“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:
- Kuranami, Winston & Bell; Non Motorized Vehicles in Ten Asian Cities, World Bank, Washington (1995).
- 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.