Practice and Theory: The Unexpected QUESTions to Vikram Akula

[A Shorter version of this review was published in Business Standard, 09 December 2010]

A Fistful of Rice: My Unexpected Quest to End Poverty Through Profitability

Vikram Akula

Harvard Business Review Press, 2011

pp.191. Price Rs.495.

[With a bonus reference to Assessing Microfinance: An Investigation of Whether Microfinance Reaches the Very Poor, by Vikram Akula, PhD Dissertation submitted to University of Chicago in 2004]

This is not the best of the times to be writing about Vikram Akula’s book. He is still hanging on a roller coaster that he got on to in 1998 and has seen the world turn topsy-turvy around him. For somebody who has been living life of a celebrity for the past few years, the party was planned well: There was a blockbuster IPO, the quiet period had ended and with business processes well in place, he would have moved on a book promotional tour before differences arose with his CEO Suresh Gurumani [whom he acknowledges rather warmly in the book] leading to Gurumani’s sacking and the regulatory cyclone hit the state of Andhra Pradesh, where his operations were concentrated.

While one could argue about the ideological position that Vikram takes in the book about how best to serve the poor, it would be very unfair to use his story to make a case against the model of microfinance he practices. However, what would be of interest to us is how this thought process evolved in Vikram’s life. Why does he call his quest as “unexpected”, if that was what he believed in right from the beginning? For somebody who says “I bought a one-way plane ticket to Hyderabad and packed a single gym bag with clothes. I wanted to travel like Mahatma Gandhi – no unnecessary attachments, no excess material goods….” [p.20], to a recent interview where he says.. . "I've made a tonne of money… more than I ever thought I would make in my lifetime and my kid's lifetime combined….” is a long ideological journey indeed.This is not the best of the times to be writing about Vikram Akula’s book. He is still hanging on a roller coaster that he got on to in 1998 and has seen the world turn topsy-turvy around him. For somebody who has been living life of a celebrity for the past few years, the party was planned well: There was a blockbuster IPO, the quiet period had ended and with business processes well in place, he would have moved on a book promotional tour before differences arose with his CEO Suresh Gurumani [whom he acknowledges rather warmly in the book] leading to Gurumani’s sacking and the regulatory cyclone hit the state of Andhra Pradesh, where his operations were concentrated.

But the book is an incredible story of Vikram Akula’s journey from a comfortable New York to rustic Narayanakhed. For somebody who has had a rather comfortable life in New York to come back and re-discover his roots and to work in trying circumstances, fighting a difficult terrain, hostile bureaucracy, insurgency of the Maoists, and local politics certainly has not been easy. For those who believe that Vikram was an overnight success, this story is indeed an eye opener that it took almost a decade and a half of uncertainty and hardship to and even a brush with personal bankruptcy to achieve what he has. To pick up an idea from Muhammad Yunus from the not-for-profit arena, to struggle around the implementation aspects and suddenly to be recognized as the face of Indian microfinance, [while people like Ela Bhatt and Vijay Mahajan remained in the background] – much before SKS achieved scale is no mean achievement. Vikram has worked hard, very hard to be where he is.

Vikram uses his internship with Deccan Development Society [DDS] to lay the foundations for his argument of a scalable commercial model of microfinance. The argument is that the poor have no time for lectures on empowerment, and while they care about education and health initiatives, they also want to get on with life here-and-now [p.43]. This argument is similar to the one that has been extended by Shafique Chowdhary of the extremely successful microfinance initiative ASA of Bangladesh. The evolution from an inefficient all round developmental intervention of DDS to a focused efficient single point intervention carried out by SKS is understandable. Given that the arguments of providing access to financial services to the poor is a laudable business; that this business is less exploitative and provides access with dignity, and is completely voluntary in nature, why is a person like Vikram amidst many controversies?

The answer for this also lies in how the book is constructed, and also on how Vikram’s other writings are constructed. Vikram uses Foucaultian discursive approach to discuss the dominant discourse in microfinance and dismisses the existing models in his thesis submitted to University of Chicago. Using that approach, we could try to understand the text and subtext of Vikram’s book. While the book starts with a woman in a purple saree asking a life changing question as to why she is not getting microcredit while being poor, it ends with a woman showing off her colour television, thanks to SKS not only giving her successive loans, but also inadvertently creating a job for her son.

With her water buffalos, and a home front kirana store her poverty is eradicated and mission accomplished. Or is it?

For instance let us take this excerpt from the book: “Often, when we started …. people decided to test us by willfully not paying. But we instructed our loan officers not to leave the meeting until the repayment came in…. This had a powerful social effect. The entire village would realize there was some issue…..And that person would lose izzath – lose face. Losing face is a fairly devastating thing in a village context, and people will do anything to avoid it.” [p.76] something that ensures repayment and discipline could also be termed coercive if one crosses the line. Clearly there could be a whole debate on where the elusive line is. Vikram does offer a solution for borrowers who faced hardship, but the solution lay not in a pro-active action on the side of SKS but an action that gave the community a lesson on co-operation on how they should bail each other out in case of difficulty, while there is no mention of what SKS would do pro-actively in case of a default.

