Sreelatha Menon: Spend thrift

EAR TO THE GROUND

There was a time not long ago when one was taught to live within one's means and to save for a rainy day. But today, the formula that is being embraced is 'Spend'. That is so for some who have money, and also for the many who have no option but to spend on food and other necessities and are in no position to save.

A social activist in Bhopal has grabbed the essence of consumerism to work out a social security programme that should give the proposed social security programme of the Government of India a run for its money.

While the government's proposed social security Bill for the unorganised sector is based on savings and subsidies, the strategy that activist Pradeep Ghosh, founder and president of NGO Oasis, has adopted is based on expenditure.

The premium for one's insurance would come from the actual money one has, which is the money one spends. This is because savings are non-existent, at least in the context of the majority of people in the unorganised sector, which forms 93 per cent of the workforce.

Ghosh, who is also advising the government on an insurance scheme for the disabled, has prepared an elaborate model which is being piloted in villages in two districts, one each in Madhya Pradesh and Maharashtra.

The Madhya Pradesh government has identified a rural block (Shahpur) in Betul district, while an associate NGO of Oasis is implementing the model in two villages of Solapur in Maharashtra.

Ghosh's model works this way: A consumption survey of the community is done. This helps them in understanding how their expenditure drains away their entire income and savings into the hands of traders. Then, if it is a village, self-employed groups (SEGs) are formed out of the existing self-help groups (SHGs). These SEGs provide services and products for meeting the daily requirements of the village.

Retail outlets are constructed in a village cluster to provide services, including transportation. Every SEG has an exclusive set of products/services to offer. This is done to ensure that every SEG gets enough business. Also, this ensures that all SHG families become committed customers of all the SEGs, as it is their own shop.

The net profit, instead of going into the hands of traders, now accumulates into a social security fund for the entire community. Based on the purchases made by the families from the SEGs, the social security fund gets apportioned into special savings accounts. The community also gets to choose the insurance company. Special 'Pass' accounts are made in the local bank for the SEGs and the fund is created from a portion of these.

The model requires financial support for establishment at the initial stage, but once it reaches a critical number of beneficiaries, it becomes self-sustaining, says Ghosh.

Corporates should grab the model for their corporate social responsibility projects as it would bring back the money invested in social work into expanding their businesses, he adds.

Ghosh's dream project will begin sending money into the social security funds of these select villages next month. He sees the prospect of scaling up the project once corporates and other state governments see how a social security programme can be possible without the government paying subsidies through its nose or the poor people being forced to either pay out or be left out.