Introduction: A defining element of UBC’s MPPGA program is an intensive Global Policy Project (GP2), which provides opportunities for students to engage with policy makers and civil society and apply creative thinking and strategic design skills to a real-world policy challenge. Reflections from the GP² student team that visited India in December 2016 are below.
India holds 3 of the world’s top ten megacities, and has the second largest populous with over 1.2 billion people. Despite occupying just 2.4% of the world’s land area, India supports over 17.31% of the global population. This federation is extremely diverse: supporting devotees of four world religions, has 22 official languages, and prides itself on being the world’s largest democracy. The complex political, economic, and social structures operating within India are best seen from the ground.
In September 2016, we were introduced to our client BASIX; a livelihood promotion institution established in 1996 working to promote a large number of sustainable livelihoods, including those targeting the rural poor and women. BASIX has created several initiatives to support their mission. One of them, Sub-K has the goal to provide financial services and technical assistances in an integrated manner various financial inclusion services including: savings, micro-pensions, micro-insurance, NREGA and other government payments, money transfers, micro-credit, and utility payments. They do this through an innovative last-mile delivery service platform known as the Banking Correspondent (BC) model. Working closely with BASIX Sub-K our aim is to develop a comprehensive understanding of the financial inclusion policies environment that influences the financial services available for the bottom 20% in Indians and to evaluate the place of current BC model within that setting.
In December 2016, after over 2 months of preparation, including research, policy analysis, and survey design, we packed our bags for a 20-day field visit to India. The purpose of this trip was to attain a deeper understanding of the financial eco-system through stakeholder engagement, field research, and the immersion of the team into the Indian context.
We happened to arrive in the midst of the immense chaos, a cash-crunch caused by PM Modhi’s demonetization policy. On November 8th, 2016, all ₹500 (US$7.40) and ₹1,000 (US$15) were demonetized. Citizens were given until December 31st to exchange said notes at approved locations for the new legal tender. Immediately after the November announcement retailers and citizens were no longer able to use the currency for daily transactions, leading to a massive rush to exchange them for new bills. Watching this policy, a supposed response to ‘black-money’ and its illegal uses, in action was beyond chaotic. Not surprisingly, ATM line-ups were hours and hours long, many banks were closed. All shops and venders were also experiencing a severe cash shortage because the government missed a critical step in the implementation process – printing the new money in time. The number of cash-related deaths were reported to be rising; however, government communication through the media outlets assured citizens this was a temporary struggle.
We had a unique opportunity to collect data in order to evaluate whether the demonetization policy impeded India’s financial inclusion efforts. We asked about the challenges and implications for a heavily cash reliant economy and specifically, for the most vulnerable and poor of India. Currently, close to 90% of India’s small business have no links with formal financial institutions and 60% of the rural and urban population do not even have a functional bank account. Our findings revealed a systematic exclusion of India’s bottom 20% from accessing affordable financial services to facilitate the achievement of sustainable livelihoods.
We spent our days immersed in the smells and sounds of Delhi, Raipur and Hyderabad. We engaged with top and mid-level stakeholders who had various roles within the financial network. They provided their valuable opinions, experiences and varying expectations for the future of financial inclusion in India. We were also able to attend the Inclusive Finance India Summit, where many of those stakeholders gathered to discuss the current status of financial inclusion in the country. The two hot-topics were the last-mile delivery service (Banking Correspondent) and the shift to a cashless or “less-cash” society. Our experience was further enriched by speaking to consumers, BC’s, and other stakeholders, who were either directly or indirectly engaged within India’s complex financial ecosystem. Spending our first year in the MPPGA strengthened our core skills in communicating policy, policy analysis, strategic design, governance structures, and survey design. This strategic advantage has proved to be an important asset as we continue to develop a deliverable for our client BASIX. Stay tuned for the final report!
– Zameena Dadani, Corrin Bulmer, Chad Rickaby, and Fernando Rodríguez, MPPGA students