Can Microfinance "Cure" Poverty?

Microfinance is the probably most important innovation for ending poverty currently being misunderstood. Considered by many as a panacea to eradicate poverty, Microfinance has been implemented in over 100 countries to varying degrees of success.

Microfinance is increasingly seen as a powerful tool to provide a wide range of high quality financial services such as credit, savings, insurance and fund transfers to the poor and near-poor households of the world. It’s proponents believe that it creates entrepreneurs among the poor, helps micro industries grow and provides income generation to poor households. While there are some visible evidences of the above, Microfinance cannot be singularly based on its innate ability to end poverty. 

Poverty brings with it a whole lot of issues ranging from health, education, nutrition etc. It’s a vicious cycle where one gets trapped into. While Microfinance is one effort that allows the poor to escape the poverty trap, it would be a stretch to view Microfinance as an economic tool that has the intrinsic potential to alleviate poverty. 

While financial inclusion is a significant positive step towards breaking the poverty trap, it has its own caveats. The poor have little to no assets or credit history and hence are subject to high interest rates. Numerous Microfinance firms have witnessed high rates of default. In fact, according to a UN study, only 10% of the global Microfinance organisations are self-sufficient.

The more pertinent problem however is the absence of tools among the poor to benefit from financial inclusion. Lack of financial literacy, vocational skills and a variety of social factors prevent the poor or near poor households to leverage availability of capital. Capital borrowed by the poor from these organisations has often pushed individuals into crushing debt, a problem compounded by high interest rates. 

A holistic approach towards alleviating poverty should aim at leveraging financial inclusion of the poor households to provide solutions to the other factors affecting poverty. One of the key reasons why Grameen Bank has been a Microfinance success story in the poverty stricken country of Bangladesh is because they have successfully packaged financial services with financial literacy and social development. The Bank predominantly lends to females with the aim to improve the social standing of women. It also incorporates a set of values embodied by the Sixteen Decisions which the borrowers recite and vow to follow them. As a result borrowers have been encouraged to adopt positive social habits such as sending children to school. These virtuous social values leverage the reach of financial inclusion to enable the poor fight poverty.

Viewing Microfinance as financial tool to eradicate poverty is an myopic view of a complex issue. However, it certainly is a powerful medium to financially include the poor, cultivate positive social habits and provide financial and vocational training to equip them with the tools to fight the poverty trap. 

The Age of Sachin

In a nation of over 1.2 Billion people, millions of gods and tens of religions, one thing can be undoubtedly stated as a fact: Sachin is India's god. For the past 24 years, he has been the ultimate role model with his performances on field and his demeanor off it.

I'm sure a you'll read a ton of posts on Sachin and his impact on your lives. This post is not about that. You'll find another ton of posts on how Sachin made you laugh, cry and smile. Again this post is not about that. This post is a mere attempt to explain that even though India has suffered tectonic shifts in these past 24 years, there has been one constant. No, it's not change, its Sachin Ramesh Tendulkar.

During his career, we as a nation have changed. From owning Maruti 800s to driving Jaguar, watching Doordarshan to laughing at Comedy Central, eating khichdi to gorging at McDonald's, wearing Vimal to flaunting Nike and Adidas, calling from PCOs to brandishing iPhones, watching Rishi Kapoor movies to flocking at Ranbir Kapoor films, dreaming of Olympic medals to finally winning a Gold, economy nearly collapse in 1991 to become the next big growth story and hundreds of other ways through which our lives have changed. We have started flying regularly, became part of  the IT boom, had huge amounts of FDI pour into India along with multitude of brands we had only seen previously in SRK-Johar movies, witnessed the fall and rise of Amitabh Bachchan. We as a nation have exploded in population, changed our tastes and preferences, grown as a soft power and scaled new heights and throughout this whole time, the one constant was seeing Sachin at number 4 in the test line-up for the Indian Cricket team.

If today BCCI is the richest sports body in the world, it has to thank Sachin. If today we are graced with cricketers like Dhoni and Kohli, we have to thank Sachin for inspiring them. If we could afford to under-appreciate the genius of Laxman and Dravid, we have to thank the sheer brilliance of this genius. If UP ka Bhaiyyas like yours truly not afraid to live in Mumbai, its because Sachin told Thackerays that he belongs to India and so does Mumbai. In fact, the only reason we can claim cricket to be our religion, its because we had Sachin to be god.

