Blog

Using a behavioral lens to develop training and marketing tools to enable agents to sell non-CICO (cash-in and cash-out) use cases in India

Posted on by Deepesh Singh

The first blog of this series discussed the importance of diversifying BC agents’ service offerings to include non-CICO products for enhanced economic viability. We also highlighted the need for training to support this shift. In the second blog, we identified potential non-CICO products through a structured framework. This blog will explore ways to train agents effectively to sell these new products.

How are agents trained when a new product is launched?

Public sector banks generally train BC agents based on the Indian Institute of Banking and Finance (IIBF) curriculum, which focuses more on regulatory compliance than practical product knowledge. This results in inadequate training on new products, shifting the responsibility to the field staff of Business Correspondent Network Managers (BCNMs). These staff members, who handle onboarding and training, often lack the resources or skills for effective knowledge transfer, leading to misinformation, often developing a ‘chinese whispers effect’ by passing on incorrect information or faulty training to agents. While some private sector and payment banks manage their own BC agent networks, their training also tends to focus mainly on operational aspects.

MSC’s analysis further reveals that almost all the providers we have worked with share a similar approach to introduce new products, train agents, and market these new products. Typically, most providers follow this method:

Several providers provide digital training by developing and posting instructional videos on their apps to inform agents about various products they can sell. However, a significant area for improvement that affects agents’ active use of these videos is their narrow focus on basic operational tasks. Agents are often confused about which buttons they must press or options they must select to open an account for a customer. But in addition to this, these videos fail to address the need to upskill agents to match the right product with the right customer and deliver accurate product pitches.

How can these issues be addressed?

We propose the development of a “communication toolbox” to bridge this gap and ensure that the non-CICO products have a higher uptake among agents and, ultimately, among customers. A communication toolbox is a collection of marketing materials, training guides, and communication templates designed to standardize and streamline information sharing. This will ensure consistency and effectiveness. We believe a communication toolbox is essential for BC agents, specifically for non-CICO use cases, due to its flexibility and the range of resources. Non-CICO use cases include insurance, e-commerce, and logistics, among others.

MSC has developed several communication toolboxes in the past using a design thinking approach. These are designed with in-depth behavioral research to understand the agents, their awareness levels, their preferences, their motivations, their skills, their contexts, and the challenges they face. Agent personas can be developed through this research. It can help identify key challenges and bottlenecks. These insights can be used to create the content and determine the nudges required for each agent type or persona.

A communication toolbox can potentially have the following features:

Tailored training for diverse agent personas: Insights into agent personas and agent segmentation

Not every BC agent is alike. Thus, stakeholders must identify different agent personas to understand their needs, experiences, behaviors, and goals. We have identified two types of BC agents based on their performance, skills, and willingness to work as BC agents to understand how they can use the communication toolbox effectively:

These personas have been developed based on our many studies with agents over the past two years. A high-performing agent is generally younger, agile, digitally savvy, and understands the customer. In contrast, a low-performing agent is often a middle-aged or older person with limited education who is uncomfortable with technology and does not have a strong customer base.

It is clear that a single line of communication will not be effective for these two agent personas due to their inherent differences in motivation and business acumen. While a high-performing agent may quickly grasp product details and target the right customers, a low-performing agent may struggle to understand the product’s technical aspects and identify suitable customers. Thus, they may struggle to pitch the product effectively.

Therefore, we believe that a communication toolbox can be easily deployed for both types of agents with the agent segmentation in mind, as can be seen below:

As the agent network in India matures with 2 million agents, training remains a critical yet underdeveloped area. The development of need-centric communication toolboxes is essential to improve communication and reduce information asymmetry. MSC’s previous work (1 and 2) on communication toolboxes highlights that agents become more engaged and effective in their roles when they are equipped with the right tools and training and also increase their income by 36%.

A well-designed communication toolbox can be tailored to suit the unique characteristics of different agent outlets and customer segments. It can enhance agents’ knowledge of products and their ability to pitch them to the right customers. For instance:

  • Outlet size and layout: In small agent outlets cluttered with posters and other materials, signages can be developed for desks instead of walls. This will ensure the message is clear and unobstructed.
  • Targeted customer segments: The images and captions on posters and signages can be customized to the target demographic.
  • Use of audio tools: If the agent outlet has a speaker system, audio briefs can be tailored to directly address the target customer group’s specific needs, which will make the communication more effective and engaging.

The toolbox is a customizable template that enables agents to adapt communication strategies as per their customized contexts. This approach enhances agents’ income potential, equips them to market and sell non-CICO products more effectively, and improves providers’ overall economics.

