A study of the business households among the urban poor, based on the findings from Ramanagaram financial diaries

Abstract

Poverty is widespread in India, with over 50% people living below the poverty line.1 Majority of the poor do not have access to the formal financial services, with most of them even lacking the basic services e.g. savings account. RBI sources put the percentage of adult population in India having a bank account at 59%.2 Poverty is not just a feature of rural India, but is also prevalent in urban areas. Increasingly, research has been conducted to understand the causes, trends and features of the urban poverty. Migration is mostly a common story which the urban poor have to say. Most of them come to the cities in search jobs, as they aspire for better living conditions than they have in their villages. By the time the truth hit them hard – that they can’t find permanent jobs so easily, going back to the hometown is no longer an option. So in the struggle to earn their daily bread they end up doing a variety of activities like beedi rolling to embroidery. Some lucky ones find a permanent job here and there. This is precisely the story of every urban poor of India. Moreover, the businesses they are in require investments at regular intervals for which they are forced to borrowing money from several sources. Family and relatives come to the rescue of a few. But most of them end up borrowing from MFIs or finance companies at high rates of interest. Since they don’t have an alternate option, most of them resort to these sources and start the businesses. Increasingly several studies and research has been conducted to understand the lives of these people in general and the fate of their businesses. Several NGOs and social groups have been actively involved with these groups of people to make a difference in their lives. In this project we aim to look at the businesses of the urban poor from a data centric approach, based on the study conducted by the Microfinance group of IIMB a few years ago.