An Entrepreneur Speaks

You are not likely to find many IITians, armed with a PhD degree from US, commenting," IIT Kharagpur motto says-In Service of the nation. But which nation it is-USA or some IT and Finance companies." Equally unlikely is to find a Schwab Social Entrepreneur denying its concept altogether," Once you put a term like Social Entrepreneur, people consider you an NGO, a grant based body. I am in this business since 1994. I have never taken grants."

Harish Hande, Schwab Social Entrepreneur 2007 is apparently angry. But why? And he replies," Regularly I meet people who praise me that they are impressed by my work and they will also take up same kind of business once they make some money. I get furious at it. Socially responsive business is something they want to do after retirement."

As Managing Director, SELCO, an enterprise working for energy solutions, he has mapped entire Karnataka. With extremely localized team, he serves energy related needs of the poor. Why localized staff? "Because a local person can easily understand the lingua and needs of local community." No surprisingly, he credits this award to his team of technicians and local staff.

He was in Taj Palace, Delhi to receive this award. Read an absorbing interview with him.

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You have had an illustrious background of IIT and later a PhD from US. You could have gone into more commercial ventures. What prompted you to opt for becoming a social entrepreneur?

I didn't opt for becoming a social entrepreneur. I believe that's how businesses should be. Why do we segregate entrepreneurship into social & commercial? SELCO sits with the end client, understands his needs and accordingly focuses on energy and equitable services. Isn't that each entrepreneur suppose to behave?

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You are turning the concept of social entrepreneur upside down.

Absolutely. Why do we segregate entrepreneurship? It's like we have segregated SCs & STs.

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It's probably that since some entrepreneurs are uncomfortable to do business in a socially responsive way; therefore, they have created this divide of social & commercial.
How do you find present business in India? Is it socially sensitive?

Business in India has gone into hard core consumerism. 8-9% growth we are talking about caters to a small population. Rural infrastructure & situation have not improved. You have not created market linkages to rural areas. And we are talking of rural markets. Rather than buying something from them, people focus on selling their products to them.

We are creating these one-sided linkages. You need to increase their income & buy products from them. You are selling them shampoos without giving them any choice to spend their money on-shampoo, electricity or cooking.
People claim rural India is a huge market, which is a very vulgar term. It's always that poor buy from the rich & not vice versa.

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The market is extremely compartmentalized & exclusive.

Absolutely. You have Café Coffee Day & Baristas selling coffee at exorbitant prices, whereas a small coffee vendor sells fantastic coffee in Bangalore at 3/-, but very few go to him.

Fine, some people do need to visit upcoming cafes. But it also creates false aspirations.

There is this new Mall in Bangalore. It's difficult to get appointment of its owner. This Mall has huge back-up diesel generators, emitting pollution. Near that Mall there are fifty street vendors selling green vegetables using solar lights. But they never get attention. The guy who is polluting the atmosphere is respected, but street vendors are considered eyesore.

Recently I was in Gujarat & was shocked to witness child delivery system. They make holes in walls; place a mirror outside, reflecting sunlight inside to enable delivery. And this is India of 21st century.

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And this is Gujarat, one of the most economically vibrant states, which attracts huge FDI & register high economic growth.

This is not about Gujarat; rural areas are same in entire India.
Karnataka is considered as one of the modern, progressive state and fifty percent of the rural households do not have electricity.

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What links do you find between poverty alleviation and climate change?

See, climate change affects the poor. But we do not realize that poor also contributes to climate change. However, they do not have a choice. You can't tell a poor person, who has no means of survival to stop using woods or kerosene for cooking food. We are not looking at the solutions they need. By serving their energy needs you not only give them a fantastic solution but you also reduce the contribution to climate change. That's how climate change & poverty are interrelated.

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How do you find opportunities for your kind of business?

Opportunities are fantastic provided somebody is committed. We do not go to a farmer, mid-wife or laborer to sell a product. We visit them to understand their needs of solar lights & other energy related equipments. We get finance for that & install it.
We do not sell a product, we sell our service.

Software companies are successful in India because they customize the solutions. However, when it comes to poor we resort to standardization. We use non sense words like scalability and replicability. Needs are different in every rural household. Respect their needs.

