Abstract: 

This paper discusses the current situation of various measures to handel the rural povery with reference to Indian rural demographics. Poverty is a state where an individual /household does not have the means to afford a basic minimum standard of living.   The conventional approach to measuring poverty is to specify the sum of money required to buy a basket of goods and services necessary to meet the basic needs of the individual/household. This expenditure is called the poverty line(Gillie, 1996).   Poverty can be measured in terms of the number of people living below this line. Globally, countries use different measures for measuring poverty but the underlying principle remains the same - a poverty line is calculated based on the minimum standard of living.  India accounts for the largest number of people living below the international poverty line as defined by the World Bank. (World Bank, 2016)   i.e.  30 percent of the Indian population is earning less than US$ 2 per day. This paper deliberates on some successful Models in the mission of rural povery reduction by veriuos agencies, including thr governmrnt,  in India. 

Keywords: Rural India, Poverty, Poverty Elimination, Microfinance, Dairy

Introduction:

Poverty is a state where an individual /household does not have the means to afford a basic minimum standard of living.   The conventional approach to measuring poverty is to specify the sum of money required to buy a basket of goods and services necessary to meet the basic needs of the individual/household. This expenditure is called the poverty line.   Poverty can be measured in terms of the number of people living below this line. Histories of the poverty line begin with the 'line of poverty' Charles Booth said he used, in the late 1880s, to divide the people of London into those “in poverty” and those 'in comfort' (Booth,1889). Globally, countries use different measures for measuring poverty but the underlying principle remains the same - a poverty line is calculated based on the minimum standard of living.  India accounts for the largest number of people living below the international poverty line as defined by the World Bank   i.e.  30 percent of the Indian population is earning less than US$ 2 per day. As per the “Tendulkar Methodology” adopted by Govt. of India for estimating poverty, the poverty line was an income of Rs. 816 per capita per month in rural areas which translates to Rs. 27 per day. India accounted for the largest number of people living below the international poverty line (Raveendran,,2010)

Economic activities in Rural India have grown significantly in the last three /four decades both government and private sectors. Various schemes of the government have ensured the economic empowerment of families that were so far considered as marginal and were below the poverty line. Further activities for income addition in the form of promoting ancillary activities like Dairy poultry beekeeping and fisheries are being promoted by the government, to help increase the income of farmers. All such activities have yet to achieve results to the desired extent.

Need for Research:

While theories like human capital theory or modernization theory maintain that when resources are spent for development, they would bring gender equality in different walks of life, including participation in the workforce. However, this does not seem to be the case in India. In the past, three or four decade’s two significant new activities in rural India that involved women contributed to their economic and social empowerment.  The first such activity is dairying and the other is microfinance.  Dr. Verghese Kurien promoted the Anand pattern of cooperatives in the Dairy Sector and enabled millions of poor in rural India to earn their livelihood through milk and women carry out the majority of activities in dairy farming. Similarly, the Micro Finance model promoted by Prof Mohammed Yunus in Bangladesh not only became popular in India, but India has become the largest country in terms of beneficiaries of microfinance, and a majority of the beneficiaries are women. While both models have women and rural India at the core of their operations, organisationally they are quite dissimilar. 

Demographic Differences:

A significant aspect of empowerment of rural poor is related to women. They constitute about 48% of the population but are either unemployed or underemployed. Participation of rural women in the workforce (PRWWF) and utilizing their time skills and energy for productive purposes is Paramount to the development of this country. Not only could they contribute to the family as well as the national income, but their economic empowerment would also contribute to social empowerment. While PRWWF in India has remained quite low, a question that arises is whether access to income sources enhances the standing of women within the household and society and enables them to take independent decisions.  In some of the Indian states, it is seen that higher PRWWF leads to empowerment of women in economic, social, and political spheres, towards gender equality.

The milking cow is one of the factors that contribute the most to well-being due to the role it plays within the farm: supply of milk and beef for household consumption, utilization of labor with low opportunity cost, security against crop failure, liquidity against financial crisis, as collateral for informal credit, and as a protection against inflation (Estrada 1995) Milch animals can positively impact the small farmers as any contribution from milk helps in the improvement in the quality of life. 

