BicyclePotential.org

Bicycle: The Unnoticed Potential

2009-02-11T00:00:00.000-08:00

Increased government attention in recent times has evolved for stimulating growth in the rural sector in India. Transport, if analyzed for the cost-benefit analysis for rural poverty alleviation, has given one of the best returns in this regard. Road Investments in India were a staggering 3-10 times more effective than almost all other investments and subsidies in rural economy in the decade of 1990s.

Road investments are a pseudonym for investment in transport. Another integral part of increased mobility through transport in the rural areas is the bicycle ownership. What a road does at a macro level, the bicycle supports at the micro level.

BicyclePotential.org in that context explores the idea of using bicycle as one the best means to eradicate rural poverty in India. Analyzing researches and experiments done on the subject, it figures out the immense unnoticed potential bicycle has for rural growth and poverty reduction in India, since:

Per capita bicycle ownership in India is dismally low (1/7) compared to other developing nations like China and Brazil .
Price of bicycle in India , in relation with the per capita income, is 2 times compared to other developing nations like China and Brazil .
Experiments done in Africa (Uganda and Tanzania) and Srilanka on hundreds of households have shown that a bicycle can increase the income of a poor family by as much as 35%.

Transport has shown to have the second biggest potential to eradicate rural poverty in India in last 4 decades. Increasing bicycle density to a normal level would induce a lot of rural growth.
The main reason that is apparent for a low bicycle density in India is the higher relative purchase price for a family compared to other nations. (Please click the figure below to see a better version).

If the purchase price of the bicycle is reduced by 50% by providing subsidy, it will cause a huge spurt in bicycle ownership in India and subsequent substantial productivity increase.
The subsidy thus provided will be straightly targeted to the lowest strata, leak proof, and having long-lasting effects for years. Over a longer term, it would increase the productivity of about 20 crore poor people.
Such a subsidy will cost a mere 1-2% of total Central Government subsidy outlay.
It is ironical that to support transport, huge subsidy is given on petrol, which is consumed majorly by middle class households, but not on bicycle, which is used majorly by poor households.
Even if rural roads are there, a dismal bicycle density means a bottleneck for the rural transport.

There is a hidden boon in bicycle for rural India .

Opinion

2009-01-20T18:32:00.000-08:00

Below are some comments on the concept by some eminent economists/ public policy thinkers.

"...I read your email note on importance of bicycle for rural productivity and growth. I am in agreement with your thrust. I congratulate you on this line of thinking."

-Dr. S. C. Jha, Member, Economic Advisory Council to the Prime Minister.

"Nice idea..... I'll read the whole report."

-Mr. S. M. Krishna, Foriegn Minister, India and Former Chief Minister, Karnataka.

"Many thanks for your email and the report on the need for increase in bicycle density in rural India to alleviate poverty. I shall definitely tell this to my colleagues and discuss with them your report."

- Dr. Pinaki Chakraborty, Senior Fellow, National Institute of Public Finance and Policy (NIPFP)

"...As an idea to combat rural poverty this could be one of the weapons.....the hinterland still stays same, without road, without electricity, without communication. Your pet bicycle will play wonders there."

-Dr. P. R. Jena, Senior Economist, National Institute of Public Finance and Policy (NIPFP)

"Gaurav, Great idea!"

-Mr. Gurcharan Das, Noted Columnist and Chairman, Center for Civil Society

"I have shipped over one hundred and twenty two thousand bicycles to thirty developing world countries. I have seen first hand the dramatic impact. IF you can get twenty percent of the working age walking adults on to a bicycle there is a cumulative effect which exponentially lifts the Commerce ( economy) of a town."

-David Schweidenback, President, Pedals for Progress, An American NGO involved in providing used donated bicycles to developing countries.

