THE DEPUTY governor of RBI, Viral Acharya, on Saturday said that a group of economists believe that the poor people take the best economic decisions as “they have to really care about every single paisa that they are going to spend.
Addressing students at the Techfest 2018-19, held at IIT-Bombay, in Powai — where he was a former student — Acharya said that he didn’t have much to talk about technology but would focus on the root of economics, the origin of the world economics, and how is it important in household management.
He narrated four stories that he experienced with his family and while he is on his way to office or the Bombay Gymkhana. One of these was about a woman living with her two children on the footpath near S V Road, Juhu. Acharya said that early in the morning, to avoid traffic, he used to set out in his official vehicle — either to go to office or to Gymkhana. While on some days, he used to notice the mother waking up the children sternly because they were late for school, on other days, she used to bathe them with water from the sidewalks.
“You can see that she has a single-minded focus of getting her children that chance to fly and she totally seems committed to the road. Again questions start hitting you. How does she make it all work? What is the source of income? How does she afford the supplies for school? Is she home when the children come back? Is she doing a job during the day? We don’t know the answers but these questions keep running in your mind,” Acharya said.
He added that while travelling in Delhi, he saw about 20 women, mostly in saris — in the age group of 20 to 50 years and above — gathered around a banker. “They were there because they had borrowed some money from the banker. The banker digitally swiped the bank card of each woman on a machine. Some had to repay the money they had taken earlier while others were withdrawing money from their accounts rather than borrowing.”
Acharya said that he learned that these women were entrepreneurs — some were into the sari business, buying them in Kolkata, bringing them to the suburb and selling them in the neighbourhood.
He added that with the help of a loan from the banker, one of them had acquired a machine and used to stitch blouses to go with the saris.
Another had opened a beauty parlour and a third one had started a soft drink stall in her husband’s stationery store.
“I chose the example of women because most of the micro entrepreneurs in the country are women. Maybe I have deliberately painted a very romantic vision of such access to finance,” Acharya said.
He added that “important destroyer of wealth in poor families is health expenditures”. “So, anything would be going fine with them for a while and suddenly someone falls ill, everything gets washed off. They are very poor for insurance capabilities but if you have the track record of their expenditures on hospital, you can know exactly the cash flow variability that hits a particular income profile (sic),” Acharya said.
“So, a bank can collect this information from a large group of borrowers and have a systematic study of the rural region or income profile. Once they do that, they can improve their lending decisions. There is a lot technological advance that can happen and RBI is quite excited about it. We can solve the credit problems from the grassroots for the entrepreneurs in a fundamental way. It would be much better for the banks, for the fund providers as well as the entrepreneurs (sic).”
Another speaker at the fest was BJP leader Varun Gandhi. The MP said that one farmer has committed suicide everyday for the last seven years in Vidharbha, because the farmers there get access to only 9 per cent of irrigation facilities.