In conclusion, the adoption of agent-segmented communication plans should be a key focus in industry players’ marketing strategies. The industry can ensure that all agents can effectively contribute to their businesses’ growth and sustainability regardless of their background or skill level through the development of communication tools that are both need-centric and customizable.

Frameworks to consider while developing non-CICO (cash-in cash-out) use cases

Posted on by Saumya Dixit

Blog 1  in the series indicated the need to diversify use case offerings for Indian business correspondent (BC) agents so they can become economically viable and, hence, serve as a long-term sustainable model. In this blog, we will delve into possible ways to achieve this.

MSC has worked with many prominent financial service providers for the past 25 years. We have developed a framework that can help financial service providers identify ways to enhance their use case offerings through BC agents and make them suitable for LMI customers. This framework is based on the experience and insights generated from multiple behavioral research studies with agents, low- and middle-income (LMI) customers, and financial service providers, such as banks, payment banks, rural banks, FinTechs, and business correspondent network managers (BCNMs).

What are non-CICO use cases?

Cash-in and cash-out (CICO) refer to cash deposits and withdrawals from one’s bank accounts or mobile money wallets. LMI customers primarily use BC agents to deposit the wages they often receive in cash into their bank accounts through digital financial services. They sometimes also deposit cash at the agent point to transfer money to their families and withdraw DBT (direct benefit transfer) funds or salaries from their bank accounts to use the money for daily needs, such as groceries.

Besides this, customers also use BC agents to open bank accounts, conduct balance inquiries, and process insurance registrations, airtime top-ups, utility bill payments, and travel ticket bookings. These transactions or activities are classified as non-CICO products, where the customer obtains essential services through BC agent points beyond cash deposits and withdrawals. As per MSC’s Agent Network Accelerator (ANA) research (2018), providers and BC agents had a limited uptake of these non-CICO use cases.  MSC’s extensive fieldwork since then suggests only marginal improvements in adoption in India. While innovative use cases like EdTech and logistics have been introduced by a few providers, their uptake remains limited to specific agents of these providers. However, a comprehensive ANA survey is needed to quantify the changes over the past six years.

MSC has classified non-CICO use cases into three categories based on the complexity of the products and their requirement for the LMI customer segment:

  1. Scale-up use cases: These refer to the use cases that BC agents have offered for some time, such as utility payments, customer service centers (CSC), and ticket booking. While these use cases potentially generate significant revenue for agents, insufficient provider support has hindered their widespread adoption. Diversification to these use cases helps providers immensely as it does not require extensive research, has a predefined customer base, and uses the providers’ existing capabilities. Therefore, providers can adopt them quickly and effectively.
  2. Incremental use cases: A few providers have experimented with these use cases. However, the development of such use cases requires qualitative and quantitative research. This would allow them to offer tailored products, such as social protection, grievance resolution, and wealth management, to improve relevance and uptake. Providers can, therefore, explore solutions for high-commission use cases to create new opportunities for growth and expansion. Such use cases include logistics, insurance aggregation, and digital credit products.
  3. Adjacent use cases: Businesses have significant opportunities to explore new customer segments and innovative use cases, such as EdTech, telemedicine, and MSME-embedded finance. CICO agents can expand their reach and grow their market share if they understand these customers’ latent needs and the incentives that drive them. These are potentially innovative and revolutionary use cases.

Successful scaling up of non-CICO use cases

MSC’s preliminary research on non-CICO use cases available in the market reveals some interesting, successful case studies. Eko’s partnership with EnglishBolo, an English learning app, is a rare success story among adjacent use cases. 150,000 agents were used to extend EnglishBolo’s services through the partnership to those who lacked access to digital payment mechanisms. Similarly, a few providers, such as Vakrangee, have been working to provide logistics services to underserved communities through its BC agents.

More recently, providers, such as Airtel Payments Bank and FINO Payments Bank have launched a range of microinsurance products. These include hospicash, a small-value medical insurance product to cover hospitalization and related expenses, alongside insurance, which cater to LMI needs. Airtel Payments Bank could scale up its hospicash insurance product to more than 600,000 LMI customers in the past year (2023-24) alone. This highlights the demand for such innovative products in the market. The uptake among customers has also directly led to an increase in the agent’s commission. Such examples are few and far between. However, they highlight the importance and potential of the successful launch of new and innovative use cases through BC agents.

How can providers identify which use case is a perfect fit for them and their agents?