Quantitative Experiments

2009-01-19T10:05:00.000-08:00

Effect of Bicycle on Poverty Alleviation

Quantitative Field Study-1: Uganda

Organization: Institute for Transportation & Development Policy, Europe

Cost-benefit analysis of bicycle ownership
300 poor households from different regions of Uganda were given subsidized bicycles and a one-time guidance of how to utilize the time saved in doing any allied productive work

Results:

All households either enlarged the area of land used for agricultural purposes or intensified the level of cultivation
Roughly half of all households began or intensified non-agricultural activities during the survey period, and in that way diversified the composition of their household income.
Saving of almost 2 hours per day of transport time per household
Substantially more frequent visits to market and medical facilities
35% higher income

Full Report

Quantitative Field Study-2: Tanzania

Organization: International Labour Office

The understanding that "Roads Are Not Enough" was the reason why Integrated Rural Transport Project in Makete District, Tanzania was conducted.
~50-100 households surveyed for impact of bicycle ownership

Results:

Bicycle has very strong impact on the market production: It enables the farmers to cultivate bigger fields and use more fertilizer.
Bicycle households marketed two fifth more than comparable non-NMT-households.
Total monetary benefits of a bicycle 55% of the household’s income
The main restriction for the purchase of a bicycle is the relative high procurement cost.
80-90 % of the households desiring an NMT stated that they could not afford the price

Full Report

Quantitative Field Study-3: Srilanka

Organization: World Bicycle Relief, USA.

After Tsunami, 24,000 free bicycles distributed
Surveyed 221 bicycle owners for impact made

Results:

More than two years after the tsunami, 88% of respondents still rely on the bicycle as part of their livelihood
Bicycles save between 10 and 20 percent of a household’s annual income over other transportation alternatives, and in the poorest households as much as 30 percent – income that contributes directly to livelihood security
Bicycle distribution has effectively mobilized and empowered women, with 82 percent of women recipients reporting that they use the bicycle for income-generating activities
Bicycle saved, in alternative transportation costs, 18% of a recipient’s $71 average monthly income.
If saved time was spent on productive endeavors, then $0.52/day additional income could be produced – a more than 17% increase.
While this survey did not specifically calculate the cost savings of a bike recipient’s ability to reach regional markets, parallel surveys show further significant cost savings.

More Details

Impact of Bicycles for India

2009-01-01T02:35:00.000-08:00

"We certainly like the idea and understand the importance of transport. The main focus of the discussion came to the realistic practice of the idea that if some one finds something very important for oneself then tries to have that. So the question comes up that if the bicycle is one important thing for poor people in rural areas then why aren’t people buying it. The reasons may be money and poverty or people don’t understand importance of having bicycle.

So the major question comes up that if given money would people like to buy it? For an example there are many SHGs which are providing loans to the poor families and the members normally take loans and buy buffalos but not bicycle etc.

So, are there some studies that show that when the poor people have access to resources they prefer to buy bicycles? "

- Query by one of India's leading research and educational NGO.

Reply:

Well, both of the reasons, that the poor don’t have the money and they don’t understand the impact a bicycle can make in their lives, appear to be the reason for the under-ownership of the bicycle. Additionally, cultural resistance in some parts of India might also be responsible to make it difficult for women to own bicycles whereas in similar conditions in other developing countries like China and Brazil there might not be any resistance. Lets look at these issues.

Let me take the point of ignorance about the benefits of bicycles first. The fruits of investment in a buffalo, goat, sewing machine, poultry and fishery are very much visible to a human mind. But at the same time the benefits of education, roads, vehicles and to that effect even communication are not that much tangible and provide a secondary support in income generation. Though they may have a significant impact, their impact is not readily evident and may take time to materialize.

For an example, take again the results from the IFPRI study on subsidies and rural investments. (Please click the image to see it better)

Though roads, education and agricultural R&D provide significantly better returns, to the simple logic of policy makers often the fertilizer and power subsidies take a preference since they provide instant, visible and easily measurable outcomes.

Further, the growth in income shown by the experiments done with bicycle has also been reported due to increased access to markets with higher crop prices, labor markets with higher labor rates, and the new economic activity started due to the saved time. These ‘probable’ outcomes might underscore for a poor in comparison to apparently ‘certain’ outcomes associated with a buffalo or a goat.

