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Do the Urban Poor contribute?

By Dr. Kala Seetharam Sridhar,  A Venugopala Reddy.

Published in the Business Standard, June 8, 2013.

India’s urban poverty is over 25 per cent. Rightly, the Reserve Bank of India has asked banks to bring metropolitan areas under the lead bank scheme for the first time since 1969, a move aimed at providing to the urban poor doorstep banking and direct transfer of cash benefits under social welfare programmes. The central bank has admitted that financial exclusion is not merely a rural phenomenon.

Since policy makers have always viewed the urban poor as burdens on public services and infrastructure, the apex bank’s initiative is a step in the right direction. Studies we have completed at the Public Affairs Centre in Bangalore and Chennai show that, while the urban poor contribute significantly to the city economies where they are located, only 5 per cent of the informal enterprises in Bengaluru and 2 per cent of surveyed enterprises in Chennai approached a bank for a loan. Only 30 per cent and 35 per cent of respondents respectively in Bengaluru and Chennai’s slums had a bank account.

[Read the full article here]

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