Visit to small women entrepreneurs of Gorakhpur
On July 6th of July 2024, the Modern Energy Cooking Services (MECS) programme in India, Finovista, visited the project location of Micro Energy Credits (MEC) in a small interior village of Gorakhpur. The team met with the beneficiaries of Induction cook stoves through micro-financing model of MEC. These all were small women entrepreneurs whose lives were positively impacted by a small addition of induction cookstoves in their respective homes. Before going forward, lets know a little more about the
current microfinance scenario in India.
Microfinance Institutions in India: A snapshot
As of September 2023 the microfinance sector in India is dominated by NBFC-MFIs, which hold a loan amount outstanding of Rs 1,47,829 Cr, constituting 39.3% of the total industry portfolio. Banks are the second largest providers with Rs 1,18,846 Cr, representing 31.6% of the market. Small Finance Banks (SFBs) account for Rs 73,118 Cr or 19.4%, while other NBFCs and non-profit MFIs contribute 9.1% and 0.5% respectively . Additionally, the National Rural Livelihood Mission (NRLM) significantly impacts the microfinance landscape through its SHG Bank Linkage Programme (SBLP), with 83.7 lakh SHGs holding an outstanding portfolio of Rs 2,08,304 Cr as of September 2023. Considering SHG outreach, the total Gross Loan Portfolio (GLP) of the sector stands at approximately Rs 5,84,414 Cr.
Microfinance in India, inspired by the Grameen Model, began in the 1990s and has evolved into a diverse and competitive sector with over 100 regulated players, including banks, SFBs, NBFC-MFIs, and NBFCs. The sector’s growth was propelled by the transition of non-profit MFIs to for-profit NBFCs, attracting private capital and enhancing professionalism and efficiency. In 2011, the Reserve Bank of India introduced NBFC-MFI regulations to address customer protection issues, leading to a decade of significant growth. By March 2022, the RBI implemented harmonized guidelines to ensure a level playing field. Today, nearly 99% of microfinance loans are extended to women from low-income households, primarily through the Joint Liability Group (JLG) lending model. The sector boasts a broad geographic outreach, with 76% of the loan portfolio in rural areas and a remarkable performance record, maintaining non-performing assets below 1%.
Interaction with Women Entrepreneurs
During our visit our team engaged with two groups of women entrepreneurs, each comprising 5-7 members. These women, involved in various businesses such as roadside carts selling Chinese food, cosmetics, dairy products, and vegetables, shared their experiences of using induction cook stoves provided by MEC. Previously, they relied on LPG gas stoves and biomass for their cooking needs. The introduction of induction cook stoves has brought significant positive changes to their lives.
The women reported a substantial reduction in their cooking expenses. While the monthly cost of using LPG stoves ranged from ₹1000-₹1200, the electricity cost for operating the induction stoves is approximately ₹200. Each woman received a 1200-watt single burner induction stove for which they paid ₹2500. The induction cook stoves have reduced cooking times. The auto mode and multi-functionality features have made cooking faster and easier, allowing the women to multitask. The auto cut-off functionality permits them to leave the food unattended while performing other chores. Interestingly, the women noted that the taste of food cooked on the induction stoves is more enhanced. This could be attributed to their excitement and satisfaction with using the new technology. They expressed their satisfaction with the safety features of the induction stoves, mentioning that even children aged 8-12 years can safely operate the stoves and cook food without any risk. The MEC team provided training on how to operate the induction stoves, ensuring that the women were well-equipped to use the new devices.
The village receives electricity in intervals: 2-3 hours in the morning, 2-3 hours in the evening, and 2-3 hours at night. During our visit, there was a power cut, and we observed that each household has an electricity load capacity of 2KW. The women are able to cook half a kilogram of vegetables and even roti (Indian flatbread) using the induction stoves. Many women are further enhancing their cooking skills by watching instructional videos on YouTube. An interesting insight is that male family members have also
started cooking because the women are contributing to the household income. A notable observation is that households are practicing fuel stacking, using a combination of LPG, electricity, and biomass for their cooking needs. The cost of firewood in the village is ₹600 per quintal.
Conclusion
The introduction of induction cook stoves by MEC has significantly impacted the lives of women entrepreneurs in the village, reducing their cooking expenses from ₹1000-₹1200 for LPG to about ₹200 for electricity. These stoves, costing ₹2500 each, have not only cut cooking times but also added convenience through auto mode, multi-functionality, and auto cut-off features, enabling women to multitask effectively. The enhanced safety features make the stoves safe for children to use, and the MEC team’s training ensured proper usage. Despite intermittent electricity supply, the women have adapted well, continuing to cook various foods and improving their skills via YouTube. This transition has also encouraged male family members to participate in cooking, recognizing the women’s financial contributions. However, fuel stacking remains common, with households using a mix of LPG, electricity, and
biomass, partly due to the high cost of firewood at ₹600 per quintal.
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Click to access Micro%20Finance%20Sector%20in%20India.pdf
Click to access 1409233729status-of-microfinance-in-india-2022-23.pdf
https://www.ibef.org/blogs/evolution-of-micro-finance-in-india