lately I have stopped. With the passing years, I find it harder to complete the puzzle. Similarly, I have always thought of our dealings with the government in India as a puzzle to solve. And as the years pass, the puzzle of the Indian government becomes more convoluted and illogical, difficult to solve in an honest way. Yet, one is compelled to play it if he/she wants to function in India.

Consider the telephone service. The Shanti Bhavan School we run in rural Tamil Nadu has a dozen or so telephone lines installed by the government-run monopoly. Each line is charged a fee of Rs. 125 per month – a small sum by comparison to the monthly fee paid in the U.S. The fee is charged regardless of whether the service is provided or not. That is the rule, according to the telephone department.

At any given time, one or more lines are not functional. It is not uncommon to have all lines cut off for several days. The reasons given are numerous and varied: vandalism, digging of road by other government departments (such as electricity, sewage, etc.), “improvements” being made to the service, or “exchange problems.” In most cases, we have to send a vehicle to pick up the linesman to detect and repair the problem. Unless the linesman is paid a “fee” for his services, problems will not be solved. If the fee is low, he is likely to make faulty connections (line disturbances, wrong number connected to your line, more than one line connected together, etc.) and we will have to bring him back to make further repairs.

Regardless of whether the service is available or not, the monthly bill must be paid. We receive the bill for all our lines, and if full payment is not made, all lines can be disconnected. There is no use complaining about it.

For over 3 years, one of the lines has not been operational. We have tried to get it fixed, but to no avail. We wrote to the telephone department not to charge the monthly fee for this nonfunctional line, but that too is declined. It is likely that this line has been made available to someone else.

Try complaining to higher authorities, and soon you will find more frequent problems with all the lines. Politicians are not interested in setting these practices right – either there is no money in it for them to get involved in such issues, or they are receiving their share of the “benefits.” I am not sure there is an honest way to solve this Indian puzzle.

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Mini-Loans to Small Rural Businesses can Reduce Poverty

2007-05-29T07:31:00.000-05:00

There is considerable publicity these days about micro-credit as a tool against poverty. There is no doubt that a loan of $100 to an impoverished person can help him or her tide over personal emergencies such as payments toward dowry for a daughter’s marriage, a medical surgery or fixing a leaky roof. In some cases, micro-loans to local merchants might help them overcome temporary financial difficulties. However, there is no substantiated evidence that micro-loans are creating sustainable businesses run by the poor (whose daily income are below $1 a day, or family income below $2 a day). Further, micro-loans barely add any significant new employment among the poor.

It is not possible for even a very small fraction of the 3 billion living in poverty (below $2 per day in income) to become successful entrepreneurs. Most of them do not have any education, business skills or financial resources. In countries like India, the poor are both illiterate and socially disadvantaged; there is little chance that micro-credit or even larger funds can help them plausibly start and run businesses. The present generation of impoverished people can only hope to earn a living by working in the fields for landlords or at businesses nearby.

If vibrant business activity and the associated new employment opportunities are what will reduce poverty, we have to think of ways to promote existing small businesses. In my social work in rural Tamil Nadu, India, I frequently get to meet owners of local businesses – furniture manufacturers, auto repair shops, welding and fabricating facilities, and so on – each employing a few workers. With meaningful financial assistance, many of them will be able to expand their businesses, while hiring several more employees. These are businessmen with the proven skill-base and sales ability to successfully run enterprises. As they employ more workers from nearby villages, poverty is correspondingly reduced.

Micro-credit is inadequate to meet the needs of businesses that have the potential to expand and add new employees. They require significantly larger credits – mini-loans of $1,000 to $10,000 or more for each activity – for such things as new machine tools, additional hardware and supplies, or a vehicle to transport the merchandise. Small contributions from individuals and institutions may be combined to offer such mini-loans. With additional capacity to meet the needs of a wider customer base, these small businesses have the potential to grow.

Hardly any venture can be expected to sustain itself when financing costs are exorbitant. If small businesses are to be helped, they must be able to borrow at reasonable interest rates. Regardless of the justifications given by lenders for charging 24-36 percent annual interest rates, there ought to be a realization that such practices are simply not viable if the goal is to help small businesses succeed. The business of credit to the poor cannot ride on exploitation.

Combined with efforts to attract large businesses to rural and other economically deprived areas, mini-loans at modest interest rates to small businesses with good track records can be an effective tool in addressing poverty. When the poor gain the opportunity for income generation from employment, they will one day become self supporting and in turn, their children will have expanded opportunities. Until then, the goal of poverty programs ought to be the delivery of basic services (such as education and healthcare) at affordable prices and the creation of employment.

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A Lesson From Climate Change: Grapes are Sweeter!

2007-05-19T02:24:00.000-05:00

Ever since The George Foundation started its operations in 1995 in Tamil Nadu, India, we have been working toward generating internal sources of income to fund at least part of the expenses for our various humanitarian projects. Baldev Farms is one such effort -- to empower poor women who work on our farms, while generating profits. In the initial two years, the farm was growing vegetables - tomatoes, beans, gherkins, etc. We even tied up a marketing arrangement with a French company in Bangalore. Despite high crop output, we couldn't make a profit. For example, tomatoes prices fluctuated between Rs.0.50 to Rs.4.00 per kg every year. One has to be lucky to harvest the crop when the price is high; usually prices are high only when the crop is out of season.

We switched to bananas in early 2000 when the rains were predictable and sufficient. It is one crop that maintains fairly steady prices – between Rs. 4.50 and Rs. 5.50 per kg most of the year (though prices haven't risen in these 6 years). The fact that bananas are the poor man's fruit was an added attraction. We knew that it needs plenty of water daily. Hence we joined forces (technology transfer) with Natafin (an Israeli company) to find ways to reduce the need for water. The techniques used were drip irrigation, mulching, compost (which holds water), and use of "good" bacteria. With these, one acre required around 7,000 litres of water daily. That quantity of water is only 1/3rd to 1/4th of what is usually given under flood irrigation (without drip -- 28,000 litres). Yet we were getting excellent quality bananas, with bunch weight mostly between 25 Kgs and 35 Kgs.

With nearly 200 acres of land under cultivation, the daily need for water was still 1.4 million litres. Since there are no rivers around, we drilled dozens of ground wells for water. We thought we could capture sufficient rain water each year to recharge the underground water. A check-dam was built, and nearly 100 collection pits were made. But with rain shortages in almost all the years since 2000 (30-60% less than the average rainfall in previous years), we were experiencing significant declines in ground water levels. We laid pipelines for a distance of 7 kms from wells in a dry lake-bed elsewhere, but this was still not enough.

Finally in 2006 we decided that we couldn’t wait any longer for a favorable climate change. If we are to believe in recent climate forecasts based on global warming, the chances are that rains will only decrease over the coming years. We decided to switch over to grape vine.

Vine is a semi-arid crop. It doesn't like much water. Watering once or twice a week is enough . Again, with drip, proper mulching and compost, water consumption can be kept to a minimum. If it starts raining as it used to 10 years ago, our vineyard will be in trouble!

So here it is. For us, grapes are sweeter than bananas. We are switching from a poor man's crop to a rich man's crop. While there is no revenue for the next 3 years until fruiting starts, we expect that grapes will soon cover some of the costs incurred for our other projects, and still employ lots of people. May be, we will get into the liquor business one day to help the poor! But it is no easy task. Vine requires lots of care -- grafting, pruning, etc. Diseases, termites, rodents and birds are problems to handle. Hopefully it is still a wise strategic decision not to fight mother-nature.

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Rain Shortfall Bodes Severe Hardships and Dangers for India

2007-05-14T08:25:00.000-05:00

Experts are predicting that the worsening climate change from global warming will result in lesser rainfall in regions close to the equator. India, Bangladesh and Pakistan are among the South Asian countries that are likely to be severely impacted. These countries depend on rainfall for much of their crops, and they have not utilized major rivers that run from the Himalayan ranges and other rain-dense sources for supplying water to interior areas. For many years there has been talk about diverting rivers like the Ganges and the Brahmaputra, and building dams, but thus far nothing has been initiated. There are no major projects underway to supply water from rivers to water-scarce areas through large pipelines. These projects take anywhere from several years to decades to complete, even if a plan is agreed upon by all parties. Successive central governments have been less than transparent about their plans, and only those private companies who might be beneficiaries of the potential work on design and construction seem to know what is being contemplated, if anything.

Water shortage is already affecting crops in many areas within several states in India. Pressured by money-lenders, some farmers have abandoned their land in search of immediate income from employment in the cities. Stories of farmer suicides are now heard more frequently. Government assistance by way of subsidies and employment guarantees is increasingly becoming their last main hope. With over 700 million people living in India’s villages, and most of them depending on agriculture, it is far from certain that handouts are sustainable. It appears that the projection made two decades ago by a major research institution in Los Alamos, U.S. that climate change and rain shortfall might be among the five gravest dangers to hundred of millions of people is beginning to come true. The report went on to add that desperate rural population might be forced to move into prosperous urban areas, occupying even five-star hotels!

The other day I read an op-ed column by Thomas Friedman of the New York Times about drought in some of the tall-grass lands of Africa where wild animals have for centuries made their habitat. I wrote to him about the drought conditions in Hosur Taluk, Tamil Nadu, for the past 5-6 years. When I first started our humanitarian projects in that area some 11 years ago, I was told that rains were fairly predictable in April, June-August, and November-December. The lake close to where we built Shanti Bhavan, the residential school for children from poor homes, was literally overflowing when I came to purchase the land for the school. Today, this lake and others in the area are mostly dry. There has been very little rain in recent years, and our attempts to gather ground water with collection pits (a major check-dam constructed and over 100 collection pits made in an area of 100 acres) don’t seem to be sufficient. Small farmers who depend on raggi grain grown once a year are not able to support themselves.

To make matters worse, farmers who depend on well water and free power for the pumps find both in short supply. Without sufficient rain for several years, ground water levels are going down, forcing many to dig deeper wells and use more powerful pumps. With little water outflow, pumps have to be run around the clock to meet the needs. As every well is pumping, the result is power shortage and lower voltage. Many pumps don’t function properly when voltage falls, causing even further depletion of water pumped for the crops. Today, power cuts for several hours in a day are common, and we are forced to run diesel generators to meet the needs of our school and farms. Unless sufficient rains come this year, the situation is likely to worsen to levels that might cause severe hardships and social unrest.

I do not know what the state and central governments are planning to do in addressing water and power shortages in rural areas. Today nothing appears on the horizon, except some passing clouds.

Please visit us at www.tgfworld.org and www.indiauntouched.com.

Who can “fix” poverty?

2007-05-03T09:24:00.000-05:00

For long, we have been relying on the government to fix the problem of poverty. Then we thought that NGOs will somehow solve the problem. Now we think private companies, through their “corporate social responsibility” (CSR) programs, will significantly reduce poverty.

Many companies in India have formed CSR departments that make donations and involve themselves in initiatives designed to help the poor. But for the most part, the CSR movement appears to be a public relations campaign or a “feel good” effort, and less of any major assistance to the poor. The little that the companies do is somehow tied to publicity and favors to politicians, and often an indirect way to sell their products. Companies have figured out ways to extract government grants for their CSR activities, and hence, minimize their own contributions. Regardless of all these, if even small benefit goes to the poor, it is well and good.

I like to see corporations investing in the rural sector. They must be required to pay wages that allow families to support themselves. They must offer at least minimum benefits for employee healthcare and educational support. They must not damage the environment. If they would do just these – be socially conscious citizens --, it is more than sufficient. Unfortunately, even those companies that have CSR programs do not adhere to these simple principles.

Governments must offer sufficient incentives for companies to invest in the rural and deprived communities by way of soft loans, infrastructure improvements, tax breaks, etc., and keep out of the process except for enforcement of labor laws, worker safety and environmental protection. Market forces will automatically take hold. The trouble is that neither the government nor the companies do their part.

We are under the illusion that poverty can be solved by NGOs and the government. Now we are beginning to think that the CSR movement will. Both NGOs and governments have roles to play, but the real solution is in creating vibrant economic activity. This is the lesson I have learnt from our Baldev Farms and other work in Tamil Nadu.

Please visit us at www.tgfworld.org and www.indiauntouched.com

Who is interested in better governance?

