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The Concept and the Need For Global Ecosystem Hubs

Two major injustices that plague the world today — stark inequality and the unequal impact of climate change. The two are intricately linked with the impact of one (climate change) grossly exacerbating the impact on the other (inequality). Inequality is often described from an economic lens and in terms of wealth ownership of the world’s richest vs the rest. On the other hand, if one begins to view inequality beyond an income lens and sees it in terms of access to quality education, health, employment, food security, financial inclusion, water resources and so on, the widening gap between the haves and the have nots becomes much starker.

Economic growth is often hyped as a sure means to rise above poverty but it cannot sustain at the cost of social and environmental injustice. Inequality should be viewed as a consequence of failed economic models. In many of the existing development programs, economic growth in itself serves little purpose and needs to be in consonance with a quality of growth that includes social progress such as access to good schools, health care, electricity, safe water which are not hindered by socioeconomic status, gender, ethnicity, and geography. Thus, it is critical to devise solutions that are more inclusive.  

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Steps India should take to prove its Leadership

There are some colossal failures around the world that India can learn from and provide alternate solutions to.

  • More than 4 billion people are poor and lack access to basic needs of life. For sustainable poverty eradication, access to energy services is essential. But there has been a global failure to provide simple energy services to the poor. For example, even a century after the light bulb was invented, 1.6 billion people do not have access to electricity and more than 3 billion people have no access to cleaner forms of energy access (lighting, cooking, drying etc.).
  • Many a time, local governments could provide sustainable energy services if they had access to technology and finance. Many developed governments that do have access to needed technology have not taken the initiative to share it, thus leading to this huge divide between the haves and have nots.
  • Many of the intergovernmental institutions lack the ability to create practical solutions, policies etc because of the lack of skilled human resources.

What can India do today to prove its leadership?

There are many simple steps that India can take today, which surely can be replicated in other parts of the world. Some of these are:

Creation of Solar Energy Portfolio in Financial Institutions

A certain percentage (5% at least) under the priority sector financing should be earmarked for financing energy services to the poor. The channels of these financing could be the nationalized banks and regional rural banks. The percentage (5%) could be broken into two parts –

  • Dedicated financing portfolio for entrepreneurs to create a network (sales and after sales service).
  • Dedicated financing portfolio for end-users.

The methods of implementation can be borrowed from years of learning in agriculture sector financing. Dual financing (for service providers and end-users) will lead to a sustained effort to promote the use of sustainable energy services (especially in the rural areas of India). Rural networks of various banks are the best agents for the propagation of technology.

There are successful examples – especially in the state of Karnataka. Banks like Syndicate Bank, Karnataka Vikas Grameen Bank have proved that solar systems can be financed without the need of capital subsidy, provided good service facilities exist. Apex Financial institutions like RBI, NABARD have to get seriously involved in the implementation of these programs. They have shown success in other fields like agriculture and could do the same in the field of renewable energy. The Reserve Bank of India is seriously propagating the concept of financial inclusion and renewable energy could be easily brought under that umbrella – as sustainable energies like solar can be powerful agents of poverty reduction.

Substituting Capital Subsidy with Interest Subsidy

There have been colossal failures of many programs that have undertaken the implementation of solar systems (lighting, pumping etc) using capital subsidy through nodal agencies. They are primarily ‘product centric’ rather than focusing on the whole issue of need-based systems, supply chains, after sales service and appropriate financing (typically done in any other service sector). It never makes sense to have the government be part of the business chain (today many of the products are sold via government stores with absolutely no after sales service).

It would be worthwhile to divert all the earmarked capital reduction subsidy to financial institutions for the reduction in interest rates. Good performing entrepreneurs, low income groups, good repaying clients should get the benefits of reduced interest rates. There are specific two successes that have shown that a similar shift will work:

  • Solar Water Heaters: In the mid-nineties MNRE (then MNES) removed capital subsidies from solar water heaters. Many of the nationalized banks were provided with financial assistance by MNRE to reduce the interest rates.  The incentives led to increase of manufacturers and service providers from 6 in 1994 to more than 50 by 1999. The interest rates range from 2% to 5% (depending on whether it is domestic or institutional system). Specially in Karnataka, solar water heater has become a typical consumer product (thanks to reduced interest rates and the active participation of financial institutions).
  • UNEP Program with Syndicate Bank and other FIs: Around 2002, United Nations Environment Program created a program along with some nationalized banks in Karnataka to promote solar home lighting systems in the rural areas. UNEP subsidised the interest rates for solar home lighting systems – capping them to 5%. More than 21,000 systems were financed by UNEP (within a span of 2-3 years) under this scenario. UNEP also made sure that vendors were chosen properly, ones that had a track record to provide reliable after sales service to the clients financed by the respective financial institutions.

Though these programs were small, they have a great potential to scale up – with subtle policy changes by the government.

Finally, if some of the suggestions (if not all) are implemented, India will come up with a variety of models (business, social technology) owing to the diversity of its poor. These learning experiences and models will be very valuable for the world’s poor and decision makers of other countries in Africa, Latin America and Asia. Now it is up to all of us to rise up to the challenge and lead the way.


