Brainforum

Solve the problems of the villages to help the cities

I remember reading a comprehension passage during my school years titled “A billion strong or weak” which in a Rashomon-esque manner illustrated how we can look at India either as a billion mouths to feed or as 2 billion powerful hands that can be put to work.

Idealistic in many ways, it emphasized on a very important part which I only realized after coming to college.

The economy has to ensure that there’s inclusive growth. This isn’t a rant against capitalism, neither is it a cry for pity. Over the last 2 years I have immersed myself to learn more about the developmental sector and the problems that face our nation. A talk with an eminent social entrepreneur (and one of the first Oxfam GB trustees from a developing nation) made me realize that most models of capitalism don’t benefit the poor because of the way they are structured. The poor end up having no savings because they are caught in a vicious cycle of loans and debt out of which there is no escape. This isn’t to say that capitalism in itself is wrong, in fact I believe that market based approaches to alleviating poverty are in fact very essential for progress. But the form of capitalism that I subscribe to should be inclusive in nature.

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What western economic systems can learn from micro-insurance and micro-credit

The concept of micro-credit has been praised throughout the past years, leading even to a Nobel Peace Prize for one of the founders of a successful micro-credit scheme.

One of the recent discussions in the “micro” segment is the one lead about micro-insurance. Such models are supposed to provide affordable insurance for the informal sector in different areas such as health or agriculture. Most of the time, these insurance schemes are realized as group policies on a community base.

As one of the members of the BRIC states, India has reclaimed the “Health for All” aim.  Given that neither the private supply of health facilities nor the public ones have been able to significantly bridge the gap in health insurance for the poor, micro-insurance plays an important role for being able to achieve this goal.

Their trait of being community based implies that every action of a member has consequences for the group as a whole. The premiums of every member are collected in a common pot and used in the case of the incidence of risk. This requires a high responsibility of every individual involved. The concept not only enables insurance for a part of the population which was seen as uninsurable, but also weakens or even avoids aspects such as fraud, moral hazard or adverse selection.

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