By Divya Moorthy, CIFD
Childbirth ushers with it a ray of hope and joy for the family. Pregnancy, birth and motherhood, in an environment that respects women, can powerfully affirm women’s rights and social status without jeopardizing their health. The enabling environment for safe motherhood and childbirth depends on the care and attention provided to pregnant women and newborns. Despite various initiatives, the maternal mortality rate (MMR) and infant mortality rate (IMR) in India is alarmingly high at 450 deaths per one lakh live births and 55 deaths per 1000 live births respectively.
Access to finance to acquire improved health care, quality reproductive health services, emergency obstetric and neonatal care and nutrition for the mother and her child is pivotal to addressing the issues of high mortality rates in India.
Centre for Innovative Financial Design (CIFD), IFMR, has developed the ‘Pregnancy Financing’ product that allows poor pregnant women to meet expenses related to child delivery and ante and post-natal care. ‘Pregnancy Financing’ is centered on the premise of Behavioral Collateral; where a particular behavior is treated as collateral for providing financial service. The rationale behind this is:
- Some women belong to the marginalized section of the society and hence would be unable to form groups that can underwrite each individual’s commitment.
- The women are too poor to possess tangible assets that could serve as physical collateral.
Women are encouraged to enroll in this product as early as possible during their pregnancy. Women who take-up the product, save regularly over the course of their pregnancy, with the amount of saving left open for the borrower to decide.
Two weeks prior to delivery, the savings accumulated by the woman is given back to her along with the loan since the savings behavior and not the amount of savings, works as collateral. The underlying principle behind this idea is that if a poor woman can forgo some of her current consumption for savings, then she can also forgo certain part of her consumption in future periods for repaying the loan.
CIFD has entered into collaboration with The Guntur District Cooperative Bank Limited in Andhra Pradesh and The Banswara District Central Cooperative Bank in Rajasthan for offering the pregnancy financing product. As part of the understanding, CIFD will design and develop the product and the associated processes for rolling it out. CIFD will also design the branding and marketing campaign to launch the product. The Bank from its end shall offer the necessary infrastructure and customers, also, it would extend the local level support required for the implementation. The product will be launched during the 2ndweek of August 2010.
What’s your take on the product?
Today, the Center for Innovative Financial Design (CIFD) has launched the endline survey of its project on contract enforcement in water markets in rural Uttar Pradesh. It will shed additional light on the appropriate interventions to overcome obstacles in irrigation markets in rural India. For that purpose, CIFD has recruited and trained field teams to survey more than 900 households in 22 different villages of Sitapur District over the course of the next 5 weeks. The training comprised different theoretical as well as practical sessions such as using GPS devices, using the survey questionnaires, and data quality management. The questionnaires that have been extensively field tested in the last 10 days cover various aspects related to water trade in rural areas such as pricing, mode of payment, and social relationships between water buyer and seller.
CIFD’s Survey Supervisor Mr. Bipin Gena piloting the Endline Survey questionnaire
Some background info on the research project: often we tend to romanticize about life in rural India, particularly, the social aspects. A common perception is that villagers have lived together for generations and the social interactions they engage in are not marred by conflicts. Such a milieu would facilitate the initiation of informal contracts amongst villagers which unfortunately is not often the case given anecdotal evidence from our field research in the dusty Hindi heartland of rural Uttar Pradesh.
In our preliminary fieldwork on irrigation markets in villages that encompasses the buying and selling of water through engine rental for irrigation of fields, we found that farmers do not undertake additional irrigation that would result in a significant increment in their output.
Pictured above: Survey field team members familiarizing themselves with GPS meters during the survey training
This is due to the paucity of funds to pay for such irrigations before the monsoon when they are most needed. For our randomly created sample water buyer-water seller pairs, we define a water seller as a farmer who owns both an operational bore-well and an operational engine. The matched water buyer in the same village is a farmer without an engine who owns a plot capable of being irrigated with water bought from the seller. GPS devises help to locate all households in the sample.
From today, the survey rolls out
The pertinent question here is why water sellers are not allowing water buyers to pay for irrigation cost or at least a part of it after the harvest when they get lump-sum payments. In return they could charge an extra fee from water buyers for delayed payments. The existence of irrigation credit markets within water buyer-water seller pairs seems to be natural if we consider farmers to be economically motivated.
But this is not the way things are on the ground. One of the reasons could be the difficulty in contract enforcement in rural areas. The experiments we carried out last year aimed to introduce variation in enforcement institutions for farmers and look at effects on bargaining over water sales. By providing subsidies in some cases to the buyers and in other instances to the sellers, we intended to observe a difference in irrigation transactions between these two groups if at all there are enforcement constraints in water markets.
Stand by for our findings when we complete the endline survey by July 2010.
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Sanchit Kumar, Project Manager at CIFD, contributed this post.
The Agence Française de Développement (AFD), the Bill & Melinda Gates Foundation and the World Bank will co-host an international Marketplace on Innovative Financial Solutions for Development (2010 MIF) to be held in Paris on March, 4-5 2010.
The event seeks to garner and highlight fresh ideas on the use of innovative financing mechanisms to solve development challenges at local, country, regional, or global levels, with the goal that successful innovations may be scaled up and replicated.
The conference objectives revolve around advancing the agenda on innovative financial solutions for development, facilitating knowledge sharing and spurring the evolution of projects that apply innovative financial mechanisms to development challenges.
One of the key elements of the 2010 MIF is a competition that calls for innovative ideas on how financing mechanisms could address development challenges. The open-call for proposals resulted in around 800 applicants from across the globe.
From amongst the pool of applicants, 20 finalists were chosen; and it is with delight that we note that CIFD’s (Centre for Innovative Financial Design) proposal is among the chosen twenty. CIFD’s proposal is titled “Savings Card: Increasing Savings by Re-Framing it as an Impulse Purchase”.
Anil Kumar, from CIFD, briefs about the proposal that “Savings card is an idea of creating savings when the customer is in the ‘consumption moment’. While the poor is purchasing goods at a purchase point, we present her a nice looking and cleverly communicated savings cards as a product that she can purchase, thereby, riding on the impulse purchase behavior. The card or the vouchers will have images such as a new bicycle or a wedding that tie savings to future consumption or asset purchase.”
The 20 finalists will be presenting their proposals in Paris at the Marketplace, and from among them 5 winners will be awarded pilot grants of up to 100,000 USD each to assist them in the implementation of their proposals.
In the spirit of the location where the 2010 MIF is to be held, perhaps befittingly, we say ‘Tout le meilleure’ CIFD.
