A New Approach to Microfinance Biogas in India

Mohit Sharma

This Power-Point presentation (now text) is part of my Marketing project Potential, Feasibility & Microfinance of Biogas : Rural India. My MBA (Energy Trading), University of Petroleum & Energy Studies, group members (Abhishek Ray, Vanya Narain, Vivek Chaudhary) covered various other aspects related to Biogas included in this book. This project is based on my observations on our 2 surveys (First on 18 Families & second on 136 families in Dehradun City). To entertain you I will start with two Print-Multimedia Ads (Biogas AKA Gobar Gas) which I performed after the presentation. Mohit Sharma

Biogas Ad 1 (Hindi)

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Biogas Ad 2 (English)
So, you are vegetarian! According to Smt. Maneka Gandhi if you consume milk or milk base food product are derived from animals & in the process we forcefully consume the share of their young ones. As India is the biggest producer & consumer of milkBut now, we are habitual. So Why not using your livestock to save natural resources & using them to produce Biogas & related products.

At least, we can neutralize Smt. Gandhis statement to some extent.

A New Approach to Micro-financing of Biogas Projects in India

In India, Most households in rural areas & considerable percentage in urban India (total more than 80% of total population) still rely on traditional energy sources for cooking and heating, such as firewood, dry cow dung, agriculture residue with few having access to electricity. Having said that, India is one of the leaders in world in terms of livestock, arable land and organic matter. Microfinance & Microcredit Microfinance refers to financial services like savings, credit, insurance, money transfer and other financial products provided by different service providers, targeted at poor and low-income people. Microcredit is also an important constituent of Microfinance in which small monetary loans are given to unsalaried borrowers with little or no collateral.

Biogas (Gobar Gas) Biogas is the gaseous product of the anaerobic digestion (decomposition without oxygen) of organic matter. It is typically made Methane = about 2/3, Carbon dioxide (30-35%), and traces of gases such as hydrogen, carbon monoxide, and nitrogen. Biogas is sometimes called swamp gas, landfill gas, or digester gas. It is created when animal and human waste are converted into clean sources of cooking fuel, replacing the need for wood, dried dung, and fossil fuel based sources of energy. Its byproduct can also be used as a natural fertilizer to increase agricultural yield. It also offers a many practical benefits to families and individuals. Indoor air pollution is reduced (which is a serious problem in rural areas), money is saved on lighting fuels, time is saved from gathering firewood, sanitation improves as latrines are connected to biogas, and finally, soil fertility increases as bio-slurry is used as a fertilizer. It can also be used as alternative source of electricity.

Indian Scenario Majority of households in India still use chulha, dry dung, etc which is a major cause of in house pollution & diseases, disorders arising due to it. The proportion of rural households is much more in this case compared to urban population. The usage of traditional methods also depends on the level of income and standard of living of a family. India has immense potential in alternative energy when it comes to Biogas energy which is due to the anaerobic digestion of organic waste (without oxygen). The reason behind this is that India has largest population of livestock in the world which automatically increases the byproducts derived from them. Most of the waste is untapped mainly because of Financial Constraints, Significant number of people still following the Subsistence Agricultural practices and grazing, etc. Wealthy class in rural areas also exist in the form of landlords, etc who have huge land, significant part of which is unutilized. They also have financial backing. Their resources can be utilized for Community Biogas Projects to facilitate the large unprivileged class. To counter the financial constraints Microfinance is a great tool. In community project all the beneficiaries can separately or combined apply for the microfinance as per the requirement. The houses (on paper) can be categorized according to their Social Class (and sub social classes) and marked with colors accordingly. MNREGA and other Government schemes are centrally governed schemes in which funds are allocated to Block Division (of few villages) or Gram Panchayat, as per the size of the village. The marking can be made

flexible by regular surveying or trend projection of future if surveying is done after few years. The reach of Banks and Financial Bodies is limited and they generate very less profit from the Micro-financing function. Therefore, these financial bodies can pact with Phone Service Providers (or other popular products in target areas) for surveying and micro-financing in remote areas. The Mobile representative can conduct survey and offer the individual or community loan as per the requirement. The microfinance can also be merged with Mobile company schemes or the Monthly ration which will create the economy of scale and bring down the per capita cost.

Microfinance Increasing the Feasibility of Biogas Use in India (Survey Questions) 1. Approximate organic matter per family? 2. Adequate land for Individual pit (Per Capita Land)? 3. Social Class Distribution of village or target area(s)? 4. Land holdings by upper class? 5. Subsistence agricultural pattern? 6. Number of families below poverty-line (for the estimate of Community Biogas Projects)?

