Will demonetization reach C.K. Prahalad’s bottom of the pyramid?

Thursday, January 26, 2017

What after demonetization? Can the Modi Government use it to empower the poor and turn the economic initiative into a definitive political initiative? The economists are divided on the issue. The Late Professor C.K. Prahalad the author of the much acclaimed book Fortune at the Bottom of the Pyramid suggested some pathbreaking methods over  a decade back that the economists backing demonetization could take heed off.

Unfortunately the powers to be  under the Nehru Gandhi socialist rule during those days had no appetite for his style of market driven poverty economics. As a result Professor Prahalad returned to the US after a two year stint at IIM Ahmedabad in the eighties.

‘Next Generation Business Strategies for the Base of the Pyramid’ by London and Hart (FT Press) has an introductory chapter from the late C..K. Prahalad penned over a decade ago.  Talking of the Bottom of The Pyramid BoP markets Prahalad says “the total market for credit in rural India is Rs 15,000 billion ( now mostly done by moneylenders, at 100% maybe).

The banks have just scratched the surface with Rs 40 billion. Even if the organized sector only got to Rs 10,000 billion and reduced the interest rate from 100 percent to 20 percent, you can calculate the income generated for the poor.”

Source: Economic Times (link opens in a new window)

Base of the Pyramid