A Bond with Bones

By M H Ahssan

The traditional system of mending bones practised by some of the hakims in the Old City of Hyderabad has a loyal clientele which seems to increase by the day.

Accidents can happen to anyone. They could take place at home or even when one is out on the roads. Minor or major, injuries on the body can leave one writhing in pain and rushing to the nearest doctor. For most people, allopathic cures are the easiest option, because of advances in medical technology. However,

when bones break, the hefty bills slapped upon hapless patients by the orthopaedic hospitals, is perhaps much more painful than the fractured limb itself. Some may not have the wherewithal for such expensive treatment and there are the ones who go in for traditional systems of healing. The Puttur (near Tirupati) bone setters being a case in point. In the city, there are people who have set up clinics in the old city area and have a devoted clientele. The hakim's hypnotic gaze and a touch of ice anaesthetises the affected part. His dexterous fingers spot the fracture and set it right in a jiffy while the assistant applies a paste, bamboo stick patti bandage. It is all over in a few minutes. They come with tears but go back with smiles. This system might prima facie appear crude but all this ultimately boils down to aiding nature's own healing mechanism.

Though bone setters have mushroomed all over Hyderabad, the families of hakim Ghulam Rasool Khan and Quadri of Shahalibanda only have gained international recognition. Ghulam Rasool Khan, the ninth generation orthopaedician, traces his lineage to Hakim Ghulam Ahmed, the Royal Jerrah (orthopaedic) to Emperor Aurangzeb. His father Hakim Mohammed Moin was the Royal jerrah of the Raja of Khairpur. Khan, who believes in transparency of the whole system, recollects with pride a BBC documentary on his art by Dr. Michael Yorke.

The Quadri family, on the other hand, has a mass appeal having treated over 40 lakh cases in 67 years for which they have written to the Guinness Book of Records, with evidence, for an entry.

The late G.A. Quadri learnt the unique art of treating orthopaedic problems with mere manipulation of fingers over the affected part along with massage of herbal oil and specially prepared pastes. Perfecting his skills in Secunderabad and Mumbai in the early 1940s, senior Quadri set up the present clinic in Shahalibanda which is now being managed by his almost dozen strong siblings including a lady Mrs. Rafath Aziz.

In order to gain recognition from the modern medical fraternity, the Quadris are maintaining systematic records of the patients. These contain the initial prescription of the allopathic doctor, medicines prescribed, X-rays and other reports before the commencement of the traditional treatment. An X-ray record or even a video if the case is very complicated, is kept after the cure. Their dream is to set up the world's best Ortho-neuro Techniques Research Institution which will be a fusion of the traditional and modern orthopaedic systems. Patients come from faraway places like Delhi, Maharashtra, TamilNadu, Karnataka and Rajasthan with several orthopaedic problems like sciatica, prolapse disc, backache, cervical spondylitis.

Ironically, the efficacy of the Quadris orthopaedic wizardry has been proved by the same fraternity of modern doctors who ridicule them the most. Suffering from an advanced stage of `cervical spondylitis', Dr. Ghansyam of Yawatmal got relief in just three sessions. When pain-killers failed to stop the shooting sciatica pain, Dr. Shook Kumar, a noted surgeon, reluctantly approached the Quadric where he got "relief by a gentle touch of Quadric.'' while the sceptics might find umpteen flaws in Quadric `crude' cure, the rush for grabbing a token for day's treatment seems to be unabated.

TAMILNADU'S PARADOX - Alarming malnutrition pushing children out of school - II

By M H Ahssan

NGOs have fared better than the government in tackling iron deficiency in poor children. Activists, policy analysts and funders want a convergence of various departments as opposed to boxing nutrition into the health-sector alone.

Community-based outreach
Where the juggernaut of the government faltered, voluntary organisations have prevailed. The few of them that have focussed on public health communication campaigns have had better success in reducing iron deficiency anaemia. Nalamdana Trust's five year project in the fishing hamlet of Urur-Olcott Kuppam, in south Chennai has shown that with mere information and without the free supplements it is possible to improve nutritional status.

Nithya Balaji, Executive Trustee of Nalamdana, says her project used the popular medium of theatre to introduce behavioural changes and ownership for health and nutrition projects. “At Urur kuppam, initially we got a private donors to add an additional Rupee per child per day to the ICDS expenditure to add a few locally available vegetables, dhal and oil. The children's growth charts showed an impressive increase in the first two months of nearly 1.5 kg. This scheme is currently being supported by local sponsorship, but can easily be transferred to the parents if the state permits it," she says.

The other target group of the project was adolescent girls. “As a pre intervention indicator, we measured the anemia levels of 95 girls and held regular meetings for 8 months. The sessions covered issues of understanding one's body, pre-puberty issues, reproductive health and importance of nutrition. Only accurate information had been given- no doles, no tablets. Their Hb levels had increased from 8 and 9 to 11 and 12, respectively. They had adopted better hygienic practices, started eating breakfast and also included greens, vegetables and one affordable fruit in their daily diet," says Nithya.

When the project was evaluated in 2004, after a year of information and education campaigns, Nalamdana found that haemoglobin count increased by an average of 1.5 and in girls with severe anaemia up to 5.6 counts. In a second project area in Subbu Pillai Thottam (in Central Chennai), both adolescent boys and girls were targeted with information and education campaigns done mainly through one on one interaction and street theatre. There again, the Hb levels increased by an avearage of around 2 counts. The scheme implemented in partnership with other NGOs is being continued despite the original donor agency withdrawing from the project.

Nalamdana's findings are anecdotally affirmed by the Anganwadi staff. Tamizhagi says mere supplementation showed only marginal improvement in the moderately anaemic adolescent girls. “The eating habits have changed drastically in the last two decades, moving towards a rice-based diet. Traditional iron-rich food like drumstick greens thovaiyal or curry leaf thovaiyal have become devalued and pushing those through the nutrition eduation programme often backfires with adolescents," she adds.

Nalamdana circumvented this issues by involving the community in their own nutritional improvement. Recipe clubs were formed in the study area with the women being given basic information about nutrition dense food. With help from nutritionists and students, the women innovated their own healthy recipes, thus making their integration into daily diets an easy affair, says Nithya.

Juxtapose this with a study by the National Nutrition Monitoring Board that came to the conclusion that national nutrition programmes have failed in achieving their goals largely due to lack of nutrition education with poor outreach. A study of Vitamin A deficiency among rural preschoolers done in 2007, established high prevalence of subclinical deficiency largely due to poor nutrition and that nutrition education component covered a mere 14 per cent of the target population.

No night-blindness, but Vitamin A deficiency still high
In the rural survey, NNMB, an arm of the Indian Council of Medical Research, found that nearly half the children in the under-five age group were found to have sub-clinical VAD or vitamin A level of less than 17 micrograms per decilitre. This is despite that clinical Vitamin A deficiency (night blindness, Bitot's spot and conjunctival xerosis) is prevalent in less than 0.5 percent of the children in this age group, in part due to the massive dose Vitamin A supplementation in the neonatal period (at birth) and near total institutional delivery.

In their book, Gillespie and Goddad say Vitamin A deficiency causes increased morbidity and mortality among infants, children and pregnant women, poor growth of children. It also contributes to anaemia, they say. The NNMP survey results linked poor nutritional habits and weaning food choices to the sub-clinical deficiency.

Interestingly, this study linked the higher prevalence of clinical manifestations of Vitamin A like Bitot's spot in the eye to the mother being illiterate and to populations without access to sanitary toilets. Ascaris and hookworm infestation are often leading causes for Vitamin A deficiency and iron deficiency anaemia in the state.

Poor sanitation undermining nutrition thrust
All nutrition interventions have to go hand in hand with improvements to sanitation and access to protected drinking water, believes Dr Devashish Dutta of UNICEF. “As much as 83 percent of rural homes in Tamilnadu, according to NFHS-3 surveys, do not have access to sanitary toilets and defecate in the open. ‘Sanitary toilet’ refers to one where is not just clean inside, but also where refuse is cleanly disposed off, as in through a septic tank, sewerage.

A large percentage of students do not use footwear while going to school. Hookworm enters the body through the feet of the person walking on an area contaminated with faecal matter. The worms anchor onto the small intestine and the blood loss over a period of time also leads to anaemia," he says. Though the state has its deworming programme, it could be scaled down and resources used elsewhere if people were to wear footwear before the stepped out of their homes, he adds.

Even in urban areas, only 33 per cent have access to flush toilets that are connected to sewerage, septic tank or pits, according to NFHS-3. A whopping 40 per cent have seen no improvement since the last survey of 1998 and continue to use toilets which are either shared between households or have no flushes/poured flushes. Twenty-six per cent continued to use open spaces for toilets.

This was no different even in targeted nutrition interventions like the ICDS. According to 2000-2001 study by TN-FORCES of the Anganwadis in 150 areas in Chennai showed that 87 percent of them had no access to toilet, an overwhelming 90 per cent did not have potable water, 90 per cent had no electricity and only 50 per cent were well ventilated with windows. “Often, the centres are right next to public toilets or sometimes right next to garbage collection points, making hygienic Anganwadis a rarity," says Shanmughavelayutham of TN-FORCES.