The identification of the perfect use case for agents is crucial for financial service providers (FSPs) to enhance their service offerings and ensure agent effectiveness. Providers can use MSC’s and the enabling ecosystem to determine the most suitable use case. This can be seen below:

Providers must analyze their current market position and infrastructure to identify suitable use cases. This involves qualitative and quantitative research on the customer base to understand their needs, aspirations, perceptions, and behaviors. Providers can identify the most suitable use cases for their agents and customers through the integration of these insights with the seven-factor outline.

The way ahead

Looking forward, financial service providers can use this structured approach to expand their service offerings strategically. It will ensure they meet LMI customers’ evolving needs.

Additionally, it is time for the industry to view BC agents as more than just facilitators of financial transactions and recognize them as “distribution service providers.” As many agents are in underserved and unserved areas, they can enhance access to essential products and services, such as M-health, M-power, M-insurance, M-agriculture, and M-everything. This not only improves accessibility but also fosters economic growth through the integration of rural populations into the broader market through “universal agents.”

The need to expand and diversify use cases of cash-in and cash-out (CICO) agents and its potential: A case study of India

Posted on by Deepesh Singh

“I have been an agent for a Payments Bank for more than six years. My business correspondent (BC) business has reduced since people started to use UPI (Unified Payment Interface). I used to earn more than INR 10,000 (USD 121) a month from the BC business, and now I only earn around INR 1,500 (USD 18) to INR 3,000 (USD 36) in a month. This paltry amount does not help me run my household. I have stopped paying much attention to the BC business and only focus on selling groceries.”

 – A payments bank agent, rural Odisha

MSC’s recent qualitative interviews with agents in Delhi National Capital Region, Bengaluru, Sambalpur (Odisha), Ranchi (Jharkhand), and Raipur (Chhattisgarh) shed light on the low profitability of the CICO business for CICO agents. It revealed that rural agents, on average, earn INR 8,000 (USD 97) per month, which varies from INR 600 (USD 7) to INR 20,000 (USD 243). Agents who earn higher incomes of more than INR 15,000 (USD 180) are located in prime areas within districts with high migrant traffic and a relatively higher volume of daily transactions.

Most CICO agents have failed to make ends meet through CICO agent business due to low profitability and competition from emerging technologies, such as user-friendly UPI, QR-based payments, and internet banking, among others. As a result, CICO agents scout for alternate income streams and lose interest in the CICO business, which leads to higher dormancy rates.

The profitability problem

An analysis of the agents’ unit economics reveals that this business provides limited economic benefits to agents. Traditional agents typically reach breakeven in seven to eight months due to higher setup costs. In contrast, new-age agents achieve breakeven within two to three months. Further, as illustrated in the infographic, MSC’s cost-benefit analysis for new-age BC agents in India shows a monthly profitability that ranges from INR 4,000 (USD 48) to INR 11,000 (USD 131). In contrast, traditional agents earn around INR 7,000 (USD 85) to INR 15,000 (USD 180) monthly. However, these traditional agents have to make significant investments of $600-2,400 for capital expenditure to set up their outlets. When these investments are amortized, even over five years, the profitability of traditional agents is significantly eroded. Indeed, many are making losses.

* Traditional agents incur higher one-time setup cost ( USD 600- USD 2400), whereas the operational expenditures remain similar for all agent types with minor variations depending on the bank’s model; Source: MSC, 2022

The profitability for both agent types indicates they do not earn high incomes, especially if we consider the effort and operational costs involved. The profits generated by these agents are modest and may not prove beneficial for long-term financial stability. The market saturation, evolving customer needs, and increased competition contribute to their struggle for profitability. Moreover, the need to hold large amounts of liquidity for CICO operations introduces an opportunity cost, as this capital can potentially earn higher returns if invested in other ventures, such as a grocery store business.

The retail digital payment sector in India has experienced impressive growth, with transaction volumes increasing at a CAGR of 50.84% from 2017 to 2023. However, the BC channel’s use remains limited, with transactions at BC agent outlets comprising only 3% of the total digital payment transactions. More than 80% of the transactions at the agent outlet comprise basic CICO transactions, which earn the agents less than 1% commission on the transaction value.

Most agents manage 10 to 50 daily transactions, especially in rural areas, with a maximum transaction value of around INR 50,000 (USD 595). On average, an agent earns 0.10% commission on a transaction of INR 1,000 (USD 12). Based on this, the agent’s monthly commission is around INR 3,000 (USD 35) to INR 5,000 (USD 60). Agents must conduct transactions worth INR 30 million monthly (USD 0.35 million) to earn at least INR 30,000 (USD 365). Such a high volume of transactions is restricted to certain areas and districts and depends on agents’ financial capability – is how well they invest in and manage liquidity, and soft skills – such as clear communication that builds customer trust.

