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Copyright ©2011 ShARE. All Rights Reserved Copyright ©2011 ShARE. All Rights Reserved
Pheriwaalo ka Sapna: A socio-economic perspective on street vendor market enhancement
Copyright ©2011 ShARE. All Rights Reserved 2
Executive Summary
Brief introduction of street vendors, their importance to Indian economy and
problems faced in conducting their business.
The two-fold solution proposed to deal with the problems plaguing the industry –
financial inclusion and waste disposal
Importance of Financial inclusion of street vendors in Indian economy.
Expensive loans from informal sources for working capital and vicious circle of
debt and poverty.
Various existing SHG models, effective implementation and ways to tackle
problems hampering it’s growth.
Waste disposal, biomanure and biogas production and feasibility to generate
extra revenue.
Copyright ©2011 ShARE. All Rights Reserved 3
A Brief Introduction of the Street Vendors
Source: TISS-YUVA Survey
2.5 lac Mumbaikars engaged in street vending
INR 120 billion is the net worth of the current street vending industry
90% of the street vendors work for 15 hours a day
10-20% of their income is given away as bribes or extortion money
Copyright ©2011 ShARE. All Rights Reserved 4
1
16
55
132
301
159
71
4 2 2
1200-1500 1500-3000 3000-4500 4500-6000 6000-10000 10000-1500015000-2500025000-3000030000-4500045000-60000
Income in INR
Monthly household income in INR versus number of vendors
Total
The street vendors mean monthly income was in the
range of INR 6000-10000.
Source: Street Vending in Ten Cities in India by Sharit K. Bhowmik
Copyright ©2011 ShARE. All Rights Reserved 5
The hawkers face multiple problems such as financial
instability, lack of social security and many others.
Surplus handling and waste disposal
Difficulty in business expansion
Lack of alternate sources of income
Expensive loans from informal sources for working capital
Unreliable remittance services
Lack of awareness on risk mitigation and pension products
Exploitative practices of multiple authorities – municipal, police and local
leaders
Copyright ©2011 ShARE. All Rights Reserved 6
Integrating the vendors with biogas
firms and incentivizing the organic
waste disposal, generating revenue.
Two fold solutions proposed to increase the
disposable income and help in waste management
Formation and linkage of Self Help
Groups with financial institutions for
access to institutional credit
Copyright ©2011 ShARE. All Rights Reserved 7
Fruits and Vegetable vendors together form the largest
proportion of Street Vendors in Mumbai.
66
40
8
13
41
10
22
Vegetables
Fruits
Electronic items
Household Utensils & Stationary
Garments
Leather Items
Food
Number of People engaged in a particular vending activity
Source: Conditions Of Street Vendors In Mumbai by Debulal Saha
Copyright ©2011 ShARE. All Rights Reserved 8
Capital is needed for initiating the business and, later, for running and
expanding the business
Street vendors are unable to offer collaterals or guarantors because of their
weak economic status
The vendors rely on moneylenders for all sorts of borrowing.
Microfinance Institutions (MFIs) have been actively working to promote financial
inclusion of the street vendors
Flexible loan repayment schemes of moneylenders makes MFI ineffective for
street vendors, hence the vendors end up paying exorbitant interest rates
Financial inclusion is an integral measure for increasing the
disposable income of the street vendors
Copyright ©2011 ShARE. All Rights Reserved 9
Principal amount of borrowing shows a
peak value for the range 1000-10000
Amongst several reasons for borrowing,
business expansion topped the charts.
On an average, street vendors borrowed an amount of INR
10000, primary purpose being business expansion.
8
502
167
4114 110
100
200
300
400
500
600
Nu
mb
er o
f P
eop
le
Amount borrowed
603
13 5
74
10 16 17
0
100
200
300
400
500
600
700
Nu
mb
er
of
Pe
op
le
Purpose
Source: Financial Accessibility Of The Street Vendors In India by Sharit Bhowmik
Copyright ©2011 ShARE. All Rights Reserved 10
Traditional moneylenders were the most sought after
source of credit with interest rates as high as 100-200%
When the amount is borrowed from a Moneylender (widely accessed option for this
community), for a rate of interest of 150 percent per annum, vendors lose about 20% of their
monthly income, paid as interest to the amount borrowed.