2007-04-13T11:03:00.000-05:00

A few weekends ago (March 25, 2007), I was interviewed by a Malayalam media organization that publishes a weekly newspaper and a monthly magazine in Kerala and the Gulf. I got to talk to the editor confidentially, and asked how much independence he has in covering the stories he wants to. He says that no newspaper owner in India – even Malayala Manorama – will permit publication of articles that would hurt their revenues. As a rule, most papers do not publish articles criticizing any of the wrong doings of their advertisers. In fact, editors are encouraged to “consult” companies to obtain “stories of interest” (that benefit the company). Consequently, you would not see much by way of articles on pollution, consumer safety, fraudulent practices, and other misdeeds by companies.

It seems to me that there is very little incentive for companies to work toward reducing corruption or improving the press. They can afford to bribe the officials. A weak press might be in their best interest. It is the rest of the population – ordinary citizens– who are affected by bad governance.

I would appreciate your views on the above.

Please visit us at www.tgfworld.org and www.indiauntouched.com

Is Micro-Finance the Answer to Poverty?

2007-04-04T08:58:00.000-05:00

By Vivek George

These days micro-finance has gained considerable popularity and is seen by many as the answer to poverty. In this, micro-finance does not differ much from fad-diets; everyone is obsessed with it, many hope it will be the panacea to the world’s ills, and perhaps micro-finance even helps a little here and there, but in the end, the root problem still exists. The practice of micro-lending is not new, however. Micro-finance as we know it dates back to the 1970s, but within the last few years it has gained a great deal of momentum, especially through the efforts of last year’s Nobel laureate Mohammed Yunus. Mr. Yunus’ Grameen Bank (founded in 1983), is one of the leading micro-finance organizations, lending millions of dollars worth of micro-loans to the “poor”. But have these loans truly been directed to the poor and more importantly have they assisted in breaking the cycle of poverty? Well, let us see if we can answer that question.

The other day a close friend sent an email to me and a few others entitled, “Interesting”. Being interested I decided to give it a look. What I found was a link to the New York Times article, You, Too, Can Be a Banker to the Poor, by Nicholas Kristof. After reading a few lines, I realized this was yet another one of those micro-finance articles, the type that has become ever-increasingly popular in the press, touting that the end of poverty was simply a few clicks away. Annoyed by a lack of informed reporting on the subject, I decided I would write to my friends to provide them a more realistic view of the subject.

From the first line it was clear that Mr. Kristof did not understand how micro-finance works in the real world. “For those readers who ask me what they can do to help fight poverty, one option is to sit down at your computer and become a microfinancier,” he wrote. The key flaw of this line is “fight poverty”. This is because, for the most part, micro-finance does not help the poor (those who live on less than $1 per day, the UN yardstick for poverty). Mr. Kristof cites a man who owns a TV repair shop as an example of a person who has benefited because of loans from organizations such as Kiva (a leading micro-finance organization). But let’s be honest--do we really think a man who owns a TV repair shop or carries a mobile phone lives on a dollar a day (I doubt there are many poor Americans who can afford a TV repair shop)?

In India, roughly speaking, the family income bracket breaks down as follows:

Families with less than $1 per day – 300 million
Less than $2 per day – 600 million
Less than $10 per day – 900 million
Over $10 per day – 200 million
(Note: A family is defined as consisting of 4 members)

The TV repairman in India is likely to be in the $2-$10 (or higher) bracket. While people in the West might consider such incomes as low and hence, "poor", those who work among the impoverished do not think of shopkeepers as poor. It is misleading to talk of assisting those living on $2-$10 or more per day as helping the poor.

And what about illiteracy and lack of education? Can we really expect a poor, illiterate person from the rural, third world to create a sustaining business from a $100 micro-loan? It is hard to find any meaningful number of entrepreneurs among the truly poor. Even in a superpower like America, most of us would not be able to start and run a successful business, so how can we expect every loan we send to India, Angola, or Haiti to initiate an entrepreneurial endeavor?

Kiva and other micro-finance institutions (MFIs), for the most part, help the lower middle class – those in the $2-$10 range in family income – who may not have easy access to credit from commercial banks. For this reason MFIs may be their best and only option to pay for emergency hospital care or dowry for their daughters' marriage. But these organizations are not real charities that focus on the poor and their needs(education, healthcare, infrastructure, etc). Nor do MFIs care to know what the borrower uses the funds for as long as there is an assurance (usually collectively guaranteed by a group) for the return of loan principal and payment of interest.

This leads to the next issue which Mr. Kristof’s article and most others on the topic miss – interest rates. Most micro-finance organizations charge interest rates between 24% - 36%. Can you imagine ever taking a loan out at that rate? MFIs trumpet a loan repayment rate of 95 percent or higher (to make a point that the poor are very credit-worthy), and yet they justify these exorbitant interest rates by claiming a high risk of default.

Fundamentally there isn’t anything seriously wrong with most micro-finance firms; the issue is the context of what they really do and who they really help. Micro-finance firms must be honest about who their borrowers are, and what they do with the loans. To determine whether these firms are truly fighting poverty or if they are just running another business for profit (Kiva is not-for-profit, but this is not the case for many MFIs) I return to the question I first asked – is their goal to truly reach the poor and more importantly break the cycle of poverty? I think it is clear that these firms are far from genuinely trying to eradicate poverty.

I apologize if this is discouraging, but fighting poverty is going to take more than just throwing money at the problem from the comfort of our homes. You may be saying now, how can I fight poverty with the little time and resources I have? There are different answers to that question, but what is important is that we seek real solutions, not comfortable myths, to this global problem.

Please visit us at www.tgfworld.org and www.indiauntouched.com

The George Foundation Video

2007-03-23T13:23:00.000-05:00

A PICTURE IS WORTH A THOUSAND WORDS.

If you are having any trouble with the video or would like to see it in a larger format, copy and paste the link below:
http://video.google.com/videoplay?docid=-2963801976172275189&hl=en

Please visit us at www.tgfworld.org and www.indiauntouched.com

Is Government’s Data on Poverty in India Acceptable?

2007-02-22T12:53:00.000-05:00

Abraham M. George

The World Bank's definition of the poverty line for developing countries like India is US$1 per day/person or US $365 per year. According to the Indian government, poverty line is based on the cost of consuming certain number of calories in food intake -- for the urban areas it is Rs.296 per month and for rural areas it is Rs.276 per month. That works out to less than Rs.10 per day. Based on this measure, the government claims that less than 29 percent of the national population is poor.

It is hard to believe that anyone can live on Rs.10 per day ($0.22) and claim to be not poor. My personal observation of the population we serve in the 17 villages of Hosur Taluk in Tamil Nadu has convinced me that a great majority are indeed poor by any reasonable standard. Without arguing about at what income level poverty should be defined, our foundation decided to survey the four villages close to our projects at different income levels. This house-to-house survey by our social workers was conducted in January-February 2007. The results are as follows:

The above data shows that 83 percent of the population is below the World Bank’s definition for poverty at $1 per day. However, as per the government’s definition of poverty at $0.22 per day, less than 16 percent of the population is poor – a far better scenario than the national average of 29 percent. This significant difference can be explained by the fact that Tamil Nadu is a more prosperous state than most others. (Note that the four villages surveyed are only 40 km from Bangalore, the technology center of India, and 15 km from Hosur, one of the industrial cities in South India).

However, if 83 percent of the population in the same four Tamil Nadu villages is below $1 per day, it is very likely that a higher percentage of the nation’s population is poor by the same definition.

This blog does not attempt to define the income level at which poverty should be defined. The World Bank has set those levels at $1 and $2 respectively as per its narrow and broad definitions. Successive national governments in India have defined poverty very differently, and have achieved a lower level of poverty in India.

Please visit us at www.tgfworld.org and www.indiauntouched.com

Preserving India’s Ancient Culture and Tradition – whose job is it anyway?

2007-02-15T00:01:00.000-05:00

Blog dated February 15, 2007 by Abraham M. George

Following a recent visit to Shanti Bhavan (a residential school in Tamil Nadu for children from poor families) by a group of graduate students from a prestigious American university, an accompanying professor of Indian origin (I prefer to keep his identity anonymous, but let us call him Subramaniam) wrote me an email expressing his unhappiness with the school’s curriculum. His main complaint was that Shanti Bhavan is promoting Western values and culture, and ignoring India’s rich traditions as expressed in its ancient art, classical music, teachings of its religious/spiritual leaders, and traditions. He suggested that we teach our students “tabla, or sitar or sarod…... classical music ….. sing the songs set to music in Gitanjali by Tagore …. folk songs of harvest of love and joy … enjoy the music, the rhythm and the melody of dance that is in their neighborhood, than something that is sung or played thousands of miles away ….. let them know some aspects of the heritage of Indian language that is Sanskrit.”

While Subramaniam makes some valid points, many of his recommendations are based on incorrect assumptions about what we do at Shanti Bhavan. He admits that he did not have a chance to interact with the students or the staff during the two or three hours he spent at the school, and his comments were based on seeing the posters of western musical instruments in the arts room, and a conversation he had with one of our senior staff about our secular orientation. But he concluded his email by letting me know that “I cannot (financially) support your school as currently structured. The de-Indianisation of the entire project is an affront to any one who sees themselves not in isolation of a particular region or religion, but that their very body and mental make up represents everything from the time of the Indus civilization to what is India today.”

After struggling for over ten years to build a quality institution for children from some of the poorest families in India, founded on universally accepted values and secular principles, this lecture from someone who had visited us for a few scant hours and saw very little of our efforts was hard to take. However, I decided that I would reply politely, and clarify for his benefit what we actually do at Shanti Bhavan.

I wrote him back, explaining that “our children learn three Indian languages, sing in both classical and modern styles in those languages, and dance classical, spiritual and modern (Bharatanatyam dance as well as folk dances of Kerala, Punjab and Nagaland, among many others). Further, they constantly do projects on a variety of Indian topics and history. Students are introduced to the great works of Tagore and Vivekananda, and the epics Mahabharata and Ramayana. We celebrate every major Indian festival (no organized prayers, however), regardless of religion. As for the music room, many of the pictures/art-work on the wall might be of Western instruments as volunteers are usually from abroad and they bring posters. We do not have any music teacher of our own at this time (musicians living in the city are unwilling to travel to our remote village to teach music or dance for a few hours). However, our own academic teachers who know something of music train our children in Indian music and Indian dances (click on “Tour” on http://www.tgfworld.org/). In fact, our children are better versed in Indian music and dance than Western. Further, our children have a great deal of knowledge about our many national heroes. There is no attempt to downplay Indian achievements, just as there is no attempt to downplay any other nationality.”

I didn’t expect a response. I didn’t get one.

This isn’t the first time I have received such advice from a so-called “intellectual” concerned about preserving India’s culture and traditions. Over these past years since starting Shanti Bhavan, we were told by politicians to change the medium of instruction to the language of the community (Tamil or Telugu), and others in the Bangalore elite class have expressed their concern about our children losing touch with their communities and families. We have tried to explain that proficiency in English gives our children maximum opportunity in the global marketplace. As for their connection to their communities and families, we try to make our children understand (and they do) that there is nothing to be ashamed of in having been born poor (an accident of birth) and that they should respect everyone, rich or poor. In a wonderful way, our children quickly learn to adjust, living in two different worlds simultaneously, and aspire for professional success that would one day carry their families and communities out of poverty and social deprivation.

All this discourse brings up two important questions. First, with rapid economic prosperity in certain sectors of India, its beneficiaries are enjoying many of the comforts that were once available only in developed countries. The burgeoning middle and upper classes are best equipped to carry forward traditional (and better-known) Indian values and its heritage, and yet, they have taken up many Western values and practices and blended India’s ancient traditions and beliefs with modern ways. Is it now up to the rural poor to preserve the “purity” of India’s heritage? Why is the expectation placed on the rural poor to represent popular Indian culture, as if they are a living museum for India’s past?

Secondly, what Indian traditions and culture can we expect the rural poor, especially those from the dalit communities (previously called the “untouchables”) to preserve? The children of Shanti Bhavan come from the poorest and most socially deprived communities in South India. Their families live in tiny huts (most of them do not have running water, kitchen or bathroom) in the secluded section of the village where dalits are expected to remain. I have written extensively about their living conditions in my book, India Untouched: The Forgotten Face of Rural Poverty.

While dalits have been exerting their human rights in recent years, they still face, as they have for over two thousands years, oppression and social subjugation. For centuries (and even now), they were not allowed into temples where the upper castes went for worship. Their prayers are not the “bhajans, mantras and chants” sung by the Brahmins; their art is mostly the simple crafts practiced to earn a few rupees in the market. I do not know what the dalits from these poor rural communities do for their leisure, but I do know that they do not read Tagore, sing Karnatic music, or dance the Bharatanatyam dance. To them, these are the privileges of the upper castes and the elites, and at best, they might have a chance to see them performed by others in movies or television.

