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Impact of Bicycles for India

“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:

Both lack of money and limited understanding of the impact of bicycles in their lives are reasons for the under-ownership of bicycles among the poor. There may also be cultural resistance in certain areas of India that makes it difficult for women to own bicycles, while in similar conditions in other developing countries such as China and Brazil, there may be no such resistance. These issues warrant further investigation.

First, let me address the notion that bicycles do not offer significant benefits. While investments in buffalo, goats, sewing machines, poultry, and fisheries yield visible returns, the advantages of education, roads, vehicles, and even communication may not be as tangible and serve as secondary sources of income. However, these investments can still have a significant impact, though it may take some time for their effects to materialize.

For example, consider the insights presented in the IFPRI study regarding subsidies and investments in rural areas.

Despite roads, education, and agricultural R&D offering significantly higher returns, policymakers often prioritize subsidies for fertilizer and power due to their immediate, visible, and easily measurable impact.

Furthermore, the increase in income demonstrated by bicycle experiments is attributed to enhanced market access with higher crop prices, labor markets with greater labor rates, and the initiation of new economic activity resulting from time saved. These ‘possible’ outcomes may seem disadvantageous compared to seemingly ‘certain’ outcomes associated with buffalo or goat rearing among the poor.

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. In Lima, Peru, low-interest loans were offered to low-income families to purchase bicycles, and several kilometers of bike paths were built. As a result, the city increased the percentage of trips taken by bicycle from 2% in the mid-1990s to 10% by 2000.
In addition, a tax reduction in Kenya – from 80% to 20% – between 1986 and 1989 (equivalent to about a 1/3 price reduction) resulted in a staggering 1500% increase in bicycle sales. Although a direct correlation of these findings with other countries cannot be established, it is reasonable to state that the impoverished have displayed a significantly higher propensity for owning bicycles when faced with reduced financial barriers, such as subsidies, tax cuts, or microfinance.

In India, government data indicates that at least 836 million individuals survive on less than Rs.20 per day, with over 200 million of them subsisting on less than Rs.12 daily. 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, 66 million households out of 193 million (34%) lack access to basic amenities such as a radio or bicycle. Among the 60-65% of Indian households classified as poor, an estimated 80 million do not own a bicycle. Among the 60-65% of Indian households classified as poor, an estimated 80 million do not own a bicycle. Among the 60-65% of Indian households classified as poor, an estimated 80 million do not own a bicycle. Although it is unclear whether these households have intentionally refrained from purchasing bicycles due to perceived lack of utility, data from countries such as China and Brazil demonstrate that people typically purchase bicycles when financial means allow for it.

Here, the issue of cultural resistance becomes less significant. When almost 40% of households lack even a single bicycle, the problem of resistance to women bicyclists becomes secondary.
Furthermore, MFIs/SHGs prioritize providing loans for visible and quick methods of income generation. For example, it seems that MFIs may not be as inclined to offer loans for children’s education, but rather for the purchase of a buffalo or sewing machine, as it assures income generation and early repayment to a greater degree in the latter case. Given the absence of collateral, an MFI’s premise depends on the borrower’s visible, rapid, and assured income generation. In this regard, buffaloes outperform bicycles.

Thus, the under-ownership of bicycles is attributed to two reasons: the lack of awareness about their potential and the affordability barrier. Policy-makers seem to be ignorant of the potential of bicycles and continue to subsidize petrol, which is mainly used by the middle class. While vast sums are spent on building rural roads, little effort is made to increase rural transport on these roads.

References:

  1. Kuranami, Winston & Bell; Non Motorized Vehicles in Ten Asian Cities, World Bank, Washington (1995).
  2. The bicycle in Africa: Luxury or necessity, Velo City Conference, Nottingham, 1993, John Howe and Ron Dennis, IHE, Delft, 1993.

“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.

While an increase in bicycles may not directly result in a ten-fold increase in per capita GDP, it can significantly reduce poverty rates. Furthermore, this can help raise the average per capita GDP and narrow the income distribution curve’s variance.
Additionally, more accessible and cost-effective transportation provided by an increase in bicycles benefits rural India (The bicycle industry reports that approximately 90% of all basic model bicycles are sold in rural/semi-urban India). If someone who travels 6 km on foot every day is encouraged to buy a bicycle, they could save about an hour of their time daily, potentially increasing their productivity by 10%.

Bicycle ownership in India is significantly lower than in many other countries, resulting in a high number of individuals who continue to waste 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.