Coming to the point that poverty may be the reason, yes, this might be a great reason for it. Bicycle ownership has shown to be increased with a rapid rate when the economic hurdle was reduced in size. For example, in Shanghai the bicycle ownership increased 360% during 1980 to 1990 due to subsidy provided on the bicycle(1). In Lima (Peru), where low-interest loans were available to low-income families for the purchase of the bicycle and many kilometres of bike paths was built, the city succeeded in increasing the percentage of trips made by bicycle from 2% in the mid 1990s to 10% in 2000 (2).

Also, in Kenya a tax cut- from 80% to 20%- between 1986 and 1989 (i.e. about 1/3 price reduction) led to a whopping 1500% increase in bicycle sales(3). Though a direct mapping of these results can not be done for any other country, it can be reasonably said that the poor have shown signs of a much greater bicycle ownership when the economic hurdle has been reduced, either by subsidy, tax-cut or by microfinance.

In India there are at least 836 million Indians living on less than Rs.20 a day as per the government data. Over 200 million of them live on less than Rs.12 daily(4). So economic hurdle appears to be a great reason in the under-ownership of bicycle apart from the ignorance about its benefits.

As per the 2001 census out of 193 million households, 66 million (34%) do not have even a radio or a bicycle. Out of the about 60-65% poor Indian households, more than 60% of them (about 80 million) are estimated to be having no bicycle. Although it can not be said whether or not many of these households have intentionally not bought a bicycle as they see no benefit in it, comparison with a country like China or Brazil shows that people do buy a bicycle if they have the money for it.

Here the point about the cultural resistance also subsides. When about 40% of the household do not have even a single bicycle, issue of resistance to the women bicyclist becomes secondary.

Also MFIs/ SHGs focus on providing loans for visible and rapid means of income generation. For an example, as I understand, MFIs wont be that much interested in providing loans for education of children but for a buffalo or a sewing machine since income generation and hence early re-payment is assured to a better degree in the second case. In the absence of a collateral, the whole premise of an MFI is hinged on the visible, rapid and assured income generation by the borrower. Bicycle loses to buffaloes in that race.

Hence, both the reasons, the ignorance about the potential of bicycles and the inability of people to buy it should constitute for the reason of its under-ownership. Even the policy-makers appear to be less aware about bicycle’s potential- they spend much more on subsidizing petrol, used primarily by the middle class. Even while huge sums are spent to build rural roads, commensurate efforts are not made to have increased rural transport vehicles on these roads.

References:

1. Kuranami, Winston & Bell; Non Motorized Vehicles in Ten Asian Cities, World Bank, Washington (1995).
2. http://www.ecf.com/misc/filePush.php?mimeType=application/pdf&fullPath=http://www.ecf.com/files/2/12/23/BRR_162_English.pdf
3. The bicycle in Africa: Luxury or necessity, Velo City Conference, Nottingham, 1993, John Howe and Ron Dennis, IHE, Delft, 1993.
4. http://www.indiatogether.com/2009/mar/psa-forbes.htm

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“India has a per capita gdp of $1000. To be a grown up country means getting this up to $10,000. How can more bicycles do that?”

-Got an email query from a leading Indian economist.

More bicycles can not directly make per capita GDP ten times, but they can help mitigate the poverty at a significantly rapid rate. This in turn, will help raise the average per capita GDP, and reduce the variance in the income distribution curve.

More bicycles mean easier and cost effective transport to the rural India (Bicycle industry reports that about 90% of the basic model bicycles are sold in rural/ semi-urban India). If some-one traveling 6 km per day on foot can be induced to buy a bicycle, it will amount to about one hour saving of his time daily, i.e., the potential to raise productivity of a person by 10%.

Bicycle ownership in India is significantly lower compared to many other countries. So there are a lot of people who are still losing their time traveling on foot.

This move will marry those with one of the highest potential for growth (due to a very low base effect) with something that has one of the highest potential to cause growth.

-To read the full reply, and excerpts from relevent literature on the subject, please Click here.

Links for References

2009-01-01T02:34:00.000-08:00

Please click here to get the internet-links to download the references mentioned in the Bicycle Report.

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