Shanti Bhavan children enjoy watching, singing and dancing to the mainstream classical music of India. But they also ask us to tell them about their history, how their forefathers survived oppression by the upper castes, their culture and traditions. They want to know about their own heritage just as African-Americans want to know about slavery. No one expects poor African-Americans in urban slums or American Indians in reservations
to preserve the culture and traditions of mainstream America, i.e., those of their European forbearers, no matter how great they are (symphonies by Beethoven or Mozart, or the Viennese Waltz, for instance); they must seek out their own roots. This knowledge of their past, however painful it may be, is part of understanding their own self and the present.

Let us not add insult to injury. We cannot ask the dalits of India to preserve India’s traditions and culture that are not their own. They want to be part of what is beautiful and good in India, and they must be allowed to do so in their own way.

India is the most heterogeneous nation on Earth; it represents hundreds of different languages, cultures, religions and beliefs; its history is varied and complex, often dependent on class and caste. There is no “one true India” to preserve; India’s greatness comes from its diversity.

I want the children of Shanti Bhavan to grow up with different experiences – both Indian and Western. I want them to appreciate ceremony and tradition if both are just and noble, regardless of where they originate from. It is the universality of their outlook that is important. We offer our children what we can within our limited resources, and let them decide for themselves what they want to embrace and enjoy.

Please Visit Us at http://www.tgfworld.org/ and http://www.indiauntouched.com/

Rural India Needs Corporate Investment

2006-12-29T19:48:00.000-05:00

In recent years, there has been considerable talk about poverty and how to deal with it. The idea being promoted by supporters of the UN Millennium Project is that underdeveloped nations can be saved through more outside assistance and by expanding existing programs that are run mostly by governments. The emphasis is still on more funding for programs that have been in existence for many years. But there is very little evidence that foreign assistance has made much difference in overcoming poverty in any country.

Poverty levels in India

Before we can think of devising new approaches to poverty alleviation, the true extent of the problem must be understood. The World Bank has introduced two measures for poverty levels: $1 and $2 per day per individual. Instead of adhering to world standards, The Indian government chose to define caloric intake and its corresponding cost as the measures by which poverty is to be defined. The government assumes that only Rs. 327 ($7.25) per month is needed for an individual living in the rural area to buy enough food to meet the required calories. This works out to less than Rs.11 ($0.25) per day per person. By this measure, the official estimate of poverty is 26 percent of the country’s population.

The real story is much worse. According to respected economists and statisticians in India, in the year 2000, the monthly income needed for a rural individual to consume the required calories in a day as per government standards is not Rs. 327 ($7.25) but Rs. 567 ($12.60). At this income level, which amounts to $0.42 per day, probably over 50 percent of the rural population is poor.

The George Foundation’s own survey of 17 villages in Hosur Taluk in Tamil Nadu shows that over 80 percent of the population has family incomes of less than $1 per person, and over 90 percent of less than $2 per person. If this is any indication of actual poverty in rural India, there are far more poor people in the country than what is presented in government statistics.

The dismal state of rural education and healthcare

There is no doubt about a close linkage between illiteracy and poverty. As Amartya Sen, the Nobel laureate in economics, points out, the capacity to read and write deeply influences one's quality of life.

Official data on literacy is collected from household surveys during national population census. These estimates are based on information that are frequently inaccurate, with the result of significant over-count of the truly literate.

To validate published official records, The George Foundation recently completed a house-to-house survey of several thousand people in 17 villages in Hosur Taluk, Tamil Nadu. Those surveyed were asked to read and respond to a simple question written in their local language: How old are you? Less than 15 percent of the people among the “lower” social classes or “dalits” were able to read the question, while barely 40 percent of the “upper” classes responded correctly; the overall count of literate people was below 25 percent. If this survey is representative of most villages, it is hard to believe the government's claim of 65 percent adult literacy in all of India (when over 700 million people live in the rural sector).

Besides the absence of proper education, poor people in India lack access to anything resembling quality healthcare. Inadequate infrastructure, too few physicians, absence of drugs, and lack of accountability have turned government-run primary health centers into ineffective institutions. More than half the children in India under the age of four suffer from malnutrition, 30 percent of the newborns are significantly underweight, and 60 percent of women are anemic.

Why rural income is low

Billions of dollars have been expended over the past half a century by governments, international agencies, and donors to address the problem of unemployment. For example, in rural India, government programs focus on subsidies (for electricity, fertilizer, and other), food rations, price support, land allocation/distribution, job training, and financial assistance for initiatives in agriculture and small businesses. But the direct beneficiaries of these programs are the corrupt officials who manage/distribute the funds, and the landlords and powerbrokers in the villages who have the ability to extract the benefits.

Over 90 percent of the agricultural land is owned and cultivated by less than 10 percent of the rural population. The poor are unable to use their land (if they have any) for agriculture for lack of water resources, poor soil conditions, and unavailability of credit. Hence, they do not stand to gain directly from any of the government programs.

A small number of people, mostly village officials/leaders and their family members operate the few small businesses in the villages. The great majority of the poor — some 60-70 percent of the rural population — are uneducated and serve as labor for landowners and the few nearby businesses, when their services are needed. Hopefully, if and when these landlords and small businesses prosper, the rural poor may also benefit from its trickle down effects.

Most poverty eradication programs run by NGOs and supported by the government and/or donor funds do not directly target the bulk of the rural population who are seasonal laborers. For example, contrary to the widely held belief, the beneficiaries of micro-credit (loans of $100 or so) are not the poorest among the population. The socially deprived labor class — over 60 percent of the village population – is not even targeted by these projects for obvious reasons: they simply do not have the ability to run a business or payback the loan. Yet, many make the claim that more than 95 percent of the people who receive micro-credit are really poor, and that practically all of them succeed in new entrepreneurial activities which enable them to meet interest obligations at 26 percent or higher and repay the principal.

Corruption, political influence on credit, land allocations and other related decisions, diffused focus and priority, poor execution, shortage of rural infrastructure, social inequality and a host of other factors remain as impediments to poverty reduction. These are ultimately the result of failed governance. It is unrealistic to assume that governments can be made to run projects efficiently and honestly.

The limited role of NGOs

NGOs have gained considerable attention in recent years as they focus on micro-issues and provide grass-roots assistance. Many have taken up projects to improve the quality of education and healthcare, while focusing on specific critical areas such as HIV/AIDS, illiteracy, and women’s empowerment. Several are involved in income generation activities, offering assistance in areas such as water resource management and use of indigenous technology. These efforts usually complement those of governments in the implementation process.

Despite their positive contributions, NGOs have not been involved in major developmental undertakings intended to create large employment and wide income generation through sustainable businesses. This is attributable to their lacking good managerial skills and organizational structure to take up business ventures. Consequently, the role that NGOs are best suited to play is in support of projects funded by governments and international agencies, or those limited initiatives approved by private donors.

The crucial role of the corporate sector

Government’s role ought to be that of a catalyst for private economic activity. There should be no room for bribes. When private individuals and institutions find it worthwhile to take risks and invest in economically depressed areas, there will be sustainable development and poverty reduction. As incomes rise, there will be less need for government involvement in the delivery of many services currently provided.

In most developing countries there is no serious effort to involve private companies, though most rural areas are, in fact, ideally suited for industries in herbal products, food processing, alternate fuels, cement and tile, lumber and pulp, meat, dairy and poultry. Investments in these can create large numbers of sustainable jobs. By offering employment opportunities in villages, they would mitigate labor migration to cities.

Financial incentives like low-interest loans and tax breaks, and physical infrastructure improvements will motivate private companies to build factories in rural areas. Elimination of controls on the sale of agricultural products, and assistance in finding new markets will attract many businesses. These measures will in turn improve the demand for produce and boost commodity prices to levels that can financially sustain rural families.

Even in the delivery of basic services, such as education and healthcare, lack of affordability on the part of the rural population should not prohibit private sector participation. Private institutions can deliver services at reduced prices, but at a profit, within a competitive and independently monitored system where costs are subsidized or even fully paid for by the government. Such partnerships can work in a cost-effective fashion only with arrangements for independent audit and arbitration by credible third parties.

A new approach to poverty reduction

International agencies and donors must consider equity participation in companies instead of simply channeling funds through governments or offering grants. They should provide loans at low interest rates directly to businesses that are prepared to invest in rural areas. Instead of trying to create entrepreneurs out of poor illiterate adults, the emphasis ought to be in generating sustaining jobs in large numbers.

As long as significant poverty exists around the world, and disparity between the rich and the poor widens, private companies in developing countries need to make a contribution to solving the problem. A dialogue must begin between and among business leaders on devising rules for business conduct in deprived communities. The model must consider how poor people can be brought into the mainstream of consumers with sufficient purchasing power within a reasonable time period.

Those who work must earn enough to be able to come out of poverty. Minimum wages and benefits must be adequate to meet at least basic human needs, and farmers must be able to sell their crops at prices that assure a fair net gain. Economic success and social justice must go hand in hand.

There is serious concern in many circles, and rightly so, about whether the private sector can be trusted to operate fairly in communities that are poor. The fear is that free markets mean exploitation, citing what they call the “Wal-Mart Syndrome” of forcing suppliers, especially those from poor countries, to offer products at prices that leave little gain for workers.

Troubling issues like this one will always exist. But they can be addressed through effective enforcement of laws and regulations concerning minimum wages, worker safety and benefits, non-competitive practices, and environmental protection.

Companies must recognize that it is in their long term interest to win the support of communities where they operate. Repressive local norms in compensation and treatment of labor must be replaced with fair practices that assist the poor in adequately caring for their families. Market forces of supply and demand and competition for gaining a dedicated labor force and loyal consumers are powerful factors in motivating good behavior on the part of corporations.

India’s rural population is increasing by over 13 million annually. Urban prosperity will not trickle down fast enough to reduce rural poverty. Government-run projects are not capable of adding 600 million sustainable jobs. NGOs can at best lower the misery faced by the poor, but not much more. Only the private sector can produce the kind of vibrant economic activity that will generate sufficient employment and higher income for the rural population.

Handouts will not solve poverty. The poor want jobs and not benevolence. A market-based approach to poverty reduction will result in income and wealth creation, and lay the groundwork for the next generation to avail of a wider range of opportunities with enhanced resources.

Please visit us at www.tgfworld.org & www.indiauntouched.com

Copyright © Abraham M. George, 2006

The Fight Against Poverty

2006-12-21T15:11:00.000-05:00

y the World Bank’s broad definition for poverty ($2.00 or less per day per person), there are more poor people in the world today than a quarter century ago. Nearly half the world’s population, over three billion people, lives in poverty. In India alone, two-thirds of its one billion plus population is poor. Yet, the strategy for alleviating poverty across practically every developing nation has remained essentially the same for the past several decades.

There is plenty of talk about ways to increase income, reduce illiteracy and ill-health, and empower women. The increased attention given to these issues and pledges of additional financial assistance by world leaders are not matched by new and effective national initiatives that can significantly reduce poverty. So far, none of the poor countries has been able to achieve any of its key developmental targets. The emphasis is still on more funding for programs that have been in existence for many years. Yet these programs have had only marginal effect, and have not kept up with population increases.

My personal experience on developmental projects is confined to India, but the broader lessons learned there are applicable to most developing countries. What follows explains what I consider are misconceptions in the current approaches, and how the attack on global poverty can be far more successful.

International development assistance hasn’t worked

The UN Millennium project argues that it is the poverty trap of poor health, poor education and poor infrastructure reinforcing each other rather than bad planning, corruption, and ineffective execution that is hindering development of poor countries. The idea is that underdeveloped nations can be saved through more outside assistance and by expanding existing programs that are run mostly by governments. Those who support this notion want the World Bank and other international agencies and donors to make increased contributions to supplement domestic government resources. But there is very little evidence that foreign assistance has made much difference in overcoming the poverty trap in any country2.

As a consequence of the financial assistance received from international agencies, national governments rely on strategies developed by planners at organizations such as the World Bank and the United Nations. There is no shortage of ideas, enthusiasm, and expectations at the planning level, but what is lacking is good execution.

Planners have no responsibility for ensuring that funded projects meet their goals in the field. Other than requiring periodic written reports and demonstration of individual cases where success has been prearranged, there is little feedback or accountability. Beneficiaries are not in a position to let their views be known, nor do they understand what is expected in the longer run.