The potential of livestock to reduce poverty can be gauged from the fact that Animal Husbandry contributes to the livelihoods of more than two-thirds of the world's rural poor.  The landless labor and poorest of the poor might not own animals, but if they can acquire animals, their livestock can help start their economic upliftment out of poverty. Besides livestock rearing contributes to storing wealth,   food, and nutritional security, providing draught power, transport and manure, and even in done the animal hide can be used productively. In some situations, the "livestock ladder" may allow the poor to progress from modest livestock holdings, such as a few poultry, to acquiring sheep and goats or pigs, or even cattle (ILRI 2003) 

Livestock production provides a constant flow of income and reduces the vulnerability of agricultural production. 84% of income from livestock can be attributed to income from milk; therefore increase in the total production of milk will increase the total income of farmers.  85% of India's farmers are small farmers they own 45% of farmland and 75 percent of all bovines. Milk and milk products have the highest income elasticity of demand among four commodity groups therefore the demand is likely to increase rapidly as the economy grows and comprises as is being witnessed in India now. As the distribution of milch animals is more equitable than landholding in India, the landless, small and marginal farmers have a larger contribution from dairying /livestock than medium and large farmers.

Anand cooperative model operates as a structured set up where the dairy members, of dairy cooperative society, collect milk from villages, feeding into district unions, which process the milk, add value, package, and send to market either thru the state Federation or on their own. And the whole supply chain results in ensuring that the urban areas are getting milk at their doorstep.  The rural producers get paid on an average three times a month.    In the Cooperative Dairy Sector country,   the dairy farmers realize on an average rupees 28.18 per liter of milk, and approximately 2.5 liters of milk per day is sold per Dairy farmer. Assuming that self-consumption is taken care of, and the cost of self-employed labor is  @ 20% of the cost of milk production inter-alia price realization the average dairy farmer gets an incremental income of rupees 14 per day,  for his efforts towards dairying, which is about half the amount mentioned as the poverty line.

The best part of the Anand model is that about three fourth of the final price of the milk reaches the farmer, a well-recognized fact which helps dairy farmers come out of the poverty cycle much faster. A study conducted by NDDB suggested that 85% of the activities related to dairy can be undertaken by women. It is significant to note that the women members manage more than 70 percent of the milk cooperatives (Sapovadia,2006).  This model ensures that women earn without necessarily leaving their household and can still manage their day-to-day household work.  

Microfinance Model

The microfinance model as developed by Professor  Muhammad Yunus in Bangladesh and the indigenous version promoted by NABARD has women in rural areas as their prime target.  The microloans customers are typically those who are at the Bottom of the Pyramid. They do not have easy access to formal banking structures and are afraid to get into formal banking channels as they do not possess documents that banks require.  Such customers have no credit history with any formal organization, and in yesteryears were dependent on moneylenders for their emergency or working capital needs. Such people, mainly women for the clientele form the entities that give microloans.

In terms of modalities, five or more women staying in the same locality, who belong to similar economic strata, come together to form the joint Liability Group (JLG) or Self-help Group (SHG).  This is not a formal structure and these women can engage in any income-generating activity of their choice and these activities could be different for all members of the groups.  These women members undertake economic activities for the economic betterment of their own families.  Based on their income profile as well as saving and business potential, microfinance institutions, as well as banks, lend to these women.  All such microloans do not require collaterals or guarantees. Group guarantee in the form of mutual consent and mutual guarantee is the only security available for the lenders.  Repayment services are also provided at the doorstep of the woman as the representative of the lender collects the repayment installment from a pre-determined place in the village on a pre-determined day.

