As we discussed the current model of the Urban Micro Business Centre (MBC) project as has taken shape after more than a year of tinkering with various approaches to fit the local context, the team representative got increasingly excited.
It turns out that the idea of an MBC centre was dropped from the final draft of the Mission document because the policy planners could not find a real world model demonstrating the concept, which would have allowed them to draft tangible guidelines.
It is thus that I was invited to the Odisha state level forum being jointly organised by the Govt. of Odisha and the Govt. of India, to discuss implementation models for the State Urban Livelihoods Mission (SULM is the state level plan for the NULM).
The NULM government scheme essentially puts a lot of pressure on nationalised banks to give out collateral-free, low interest (@ 7%) business loans to the urban poor, namely slum dwellers. The idea is that the government subsidises these loans, thus paying the remainder of the interest value to the bank in lieu of the loan recipient. Further, to prevent loans from putting off loan applications until the government subsidy is received, the scheme stipulates that subsidies shall only be provided upon proof of loan disbursement by the bank. States have targets for the scheme's implementation, including targets for number of loans disbursed per year.
The bank representatives raised a row over this at the NULM forum. The policy precursor to the NULM - SJSRY - had had very similar stipulations, but as the bankers complained, most of their firms hadn't received any subsidy for the 2012-2013 year, despite having disbursed such micro-loans in partnership with community and municipal organisations.
Community workers (from NGOs and also municipal agencies) had their counter attack ready. They complained that despite spending weeks helping slum dwellers prepare loan applications and sending scores of such applications to banks, there was no response from bank officials, let alone any disbursement of loans. (In the NULM scheme, banks have a mandate to respond to all applications definitively within 15 days, whether the response is yes or no).
Thus the NULM workshop (photo above) turned out to be an excellent platform for demonstrating the problems of implementing a multi-stakeholder project or policy, especially in an institutional context where :
(1) there is a trust deficit between the stakeholder groups that leads to such circular debates (as in, the local government complains that banks don't help the poor, the banks complain that the state government doesn't give them the promised subsidies, and the state government blames the rest of the stakeholders for not cooperating with each other to find a solution).
(2) there is poor institutional accountability toward keeping the promises made to each stakeholder, keeping which promise is actually the incentive for everyone to cooperate (the critical promise in this case is subsidies to the banks). Without this cooperation cannot be expected frequently or extensively; banks, NGOs, and municipal agencies have different incentives that typically don't align.
Below is the presentation I made at this meeting. The presentation includes a summary of our approach, and examples of how our model is starting to work on ground. While banks and other community organisations approached me for linkages to the project after the presentation, it remains to be seen how much the government follows up on its own mandates and vision.