Source: Financial Inclusion of Street Vendors by Sharit K. Bhowmik and Debulal Saha
Copyright ©2011 ShARE. All Rights Reserved 11
The SHG-Bank linkage program is the largest microfinance program in the country
with a total outstanding bank loan of Rs 17000 crore and a total of 3.6 million SHGs as
of March 2008Source: Financial Inclusion of Street Vendors by Sharit K. Bhowmik
Primary
Lending
Agency
Model 1 Model 2 Model 3
Facilitator/
Intervening
Agency
Banks directly to
SHGs
None
Banks to SHGs
NGOs
NGOs to SHGs
NGOs
SHGs would be groups of 20-25 street vendors from a locality who pool money monthly and lend it to anyone from the group at a low interest rate
as and when needs arise
In contrast to moneylenders, if the money was borrowed from SHGs, they lose only about 4.1% of monthly income, hence saving 16.66% of the
monthly income of the Street Vendors effectively.
SHGs will impart the flexibility to financial instruments of access in contrast to rigid norms
Self Help Groups formation and models emerged till date.
Model II is the most robust option for the street vendors.
Copyright ©2011 ShARE. All Rights Reserved 12
To deal with problems faced in SHG formation, certain
recommendations need to be implemented.
Coverage and outreach issues
• Only around 2500 vendors (out of the 250000 street vendors in Mumbai) are under a co-
operative system
Lack of adequate supportive infrastructure
Absence of business model
Less participatory involvement by all the stakeholders
Organise workshops for the
uneducated urban poor as how to
utilise the available fund and
conduct skill development and
training programmes.
Provide free advice and
consultation and organise
financial literacy sessions and
camps.
The following need to be conducted extensively with support of local NGOs,
Municipal Corporations, Trade Unions and existing Cooperative Unions :
Copyright ©2011 ShARE. All Rights Reserved 13
1. Organic waste Compost
Feasibility of the aforementioned solutions will depend on some factors and
possible constraints :
• Collection of waste.
• Segregation at source
• Packaging and logistics
• Centralization based on region
• Availability of land for setting up of biogas plant
• Government or private support
• Distribution of biogas
2. Organic waste Biogas
Waste disposal and management can be incentivized
by two ways to generate additional revenue.
Copyright ©2011 ShARE. All Rights Reserved 14
Almost all the vegetables and fruits came from APMC, Vashi and it costs approximately
INR 30 per sack of goods to be transported to Dadar.
The wholesale dealers sell about 50 to 100 kgs of goods per day with a profit margin of
INR 2-3 per kg.
Have no proper methodology to dispose waste except for piling up and unloading in the
BMC waste collection truck.
Income ranges from INR 2000-9000 depending on the type of goods sold.
A more focused survey on waste disposal of the vendors at Powai Market indicated
that the vendors had no clue that the waste they generate can be incentivized. Also, it
is observed that the truck which goes to get the goods from Vashi generally travels
empty till Vashi.
Some of the important findings during the field visits
Copyright ©2011 ShARE. All Rights Reserved 15
Street vendor TruckComposting
Plant
Garbage BMC TruckDumping Ground
Waste Flow
Cash Flow
Waste handling and additional income generation
Current Scenario
Solution proposed: Incentivizing Solid Organic Waste
Waste flow
Cash Flow
The solution pertaining to incentivizing waste is quite sustainable. Since organic waste
generation cannot be stopped in a way or another, the biogas/ manure production or any
alternate technology to consume the waste will come up.
Copyright ©2011 ShARE. All Rights Reserved 16
Costs associated with the execution and feasibility of the
proposed solution.
300 m2 per day capacity
with enrichment and
bottling
INR 2.8 million
Fixed operational cost =
INR 0.3 million
Annual running cost =
INR 1.2 million
Total cost = INR 1.5 million
INR 2.2 million
INR 7 million
4 years
Area
Payback
period
Profit
Income
Capital Cost
Operational
Cost
INR 4 millions for a 20
kW plant
INR 0.8 million at a rate
of INR 40000/kW (By
MNRE)
4.5-5 tonnes of organic
waste per day for
operations
100-150 kg waste sold
at INR 3-25/kg ( by 1
tonne plant)
Cost
Subsidy
Waste
requirement
Profit incurred
Costs for cylindering of methane from
Biogas plant
Costs associated with the production of
Biomanure
Copyright ©2011 ShARE. All Rights Reserved 17
Q&A