We could also look at another instance where the loan taken ostensibly for purchase of a goat was kept to buy food. His lieutenant tells the customer “Buying food doesn’t generate income, so you’ll be no closer to getting out of poverty that way. Either buy a new goat, or give us back the loan money” [p.82]. How does his organization expect people out of poverty when they cannot even buy food, but are expected to run an enterprise? The contradiction that we see in this instance has been the pattern of contradictions that Vikram has had to live with. This is where the dots in his discourse lose the connections.

The third interesting discourse in the book is about interest rates where Vikram says “… we actually could have charged much higher interest rates than we did, while still significantly undercutting the moneylenders. But our goal was not to be extractive; it was to make enough profit to cover our costs and fund further growth..” The numbers of SKS as of 2009 and 2010 does not seem to reflect the benevolence in pricing. Of course, if the market can bear it, there is no need to show benevolence in pricing, but to constantly reaffirm the aspect that efficiency gains were passed on to the customers certainly need closer scrutiny. The hard fact that comes out is that the proportionality of transfer of reduced costs to borrowers is not in sync with the gains accruing out of increased efficiency.

So, are we quibbling about the claims made in the book without having an appreciation of what the SKS model is delivering? To be fair to both the promoter and the organization, SKS has indeed shown how a cookie cutter model of microfinance, inspired by Starbucks, McDonalds and Coke could scale and work. It has reached more clients than many of its competitors, scaled fast and shown the potential to hold out. It certainly is not the most profitable [Spandana and Share turn out better numbers] and its yield ratios are also lesser that the two [indicating that it is somewhere in the middle of the exploitative scale, with organisations like BASIX being even less exploitative!].

But we have to realize that this model is hardly justified by the discourse that we get in the first half of the book. The first half of the book tries to look at the clients in their eyes, peep into their hearts and tries to live the life of a client, by using participatory research methods to find out when agricultural would pick up, the wage payment pattern and employment days [p.72]. Having started with methods that were client centric, what made SKS shift to the model where he is obsessed with the idea of cutting meeting times using stop watches, village routes being scheduled on a single road [p.103]? Great management idea, great gains in efficiency, better bang for the buck.. but does not answer the question that the woman in purple saree asks in the beginning of the book.. What happens to the poor families who do not fall on the SKS highway? This is a contradiction that seems to haunt SKS throughout the book.

The move of SKS from client-poverty focused model to an investor-prosperity focused model is rapid. It is so rapid that the stories of several clients committing suicides because of coercion, is brushed aside as clients who had not defaulted to SKS but must have borrowed from rogue MFIs. For a person whose life changed because of a question asked by a woman in a purple sari, seventeen client suicides should have led to a deep introspection and review of business practices. But the SKS response is like the style of the book: more assertive and less reflective.

The contradiction in the life of Vikram Akula will appear even more stark when we do a reading of his PhD dissertation “Assessing Microfinance: An Investigation of Whether Microfinance Reaches the Very Poor” where he almost slams the for-profit models, while maintaining that the double bottom line is important for this activity.

Let us look at this quote from the thesis:

“As for the reasons why microfinance does not reach the very poor, there are three factors. The first is emphasis on financial self-sufficiency which leads MFIs away from the very poor. The second is group liability, which leads the moderate poor to exclude the very poor, who have a high risk of default. The third is the strict repayment schedule and tough penalties for default, which lead the very poor to exclude themselves.

“The first of these three features – the goal of financial self-sufficiency – is the biggest barrier. The problem arises because for an MFI to be financially self-sufficient, it must increase its total loans outstanding…. One easy way to achieve a higher loan outstanding is by increasing the size of the loans…

“So the desire to achieve financial self-sufficiency is a slippery slope to a movement away from the very poor. This is done in two ways. MFIs end up working in less poor regions or working among less poor in a poor region.[p.24]

The dissertation continues to examine the declaration of the Microcredit summit of 1997, which wants to target 100 million of the world’s very poor families with microfinance for self employment, which Vikram finds “incorrect and outlandish” [p.36]

Vikram in his thesis offers a solution to the problem of not being able to reach the very poor by offering the SKS model as a counterexample of microfinance, an experiment that reaches the very poor while having achieved operational self-sufficiency [profits are not mentioned here]. In offering SKS as a successful example, he does caution that with scale the organization might lose focus from the very poor including a candid admission that some of the later branches the ratio of the very poor has indeed reduced [p.116]. However he elaborates as to how a drift could be avoided and the commitment – espoused by the founder/leader has permeated through the incentive structures where the staff lose their entire incentive bonus for the month if they fail to achieve the target of getting all the 90% of the incremental clients from the category of very poor [p.117] and how this applies not only to the field officers, but up the hierarchy.