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Poor is not a monolithic race. No two poor are same.

Exactly. Their needs are different.

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You mentioned of creating false aspirations of people. Please explain it. What are the true aspirations of consumers?

See, a consumer may be poor in economic terms, but he is not poor at common sense. You have to respect their earning capacity & actual needs. Business is bringing aspirations and products to the poor, which might not be their need at all. False aspirations are created by marketing a product against genuine need. There are people who exploit the delta expandable income farmers have. I think that's stealing from the poor.

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It's not ethical business.

Absolutely. It does not consider their needs. When someone has enough to fulfill one's needs, one can certainly go to wants and products like Plasma TV, but when basic needs are not fulfilled, selling luxury products is unethical.

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What is the nature of your R&D? Do you invest a lot in getting the right solutions?

We do invest in looking at the needs, but in terms of actual, physical R&D, we partner with others. We have an innovation department, which looks not only at innovation in technology but innovations in finance. Sometimes without proper financing, a product remains half baked. Final product is always financing plus technology. For a street vendor 300/- may be expensive, but 10/- per day is not. So challenge is to find innovative ways to collect that amount on a daily basis. We do R&D in this segment. We assume there is lots of technology, but little finance is available. Our policy makers have never viewed policies through financial inclusion.

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SELCO's expertise lies in understanding the need and psyche of poor. You have three broad areas of operations- product, service & financing.

Right. Understanding the need & then create appropriate financing. Public Banking System has helped us a lot. In fact, I have survived because of the Indian Public Banking. They are powerhouse of information. A manager of a local bank knows everything about economics, demography, cropping pattern, agriculture, dynamics of community, loan repayment pattern. We wrongly ignore Public Banking System.

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We treat managers of Standard & Chartered and CitiBank with awe.

Right. India survives because of Public Banks. Agricultural financing & agricultural self revolution is courtesy these banks.
Fine, private banks have a niche, but they must also respect public banks. Because of these banks, private ones are able to build up. They are not paying for the transition cost, which public banks paid over the years.

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Government has set up a Ministry of Non-conventional Energy Resources. How do you find it?

There are very good policies over a period of time. But, I think the Ministry should stop selling from its outlets. It should stop doing business itself. Let private entrepreneurs take it over. It should stick to policy making, convince banks & NABARD to create an environment. Right now we have 4% tax on solar. We must remove it. We didn't have taxes till 2000. How much government can earn from this tax. A poor vendor by not buying kerosene is already saving a lot.

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To meet our power needs we think of either big power projects or even bigger Indo-US Nuclear Deal. There is a vacuum of discussing viability of the renewable energy sources.

There is a vacuum, both in terms of energy efficiency & renewable energy. Let's take a look at this hotel. It's so warm here. Anybody who knows something about electricity knows that converting electricity to heat is the worst form of wasting energy. Take light-all the bulbs here are incandescent bulbs, which consume five times more energy than a CFL.
If people at The Taj Palace are not aware of energy efficiency, what are we talking about the poor?
People are building up 80MW thermal power plant in Kerala. If all the bulbs in the area where it is expected to provide electricity are replaced by CFL bulbs, it's equivalent to 70MW.

In rural Karnataka, to supply one unit of electricity we produce 1.67 units. Rest is T&D losses.

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Suppose you are at the helm of the affairs, how would you improve energy efficiency of India?

I would begin with the state electricity boards. Let's take Karnataka. I will map out the individual districts in terms of energy efficiency and look out the individual energy usage- whether the transformers or water pumps need to be replaced. Farmers use water pumps much beyond their actual usage. I will talk to the appliance makers for making energy efficient appliances. Offices, houses & buildings must adhere to the minimum standard of energy efficiency. Subtle changes in monitoring process are required.

Consumers are buying what is available in market. They can't be blamed for it. We must stop incandescent bulb manufacturing.

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What is your vision of India 2020?

My vision of India 2020 is of a country, where younger generation gets away from this rat race and herd mentality. We are losing the individual charm and diversity. Compared to other countries, we have a very good pool of entrepreneurship. But today we have forgotten that & are following what others are doing. It has brought a terrible homogeneity in our thinking & behaviour.

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Ashutosh Bhardwaj
December 2007