Misuse of funds

Governments, international agencies, and donors have expended billions of dollars to address poverty. For example, in rural India, government spends significant funds on subsidies (for electricity, fertilizer, fuels, etc.), food rations, price supports, land allocation/distribution, job training, and financial assistance for initiatives in agriculture and small businesses. Loans from the World Bank and other international agencies and bilateral aid supplement domestic government resources. But who has benefited from all these programs and assistance?The beneficiaries are usually corrupt officials who manage and distribute funds, and landlords and powerbrokers who directly or indirectly extract benefits for themselves. In India, over 90 percent of the agricultural land is owned and partly cultivated by less than 10 percent of the rural population who are termed farmers; others are mostly laborers. Governments allocate land to the poor, but they are unable to utilize it because of limited water resources, or bad soil conditions, and/or inability to secure credit. Larger subsidies benefit bigger farmers, but the poor do not gain much directly from any government programs.The presumption that with more money, corrupt and inefficient governments and bureaucratic institutions will utilize funds efficiently and improve the deplorable conditions of the poor is an illusion. There are too many impediments to poverty reduction: bribery, political influence in the allocation of land and/or credit; diffused focus and priorities; poor execution; shortage of rural infrastructure; social inequality, among other factors. Supporters of the “more money” approach should be reminded of what the late Indian Prime Minister Rajiv Gandhi once admitted: less than 15 cents of each dollar in assistance intended for the poor finally gets to them3. That is not to say that assistance should not be increased. But the real focus should be on ensuring that the allocated resources reach the poor.

Corruption and misallocation of development funds are ultimately the result of failed governance. Why bad governance? Unethical and illegal practices flourish in countries without free and independent press to investigate wrongful practices. Where the press is not sufficiently strong, there is little chance of preventing the “opportunistic behavior” of individuals, businesses and officials. Corruption can be reduced by assuring press freedom and strengthening private social institutions (such as advocacy groups) that stay independent. (Surprisingly, a democracy like India does not permit private radio stations to broadcast daily news!)

If citizens cannot rely on an impartial judicial system, there is little hope for a just and fair society. Societies that do not protect property and person from predators cannot expect to create sufficient wealth for everyone. It is the erosion of press independence and the weakness of legal system that are most troubling.

The limited role of NGOs

There are several participants in the developmental arena: national and foreign governments, international agencies, private companies, and non-governmental organizations (NGOs). The role of NGOs has gained attention in recent years as they focus on micro-issues and provide grass-roots assistance. Many have taken up projects to improve the quality of education and healthcare, while focusing on specific critical areas such as HIV/AIDS, illiteracy, and women’s empowerment.

NGOs have been advocates for the poor, pointing out issues of concern and presenting ideas for improvement, often figuring out how to press through the corrupt and self-serving regulations faced by their beneficiaries. Several are involved in income generation activities, offering micro-credit or assisting with water resource management and use of indigenous technology. Some private companies have formed NGOs to attract grants from their governments and international agencies. These efforts usually complement those of governments in the implementation process.

Despite positive contributions, NGOs have not been involved in major developmental undertakings intended to create large employment and wide income generation through sustainable businesses. This is attributable to their lacking good managerial skills and organizational structure to take up business ventures. Further, donor funds are usually restricted to narrowly defined projects. Consequently, the role that NGOs are best suited to play is in support of projects funded by governments and international agencies, or those limited initiatives approved by private donors.

Unfortunately, those NGOs who actually carry out developmental work in the field are stuck within programs specified by planners in developmental agencies and donor institutions. New ideas that deviate from those already specified by planners seldom qualify for any funding. Thus project proposals are prepared to reflect the requirements set by these planners in terms of methodology and outcomes. There is little initiative from the ground up, and no real feedback. Demonstrating compliance on paper ends up more important than actually getting the job done effectively. As a result, recipients of developmental funds spend significant time preparing reports for the planners to qualify for continued funding, and less time worrying about what benefits the poor.

Micro-finance is not a panacea

The expression “social entrepreneurship” was coined to reflect corporate benevolence toward the poor. Mohamed Yunus who founded the Grameen Bank in Bangladesh in 1976 intended exactly that when he started giving poor people credit and assisting them in their local business ventures. Subsequently, many NGOs around the world started offering small loans to women who could otherwise not obtain credit from commercial banks. As different micro-credit programs sprung up in poor countries, governments, international agencies and private donors joined in with necessary capital. Several experts in these institutions termed micro-credit a revolutionary concept, and there is growing belief among many that it might be the way to solve poverty.

Today, some for-profit funds and supposedly not-for-profit organizations market micro-credit lending in developing countries, and even offer advertised returns on investment. One such micro-credit intermediary in India recently publicized that it has been charging 36 percent interest until recently when it dropped the rate to 26 percent for some borrowers by making the lending process more efficient4. After all, it argued, credit card companies charge as high as 28 percent interest for credit-risk customers.

The assumption is that poor people can be rescued quickly and easily with a modicum of money. (Micro-credit is intended mainly for starting or expanding small businesses run by borrowers.) The claim is that micro-credit (loans of around $100) has lifted tens of millions out of poverty in the developing world. Assertions that more than 90 percent of the people who receive micro-credit are poor5, that most of them succeed in businesses started with these loans, and that they repay the loans at 24 percent annual interest or higher, go unchallenged.

So far, there has not been any outcry on the high rate of interest. The poor do not have any voice in or understanding of financial markets. They are happy to get loans to meet personal emergencies (such as expenses toward surgery, marriage or dowry) or to pay off financial obligations to local money lenders who charge even higher rates. Micro-credit intermediaries claim that this is social entrepreneurship, and not living on the backs of the poor.

In my personal experience in rural India I have observed that a small number of people, mostly village leaders and their family members, operate the few shops and businesses. They are the only ones who have the support mechanisms, knowledge, and skills to make a business succeed. A great majority of the poor rural populations do not have the ability or experience to start or run businesses, with or without access to credit. To expect them to succeed in business is unrealistic. They are uneducated and labor for landowners and for the few nearby businesses. At best, they might benefit from the trickle down effect if landlords and small businesses prosper.

Our foundation6 has studied some 17 villages and over 50 micro-credit programs in South India. Data show that less than 5 percent of those receiving micro-loans start any business of their own. One preferred activity is buying and selling sheep, hopefully at a profit equal to the wages foregone. These types of activities are unsustainable in the long run. Consequently, less than 2 percent continue beyond the first three years, and very few succeed in any such “business” with small amounts of money and little or no support, training, or skills.

Micro-credit lenders are not concerned about what the borrowers do with their loans. Loans are usually made to individuals, but guaranteed by groups that can demonstrate their capacity to repay. Most borrowers of micro-credit repay loans from income received at regular jobs, or from grants provided by governments for self-help programs. Not surprisingly, it is the intermediaries – commercial banks and loan facilitators – that gain the most from the spread between the cost of funds for the intermediaries and the loan interest charged by them. Commercial banks in India, for example, receive funds for micro-credit programs from the government-run NABARD bank at 5-6 percent. They then lend at 10 to12 percent to a micro-credit intermediary which, in turn, lends at 24 to 36 percent to the final borrower.

The assurance of loan repayment makes micro-credit popular among lenders, in addition to the high interest charged. Borrowers are motivated to repay loans because of an expectation of future monetary benefits. If one borrows and repays twice (no need to start any business, but maintain good paperwork), then he/she becomes eligible for a grant for $100 or more from a separate government program (each state offers its own variation of this facility). The free money from the government can be used to repay the third micro-loan made to that beneficiary. The government is short the amount of the grant, but the borrower is debt free, and the micro-credit middle-man is assured of capital and high returns.

Why this round about way to offer free money when there are several direct means to reduce the debt burden of the poor? The answer probably lies in the fact that this form of “hand-out” is invisible within “social entrepreneurships”. Moreover, major financial institutions have become embroiled in this commercial activity. A new breed of educated and well-trained loan sharks, with bank support, is now in the micro-credit business in India. Micro-credit has become a trendy cure-all. If poverty alleviation were a matter of lending, the world could eradicate poverty easily. It would cost about $300 billion at $100 per person – a small sum in comparison to the trillions of dollars already expended over the past half a century. The present form of micro-credit, as practiced in India, results in little or no sustainable development benefit for the poor.

Importance of private sector participation

In developing countries the government bears the primary responsibility for delivering basic services for the poor. It has traditionally been the agent for healthcare, education and job training, especially due to the inability of rural populations to pay for basic services. A significant portion of the costs associated with public services will continue to be borne by the state until rural incomes rise and/or until the private sector finds it attractive to be involved in such efforts.

Government-run institutions have, for the most part, failed to offer quality services because they are unable to motivate those who carry out the tasks in the field. Those who can afford to pay for quality services rely on private providers. Even those who work for government go to private clinics for their healthcare needs, and send their children to private schools. Quality will never improve unless service providers have the incentive to serve the poor. Until then, the “haves” have markets to choose from, while the “have-nots” have bureaucrats to dictate to them.

But, lack of affordability should not prohibit private sector participation. With NGOs as project facilitators, opportunities exist for public-private partnership. Private institutions can deliver services at reduced prices, but at a profit, within a competitive and independently monitored system where the costs are subsidized or even fully paid for by the government. Such partnerships can work in a cost-effective fashion only with arrangements for independent audit and arbitration by credible third parties.

In developing countries there is no serious effort to involve private companies, though most rural areas are, in fact, ideally suited for industries in herbal products, alternate fuels, cement and tile, lumber and pulp, meat, dairy and poultry. These private industries should function in a free market with sufficient checks and balances to ensure that they operate in a socially and environmentally responsible manner. By offering job opportunities in villages, they would alleviate migration to cities for employment.

Financial incentives like low-interest loans and tax breaks, and physical infrastructure improvements will motivate private companies to build factories in rural areas. Elimination of controls on the sale of agricultural products, and assistance in finding new markets will attract many businesses. These measures will in turn improve the demand for produce and boost commodity prices to levels that can financially sustain rural families. Further, international agencies and donors must consider equity participation in companies instead of simply channeling funds through governments or offering grants. They should provide loans at low interest rates directly to local entrepreneurs who can demonstrate an ability to run successful businesses7. In short, some of the available developmental funds must be used to support commercial activities in deprived communities. With more economic activity, the poor labor class can gain employment at better wages8.

Government’s role ought to be that of a catalyst. There should be no room for bribes. The focus should be to provide incentives for private (and community) participation. When private individuals and institutions find it worthwhile to take risks and invest in economically depressed areas, there will be sustainable development and poverty reduction. As incomes rise, there will be less need for government involvement in the delivery of many services currently provided.

It is not money alone but integrity and ideas that will make the real difference. A noted economist once asked me how I would go about improving the productivity of rural laborers on our farms. Creative thinking was my thought! We have instituted a program of de-worming drugs every six months, and daily iron tablets and protein-rich nutritional supplements prepared from locally available grains and nuts. Our workers wear wide hats protecting them from direct sunlight. These are simple, low cost measures, but they have contributed to a healthier and more productive labor force on our farms. For less than $10 per person a year, we have doubled their productivity!

A new model for corporate philanthropy

Contrary to the recognized activities of NGOs, our foundation has embarked on a path similar to those of private organizations: we build institutions, develop human resources and managerial skills, and undertake major commercial projects – for humanitarian reasons. One project currently underway is a 250-acre banana farm, the second largest in South India. My life-long experience in business, my convictions about free and open markets and the need to encourage an entrepreneurial spirit in the individual have helped me not to rely on donor funds alone. Instead, our foundation has invested in sustainable projects that generate “profits” as well as steady income for the poor.

Our decision to confine business activities to farming results from the fact that the rural adult population in India is generally illiterate and lacks industrial skills. It is farming that gives them opportunities to better their lives; it is what villagers have a natural affinity for; and it is an industry where large numbers can be employed.

With the goal of empowering poor women and elevating their income-generating capacity,
The George Foundation set up Baldev Farms, a “learn while you earn” program. The farm uses precision agricultural tools, organic fertilizers and superior technology in drip irrigation to conserve water. Apart from the farm workers’ daily wages, we set a portion of the profits generated from the sale of produce in a savings account to be used at the end of 5 years for the purchase of one third to one half acre of land for each family. Families will then cultivate their newly purchased land, sharing resources, such as wells and tractors. The foundation will remain a support organization to help address concerns and difficulties, while also offering know-how and access to markets.

Within three years of starting Baldev Farms, more than 150 villagers, mostly women, have found labor and supervisory employment in the field; hundreds of others have benefited indirectly. Most have already come out of poverty, paid off their debt, and freed themselves from bonded labor status. As the foundation expands its farming activity in high-value fruits and vegetables, it will soon generate sufficient cash flow to finance other humanitarian initiatives.

