The bottom line and the bottom of the pyramid

Creating sustainable for-profit  businesses that target people at the bottom of the income pyramid is a topic of growing interest to development finance institutions, private investors, and local entrepreneurs to support poverty reduction through private sector business opportunities.

With increasing focus on this lower income segment, companies both large and small have started to recognize that there is a large market potential represented by the base of the income pyramid.

For multilateral development banks, like ADB, this is an important way to mobilize and engage the private sector to achieve poverty alleviation and reduce income inequalities in developing countries.

The good news is that the Asia and Pacific region is already demonstrating how innovative, inclusive finance can make a difference, but much more can be done. In India, for example, the government has prioritized financial inclusion and, as a result, great strides have been made in opening bank accounts for millions of the previously unbanked.

Banks and non-banking financial companies such as IFMR Holdings have developed business models that have as their core business strategy a target of financing lower income people. IFMR Capital innovatively works to mobilize capital markets funding for microfinance institutions, which traditionally have limited access to this financing base.  

Other successful examples of bottom-of-the-pyramid funding are being seen in Central Asia through the Access Microfinance Holding network and through the pioneering work of the Kashf Foundation in Pakistan.

Mountain Hazelnuts, an agribusiness firm, has been a pioneer of bottom-of-the-pyramid solutions in Bhutan. It grows and exports hazelnuts to the People’s Republic of China, where it has found a niche in capturing the increasing demand for higher-end agricultural products from the Chinese market. At the same time, it is increasing livelihoods for thousands or rural workers – mostly women.

Of course, these solutions do not happen without finance. Leading global banks such as Credit Suisse see that bottom-of-the-pyramid investments can be good business. But the market is far from saturated. With over 2 billion consumers spread across developing Asia, the opportunities are limitless for financial institutions that take the time to understand their clients and develop the kind of innovative solutions that can serve this underserved market.

Modi Govt is now trying the same idea for achieving political gain by investing in the rural india,as the interim budget on 1st Feb 2019 provision for farming & agriculture can be anything between 11 lakh crore to 15 lakh crore.
My suggestion to the govt is that it should utilize and spend money mostly of investment in nature for the rural upliftment to touch the bottom of the heart of the bottom line of the pyramid to get the ballot support from the rural masses, because other methods such as MSP,Loan waiver and other schemes may not be attractive to the masses because these all schemes are reaching  only to 20% to 30 % of the rural masses. Besides rural population has many other non farmer and non farming labours. Who will take care about their grievances? They also form a great chunk of rural population.
Regards,
DR N K ARORA

Income support scheme under DIT( Direct income transfer) to tje rural farmers of india.

Odisha Govt under the  Krushak Assistance for Livelihood and Income Augmentation (Kalia)  will transfer the amount under the scheme comprises three components: a) Rs 5,000/family per crop season to over 30 lakh small and marginal farmers having less than 5 acres of land, b) Rs 12,500/family per year to 10 lakh landless agriculture labourers and c) Rs 10,000/family to 5 lakh ‘vulnerable’ farmers every year.

The cost for the whole scheme has been estimated at Rs 10,180 crore in five seasons starting rabi 2018-19.
While Telangana is giving Rs 4,000/acre each season to all land-owing farmers, Odisha has restricted it to Rs 5,000/family as it has also announced scheme for landless farmers.

State Govt of Telangana has been implementing an income support scheme for farmers called Rythu Bandhu since May 2018 paid Rs 5,256 crore to about 51 lakh farmers during kharif 2018 under the Rythu Bandhu for purchase of inputs like seeds, fertilisers, pesticides and labour costs.