Throughout these indelible changes Sachin remained the same. Genius at cricket, aggressive in competition, dedicated to his sport and excellent in conduct, he is the ultimate role-model for the emerging India who is not afraid of punch its weight at the world. Before Sachin arrived on stage and played on after a bloody nose from Waqar Younis, thwacking bowlers all over the park, Indians were a bunch of whinies scoring 36 runs not out after opening in a 60 over match. It would be no exaggeration to say that Sachin's performances against the best, be his century at Perth or his twin century at Sharjah, Sachin taught us that we are no way inferior to the world and to this, we owe him a debt we can never repay.

I might be going on a hyperbole here but I truly believe that these past 24 years can only be defined as the Age of Sachin. When historians talk about history, they speak of the age of Ashok, the age of Akbar et al. Let them speak of the Age of Sachin. Mythology is often described as the time of Rama, time of Achilles and the time of Krishna. Let this time be extolled by bards as the time of Sachin.

It is no surprise that a bunch of my favorite memories are associated with Sachin. My first cricket matches were those twin centuries in Sharjah through the dust storm. The one time I bunked coaching classes was to see Sachin score a century against Australia. My first college festival started to the chants of Sachin when he scored 175 in a losing cause. My first day long hangout on a beach shack was graced by Sachin scoring 200 runs in Gwaliar. Of course this list cannot include the innumerable days when I would escape from this sometimes deadful world and appreciate the sheer beauty of Sachin's trademark straight drives.

Harsha Bhogle perhaps put it best when he said, Sachin, you were a great habit. Like with all addictive habits, when one is forced to stop, one suffers withdrawal symptoms. Even with Dhoni, Kohli and the next generation of cricketers to alleviate the pain, I shudder to think what India will have to go through after Sachin retires on November 18th.

The Greatest Hero Of Them All

Disclaimer: The following post is based on personal experience and likes/dislikes. So expect it to be heavily biased and if I ignore many protagonists worthy of recognition and did not mention them, it might be merely because I have not encountered them. Read the whole piece with a pinch, nay, buckets full of salt.

A huge fan of fiction, I have encountered numerous protagonists in my literary learning. Most of them qualify to be great heroes on their own right. That got me thinking, which would be the greatest hero of them all?

The old bard Shakespeare in his play 'The Twelfth Night' wrote, "Some people are born great; Some achieve greatness; And some people have greatness thrust upon them." I cannot agree more to this definition of greatness. Using it as the barometer to define greatness I mentally scanned through my list of favorite heroes and finally decided on my personal top 3 viz- Batman, Aragorn and Harry Potter.

Karna, Sherlock Holmes, General Maximus Decimus Meridius, Rama, Hector were some names I thought of, but decided to go with the fore-mentioned three.

On Achieving Greatness: Batman achieves greatness by overcoming his fear of darkness and being the savior of Gotham City. He constantly battles numerous types of different criminals preying on his fears, but he regularly defeats them, inspite of his vow not to kill anyone.

Aragorn leads the free folk of Middle Earth to freedom from the evil clutches of Sauron and becomes the first king of the re-united kingdom of Arnor of the north and Gondor of the south after over 2000 years. Even though he is a mortal, he is even considered worthy of marrying an Elf, an Elven Princess for that matter.

Harry Potter destroys The Dark Lord and establishes peace in the magical society. He does this while facing his inner demons and huge backlash from the very people he intended to save from the evil lord. he is even bestowed with Godric Griffindor's sword for god's sake!! 

In short: All of the three have achieved greatness. That is why they are your heroes, figures you would look up to for inspiration.

On Being Born Great: Now if we talk of Batman, was he born great? He was surely born into a rich family, a family which dominated Gotham and sought it's well being. But was born great? I doubt that. As a terrified kid he forced his parents to leave the theatre and witness them getting mugged and shit while he did nothing. Well, it would be unreasonable to expect more from him, but the fore-mentioned actions don't warrant of a man born great.