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ವಿಕೇಂದ್ರೀಕರಣವೇ ಸಬಲೀಕರಣ

ಎರಡು ದಶಕಗಳ ಹಿಂದೆ, ಡೊಮಿನಿಕನ್ ರಿಪಬ್ಲಿಕ್ ದೇಶದ ಒಂದು ಹಳ್ಳಿಯಲ್ಲಿ ಸಿಕ್ಕ 55 ವರ್ಷದ ಸ್ಪಾನಿಷ್ ರೈತ ಮಾರ್ಟಿನೆಜ್ ’ವಿಕೇಂದ್ರೀಕರಣವೇ ಸಬಲೀಕರಣ’ ಎಂಬ ದೊಡ್ಡ ಪಾಠವನ್ನು ನನಗೆ ಕಲಿಸಿದರು. ಅಸಮಾನತೆಯು ಕೇಂದ್ರೀಕರಣದ ದೊಡ್ಡ ಫಲಿತಾಂಶ ಎಂಬುದನ್ನು ನಮ್ಮ ಸುತ್ತಲೂ ನಾವು ನೋಡುತ್ತಿದ್ದೇವೆ. ಇಷ್ಟು ವರ್ಷಗಳಾದಮೇಲೂ ಈ ಮಾತು ನನ್ನ ಮನಸ್ಸಿನಲ್ಲಿ ಅಚ್ಚಾಗಿ ಉಳಿದುಹೋಗಿದೆ.

ಮೇಲ್ವರ್ಗದಿಂದ ಬಡವರ ಕೈಗೆ ಅಧಿಕಾರವನ್ನು ತಲುಪಿಸುವಲ್ಲಿ ವಿಕೇಂದ್ರೀಕೃತ ಸೇವೆಗಳು ಮಹತ್ತರ ಪಾತ್ರವನ್ನು ವಹಿಸುತ್ತವೆ. ಸೌರಶಕ್ತಿಯ ಮೂಲಕ ದೇಶದಲ್ಲಿನ ಪರಿಸ್ಥಿತಿಯನ್ನು ಬದಲಾಯಿಸಿ ತನ್ಮೂಲಕ ಭಾರತದ ಬಡವರು ಸಮಾಜ ಪರಿವರ್ತನೆಯ ಮಹತ್ಕಾರ್ಯದಲ್ಲಿ ಸಮಾನ ಪಾಲುದಾರರಾಗಿ ಭಾಗವಹಿಸಬೇಕು ಎಂಬ ಯೋಚನೆಯೇ ಸೆಲ್ಕೋದ ಸೃಷ್ಟಿಗೆ ಕಾರಣವಾಗಿದೆ.

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Sustainable Energy and Poverty Reduction: Chance for India to take leadership !

Many of us do not understand the connection between diffusion of renewable energy and poverty reduction. The common notion is that renewable energy is expensive and thus to provide the poor with immediate access to energy, nuclear and coal are the only options. This is an extremely naive thought process and they are financially and socially unsustainable.

The Copenhagen talks showed us how divided the world is and how the power structure has moved away from the Europeans and the Americans. India and China dominated the proceedings but with very few end results.

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Decentralisation means Empowerment

More than 2 decades ago in the villages of Dominican Republic, a 55 year old Spanish speaking farmer, Martinez, taught me the most important lesson in my life: ‘decentralisation means empowerment’. Inequality is the biggest outcome of centralization- and we can see it around us. And that is what has stayed with me for all these years.

Decentralised services lead to transfer of power from the top into the hands of the poor; this idea lead to the creation of SELCO – an organization which uses energy access as a means to transform the system, in which the poor of our country access and participate in the change around them as equal partners.

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Link Between Sustainable Energy & Development

Today the world has more than 730 million people living in extreme poverty and at-least 175 million of them live in India. We also have more than 200 million people in India, with no access and at least another 200 million with very poor access to reliable energy.

The poor and their needs differ according to their geographies, social and cultural contexts. In each of these topographies, the poor face challenges in the areas of livelihoods, health, education and well being. For e.g. a Manipuri weaver needs modernization of loom technology while a blacksmith in Karnataka needs a more efficient hammer with affordable finance.

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Sustainable Energy and Poverty Alleviation

There are proven sustainable models and processes that link sustainable energy solutions to poverty alleviation. But they get lost in the large picture because of lack of understanding of the grassroot problems that exist among the underserved communities of India. That needs to change if we have to tackle poverty in a more systematic way – decentralized sustainable energies like solar, biomass, small wind, etc. provide these solutions.

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Policies not conducive for Grassroot level Energy Enterprises

Time and again policy makers have spoken of the importance of emergence of rural enterprises in India; especially in the rural sector. Reliable rural energy service can only be provided by ground level rural enterprises; an entity that has to be at the doorstep of the rural client for it to deliver the required service.

Many policies around the country have been formulated in order to cater to the needs of these rural enterprises. Sadly negligible numbers of these policies are pragmatic in approach. Most of the policies are directed towards creating monopolies of certain urban financial and manufacturing institutions in the rural areas and thus making the sustainable rural dependent on the unsustainable urban world.

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Energy and Livelihoods – The Missing Eco-System and SELCO’s Solutions

Poverty alleviation is a need of the 21st century. Time and again SELCO has reiterated the need for energy access to alleviate people from poverty. For this, conducive eco-system has to be provided and filling the gap is vital.

The Economic Pyramid – As we see it

The economic pyramid as defined today is too simplistic. It is interesting that all types of ‘poor’ segments are clubbed into one – thus creating a homogeneous segment. Thus many of the models that target the “bottom of the pyramid” do assume one size fits all methodology and completely disregard the numerous segments in that category. This does not work effectively as the bottom part can be divided into many parts depending on income streams, geography, nature of work, culture etc.

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Energy and Livelihoods

Now, in the 21st century it is critical that for overall development of the society to take place poverty has to be alleviated. For poverty to be reduced in a sustained manner, poor need income generating activities and become owners, employers and asset creators. They just cannot be considered as a labor force for the other parts of the world – a situation that will be lead to social unsustainability.

For development to happen in the way explained above – energy will play a key role. Over the last two odd decades, numerous documents and studies have kept repeating the number that more than 2 billion people in this world lack access to electricity (otherwise known as off-grid) and 3 billion still use other forms of dirty fuels for basic cooking. These numbers in the last 20 years have not changed.

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