Though the final chapter on this program is not yet written, the concept of offering each poor family a piece of the land to cultivate profitable crops is proving to be sound. With the profit sharing plan in place, everyone in our farm is highly motivated, takes initiatives and works hard. It is becoming increasingly clear to us that good management and a dedicated work force are assuring profitability to empower the poor.

Admittedly, our “corporate” approach to philanthropy cannot be replicated by most NGOs. Only private for-profit companies have skill bases and resources to undertake such business ventures. But they must recognize that market opportunities can be tapped only when the purchasing power of consumers rises. Hence, for the foreseeable future, investment in the rural sector ought to be toward production as opposed to selling to the “bottom of the pyramid.” In the longer run, it is competitive markets and involvement of the community in sustainable development projects that will solve poverty.

As long as significant poverty exists around the world, and the disparity between the rich and the poor widens, private companies in developing countries need to make a contribution to solving the problem. It is not corporate benevolence, but fair and socially responsible business practices that are expected. A dialogue must begin between and among business leaders on devising rules for business conduct in deprived communities. The model must consider how poor people can be brought into the mainstream of consumers with sufficient purchasing power within a reasonable time period. Those who work must earn enough to be able to come out of poverty. Minimum wages and benefits must be adequate to meet at least basic human needs, and farmers must be able to sell their crops at prices that assure a fair net gain. Economic success and social justice must go hand in hand.

There is serious concern in many circles, and rightly so, about whether the private sector can be trusted to operate fairly in communities that are poor. The fear is that free markets mean exploitation, citing what they call the “Wal-Mart Syndrome” of forcing suppliers, especially those from poor countries, to offer products at prices that leave little gain for workers.

Troubling issues like this one will always exist. But they can be addressed through effective enforcement of laws and regulations concerning minimum wages, worker safety and benefits, non-competitive practices, and environmental protection. Private companies must resist the temptation to extract government funds for their business activities in the name of social entrepreneurship. They must recognize that it is in their long term interest to win the support of the communities where they operate. Repressive local norms in compensation and treatment of labor must be replaced with fair practices that assist the poor in adequately caring for their families. Market forces of supply and demand and competition for gaining a dedicated labor force and loyal consumers are powerful factors in motivating good behavior on the part of corporations.

Concluding remarks

There are no easy answers. Poverty, in large part, can be solved if the poor gain new skills and if more jobs will become available in the rural sector. For some, the solution lies in ownership of a permanent income generating asset: land. The poor need to have the opportunity to own and develop land, and grow profitable crops that can be sold in a competitive market.

More money is not a prerequisite for success; proper use of available funds is. There is no substitute for good planning, effective organization, and execution with accountability. Only those who bear financial risk can be expected to perform effectively.

Handouts will not solve poverty; neither will it be solved by grand government projects, or by piecemeal interventions of NGOs. Instead, poverty will be solved with vibrant economic activity driven mostly by the private sector. The hundreds of millions of new jobs that are needed each year will come mainly from corporate business ventures in rural areas. The developmental strategy to address poverty must embrace this reality.

A market-based approach to poverty reduction will result in income and wealth creation, and lay the groundwork for the next generation to avail of a wider range of opportunities with enhanced resources.

*Abraham George is the founder of The George Foundation, an NGO engaged in humanitarian work in India, and the author of “India Untouched: The Forgotten Face of Rural Poverty,” (http://www.indiauntouched.com/).

1. Investing in Development, UN Millennium Projects Reports, September 2000, commissioned by the UN Secretary-General and sponsored by the United Nations Development Programme on behalf of the UN Development Group. The report is an independent publication.

2. Considerable evidence on whether foreign aid has been effective in reducing poverty in poor countries is provided in The White Man’s Burden, William Easterly, The Penguin Press, New York, 2006.

3. Unscrupulous politicians and bureaucrats in developing countries have perfected schemes for siphoning off funds allocated for poverty eradication in their national and state budgets. It is not uncommon that additional funds are assigned by governments for projects that have already failed, with the assertion that more money will solve the problems.

4. “Entrepreneur Gets Big Banks to Back Very Small Loans,” Wall Street Journal, May 15, 2006.

5. The question on who are the beneficiaries is answered by a recent study of one of the largest micro-finance intermediary in India that has shown that most borrowers use the funds to finance the purchase of a new motorbike, pay the family doctor, and/or to meet other needs that are way above what poor people can afford. Tyler Cowen, “Micro-loans May Work, but There Is Dispute in India Over Who Will Make Them”, New York Times, August 13, 2006.

6. The George Foundation is engaged in several poverty alleviation projects in rural Tamil Nadu, India, focusing on income generation activities, education, healthcare, and community development (see http://www.tgfworld.org/).

7. Examples of equity participation in and loans to small businesses to promote development can be seen in projects funded by the International Finance Corporation (an agency of the World Bank) and Acumen Funds. However, currently such allocations of funds by international agencies and donors are very limited.

8. The argument that villagers can lift themselves out of poverty much faster by getting a job in a successful business enterprise, instead of trying to start businesses of their own, is beginning to gain some attention. “Shopping for a Nobel,” op-ed, New York Times, New York, October 17, 2006.

Copyright © October 2006, Abraham M. George

Please visit us at www.tgfworld.org and www.indiauntouched.com

Social Entrepreneurship as Poverty Solution

2006-12-21T15:06:00.000-05:00

Laxmama lives alone with her three children in the tiny village of Sidhanalli in the southern Indian state of Tamil Nadu, and just recently she was faced with a personal family crisis. Her 17-year old unmarried daughter underwent a botched partial abortion in the hands of a village “doctor.” Bleeding profusely, Laxmama took her daughter to a nearby private hospital where the physician reluctantly agreed to complete the abortion for a discounted charge of Rs. 4,000 (nearly $100). With little savings of her own, Laxmama turned to her local money-lender who immediately advanced her the funds at terms acceptable to her – Rs. 200 in interest and Rs. 200 in principal each month over 20 months. The loan was arranged in less than two hours, confirming the terms with her thumb impression on a two line promissory note. The surgery went off well, and her daughter has recovered since then.

The high interest charged by her money-lender would result in Laxmama repaying double the amount of the loan, but she feels that no one else would have provided the funds in such a short time to save her daughter’s life. She doesn’t know about today’s so-called social entrepreneurs who might have been willing to advance her a micro-loan at a relatively much lower interest rate. Even if she had known, she couldn’t have waited to go through the loan approval process.

Micro-credit is touted often these days as one good example of “social entrepreneurship,” especially since Dr. Yunus received the Nobel Prize last month. Yet there has been very little effort to define and distinguish it in practical terms. The assumption is that social entrepreneurship is “business for benevolence.” Some associate it with doing business in a deprived area, especially in a rural environment. Just as business entrepreneurs create and transform whole industries, social entrepreneurs are presumed to apply entrepreneurial principles and act as agents of change for society, seizing opportunities to advance sustainable solutions that create social value.

The question then is whether all entrepreneurial activities involving the poor can be termed social entrepreneurship.

The term "social activist" has been in existence without much ambiguity for quite a long time. Anyone who is engaged in bringing about social change is deemed to be a social activist. Many organizations are engaged in advocacy for causes such as fair labor laws and practices, women and minority rights, environmental protection, and others. Some of these organizations, for example, offer consultancy services to other institutions in ensuring compliance with regulatory requirements. None of these businesses are considered social entrepreneurs, even though their work might lead to social good. What makes them any different from today's self-proclaimed social entrepreneurs?

An entrepreneur is one who usually takes on personal financial risk to create value, with the expectation of generating profit; the real test for an entrepreneur is its success in mobilizing resources or generating income. Social entrepreneurship is more about creating social value from proper/innovative allocation and application of available resources than about conducting any business. But as it is understood today, social entrepreneurship implies some sort of business-like activity (preferably sustainable and self-supporting) that benefits the poor. The real distinction between entrepreneurship and social entrepreneurship is the main intent and purpose. A business or business-like activity that is intended mainly (or solely) for social good is social entrepreneurship. He/she is expected to run the entrepreneurial activity in a sustaining way, and preferably at a profit, so that he/she may be able expand the work and do more good for the poor. For the sake of clarity, let us examine a few cases.

No one doubts that Wal-Mart is a successful business, generating considerable profit for its shareholders. It is also one of the world's largest private employers, providing jobs to people from every segment of the society. Its purchase of innumerable products for subsequent sale is instrumental for the success of thousands of supplier firms. These suppliers/manufacturers employ millions of people, many of whom might have been previously unemployed or living in deprived areas around the world. Does the fact that Wal-Mart's entrepreneurial activities benefit many poor people qualify it to be called a social entrepreneur?

Let us take the case of a non-governmental organization running a rural hospital and carrying out several innovative outreach programs. It charges a small fee for its services, while most expenses are met by donor funds. This NGO is engaged solely in socially beneficial activities by conducting a "business" that is consistent with the financial ability of its customers. Does it qualify as a social entrepreneur?

Many people associate micro-finance activity to social entrepreneurship. There is no doubt that the borrowers of micro-credit are better off even at 36 percent annual rate of interest than being obliged to local money-lenders who might charge over 100 percent interest. But the lenders, usually called micro-finance institutions (MFIs), are seldom concerned about how the funds are used by their borrowers; their sole aim is to collect both interest and principal on the loans as per their lending terms. This form of credit is usually a profitable business for a variety of reasons that have little to do with any entrepreneurial activity among the borrowers. Does the fact that the borrower is able to obtain loans at interest rates lower than what a money-lender would charge qualify the lending organization as a social entrepreneur?

In my opinion, none of these cases fall within the true meaning of social entrepreneurship. As for Wal-Mart, it is engaged in a business activity to maximize profits for its shareholders, and not necessarily to benefit the poor. In fact, many accuse Wal-Mart of "squeezing" its suppliers who in turn might exploit their workers to keep costs low. Even though the consequential result of its business activity is job creation for many poor people who might not otherwise have comparable employment, the intent and purpose is not social good.

The NGO that conducts a quasi-business activity is certainly involved in doing social good. But it is not an entrepreneur that takes financial risk of its own and carries out a self-supporting activity. When donor funds dry up, its human services might also stop.

Despite the life-saving help, no one will argue that Laxmama’s money-lender is a social entrepreneur. However, the fact that MFIs charge interest at relatively lower rates than money-lenders does not necessarily qualify them as social entrepreneurs either. MFIs exist to make profits for their owners, and are least concerned about whether borrowers use the funds for worthwhile purposes.

Unlike local money-lenders who offer credit for the specific needs of borrowers (such as crop loans given prior to planting seeds and repaid after harvest, and loans to cover expenses toward medical emergencies like surgery), MFIs do not earmark their loans. Many borrowers utilize the loan to pay dowry for their daughters, cover expenses for festivals, and for other reasons that have little to do with income generation. The absence of any direct involvement on the part of MFIs to help the poor use the loans properly, and the mechanisms through which its financial risk is offset by government grants and obligations of groups (instead of the borrower alone) make this form of lending simply a commercial activity. In any other section of the society, their collection practices might be questionable, both legally and ethically. While MFIs also add value to their customers (in this case, for the relatively poor people), their primary intent and activities are not necessarily aimed at doing social good.

Everyone who does business in a rural or deprived area is not a social entrepreneur. In fact, many businesses are springing up these days with the financial support of governments to sell products to the "bottom of the pyramid". These forms of business activities are far from social entrepreneurships.

So, who is then a social entrepreneur? It is hard to find many individuals or institutions that meet the true test. Those who take on financial risk by engaging in a business or business-like activity designed mainly to benefit the poor are certainly social entrepreneurs. Hopefully, the entrepreneur who fits this definition is able to generate enough income to at least cover the expenses so that the business is sustainable.

What we really need are every day entrepreneurs who are prepared to invest in rural and other deprived communities. They would generate employment and income for many poor people. Only through vibrant business activity can the needed 2 to 3 billion new jobs be added in developing countries.

Businesses who conduct themselves in a socially and environmentally correct manner (by paying fair wages, ensuring worker safety, and adhering to environmental standards) are meeting their community responsibilities. Instead of searching for social entrepreneurs, it is time to raise the bar for our expectations of anyone who does business, especially in the rural sector.

Abraham George is the founder of The George Foundation (www.tgfworld.org), an NGO engaged in humanitarian work in India, and the author of “India Untouched: The Forgotten Face of Rural Poverty.