In their 2007 study of 45 best practice Anganwadis, the State ICDS Project Office reiterated their older study: 26.7 per cent had no toilets, 20 per rcent had no access to drinking water, 22 per cent had furniture for early development activities, 20 per cent had no separate kitchen and 4 percent used classrooms for cooking, 62.2 per cent had asbestos sheets for roof and 33 per cent had no indoor and outdoor space marked for grossmotor activities for the 0 to 3 age group. “This is the state in the best 45 of the 10,000-odd Anganwadis in the state. There are no norms or standardisations, no child-friendly toilets or safe areas or even adequate ventillation, says Shanmughavelayutham.

And that is why activists, policy analysts and funders alike say nutrition cannot be just a health-sector issue and have been working with the government in bringing about a convergence of various service delivery departments. All sectors like health, social welfare, nutrition, school education, women's development, civil society, water and sanitation, rights groups, universities and colleges, elected peoples representatives and the media at all levels need to make anaemia a priority as its effects are widespread, contributes significantly to a huge number of preventable deaths and illnesses and is expensive to deal with during pregnancy alone.

UNICEF is also working with the government in scaling up projects that link poverty alleviation to better nutrition. “The simple fact is a person who is born with low birth weight, goes through childhood being undernourished will do poorly in school and perhaps drop out. When he is not educated, he will make poor choices for his family about nutrition and will perpetuate the cycle," adds Shanmughavelayutham.

Others agree. Iron tablets and nutritious mix are welfare-based schemes, and at best they can be a temporary solution to a problem that needs an inter-sectoral solution.

(Click here to read - PART-1)

TAMILNADU'S PARADOX - Alarming malnutrition pushing children out of school - I

By M H Ahssan

Tamilnadu leads the country in nutritional interventions and yet has alarming levels of hunger in children. Research indicates that is a very likely cause of poor schooling achievement and drop-out rates.

Despite several schemes, chronic malnutrition persists in Tamilnadu and this is very likely a major cause for continuing poor performance and high dropout rates of children in Tamilnadu’s government schools. Ironically, the state leads the country in nutritional interventions and has improved its standing in comparison to other states in the last two decades since the scaling up of nutrition schemes. Yet, nutritional status have only marginally improved and in some cases like the anaemia count going up, perplexing activists, policy researchers, and funding organisations.

The state is a study in contradictions: It gave the country its direct nutrition intervention in the form of the Noon-meal Programme (NMP), and yet has alarming levels of hunger, according to the International Food Policy Research Institute's India State Hunger Index (ISHI) of 2008. The index gave the state this rating from a choice of: low, moderate, serious (6 states), alarming (10 states including TN), extremely alarming (Madhya Pradesh). The ratings are based on the prevalence of calorie-energy deficiency, child mortality and the number of children below the age of 5 who are underweight.

One out of every three persons ate less than 1,632 calories a day (much lower than the national Below Poverty Line cutoff of 2,100 calories) in Tamilnadu. Every third child below the age of 5 in the state is underweight (low weight for age) and the under 5 mortality rate of is 3.5 per 100 births.

The National Family Health Survey data of 2008 show a similar trend: Almost one-third (31 per cent) of children under age five in Tamilnadu are stunted, or too short for their age, which indicates that they have been undernourished for some time; 22 percent are wasted, or too thin for their height, which may result from inadequate recent food intake or recent illness and 30 per cent are underweight, which takes into account both chronic and acute undernutrition.

Seven out of every 10 children below the age of 5 have iron-deficiency anaemia (IDA) according to the NFHS. IDA has actually increased from 69 to 73 percent in the 0-3 age group from the last survey of 1998. Only 40 per cent of the households have access to adequately iodised salt and Vitamin A deficiency persisted despite prevention programmes.

The effects of such acute and chronic undernutrition are well established. Increased mortality, poor cognitive and motor development and other impairments in function as fallout of undernutrition, show Dr Stuart Gillespie and Dr Lawrence J Haddad of IFPRI in their book The Double Burden of Malnutrition: Causes, Consequences and Solution. “Children who have been severely undernourished in early childhood suffer a later reduction in IQ by as many as 15 points (Martorell 1996), significantly affecting schooling achievement and increasing the risks of drop-out or repeat grades.”

Impact of stopping noon meals for over-14
Activists of Right to Food (Tamilnadu) also chalk up a higher drop out rate of close to 40 per cent in the higher classes also to the cessation of noon meal schemes after the age of 14. S Kanniyan, RTF-TN convenor, says with decrease in agricultural work in the villages, more and more women have taken up contract work in construction industry. “Many children no longer have breakfast because their mothers need to be at work early in the day. Classroom hunger is a serious cause of concern. When the child comes hungry to school, her learning is going to be impacted. Often teachers do not understand the reasons for poor scholastic achievements and instead punish the students; which only pushes the child into dropping out,” he said.

The noon meal is made available in higher secondary classes only to students belonging to MBC, SC/ST castes. Often older children are ashamed of the caste and socio-economic status identification their noon meal plates accord them and prefer to skip the meal altogether, says Aruna Rathnam, Education specialist, UNICEF. “Younger children are more enthusiastic about noon meals, especially since the introduction of eggs two times a week, because of hunger. For adolescents, the lunch hour becomes a question of peer acceptance and socialisation. Many students prefer to eat packaged food of poor nutritive value to the prepared meals in schools," she says.

Even in the below 14 category, the efficiency has come under question. A review of Tamilnadu's Noon-meal programme (NMP) implementation shows that the per-day-per-child expenditure is 35 paise, for vegetable, condiments and salt. TN FORCES, an NGO that works throughout the state with day cares and crèches, says vegetables or oil or other seasoning are often not present in the Anganwadi centres. Sometimes even salt is brought from the home of the beneficiaries. TN FORCES is the state wing of Delhi-based FORCES.

K Shanmughavelayutham, TN FORCES convenor says that only two-thirds of children who are eligible for the nutritious meal scheme get coverage. Despite that, the nutrition schemes are unable to meet the needs and the government should commit at least 3 percent of the budget for nutrition, he says.

Both Right To Food and TN FORCES have been seeking an improvement in infrastructure and quality of food given to children. “After the death of a child in Melvalampettai Higher Secondary School after a vessel holding hot sambar toppled onto him, we sought improvements to NMP kitchens in schools. A committee that inquired into the incident that happened in 2006, said NMP urgently needed upgraded, smokeless kitchen and a safe serving/eating area. The improvements have been slow in coming.

“Nutritionally too, the scheme needs a re-think. Rice that is used is from the Civil Supplies department and is so heavily processed that it is shorn of all nutrients other than starch. The only other food children get is red gram (masoor dhal) in the sambar, not even oil. The meal, though supposedly provides one third the calorie need of the child, does little else in the form of minerals or vitamins," they say.

Tackling the challenge of Anaemia
Another issue that has the child health organisations worried is that of iron deficiency anaemia (IDA). According to NFHS-3, in the below 5 years group, a majority -- 64 percent – is anaemic. This includes 27 percent who are mildly anaemic, 35 percent moderately anaemic, and 3 percent with severe anaemia. Children of mothers who have anaemia are much more likely to be anaemic themselves. And in the state, those numbers are also of concern: various health surveys put that between 53 and 69 percent for pregnant women.

Dr Devashish Dutta, Specialist in charge of Health, UNICEF office for Tamilnadu and Kerala says maternal anaemia impacts maternal mortality. It could also lead to pre-term deliveries, abortions and growth retardation with nutrition to the unborn baby being less than sufficient, he says. “Anaemia reduces the capacity of the baby to survive, through diminished immunity, poor growth and development. Poor immunity leads to the child falling ill often, which in turn impacts her nutritional status leading to further reduced growth and immunity, and hence more illness and so on. When the child grows up to have children, the vicious cycle of anaemia leading to low birth weight, poor immunity, frequent illnesses, retarded growth, development and malnutrition is repeated," says Dr Dutta.

Gillespie and Goddad, in their book, further aver: “Infants with low birth weight are born with low iron stores, depleted by two to three months. Because breast milk cannot meet their iron requirements, it should be supplemented with iron starting at two months of age....

"Iron supplementation of anaemic preschoolers improves their cognitive and physical development.”

Unfortunately, the under-five group is outside the purview of the IDA prevention programme in Tamilnadu, that focus on adolescent girls and pregnant women. Nor have issues like links between poor iron absorption and Vitamin A deficiency and worm infestation been integrated into the scheme.

“Protein deficiency in the diet can also cause anaemia, given that iron binds with a protein called globulin. Often more than one deficiency co-exists indicating that the nature and quantity of food available or feeding practices were poor," says Dr Dutta.

Even in the case of adolescent girls who receive the weekly supplementation of Iron and Folic Acid tablets, activists are not happy. A daily supplementation dose will not have as many side-effects as the weekly dosing, which are often accompanied by black stools, gastro-intestinal discomfort, and malaise. “Ideally, the supplement is had in the night after dinner with another food with vitamin C like lime juice or sweet oranges. But the government has asked us to ensure that the IFA is taken in our presence, so we give it with the noon meals. Occasionally, some girls feel nauseous or vomit after taking the tablets. Then encouraging others to consume it becomes an issue," says S Tamilazhagi (name changed to protect identity), an Anganwadi supervisor in St Thomas Mount Panchayat union, that abuts Chennai Metropolitan area to the west.