7. Scope in MGNREGA and other Government sponsored schemes? 8. Number of Phone service provider in that area? 9. Average amount required in individual and community projects? (to be clubbed with Mobile schemes or other products)? 10. Popular products with very high demand in rural areas? 11. Any influence of state policies? 12. Compared to other Nonconventional projects of what is the energy generation, share of biogas? 13. Successful project examples & prototypes?

Limitations of Governmental Schemes for Rural Development

*) - (CAPART) Council for Advancement of Peoples Action & Rural Technology *) - MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Scheme) *) Diksha *) IAY (Indira Awas Yojna) These & many more schemes focus to improve the standard of living & basic necessities not on related concepts like Biogas or relatively new ideas.

Worldwide Examples With the cooperation of Government, Private & International Non Profit Organizations there are successful examples of implementation of Biogas Projects in various underdeveloped countries in Africa (Nigeria, Kenya, Angola, Congo, Zambia), Latin America & even in South Asia (Nepal, Bangladesh, Myanmar, Pakistan, Sri Lanka).

Constraints (India)

1) As India is a diverse country in terms of regions, traditions, & community based social norms followed in different states. 2) Maintenance & service of plants. 3) Religious issues. (In few countries like Indonesia Human waste & Pig waste is used to produce Biogas which is unimaginable in India) 4) Semi-protection of Rural Development sector by federal setup of Government.

Private Microfinance Plans

*) - Promotion & Introduction of private companies in Microfinance. *) Using powerful distribution networks of private companies where Government Banks & Financial Institutions are not there.

1) Agricultural Goods (Seeds, Fertilizers, Tractors, etc Agencies) 2) Foods Products (How often I came across a poor peasant enjoying Parle G) 3) Consumer Goods

Community Loans

Community loans which are useful in regions where subsistence farming & grazing are dominant. Dominance of low income groups. There are two proposed methods. Volunteer contribution & equal supply of Biogas. (In few communities, tribes funds are centrally managed) Supply according to contribution.

Defaulters Though, the default rate in Microfinance is less but such defaulters should be given chance to pay their loans by doing some community service with no or less pay.

Bio Credit (Yes, I got inspired from Carbon Credit) Monetary/Non Monetary rewards can also be given if, 1) - A person saves biogas & passes it on to other needy people through inter-connected network. 2) - A person spreads awareness, knowledge & promoting usage of Biogas.

Suggestions for improving the Feasibility of Biogas in Rural India

*) - Integration of Biogas projects with Rural Development schemes by Ministry of Rural Development. Focus on agricultural waste & other organic waste apart from livestock waste. Customized plans, schemes according to the nature of regions. Clubbing of common areas (Community & Individual Projects) to minimize dulpication.

Micro-financing of Biogas Projects in India : (Focus Bidholi, Dehradun)

Result of a survey Feasibility of Biogas as an Alternative Fuel in Rural India, I conducted in Bidholi Village. Later I along with my Marketing project group conducted a bigger survey covering aspects like Potential, Feasibility, Electricity from Biogas, Microfinance & various other aspects.

Village Bidholi, Dehradun. No. of Families Covered : 18 Total Members : 87 (Average 4.8 Members/Family, Range : 1 to 8) Total Cattle/Animals : 73 (Average 4.05/Family, Range : 0 to 34) Total Organic Waste/Day : 265 Kgs. (Average 14.7 Kgs/Family, Range : 0 to 120) Positive-Negative Response to Biogas as an alternative : 15-3 (83.4% : 16.6 %) Number of Families getting 12 Hours or less electricity per Day 13 Number of Families getting no Electicity 6 Total Land : 105.33 Bigha/43 Hectares Approx. (2.35 Hectares/Family, Range 0 to 15.5) Usage of Chulha to LPG Ratio 12 : 6 (67%-33%)

The statistics above clearly indicate that local households produce good amount of organic waste which includes Bagasse, crop & animal waste, etc & have sufficient land. Many villagers are willing to opt Biogas as an alternative energy source but are unable to initiate it due to financial constraints, myths, lack of governmental support. Private Financial Bodies, Banks and Government can spread awareness & provide microfinance for community based Biogas Projects providing electricity and cooking gas to many households by pooling their resources. Individuals possessing huge livestock and land can provide these resources for very poor households or whole village if the community projects fall short of villages need.