Please visit us at www.tgfworld.org and www.indiauntouched.com

Poverty Alleviation Strategy:Three Fundamental Flaws

2006-12-21T15:03:00.000-05:00

According to the World Bank, by the broader international definition of poverty ($2.00 or less per day per person), there are more poor people in the world today than there were a quarter century ago. Yet, during the same period, the strategy for alleviating poverty across practically every developing nation has remained essentially the same.

The assumptions that underlie the present approach to combating poverty are flawed on at least three counts. First, there is the idea that underdeveloped nations can be saved through more outside assistance and by expanding existing programs that are run mostly by governments. Accordingly, those who support this notion want the World Bank and other international agencies and donors to make increased contributions to supplement domestic government resources.

The presumption is that with more money, corrupt and inefficient governments and bureaucratic institutions will somehow deliver the goods. Supporters of this “more money” approach should be reminded of what the late Indian Prime Minister Rajiv Gandhi once admitted: less than 15 cents of each dollar in assistance intended for the poor finally gets to the beneficiaries.

Corruption, political influence on credit, land allocations and other related decisions, diffused focus and priority, poor execution, shortage of rural infrastructure, social inequality and a host of other factors remain as impediments to poverty reduction. Sure, more money – even if it is only 15 cents on the dollar -- would help. But what is far more important is the national will to tackle these and other obstacles.

The second erroneous assumption is that governments are the best agents for delivering basic services, such as health care, education and job training, especially in rural areas (which is where the majority of the population in most developing nations lives). This misconception has arisen due to the inability of rural populations to pay for basic services. Until rural incomes rise, a significant portion of the costs associated with public services must be borne by the state. The private sector, on the other hand, has not yet found it financially attractive to be directly involved in such efforts.

But lack of affordability alone should not prohibit private sector participation. Opportunities exist for public-private partnership; private institutions could deliver services at reduced prices, still at a profit, within a competitive and independently monitored system. This would require that the costs be subsidized or even fully paid for by the government.

In most developing countries, poverty-eradication programs are also mainly government funded and managed initiatives. In rural areas, they take the form of land allocations, as well as subsidies and grants to farmers. But there is no serious effort to involve private companies; the rural sector is generally viewed as the bread basket for the country, with employment confined to farming and cheap labor for urban businesses.

Most rural areas are, in fact, ideally suited for industries such as herbal products, cement and tile, lumber and pulp, meat, dairy and poultry. Financial incentives, in the form of low-interest loans and tax breaks, and infrastructure improvements, can motivate private companies to build factories in rural areas. These businesses could offer job opportunities for people in villages who would otherwise migrate to cities for employment.

Government-run programs and handouts will not solve poverty. The government’s role ought to be that of a catalyst, rather than an implementer or manager of change. Only when private individuals and institutions find it worthwhile to take risks and invest in economically depressed areas will there be sustainable development and poverty reduction.

The third incorrect assumption is that every poor person can be rescued from poverty fairly quickly and easily with a modicum of money. For example, many make the claim that the micro-credit facility (loans of around $100 to each impoverished person) has elevated tens of millions of people out of poverty in the developing world. Moreover, assertions that more than 90 percent of the people who receive micro-credit are genuinely poor, that most of them succeed in businesses started with these loans, and that they repay the loans at 15 percent annual interest or higher, go essentially unchallenged.

In my social work in rural South India, I have witnessed how micro-credit can help reduce the debt burden faced by the poor at the hands of money lenders who charge exorbitant interest rates. But only a few among the poor can expect to succeed as entrepreneurs with such small amounts of money and with little other support, training, or skills.

The truth is that most beneficiaries of micro-credit repay the loan from income received from their regular jobs and from grants provided by governments for self-help programs. Not surprisingly, it is the intermediaries – commercial banks and loan facilitators – that stand to gain the most from the spread between the cost of funds and loan interest rates.

There are no easy answers. For the most part, poverty will be solved when the poor gain new skills and when more jobs become available in the rural sector. For many, the real solution lies in the ownership and use of a permanent income generating asset: land. The poor must be given the opportunity to own and develop land, and to grow profitable crops that can be sold in a competitive market. This will lay the groundwork for the next generation which, through enhanced resources and better education, will have access to a wider range of opportunities.

Please visit us at http://www.tgfworld.org/ and http://www.indiauntouched.com/

Children's Loss of Global Proportions

2006-12-21T14:58:00.000-05:00

Almost one year ago (December 23, 2005) we tried to clear customs at Chennai port for a container full of donated items I had collected from my neighbors and the community for the children of Shanti Bhavan school. One of the items was one dozen small Globes donated by a crippled young lady I have known for years, and who is always thinking of our children at the school.

Well, the customs officer confiscated the Globe, saying that it doesn’t clearly show Indian and Pakistan controlled Kashmir. Well, India itself is hardly 2 inches in size on this small children’s educational globe my friend had purchased from a local school supply shop. There isn’t much space for such details, and after all, this is not about geo-politics. The officer tells us that he has been instructed to check all maps and globes shipped from abroad!

Are we a paranoid nation that doesn’t trust our own people’s judgment? To what extend do we go in such matters?

By the way, the items for which customs duty is charged include used children’s bikes, used classroom chairs, rejected paint in cans (when paint shops make mistakes when adding color, and customers reject), etc.

There is no use explaining that these used/donated items are for children from among the poorest families in the world. I guess the government (current and all past) has good reasons for these regressive policies. There are many crooks among us!

Further, we are a proud nation now to receive donations. Why can’t you buy them in India?

Please visit us at www.tgfworld.org and www.indiauntouched.com

Indian Media in Transition

2006-12-21T14:52:00.000-05:00

On December 13, as I was listening at my New Jersey home in the U.S. to an NPR (National Public Radio) program on investigative journalism in India, I could not help thinking about the motivation behind my decision nearly six years ago to enter the field of journalism, a decision that led to the creation of the Indian Institute of Journalism & New Media in Bangalore. It was during the Kargil war in May 1999 that I had come to the inevitable conclusion about India’s democratic system. I was dismayed by the absence of honest reporting on the mistakes made by our politicians, the hasty and costly strategies undertaken by our military commanders, and the undercount of our casualties. Indian reporters failed to pursue anything resembling investigative and independent journalism, and the media was generally prepared to go along with the government’s view of things.

Coupled with my frustration with the widespread corruption in both the government and private sector and the cynicism on the part of almost everyone towards the possibility of any positive change, I had felt then, as I do today, that a free and independent media in India is the country’s best hope. Until the Indian media is prepared to uncover and report on the corruption and misuse of power by politicians, government officials, and private companies, the country will not be able to achieve its full developmental potential in an equal and fair society. Without transparency in governance, it would be difficult, if not impossible, to formulate sound policies.

Listening to the NPR segment today on India, I feel somewhat vindicated. IIJNM was founded with one ideal in mind – to improve the quality of the Indian press. It was my conviction then, as it is today, that it is our journalism students – the idealists among us -- who will bring about the necessary change that the country is longing for -- an open and far less corrupt system.

Today, television media has more or less taken the lead. Among the most popular programs in India, as I understand, are those reporting on corruption and misdeeds of politicians and government officials. “Candid camera,” as it is called here in the US, has taken hold in India. It reports with hidden camera the many true stories of the day -- the bribe that the police inspector extracts from the victim of a crime before agreeing to investigate, the “fee” that the government officer charges for his giving the order to make an electric connection, and the “contribution” that a company pays a member of the parliament before bringing up a legislative concern in the Lok Sabha. These stories are now part of the family entertainment offered by many TV stations, and believe it or not, those in power are a lot more careful today.

As many new TV channels enter the market, there is even greater competition for viewers. These stations will have to offer something better and more informative than the ordinary. With foreign media joining forces with Indian operators, these stations have the financial backing to produce better programs. Sure, there will be some weeds, but overall the flowers will brighten up the garden. The nation will benefit immensely.

Unfortunately, the print media, especially the daily newspapers, are still monopolized by a few proprietors. Foreign media is not allowed to have more than 26% of the total ownership. Consequently, many papers do not have the financial strength to take on today’s major players in the market. When this last bastion of power in the media is removed from the few proprietors, we can expect vigorous competition in search of truth. The power of the pen shall prevail. Neither the politician nor the judiciary will be able to deny the people’s right to information – the truth about ourselves and our rulers.

The author is the Dean of the Indian Institute of Journalism & New media, Bangalore (www.iijnm.org), and the author of “India Untouched: The forgotten face of rural poverty.”

Please visit us at www.tgfworld.org and www.indiauntouched.com

Rural Poverty on the Rise

2006-12-21T14:45:00.000-05:00

Of the 6 billion people presently living on our plant, over 60% or 3.5-4 billion are in rural areas. In India alone, nearly 700 million people live in the villages. The rural population is increasing at a faster pace than their urban counterpart, mostly as a result of illiteracy, lack of access to birth control measures, and poverty. The pace of overall development in most countries does not keep up with the needs of this increasing population. The result is that there are more poor people in the world today than 50 years ago, and most live in rural areas.

According to the U.N. and the World Bank, nearly 35% of the world population subsists on less than $1 in daily income. Over 50% live under $2 per day. Depending on which of these two yardsticks is used for measuring poverty, there are 2-3 billion poor people in the world – a staggering number by any account. Poverty in India closely reflects these world statistics.

Billions of dollars have been expended over the past half a century by governments, international agencies, and donors to address the problem of poverty. For example, in rural India, government programs focus on subsidies (for electricity, fertilizer, and so on), food rations, price support, land allocation/distribution, job training, and financial assistance for initiatives in agriculture and small business. Loans from the World Bank and other international agencies, bilateral assistance, and donor funds supplement domestic government resources. But who has really benefited from all these programs and assistance?

In a country like India, the direct beneficiaries of these programs are the corrupt officials who manage/distribute the funds, and the landlords and powerbrokers in the villages who have the ability to extract the benefits. Over 90% of the agricultural land is owned and cultivated by less than 5% of the rural population. In most villages, almost all the cultivable land is owned by a handful of people, and the remaining land is owned by the government and by the poor. The poor are unable to use their land for agriculture for lack of water resources, poor soil conditions, and unavailability of credit. Hence, they do not stand to gain directly from any of the government programs.

A small number of people, mostly the village officials/leaders and their family members, operate the few small businesses in the villages. They are the only ones in the village who have the necessary support mechanism, knowledge, and skills to make a business succeed. The great majority of the poor – some 60-70% of the rural population – do not have the ability to start or own businesses. They are uneducated and serve as labor for landowners and the few nearby businesses nearby, when their services are needed. Hopefully, if and when these landlords and small businesses prosper, the rural poor may also benefit from its trickle down effects.

Most poverty eradication programs run by NGOs and supported by the government and/or donor funds do not target the poorest and socially deprived segment of the society. For example, contrary to the widely held belief, the beneficiaries of micro-credit (loans of $100 or so to each entrepreneur) are not those at the bottom of the society. Most of those who are assisted by micro-credit use the funds to pay off exorbitantly high interest loans from money-lenders and for personal needs. Only a small segment of the recipients start any entrepreneurial activities.

Similarly, many of the projects funded by private donors do not directly impact the rural poor. This is not to say that these projects are worthless or ineffective. For example, assistance in channeling river/canal water for irrigation, rain water harvesting, preparation of compost and bio-gas, and similar initiatives help a small number of landowners and businesses to improve their productivity. But those in the poor labor class can only hope that they will somehow benefit when the landlords succeed.

There is no doubt that better rural infrastructure, elimination of controls on the sale of agricultural produce, and assistance in finding new markets will attract many businesses to the rural sector and help create new employment opportunities. These measures will also improve the demand for produce and help farmers enjoy higher prices. With more economic activity, the poor labor class might gain employment at better wages. But none of these actions will be sufficient (or happen fast enough) to alleviate poverty.

There are no easy answers. The real solution lies in the ownership and use of a permanent income generating asset by the poor: land. The poor people must be given the opportunity to own and develop land and gain the skills and capabilities necessary for cultivating high-value crops. They must learn modern farming techniques, and to package and market their produce. Handouts won’t do either; training and handholding will. Imagine a country like India’s export potential for agricultural produce, processed and packaged properly, for world markets!

Please visit us at www.indiauntouched.com and www.tgfworld.org

A Dollar a Day Doesn't Keep Hunger Away

2006-12-21T14:13:00.000-05:00

There is plenty of confusion about how the poverty level should be defined so that the percentage of people who are poor can be determined. The World Bank has introduced two measures: $1 and $2 per day per individual (though these are based on some earlier year’s purchasing power parity). By these definitions, 35 percent of the world population lives on less than $1 per day, and more than 50 percent on less than $2 per day. While these poverty definitions have been suggested by international agencies, they do not correspond with the definitions that individual governments might follow.