Some anganwadi workers who are involved in distributing IFA tablets in neighbouring Kancheepuram and Thiruvallur districts say the supply has been erratic over the past two years and others allege that after initial testing of haemoglobin levels in 2005-2006, the government has subsequently failed to study the impact of the programme.

“The distribution of tablets or testing for haemoglobin levels depend on the initiative of the VHNs and Anganwadi workers. Often the service delivery is interrupted because of government chooses to implement other non-nutrition related schemes through us. For example, we are also to talk to the adolescent group about nutrition, reproductive health, menstrual hygiene and entrepreneurship development," says N Gomathi, a leader in the TN VHN Association.

(Click here to read - Part - 2)

The silent revolution

By M H Ahssan

Despite the severe social and political constraints in our country - caste system, feudal setting, patriarchy, illiteracy, uneven development - the last 10 years have witnessed notable progress in women holding office in panchayats and municipalities.

More than 10 years ago, on December 23, 1992, when Parliament amended the Constitution (the 73rd and 74th Amendments) making the panchayats and municipalities "institutions of self-government" - reserving not less than one-third seats for women in these bodies - it was hailed as the beginning of a silent revolution.

The two constitutional amendments became laws on April 24 and June 1, 1993 respectively. In 1994, all Indian states passed the Conformity Act reshaping their Panchayati Raj system according to the new amendments. Today, thanks to these amendments, out of 3,200,000 members elected every five years to the panchayats and municipalities, more than 1,000,000 are women. Women head one-third of all the local bodies. Quite naturally, April 24 is celebrated as women's political empowerment day in India.

Stories of empowerment can be found in many states. Geeta Rathore (44) belongs to Jamonia Talab gram panchayat, Sehore district, Madhya Pradesh. She was elected sarpanch in 1995 from a reserved seat; but in 2000, the village people rewarded her for her admirable work by electing her again - this time to a non-reserved seat. From a humble housewife, Geeta has grown into a leader displaying political farsightedness - she has harnessed the collective energy of her panchayat to renovate water tanks, build a school building, construct village roads, fight against domestic violence and atrocities against women, create environmental awareness, encourage afforestation and water management in her village.

But in the same state, there was Sukhiya Bai - the tribal sarpanch of Gubrail panchayat in Betul district. A year ago, she died in a hospital in Bhopal with 80 per cent burns. Sukhiya tried to struggle against the corrupt officials who demanded a cut for releasing money for development work. Simultaneously, she was under pressure from the villagers who demanded the money due to them for their labour. She had even borrowed Rs 4,000 from a relative to pay the panchayat secretary who had been demanding a bribe for releasing the money for a well that had been constructed by the villagers. Unable to bear the constant tension, she set fire to herself.

In Tamilnadu, Leelavathi contested the Madurai municipal elections in 1996, promising to bring water to the ward. She was elected as councillor and within six months water came to the area. This threatened the mafia of the water tanker owners, who had a flourishing business in the area. Within days of her victory to get water in the area, Leelavathi was murdered by those who lost their water business.

After the decadal journey, although leaders like Geeta Rathore have emerged, the big concern is the way this silent revolution is being threatened by the same forces it set out to defeat - patriarchal violence, inequality and discrimination. Why did the journeys of Sukhiya and Leelavathi have to have a violent end? They contested the elections according to the Constitution of India, occupied the constitutional positions and attempted to discharge their duties as per the law of the land.

But despite the severe social and political constraints in our country - caste system, feudal setting, patriarchy, illiteracy, uneven development - there are several aspects we can be proud of. The last 10 years have witnessed a steady progress as far as the inclusion of excluded sections of Indian population in the decision-making process from the village to the district level is concerned. About 3 million women are contesting the elections to panchayats and municipalities. This is no mean achievement in a hierarchical and male-dominated society.

With this, we have shown to the world that Indian women are not politically passive or uninterested in public life. Today, many women who fight the elections are from poor economic and backward social backgrounds; breaking social, cultural and economic barriers.

The notion that women's political connections matter and only the kith and kin of known leaders or those connected to them will enter the local bodies has been proved wrong in the recent past. The common refrain that it is the menfolk in the families who control the women elected members may be partly true; but studies show that the situation is rapidly changing. Some state governments have already taken measures to ensure that sarpanch patis (husbands of women office bearers) don't interfere with their wives' duties.

The number of women getting elected from general constituencies (defeating men) is also increasing. For instance, in Karnataka, 43 per cent women are now getting elected to local governments. Taking advantage of the new ethos, innovative and creative experiments in local governance involving women, like gender budgeting and self-help groups, are taking place in several states.

However, there are structural and systemic problems that women face. For instance, if women panchayat presidents do not yield to pressures from powerful landowners or contractor lobbies, no-confidence motions are moved and they are removed from office.

In some cases, the women panchayat members have had to face violence, intimidation and harassment for questioning male dominance and asserting their rights as elected representatives. Although society has by and large accepted the concept of women in the panchayats, women sarpanches in socially conservative areas face obstacles every day in their work.

Further, several states have passed legislations whereby those having more than two children cannot hold office and if a child is born when they hold office, their membership in the panchayats or municipalities ceases to exist. This is a discriminatory law, only applicable to panchayats, and women in the villages are at the receiving end.

In certain areas, male officials do not hold elected women members/presidents in high esteem because of their low social status. Women are thus doubly disadvantaged: carrying the burden of household chores and demands from the community as well as the office they hold.

Ten years is a short journey. Even if the representatives have not worked wonders, they have made small but significant beginnings. And even for these small beginnings, they have had to pay a huge price. We cannot and must not allow the sacrifices and dreams of the Sukhiyas and Leelavathis to fade away, although the insensitive would like to have it that way.

This is the biggest challenge facing India today: can she turn the present phase of women becoming victims of oppressive structures into one of gender equity and create a public life with dignity for all? It is encouraging that enlightened citizens, NGOs and media are taking the initiative to meet this challenge with some measure of success. If the trend continues, India will soon have Geeta Rathores occupying 50 per cent of public offices and positions of power.

Corporates look for rural gold

By M H Ahssan

Business honchos are descending on the rural markets, expecting to make a killing from whatever is left in the pockets of India's poor, led by an NCAER forecast of robust sales growth here.

All eyes are now shifting to the rural areas. Trucks carrying consumer goods are being directed to the nearest village. Rural India is now up for grabs.

It is no longer only hair oils, toothpastes, shampoos, soft drinks and potato chips that you will find stacked on the dusty shelf in a village shop. Corporate India now believes that the loan waiver, the National Rural Employment Guarantee Programme (NREGA) and successive bumper harvests have brought enough cash surplus into the hands of the rural community. It is therefore time to cash in on this new-found richness in the rural areas.

Is rural India really becoming prosperous? Or is Corporate India's greed that is driving them to the hinterland? Before we look at the ground realities, let us first see how the markets are shifting gear. The mobile phone has already made an aggressive foray. The sale of computers is being pushed through the government-sponsored e-governance programmes. Cars, two-wheelers, and consumer durables are eyeing the smaller markets. Coca Cola, Pepsi and Dabur India have relaunched specific marketing programmes. The wedding industry is already camping in the smaller towns. And the futures market too is excited.

According to news reports, Samsung, Nokia, Sansui, Philips, Maruti, Mahindra & Mahindra, LG, Tata Motors, Hyundai, Tata Sky, Hero Honda, Air Tel, Vodofone, BSNL, ICICI and Nestle are some of the corporate giants eyeing the rural markets. There are innumerable other smaller companies who have now ramped up their marketing operations in the tier II and tier III towns.

No, there isn't an economic revolution happening in rural India. It is only that the business honchos are descending on the rural markets, expecting to make a killing from whatever is left in the pockets of India's poor. Leading the corporate march into the rural areas is the industry think-tank, the National Council for Applied Economic Research (NCAER). It believes that the rural middle class is steadily growing, and the corporate can expect a sales turnover of 60 per cent from rural India.

Not only the domestic majors, global giants too are looking at India's rural sector as a potential kill. American agribusiness giants - Monsanto, Cargill, Wal-Mart and ADM - among the world's top multinationals have already found a foothold in the rural retail segment through the Indo-US Knowledge Initiative on Agriculture Research, Development and Marketing (KIA) agreement. These multinationals have already made it clear that they are not interesting in collaborating on agricultural research but keen to sell their products.

Meanwhile, not satisfied with the marketing opportunities under the agreement, two American senators have demanded a detailed study of the potential that Indian agriculture markets contain. Their plea is to open up the Indian farm sector to American agricultural products. At present, only 5 per cent of American produce finds its way to Indian farms. Well, the eagles are descending, and from all directions. The village mouse may find it hard to find a suitable cover to escape the attack.

The reason is obvious. So far, it is the sale of alcohol - both domestic brands and the locally produced - that has been the biggest destroyer of rural homes. Much of the farm income is known to have found its way to the liquor shops. No wonder, cereal consumption has further declined in rural areas, even though families are spending more on it. According to the latest report of the National Sample Survey Organisation (NSSO), monthly expenditure on cereals has gone up from Rs.101 to Rs.115, and yet per capita cereal consumption has climbed down from 13.4 kg per person per month in 1993-94 to 11.7 kg in 2006-07.