The thesis itself raises a larger moral question of a conflict of interest. How could a person study a problem and then turn around and offer a solution in an organization that he has promoted and has been heading? To attribute the success to his own leadership skills is at best preposterous. How can a person be his own evaluator and use that to gain a doctorate? Somewhere down the line we find that the University might have erred in permitting this methodology from a pure point of a conflict of interest [notwithstanding the issue that the methodology could be rigorous]. When Vikram uses the word ethical position vis-à-vis the allotment of the second round of capital, it does not come out with a sense of conviction to these values. Or possibly we do not understand the concept of conflict of interest at all. Everytime an issue is thrown at him, the response ranges between his ethical or moral stand to a legal stand. I suppose, SKS and Vikram are legally correct in what they are doing. Let us grant that and then look at the larger debate on the moral fabric of the person and the organization the person heads.

Unfortunately by the time we come to his book of his “unexpected” quest this entire discourse is lost as he moves into the Google territory where he talks about providing access of his client database to players like Metro cash and carry, Airtel, Nokia, Bajaj Allianz, Cavincare and Wipro…[p.165 of the book] to sell their wares on a win-win-win model – where the client, SKS and the commercial establishment all win.

This is not only a huge and unexpected transformation from a young professional who came in the quest of working for the poor, a young professional who questioned the traditional microfinance models and their lack of focus on the very poor, a young professional about whom Vijay Mahajan says “we [Mahajan and Vikram] have differed over several things over the years but we still share a warm relationship. Earlier he thought I was too commercial and now I think he is too commercial.” [Interview with Forbes India, August 10, 2010].

There is a very honest attempt by Vikram to justify his model of work as an end in itself of portraying a successful business. In this the book does a great job. Vikram has a flamboyant style of writing that is convincing. However, there is a huge connect that is missing between the dots… What happened between December 2004 when Vikram submitted the thesis which in its tone and tenor would have ripped the current day SKS to shreds and 2006 when he returned and changed the face of SKS remains a black box. That is the unexpected turn in his life and it would have been great to know why Vikram moved to this extreme commercial model. There must have been some pressing reasons for the transformation of Vikram Akula and I suppose the microfinance community and the world at large would have greatly benefitted it Vikram had been candid and reflective on this, rather than be assertive.

I end this review by looking at the cover of his book. It is titled “A Fistful of Rice”, the picture shows two palms full of rice, a classic mismatch that is endemic to Vikram and SKS. Is it delivering more than what he is promising or promising more than what he can deliver? The choice is for the reader, or should be left for history to decide.

What is Wrong With Micorfinance in India?

[Published in Forbes India]

Growth at a scorching pace

From people having a sling bag on their left shoulders and a KVIC kurta, microfinance industry has moved upmarket either to suits or to fabindia kurtas. The sling bag is replaced with a net book on the right shoulder. In about a decade microfinance has moved from helping the poor to access finance to an interesting business at the bottom of the pyramid. This paradigm shift, happened with the entry of funding initially from the silicon valley and then from the people who funded and fuelled the growth of silicon valley.

In various ways it is a curious mix. Somebody from the Silicon Valley would typically be an entrepreneur who started small, scaled up fast, used the asymmetries in the market and logically and legally became rich. Many of these entrepreneurs were first generation entrepreneurs and did not forget their roots. It was logical for them to invest their surpluses into the business of doing good. However, their own success and growth experience dictated that while they do good, they should also do well. Doing well translated into a good business plan, targets and also growing at a scorching pace.

It was well when the base was small. There were several 100%s in the microfinance sector. The growth rate was in excess of 100%, the recovery was 100% and the sustainability indices quickly crossed 100%. Voila, we had found a magic mantra where the poor could be served, we could look good and put “eradication of poverty” as our mission statement and of course lead a comfortable life with the decent margins that we got. The alternative sources that were funding the poor were charging much more than us and that made us look like messiahs.

The problem was that we were dealing with people and not processes and systems. This involved group formation and dealing with behavioural pattern of people. But we got addicted to the heady growth target. And when we chase targets without a logic, we cut corners. We became cut-throat in competition and we lost a sense of balance. There are enough signals for us to push the pause button.

Multiple lending

Is there a bubble that is being created? Are most of the microfinance institutions chasing the same customer? Are we pushing the customer – the poor woman into a debt trap? Would this lead to suicides? It is possible to be alarmist and press the panic button? We have to realise that these are not issues of today, but issues of the yore. When an MFI lends to a family that is indebted to a moneylender, there is already multiple lending. In 2005 when I was doing fieldwork, one of the microfinance heads told me – “we have made our processes simpler: if the potential borrower has already passed a group recognition test of a competitor, she is eligible for a loan from us”. It could be interpreted as leveraging on the social capital built by others, or as multiple lending – the choice is yours.

