09 February 2012

India Day 2 Recap: Bangalore/Krishnagiri

For the second part of the trip we flew down to Bangalore as a hub to make the 3 hour drive out to Krishnagiri in order to see how microfinance is being used to purchase Unilever's Pureit filters.

As I recently learned, thanks to David Roodman's book, India operates a unique form of microfinance that differs from the more well known form as made popular by Mohammad Yunus.  The self-help group model used in India has the basics of modern microfinance (group loans, women only, group liability), but differs in how the loans are executed.
In 1989, the Indian government began funding other NGOs to do the same. Three years later, it piloted the SHG-Bank Linkage Program, which operates to this day. With government funding, NGOs organize groups and train members in saving, lending, and accounting. The group then opens a savings account at a bank. Once the group has saved enough, the bank gives it a loan, typically four times as large as the savings balance, for which members are jointly liable. As in village banks and Raiffeisen's cooperatives, members apportion the credit among themselves...the Indian SHG-bank linkage system can be considered the largest microfinance program in the world, albeit with a degree of subsidy beyond that of other large microfinance programs.*   
In Krishnagiri, we saw one group's bi-weekly meeting that was followed by a presentation by a Hidustan Unilever Limited (HUL) representative. HUL teams up with the Integrated Village Development Programme (IVDP), the linkage NGO described by Roodman, to provide loans to members so they can buy Pureits (more on that relationship later).

The meeting itself was rather quick. The bookkeeper did a quick role call for the 15 members, recorded the attendance, announced that they passed a recent audit of their books by the bank, called out what each member owed for the month, noted the collection of money and ended by announcing that members were able to purchase a D-Light solar lamp through with a loan.

It was then time for the Pureit pitch. This area of the country is where HUL has been performing a pilot program in cooperation with IVDP. The product is presented in the same way that an NGO would do an awareness campaign. It is not so much a sales pitch as it is informing the members about how the device can bring safe water home. They use giant flip cards with animations to explain why safe water matters and so on. The presentation finishes with a short video about the product that is translated in 15 different Indian languages (these people spoke Tamil).

Within the particular group, 11 of the 15 already own a Pureit and two indicated that they are interested in buying on in the near future. The way the partnership works with HUL and IVDP is that IVDP essentially makes the sale of the product.  They received a commission for the sale as would any other vendor. In return, they agree that the loans taken to make the purchase will be interest free.

The filter costs 2000 rupees and the member can pay the sum over a 20 month period. When it comes time to change the filter, they can again take an interest free loan to buy the replacement. Thus far, the trial has been quite successful for the two partners. They say that 60% of IVDP members in the region own and use a Pureit.

We then had the opportunity to speak with the group as a whole then go into two homes and speak further with each of the women. Some parts of the conversation that stood out:

- The women have used loans to buy goods like televisions and refridgerators
- The group is 11 years old. There were some 'troublemakers' in the beginning who were kicked out and there have been no troubles since.
- When asked why they decided to join the group one responded "For our own development"
- What do they want to buy in the future? The overwhelming response was a gas stove. One said she would like to buy gold. I was explained that gold is something families aspire to buy as a form of investment.
- I asked what else they would like offered from IVDP/the bank. They listed: education loans (one mentioned for university level) and health insurance.
- Again, women are provided the information about the product but the final decision to make the purchase comes from the husband.
- What has the loan done for them? Allowed their children to stay in school and for many of them to build a home. One spoke of how it gave her confidence.  She said she was not educated. Because of the SHG she had to learn how to sign her name and go to the bank. She was scared at first, but now can walk right into the bank knowing exactly what she will do. (On a side: If you want to talk about empowering women, you don't get a better story that shows how simple it can be but also so very complicated).
- Both women during the home visits reported improved health in their children.
- in face one of them got it because of her children. They learned about safe water in school (likely a UNICEF project in the past year) and began to advocate for a better option. Since she bought the filter, they have insisted on only drinking water from it, make sure that it is clean, and have added stickers to it for looks.
- Both women did not boil water before using the Pureit.  One said she would boil only when someone was sick. The other said she never knew about the need for treating her water and always just drank it as is. (This is interesting because it will affect the carbon offset claims.  For some of these women, they are actually using more carbon to access safe water than they were doing before.  Now, the difference here is that it is a very small amount and they are now drinking safe water.)
- One of the women interviewed just completed her second of three homes that she intends to build (one for each child).  Her husband is a sugar cane farmer and she sells cow's milk. Certainly not ultra poor, but the income stream is not consistent (sugar cane is generally harvest annually give or take).
- One of the most interesting things said was by the same woman who said that she always pays more than is required in order to pay off the loan as quickly as possible. Yes, plenty of people do this around the world, but I cannot think of an instance where this has been told in the context of microcredit.
- Despite keeping a pass book with their loans and payments, neither of the two did anything to keep track of their personal revenues or expenses.
- One is the first to purchase the D-Light. Despite having electricity in her home (she is certainly lower-middle income) it is not consistent. She bought it as a way for lighting the home and so that her children can continue their studies if the power is out. I asked if she planned to buy more and she said yes without hesitation that she wants at least 2 more.

