Conference on Renewable Energy Policy Challenges in India

Over the next two decades, India- with its expanding population and robust economic growth is expected to be the second largest contributor to the surge in global energy demand[1]. This increasing demand for energy from conventional resources, in conjunction with climate change makes the sustainable generation of energy, and the expansion of the share of renewable sources, critical for the future.

Although India is well placed to build on this momentum[2], the deployment of renewable energies largely remain uneven and untapped[3] and need to be further expedited. According to N. Roberto Zagha, World Bank Country Director in India, “India needs to apply multi-pronged solutions to achieve the massive additions in generation capacity to meet the demands of its fast-growing economy. Renewable energy is one such solution, particularly in light of its economic feasibility. The entire renewable potential including solar is less expensive than diesel, where existing 20 GW of diesel based installed capacity points to innovative possibilities of scaling up renewable in a big way.”

This has led to a burgeoning interest in analysing the policies that play a pivotal role in driving renewable energy markets, investments, and industry developments[4]. According to the World Bank report titled Unleashing potential of renewables in India, although national policies facilitate an enabling environment for renewable energy development, it is the state policies and regulatory support that largely determine the pace of development. Further, the sector’s development depends upon appropriate introduction and use of different policy instruments at relevant stages of renewable energy development and consumption.

Despite the fast and on-going growth in the renewable energy sector, there are several challenges that need to be addressed specifically in the policy front to make this sector compliant with the renewable energy targets set by the government. Implementation gaps continue as a result of ineffective coordination led by multiple regulatory and institutional overlaps[5].

We, the Rural Markets Insight Division of CDF, plan to bring all the key stakeholders on a platform to discuss the current policy climate and other challenges critical to growth of renewable energy in India. Our initial analysis suggests that there is a significant disconnect between different stakeholders and this platform will not only aim at connecting them together but also help the sector in identifying the key issues that need to be addressed on policy front, as well as on business environment front.

Conference Output:

In recognition of the need to find sustainable solutions to these implementation gaps in the renewable energy sector in India, the conference intends to discuss the following issues:

1. Understand, evaluate and get a unique insight into all the key policy issues and challenges for market participants in the renewable energy domain.
2. Establish a platform for and create synergies between various renewable energy stakeholders in order to facilitate easy access to information and transfer of knowledge and skills to interested parties.
3. Develop framework that defines the roles of different stakeholders in establishing objectives for energy innovation and research.
4. To understand the general conditions needed for obtaining large scale commercial viability in the renewable energy market and understanding the obstacles in the policy framework impeding the commercialization of renewable energy technologies.

The conference (scheduled to be held in Delhi, March 2012) intends to bring together, members from TERI, The Confederation of Indian Industries, Prayas, The World Resources Institute, The New Ventures India, and other dignitaries who have been actively working on Renewable energy policy, to give a unique insight into all critical topics in the renewable energy field.

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[1]International Energy Agency (IEA) Report 2010

The World Energy Outlook of 2011 projects renewable energy to be the fastest growing source of primary energy over the next 25 years. However, fossil fuels will remain the dominant source of energy.

[2]The report titled Unleashing the Potential of Renewable Energy in India-2011 states that India has tripled its renewable generation capacity in the last five years and ranks fifth in the world in total installed renewable energy generation capacity.

[3]The report titled Unleashing the Potential of Renewable Energy in India-2011 suggests that only 10 percent of about 150GW of known potential has been developed.

[4]Global Status Report- Renewables 2011

[5] Unleashing the Potential of Renewable Energy in India

- Sunanda Rathi, Rural Market Insight - Centre for Development Finance

A letter from a MFI Client

Dear regulators, policymakers and other stakeholders:

I am a MFI client from an urban slum, and yes I have taken loans from 2-3 MFIs operating in my area. I do have a bank account, however, every time I have tried to use the banking services, I found the entire process too complicated, and I have no idea about bank Khatas or bank’s  products. In addition, I do not find their staff friendly or courteous. I remember the day when a MFI loan officer visited my house asking if I needed any credit. My friends and neighbors were asked to make a group and apply for the loans together.  Why did I need credit at that time?  I remembered that I had taken a loan from a moneylender the previous month, and I thought I could use this MFI’s loan that had a lower interest rate to pay the moneylender. At least that way I could save some money, which, otherwise would have gone to the moneylender.