The question is not whether there is multiple lending. The question is whether the lender knows the absorption and repayment capacity of the borrower. It is impossible to know this if we are doing a group meeting in 20 minutes and moving on. It is impossible to address this when we have standardised products and offer a higher loan each cycle. Our credit officers are trained to be robots following a process mechanically and are prohibited to think. Therefore multiple lending is a problem of the MFIs. We clearly do not know our customers enough, and do not have the time to know them.

There have been moves to have a credit bureau to address this problem. Is this not a joke? What will a centralised database covering Ganjam and Ernakulam, Chennai and Ludhiana tell me better than what my credit officer can tell? Every organisation operating in the area knows the other. We have asked our credit officers to chase targets. If only we ask our credit officers to treat this money as their own and see if it is worth lending to the client; if only we allow our credit officers to think..

Reading the signals wrongly

There was a crisis in Krishna. We read it as a jealous government programme trying to get back at us. Imagine we wanting to help the poor and the state wanting to be jealous because they also wanted to help the poor? This was a crackpot zealous set of people who just wanted to shut us up because we were immensely successful. Then there was Nizamabad. We said that this is communalisation. How could this happen to a secular business like lending to the poor. Then Kolar, and Idukki. This is not a localised response. People of different orientation and different backgrounds are getting upset with our business. We can have a micro argument for each one of these and be satisfied with “I am the best and nobody understands me” syndrome. Where are we going wrong? Is there something in what is happening?

In Krishna, we suddenly decided that we could afford to reduce interest rates and continue with life as usual. Does that mean that we were charging more? How do we tread the fine line between trying to seek “what the market can pay” price and not appear greedy. The reason why we should not appear greedy is not because we should not make money and lead a comfortable life, but because we have positioned ourselves as institutions that work exclusively with the poor and towards the eradication of poverty and empowerment of women. If that is the positioning, we should not be seen as seeking excessive returns from the poor to lead a lavish lifestyle.

The signals in Krishna, Nizamabad, Kolar and Idukki are about the mismatch between the lofty objectives, our target clients on one hand – and the amount of returns and overnight wealth we are getting – on the other. These are larger signals. We need a macro response and not an isolated, insulated response. We should be seen as “responsible” lenders and be seen more aligned to the larger public sector banks rather than be called white collared moneylenders…

Good boys in bed with bad

The microfinance sector in general has a false sense of solidarity. The good boys constantly stand up for the bad boys in case of a crisis. This is a peculiar syndrome. If there is bad name for microfinance on account of a bad egg, it affects us. Therefore if there is an organisation we do not like, we still support them because it might affect us. So the good boys think they need to protect the “sector”. The good boys think that they are using the bad boys to build the numbers and show how big and influential they are, and the bad boys are shooting under the cover of good boys.

It is time that some of the leaders of microfinance stood up and called a spade a spade, or something similar to a spade. We are afraid to raise questions about “successful” and “powerful” people because it might affect us. While that is a good short term view, it is going to his us badly in the long run. We hope that if we form an industry association and evolve a code of conduct the entire problem would be solved. It is just a matter of getting together, putting our heads together and making pledges about being transparent, non exploitative and treating the poor client with dignity. Unfortunately we do not say this before we admit somebody to the association. Why can we not say that unless we are already adhering to the code there is no admission to this club? But no, we live in eternal hope that we will reform our mal-adjusted juvenile delinquents.

We keep their company when we meet the regulator, we ask and even plead with the bad boys to be with us when we meet the ministry. We want to show that we are united. United for what?

Is there hope of a correction?

The poor are smart, sometimes smarter than the people who are lending to them. They have learnt the art of juggling the impossible, struggling for everyday life and therefore they know every trick in the trade that has been used and not used. If we think we are taking them for a ride, let us pause and think. If the MFI gives the sense to the borrower that it is unscrupulous, the borrower will take the MFI for a ride sooner or later! The day they reach a tipping point where they think enough is enough, they will default. Neither coercion nor any group mechanism will work. It will not work because we would have already put them into a debt trap and this is the only response they have. Since they have no exposure with us and we have all the exposure with them, it is us who will collapse not them.

There are talks of self regulation and passing a bill. Self regulation is an oxymoron. I should show responsible behaviour and I have regulated myself. Period. I do not need a peer group to regulate my already good behaviour. Therefore it is a question of intent. If I want to be responsible, then no law will prevent me from being good. Regulation is needed to deal with the deviant behaviour. Therefore regulation is not preventive, it is only a framework to deal with an event after it happens.