Graph 1: Volume and value of transactions at agent points

Source: RBI annual report (2023-24)

The Reserve Bank of India’s annual report, 2023-24 (Graph 1), reveals that the value and volume of transactions at BC agent points have grown since the dip in 2021. Still, the total transaction growth has been limited to 11% per year, while the growth of the volume of transactions is at 40%. This has had limited economic benefit for the agents as the percentage of commissions earned on transactions has reduced over the years. MSC’s market intelligence has revealed that the banks have reduced agent commissions on several services due to mergers of public sector banks, high cost of intercharge fees, and oversaturation of agent points in key geographies/markets. This makes it difficult for agents to sustain the BC business and meet the rising cost of living. Low commission and profit-earning potential make it difficult for agents to cover operational costs, especially in rural areas where transaction volumes may be high, but the value per transaction is low. This led to a net decline in the number of CICO agents by approximately a from 2022 to 2023.

Stiff competition from other modes of payment

In 2021, during the COVID-19 pandemic, UPI saw a significant surge in its usage as digital payments became more prevalent. Innovations, such as QR codes, made digital transactions more accessible to low- and moderate-income (LMI) groups.

As of 2024, India has 884 million Internet users with a 52.4% Internet penetration rate. The increase in Internet users has led to a significant uptick in digital transactions, with a colossal average daily volume of transactions worth INR 480.47 million (USD 5.7 million). UPI’s instant money transfer capability has reduced the reliance on BC agents.

Can BC agents dream of a brighter future?

An analysis of the total savings accounts opened at bank branches versus BC agent outlets reveals that BC agents have consistently opened more accounts than bank branches (Graph 2). This proves their relevance to the expansion of financial inclusion. Per the RBI’s Annual Report 2023-24, the total basic savings account opened by BC agents is 427 million. However, deposits made at BC agent outlets are on par or slightly lower than those made at bank branches (Graph 3). Therefore, while CICO agents open more accounts, they do not get enough “cash-in” transactions, which serve as an important source of income for agents.

Graph 2: A comparison of savings accounts opened at bank branches and BC agent outlets

Source: RBI annual reports (2019-24)

Graph 3: A comparison of deposits made at bank branches and BC agent outlets

Sources: RBI annual report 2019, 2020, 2021,2022, 2023

Agents are crucial in the delivery of essential formal financial services to underserved communities from the LMI segment. However, they find the current overreliance on basic CICO transactions economically unsustainable due to low commissions. Agents can earn more through a broader range of non-CICO use cases, such as savings, deposits, insurance, and utility payments. Although providers, such as public sector banks and payment banks, offer some of these services through their agent networks, the uptake among agents remains limited. This is due to a lack of clear value propositions and insufficient training and support from banks and business correspondent network managers (BCNMs).

Providers must, therefore, invest in the development of innovative, LMI-friendly products with higher commission structures and provide uniform training on these non-CICO products to ensure BC agents’ economic viability. By doing so, agents can better serve the growing number of LMI customers they enroll in formal financial services. For instance, they can open basic savings accounts while they increase their income by selling non-CICO products. This strategy also provides banks a valuable opportunity to decongest their branches, as well-trained BC agents can handle more transactions and allow branches to focus on more complex and higher value banking services.

Blogs 2 and 3 in this series delve deeper into these two critical aspects: The development of innovative LMI-friendly products and the tailored training required for different agent segments to sell non-CICO products.

Putting agents to use: Insights from a multicountry research on customer’s usage of CICO agents

Posted on by Deepesh Singh

Nearly 48% of customers in Bangladesh, India, and Kenya have stopped using CICO agents, with around 20% shifting to alternatives like ATMs and mobile apps. MSC’s multi-country research on customer journeys with CICO agents reveals that convenience—driven by accessibility and seamless user experience—and trust, anchored in customer perceptions about the agent, are crucial for retaining customers.

CICO agents have revolutionized financial access in underserved regions, but their role and quality of services need to evolve. Explore our report to discover strategies for enhancing customer retention among CICO agents.

