4) The main challenge in scaling the model is of ensuring collective action happens. We know from experiences from across the country and world that in spite of the advantages of collective action in agriculture and other activities, there are hardly any examples where people have come together to work in groups on livelihood activities. Please do spell out a more detailed strategy for addressing this challenges.

A. You are right. Ensuring collective action is the toughest thing. That is why we have tried to adopt a different strategy. In this model, the SHG members feel directly responsible for managing the shop. They employ someone literate to run the shop, but keep a daily tab on its affairs. They have slowly started appreciating the importance of having their own shop. Although each SEG outlet (owned by an SHG) is not allowed to keep the items in the other SEG shop, and salaries are kept equal, there is a healthy competition among the SEGs that makes their SHG feel proud of them. We had some ups and downs in this strategy too, but have been able to overcome all obstacles till now.

5) Though the overall idea sounds interesting, please do put some numbers to back up your arguments. Once we put the idea through the acid test of empirical data, we can identify the strengths and weaknesses more clearly.

A. Well to quote examples: A village in MP has 121 families, out of which 80 families are regularly buying from the SEG outlets. They have been buying only 50% of their needs from these shops, as they have not been able to come out of debts of the shopkeepers in the common market. With such restraints and limitations, the social security fund collection has been Rs 9000 in 10 months.
Another village in Maharashtra has 157 families, 90% of them buying from these shops, the social security fund collection has already reached Rs 8000 in 4 months.

Hope to hear more from you.

Regards

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Pradeep Ghosh (Ashoka Fellow)

Q. 2) If the premium is being automatically allocated for insurance, then people do not have the choice to opt out if they want to. Is the decision based on the assumption that people, when left to their own, will not make the right choices? It may be a good idea to give people choice, and inform them about the implications of the choice.

A. The objective is to provide them social security without straining their existing financial condition. The people do make the choice on the insurance product as a group. We only facilitate by bringing the insurance companies to them and helping them to understand and analyse dfferent products and compare with others. So we give them the choices and inform them about the pros and cons. They make their choice.
The only mandatory thing here is that we use the social security fund for providing social security only. We do not allow them to use the collection for any other purpose.

Q. 3) Why and how will the banks pay more on the deposits, unless you are intending to put the money in fixed deposits, which are less liquid?

A. Since the deposits will be recurring in nature and will lie untouched for a year, the banks can give the interest rates of recurring deposits that is more than the normal savings a/c interest rate. As the social security fund collection varies proportionately depending upon the number of families involved in the system and their transactions, banks would love to provide social security accounts to an entire group / village.

Replies to other queries are in the following comments.
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Pradeep Ghosh (Ashoka Fellow)

Dear Mr Suyash and Kaylena,

Many thanks for your comments.
I sincerely apologise for not being able to respond soon, as I was traveling and entrapped with some messy issues in other projects. I wanted to have a cool head before answering your queries. Let me do that one by one:

Q 1) It is not clear how the insurance in the model is FREE. When the premiums are being deducted from the incomes generated by the activities undertaken by the people, any premium deducted is a fee on the people.

A. The premium is not a fee on the people. In this model, the SHG members work in groups to run their retail outlets, where the commodities are sold at the same rate as the common market. After paying salaries and overheads, the net profit is divided into 2 halves. While one half goes back into the business for growth, the other half is collected as Social Security Fund. It is the same amount that currently goes to the trader at the common market for building his personal riches. Now this amount goes back to the people in the form of social security.
It does not even come out of an individual's income. It is the balance profit left after paying all salaries (as decided by the SHG members for the ones who manage the shops), overheads and putting back into the business for growth.
Hope this makes the model clearer.

Answer to your other questions follow in the next comments.

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Pradeep Ghosh (Ashoka Fellow)