The Centre is now also reportedly considering an income support scheme (which may be announced in the interim Budget to be presented on February 1),

I doubt that the said scheme of income
support can be implemented in the right spirit because all other states are also rolling out one or the other income support scheme and there will be a total chaos due to duplication of the income support schemes at the state level and center level both to claim the contribution of the respective political party or the concerned Govt.
Therefore the central government shall roll out the income support scheme very cautiously so that the real benefit goes to the real and needy poor and mass farmers.As the govt of telangana and odisha has been giving benefit to only approx 1 crores farmers and landless farmers. It will be a harculrean task for the central govt to handle all the farmers and landless farmers which are to the tine of more than 10 crores landholdings.
As per Registrar General of India & Census report 2011 the total farmers or cultivators population of India is 118.7 million (2011) & 144.3 million agricultural workers/labourers which consists 263 million ot total rural  population means 26 crore.
I don't think that it is a easy job for the central govt to roll out a i come support scheme in such a small period of approx 2 weeks time by 1st Feb 2019  for such a large population data of rural india. Govt should rethink and replan by allocation of funds to states for devising their own policies of i come support, because different states having different agricultural ecosystems with different problems of the agricultural it related issues and they have to be first understood and then the scheme can be devised by the respective States. Otherwise if the central government wants to take credit for the benefit of the farmers then they must derive some scheme of assuring income through MSP already declared and to be implemented through already legal instruments in existence by the government of India which are Aadhar/WDRA and ENWR which can be linked with each other and the government can transfer the amount of MSP to the respective farmers and this is the only way where in the smallest available time it can be implemented with very proper accuracy otherwise it may be failure.

Growth of electronic negotiable warehouse receipt under regime of warehousing development and regulatory authority (WDRA)

History of WR ( warehouse receipt) started from the day of 1960s  when the warehouse receipt used to be issued by warehouse man under the different state warehouses act. Thereafter in the years of 1980s this instrument of warehouse receipt became the symbol of hundi where  the traders and farmers used to keep this warehouse receipt in the custody of landlords and money lenders and took loan and Finance against the warehouse receipt hypothecated with the landlords /money lenders, is this instrument of warehouse receipt used to be considered as a safety or the guarantee from the warehouse is that there the stock mentioned in the warehouse receipt is safe and can be handed over to the person in whose name the endorsement is given by the owner of the warehouse receipt. This way the confidence built up started amongst the Financial Institutions also against the guarantee being given and understood to be given by the warehouse man for the stocks and details mentioned in the warehouse receipt. Thereafter this became the practice of the day and there used to be huge financial transactions of the cost of commodities along with the quality and quantity mentioned in the warehouse receipts.
But in the above practice off day today transactions and transfers of warehouse receipts from one person to another person there started some legal complications also when the dishonest elements came into the scene of warehousing and then it was realised that some legal status has to be given to this warehouse receipt so that legal problems may not arise and the transfer of warehouse receipt becomes smooth and easy and with this idea concept of Negotiable warehouse receipt started on which various committees of the government along with the committee of Reserve Bank of India started working on it and came out with the suggestion of making negotiable warehouse receipt and its regulation by some authority and later on this concept was tabled in the form of Bill in the Parliament and and Act was passed named as warehousing development and Regulation Act 2007 under which authority named as w d r a came into existence in 2010 under which provision for converting of these warehouse receipts into electronic negotiable warehouse receipt was mentioned and after making great efforts by various experts on this field concept of electronic negotiable warehouse receipt emerged and wdra started working on this concept and came out with a idea of making available the services of electronic repository for keeping the  data  store  of different commodities  being stored in the warehouses and details their of are issued in the form of warehouses receipt, just on the line of the depositories keeping the records of dats being stored for the stocks like, equities and shares.
To bring about the above concept of eNWR into practice, WDRA came with appointing two repositories namely NERL and CCRL in September 2017 after making detailed guidelines for the repositories.

The eNWRs issued by the warehoused are kept and stored on the electronic platform of the repositories and are just like digital  money, wherein the farmers can sell the commodities mentioned on these enwr when the farmer finds that the price of the commodity is reasonable and to his satisfaction for which he has expected the price for the commodities produced by him so that he is suitably compensated for the labour and investment he has made in producing the agricultural commodities. And in case he does not get the desired price then he has another option of this platform of repository by keeping his eNWR under pledge so that the same stocks can be his source of raising loans from the Financial Institutions and banks.

