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A-Ramesh-Kumar

Historians will say that an explosion of creativity occurs the moment the world starts complaining that there is nothing left to invent, or that the search for solutions to complex problems has come to an end.

This explosion is fate’s way of reminding us that there is always something just over the horizon of knowledge. Social entrepreneurs are now using their talent to bring lasting solutions to several entrenched problems at a time when the world has never needed them more.

One of the most challenging problems of our times is homelessness. The statistics are jaw-dropping. A 2013 report, ‘Housing Microfinance in India: Benchmarking the Status’ by ACCESS-ASSIST found that in India, the total housing shortage is 42.69 million units in rural areas. The government ducks the issue by pointing fingers at legal logjams and financially-strapped housing programmes.

The key constraint in providing shelter is that people do not have proof of being owners of the piece of land on which they live. Being “invisible” in land records strips them of their access to basic rights and services.  Lack of proper documentation is a major obstacle as many families may not have had it for generations. While many villagers own their homes, which they likely built themselves, they rarely own the piece of land which holds their dwelling.

These households cannot provide mortgage-able collateral for a loan and third-party documentation of their earnings. The formal financial sector is unable to serve them. Excluded from formal financing, many households delay investments in housing or are unable to make it.

In 1995, the Supreme Court wrote a landmark judgment in Chameli Singh vs the State of UP, emphasising the centrality of the right to housing as the precursor to all rights. Successive judgments on similar matters in the Supreme Court reiterate similar concerns.

Interestingly, the court, combining the obligations of the State under the Right to Life, the Right to Residence and Settlement under Article 19(1) (e) and international obligations, gave a very progressive interpretation to the Directive Principles and held that:

The right to shelter when used as an essential requisite to the right to live should be deemed to have been guaranteed as a fundamental right. As is enjoined in the Directive Principles, the State should be deemed to be under an obligation to secure for its citizens, of course, subject to its economic budgeting.”

The Court succeeded in formulating a distinct right to housing and associated it with the aim of the Indian Constitution in securing economic and social justice as stated in the Preamble:

Want of decent residence, therefore, frustrates the very object of the constitutional animation of the right to equality, economic justice, fundamental right to residence, dignity of person and the right to live itself.”

All these developments opened new vistas of innovation and policy reform and also spurred entrepreneurs to have a fresh look at the l development landscape.

Ramesh Kumar, a social entrepreneur who had successfully championed new approaches for addressing the problems of low-income households in his earlier innings as a banker, decided to solve the puzzle the same way he recontoured the microfinance programme in central India.

Maharashtra had proved an infertile territory for microfinance and ranked low in terms of visibility on the microfinance map before Kumar became its new shepherd. In 2004, Kumar introduced several revolutionary ideas in microfinance which has self-helped groups comprised primarily of women. The State Bank of India, whose western operations he headed saw a new upsurge in microfinance driven by his creative fillip. It soon became the new Mecca of microfinance. His innovations had a very long-term impact. Today, Maharashtra heads the microfinance portfolio among all the states.

In 2005, the National Bank of Agriculture and Rural Development (NABARD) invited Kumar to be chairman of the National Committee of Habitat whose focus was to address the deficiencies in rural housing finance. He contributed to the development of a report resulted in the National Rural Habitat Policy for India.

After seeing how many good ideas, including many recommendations from the National Rural Habitat Policy for India, did not come into play, Kumar reconsidered his own approach. In 2009, Ramesh Kumar started Swarna Pragati to address the market gap in access to housing finance in rural communities.

In 2009, Kumar registered Swarna Pragati Housing Finance and came up with a new model based on empowering rural communities. Rewriting the script of failure has meant identifying roadblocks. Kumar spotted in panchayat raj institutions the building blocks for innovations in housing. He built linkages between self-help groups (SHGs), gram panchayats (village councils) and other government departments and service providers to design a simple but strong ecosystem for housing finance and mortgage that would overcome arcane procedures.

Swarna Pragati’s process of titling, mortgaging and financing has now become a widely recognised practice within local bureaucracy et al. The key grid is the Gram Sabha (village assembly), a constitutionally mandated bottom tier of governance. The Gram Sabha endorses the titles and mortgages and certifies the income of the potential clients of Swarna Pragati. This community titling and participatory screening have paralegal sanctity. It is a cost-effective and progressive way of building tenure documents that carry legitimacy and weight in local institutions. Kumar is trying to get a buy-in with the regulators, the National Housing Bank, which is bound to follow once the efficacy and tenability of the process are firmly established.

Kumar’s model has a strong gender window. It is in keeping with his personal philosophy that gender perspective needs to be woven into any social as well as business intervention if want to have a wider and deeper impact. The loans are mostly to women and so they legal entities in the mortgage process which gives them an implied share in the ownership of the house. This has motivated several households to register their plots jointly with their wives.

Kumar has introduced multiple innovations in the model which mitigate problems both for the financiers and the clients.

First, the model practices modular or incremental housing with both construction and the finance broken into numerous components namely, roof, flooring, kitchen, toilet, well, work shed et al, and financing is done for one or more modules at a time keeping in view the psychology of seeking short-term loans with affordable repayment instalments. Second, the focus is on habitat and hence work-sheds, wells for water supply toilets and renewable energy sources. Third, self-help groups (SHGs) and joint liability groups are used as the delivery models because they save costs and risks for the financiers.

The Swarna Pragati model is just one of the many creative ways village panchayats can become harbingers of a larger revolution. Kumar is now a shaper of the entire ecosystem for rural housing finance. And he knows his model will light up the path for many others. The model has been recognized by NITI Aayog as one of 20 Mission Driven Social Impact Innovations in the country.

Changing governance, raising money, and designing new policies take time. However, the stresses on the accounts of inadequate housing and sanitation are mounting fast. It will all be worth the effort if the talents of the private and public sector are synergised through creative partnerships and fruitful linkages. Entrepreneurs like Kumar can serve as useful candle lights for the start-up sector. The government must summon the political will to embrace the new innovations and act fast before the time runs out.

Moin Qazi is the author of the bestselling book, Village Diary of a Heretic Banker .He has worked in the development finance sector for almost four decades .He can be reached at moinqazi123@gmail.com

One Comment

  1. K SHESHU BABU says:

    People like Kumar should be given full co- operation by social organisations as well as government in their valuable contribution to rural housing and develop the standard of living