The hidden cost of care: How female informal workers reduce the societal burden of care work

Posted on by Saumya Dixit

Wati, a 40-year-old online ride-hailing driver in Makassar, wakes up at 5 a.m. to cook and prepare her children for school. She takes them to school by motorcycle and then starts her ride-hailing job. At 1 p.m., she returns home to do household chores and pick up her children from school. After she drops them off, she works until 6 p.m., prepares dinner, and looks after her children. In Indonesia, 36.3 million other female informal workers follow a routine similar to Wati. Their significant yet often overlooked contributions highlight the need to redistribute care work to enhance women’s productivity.

Many Indonesian women perceive informal work as a “win-win” solution as it enables them to contribute financially to their household and simultaneously manage domestic responsibilities. A recent study of women’s informal employment in the digital economy by MicroSave Consulting (MSC) and the Ministry of Women Empowerment and Child Protection (MoWECP) showed that approximately 66% of female informal workers, particularly those of reproductive age, choose informal jobs because of flexible hours. However, this flexibility often means longer work timings. Our study also revealed that 60% of female informal workers spend more than 40 hours weekly on paid work and more than 20 hours weekly on care work. Despite the extensive hours, their income remains low and unstable, with most earning less than IDR 3 million (~185 USD) per month. They also lack a safety net, such as benefits for work-related injuries and death, as most of them are not registered with BPJS Ketenagakerjaan.

In an ideal world, women should not have to bear the cost of care work alone. It should be a productive activity that reduces women’s care burden and be redistributed to other family members, employers, and the government. Comprehensive and inclusive care policies should also be available to help women. A study by the International Labour Organization (ILO) estimated that, by 2035, Indonesia could create 10.4 million jobs, increase the female employment rate to 56.8%, and reduce the gender wage gap to 10% if the government invests in universal childcare, long-term care, and a comprehensive care policy package.

The first half of 2024 has seen progress in the improvement of Indonesia’s care economy. In March, the MoWECP and the ILO launched a road map for the care economy. This document outlines seven priorities: Childcare, elderly care, inclusive care, maternity leave, paternity leave, fair working conditions for care workers, and social protection related to care work. The road map seeks to guide policy formulation across ministries and agencies that will align with the country’s Long-Term National Development Plan.

Another important milestone is the recent passage of the Maternal and Child Welfare Act (UU KIA). UU KIA regulates maternal and child rights in the first 1,000 days of a child’s life, family responsibilities, and the government’s duties and authority. The Act stipulates that mothers are entitled to three months of paid maternity leave, with an additional three months available under special circumstances. Fathers are entitled to two days of paternity leave during childbirth, which can be extended for up to three additional days or as mutually agreed upon with the employer.

However, despite its positive intentions, the Act can be improved significantly. For instance, the stipulated paternity leave is below the global average of nine days and the Asia-Pacific average of seven days. Additionally, the paid maternity leave regulation is designed only with formal sector workers in mind, where the employer pays for the leave and the leave is agreed upon in the work contract. This can put female informal workers at a disadvantage. Informal workers, such as homeworkers, often lack legal contracts and formal employers. They typically receive work orders from various employers through an intermediary party without any physical contracts.

The government can implement several measures to address the disproportionate burden of care work on female informal workers. Here are a few possible measures:

Strengthen policies on paternity leave: The government should introduce substantial paternity leave policies to encourage men’s involvement in childcare. In other developing countries, such as Myanmar and Uruguay, the government offers more than 10 days of paid paternity leave through social insurance. This approach helps alleviate the pressure on female workers and supports a more balanced distribution of care responsibilities. A public perception survey on maternity and paternity leave in Indonesia shows that people wish to get a month-long paternity leave, which suggests strong support for such initiatives. Indonesia can implement similar policies to foster a more balanced distribution of care responsibilities and enable fathers to participate actively in child-rearing.

Additionally, the government, in collaboration with relevant stakeholders, should launch social campaigns to normalize men’s involvement in caregiving activities. The government can promote men’s participation in school events and care for sick children and create an encouraging office culture that embraces care leaves. Such initiatives can challenge traditional gender roles and encourage a more equitable sharing of care duties.

Develop affordable public childcare: The study by MSC and the MoWECP also found that about 59% of female informal workers lack access to reliable and affordable childcare services. The government can develop several models of childcare services to cater to different segments of the population. One such model is community-based childcare, which can emerge as an affordable alternative. It creates local job opportunities and fosters community trust and collective responsibility. This model can enhance accessibility for informal workers. It can also reduce the stigma around women who place their children in daycare centers to pursue work, as it involves the community’s participation.

Indonesia has a National Daycare Standard in place. However, its implementation needs to be expanded and monitored across various types of daycare facilities. Adherence to these standards will be crucial to maintain quality and meet the diverse needs of families, particularly those of female informal workers in need of reliable childcare. The government can also subsidize daycare fees for informal workers as their income tends to be relatively low and unstable.