To finish, I am going to answer a few of the questions posed in the comments section to the best of my abilities for the recap from day:

1. How does the Pureit itself compare to e.g. Brita/Pur-type filters common in the US? Is it a different technology or is it more about how they have marketed/distributed it?

It is different in that it is meant to filter the very dirty water around the world and produce a drinkable water that meets the EPA standards for safe drinking water. The water is poured through an initial strainer that captures any large particulate such as rocks and dirt. It is filtered through a carbon block, passes through a chlorine tab, is piped down to sit so the chlorine does its job and is finally filtered once again through a second carbon block to remove any other particulate and the chlorine taste.  The final product is clear and good tasting water.

2. Role of Indian government

Unfortunately I have not had the opportunity to speak directly with any officials. As I have come to understand, the government is pulling from the business of providing water to people. The hope is the private sector will fill in that infrastructure role (ie piping and providing water). This is something I need to follow up and learn a bit more. Right now, it is clear that what is being done is not cutting it. Pureit is one solution, but it only takes care of half the problem. There is still the issue of how people access water itself let alone safe water.

3. Is it a short term fix or long term solution

I asked about this to the Unilever people. The answer is both. It is a short term fix in terms of its present offering. In the long term, Unilever thinks that people will still buy filters.  Remember, despite having great water in the US, we still buy a lot of bottled water and there is a huge market of at home water filters. The process will be a graduation from the heavy duty Pureit to something lighter that is used in the US to strain out chlorine and harmless minerals that affect flavor.

4. There are many approaches out there for water purification. Is Pureit the best or cheapest approach? Who says?

All in all, it does not appear to be the cheapest. We can look to chlorine as being really cheap.  However, one thing to keep in mind is that the ease of use and the fact that it delivers a product that people actually want. I am coming to learn that people hate chlorinated water and will often not use the tablets when provided. Does that make Pureit the best? I have no idea. They certainly make a compelling case but this is coming from them so they better do all they can to make that case.  I asked them what they thought about building a product that in an ideal world will no longer exist and they had not problem with that future (also, it is fine since they can still deliver a filter as I mentioned above).


I am considering going on a slum tour while here in Mumbai. I have been a vocal critic of slum tours in theory. I think that they have little ability to provide meaningful learning and end up turning the homes of millions of people into a zoo for white foreigners to gawk, point and snap some pictures. However, I have never actually gone on one. I think that I am right on this, but also recognize that I should actually participate in something and learn as much as I can before criticizing too strongly. What do you think? It will only cost about $10, so it would not be all that much money. I want to take an honest look and see how it goes.

Let me know what you think.

Note: I need to be a bit more clear on this. My interest is in evaluating the experience itself through participation. It is not about finding a way to tour a slum. Even if I find a local partner, it still becomes about me staring at poor people which is not what interests me nor is dignified.


*David Roodman. Due Diligence: An Impertinent Inquiry into Microfinance (Kindle Locations 1188-1189). Kindle Edition.