One year ago, I had a conversation with a friend who works for one of India’s largest microfinance firms. He travels the country to establish microfinance banks in marginalized communities. I asked him to share his thoughts on savings/loans programs in Kutch, a rural desert region in northwest Gujarat.
These villages are too spread out for microfinance success, he told me.
He explained that the population of Kutch is far too scattered for successful banking programs. In contrast to larger cities such as Calcutta and Delhi, Kutch’s population lacks density, making it difficult to monitor savings and loans cohorts. Further, there are financial systems specific to Kutch that have allowed people to save and invest for centuries before microfinance institutions were invented.
He explained, People here are saving and investing without our help.
At the time of our conversation, I had been traveling to villages in Kutch to observe the embroidery collection process facilitated by a collective of craftswomen I volunteered for, Qasab. Qasab pays its craftswomen upfront in rupees for embroidery before compensating the women with jewelry and vessels for the sum of their work at the end of each year. It is important that the women receive compensation other than paper notes — when women receive rupees in Kutch, they are often expected to invest them in their homes or in food and education for their families (or they are expected to surrender them to their husbands or fathers). These expectations prohibit women from directing their rupees towards their personal financial planning goals.
During visits to the villages, I was able to see the homes of several craftswomen. Many of the women had impressive collections of steel vessels, jewelry, and embroidery displayed on their shelves and walls. I was struck by the beauty of each home’s ornamentation, but did not understand the judicious logic behind their aesthetic until later.
While much of the economics was over my head, my conversation with my microfinance friend clicked as I reflected on Qasab’s payment practices and my observations from the field. Defining economic capital around paper notes excludes many communities. Centuries before banks were built, people invested their resources in income generating activities such as goat herding. Investing in a goat can produce interest in the forms of wool and milk. Risks can be assessed based on knowledge of agriculture, animal husbandry and ecological health. And goat meat and hide can act as financial security – a last resort if all else goes awry.
Applying the same measurements of economic development to all communities can be limiting – banking structures may not always be necessary for financial planning.
Below are some forms of investment I saw in Kutch:
Bronze and steel vessels
People in rural Kutch may not deposit their rupees in a bank, but they invest them to earn capital through alternative systems. Embroidery in itself – a product with increasing value – is an investment.