Aragorn is the only direct descendant of the Numenor, the last great men of the west having half elven blood. A prophecy destines him to be great. Taught by Elrond the great elf of Rivendell himself, he was indeed born great.

Harry Potter was born a direct descendant of Godric Griffindor (founder of the house Griffindor which personifies heroism), born to great magicians James and Lily and with Sirius as godfather there is no doubt that he was born great. (J.K. Rowling intentionally plays down this aspect). Also, the prophecy by prof. Trelawney made sure he was indeed born great.

In short: Harry Potter and Aragorn were born great.

On Greatness Thrust Upon Then: Batman 'merely' achieves greatness. He does not undergo any experience where one could say he has greatness thrusted upon him.

Aragorn also does not have greatness thrusted on him. Had he been the one to carry the burden of the one ring and go on the quest to destroy it in the cracks on Mt. Doom, he would have qualified for the critieria, but that role passes to Frodo.

Unlike the above two, Harry Potter has greatness thrusted upon him the moment Voldemort unintentionally makes him a horocrux and dies when he intended to kill him. That moment made Harry Potter the 1 year old kid, savior of the wizarding community. His special connection with Voldemort ensured that even though he may not be born great, or achieve greatness, he will have greatness forever thrusted upon him for that single act by Voldemort. The prophecy of Trelawney could have been applied to either Neville or Harry, but on choosing Harry to be the chosen one, the one to destroy him, he directly thrusts greatness on Harry.

In short: Harry Potter is the only one of the three heroes in question to have greatness thrusted upon him.

That is why Harry Potter was, is and will be my favorite hero of all time.

PS: Another hero I would love to add is Karna. Son of Surya Deva himself, he was born great. He achieves greatness when in spite of being self-taught, he turns out to as skilled as Arjuna. Greatness is thrusted upon him by a cruel twist of fate when on being abandoned by his mother Kunti, he joins forces with the opposition camp of his brothers and chooses to be loyal to the Kauravs in spite of knowing the truth about his lineage.

Gandhiji, we respect you.

MK Gandhi played an instrumental role in helping India gain independence. He led the nationwide protests against Britain and employed the ideology of 'Satyagraha' and was revered to such an extent that he was named 'Mahatma'. How exactly did Gandhi develop his concept of 'Satyagraha'?

A barrister by profession, Gandhi was sent by the Diwan of Porbandar to complete some legal proceedings in South Africa. On his way to the destination, he took a train, only to be thrown out at Pietermaritzburg. Behind schedule, as last resort, he climbed onto the Wagons transporting the British public and hung on the back railing, since non-whites were not allowed to sit in the wagons. The British were peeved seeing brown hanging from their wagon and tried to poke and hurt him in an attempt to make him fall. Inspite of all the pressure and the numerous taunts, Gandhi stuck to the railing and didn't fall down.

Soon, the British got tired of the 'game' and let Gandhi travel. Hanging by the wagon on one hand, Gandhi had an epiphany. He realized that if one is convinced about his stand and sticks to it, no matter what may come, he will succeed. He also realized that it is easier to stand your ground if you are fighting for the truth. In short, if you know in your heart that you are true, you can stand your ground, protest in a non-violent method and achieve your goals.

Gandhi experimented with this theory in South Africa and achieved great success. He used his fine-tuned version of 'Satyagraha' in India to help one-sixth of the humanity gain independence and make its voice heard.

Gandhiji, we respect you.

Corruption & Butterfly Effect

Touted to root out all corruption from the current political system, LokPal Bill has finally been tabled in the parliament. One must laud the efforts of Anna Hazare and his team who fought for the bill and took the fight against corruption to the corrupt politicians.

LokPal Bill proposes numerous Lokayuktas which identify various corruption cases and aim to pronounce verdict within 2 years. These Lokayuktas will be independent of any body just like the Election Commission (EC). However, one wonders how many cases can these Lokayuktas handle each year, and will they be enough, given the extent of corruption right from the level of peon to the PMO. Also, one cant be sure of impartiality on part of the Lokayuktas. Another question which arises is,"Who will watch the watchdogs?".

Warren Buffet states that greed is essential human behavior. Government makes laws and rules to preempt acts of greed. People bend rules and supersede law out of pure greed. Law does slow down greediness, but doesn't eradicate it. LokPal Bill will only slow down the process of corruption, it wont eradicate it.