This report also comes at a time when the National Commission on Enterprise in Unorganised Sector very clearly and loudly states that 77 per cent of India's population (and the bulk of it inhabits the rural areas for sure) equivalent to 836 million people spend not more than Rs.20 a day. I am sure with Rs.20 a day expenditure, you cannot expect 836 million people to buy even two square meals daily. To these hungry millions, selling a growth dream in the form of consumer durables is certainly something that cannot be easily digested.

I stall can't fathom what the ICICI chairman H V Kamath had said sometimes back: "There is a lot of money to be made from the rural areas." If this is true, I see no reason why India should rank a dismal 66 out of 88 countries on the 2008 Global Hunger Index. As many as 12 of the 18 states measured, and that includes 'vibrant' Gujarat, technology-savvy Karnataka, suicide prone Maharashtra and the rice bowl of Tamilnadu, are listed in the category of 'alarming'. In fact, India stands much lower than Sub-Saharan Africa in the Hunger Index. Even Punjab, the food granary of India, is worse off than Gabon and Vietnam.

The villages of India have traditionally been victim of what is called reverse terms of trade. All these years, more money has actually been taken out from these villages than what has been invested. Some studies have shown that from a rural landscape of the size of 1000 acres, agricultural-input companies and that includes fertiliser, pesticides, and seeds, on an average pump out anything between Rs.30 and 70 crores every year, depending upon where these areas are located.

If only this money had stayed back in the villages, the face of India's village would have been in any case looked bright and vibrant. You wouldn't require the skills of organised money-lenders, through the micro-finance route, to exploit the poor and gullible. Although 50 million poor households are being given micro-finance, the poor are actually being forced to fork out returns at an exorbitant interest of an average of 20 to 24 per cent. In urban centres, you would be up in arms if you were made to pay such a high interest rate. But than, you need to know that the poor are being 'empowered'.

If the poorest of the poor women in a self-help group wants to buy a goat, which she needs for earning a livelihood, she has to pay an average interest of 24 per cent. I am sure, for a TV, fridge or a two-wheeler she will now get interest-free loans. After all, economists will tell us that the more she buys consumer durables, the more the GDP will grow. Even if they have to go to bed hungry instead, these are small sacrifices that need to be made for the sake of country's growth. Who said, selling dreams is only a Bollywood's prerogative?

Indian Rural Market

By M H Ahssan

An Overview
The Indian rural market with its vast size and demand base offers great opportunities to marketers. Two-thirds of countries consumers live in rural areas and almost half of the national income is generated here. It is only natural that rural markets form an important part of the total market of India. Our nation is classified in around 450 districts, and approximately 630000 villages, which can be sorted in different parameters such as literacy levels, accessibility, income levels, penetration, distances from nearest towns, etc.

Few Facts
70 % of India's population lives in 627000 villages in rural areas. According to the NCAER study, there are almost twice as many 'lower middle income' households in rural areas as in the urban areas.

At the highest income level there are 2.3 million urban households as against 1.6 million households in rural areas.

Middle and high-income households in rural India is expected to grow from 80 million to 111 million by 2007.

In urban India, the same is expected to grow from 46 million to 59 million. Thus, the absolute size of rural India is expected to be double that of urban India.

Opportunity
The above figures are a clear indication that the rural markets offer the great potential to help the India Inc which has reached the plateau of their business curve in urban India to bank upon the volume-driven growth.

The Indian rural market with its vast size and demand base offers a huge opportunity that MNCs cannot afford to ignore. With 128 million households, the rural population is nearly three times the urban.

As a result of the growing affluence, fuelled by good monsoons and the increase in agricultural output to 200 million tonnes from 176 million tonnes in 1991, rural India has a large consuming class with 41 per cent of India's middle-class and 58 per cent of the total disposable income.

The importance of the rural market for some FMCG and durable marketers is underlined by the fact that the rural market accounts for close to 70 per cent of toilet-soap users and 38 per cent of all two-wheeler purchased.

The rural market accounts for half the total market for TV sets, fans, pressure cookers, bicycles, washing soap, blades, tea, salt and toothpowder, What is more, the rural market for FMCG products is growing much faster than the urban counterpart.

Features of Indian Rural Markets

Large and Scattered market: The rural market of India is large and scattered in the sense that it consists of over 63 crore consumers from 5,70,000 villages spread throughout the country.

Major income from agriculture: Nearly 60 % of the rural income is from agriculture. Hence rural prosperity is tied with agricultural prosperity.

Low standard of living: The consumer in the village area do have a low standard of living because of low literacy, low per capita income, social backwardness, low savings, etc.

Traditional Outlook: The rural consumer values old customs and tradition. They do not prefer changes.

Diverse socio-economic backwardness: Rural consumers have diverse socio-economic backwardness. This is different in different parts of the country.

Infrastructure Facilities: The Infrastructure Facilities like roads, warehouses, communication system, financial facilities are inadequate in rural areas. Hence physical distribution becomes costly due to inadequate Infrastructure facilities.

The rural bazaar is booming beyond everyone's expectation. This has been primarily attributed to a spurt in the purchasing capacity of farmers now enjoying an increasing marketable surplus of farm produce. In addition, an estimated induction of Rs 140 billion in the rural sector through the government's rural development schemes in the Seventh Plan and about Rs 300 billion in the Eighth Plan is also believed to have significantly contributed to the rapid growth in demand. The high incomes combined with low cost of living in the villages have meant more money to spend. And with the market providing them options, tastes are also changing.

Problems in the Booming Rural Marketing
Although the rural market does offer a vast untapped potential, it should also be recognized that it is not that easy to operate in rural market because of several problems. Rural marketing is thus a time consuming affair and requires considerable investments in terms of evolving appropriate strategies with a view to tackle the problems.

The major problems faced are:

Underdeveloped People and Underdeveloped Markets:
The number of people below poverty line has not decreased in any appreciable manner. Thus underdeveloped people and consequently underdeveloped market by and large characterize the rural markets. Vast majorities of the rural people are tradition bound, fatalistic and believe in old customs, traditions, habits, taboos and practices.

Lack of Proper Physical Communication Facilities:
Nearly fifty percent of the villages in the country do not have all weather roads. Physical communication of these villages is highly expensive. Even today most villages in the eastern parts of the country are inaccessible during the monsoon.

Media for Rural Communication:
Among the mass media at some point of time in the late 50's and 60's radio was considered to be a potential medium for communication to the rural people. Another mass media is television and cinemas. Statistics indicate that the rural areas account for hardly 2000 to 3500 mobile theatres, which is far less when compared to the number of villages.

Many Languages and Dialects:
The number of languages and dialects vary widely from state to state, region to region and probably from district to district. The messages have to be delivered in the local languages and dialects. Even though the number of recognized languages are only 16, the dialects are estimated to be around 850.

Dispersed Market:
Rural areas are scattered and it is next to impossible to ensure the availability of a brand all over the country. Seven Indian states account for 76% of the country's rural retail outlets, the total number of which is placed at around 3.7 million. Advertising in such a highly heterogeneous market, which is widely spread, is very expensive.

Low Per Capita Income:
Even though about 33-35% of gross domestic product is generated in the rural areas it is shared by 74% of the population. Hence the per capita incomes are low compared to the urban areas.

Low Levels of Literacy:
The literacy rate is low in rural areas as compared to urban areas. This again leads to problem of communication for promotion purposes. Print medium becomes ineffective and to an extent irrelevant in rural areas since its reach is poor and so is the level of literacy.

Prevalence of spurious brands and seasonal demand:
For any branded product there are a multitude of 'local variants', which are cheaper, and, therefore, more desirable to villagers.

Different way of thinking:
There is a vast difference in the lifestyles of the people. The kind of choices of brands that an urban customer enjoys is different from the choices available to the rural customer. The rural customer usually has 2 or 3 brands to choose from whereas the urban one has multiple choices. The difference is also in the way of thinking. The rural customer has a fairly simple thinking as compared to the urban counterpart.

The 4A Approach
The rural market may be alluring but it is not without its problems: Low per capita disposable incomes that is half the urban disposable income; large number of daily wage earners, acute dependence on the vagaries of the monsoon; seasonal consumption linked to harvests and festivals and special occasions; poor roads; power problems; and inaccessibility to conventional advertising media.

However, the rural consumer is not unlike his urban counterpart in many ways.

The more daring MNCs are meeting the consequent challenges of availability, affordability, acceptability and awareness (the so-called 4 As).

Availability
The first challenge is to ensure availability of the product or service. India's 627,000 villages are spread over 3.2 million sq km; 700 million Indians may live in rural areas, finding them is not easy. However, given the poor state of roads, it is an even greater challenge to regularly reach products to the far-flung villages. Any serious marketer must strive to reach at least 13,113 villages with a population of more than 5,000. Marketers must trade off the distribution cost with incremental market penetration. Over the years, India's largest MNC, Hindustan Lever, a subsidiary of Unilever, has built a strong distribution system, which helps its brands reach the interiors of the rural market. To service remote village, stockists use auto-rickshaws, bullock-carts and even boats in the backwaters of Kerela. Coca-Cola, which considers rural India as a future growth driver, has evolved a hub and spoke distribution model to reach the villages. To ensure full loads, the company depot supplies, twice a week, large distributors which who act as hubs. These distributors appoint and supply, once a week, smaller distributors in adjoining areas. LG Electronics defines all cities and towns other than the seven metros cities as rural and semi-urban market. To tap these unexplored country markets, LG has set up 45 area offices and 59 rural/remote area offices.