In FY19, the loan portfolio of the Indian microfinance industry had grown at the rate of 40% YoY, with an outstanding loan portfolio worth INR 1.785 trillion and 64.1 million unique live borrowers. The Book size of the microfinance industry as of 31st December 2020 is stood at INR 2.2918 trillion registering a growth of 16% from Dec 2019 to Dec 2020. The top 5 states contribute 55% to the Pan India portfolio (West Bengal, Tamil Nadu, Bihar, and Karnataka & Maharashtra).  However when one considers the top 30 districts in the country, 9 districts each are from West Bengal, and Tamilnadu,3 from Bihar,  2 each are from Karnataka, Kerala, and Assam, and one from Tripura, Odisha, and Maharashtra   This means that over 50% of districts are from the Eastern region of the country, which economic terms is the backward region as compared to other regions in the country. It is expected that the MFI customers, will graduate to being banking customers, once their financial records are established and will be upwardly mobile in economic terms. 

With approximately 85% of the microfinance borrowers in India being women, there is a pressing need to provide them access to information, to utilize the microloan to maximize income, rights to financial decision-making, and assistance in varied entrepreneurial pursuits.  As evident from the Dairy cooperatives in states like Gujarat, women-driven dairy enterprises will not only ensure regular repayments for microfinance lenders but will also establish a strong influencer channel in the form of women entrepreneurs for higher credit penetration. 

Convergence between Microfinance and Dairying

While both these models ventured into the then-unknown territory of economic empowerment of women through their business models and enabled women to understand their business and expand the activities to uplift them out of poverty.  Initial success in any of these models has resulted in women becoming more ambitious and expanding their businesses to earn better livelihoods.  Fortunately, both these models succeeded and they not only insured economic empowerment of women but also ensured that women became more confident to handle economic activities on their own.  Such confident women not only added to the incomes of their own families but also gained say in economic matters and socialist standing went up several notches.  In terms of social benefits whenever a woman is earning, such families not only see e enhance family income and results and benefits but also ensure for the children and their families through education.   Indirectly both these models have added to the increase in the GDP of the country.

While both dairying and microfinance have had their growth trajectory and spheres of influence in terms of geography, over the last decade or two, there appears to be some confluence. As microfinance is growing, a major purpose for which the women borrowers wish to avail loans is dairying. It is preferred, because it provides liquid cash, is profitable, and can easily be undertaken by women themselves in their backyard. 

 In 2015, RBI regulation stipulated that a minimum of 50% of the MFI loans are to be deployed for income-generating activities. Analysis of the loan portfolio held by reporting MFIs for 2019-20 as reported in the Bharat Microfinance Report of Sa-Dhan (Self Regulatory Body of Microfinance Sector)  shows that the proportion of income generation loans to non-income generation loans is 93:07.   Agriculture, animal husbandry, and trading are major sub-sectors where income generation loans are deployed. Non-income generation loans are used for consumption, housing, education, water & sanitation, health, etc. Animal Husbandry (Dairy) has a 21% share of the income-generating activities. As of 31 March 2020, the combined microcredit portfolio of 252 lenders has reached `2,36,427 crore through 1,085 lakhs active loans. 

It means about 18% of the total that is approximately Rupees 40000 crores are outstanding for loans availed for Animal Husbandry activities. In terms of the number of animals, the loan portfolio would account for ownership of 50 lakh cows thru microfinance in the last two year (since microfinance loans get repaid in 2 years), if one assumes Rs 80000 being the price of a Crossbred cow or 1cr animals if one considers indigenous cows. This translates into 5 cr liters of milk per day on an average of Rs. 250 cr per day or approximately Rs. 93000 cr annual turnover, if one considers the rate of milk at the consumer doorstep in metro cities.

Conclusion 

Dairying and Microfinance models have proven that they can help rural women and their families to come of the vicious circle of poverty. However, the challenge for a vast developing country like India is to develop mechanisms to provide smallholders and landless farmers means to get out of poverty faster.  A combination of livestock acquisition thru microfinance, and marketing thru a cooperative structure can help bring upward mobility.  The efforts could be speeded up through the intervention of the Government and the financial empowerment of women will also enable them to make financial choices for other consumption-based needs of their households, thus resulting in overall business growth for microfinance players.