Raja Menon is facilitating the creation of "grassroots companies," a new organizational form for poor rural producer groups in India.
The New Idea
Raja Menon has institutionalized a comprehensive Livelihood Promotion Center to provide technical/managerial support to start­up economic programs at the local level and to orient citizens' organizations, grassroots groups and local self­government bodies to pilot programs that are workable on a national level. He has organized more than 2,000 families into savings groups and simultaneously developed fifteen different types of economic activities for poor families. In addition to conducting small pilot programs to test viability, Raja has conducted large ones for at least five activities for 100 to 200 families. He has also extended successful activities by involving other institutions through training and networking.
Small producers in developing countries face enormous challenges in finding, creating and maintaining adequate levels of income. Mainstream institutions tend to address the issue by targeting the need for capital, but capital has often been used for patronage, and the poor rarely qualify for loans, despite the successful payback record of such micro-credit programs as the Grameen Bank. Most credit institutions remain very reluctant to finance the poor, and many poor families become ineligible for loans because they have defaulted on conventional bank loans.Even when there is access, there is an unequal donor beneficiary relationship. Even when producers band together into a cooperative, these organizations often fail, and there are few organizational forms that allow the poor to obtain the benefits available to large corporations. The corporate sector could offer the kind of experience that could make a real difference, but it has rarely been tapped for the economic development of the poor, due to a lack of effective links to poorer communities.
Poor rural producers have usually been limited to credit groups and cooperatives as organizational models of financial institutions. Yet, these models have not proved to be ideal springboards for micro­entrepreneurs. Credit groups have not addressed the need to proactively create new and improved livelihood sources. Cooperatives have suffered from political in-fighting and diffused ownership that has led to corruption and poor standing in the community. Neither model provides the economic advantages and market power of the large corporation.Armed with this insight, Raja forms grassroots companies that combine the strengths of these popular models and rectify their individual weaknesses. Broadly speaking, the strategy of the "grassroots company" as a new mechanism is to create one vehicle that can open doors across many sectors and therefore be positioned to create new business opportunities.Raja first organizes villagers into familiar savings/credit groups that grow into responsible sources and primary launching pads for new economic ventures. The groups are trained in self­management and linked with banks that act as both financiers and repositories for group savings. A promising economic activity is identified that is small in scale but has promising long-term sales potential and also allows for involvement of a large number of people. Pilot programs, extension groups and co­ventures are then implemented. Throughout this formative process, the banks, corporate sector and government are accessed for managerial skills, professional work systems and utilization of state subsidies.At the final stage, a corporate structure is formed, with the primary producers as shareholders. The activity is extended through other savings credit groups to cover as many families as possible. The profits are passed on to the producers by their share holdings.By linking several activities in a sectoral organizational mold, Raja combines the economic activities being pursued by separate individuals or groups to form several larger institutions. Over a span of ten years, the institutions set up by Raja should benefit approximately 10,000 families directly and support ten times that number as a resource center. Several hundred families have been organized into approximately 30 credit groups in villages around Calcutta. Many other economic packages are in various stages of development, several of which have moved beyond the experimental stage. For instance, the breeding of pigs, sheep, goats and ducks has been explored as potential future ventures.
Raja was born in Calcutta. His introduction to social responsibility occurred during his Jesuit schooling at St. Lawrence's School in Calcutta. His work experience served to sharpen his focus. After specializing in agricultural engineering at the Indian Institute of Technology in Kharaqpur, Raja joined the National Dairy Development Board as a management trainee on the staff of "Operation Flood II" in West Bengal. That training enabled him to tour Gujarat extensively and spend time at the main Amul plant and the branch at Erode, Tamil Nadu, learning both shop floor management and plant engineering.He spent six months at Darjeeling studying why the cooperative model was not yielding positive results. Subsequently, he spearheaded a team that organized a dairy producers' union in the Burdwan milk shed. Although he and his team organized six village cooperatives and enabled a milk union to become registered, they were disappointed to learn that vested political interests would not allow powerful cooperatives to unionize.In April 1983, Raja joined Action Aid as a field officer and spent the next two and a half years finding, monitoring, evaluating and creating support services for voluntary agencies in Kerala, Karnataka, Goa, tribal Bihar and West Bengal. In the process, he gained valuable exposure to grassroots work in rural India.Raja received a master's degree in business administration from the Indian Institute of Management in Ahmedabad in 1987 and worked on income-generation projects with the Child­In­Need Institute. While at the Institute, Raja experimented with various ideas and approaches such as the development of postage stamp packages for children, oyster and mushroom cultivation and the manufacture of traditional local sweets. He discovered that all these group activities would only work on a very small scale and remained dependent upon active external management and marketing support. Realizing that such support could benefit far greater numbers of people if the activities were chosen more wisely, Raja focused on leveraged projects such as broiler chicken farming, where the products could be sold in very large quantities to hotel chains and other large-scale buyers.In 1987, Raja married his classmate Encode Ghatak, an experienced journalist, teacher and trainer of rural development workers, who is an active supporter of Raja's work. They have two young sons, Anand and Rahul.