Dear friend,
I would like to wish you, your family and colleagues a fruitful, happy and prosperous 2009!
If you’d like to explore possible solutions to the current economic downturn, financial sector reforms, accelerating economic growth, and achieving the UN’s poverty-related Millennium Development Goals, additional details are available on the links below …
The principles outlined can be applied to reduce poverty and accelerate economic growth across developing countries, as well as empower disadvantaged / excluded groups in developed countries.
My paper on Reducing Poverty and Accelerating Economic Growth has been included in the syllabus at the National University of Juridical Sciences. It was abridged and published on the Editorial page in all editions of The Times of India on 4th April 2001, and noted in the records of the Indian Parliament. It could help the United Nations achieve its poverty-related Millennium Development Goals.
The paper on Reducing Poverty and Accelerating Economic Growth (which is currently being expanded into a book) is available at:
http://civilsociety.developmentgateway.org/uploads/media/civilsociety/Reducing%20Rural%20Poverty.pdf
A summary of the ideas are presented below - as part of a submission I’ve made to Google’s Project 10 raised to 100 (http://www.project10tothe100.com/).
What one sentence best describes your idea?
Reduce poverty, reform the financial sector, and accelerate economic growth by creating a refinance market that bridges formal and traditional financial sectors.
Describe your idea in more depth:
According to Professor Michael Todaro, the problems of widespread poverty, growing inequality, rapid population growth and rising unemployment all find their origins in the stagnation of economic life in rural areas. There can be no national development without rural development (Michael Todaro, Development Economics).
The economic prospects for rural development are far from bleak (indeed, they show an astonishing robustness):
In comparison to heavy industry which employs a mere 3 million workers in India, small scale and cottage industries (despite their comparatively restricted access to credit) employ over 30 million people.
Unlike heavy industry, small scale and cottage industries can be located throughout the country, facilitating the dispersion of economic wealth rather than its concentration.
However, the rural economy’s development potential – and with it, the growth prospects of the entire economy – are not going to be achieved without the availability of (a) affordable credit, (b) in adequate quantities, (c) at the right time.
While the modern financial sector in India offers affordable credit that enables enterprise and fuels economic growth, it falls short in all other criteria (which the informal sector excels in, including a presence in 600,000 Indian villages that have no branch banks, and loan recovery rates that approach 100%).
Since the informal financial sector’s strengths are the modern financial sector’s weakness (and vice versa), I propose a refinance market that bridges the two sectors to leverage each other’s strengths.
Describe the optimal outcome should your idea be selected and successfully implemented. How would you measure it?
Several billion people without access to affordable credit (at say 12% per annum instead of 120% or even 1200%!) will now have it, enabling the creation and growth of sustainable micro-enterprises.
Imagine the impact on the economy if 700 plus million people in rural India alone had an extra twenty thousand rupees or more to spend every year! This would create a powerful engine for growth not just for India but the world economy!
One good measure for the success of this idea is whether it significantly contributes to the achievement of the United Nation’s poverty-related Millennium Development Goal of halving, between 1990 and 2015, the proportion of people whose income is less than $1 a day, a goal that currently looks elusive.
If you’d like to recommend a specific organization, or the ideal type of organization, to execute your plan, please do so here.
The United Nations system, Federal Reserve banks and financial market regulators.
More details are available if you scroll down my Ecademy profile page:
http://www.ecademy.com/user/imonghosh
Grateful for your thoughts on how we can bring these ideas to a tipping point, and make them happen for the benefit of several billion people around the globe!
With all good wishes,
Imon
http://www.linkedin.com/in/imonghosh
http://www.ecademy.com/user/imonghosh
http://www.naymz.com/search/imon/ghosh/2376471
In India , the focus on human development should continue.
The true human development is empowerment of the individual through literacy and education .
There should be endeavor on war footing to raise literacy level of the cow belt states.
If present 30% illiteracy level can be reduced to 10% illiteracy by 2012 , the Indian economy on rebound after the present crawl will touch 16% of which 6% will be due to 20 % up gradation of literacy .
The return on investment in literacy is 30% , the highest return on investment in any sector .
Congratulations for creating this educative blog. The presentation is appealing and the intellectual content is stimulating. Wish you and other visitors great blogging.
I am happy to visit this educative blog through ecademy. I am looking forward to see more such posts from you.
