India in a Week!

First off, I’d like to share a little bit about what takes me to India. I have been hired as a research assistant through Ideas42, a research institution out of Harvard. Ideas42 works with a research organization in India called IFMR, which I interned with during the summer of 2007. I interned with IFMR’s Center for Microfinance, but I will now be working for the Small Enterprise Finance Center (SEFC). The SEFC conducts research related to small and medium enterprise (SME) development. A lot of times this research takes on the form of an impact study of a particular financial product or service. SEFC helps financial institutions design the financial product to be tested and then does a formal impact analysis with a randomized treatment and control population.

Other than this, I really do not know what exactly I will be working on when I get to India. I don't even know where I will be living! I will start out in Chennai, which used to be called Madras, which lies in the South East in a state called Tamil Nadu.

My background is in microfinance, but I have a keen interested in SME development as well (this is originally what I thought I would specialize in when I started my master’s degree in 2006). What is interesting to me is the perceived gap in financing between microenterprises and large companies that is currently not being adequately addressed by the financial sector. Microenterprises are finding sources of capital thanks to the work of microfinance institutions (MFIs). Large companies have access to the traditional capital markets (though things aren’t looking so good these days). SMEs have a little more trouble as they need more money then MFIs can provide, but many times do not have the assets required by traditional lenders in order to guarantee a loan . With 24 million people employed in the SME sector in 2002 (sorry my stats are out of date) and $17 billion in output that year, India has an interest in seeing the success of this sector. But how can they facilitate growth while managing risk and not creating stifling bureaucracy? This is what my next year will be devoted to learning.