Prepare infrastructure and policies for elderly care: Moving forward, we must shift our focus beyond childcare provisions. Indonesia’s demographic dividend will slow down in 2030 as the aging population increases. Given the country’s aging population, the development of comprehensive care policies and infrastructure for older people is vital. This aspect of care work is often overlooked but has become increasingly important, as is evident in many other developed and developing nations.

The government should provide the necessary infrastructure and policies supporting the elderly to ensure that the burden of elderly care does not fall disproportionately on informal female workers. Programs, such as the Program Keluarga Harapan (Family Hope Program) at the national level and Jakarta’s Kartu Lansia (Elderly Card) at the subnational level have already started to offer social assistance for the elderly. However, such efforts need to be intensified further. The government can follow the examples of other developing countries, such as Chile or Uruguay, and provide subsidized long-stay residences, day centers, and teleassistance for the elderly.

Wati’s story reflects countless Indonesian women whose contributions to the economy remain undervalued and unsupported. These women are the backbone of their households and communities yet endure grueling conditions and limited social protection. Indonesia must redefine its economic landscape to acknowledge and address this gender disparity. It can implement robust paternity leave, foster men’s involvement in caregiving, invest in community-based care infrastructure, and prepare elderly care infrastructure to alleviate the burdens women face and unlock its workforce’s full potential. Such measures are vital to achieve a more equitable, inclusive, and prosperous nation.

***

Rhifa Ayudhia and Jilan Zahra Jauhara are Analyst and Associate, respectively, at MicroSave Consulting (MSC). This article also features contributions from Raunak Kapoor, Rahul Ganguly, Vaishali Patra, and Padma Angmo.

Millets: The nutritional powerhouse for a sustainable India

Posted on by Deepesh Singh

Over the years, the Indian government has made significant strides in ensuring food security and satiating the hunger of millions of its citizens. In 2023-24, the Government of India (GoI) spent nearly USD 26 billion to subsidize food grains to nearly 800 million citizens. The GoI’s flagship National Food Security Act (NFSA) 2013 legally entitles up to 75% of the rural and 50% of the urban populations to receive subsidized food grains under the Targeted Public Distribution System (TPDS). NFSA also entitles nutritional support to pregnant women, lactating mothers, and children aged six months to six years under the Integrated Child Development Services (ICDS) Scheme, and school-going children aged six years to fourteen years under the PM POSHAN (POshan SHAkti Nirman) Scheme. However, despite these efforts, a nutrient-rich diet remains elusive for many. Data from the National Family Health Survey (NFHS-5) reveals alarming rates of anemia and malnutrition among children and adults alike.

The government has implemented several targeted interventions to address these dietary deficiencies, such as weekly iron-folic supplementation, vitamin A supplementation, rice fortification, etc. While these measures have had some success, there is an urgent need to bundle these interventions with prioritizing and ensuring diversity in household/individual food consumption and behavioral nudging. The GoI has taken significant steps towards nutrition security with the distribution of fortified rice and is now focusing on further diversifying the food basket by including millets in the TPDS, PM POSHAN, and ICDS. Additionally, some state governments have taken initiatives to promote millets under their respective state missions in different capacities.

Historically, millets comprised about 20% of India’s food grain basket until the late 1960s. Despite their superior nutritional value and health benefits compared to rice and wheat (refer to figure 1 below), millets fell out of favor due to low remuneration for millets vis-à-vis competing crops, their complex processing requirements, taste and texture, short shelf life, seasonal consumption patterns, etc. However, with growing concerns about nutrition and climate change, the government has again begun promoting millet cultivation and consumption.

The GoI notified millets as ‘Nutri-cereals’ in 2018 as they are not only a powerhouse of nutrients, but also are climate-resilient crops and possess unique nutritional characteristics. The United Nations General Assembly had even declared 2023 as the International Year of Millets (IYOM), thanks to India’s resolution and several other countries’ support. Hence, promoting millets and their inclusion in food and nutrition security programs is one of the strategies to improve nutrition and address the above challenges, aligning with global efforts to promote millets for their nutritional and environmental benefits.