Study on buying behaviour of rural consumer indicates that the rural retailers influences 35% of purchase occasions. Therefore sheer product availability can affect decision of brand choice, volumes and market share. Some of the FMCG giants like HLL took out project streamline to significantly enhance the control on the rural supply chain through a network of rural sub-stockists, who are based in the villages only. Apart from this to acquire further edge in distribution HLL started Project Shakti in partnership with Self Help groups of rural women.

Affordability
The second challenge is to ensure affordability of the product or service. With low disposable incomes, products need to be affordable to the rural consumer, most of whom are on daily wages. Some companies have addressed the affordability problem by introducing small unit packs. Godrej recently introduced three brands of Cinthol, Fair Glow and Godrej in 50-gm packs, priced at Rs 4-5 meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh - the so-called `Bimaru' States.

With large parts of rural India inaccessible to conventional advertising media - only 41 per cent rural households have access to TV - building awareness is another challenge. Fortunately, however, the rural consumer has the same likes as the urban consumer - movies and music - and for both the urban and rural consumer, the family is the key unit of identity. However, the rural consumer expressions differ from his urban counterpart. Outing for the former is confined to local fairs and festivals and TV viewing is confined to the state-owned Doordarshan. Consumption of branded products is treated as a special treat or indulgence.

Hindustan Lever relies heavily on its own company-organised media. These are promotional events organised by stockists. Godrej Consumer Products, which is trying to push its soap brands into the interior areas, uses radio to reach the local people in their language.

Coca-Cola uses a combination of TV, cinema and radio to reach 53.6 per cent of rural households. It doubled its spend on advertising on Doordarshan, which alone reached 41 per cent of rural households. It has also used banners, posters and tapped all the local forms of entertainment. Since price is a key issue in the rural areas, Coca-Cola advertising stressed its `magical' price point of Rs 5 per bottle in all media.LG Electronics uses vans and road shows to reach rural customers. The company uses local language advertising. Philips India uses wall writing and radio advertising to drive its growth in rural areas.

The key dilemma for MNCs eager to tap the large and fast-growing rural market is whether they can do so without hurting the company's profit margins. In case of nestle, company's product portfolio is essentially designed for urban consumers which cautions companies from plunging headlong into the rural market as capturing rural consumers can be expensive.

Role of Rural Retailing
Retailing is the final phase of the distribution channel and it is clear by now that it is availability and distribution that drives growth in rural Indian markets. Hence retailing will be significant and will undergo greater organisation and maturity as is being witnessed in the urban markets, even in the rural markets. Innovative retail models which take into account the nuances of rural markets is the way forward.

Format
Chaupal Sagar cannot be shoehorned into any of the existing retailing categories. At 7,000 square feet, it is too small to be a mall.

It has opted for self-service, stocking its merchandise on shelves lining the neat aisles, it stocks a breadth of products no supermarket can. It offers almost everything - from toothpastes to televisions, hair oils to motorcycles, mixer-grinders to water pumps, shirts to fertilisers... It defies pigeonholing. It is just a very sharply thought-out rural store.

Most of the brands it sells are national such as Marico, LG, Philips, torches from Eveready, shirts from ITC's apparel business, bikes from TVS, and tractors from Eicher.

Facilities
Spread over 5 acres of land at Sehore in Madhya Pradesh: -

Rural shopping malls will be open from 6 am to 9 pm.

Features and facilities at these ITC malls can overshadow those in the metros. The ITC store sells everything that a rural consumer may ask for - sarees to kurta-pyjamas to shirts (in the range of Rs 99-500), footwear, groceries, electronic durable from TVs to microwaves, cosmetics and other accessories, farm consumption products like seeds, fertilisers, pumps, generators and even tractors, motorcycles and scooters.

Banking and automated teller machines will be standard at the malls.

Insurance products for farmers.

Entertainment facilities, restaurants, public facilities and parking space will also be available.

There is even a fuel pump in tie-up with BPCL and a cafeteria.

Parking lot for 160 tractors.

There will be a primary healthcare facility to be serviced by a private healthcare service provider.

Information centres: The company will create the facility for providing online information on commodity rates and weather.

Shopping malls will have a training facility on modern farm techniques.

Farmers can come and log on to the Internet and check the pricing and sell their commodities.

There will also be godowns for storing the wheat and soybean and also for stocking products retailed at the mall.

Business Model
The business model of Chaupal Sagar is linked closely with the E-chaupal initiative of ITC.

Role of ITC is to create infrastructure such as space, computers, and building.

ITC will charge a fee for the services and items sold at the mall.

E-CHAUPAL: E-Chaupal is the backbone of these rural malls. While the first layer (E-Chaupal) provides the farmers necessary information about weather and prices, this hypermarket initiative will provide them another platform to sell their produce and purchase necessary farm and household goods under the same roof.

The e-Choupal model required that ITC to make significant investments to create and maintain its own IT network in rural India and to identify and train a local farmer to manage each e-Choupal.

E-Choupal combines a Web portal in the local language and PCs with Internet access placed in the villages to create a two-way channel between ITC and the villagers. The project started with a pilot in June 2000 in Madhya Pradesh with Soybean farmers. Currently, it covers six states, and multiple commodities like prawns, cotton and coffee with 4000 Choupals.

Plans are to reach 15 states by 2010, covering 100,000 villages with 20,000 Choupals.

Each e-Choupal (equipped with a PC with Internet connectivity, printer and UPS) typically housed in the farmer's house, is linked to the Internet via phone lines or, increasingly, by a VSAT connection, and serves an average of 600 farmers in 10 surrounding villages within about a five kilometer radius. Using the system costs farmers nothing, but the host farmer, called a sanchalak, incurs some operating costs (The IT part of each e-Choupal costs about Rs 1.3 lakh, each e-Choupal is estimated to pay back for itself in 4.5 years) and is obligated by a public oath to serve the entire community; the sanchalak benefits from increased prestige and a commission paid him for all e-Choupal transactions. The farmers can use the computer to access daily closing prices on local mandis, as well as to track global price trends or find information about new farming techniques-either directly or, because many farmers are illiterate, via the sanchalak. They also use the e-Choupal to order seed, fertilizer, and other products such as consumer goods from ITC or its partners, at prices lower than those available from village traders; the sanchalak typically aggregates the village demand for these products and transmits the order to an ITC representative. At harvest time, ITC offers to buy the crop directly from any farmer at the previous day's closing price; the farmer then transports his crop to an ITC processing center, where the crop is weighed electronically and assessed for quality. The farmer is then paid for the crop and a transport fee. "Bonus points," which are exchangeable for products that ITC sells, are given for crops with quality above the norm. In this way, the e-Choupal system bypasses the government-mandated trading mandis.

Farmers benefit from more accurate weighing, faster processing time, and prompt payment, and from access to a wide range of information, including accurate market price knowledge, and market trends, which help them decide when, where, and at what price to sell. Farmers selling directly to ITC through an e-Choupal typically receive a higher price for their crops than they would receive through the mandi system, on average about 2.5% higher (about US$6 per ton). The total benefit to farmers includes lower prices for inputs and other goods, higher yields, and a sense of empowerment. At the same time, ITC benefits from net procurement costs that are about 2.5% lower (it saves the commission fee and part of the transport costs it would otherwise pay to traders who serve as its buying agents at the mandi) and it has more direct control over the quality of what it buys.

By building a network of warehouses near the production centres and by providing inputs to the farmers and test output at the individual farm level, ITC is able to preserve the source and quality information of produce purchased. By helping the farmer identify and control his inputs and farming practices and by paying better for better quality, ITC is able to improve the quality of produce that it purchases. In the commodities market, these two combine to help ITC create the differentiator that it set out to establish in the beginning.

ITC gains additional benefits from using this network as a distribution channel for its products (and those of its partners) and a source of innovation for new products. It is also being used to provide services like rural market research to those interested.

Strategy for Success

Use of ITC warehouses
This will help in cost control as well as better utilisation of space in these warehouses. It will also provide convenience and familiarity with the target customer.

Targeted at Farmers selling to ITC warehouse through E-chaupal
With its network of e-chaupals, ITC communicates its latest commodity prices to the farmers via the Internet or VSAT lines. If they find these attractive, they sell their produce to ITC. The sanchalak (the person who operates an e-chaupal; most of them are farmers) of villages near these malls reckons that half the farmers in his village deal only with ITC. Now, by setting up the mall next to the warehouse, ITC is trying to monetise the footfalls from farmers; that is every time sanchalaks- and farmers visit ITC's soybean factories in MP to sell their produce, they also have the opportunity to spend their freshly earned cash.

ITC realised that the farmers had just got money, that they would spend it anyway, and that they had an empty vehicle with which they could lug the stuff back.

ITC intends to capture the rural folks' out-of-village shopping
The warehouse is one bulwark of its strategy, obviously. But the farmers will come here only after every harvest. To ensure that they keep coming to Chaupal Sagar even at other times, the company is offering a slew of other goodies. Another building is coming up next to the main warehouse. When completed, it will house a bank, a cafeteria, apart from an insurance office and a learning centre. ITC has tied up with agri-institutes to offer farmer training programmes. Then, plots of land have been earmarked to display large agricultural machinery like threshers. Other parcels of land have been earmarked for pesticide and fertiliser companies for demonstrating their products. A petrol pump is coming up as well.