The industry has to auto correct. I do not think there is any other way. MFIs may have a cascading collapse, in places where the competition is unscrupulous and intense. I think we should not lament if a MFI collapses. Nothing can grow at the rate at which MFIs are growing, particularly in the financial world. It is all a question of who is the sucker who exits first when the going is good.

Finding Fault with Microfinance; Finding Fault with Fault Finders

What’s Wrong with MICROFINANCE

Edited by Thomas Dichter and Malcolm Harper

Rawat Booksellers/Practical Action Publishing, 2007

pp.271. Price Rs.795.

Introduction:

Malcolm Harper is a well known figure in the Indian microfinance circles. He is known for being enthusiastic, ever willing to go to field, break the language barrier and interact with the poor, and return to the host organizations to ask some probing questions. He is also known for his rather sarcastic humour and therefore it was indeed surprising that all his earlier writings about Indian Microfinance were in such a positive spirit. However, the current book edited by Harper and Thomas Dichter [who also asks tough questions as a consultant] is asking the right questions and bringing to the fore the questions that we always brushed under the carpet in the hope that the euphoria of the so called success will numb all valid criticism about the much hyped microfinance industry.

The book is divided into three broad parts – the first talking about clients, the second about institutions and the third about expectations from microfinance. It has a large number of authors and papers, mostly from the practitioners of microfinance who are giving an ‘inside’ view of the negatives of microfinance. There are also a few papers by academics. I shall discuss the book in a thematic format.

Savings and Credit: The Chicken and Egg of Microfinance

Thomas Dichter basically comes from the school that has been arguing consistently that the starting point of microfinance is possibly not debt, but savings and therefore raises the basic question on how the global microfinance industry is organized. If we look the world over, what we know today as microfinance is basically debt based – be it the Grameen model, the Latin American model or the programmes undertaken in the African continent. In a way it is only the Indian self-help group [SHG] model that fits into Dichter’s argument of savings first.

Hugh Allen also argues about the need for savings products in the same spirit as Dichter, citing instances where the poor are even willing to pay for the services of safe-keeping of their savings and thereby pay a reverse interest. While this service is not available, one wonders if it is a valid criticism against the microfinance [or microcredit] industry – particularly in the sections pertaining to clients and institutions. This argument largely belongs to the “expectations” we have of these institutions. The point is simple – we need to ask the question as to whether the existing microfinance models are performing a function that is sorely needed by the poor; whether they are doing the function in a manner that is efficient while giving dignity to the poor. If so, why are we hanging the microfinance institutions for what they are not doing – just because it is important to have savings and we expect institutions to deliver that product? The problem possibly does not lie with the microfinance institutions, but rather in the policy and the legal framework of the respective countries that do not allow savings products to be launched. Therefore, this aspect needs to be highlighted and brought to focus in a manner that it attracts the attention at an appropriate place – an instance of bad structuring and editing of the book!

Where does microcredit take the poor?

This question is like the protagonist in the film “Gods Must be Crazy” looking for the end of the world to throw the Coke bottle in order to protect his tribe! Dichter’s question is on the growth of the microcredit model itself. Does the growth of microfinance put the ‘poor’ into a debt trap? It is indeed an interesting conundrum. Dichter citing the evolution of the sequence of growth and credit in economic development, argues that credit has usually followed growth and not spurred growth. While one could take up issues on this line of argument, it might be useful to look at the dichotomy of what credit does with a small illustration:

A few years ago, Spandana a microfinance institution – then operating out of Guntur, Andhra Pradesh introduced a product called a dream loan. This loan was to help the borrowers to buy a consumer durable product at prices less than the market price [because Spandana would source them in bulk]. The first product introduced under this was a water filter which was followed by items like a pressure cooker and a gas stove. Spandana was hailed as an innovative organization for being creative in thinking. The argument was that water filter gives the families clean drinking water, reducing the incidence of disease and possibly increasing the number of working days and income days. The pressure cooker reduced drudgery and released the women to do more productive income generating work. The gas stove had similar arguments coupled with LPG being touted as a ‘clean’ fuel. Dichter does not deal with this constructive side of ‘consumption credit’. However, having started this line in a year Spandana went several steps ahead and had [possibly] the largest super store in Guntur with around 3000 stock keeping units ranging from soaps to refrigerators, cots to cement, bicycles to jewellery. Now, questions were being raised as to whether the organization was actually promoting consumerism and driving the clients down on the ‘slippery path’ of debt that Dichter is worried about.

On the same lines there is an interesting and introspective piece by Kim Wilson on how Catholic Relief Services moved away from the seemingly attractive poverty solution of microcredit towards more direct intervention like school programmes for children. Wilson brings out in the limitations of microfinance in providing an overall solution to the poverty problem and also the limitations on the impacts. While Wilson argues that savings based microfinance models are better, she possibly does not see a huge role for external agencies to peddle credit if the savings based models indeed existed. She is on the one hand arguing for community based models that challenge the role of a traditional as well as a new age moneylender and at the same time highlighting the limitations in the impact that the credit based moneylending can provide.