Millets are nutritionally superior, having more micronutrient and fiber content than rice and wheat

(Source: Indian Food Composition Tables, 2017, National Institute of Nutrition)

Initiatives undertaken by GoI to promote cultivation and consumption of millets

As per the third advance estimate 2023-24 of the Ministry of Agriculture and Farmers Welfare (refer to Table 1 below), India produced approximately 17.4 million metric tons of millet during the 2023-24 fiscal year. In comparison, its ongoing procurement under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) is only 0.855 million metric tons (4.9% of the production quantity, as on 06th June 2024) (refer to Table 2 below) during the same fiscal year. The data underscores a significant gap and an opportunity to procure more millets for distribution under PMGKAY.

Table 1: Ministry of Agriculture and Farmers Welfare’s Third Advance Estimates of Production of Foodgrains for 2023-24 (in million metric tons as on 04.06.2024)

Table 2 – State-wise procurement of millets under PMGKAY (figures in million metric tons)  

[1] Kharif crops, monsoon crops, or autumn crops are cultivated and harvested in the monsoon season. The farmer sow seeds at the beginning of the monsoon season and harvest them at the end of the season. i.e., between September and October.

[2] Rabi means spring in Arabic. Crops grown in the winter season [October to December] and harvested in the spring season [Aril-May] are called Rabi crops.

[3] Total includes the Kharif, Rabi, Summer, Rabi+Summer variety of Jowar.

[4] Procurement of coarse grains for 2023-24 is ongoing. The data is as on 06.06.2024.

Hence, the Department of Food & Public Distribution, Government of India (DFPD) has taken several measures to enhance agricultural diversity and food security by promoting the inclusion of millets under PMGKAY through the following key initiatives:

  • Nudging states to increase millet procurement: DFPD has actively encouraged states to procure millets for inclusion in PMGKAY. This includes organizing national seminars and workshops. Moreover, DFPD has revised its procurement targets multifold to impress upon the states to start focusing on millet procurement.
  • Increased minimum support price (MSP): DFPD has been promoting millet cultivation among farmers by consistently increasing their MSP for every procurement season over the last few years. If we compare the last 5 procurement seasons, the MSPs of sorghum and pearl millet have roughly increased by 25% and that of finger millet has increased by 22%.

Table 3: Year-wise MSP of major millets (in INR/quintal)

  • Inclusion of minor millets in MSP: DFPD’s decision to bring minor millets such as foxtail, proso millet, kodo, and little millet under the MSP umbrella ensures that farmers receive fair prices for these crops, similar to what they would for finger millet. This initiative is expected to boost the cultivation and production of these minor millets, thereby contributing to agricultural diversity and food security.
  • Enhanced shelf life: To address supply chain constraints, DFPD has extended the shelf life of millets, allowing more time for transport, storage, and distribution. The enhanced shelf life for pearl millet (Bajra), finger millet (Ragi), and sorghum (Jowar) is a positive development. The shelf lives of millets have been changed from the earlier three months to:
  1. Bajra (pearl millet) – 9 months
  2. Ragi (finger Millet) – 10 months
  3. Jowar (sorghum) – 6 months (Kharif season) and 9 months (Rabi season)
  • Inter-state movement of millets: DFPD now permits the inter-state movement of millets from surplus-producing states to deficit states through the Food Corporation of India (FCI). This facilitates the efficient distribution of millets to areas with higher demand.
  • Standardization of Millets: The Food Safety and Standards (Food Product Standards and Food Additives) Regulations, 2011, initially set individual standards for a limited number of millets, including sorghum (Jowar), whole and decorticated pearl millet grain (Bajra), finger millet (Ragi), and amaranth. However, the FSSAI has recently established a comprehensive group standard that covers 15 types of millet. This standardization ensures the availability of high-quality millets in domestic and international markets, promoting their use in diverse food products.

These measures collectively aim to promote millets as an essential component of the Indian food system, both for their nutritional value and their potential to enhance agricultural diversity and food security. The increased MSP, extended shelf life, and standardization efforts make millets more attractive for farmers, consumers, and the food industry. This can contribute to a more diversified and nutritious diet for the population and support sustainable agriculture practices.

