Nirupama Parsineti, 1811343 RBFI Reflection Note 3

I recently came across a welsh word called, “Hiraeth”. It meant longing for a home that never existed. And
home is somewhere you belong and feel freedom in truest sense. That led me to understand an important
concept that the needs of urban poor and rural poor are distinct. Overcrowding couple with high variability
of Indian agricultural has been one of the main reasons for migration from Rural landscape to Urban. The
socio-economic and financial risks that this migrant workers face in the cities is arguably different from
rural counterparts. While lack of enforceable property, variable earnings and informal sector jobs are
economic risks they face, dual burden of migrant families and lack of knowledge of financial products are
inevitable financial risks they face. The society they are part of is also different. Compared to the heartland
and countryside, there is higher incidence of crime, higher societal fragmentation(or diversity) and higher
exposure to health and sanitation risks. This multidimensional poverty as experienced by the urban poor
requires understanding of the fragile ecosystem they are part of, the impacts of global warming and
climate change on them and the rise NCDs(Non-communicable diseases) in the urban area.
To further illustrate my argument, take the case of Kaali-peeli(Cab) driver in Mumbai. Many of them
belong to migrant worker families from Bihar, UP and Jharkhand. An interesting fact about them is that
they are in the same business from generations. In most cases, they do not own the cab they are riding and
live in unsanitary, crowded and unregulated areas. This is so because most of the cabs are rented on a
daily/monthly basis from huge car rental companies. On an average, the taxi driver makes around 15-20k
in a month. The car rental may be in the range of 100-300 per day depending on the car and the distance
driven by the driver. This leaves a very meagre amount to make ends meet. Adding to the complexities are
the threats of climate change and NCDs. Any holiday he takes due to ill-health directly affect the well-being
of his family. It takes generations and a lots of luck to finally be able to afford a car of their own. Data
suggests that almost all of them are aware of various financing they could obtain but only around 53%
even approach any formal finance source. They pay very high rents and some of them, in the cropping
seasons return to their hometowns which results in highly disrupted income source. This makes risks
higher for any institution which is willing to look past the absent transaction trail.
With increase in percentage of urban poverty outstripping rural poverty, we are experiencing, what is
being called as “Urbanization of poverty”. While various financial inclusions methods such as SHGs and
MFIs have been highly effective in Rural India, the same has not been the case in Urban India as
community trust is essentially absent here. An important question that arises from this scenario is whether
the Government should play the role of the developmental state and launch scheme such as JNNURM,
Housing and smart cities mission or should it act as regulator facilitating the role of private finance and let
the productivity of the migrant workers increase.
Eradicating poverty and empowering citizens to pursue their goals without discrimination is at the heart of
the welfare state. At which level of the Government should there be a focus on urban poverty? Should the
approach be decentralized or should it be dictated by the centre. The problem with the former lies in the
fact the migrants are minorities in any region and hence, they face difficulty in participating in urban
governance. The problem with the latter lies in the fact that poverty and its alleviation is very region
specific. This makes it clear that there’s a need for public and private stakeholders in this space.
Without alleviating basic problems of housing, education and health, financing and inclusion in formal
system do not hold meaning. The Local urban government can focus on bettering housing, providing
education and health to the wards. This would help in negating any shocks to the income of the household.
In addition to this, a concept of paid-leave can be introduced in the scenario which would also encourage
more formalization of the urban poor. The private players like Jana Small finance bank can provide
financing facilities. This would also ensure that the financing activity remains profitable and it is driven by
investment based credit.
There’s a quote which describes Poverty as a worst form of violence. Lifting the urban poor from the
multidimensional poverty requires multidimensional approach. Like any systemic change, any one change
threatens to be insignificant unless bought along with complementary changes. Identifying the players,
understanding the duties and breaking the cycle of debt-income is a must. Financial inclusion, in its truest
sense calls for self-sufficiency and empowerment, merely registering people as account holders is not a
panacea that a welfare state can offer.