(Pic Source: Sushmita Meka. Note: Pic used only for representative purposes)

Another loan officer came within a month and asked me if I needed a loan. I took that loan for my children’s education. The next month, another loan officer came in our area and again offered us credit. I took that loan too to fix the floor of my house, which we were planning for the last 3 years. That year was difficult for me as I had to attend 3 meetings every week. In addition, I felt obligated to pay the installment for anyone in my group, who was not able to make the payment. There were cases when some members ran away and I had to pay their share. It was not an easy process for me. Had the banks provided me an opportunity to save or  take loan to meet my credit needs for education, home improvement and others, I would not have taken these micro loans from 3-4 MFIs and gone through this process.

GDP as well being indicator - why?

After four years of working in 'development' research, I have finally found the right moment where motivation, ability and trigger have collided (or should I say colluded) and let me blog on a topic related to work.

The trigger was this lovely article I read on the China daily (to read click here). I liked the first article as well but liked the second even more because its about something I have been thinking about since I began studying and then working in 'development'. I have constantly been at odds with indicators of progress and now it seems I have found a comrade. Yey!

The line items that appear on poverty score cards or survey questions or World bank reports that try to assess a nation's or a household's or individual's well being. are all related to consumption or expenditure. Do you own this? How much did you spend on that? I never did understand reports that boast "loans outstanding increased by 15% last year..." Are we encouraging people to want more, spend more and borrow more? Is that what we should all aspire for to be included in the 'developed' clique?

Not one of these reports asked the respondent "How happy are you?" or something to that effect. Are richer people happier people? Judging from my New York or Mumbai friends, I know I was much happier than them when I was volunteering my time at an NGO in an unnamed village. My basic needs were taken care of and I got to do what I loved the most all the time. So when and why has ownership of electrical/electronic gadgets, jewellery and livestock become an indicator of my well being?

The author says all this better of course. But why are we trying to bring people into an urban rat race while some of us are trying to escape it ourselves and run to the hills or nearest underpopulated green area whenever a weekend or vacation day makes its appearance?

Huli Nodi Dia – Did you spot a tiger?

Huli nodi dia? goes the common refrain in the tiger territory of Bandipur, Karnataka. The ESF research team visited this picturesque wilderness area in the 1^st week of November, 2011, as this is one of the study sites for estimating demand for nature based tourism. This study is funded by South Asian Network for Development and Environment Economics (SANDEE).

Bandipur Tiger Reserve (TR) as notified under Project Tiger covers an area of 880 sq. km and is contiguous with the Nagarahole National Park in its north-west; the Mudumalai National Park in Tamil Nadu to its south and the Wayanad Wildlife Sanctuary to its south-west in Kerala. These four PAs together constitute the Nilgiris Biosphere Reserve complex with tiger population in the range of 207-327 (mean= 267) covering an area of 9000 square kilometres of landscape. This area has one of the highest densities of tigers in the country.

Virtual Conference on Multiple Borrowing and Avoiding Over-Indebtedness

On the 12th and 13th of January, a Virtual Conference was organised by CGAP in association with Microsave and IFMR. Personally, this was the first time I ever participated in a virtual conference (as a facilitator and participant). A platform wherein the speakers, moderators, facilitators and the audience are individuals seated in front of a computer – not conventional for sure. However, the perspectives and queries shared highlighted quite a few things. Multiple borrowing is not a new phenomenon and the reasons behind the same are not rocket science. However, keeping in mind with the recent turn of events, the virtual conference did throw light on the factors revolving around the case of over-indebtedness.

One concern that was resounded by participants and moderators across was the increased need in understanding clients’ behaviour towards loans and the external factors that influence the same. Also, it is high time that institutions do not enforce stringent measures in order to discipline the clients’ credit discipline – this ploy as history suggests is more likely to backfire and not induce any sort of discipline. It also would be good to see if the seasonal nature of occupation for many of the clients’ has any bearing on their financial behaviour. Many studies worldwide have shown that in certain scenarios, clients indulge in multiple borrowing due to lack of avenues for savings. Perhaps, in order to maintain a good healthy transaction relationship with a formal lender, the client may tend to borrow from informal sources. Monitoring clients’ financial behaviour must be done keeping the prosperity and well-being of them in mind.