Managing Expectations

These limitations are the ones that Frances Sinha also highlights in her chapter on impacts. While there is overwhelming evidence [including that of Sinha] that the impacts of microfinance could be limited on other aspects of the lives of the poor, we continue to examine as to what microfinance could do to end domestic violence, prevent bigamy, end sexual harassment [p.79] and so on… Looking for these relationships, and lamenting about them could be as far-fetched as looking for a box office hit on a Friday morning following a particular team’s victory in a Twenty-20 match!

In similar vein Paul Rippey reflects the constant syndrome of a solution chasing a problem – applying the models that have been touted as successful to new environments. An interesting fall out of one such approach is caricatured in his paper where he talks to a loan officer who argues that the clients should get no more than three loans, because he believes that “after three loans the clients are so poor that it’s really not fair to lend them more money” [p.110].

Structuring of Microfinance Products

Harper has two papers, one that discusses the groups in microfinance and the other that talks about farmers. Group methodology has turned out to be quite attractive in microfinance and is fairly widespread at least in the Asian context. It is not that groups are a necessity. The African and the Latin American models have individual lending and even when they are joint liability groups, the way they operate is only by providing a social collateral rather than meeting at a place for transaction aggregation. While Harper goes into how much it might cost for a person to transact through a group; and whether at higher levels groups are needed and argues for a laddered approach he does not ask the obvious. Why are groups focused on women? Why is it that when microfinance deals with men usually it is at an individual level or as a joint liability group? Similarly when Harper talks about microfinance and farmers, he talks about the intrinsic return on farming and whether farming can service microfinance interest rates in a sustainable manner. He talks about microfinance being focused on women without meaningfully engaging with the question as to why men/farmers are on the fringes of microfinance.

A possible explanation for group-based microfinance being women oriented might have something to do with the slack time that the women might have, the opportunity cost being with a group rather than at home might be negligible and it might have something to do with the gender equations in the traditional rural family systems. Unfortunately neither Harper, nor Frances Sinha who deals with the issue of limited ‘empowerment’ impacts talk about such a possibility. Similarly Harper does not seem to see the point that the existing microfinance models [Surely there could be exceptions that prove the rule] are generally about one bullet outflow in the form of loan disbursement, frequency of meeting which includes regular weekly/monthly repayments, regular financial transactions [savings, insurance] and no moratoriums. Farming is about multiple outflows in lumps – preparing, sowing, fertilizing, transplantation, pest and weed management and harvesting and a bullet lumpy inflow at the harvest time. Clearly microfinance as is understood and farming are moving in different directions and therefore there is little surprise that farmers go to traditional lending institutions that understand agriculture. Therefore, instead of asking the question as to whether microfinance has not understood the logic of lending to farming, Harper seems to ask the question about profitability.

Harper talking about profitability of the client seems to make immense sense. However as we read Harper, it is clear that he has somehow crossed the line to talk about livelihood finance. It is a very thin line that divides the world of “consumption credit” and livelihood finance. Harper actually does not seem to observe this line, while in a later paper in the “Expectations” section Vijay Mahajan seems to bring this out more sharply by looking at the limitations of the microfinance models as is practiced today. While Harper is looking at whether the underlying economic activity is in a position to service the loans while talking about farmers, Mahajan points out the five major assumptions made by microfinance practitioners that do not help in sorting out certain type of financial services needed by the poor. These are basically the supply side assumptions made that credit [particularly microcredit] will be a silver bullet that solves the poverty problem of the poor, by making them successful micro-entrepreneurs in extremely profitable businesses and thereby the microfinance institutions could also become profitable and all can live happily everafter.

Both Harper [indirectly] and Mahajan [directly] ask the question of whether microfinance institutions as they grow and deal with diverse needs of the clients actually have to reinvent their delivery models to provide a solution for a possible problem, rather than peddle a solution in search of a problem!

It is in the same spirit that we need to read a rather positive paper by Imran Matin et.al on how to unleash the true potential of microfinance by imagining microfinance more boldly. Matin et.al use the examples of process innovations to look at the issue differently. In a way the paper by Matin et.al is not only looking at what is wrong with the current models, but also has some practical examples on what could happen and thus is on a very positive note.

Prabhu Ghate on the other hand picks up the Andhra crisis to examine the fall out of the inward looking aggressive growth of microfinance. His basic argument is that something that grows out of sync with the rest of the economy might have a honeymoon for a while, but eventually will generate suspicious raised eyebrows. We have seen this happen elsewhere in the dotcom bubble, the stock-market bubble and the various ponzi schemes in the financial circles. But still we are deluded to believe that microfinance is a super innovation that could have a CAGR of 100% or more. The effects of such a growth as Ghate identifies should be seen elsewhere and in this case comes out as a high handed state response.