To attract footfalls during the lean season, ITC plans to organise various activities and events including melas,training programs, demonstrations.
The hubs are strategically located to attract suburban crowds as well.

Retail channel for its own brands as well as for other brands
Working through the sanchalaks, ITC first pushed its own products, like salt, into the hinterland, and then invited others like Parachute and Philips to ride on this distribution chain. Today, it plans to similarly create revenue streams around its warehouses.

Financing Scheme
ITC is investing initially Rs 3 crore (Rs 30 million) in each such shopping mall. However it is working out a strategy to make it cost-effective for them.

To keep its own investment to the minimum, ITC is encouraging the samyojak - a local broker or middleman co-opted by ITC - to pick up equity and manage these shops as part owners.

Assisted by four ITC salesmen, the samyojaks will assess demand, ensure just-in-time delivery, manage customer service and keep accounts.

Uniqueness Of the Model: lies in the fact that it works equally well for ITC as the buyer of farm produce and ITC as the seller of desirables.

Charge fees from the brands being showcased at the mall as well as for the services being provided at the Mall.

Results & Expectations
During the peak season, a hub sees traffic of about 200 tractors per day on an average, as farmers come to sell their crops at the hubs.

Initial response: On the first day the store notched up a business of about Rs 70,000-80,000. Footfall of about 700-800 people on weekdays and soaring to 1,000 on weekends with conversion levels of 35%.

Future Plans
ITC chairman Yogi Deveshwar has promised his shareholders that the company would open 1,000 rural malls in India. This is the first one to have come up.

Encouraged by its image as a fair and reliable buyer of farm produce, ITC decided to invest in 5-acre malls, costing between Rs 3-5 crore each, across 15 states. The first five - four in Madhya Pradesh and one in UP - will be inaugurated by March 2004.

The first shopping mall is being set up near Sehore, and the second one will come up in June near Itarsi in Oshangabad district.

ITC is planning to set up 40 rural shopping centres in those. states where it has a presence through its e-chaupals and IT hubs spread across rural Madhya Pradesh and Uttar Pradesh.

Haryali Bazaars Bring Organised Retailing to Farmers
Having successfully pioneered a new concept of Haryali Kissan Bazaars in 2002 in Hardoi, agri-inputs focused DCM Sriram Consolidated Ltd. (DSCL) opened eight more (Ladwa in Haryana, Ferozepur in Punjab, Kota in Rajasthan and four locations in UP).

The store complex is spread over 2-3 acres and caters to all the farmers requirements (both DCM Sriram products & other sources): farm inputs ((fertilizers, seeds, pesticides, animal feed), farm implements, spare parts, irrigation equipment, spraying equipment. Further, the uniformed salesman, an agricultural graduate, gives free agricultural related advice in personal interactions or through mobile phones (averaging 20 calls a day). Twenty such stores, each catering to 100 villages, are planned by 2005.

Innovative Rural Retail Models
Indian FMCG firms with rural experience have typically used three rural retail methods--direct distribution structures, van operations and super-stockist structures. Each of these methods need to be evaluated taking into consideration the current network, cost impact of the proposed structure and quality control issue associated with each of these structures.

Direct Retail/Distribution Structures

Project Shakti
Project Shakti - Hindustan Lever Ltd's (HLL) rural self-help group initiative to push the penetration of its products to reach areas of low access and low market potential.

Objective
HLL's conventional hub-and-spoke distribution model, which it uses to great effect in both urban and semi-urban markets, wouldn't be cost-effective in penetrating the smaller villages.

The effort is to create a WIN-WIN SITUTAION.

Through a combination of micro-credit and training in enterprise management, women from self-help groups have turned direct-to-home distributors of a range of HLL products and helping the company plumb hitherto unexplored rural hinterlands.

Concept
The Project is a retail/distribution model that HLL established in late 2000 to sell its products through women self-help groups who operate like a direct-to-home team of sales women in inaccessible areas where HLL's conventional sales system does not reach.

Strategy for Success

1. Social Angle
Create "income-generating capabilities for underprivileged rural women by providing a sustainable micro-enterprise opportunity".

To improve rural living standards through "health and hygiene awareness".

2. Commercial Angle
For HLL, it is "enlightened self-interest".

Creating opportunities to increase rural family incomes puts more money in their hands to purchase the range of daily consumption products - from soaps to toothpastes - that HLL makes.

It also enables HLL access hitherto unexplored rural hinterlands.

How Does It Work?

To get started the Shakti woman borrows from her SHG and the company itself chooses only one person. With training and handholding by the company for the first three months, she begins her door-to-door journey selling her wares.

A Shakti entrepreneur receives stocks at her doorstep from the HLL rural distributor and sells direct to consumers as well as to other retailers in the village.

Each Shakti entrepreneur services 6-10 villages in the population strata of 1,000 - 2,000 people.

Typically,a Shakti entrepreneur sets off with 4-5 chief brands from the HLL portfolio - Lifebuoy, Wheel, Pepsodent, Annapurna salt and Clinic Plus. Other brands which find favour with a rural audience are: Lux, Ponds, Nihar and 3 Roses tea.

The women avail of micro-credit through banks. Some of the established Shakti dealers are now selling Rs. 10,000 - Rs. 15,000 worth of products a month and making a gross profit of Rs. 700 - Rs. 1,000 a month. Each Shakti dealer covers 6-10 villages, which have a population of less 2,000. The company is creating demand for its products by having its Shakti dealers educating consumers on aspects like health and hygiene.

HLL-SHG Business Model
Hindustan Lever Ltd (HLL) India's largest consumer goods company has a large distribution network comprising 5,000 re-distribution stockists and 40 C&FAs (Clearing and Forwarding Agent). Yet this network covers only 75,000 villages directly out of the total 6,00,000 villages in India. A tie up with SHGs can take HLL products to many more villages directly.

Trading opportunities with stable companies with established rural brands (Lifebuoy, Lux, Wheel, Clinic and 3 Roses tea etc) could be a boon to women members of SHGs.

How Does It Work?

A pilot project (christened Project Shakti) was launched in Nalgonda in December 2000 in a small cluster of 50 villages with 50 SHGs and 3 MACTS (Mutually Aided Co-operative Thrift Society, a federation of around 20 SHGs).

There are 3 partners and their roles are: -
MACTS/SHGs: sell/retail HLL products
HLL: supplies products, provides marketing and promotion support
MART: facilitates the process, provides business training inputs

Capacity Building of MACTS and SHGs

Achievement Motivation Training programmes have been conducted to create a desire among women for starting their own business.
Formal training of group leaders and other members have been conducted to help them become successful entrepreneurs.
Level 1: Basic orientation to HLL business and brands.
Level 2: Enterprise management and marketing.
Animators have been appointed (stipend paid by HLL) to promote sale.

'Shakti Day', an artificially created market place in the village with specially devised communication kits is conducted regularly where special discounts and schemes are offered to increase sale.

Results & Expectations

Accounts for 10-15 per cent of HLL's rural sales. The statistic assumes significance as the rural market constitutes over 40 per cent of HLL's total sales of about Rs 10,000 crore.

HLL has seen 15 per cent incremental sales from rural Andhra, which contributes 50 per cent to overall sales from Andhra of HLL products.

Lot of consumer understanding and insights comes from an exercise like Project Shakti, which in turn can lead to product innovation.

I-Shakti', an IT-based rural information service that will provide solutions to key rural needs in the areas of agriculture, education, vocational training, health and hygiene.

Future Plans

Given the success of the model piloted in Nalgonda in Andhra Pradesh in 2001, the company has plans to expand Project Shakti in 400 districts by 2006. By the end of 2004, it plans to cover 100 districts. At the moment, it reaches about 10,000 villages in Andhra Pradesh, Madhya Pradesh, Gujarat and Karnataka and works through 800 self-help groups (SHGs).

The company intends to extend the model across Madhya Pradesh, Gujarat and UP and TamilNadu markets. The Shakti vision, is to have by 2007 at least 10,000 Shakti dealers, covering a lakh villages and touching at least 100 million consumers.

Company is in dialogue with non-competing companies like Philips (bulbs) for a partnership to distribute their products through the network that HLL has established. The company is in talks with insurance companies such as ICICI Prudential and Max New York Life to sell policies through its `Shakti dealers'. Sources said that a battery maker is also in talks with the company as it is not a product in the HLL portfolio.

Super-Stockist Channel

Project Streamline
The company had earlier also launched Operation Streamline to further increase its rural reach with the help of rural sub-stockists. It had appointed 6,000 such stockists, the distribution network directly covering about 50,000 villages reaching about 250 million consumers. HLL conceptualised Project Streamline to enhance its control on the rural supply chain through a network of rural sub-stockists based in these villages. This gave the company the required competitive edge, and extended its direct reach to 37 per cent of the country's rural population.

Key Points

To increase the reach in rural areas.

Rural Distributor will have around 20 stockists attached to him who performs the role of driving distribution in villages using unconventional means of transport such as tractor, bullock, etc.

This gave the company the required competitive edge, and extended its direct reach to 37 per cent of the country's rural population.

