What an idea, Sir ji!

The Financial Express
Publication Date: 
Monday, 13 September 2010

What do programmes like the New Pension Scheme (NPS), the UIDAI, the Right to Education, the Right to Information, and many more, have in common, apart from the fact that all have been launched by the UPA? Almost all, believe it or not, were originally efforts made by individuals/NGOs which have now got mainstreamed and have the potential, in both good ways and bad, to change our lives in a big way.

The Right to Information Act, it is pretty well-known by now, was borne out of the work of Aruna Roy and her campaign to have various registers/lists made public, muster rolls of workers who were supposed to have got money from various public works programmes, lists of public works sanctioned and the money allocated to them, and so on. The list of the other parents, as it were, is less well-known, and that is what this piece hopes to correct, at least partially. The timing is a bit off since it was actually meant to coincide with the 13th anniversary of the Delhi-based Centre for Civil Society (CCS) last month, but better late than never!

Parth Shah, who set up CCS, began talking of school vouchers several years ago. Why give a subsidy to a school, which is what government-run schools essentially boil down to; why not give it to parents? That way, if parents are dissatisfied with the quality of education, they will move their children to other schools; this will then put pressure on government schools to deliver. Many others were talking the same language, but what CCS did was different—it collected money to fund the education of 400 children for a year and then used volunteers to go across to certain wards in Delhi on cycle rickshaws using loudspeakers to publicise the scheme. For these 400 students, it got over a lakh applications. Poor India wanted to vote with its feet. The Right to Education Act has several shortcomings, the principal one being the insistence that all schools must be recognised by the government, which will drive up their costs and them out of business. But CCS’s school voucher system is inbuilt into the system since 25% of all school seats will have to be reserved for RTE children for whom the government will make payments. Not bad for a 13-year old.

In 2006, Gautam Bhardwaj, along with others like Vijay Mahajan of Basix, Renana Jhabvala of Sewa and UTI’s UK Sinha, set up Invest India Micro Pension Services (IIMPS), an outfit dedicated to work on pension funds among the poor—the company has set up a proprietary IT platform and even owns the brandname ‘micro pension’. By end 2008, it had begun working with the Rajasthan government in a scheme where the government co-contributed a one-time Rs 1,000 and 50,000 persons signed up for it, contributing Rs 100 per month—Andhra Pradesh, Madhya Pradesh, Karnataka and Haryana have now announced similar schemes, and IIMPS has got queries from other Asian countries to run similar schemes for them. Meanwhile, it also signed another 1,50,000 persons for a similar programme, but without co-contributions from the government—the fund, administered by UTI, has earned around 13% per annum in the last few years. To put this in perspective, the government’s New Pension Scheme has just 11,000 members. Since NPS contributors end up giving around 10-11% of their contributions in commissions, the regulator has now announced NPS-light, with IIMPS-type minimum deposits and is also looking at working with groups like Sewa to get more contributors and at lower costs.

Around the same time, ICICI Bank’s Nachiket Mor branched out into financial inclusion and, with Fino, began figuring out how to take banking to the unbanked. Fino tied up with several banks and financial service providers, began giving biometric cards that captured all financial transactions—service outlets had card-readers and acted as banks.

Fino has 18 million customers today. It gives out money on behalf of NREGA, government pensions and even offers cashless hospitalisation in five states under the Rashtriya Swastha Bima Yojana. Unlike traditional MFIs like SKS who just lend money, Fino’s powerful backend allows banks to offer rural India insurance and money market mutual funds. Precursor to the UIDAI?

Yes, but not the only one. Anurag Gupta’s A Little World (ALW) began with smart-card based microfinance and then moved on to cardless mobile phone based banking. It has 3 million customers across 20,000 villages in 18 states. MCHQ, now mChek, the mobile payments solution, was originally developed by ALW. Others like Abhishek Sinha of Eko have improvised on this further and come up with one-time password generators for cash transfers. Rural banking, what RBI is stressing nowadays, couldn’t have come even as far as it has without these gents.

The Jawaharlal Nehru Urban Renewal Mission, similarly, was part of a process of focussing on urban planning and reform headed by individuals such as Ramesh Ramanathan (who is also an independent director of Fino and the technical advisor to JNNURM) and Nandan Nilekani. What an idea, Sirji.