For example, at the higher end, the U.S. Census Bureau has set the poverty line for an individual at $9,500 per annum (which works out to $26 per day). For a family of four (with children below 16 years of age), the poverty line is set at $18,800 or $51 per day. At the other end of the spectrum, the Indian government chose to define caloric intake and its corresponding cost as the measures by which poverty is to be defined. It has adopted the ICMR (Indian Council of Medical Research) specification of 2,400 K-calories per day for an individual living in rural area, and 2,100 K-calories for an urban individual.

The problem with the Indian government’s approach is in the determination of the income needed to purchase food. The government assumes that only Rs. 327 ($7.25) per month is needed for an individual living in the rural area to buy enough food to meet the required calories. This works out to less than Rs.11 ($0.25) per day per person. (Note that the Indian official poverty level is only one-quarter of the World Banks’ lower standard of $1 per day.)

Anxious to prove that the economic liberalization measures that have been introduced since 1991 have produced good results, India’s Planning Commission estimated that only 18 percent of the population was poor in 1999. Faced with challenges and ridicule from the international community about the accuracy of this figure, the Indian government arbitrarily increased its estimate to 35 percent. It is not very clear how the discrepancy between the two figures was reconciled. Official estimates of this kind only undermine the public’s confidence in government’s pronouncements, as they reflect an effort to hide bad news from the world.

The real story is even worse. According to respected economists and statisticians in India, in the year 2000, the monthly income needed for a rural individual to consume 2,400 K-calories per day is not Rs. 327 ($7.25) but Rs. 567 ($12.60). At this income level, which amounts to $0.42 or less per day, nearly 75 percent of the rural population is poor. One can only imagine what percentage of the rural population is below the World Bank’s broader definition of $2 per day: probably more than 75 percent.

I can speak from my own experience of working with the people in the 17 villages around Baliganapalli in Tamil Nadu, a relatively prosperous state in India. We recently completed a house-to-house survey of the entire population in these villages. It shows that nearly 90 percent of the families (counted as at least 4 members on the average) earn less than Rs. 100 ($2.20) per day, or Rs. 25 ($0.55) per individual per day.

By any reasonable measures, at least 75 percent of India’s rural population is poor. Moreover, none of the poverty definitions take into account the cost of adequate housing, clothing, education, healthcare, and entertainment. Though some of these are provided for free by the government, the quality of life in rural areas remains deplorable. We need to offer definitions of poverty that are honest, reflecting the cost of adequate food intake and other basic necessities of life.

Visit us at www.indiauntouched.com and www.tgfworld.org

Literacy Programs Are Not Helping the Poor

2006-12-21T14:01:00.000-05:00

Policy makers around the world have decided that literacy is what the poor need. That's simply doing a disservice to them. Literacy hasn't brought any real benefit or change in the lives of the social underclass.

There is no doubt about a close linkage between illiteracy and poverty. Illiterate people find it difficult to get out of poverty. Without being sufficiently literate, one can't fully enjoy social or cultural life. As Amartya Sen, the Nobel laureate in economics, points out, the capacity to read and write deeply influences one's quality of life.The trouble is that while societies increasingly emphasize information, knowledge and communication as essential ingredients of education, poor people are offered a much lower standard to achieve. A person is considered literate if he can read, write and understand a simple sentence relating to his everyday life. Using this definition, there are still nearly 1 billion adults who are illiterate, according to the United Nations. In addition, more than 100 million children don't attend primary schools today.Even among the so-called literate, especially the poor, there are those who have attended only a few primary grades in rural schools that offer little by way of education.

Data on literacy is usually collected from household surveys during a national population census. There are problems with such surveys, because the very poor are proud to label themselves as literate even if they have had a grade or two of schooling. And those doing the surveys are just as eager to count the respondents as literate to please government officials who want to publicize any progress. The net result is a significant overcount of the truly literate.

To validate published official records, The George Foundation (a nongovernmental organization carrying out poverty eradication programs in the rural areas of Tamil Nadu state in India - visit www.tgfworld.org) recently completed a house-to-house survey of several thousand people in 17 villages. Those surveyed were asked to read and respond to a simple question written in their local language: How old are you? Less than 15 percent of the people among the "lower'' social class or "dalits'' were able to read the question, while barely 40 percent of the "upper'' classes responded correctly. If this survey is any indication of actual rural literacy, it is hard to believe the government's claim of 65 percent adult literacy in all of India, when 700 million people live in the rural sector.

To make matters worse, even senior officials in government and international agencies often make wild claims about the progress being made in the fight against illiteracy.For example, UN Secretary General Kofi Annan, in his address at the launch of the UN Literacy Decade in February 2003, pointed out that as a result of concerted effort wherein women teachers traveled on bicycles to remote areas, an entire district in Tamil Nadu (usually consisting of 2 million or more people) "was declared fully literate.'' The fact is that only one small district claims to have close to 90 percent literacy rate, while the overall literacy rate for the entire state is below 75 percent.

A UN General Assembly resolution adopted in 2003 on the ``International Plan of Action for the Decade'' called for policy changes at national levels to link literacy promotion with strategies for poverty reduction, health care and other important social goals. It also emphasized the need for flexible programs, capacity building, research, community participation and monitoring. While all these are essential ingredients for success in the fight against illiteracy, it isn't clear how the new policy will be implemented.

The starting point for any realistic program is a clear understanding of the present state of affairs. With nearly two- thirds of the people in the world living in rural areas, it is rural schools that are most important in the literacy effort. Unfortunately, most rural schools in practically every developing country are of substandard quality.

Quality education is hardly ever associated with the poor; it is only for those who can afford it. Bright, motivated children are lost by their early years of schooling in an unchallenging environment. Yet they will be the literate adults of tomorrow.In a country like India, most rural schools are government- run, and only a few offer anything resembling quality education. On any given day, many primary schools are short teachers, and students from a couple of grades are combined into a single room for classes. Most teachers aren't properly trained and have very little motivation or commitment to the profession. Illiterate families in rural communities aren't involved in the education of their children, and only a minority of parents send their children to middle school. The education children receive in rural primary schools hardly prepares them for further study, employment, or effective community participation. Yet, they are classified as literate.

To compound the problems caused by a scarcity of good teachers, there are many other difficulties to overcome.Children from poor families go to school hungry; a majority of them suffer from malnutrition. A significant number are regularly sick. They don't receive periodic vision or hearing checkups. Many schools don't have toilets that offer sufficient privacy, discouraging girls from attending classes for the entire day. Most classrooms are unventilated and overcrowded, roofs leak on rainy days, books and paper are in short supply, and blackboards are nonexistent or worn out.

It is hard to see how even a good teacher can be motivated under these circumstances. Every rural school can perform well if it has committed teachers and at least the minimum in facilities. For quality education, the investment priority should be for trained teachers, not in pushing expensive high-tech tools on rural institutions in the name of bridging the "digital divide.''

All the gadgetry in the world can't equal the impact that a skilled and dedicated teacher has on a child, even in the most rural setting. Until the policy focus turns to attracting college graduates to the teaching and to rural government schools, we can't expect a real improvement in children's education.

Significant reduction in illiteracy, as currently defined, may be possible within the next decade or two. But the real question to be answered is this: Is literacy an adequate goal for the poor?The goal should be to ensure that all children receive a good education -- from grade school until high school -- in a motivating environment. Without proper education, as opposed to literacy, today's children may not have a future in an increasingly competitive global market.

Visit us at www.indiauntouched.com and www.tgfworld.org

Land Equation: Breaking the Cycle of Poverty

2006-12-21T13:59:00.000-05:00

Of the 6 billion people presently living on our plant, over 60 percent or 3.5 to 4 billion are in rural areas. In India alone, nearly 700 million people live in the villages. The rural population is increasing at a faster pace than their urban counterpart, mostly as a result of illiteracy, lack of access to birth control measures, and poverty. The pace of overall development in most countries does not keep up with the needs of this increasing population. The result is that there are more poor people in the world today than 50 years ago, and most live in rural areas.

According to the U.N. and the World Bank, nearly 35 percent of the world population subsists on less than $1 in daily income. Over 50 percent live under $2 per day. Depending on which of these two yardsticks is used for measuring poverty, there are 2 to 3 billion poor people in the world — a staggering number by any account. Poverty in India closely reflects these world statistics.

Billions of dollars have been expended over the past half a century by governments, international agencies, and donors to address the problem of poverty. For example, in rural India, government programs focus on subsidies (for electricity, fertilizer, and so on), food rations, price support, land allocation/distribution, job training, and financial assistance for initiatives in agriculture and small business. Loans from the World Bank and other international agencies, bilateral assistance, and donor funds supplement domestic government resources. But who has really benefited from all these programs and assistance?

In a country like India, the direct beneficiaries of these programs are the corrupt officials who manage/distribute the funds, and the landlords and powerbrokers in the villages who have the ability to extract the benefits. Over 90 percent of the agricultural land is owned and cultivated by less than 5 percent of the rural population. In most villages, almost all the cultivable land is owned by a handful of people, and the remaining land is owned by the government and by the poor. The poor are unable to use their land for agriculture for lack of water resources, poor soil conditions, and unavailability of credit. Hence, they do not stand to gain directly from any of the government programs.

A small number of people, mostly the village officials/leaders and their family members, operate the few small businesses in the villages. They are the only ones in the village who have the necessary support mechanism, knowledge, and skills to make a business succeed. The great majority of the poor — some 60-70 percent of the rural population — do not have the ability to start or own businesses. They are uneducated and serve as labor for landowners and the few nearby businesses, when their services are needed. Hopefully, if and when these landlords and small businesses prosper, the rural poor may also benefit from its trickle down effects.

Most poverty eradication programs run by NGOs and supported by the government and/or donor funds do not directly target the rural poor. For example, contrary to the widely held belief, the beneficiaries of micro-credit (loans of $100 or so to each entrepreneur) are not the poorest among the population. The rural poor — over 50 percent of the village population – are not even targeted by these projects for obvious reasons: they simply do not have the ability to run a business. Yet, many make the claim that more than 90 percent of the people who receive micro-credit are really poor, that they succeed in their businesses, and that they repay the loan at 15 percent annual interest or higher. If that were the case, micro-credit funding would be a better investment than those in any of the world financial markets!

Similarly, many of the projects funded by private donors do not directly impact the rural poor. This is not to say that these projects are worthless or ineffective. For example, assistance in channeling river/canal water for irrigation, rain water harvesting, preparation of compost and bio-gas, and similar initiatives help a small number of landowners and businesses to improve their productivity. But those in the poor labor class can only hope that they will somehow benefit when the landlords succeed.

There is no doubt that better rural infrastructure, elimination of controls on the sale of agricultural produce, and assistance in finding new markets will attract many businesses to the rural sector and help create new employment opportunities. These measures will also improve the demand for produce and help farmers enjoy higher prices. With more economic activity, the poor labor class might gain employment at better wages. But none of these actions will be sufficient (or happen fast enough) to alleviate poverty.

There are no easy answers. The real solution lies in the ownership and use of a permanent income generating asset by the poor: land. The poor people must be given the opportunity to own and develop land and gain the skills and capabilities necessary for cultivating high-value crops. They must learn modern farming techniques, and to package and market their produce. Handouts won’t do either; training and handholding will. Imagine a country like India’s export potential for agricultural produce, processed and packaged properly, for world markets!

Visit our web sites: www.indiauntouched.com and www.tgfworld.org

End of Poverty in Developing Countries

2006-12-21T11:43:00.000-05:00

In Time magazine's cover story last March entitled "The End of Poverty,'' Professor Jeffrey Sachs of Columbia University in New York describes eloquently his vision of how to eradicate poverty, hunger and disease.

Sachs, a key adviser to the United Nations and the World Bank, suggests that the use of appropriate technologies and efforts to boost agriculture and investments in education, health care and electricity could dramatically reduce poverty in a short time.

The thrust of his argument is that with more money, poverty can be alleviated. The international donor community, urges Sachs, should invest in rural areas of poor nations. Farmers in those countries must get a helping hand to improve their crop output, and medical facilities must be stocked with vaccines and antibiotics to fight epidemics, he says. The costs of action for donors are a tiny fraction of the costs of inaction, Sachs says, and these tasks must be carried out even in the face of global inertia, war, prejudice and skepticism around the world about money wasted in the past.