This strategy has supposed to increase the market share of HLL in rural areas by about 3%.

Control on the rural supply chain through a network of rural sub-stockists, who are based in the villages only.

Others
Marico launched a major initiative into rural markets by appointing 2,400 sub-stockists in the last two years. Recently, Dabur also finished a pilot project for its super-stockists in Patna and has now rolled it out in Bihar, Madhya Pradesh and Rajasthan. Reckitt has also adopted the super-stockist system in Tamil Nadu and plans to set up such a system all over the country in the next year, with the target of covering one million outlets in the next three years.

Van Operations

Project Bharat
In 1998 HLL's personal products unit initiated Project Bharat, the first and largest rural home-to-home operation to have ever been prepared by any company. The project covered 13 million rural households by the end of 1999.

During the course of operation, HLL had vans visiting villages across the country distributing sample packs comprising a low-unit-price pack each of shampoo, talcum powder, toothpaste and skin cream priced at Rs 15. This was to create awareness of the company's product categories and of the affordability of the products.

The personal products unit subsequently rolled out a second phase of the sampling initiative to target villages with a population of over 2,000.

Project Bharat, a massive rural sampling initiative in two phases. They have carried out one of the largest sampling exercises for this purpose to overcome barriers like lack of brand awareness, ignorance of product benefits and complete absence of any first-hand experience of usage.

Recommendations
The business model for rural retail can be successful only when integration between the profit and social motive is apparent. The social angle needs to be pronounced for it to be acceptable.

Empowerment in terms of economic power, purchasing power, knowledge and information dissemination is crucial for rural retail ventures to succeed. The model should empower the rural consumer and at the same time take advantage of this empowerment through creation of demand for its own products and that of its partners.

The level of penetration except for certain products, has been negligible so far. However, so far as the rural share in consumer expendables like cooking oil, tea, electric bulbs, hair oil, shampoo, toilet soap, toothpaste, washing cakes and washing powder is concerned, their share on an average, is much higher than consumer durables. Though the rural-urban differentials are not so pronounced in the case of durables, the rural market penetration is low with respect to urban areas. However, in case of health beverages and cosmetics like shampoos, nail polish and lipsticks, large gaps exist. Hence these products provide substantial opportunity to enter the rural markets.

Definitely there is lot of money in rural India. But there are hindrances at the same time. The greatest hindrance is that the rural market is still evolving and there is no set format to understand consumer behaviour. Lot of study is still to be conducted in order to understand the rural consumer. Only FMCGs with deeper pockets, unwavering rural commitment and staying power will be able to stay longer on this rural race and hence should venture into this territory.

Price of rice, price of power

By M H Ahssan

Most governments that stressed welfarist measures gained in last month's elections. Food prices and cheap rice are crucial, though not the sole issues.

Now that we have a Cabinet whose assets total close to Rs.5 billion on its own declaration, with Ministers worth over Rs.75 million each on average, it will be worth watching how it rises to the challenge of identifying with the poor and the hungry. That Rs.5 billion figure, painstakingly compiled by the National Election Watch, a coalition of over 1200 civil society organisations working across India, covers 64 of the 79 Ministers. The other 15 are Rajya Sabha members whose updated assets are yet to be computed.

True, these figures are skewed by the fact that the top five Ministers alone are worth Rs. 2 billion. However, as the NEW points out, the rest are not destitute. In all, 47 of the 64 are crorepatis. And the remaining 15 won't harm the score too much when their totals come in.

Together, they will preside over the destiny of, amongst others, 836 million Indians who "get by with less than Rs.20 a day" (National Commission for Enterprises in the Unorganised Sector report, August 2007). This challenge will unfold in a Lok Sabha where the average worth of an MP is Rs.51 million. Again, this average too, is skewed by a chunk of 60-70 MPs of the 543 whose asset worth is relatively very low. On the other hand, many have notched up large gains in wealth during their first term as MPs.

In a complex and layered verdict driven by many factors, one seems clear: most governments that stressed welfarist measures - particularly cheap rice and employment - gained in last month's election results. This was regardless of which party was leading them - the Congress, the BJP, the BJD, the DMK or any other. Some of these measures might not have led to large numbers of people going out to vote for those governments. But they at least lowered hostility levels amongst the voters in a hungry nation. As Madhura Swaminathan points out, the FAO data confirm that "no country comes close to India in terms of the absolute number of people living in chronic hunger."

The hungry have had it pretty bad. The rise in food prices was extremely steep over the last five years, one of our more adverse periods in decades. Between just 2004 and 2008, the price of rice rose by over 45 per cent and of wheat by more than 60 per cent. Atta, edible oils, dals, milk and even salt saw rises of between 30 and 40 per cent. Lower or near-zero inflation has seen no drop in food prices. That the media never saw hunger and cheap food as a major poll factor says more about them than the issue.

The DMK's colour television set giveaway - the focus of much derisory media attention - was never a fraction as important as its provision of 20 kg of rice per family at Rs.1 a kg since September 2008. That too, for anyone with a ration card, without dividing people into the APL or BPL groups. Tamilnadu had already been providing rice at Rs.2 a kg for some years. It also took the NREGA seriously. The State government gained on both counts.

In Andhra Pradesh, like in Tamilnadu, the Congress government of Y S Rajasekhara Reddy was helped by the presence of a third party - Chiranjeevi's Praja Rajyam - which drew a lot of anti-Congress votes, crippling the rival Telugu Desam Party. But YSR's was also a government which in its first year restored lakhs of cancelled BPL cards and issued lakhs of new ones. (The Hindu, Sept. 29, 2005) In nine years, Chandrababu Naidu's government issued no BPL card till the period just before the elections. That in a State where hunger and food have been huge issues even in urban areas.

Andhra Pradesh was where rice at Rs.2 a kg began with Naidu's father-in-law, then Chief Minister N.T. Rama Rao. NTR's charisma was never in question - but rice at Rs.2 a kg helped, more than any other factor, to convert it into votes. Chief Minister Rajasekhara Reddy in fact stole the TDP's clothes when in April 2008 he brought back the Rs.2 a kg rice scheme - a year before the national polls. This was at 4 kg per person (or 20 kg per family of five). An earlier generation of Congress leaders had trashed NTR's pet project as a "costly gimmick." But Dr. Reddy took a more sensible line and gained from it.

During Mr. Naidu's years in power, so lavishly praised in the media for his reforms, the public was repeatedly hit by massive hikes in power charges, water rates, food prices and other costs. He has not managed to live down his record or regain credibility in 2009.

His adversary ran a decent NREGA programme. In the backward Mahbubnagar district, distress migrations fell as many found work under the NREGA. This at a time when food prices were biting. So much so that people in their 70s turned up at NREG sites for work - their Rs.200-a-month pensions blown away by the rise in food prices. Even on that front, though, the Andhra Pradesh government earned some credit. When it assumed power, there were 1.8 million people in the State getting old-age, widow and disability pensions - a paltry Rs.75 each. This was raised to Rs.500 for disabled people and Rs.200 for the rest. Hardly enough - but a lot more than before. And the number of people getting these pensions rose four-fold to 7.2 million. The State also has one of the country's better pension schemes for women.

In Orissa, Naveen Patnaik played his cards most effectively, gutting the BJP and corralling the Congress. But he also gained hugely from giving people cheap rice. In the burning hunger zones of Kalahandi-Bolangir-Koraput, 25 kg of rice had been offered to all families at Rs.2 a kg since mid-2008. In the rest of the State, this was restricted to BPL families. The government also gave out 10 kg of free rice to the poorest families in the KBK districts. This had a major impact in curbing starvation deaths. Mr. Patnaik also increased the numbers of those coming under pension schemes - and housing projects for the poor - quite significantly. (At the same time, he implemented the Sixth Pay Commission recommendations before the polls, sewing up the middle classes as well).

Sure, these were not the only issues on which people voted, but they played a big role (In the case of YSR and Mr. Patnaik, there was another factor that helped this along. The positive measures in both States were present and visible. The negatives - and they are explosive, like massive human displacement, SEZs, dangerous mining projects - are in the pipeline. Disasters waiting to happen but which will take two or three years to do so. Unless, of course, those policies change.)

In Chhattisgarh, however repugnant the ways of that government in many spheres, Chief Minister Raman Singh took a personal interest in declaring 35 kg per family at Rs.3 a kg. His government then unilaterally "increased" the number of people below the poverty line to almost 15 million - in a population of 20.8 million (2001 census). That is, close to 70 per cent of the population was "declared" BPL. This was done several months before the 2008 Assembly elections. It helped the government in both the State and national polls.

The Left Front in West Bengal failed on both fronts. The State saw rioting at ration shops last year as the Centre cut allocations of grain sharply. Yet West Bengal, which tops the States in rice production, moved towards provision of cheaper rice only early this year. Too reluctantly and too late. Its performance in the NREGS was also very poor. Hunger was a factor in the rout of the Left Front.

So what should those in power read into the poll results? That they have a mandate for more liberalisation, privatisation, high prices and other such reforms? Or that the price of rice could be the price of power? That jobs and security are vital? Food prices and cheap rice are crucial, though not the sole issues. Governments cannot bank on such moves already made to bring them perpetual gains. But the whole process is a step ahead and has raised the bar on public expectations. Sharp reversals could prove suicidal.