Hi Imon,
I agree that the potential for empowering people is tremendous. I would suggest that in addition to financial support the means and methods for empowerment be also provided, at least in some form. I have considerable methods, tools and resources to that end.
One caution, the Federal Reserve system is not a good model. Recently hearings in Congress were held about the disappearance of somewhere to the tune of $10 trillion. It is a model of incredible corruption, essentially an illegal financial corporation that very few people are educated about.
Best of luck with your endeavors, and if you care to learn more about my work, please visit my Websites and send me a message.
Andy
IMHO, don’t mess with Adam Smith’s Invisible Hand. Allow supply and demand to rule. However, initially, who could possibly disagree with Andy, in Teaching a Farmer to Fish vs. Giving the Farmer a Fish. Despite the bad apples, it’s hard to be good ol’ fashioned capitalism and survival of the fittest. Even dogs were bred by Mother Nature’s laws of Natural Selection to be man’s best friend. Literacy would seem to be the beginning of all learning.
Great ideas Mr.Imon . You do have a great vision of true balance in your writings. I sincerely hope the government wakes up to these well thought (educative) & researched insights you have penned down in this digital realm. Realistically, how do we get a substantial current crop of politicians to have a vision beyond- our rightful assets, held by them and look at great ideas like these to be implemented at least as a pilot project in one state? This way the taxes would finally be put to ‘right’ use
. Frankly, these are worth institutionalization. Wake up Mr. Minister, if you ever got this far on the PC!
[...] http://imonghosh.wordpress.com/2009/03/10/exploring-solutions-to-economic-downturn/ [...]
What an ingenious idea! This appeared in the St. Petersburg Times Newspaper yesterday. The Business Section had asked readers all week for ideas on “HOW WOULD YOU FIX THE ECONOMY?”
This man nailed it.
Dear Mr. President,
Patriotic retirement:
There’s about 40 million people over 50 years old in the work force – pay them $1 million apiece severance with the following stipulations:
1) They leave their jobs. Forty million job openings – UNEMPLOYMENT FIXED
2) They buy NEW American cars. Forty million cars ordered – AUTO INDUSTRY FIXED.
3) They either buy a house or pay off their mortgage – HOUSING CRISIS FIXED.
Like I have been saying, they are bailing out the wrong people.
Dear Mr. Imon
What a Great idea – help when you’re starting out can be so beneficial! ….. This sounds like a great idea!
I am looking forward to see more such posts from you and very nice to meet you !
Regards
ashraf
Imon,
Great article. There is certainly room for developing financial markets in India’s rural areas. Given the current economic troubles caused by irresponsible lending, this idea might be falling on deaf ears but you are quite right that there are proven ways through which the financial system can improve access in rural areas without necessarily increasing risk.
However, I would also note that urbanization is an essential path of development. There is a reason why the high income countries are over 70% urbanized. Urban areas have higher productivity thanks to localization and urbanization economies. And India is missing a trick by not investing in urban infrastructure so as to make the demographic transition to an urbanized economy smoother.
The following statistic I think is quite pertinent. At the time of Independence about three quarters of India’s population lived in villages and about 70% of India’s GDP came from villages. But today, only about 30% of India’s GDP comes from rural areas. But 65% of the population still works in rural areas. In other words, the urban population in India is far more productive but sadly, the majority of Indians are under-employed in low-productivity rural areas.
Some of this could be because rural areas don’t have access to finance as you point out. But part of it is because inefficient infrastructure spending has skewed incentives for people to make optimal location decisions. India should urgently invest in large urban areas and invest in the small towns so that they have a higher capacity for population absorption.
But once again, this is not an “either/or” choice. But an “and” choice.
HI Mr. Imom,
We are running a Pan India movement in the name of “EKal Vidylaya “empowring the villgers in more than 26000 villages.The Emphasis is on
1.Basic education to make them litrete
2.Health education to keep villegers in good health
3.Development education for economic betterment
4.Swabhiman Education to let them know their rights and making use of it
We are also sharing the information for the NGO and other people who are willing to contribute intellecutally.
You are also welcome to visit web site :http://www.ekalindia.org
Hi Imon I am back. I read with interest your ideas on ‘Reducing rural poverty’ as also some of the comments of learned viewers.