It would be a game-changer for farmers. when their commodities are dematerialised in the repositories, wherein all the. Data and details of commodity under storage in a warehouse is accessible online to the banks and other financial institutions so that they are fully convinced that stocks being kept under pledge with them is guaranteed for the money recovery and hence they will be very happy to give loans to the owner of the stocks, who is either a farmer or a trader, and they would have easier access to institutional farm loans, at lower rates also.

The eNWRs have distinct advantages over the paper-based receipts. They allow farmers or depositors to have access to a large number of buyers across the country and thus would increase their bargaining power. They can do multiple transfers without physical movement of goods.

Moreover, farmers don’t even have to cart their produce to the market for selling. Once sold, the buyer would be able to pick up the purchased commodity from where it has been stored.

Even consumers of these agricultural commodities such as industries, processors, wholesalers and retailers benefit as they will be able to procure graded produce with a seal of quality assurance, 

Although the repository namely NERL is making good efforts with Quality Services being given to all the respective stakeholders , whether it is the warehouse man or a farmer or a trader or a repository Participant, it is the NERL, which is making full efforts   every time with  all the dedication for increasing its services by making more and more eNWR, in its repository and facilitating the transfer and pledging of the commodity for the help of the depositors and farmers  to get the remunerative prices of the producers and relieve them from the financial stress.
For achieving above target of relieving farmers from the financial stress and getting the remunerative prices the nerl is making all efforts as its team and key management personnel are very much devoted and in spite of many bottlenecks.

In order to review and assess viability and functioning of the repository nd also for easy movement and transfer of eNWR,and the bottlenecks in the existing system, it is very much essential to have a proper analysis about the functioning of the whole ecosystem of the eNWR.
All across globe, a well-functioning warehouse receipt financing system based on public warehouses has the potential to reduce risks and transaction costs in collateralised financing, which may result in broad-based access to such financing and low costs. However, for this to be achieved, an enabling legal environment and institutional set-up need to be in place to instil trust in the system among financiers and commodity market participants and to safeguard its integrity. Only when the financial community has a high degree of confidence in the system will it lend against warehouse receipts, and interest rates will be reduced. Core elements of a well-developed warehouse receipt system include:

  1 an enabling legal and regulatory framework;

 2 a regulatory and supervisory agency;

 3 licensed and supervised public warehouses;

 4 insurance and financial performance guarantees;

 5 banks familiar with the use of warehouse receipts.

Despite the differences among countries and legal traditions, an enabling legal framework should clearly define the following issues and related rules and procedures: i) the warehouse receipt’s legal status as a document of title or pledge; ii) rights and obligations of the depositor and the warehouse operator; iii) perfection of security interests (registration of the warehouse receipt or pledge); iv) protection of the warehouse receipt against fraud, and financial performance guarantees; v) priority for the claims of the holder of the warehouse receipt in case of borrower default or bankruptcy; and vi) clear procedures in case of bankruptcy of the warehouse operator and for the administration of financial performance guarantees.

Warehousing development & regulation Act 2007 was also meant to achieve the same objects, but the Act has not been designed to sync the basic and fundamental principles of commodity market financing as the Act has to achieve the basic goal of guarantee and trust of the warehouse receipt because of no powers to authority (WDRA) and hence teeth-less and which has to depend again on juridical proceedings for taking action against the defaulters. Secondly punitive actions are so harsh that no warehouse service provider will like to opt for registration. The punishments shall be for the regulatory lapses in the mechanism and system.But surprisingly the Act directly jumps into conclusive frauds and losses. It is a common sense that if the detailed mechanism for lapses found in different stages are worked out in the rules and the financial punitive powers are given to the Authority, then definitely a sense of regulatory control will lead to the desired level of collateral trusts in the ecosystem of financial performance guarantee..