Five Years of Researching Financial Services for the Poor

The Centre for Micro Finance at IFMR Research released its newest publication "Five Years of Researching Financial Services for the Poor,” at the organization’s annual conference, held on January 9^th and 10th in Pune in association with the College of Agricultural Banking – Reserve Bank of India. The report presents key research findings from the Centre’s work in the area of financial services for the poor. In addition to summarizing completed studies, the report profiles the Centre's new projects on agricultural information, index-based weather insurance, financial literacy, agent-based banking systems (the BC model) and recommends ways that financial services practice could evolve to meet the needs of low-income households.

CMF, founded in 2005, conducts research across four broad areas: financial inclusion, social objectives, livelihoods and policy and regulation.

Open publication 

Read the full document here. 


Here are a few of the studies profiled in the report:


The Economic Returns to Social Interaction: Evidence from Microfinance

Putting Money in Motion: How Much Do Migrants Pay for Domestic Transfers

Barriers to Household Risk Management: Evidence from India

Understanding the Psychology of Mass Default: A Case Study of Eastern Maharastra

Measuring the Impact of Providing Futures and Spot Prices to Farmers

Targeting the Hardcore Poor: An Impact Assessment

CAB-CMF Conference Summary

The 5th Edition of the CAB-CMF conference took place at the CAB Campus, Pune on the 9th and 10th of January. Here is a brief break-up of all the sessions that took place:

Inaugural session

Microfinance has evolved over the years – not just credit and savings alone. There are different parameters to determine the poor – yet to arrive at a common standard. New processes and methods to enhance the prosperity of the poor are the need of the hour. Collaboration between public and private entities should be encouraged. Research should lay emphasis on methods used and then become action-oriented research to make it meaningful. Building up livelihoods and success of all future programs depends on full involvement from all partners

Theme 1: New Rural Employment Generation Initiatives and Programmes

Different states choose different guidelines and also, implementation of mass programs depends on the enthusiasm and competence of local bodies. The best scheme and best mechanism can be achieved only if the preparedness of recipients is also taken into consideration. These factors need to be looked at even at a policy-making level, hence a refinement of planning and decision making involved in any mass programme like the NRLM. Mechanism of any scheme deserves greater emphasis, what metric do you use to measure success and how do you replicate the same across geographies

SHG 2.0 by Dr S L Kumbhare

The time has arrived that we must leverage on what exists. Is a revisit needed? Concerns include cost of delivery, interest rates and inadequate loans. However, looking forward, the SHG 2.0 will see Voluntary savings, ICT based e-bookkeeping and many other features. From providing finance to the last, lost and the least to becoming an informed and inclusive nation is the key. Good quality of SHGs and Cash Credit Accounts will have more emphasis and SHG 2.0 will look at how to minimize the undesirable effects that some SHGs have exhibited in the past.

Theme 2: The Psychology Behind Mass Default in Joint Liability Loans

The causes are of multiple kinds:- political, religious and many others. However, these alone are not the triggers. People choose what is convenient to them. Factors triggering a mass default range from individual, MFI, Community practices and even Group pressure. We need to realise how did models like JLG lose credibility? Has the theoretical model changed – need for more granularity? Banks also do finance through JLGs, and such models need to come within the scope of research. How to mitigate contagion effect is a future research topic. Inability to pay and other exigencies – are these the sole reasons behind such scenarios? High Client engagement is still a necessity if an MFI needs to be successful in the long run. However, Systemic risks need to be taken under consideration as well.

Microfinance: Translating Research into Practice – Conference

RBI’s College of Agricultural Banking together with the Centre for Micro Finance, IFMR Research will host their fifth annual conference, “Microfinance: Translating Research into Practice” on January 9th and 10th 2012 in Pune. The objective of the conference is to actively engage stakeholders and researchers in discussions relevant to current and future microfinance practice. This year renowned development economists Professor Rohini Pande (Harvard Kennedy School), Professor Erica Field (Duke University), Annie Duflo, Executive Director, IPA, Prof. Susan Thomas, IGIDR will be present to discuss results from a number of recent studies conducted in the area of financial services for the poor.

The 5 thematic sessions of the conference are:

• Government’s New Rural Employment Generating Initiatives and Programmes
• The psychology behind mass default in joint liability loans
• Way Forward: Future of Financial Services for the Poor
• Financial Literacy: Can financial literacy accelerate financial inclusion and help customers make rational decisions?
• Financing Microfinance: Scope and opportunities

Read the full conference schedule by clicking here

Behaviour Change - Key to making an impact at the BoP?