Susan Johnson and Namrata Sharma have a somewhat positive paper on structuring of microfinance delivery mechanisms and how to ensure that group based microfinance is not hijacked by a few prominent leaders. Given that the tone of the book is in finding fault, this positive paper looks out of the place, though it is indeed an interesting paper and worth a notice.

Big Names, Small Impact

Finally I do not understand why a paper by David Hulme [where the abstract seems to be lengthier than the paper] and another by von Pischke is doing in this compendium, though I can guess. David Hulme is a well known authority on microfinance and had done some cutting edge work on impacts. However, given the chatty nature of the book with hand waving conclusions it would have been difficult to put in a paper of such research intensity. Therefore the solution is possibly was to pick up a small random piece so that you get him on to the author list. Same is the case with von Pischke – his piece is based on a talk picked up for the book where he merely described the institutional typologies of microfinance than actually comment on what is wrong. It appears that both these towering figures are there in the book more for tactical purposes than for the content. Similarly an essay by Ellerman on the fallacious thought processes in the microfinance models and by Rahman on what is wrong with microfinance in Bangladesh are both, an obvious laundry list of what could go wrong with microfinance. Again I believe that these papers are in the book more for tactical reasons of putting the issues in perspective rather than for the intrinsic worth their contents.

In addition to the above there are three other papers in the book including the one by Richard Myer who writes insightfully about methodologies of measuring impact of microfinance and two other pieces which do not thematically fit in.

Final Word[ict]

What is wrong with the book is similar to what is wrong with microfinance. The editors have found a catchy title – it would sell well because it has the potential to bring out all the negatives of something that is being touted as an ultimate solution to poverty. It is motivated writing. However, but for a few exceptions, the book fails to recognize that there is a thin line that divides the positives and negatives of a concept like microfinance. This is because, the stream of argument is generally premeditated – a conclusion in search of an argument.

For instance examine this piece: “The data was collected from 215 microenterprises… the sample is not of course representative of all non-farm microenterprises…. failed businesses were not studied, because they were not there to be studied…[p.88]” “This is only a small non-random sample, and the methods of data collection and analysis were not necessarily consistent. Indian cases predominate, but this many not be unreasonable …. All data were obtained from farmers’ own recollection, rather than from… any other more systematic records…. There are many reasons why the data may be inaccurate, but the errors are equally likely to have been positive or negative, and there is no reason why the returns from farming data would be any less inaccurate, or more understated, than the returns from non-farm enterprises. The orders of magnitude are probably reasonably correct, however, and readers should be able to confirm…..[p.90]” These are the words of not a practitioner but an academic. These are the words of the editor of this volume. I guess more need not be said about where this book is coming from and where it is going.

Moving from Journalism to Constructing a Novel: Kota Neelima's Death of a Moneylender

The book Death of a Moneylender is a refreshing change in Indian English writing. It is unfair to stereotype Indian English writing as westward looking, but over a period of time we see five distinct streams of writing in English.

• One strand is popular writing but representing the elite, but not quite literature - the books churned out by the likes of Shobhaa De and Chetan Bhagat.
• The second strand is that of writers like Aravind Adiga, Arundhati Roy who clearly write with Indian roots, but one gets the feeling that their audience is much more global and thus their local stories are also adequately globalised.
• The third strand belongs to writers who are truly global in their outlook and incidentally locate themselves in India - Amitav Ghosh and Vikram Seth.
• The fourth strand seems to be that of Indians with passport from elsewhere - writing about India and Indian experience either with nostalgia or with a touristy wonderment.
• The fifth strand possibly are Indians writing possibly for the local audience - writers who could easily have been Bhasha writers,but accidentally happen to write in English. I would put KR Usha, Shashi Deshpande in this category and for a good measure add Kota Neelima whose book I read recently into this category as well.

The book in question "Death of a Moneylender" should have been in the news much more than it has been, it should have had wider set of reviews and possibly discussions around it. However, in the era of news almost always being obsessive about "Breaking" News, the media possibly does not have the time or "bandwidth" to discuss something that is away from the urban sensibility, something that does not look "sexy" or something that deserves a bit of reflection, research and patience. In this context, it is indeed interesting to read this novel set in the context of print media. It was indeed a welcome change to look at something that is so subtly reflective of our contemporary times.

Neelima's novel starts off in a Newspaper office in New Delhi which receives the news of the death of a moneylender. This is not a normal death, of a normal person. This is the death of a moneylender, and his body is found hanging by the lamp post in the village centre. Clearly this is sensational stuff. It does make a good copy and therefore the newspaper finds it necessary to collect more details. It is therefore important for the journalist who has been assigned this beat to collect as many details, analyse the situation, report and draw the attention of the readers. In the process the journalist would also be looking for recognition for himself and a possible (or necessary) pat on the back from the bosses.