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Quantitative Experiments

Effect of Bicycle on Poverty Alleviation

Quantitative Field Study-1: Uganda

Organization: Institute for Transportation & Development Policy, Europe

  • Cost-benefit analysis of bike ownership.
  • We gave 300 low-income households in diverse parts of Uganda discounted bikes and a one-time instruction on how to use the time they saved to work on related activities.

Results:

  • All households either increased the amount of land used for farming or improved their farming methods.
  • About half of all households started or improved non-farming activities during the survey period, which helped diversify their household income.
  • Each household saved nearly two hours of transportation time per day, enabling.
  • Them to visit markets and medical facilities more often.
  • The household income increased by 35%.

Quantitative Field Study-2: Tanzania

Organization: International Labour Office

  • The Integrated Rural Transport Project in Makete District, Tanzania was conducted because it was understood that “Roads Are Not Enough.”
  • A survey was conducted among approximately 100 households to assess the impact of owning bicycles.

Results:

  • Bicycles have a significant impact on production by enabling farmers to cultivate larger fields and use more fertilizer.
  • Households with bicycles marketed 40% more than comparable households without non-motorized transportation.
  • Bicycles provide monetary benefits equal to 55% of a household’s income.
  • The primary barrier to purchasing a bicycle is the high cost.
  • 80-90% of households that desire a non-motorized transportation cannot afford the price.

Quantitative Field Study-3: Srilanka

Organization: World Bicycle ReliefUSA.

  • After the tsunami, 24,000 bicycles were distributed for free.
  • We surveyed 221 bicycle owners to assess the impact.

Results:

  • More than two years after the tsunami, 88% of respondents still use bicycles as a means of livelihood.
  • Bicycles are cost-effective as compared to other transportation alternatives, saving between 10 and 20 percent of the household’s annual income.
  • In the poorest households, bicycles save as much as 30 percent of the annual income, which contributes significantly to livelihood security.
  • Distribution of bicycles has successfully empowered women, with 82% of female recipients using them for generating income.
    Bicycles save 18% of a recipient’s average monthly income of $71 by replacing alternative transportation costs.
  • If time saved by using a bicycle is utilized for productive work, an additional income of $0.52/day can be produced, resulting in over a 17% increase.
  • While this survey did not calculate the cost savings of a bike recipient’s ability to reach regional markets, other surveys indicate additional significant cost savings.
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Bicycle: The Unnoticed Potential

In recent times, the Indian government’s increased attention has spurred progress in the agricultural sector. When assessing transportation in terms of its cost-effectiveness in alleviating rural poverty, it appears highly advantageous. Notably, investments in roads during the 1990s surpassed other rural economic initiatives, yielding returns 3-10 times greater.

Road investments, which improve transportation, are closely linked to the crucial role of owning bicycles in rural transportation. Bicycles support the broader impact of roads on local communities.

BicyclePotential.org delves into the concept of bicycles as prime instruments in combating rural poverty in India. By scrutinizing studies and trials, it unveils the bicycle’s often-overlooked capacity for rural development and poverty diminution, considering that:

  • India’s per capita bicycle ownership (1/7) pales in comparison with other developing countries like China and Brazil.
  • The cost of bicycles, relative to average income, is twice as high in India as in these nations.
  • Experiments in African nations (Uganda and Tanzania) and Sri Lanka with numerous households demonstrated that bicycles could augment a family’s income by up to 35%.

Increase in income due to bicycleTransportation emerges as the second most potent force in eradicating rural poverty in India over the past four decades. Elevating bicycle density to standard levels could significantly boost rural growth. The primary deterrent for low bicycle density in India is its prohibitive cost relative to family incomes, especially when contrasted with other nations. (Please click the figure below for an enhanced view).

How bicycle density varie with relative priceHalving bicycle prices through subsidies could dramatically escalate ownership in India, leading to marked productivity gains. Such subsidies, precisely aimed at the most impoverished, promise leak-proof benefits with enduring impacts. Over time, this could enhance the productivity of approximately 200 million impoverished individuals.

  • This subsidy would represent a mere 1-2% of the total Central Government subsidy expenditure.
  • Ironically, while substantial subsidies are allocated for petrol, predominantly benefiting middle-class households, the bicycle, a staple for poorer families, receives little support.
  • Despite the presence of rural roads, inadequate bicycle density remains a critical hindrance to rural transport.

The humble bicycle holds an unheralded promise for rural India.

Below are some famous economists and public policy thinkers’ opinions on the concept.

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 Societyy

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.