TRIIIIINNNNNG! 5.45 a.m. and it’s still pitch dark outside. I know if I want to hit the gym I should be leaping out of bed right this instant, but yaaaaawn, 5 minutes of snoozing won’t hurt right? Before I know, its 7 a.m. and just about time to leave for office. And so the eternal struggle with the gym continues.

Almost everyone reading this is familiar with this kind of behaviour, if not the gym it is righteous resolutions about eating less, spending less, smoking less, reading more, you name it. In 99% of the case they remain just that – resolutions on paper. So why exactly does this happen? Well, psychologists and behavioural economics are still working on that one and there has been a lot written about present bias, time-inconsistent preferences, hyperbolic discounting and irrational behaviour.

Behaviour change is always difficult to achieve, even when it is initiated by the individual for his own good. (Read about one behaviour change model). Behavioural change for product adoption is even more complex, not least because it seems manipulative. Getting people to buy a new brand or a new product, when for generations they have been using something else is the challenge which marketers face day in and day out.

Now add one more dimension to it – income - and it gets tremendously more complicated. The poor (or Base of the Pyramid consumers) have numerous propositions vying for their attention and limited budgets, and a number of important choices to make. Should they buy clean water when free (but impure) water is available, should they buy high calorie (but cheap) carbohydrates or healthier but more expensive vegetables and fruits; and other such choices that the rest of us might never have to face. While some of these decisions might have to do with simple cost-benefit calculations, most times these calculations are not so simple. How do you calculate the benefit of vaccinating a child? How do you calculate the value of sending a girl to school versus sending her to work? (You can read about many of these issues in ‘Poor Economics’ by Duflo and Banerjee where using randomized control trials they try to understand how the poor make economic decisions).

As enterprises operating at the BoP are increasingly realizing, marketing products or services at the BoP is not straightforward, especially when the proposition is more ‘social’ than commercial. It can seem frustrating to a caring do-gooder that the poor are rejecting things which can genuinely make their lives better. Why is it easier to sell a seemingly useless bottle of Coke at Rs.5 than 10 litres of a potentially lifesaving can of safe drinking water at the same price? Why is selling a sanitary napkin in an untapped population not the same as selling a new brand of toothpaste? Why would they not choose something which is so obviously good for them?

Partly because it involves ‘selling’ something when the alternative is free, and ‘creating’ a new market rather than ‘marketing’ a new product. Buying toothpaste requires a relatively easier decision of choosing between different ‘brands’, and a Coke has a whole lot of aspiration attached to it. On the other hand, buying drinking water or a sanitary napkin involves deeper levels of behavioural change without necessarily any ‘glamour’ attached to it. The co-ordinates now change to involve a number of more difficult decisions.

How can a BoP marketer make it easier for the consumer to decide and adopt something which improves her life? Well, answering the following questions could just be a beginning.

• Do you really ‘know’ your customer? (E.g. Do you really know the problems faced by a woman who does not even have an access to a closed toilet let alone the knowledge of hygiene associated with a sanitary napkin?)

• Do you understand how the household purchase decisions are made and who makes them?

• Does your product or service create value which is ‘tangible’ for the BoP consumer or does it make claims which are not really addressing her concerns?

• Most importantly, are you communicating your value proposition in a manner which she can not only understand but which actually ‘triggers’ the required change in behaviour?

There are many more unanswered questions, but making a genuine effort in understanding the consumer and communicating ‘with’ her could be a good start. Also while you’re at it, don’t forget it takes a whole lot of PATIENCE (Remember ‘patient’ capital?). After all, I am yet to achieve my elusive goal of 5 days a week at the gym!

CGAP and Microsave Virtual Conference 2012

Hi All

CGAP in association with Microsave and IFMR will be hosting a Virtual Conference on Jan 12 and 13.

The topics of discussion are:

a) Client Protection
b) Multiple Lending and Over-Indebtedness

Those who are interested in taking part in this VC, kindly visit the link posted below and register.

Further details like Moderators and Session break-ups can be obtained at the site.

Link:- http://virtualconference.cgap.org/

Regards
Kenny Roger

What do financial services do?

A nice, readable summary on the impact of various basic financial products. Wonder what the impact of a full bouquet of services looks like?


http://www.cgap.org/gm/document-1.9.55766/FORUM2.pdf