BANKING FOR THE POOR: Micro credit gathers force

By M H Ahssan

There is now mounting hope that micro finance can be a large scale poverty alleviation tool. Banks too are shedding their old reluctance to lend to the poor, and are looking to tap the expertise of micro credit groups to create a new market.

India has one of the largest networks of bank branches in the world, but the hundreds of millions of poor in the country are largely out of it. Banks were nationalised three decades ago with the hope - and promise - that their services would reach the poor. But that goal is not even close to being met today. With 52,000 commercial bank branches, 14,522 branches of regional rural banks and 100,000 cooperative bank branches, the country is teeming with institutions that should be able to meet the credit needs of the people. But if you are poor, you're also probably out of luck with the banks; it is tough persuading them to even let you open a bank account.

The consequences have been devastating. Consider these numbers: 75 million households in India depend on moneylenders to meet financial needs; almost 90 per cent of people in rural India have no access to insurance; 50 million households are landless and need small credit to start some economic activity. And even families earning Rs.4000-5000 a month in urban areas spend huge portions of their earnings to service debt.

But out of necessity and enterprise, those locked out of the banking world have found a way out. It is called micro credit - the extension of small loans to individuals who are too poor to qualify for traditional bank loans, as they have no assets to be offered as guarantee. In India, micro credit has worked largely through self-help groups. Predominated by women, these are formed with simple rules - save, accumulate and give loans to each other. Globally, it is slowly proving one of the most effective strategies to neutralise poverty. Micro credit lending institutions are currently estimated to reach some two million households in India.

Can a mere five hundred rupees change a life? This sounds implausible, as prices spiral by the day. But in numerous villages in India, this miracle is quite real; millions of poor women are today using small loans to rewrite their present and future. Many of them have not ever seen the corridors of a high school, but are using common sense to propel their entrepreneurship and group business activities. Dr. C. Rangarajan, Chairman, Economic Advisory Council of the Government of India, points out, "Micro credit can aid employment and sustain households giving them opportunities they never had before." It is called micro credit with good reason. The size of the loan is typically small. The borrower is usually battling against poverty. The repayment schedule is simple and short. And, the activity for which the loan is taken is often of a small nature. But poor women, who are in the forefront of the micro credit movement, use the small loans to jumpstart a long chain of economic activity from this small beginning. As they have enormous pride in their integrity, they repay quickly and reliably, not wanting to be seen as defaulters. Then, they begin again, this time with a bigger loan - and keep expanding their profit base until they do not need the loans any longer.

Micro credit has given women in India an opportunity to become agents of change. The movement has made them more confident than ever helping them to explore new horizons, new dreams. The most active states are Andhra Pradesh and Tamilnadu. Other states where such self-help groups are making a dramatic difference are Karnataka, Himachal Pradesh and Uttaranchal. Sheila Dikshit, Chief Minister of Delhi, says: "Micro finance will be the future mantra for alleviation of poverty. I have met women who say that 500 to 800 rupees makes all the difference as it dramatically changes their standard of life."

A late start, and a long way to go
That is the positive side of the story. The negative one is that India's demand for micro credit is Rs.500 billion, and only Rs.18 billion of this amount has been generated so far; there is still a long way to go. Nearly 7.5 million poor households in India desperately want access to financial services to meet immediate needs. Almost 36 per cent of the country's rural households have to look for credit outside the formal sector. A World Bank study of over 6000 families in Andhra Pradesh and Uttar Pradesh, two of India's largest states, shows that 87 per cent of them have no access to credit, 85 per cent had no access to insurance and 56 per cent borrow from moneylenders. The poor need banking services more than credit, as they need to safely secure their little savings or remittances coming from their men folk who migrated in search of work.

The chief culprits are the banks, who continue to see the poor women - rural as well as urban - as unworthy of credit, and is only slowly awakening to the possibilities. Points out Jayshree Vyas, Managing Director of the SEWA Bank at Ahmedabad which mainly has self employed street vendors as account holders: "We started a bank as the women demanded it. They wanted a place to put their savings. The banking sector earlier never respected self-employed women." Today, the SEWA bank in Ahmedabad is a model for others to replicate. It has deposits of over Rs.100 crores got from nearly 250,000 women. It is the biggest poor women's bank in the world.

Even the few banks who now belatedly recognise the potential in rural banking lack the capability to serve this market, which has been neglected for so long, and need intermediaries to help build their capacity to do business with small borrowers. V.K. Chopra, Chairman and Managing Director, Corporation Bank, admits, "Lending without any collateral for commercial banks to the poorest of the poor in rural areas is very difficult as banks do not have the expertise or facilities in these areas. That is why micro finance institutions should step in. Today's banks are flush with money. If micro finance institutions are strong, banks will readily lend to them."

That there are significant opportunities for banks in micro credit is now unquestioned. Banks like ICICI are exploring how it could reap the benefits from the micro finance revolution. Nachiket Mor, Executive Director, ICICI says: "A lot has been done in Andhra Pradesh, but we want to build 250 micro finance institutions to build a network in 600 other districts each one serving a million households. It will involve around Rs. 200,000 crores and it is not an unreasonable dream." Mor feels that the micro credit movement must now move beyond their members and look at financing for roads and water.

The larger banks also need the micro credit institutions for other reasons, besides expanding their opportunities. The micro credit institutions have considerable experience in dealing with the cultural realities of life for the rural poor. Every self-help group and micro financing institution in India has been through a great learning experience in the last few years. Every day has been an experience. Women need to guard their savings even in a bank fighting off pressures from the family. Says SEWA Bank's Vyas: "We found women begging us not to send them any letters or bank statements. They even asked us to keep their passbooks, as they did not want their husbands to know they had money, as then they would be pressurized to withdraw it. More often than not, it would be spent frivolously on gambling or alcohol." Large banks are wary of this cultural minefield, and will look to their micro credit partners for help in steering the course.

Even the few banks who now belatedly recognise the potential in rural banking lack the capability to serve this market, which has been neglected for so long, and need intermediaries to help build their capacity to do business with small borrowers. V.K. Chopra, Chairman and Managing Director, Corporation Bank, admits, "Lending without any collateral for commercial banks to the poorest of the poor in rural areas is very difficult as banks do not have the expertise or facilities in these areas. That is why micro finance institutions should step in. Today's banks are flush with money. If micro finance institutions are strong, banks will readily lend to them."

That there are significant opportunities for banks in micro credit is now unquestioned. Banks like ICICI are exploring how it could reap the benefits from the micro finance revolution. Nachiket Mor, Executive Director, ICICI says: "A lot has been done in Andhra Pradesh, but we want to build 250 micro finance institutions to build a network in 600 other districts each one serving a million households. It will involve around Rs. 200,000 crores and it is not an unreasonable dream." Mor feels that the micro credit movement must now move beyond their members and look at financing for roads and water.

The larger banks also need the micro credit institutions for other reasons, besides expanding their opportunities. The micro credit institutions have considerable experience in dealing with the cultural realities of life for the rural poor. Every self-help group and micro financing institution in India has been through a great learning experience in the last few years. Every day has been an experience. Women need to guard their savings even in a bank fighting off pressures from the family. Says SEWA Bank's Vyas: "We found women begging us not to send them any letters or bank statements. They even asked us to keep their passbooks, as they did not want their husbands to know they had money, as then they would be pressurized to withdraw it. More often than not, it would be spent frivolously on gambling or alcohol." Large banks are wary of this cultural minefield, and will look to their micro credit partners for help in steering the course.

Looking ahead
What will it take for micro credit to become a mainstream mode for lending? One option is to provide other financial services similarly built around small amounts of money, such as micro insurance. There is tremendous scope to design well-adapted insurance products for the poor in the insurance sector as well; this will reduce their vulnerability to environmental influences - weather and pests - as well as diminish the risk should they - or their livestock - become ill unexpectedly. Such additional products will expand the micro finance platform, and even encourage more new directions. Credit schemes specifically tailored for urban areas can also help; urban micro finance, unlike its rural counterpart, has not mushroomed despite the rising numbers of urban poor.

The potential of micro credit to tackle poverty should not blind us to the fact that lending to the poor has to be regulated just like other lending, perhaps even more carefully considering their already weak economic standing. Some experts believe that as the movement spreads and grows, it will be apt to have a regulator in place. Titus says: "We need some ground rules. The movement must not be allowed to degenerate as it expands." Mahajan says that unless a responsible regulator is in place, very little will happen with savings. But many others are wary of regulation, and remind us that micro finance must be allowed to blossom without any interference that could choke off its potential. Malcom Harper, Professor Emeritus, Cranfield Inenstitute of Management, is of the view that the greatest challenge is to keep politicians out of the way as the movement grows, as they will just see it as a way to distribute money and not empower people.

But regulation is likely sooner or later. Self help groups today handle Rs.5,600 crores of disbursement. Just four micro finance institutions in Hyderabad alone have disbursed Rs.1400 crores. The National Bank for Agriculture and Rural Development forecasts that by 2008, about one million self-help groups would be taking loans from the bank, with a total membership of around 17 million people. Over a quarter of poor Indian households will by 2009 likely have access to formal financial services if current trends continue. With such large amounts and widespread participation comes inevitable government responsibilities to check unethical practices.