The novel that starts with the news of such a gory death goes on to examine several contemporary issues without much of a melodrama. The beat to cover this story is assigned to a young journalist Falak. Falak is a reporter who is ambitious and is in a hurry to climb the journalistic ladder. He has already got the necessary success in his current assignment, but is willing to stretch himself for the next kick upstairs. His old possibly ex-friend who is a journalist with another newspaper is the one who constantly reminds him of the difference between being a good journalist and a successful journalist. She almost appears like his conscience throughout the novel. For Falak it is a challenge to continue to be successful, while pining to be "approved" by this friend. But the lady does not see any dilemma in being good and successful. She believes that if one is good, success is incidental. However Falak is somewhat frustrated and impatient on this count.

The novel is glued together around the death of a moneylender. The fact that somebody is trying to investigate the reason behind the gruesome death is reason enough to keep the reader engaged, but Neelima uses this intelligently to weave several issues around this basic episode. For instance, the question that is often asked is that while we hear about farmer suicides, how many times do we hear about the suicide/death of a moneylender? And when that happens, why does this news hog disproportionately more column centimetres than that of farmers? Where is the balance in the reporting ethic of a newspaper and what twist do you give to such a tale? Neelima seems to ask all these questions intrinsically without actually verbalising them.

As Neelima opens up the internal contradictions and dilemmas of a journalist, she intelligently slips in issues pertaining to the basic issues haunting agriculture - economics/profitability of farming, the tensions in the relationships within a village, various issues emanating from the caste and class relations. Stories which the journalists possibly encounter in their daily life, but cannot narrate in their journalistic limitations of space and time are unpeeled in front of us.

There is a fundamental image that most of us carry about village moneylenders - that they are bloodsucking hoodlums who exploit anybody who comes their way. Therefore when there is news that a moneylender's body is hanging by the lamp post, this could be an indication of a bloody revolt. Therefore the story of such a death is something that will catch the imagination of a reader and this in turn could help us to look at the various facets of rural life. In unravelling this story, Neelima also helps us to re-examine the stereotypes we have in us - not only the stereotypes of moneylenders, but the stereotype of village life itself.

While Neelima has mastered the art of story-telling, I am not sure she has mastered the art of constructing a story. Possibly that might be one reason why the novel has not attracted as much attention as it should have. She seems to somehow believe that each one of the issues that are picked up should reach a natural conclusion. This urge to tie up the loose ends hampers the overall narrative. Possibly this might be the difference between somebody who basically writes fiction and somebody who has come into the world of fiction from the disciplined world of journalistic writing. A journalistic piece usually looks for an immediate solution, a current reality and a quick sense of accountability. However a novel usually does not have the necessity to have such a nice, digested capsule for the reader. The reader of a novel is typically willing to engage for a much longer time with the novel. Therefore it is indeed possible in this format for the writer to unravel the various aspects of a characters persona. While Neelima is relatively successful in bringing out Falak's personality with all the dilemmas and contradictions, her other characters are somewhat one-dimensional. For instance we get to know the fact that the moneylender who was hanging by the lamp post was not actually evil, pretty early in the narrative. So why did he have a gruesome death? While we do get the answers towards the end, this answer looks naive. And therefore one wonders if Neelima - through her character - has actually achieved the effect that was indeed intended. The character of the moneylender [though dead] just does not evolve in the novel, even though attempts are made to bring out his personality through reminiscences of various people - the moneylender in the end turns out to be somewhat of a one-dimensional character.

The subtle message that runs throughout the novel is that if a moneylender who generally was doing good could meet with such a tragic death, worse could be awaiting the other exploitative ones. This also makes a good headline. But Neelima does not engage with the collaterals of such an underlying theme. None of her characters even engage in alternative fall outs that could happen from this episode. Thus the richness of the un-intended fall outs is totally ignored and the ending revolves around the binary of good and bad, truth and fiction. The complexity of life is not necessarily a problem with a Yes and No answer and thus this novel stops at being a good novel without growing into a great novel.

As I was reading Neelima's novel, I realised the importance of construction in a good narrative. Irrespective of the lack of narrative maturity and flamboyance, the novel is of great importance in this era of breaking news, in the era where the visual media delivers judgements much before the courts could even examine evidence. This brings out the basic tenets of journalistic work ethic - that a story is to be analysed, examined and presented in a manner that reflects the events as they are unravelled. The novel does attempt to go beyond the regular framework of journalism and bring to the fore more serious issues and therefore should have been in the news much more than it has been. However, I guess Neelima will draw much more critical acclaim if she is able to effectively overcome the obvious limitation of a journalist and grow into a natural novelist.