This is where the Butterfly Effect comes in the picture. This effect states that a flap of a butterfly has far-reaching effects. For example, in 1980's and 90's, crime rate in US was rapidly rising. Infact America was predicted to implode by 2010. None of that happened. Crime rate has dramatically declined since late 1990's. How did this happen? The law enforcements did not work. The answer lies in the Abortion Bill. Most of the delinquents and thugs comprised illegitimate or unwanted offsprings. Ever since abortion was legalized,such babies have drastically reduced, and crime rate followed suit.

The million dollar question is, what is the 'butterfly' for our corrupt system? This question has been answered by India's Chief Economic Advisor, Kaushik Basu. He asserts that bribing should be legalized. Currently under the Indian Penal Code, both the briber and the bribe receiver are treated as accomplices of crime. If Basu's suggestion is implemented, the briber no longer is termed criminal, however accepting bribe remains crime. If bribing is legalized, the people who bribe to 'grease the process' would be willing to testify against the corrupt. However, bribing to get illegal work done would still remain a crime under this suggestion.

I personally believe Basu's approach is the path Indian Government should adopted. It is not flashy like LokPal, and may not be understood by the masses, Infact it will not show instant results, but will surely lead to terminal decline of corruption. Illegal betting, prostitution, drugs all have same solutions, legalize them and bring them in the arbit of law.

If I could sell my soul...

Jimmy Page, arguably the greatest guitarist ever, had exceptional guitar skills and was a pioneer of many musical and recording techniques. Not only was he technically proficient, he could pour emotions into his riffs, lending that X-Factor. His legend grew in stature to such an extent that rumor spread that Page had sold his soul to the Devil in exchange for musical talent.

I got one chance to sell my soul to the Devil, I would gladly grab it with both hands, without any qualms. But before actually 'selling', I would split my soul into various horocruxes. (I guess when you can sell your soul, you could also split it), and trade my horocruxes for special wishes.

I would ideally split my soul 3 times, leaving horocruxes with half, quarter and one-eighths of my soul. Here's what I would how I would trade them:-

1. Half of my soul to be a connoisseur of literature, music, food and art.

2. Quarter to become the perfect pianist.

3. One-eights to gain courage, courage to ask out the girl I like.

4. The remaining soul i.e. one-eights of original remaining in my body would be elated to pursue a successful career as food connoisseur, play the piano for fun and enjoy all this with the girl I love.

PS: The post may present me as a disturbed person, but then again, this is just extreme form of imagination. PLEASE, do not judge me from this post, I am NOT demented.

Price, Cost and Value

Price, cost and value are related terms and are often used interchangeably by people. Technically, these terms have slight but significant difference in their meanings and application. All these terms are related to products and at which rate people buy and sell.

Most often, people confuse between price and cost. Cost and price of a particular unit is different. Price is the rate at which the store is selling its products. For example, a pencil may be priced at Rs.10 . Cost is the expense the store had to incur for that product (in our case a pencil). It includes the rate at which the store bought it, plus the operating and miscellaneous costs per product. A store operates only when its price is greater than cost. The moment cost increase beyond price, for every unit sold, the store incurs a loss, and its better if the store shuts down. The situation where cost equals to price is termed as Shut Down Point.

Value is the rate pegged by the buyer on a product. For example, a retailer sells a pencil at Rs. 10. However you may peg a rate of Rs.15 on that product. That means that the buyer will be willing to buy that pencil, even if its price rises. Only when the price rises above Rs.15 will the buyer rethink buying the pencil.

Paintings, diamonds, memorabilia and other products are often sold in auctions. Auctions use the concept of value. People bid on the products at the value they peg. The person who values the item most would have bid the highest and wins the auction. However, value of concept is a crude method to explain auctions. More often than not the people who value the item most do not have sufficient money to place a bid, that is by default they value their money more than the item being auctioned.

PS: I recently wrote cost and price as two separate concepts while writing an answer in my Technical Report Writing course. The teachers correcting my answer sheet deducted marks, because according to her price and cost are the same. Even after arguing she refused to accept the truth. This post is a retort to that.