Hurdles in the Mainstreaming of Millets

Despite the number of critical steps undertaken by DFPD, the challenges regarding the mainstreaming of millets in India are significant and need to be addressed to realize the potential benefits of these nutritious crops. Here’s a breakdown of these challenges:

  • Production-Procurement Gap: The large gap between millet production and procurement is fundamental. To incorporate millets into the food and nutrition security programs for NFSA beneficiaries, a substantial increase in procurement is required, which may currently exceed the annual procurement capacity. Even if DFPD decides to include 1 kg of millet per beneficiary in replacement for the existing entitlements under TPDS, it would require 0.8 million metric tons for approx. eight hundred million NFSA beneficiaries monthly, which is roughly the same at the current total annual procurement.
  • Lack of open procurement policy for millets: The procurement of millets poses a distinct challenge. Surplus-producing states such as Rajasthan do not significantly buy millets from farmers. Once purchased, they face hurdles in disposal. The uncertainty about the amount they can distribute to other states hinders open procurement. This could result in a complicated and politically sensitive situation where the state selectively buys from farmers, thus avoiding procurement to evade a difficult situation.
  • Understanding the consumption patterns and seasonality: Millet preferences and consumption patterns vary from state to state. Different millets are favored in other regions, and their consumption often depends on seasonal factors. For instance, pearl millet (Bajra) is majorly produced in Rajasthan and Haryana, and people in North India consume it usually during the winter season. Understanding these consumption patterns and seasonality is essential for effective procurement and distribution.
  • Limited awareness about the health benefits of millets: There is a lack of understanding, particularly among rural populations, about the health and nutritional benefits of millets. Most of the rural population still believes that millet is a coarse grain. Decades have gone in classifying these grains as ‘coarse grains’ and were considered inferior to rice and wheat. Despite efforts such as the International Year of Millets (IYOM), there is a need to create awareness of millet’s nutritional and climatic benefits and bridge the urban-rural divide.
  • Productivity challenges: Post-Green revolution, research and development have primarily focused on improving the productivity of rice and wheat. According to the global initiative Smart Food, millets have an average yield of 1,111 kg per hectare (ha). This is significantly lower than the yield for paddy and wheat, which are 2,600 kg and 3,500 kg per hectare, respectively.

Way Forward

Addressing the above challenges will require a multi-faceted approach involving government policies, awareness campaigns, research and development efforts, and state coordination. millets hold great potential for improving nutrition and food security and promoting sustainable agricultural practices. By overcoming these challenges, India can maximize the benefits of mainstreaming millet in its food and farming systems. Hence, we propose the following comprehensive and strategic approach to mainstreaming millets in social safety net programs (SSNPs) and addressing the challenges discussed earlier:

  • Incorporate millets under PMGKAY in a phased manner: Currently, states have a limited procurement of millets, DFPD can incorporate millets in a phased manner. It can consider 112 Aspirational districts in the first phase, followed by the rest of the high-burden districts on stunting, raising the number to approximately 291 districts as done for Phase II of the rice fortification initiative in the country, and subsequently all the districts in the final phase.
  • Collaboration with the states: Before the procurement season, the advance requirements and modalities of distribution, such as district finalization, period of distribution, etc., of all the states can be worked out jointly between DFPD and states. Accordingly, based on landholding and productivity estimates, clear guidelines can be drafted for maximum procurement per farmer.
  • Consumer behavior studies and supply chain assessment: To understand the consumption patterns of different millets, consumer preferences, and seasonality patterns, detailed state-wise consumer behavior studies are required to build understanding. This will help effectively design the millet incorporation program into the PDS. In addition, the detailed supply chain readiness assessment will help gauge the state readiness for the roll-out of the initiative.
  • Awareness campaigns:  Launch awareness campaigns to educate urban and rural populations about millets’ health and climate benefits. Use a combination of below-the-line (BTL) and above-the-line (ATL) channels. The key is to ensure that all IEC campaigns are carefully planned, executed, and monitored with active feedback loops to ensure that campaigns are appropriately designed to convey the message. MSC’s work on the effective communication of government to people (G2P) benefit payments can provide important insights into this.
  • Incentivizing millet farmers: Besides the guaranteed purchase of millet produce on MSP rates, GoI and state governments can incentivize farmers to grow millets to bridge the productivity and ultimately earning gap between millets and rice/wheat. For instance, Haryana and Punjab have launched a crop diversification program by providing financial incentives of INR 7,000/acre to farmers for shifting from paddy to less water-intensive crops. Along similar lines, other states may launch programs to incentivize farmers.
  • Ecosystem development: Develop the millet ecosystem by promoting the creation of storage facilities, processing units, and an efficient distribution supply chain. Consider expanding schemes, similar to the production-linked incentive (PLI) scheme, to support these ecosystem components, including storage and supply chain development.

These recommendations offer a systematic approach to overcoming the challenges of mainstreaming millets, ensuring a coordinated effort between the central government and states, and involving consumers in decision-making. The aim is to promote millets as an essential component of India’s food security and nutritional strategy, ultimately improving the diet and well-being of the population while supporting sustainable agriculture practices.

The article was first published on Krishi Jagran website on 12th August 2024.