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GROWING CORPORATES COWSHED ECONOMICS
By M H AHSAN
In the past few months, life has become more purposeful for Sunil Dange, Baba Pawbake and Raosaheb Halwar, working with the HDFC Rural Initiative Group in Sangamner taluka of Ahmednagar district, Maharashtra. "Earlier, I was with HDFC's demat section in Pune. When this opening came up, I was happy to move back to my village and work with farmers. I understand their needs and problems better," says Halwar, a post-graduate, sporting his bank uniform with an attitude.
For Dange and Pawbake, both graduates, the work offers a learning curve with better payscales. Plus, HDFC's corporate identity is something to cherish. That HDFC is initially offering only two-year contracts is not seen as a liability but "a challenge for proving our worth", says Pawbake. From crop, cattle to vehicle loans, HDFC's rural initiative with local credit cooperatives is slowly being scaled up from a two-hub pilot project in Maharashtra and six hubs in Gujarat.
"Of the 275 new accounts opened from April-July this year, over 90 are first-time bank account holders. The rural initiative goes beyond giving loans, and provides services including fixed deposits, money transfer and withdrawal," says Santosh Anaspure, manager of the Sangamner branch. Pointing to the success of the programme, Anaspure adds that farmers are being equipped with debit cards that also facilitate deposits, and are empowered with mobile links and other services at their doorstep.
Suddenly, there is a concerted effort among corporates to woo rural and semi-urban customers by recruiting employees from the same geographies. Several firms have realised the need to recruit locally and, hence, upgrade local skill sets. "Rural initiatives are still in the nascent stage. We're interacting with members to see how poor people can be trained for jobs, particularly in rural areas," says H. S. Sethi, who spearheads CII's Skills Development Initiative wing.
Apart from Hindustan Petroleum Corporation Ltd (HPCL) and Bharti Enterprises, who have undertaken skill development projects as part of their corporate social responsibility (CSR), there are others like LPS Bossard and Schwing Stetters India that are providing training to meet their own requirement for skilled workforce. Larsen & Toubro, an infrastructure major, is handpicking and training people with traditional skills like masonry and carpentry to meet the changing needs of the construction sector.
As the government targets 10 million new rural jobs over the next five years, and the rural development ministry earmarks funds to train 2.5 million youth to promote entrepreneurship or employment, industry associations aim to upgrade skills of 6 lakh youth. "We are getting trainers on board and creating a databank before commencing the programmes," says Sethi. Adds K. Raghu Raman of the Hyderabad-based Dr Reddy's Foundation, "From promotion of micro-irrigation to farm equipment, there's a perceptible demand from companies catering to rural communities."
Dr Reddy's Foundation plans to train 5,000 people in each state, scaling up a project started in seven states with government funding. It has so far trained over 1,00,000 people at its Livelihoods Advancement Business School, with 80 per cent placements.
"Local entrepreneurship boosts local economies, checking unnecessary migration to cities. We have, therefore, set up the Bharti Centre for Entrepreneurial Initiatives in partnership with the Entrepreneurial Development Institute, Ahmedabad," says a Bharti Foundation spokesperson.
India has an estimated labour force of 509.3 million, with around 60 per cent employed in agriculture and related industries. Though government data reveals unemployment is marginally lower in rural areas, compared to the urban regions, Sethi is quick to point out that there is much greater under-employment in the former areas. In many cases, rural employees earn less than Rs 20 a day.
Ultimately, a bigger set of firms have realised the growth potential of the largely untapped rural and semi-urban markets. For, it is no longer just theFMCGs that are trying to scale up volumes in these areas. Private financial service players, for instance, see great opportunities. They have, however, realised that the rules of the game in rural areas vary from region to region. And that trained locals are the best marketing passports to mingle and win trust through interaction in community gatherings.
As Sanjay Daswani, product manager of HDFC's Rural Initiatives division puts it: "In rural areas, word-of-mouth publicity is crucial. One wrong move and all efforts can fail for a long time to come. Our business correspondents have their ears to the ground and therefore there is less chance of fraud." Reveals Pranav Prashad, head, ICICI Lombard General Insurance Company's rural and agri business group, "We are picking up rural youth who are enthusiastic, have good contact, are able to communicate, and can get us in touch with local leaders like the panchayat or village head."
Through a focused strategy, ICICI Lombard has expanded its insurance portfolio to include cattle insurance besides the index-based weather insurance covers that have registered 100 per cent growth annually. In three districts of Karnataka, the insurance firm has got health insurance business for 700,000 lives with the help of 900 local promoters or sevathirthankars "who have the knowledge of the local terrain and what works". Assisted by 5,000 rural promoters besides insurance agents, ICICI Lombard has an estimated Rs 125 crore rural agri business across various products.
In the case of HDFC, similar initiatives have added 25-30 per cent new business in the last quarter wherever it has been deployed in states like Maharashtra and Gujarat. With more tie-ups being forged in UP, TN and AP, HDFC is optimistic of its 'rural hubs and spokes model' paying rich dividends. Initially piggybacking on local credit cooperatives to offer their products, HDFC is in talks with various other product and service providers.
Officials admitted that many rules and packages are being reworked within permissible guidelines to win financial and insurance business while providing farmers a better deal like softer interest rates and timely loans at their doorstep. Not to be overlooked is the fact that some of the best talents from agriculture and managements schools, particularly those willing to work in rural offices with no trappings, are being selected to rewrite India's new rural growth story. The policymakers' dream to achieve double-digit GDP growth rates, along with an 'inclusive' strategy, is slowly taking a concrete shape.
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