I feel apart from micro-finance there are other challenging issues that need to be ensured. For example at Baba Amte’s Anandvan many students and professionals study the various self-sustaining units including the agriculture, plastic recycling, eco-friendly buildings, bio-gas, water management, forestry and other environmental projects carried out in villages.
Similarly Anna Hazare’s village development schemes at Ralegaon Siddhi is an example of complete transformation of a poverty ridden socially weak village to a model unit.
Anna Hazare persuaded villagers to construct a watershed embankment to stop water and allow it to percolate and increase ground water level. The first embankment that was built using volunteer efforts developed a leak and had to reconstructed this time with government funding.
Anna also take steps to stop the second big problem, soil erosion.
In order to conserve soil and water by checking the run off and contour trenches were constructed along the hill slopes. Grass, shrubs and about 3 lakh trees were planted along the hillside and the village. This process was supplemented by afforestation, nullah bunds, underground check dams and cemented bandhras at strategic locations.
The Watershed Development programme turned into a huge success and helped increase the fortunes of many farmers as they now had a reliable source of water. Ralegan has also experimented with drip and bi-valve irrigation in a big way. Papaya, lemon and chillies have been planted on a plot of 80 acres (320,000 m2) entirely irrigated by the drip irrigation system.
Cultivation of water-intensive crops like sugar cane was banned. Crops such as pulses, oilseeds and certain cash crops with low water requirements were grown. The farmers started growing high yield varieties of crop and the cropping pattern of the village also changed.
These are just a few examples of how a grass root approach based on Gandhian philosophy is key to bring in self sustainability to India’s teeming rural population.
Many professionals and thinkers are visiting these and similar places to develop social consciousness and get inspired in contributing in their own ways.
Regards
Dilip (http://dilipnaidu.wordpress.com)
I once said to an audience, “We don’t know how to alleviate poverty because we don’t know why people are poor.” The same still holds, and it explains why all the proposed solutions till date have failed to solve the problem.
Providing microfinance is, IMHO, an unqualified good. It helps individuals to better themselves. Unit banks are one solution. There are others, including an increasing number of privately financed lending schemes.
I suspect, however, that the lot of the poor in India will improve only when the following conditions are met:
1) The poor aspire to advancement and believe it possible.
2) Barriers to advancement are removed. I’d include casteism and corruption/injustice among the barriers.
3) The middle and upper classes become willing to invest in educating the poor.
4) The government and businesses increase their investments in infrastructure to serve the poor. I’d include electricity and roads/transport among the required elements.
5) More poor Indians go to work outside the agricultural sector. Agriculture cannot produce sufficient per-capita earnings to support a large population above a subsistence level.
None of these conditions would be easy to meet, and I would welcome comments on whether/how they might be met.
Quoting David above:
“Agriculture cannot produce sufficient per-capita earnings to support a large population above a subsistence level.”
And WHY is it that agriculture cannot do this anymore?
Up until the mid-20th century, family-owned farms generally did very well.
Then along came cheap oil and the industrialization of agriculture through the so-called “green revolution” that wrested economic control of agriculture from the family farms and put it in the hands of a few multinational corporations.
But another “revolution” is already underway in America (and I believe elsewhere) that promises to radically change the lot of the commoner for the better…if enough people wake up and get on board in time:
Read more about the “Down-Home Revolution” here:
http://fearlessreader.typepad.com/fearless_readers_toppicks/2007/11/the-down-home-r.html
nice scholarly blog,though its not my subject of study,few can remain immune from the subject given the daily media blaring of economic issues on all platforms.as a heavy personal investor too,your ignorance of economic and finance basics will bring your peril and monetary ruin.that way,i feel i have been sufficiently armoured with fundamentals of investment and personal finance.very happy indeed to have you as contact in ecademy.sent a request for linkedin connect too. hope to attend some of your public speeches sometimes.metro as german retail giant offers good opportunities though their kolkata operations,as is expected face some obstacles.regards..
I found it simply brilliant. It should make an important white paper for the policy makers of our country.
Hi Imon
The reading was good.
My suggestion to your objective is
1. Yes as you say improve literacy
2. Improve infrastructure – so that people can reach every where faster. Forget faster, atleast they reach
3. Can we not adopt the ideas of the great man from Bangla Desh (sorry that I forget his name), who started micro financing?
4. Most important replace the ministers with intellectuals and run the country like an organisation
5. Lastly free the country from corruption, have strict penalty for those caught.
ej