No doubt these are very worthwhile goals. Unfortunately, Sachs's prescription doesn't deal with the central problem. The important questions are, who will get the job done, and how?
Sachs argues that poor governance isn't a major reason for poverty. The presumption is that with more money, corrupt and inefficient governments and bureaucratic institutions will somehow deliver the goods.

Maybe he should be reminded of what the late prime minister of India, Rajiv Gandhi, once admitted: Less than 15 cents of every dollar in assistance to the poor finally gets to the intended beneficiaries.

Sure, more money would help. Yet with population increasing in developing countries at an annual rate of more than 2 percent, much of the additional funds that might become available will barely meet the increasing need.

With over two-thirds of the world's population living in villages, rural poverty is of paramount concern. Many of the rural poor are from socially deprived communities; they are illiterate and untrained. Without sufficient skills, social status and economic power, most of the poor are unable to do any business on their own, even with financial assistance.

It is farming that can give the rural poor an opportunity to better their lives. Farming is what villagers have a natural affinity for, and it is an industry where large numbers of people can be employed. The goal should be to help them acquire land that can be developed and irrigated, grow high-value crops, and sell their produce in a competitive market.

With financial incentives such as low-interest loans and tax breaks, private companies can be motivated to build factories in rural areas, especially for food processing and packaging, thereby assuring a steady demand for the produce as well as generating additional employment. Rural areas are ideally suited for other industries, such as herbal products, cement and tile, lumber and pulp, meat, dairy and poultry. These businesses offer job opportunities for those in villages who would otherwise migrate to cities for employment.

There is no shortage of ideas to solve poverty. What is lacking is good planning and execution. Poor governance has blocked honest efforts to improve the lives of the poor. Corruption, political influence on credit, land allocations and other related decisions, diffused focus and priority, poor execution, shortage of rural infrastructure, social inequality and a host of other factors are impediments to a successful outcome.

My own experience of working in the villages of Tamil Nadu and Karnataka states in India for the last 10 years has made me conscious of the obstacles to change. The issue isn't simply one of badly executed government projects; participating with government on projects is no easy task. After many years of trying to get officials to fix a seven- kilometer (4.3-mile) stretch of public road leading to our projects that had become unnavigable, our foundation (visit www.tgfworld.org) recently decided to contribute 25 percent of the cost of improving it if the government would come up with the balance.

Though there was an explicit understanding with the government that we would manage the project, the process of dispersing the money allowed the officials to insist that funds be set aside for government "supervision.'' The result was that, even with our objections, nearly a third of the overall budgeted expenditure for construction was used in bribes.

Nevertheless, we were comforted by knowing that usually at least a half of construction funds are wasted in illegal payments. We were able to build a superior road that has now lasted more than three years without any serious deterioration.

In most developing countries, poverty-eradication programs are government funded and managed initiatives. International organizations, such as the World Bank and the UN, channel practically all their aid through governments. Non-governmental organizations rely on government and donor funding, and hence, they must remain within set developmental models prescribed to them.

The private sector, on the other hand, hasn't yet found it financially attractive to be directly involved in such efforts, except for selling their products and services through the government. The outcome of this approach has been far from adequate. How do we then solve the problem? There is no simple answer.

To start with, there must be a genuine recognition that many of the present development models that have been in place for several decades won't produce the required results. New and innovative approaches must be tried.

Part of the answer may lie in the unchallenged assumption about government's rightful role in poverty eradication. As long as governments control the flow of developmental funds and manage projects, it won't be possible to achieve the desired outcome.

The time has come to test a new model wherein the government's role is that of being a catalyst for change, instead of being the manager or implementer of change. There should be less room for bribes and more incentives for private participation in developmental projects that directly impact the poor. Only those who assume risks are likely to perform well.

The solution doesn't lie in more money spent by governments at will. Those who still believe that government is the only effective agent to care for the poor are urged to spend real time with those outside the government working for the poor. Only with a fundamental change in approach can we begin to expect an end to poverty, as Sachs would like us to believe is possible.
Until the world embraces a new model to tackle poverty, today's corrupt governments and inefficient bureaucracies offer no real hope.

Visit our web site www.indiauntouched.com and www.tgfworld.org

Coping With Health Care in Developing Countries

2006-12-20T22:50:00.000-05:00

Dec. 20 (Bloomberg News) -- With all the attention focused on deadly infectious diseases, a far bigger challenge in developing nations is posed by a lack of basic health care.

The World Health Organization (WHO) lists the top 10 preventable health risks as childhood and maternal underweight; unsafe sex; high blood pressure; tobacco; alcohol; unsafe water; sanitation and hygiene; high cholesterol; indoor smoke from solid fuels; iron deficiency and obesity.

These risks account for about 40 percent of the 56 million preventable deaths that occur worldwide annually, accordingly to WHO. In most developing countries, the number of new cases related to many of these health risks has increased over time, partly due to rising populations.

Beyond infectious diseases, the main cause of ill health is malnutrition. Poverty, hunger and malnutrition are interrelated silent realities for a majority of people in developing countries.
In India alone, more than half the children under the age of four suffer from malnutrition, 30 percent of the newborns are significantly underweight, and 60 percent of women are anemic. A recent World Bank report shows that malnutrition costs India at least $10 billion annually in terms of lost productivity, illness and death and is seriously retarding improvements in human development. Similar situations prevail in many other Asian countries and most of Africa.

Reasons for Apathy

In the face of these appalling statistics, why hasn't there been a major outcry among health authorities and the public in general? Part of the answer probably lies in the fact that primary health care, and in particular public health, is viewed as a complicated and ``non-glamorous'' area that requires sustaining efforts but does not offer sufficient visibility. Further, most of the common ailments are perceived to be local and not likely to cross borders.

The task of dealing with common illnesses and ill health, especially among the poor in rural areas where a majority of people live, is left entirely to governments. Unfortunately, successive governments in most developing countries have failed to do an effective job.

Huge Bureaucracy

For example, during the past half a century India has built up a vast infrastructure of public health services, managed by a huge bureaucracy with little oversight. But the government spends hardly 1 percent of gross domestic product on health services, and its Primary Health Centers (PHCs) are expected to serve the 700 million or so people living in rural areas.

Inadequate infrastructure, too few physicians, absence of drugs, and lack of accountability have turned PHCs into ineffective institutions. International organizations that provide much of the external funding believe that a targeted approach to addressing some of the top health concerns can be successful, without worrying much about the institutions that actually deliver primary health care.

Solutions

What can be done to significantly improve the health conditions of a majority of people in the world who cannot afford quality private health care? The simple answer is to improve the primary health-care system in poor countries.

Primary health-care institutions are the backbone of the health system in the villages and where patients initially come for their health needs. It is the first, and sometimes only, line of intervention against frequent health problems such as viral infections, gastrointestinal disorders, and contagious diseases. It is also where early detection of almost all infectious diseases is possible.

But most government-run primary health institutions are poorly managed in practically every developing country, and they usually do not maintain proper records of patients' health history. Patient records are all the more important when dealing with an uneducated rural population that does not have a good understanding of health risks.

Recognizing this need, our foundation runs a rural hospital in south India that keeps up-to-date computerized health records of practically the entire population of 17 villages served by its outreach programs. Armed with proper information, our health workers are able to intervene effectively without wasting unnecessary time and effort.

We have found that quality health-care delivery is possible at reasonable costs with good information and effective management. Governments also need to recognize that major improvements in rural health delivery are possible without substantial increases in public fund allocations, but only if they would embrace major changes.

Public-Private Partnership

While the private sector is relied upon for economic development, the delivery of basic services, such as education and health care for the poor, still remains a monopoly of the government. This has been the case because rural populations in developing countries are unable to pay for the services. Until rural incomes rise, a significant portion of health-care costs must be borne by the state from public funds.

But lack of affordability alone should not prohibit the involvement of the private sector. Opportunities exist for public-private partnership in a competitive environment. Private institutions may deliver their services at a profit but at reduced prices, subsidized or even fully paid for by the government. Similarly, the government may make available products, such as drugs, for free or at significantly low costs to private providers who serve the poor.

There is no shortage of ideas to improve the quality of health-care delivery, while ensuring access for everyone regardless of income. But only with a global commitment to improving primary health care can the present health crisis faced by developing countries be effectively addressed.

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India in Search of its New Identity

2006-12-20T22:41:00.000-05:00

A few months back (September 2005), I participated in a one-hour debate in Delhi over BBC radio on "Who runs your world?" This debate was more notable for what it was not than for what it was. I had expected the panelists to discuss the evolving roles of various institutions, including the government, in a global economy, and how they affect our lives. Instead, from the very start, the debate turned mostly to India's emerging power in the world, and predictions about what can be expected in the coming years.

In the interest of not offending anyone personally, let me indicate only the official positions held by the other panelists: a cabinet minister in the central government, a president of a major industry association, a co-founder of a pharmaceutical company, a head of a government-run cultural organization, and a prominent academician associated with an economic research institute (funded by government).

The discussion started with the president of the industry association claiming that the next decade is India's, and that the question is not whether India will be a superpower, but how soon. He cited many national statistics, including the rate of growth in GDP, and talked about India's thrust in research and innovation that has led to the recent "discovery of two molecules" by Indian scientists. The economist dismissed corruption in India as not worthy of discussion, as almost every developing country has varying degrees of poor governance. The head of the cultural institute trumpeted India's democratic system as an example for the rest of the world, and highlighted its importance in India’s emerging position as a superpower.

The union cabinet minister opened his remarks with politically correct statements, and expressed his concern for the rural sector that depends mostly on agriculture. He assured everyone that the government was allocating large funds to rural areas through employment schemes. When a member of the audience in the debate hall (an NRI residing in the U.S.) expressed her unhappiness with the difficulties faced by the public because of poor governance, the minister retaliated by pointing out that she was probably not a good “ambassador” for India abroad. The minister went on to praise the country’s ancient culture and traditions, and pointed out that neither the British rule nor the "free" foreign press in India, led by Rupert Murdoch of Star TV and the BBC, was able to impact it. Judging from the applause of the audience, most attendees were very pleased at those remarks.

It is probably understandable that the nation is hungering for success after several decades of poor economic performance. Indians want to be respected for their recent achievements, and look forward to being recognized as a leading economic and military power. The tone of this BBC debate and the numerous articles with similar viewpoints authored by Indians that now appear almost daily in the media confirm my suspicion that all this talk is leading the debate in the wrong direction.

A well known Indian journalist recently argued in his opinion column that the U.S. is in a decline, and India will soon gain its rightful role on the world stage. He even cited the increasing non-white population in America as a reason for a likely future tilt in public opinion in America in favor of India.

It appears that the participants in the so-called "national debate" are mostly the beneficiaries of the recent economic expansion--those who work in the information technology sector and the major industries operating in urban areas. Many of them seem to be unaware or unconcerned about the predicament of the great majority of the nation's population, especially the 700 million people who live in the villages. The country has no less than 600 million people whose daily income is less than $1 per person, the international definition for poverty level. The assumption is that the poor will one day benefit from the trickle-down effects of a growing urban economy. Therefore, those in power--both financially and politically--feel no need to address their plight directly.

What is equally disturbing is the apparent arrogance among many who elevate themselves by talking down other nations. The argument about the decline of the West is such an example. Instead of trying to learn what has made America, Europe and Japan succeed in the last century, the Indian media is busy playing to the national pride.

I don't share these narrow views. For example, the demographic argument that non-whites will have greater influence and loyalty to India is misguided. America has always been multi-ethnic and multi-cultural, and while color has been a cause of discrimination in the past, it is still ideas, innovation and risk-taking that have assured the country’s progress. Individual freedom has enabled the country to correct itself, even when national leaders have swayed the pendulum too much in one direction or the other. America's strength lies in its diversity and the tolerance for new ideas, and it will be a mistake to underestimate that power.

The danger India faces is one that arises from overestimating the impact of its recent economic success, which is, by the way, demand driven from the West. A little bit of humility and a realistic understanding of the power of ideas that makes the world what it is not only today, but in the future, would help a great deal. All this talk about India's culture and traditions as superior to those of other nations gets a little stale. What really counts is what we are today as a people, the values we share with others, and what we leave behind for our children and grandchildren.

Instead of talking down to others and trying to elevate oneself, why don't we focus our attention to improving the lives of all our people, in a fair and just society, with equal opportunity for everyone? We need to think beyond our own self-–nationally and internationally--and learn to work in a global economy where other nations have their strengths and weaknesses. Let us not rejoice at their failures and at our small successes.

There is already too much talk of India becoming a "superpower." What kind of superpower? What happens then?

Visit us at www.tgfworld.org and www.indiauntouched.com