Pheriwaalo ka Sapna

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.


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


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


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


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


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


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


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


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


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.


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 :


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.


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


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.


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


Q&A

Pheriwaalo ka Sapna

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