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The Rajagiri Blog
Hybrid Value Chain (HVC)
Author:
Abhilash G Nambudiri
Abhilash G Nambudiri
  • Sustainable Development Goals(SDG)
  • 24-11-2021
Hybrid Value Chain (HVC)
Editor: Anandu B
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Leveraging the Power of Hybrid Value Chain for a Better Society

What is a Hybrid Value Chain (HVC)?

None of the social problems that exist today are addressable or solvable with any one kind of entity alone; be it public, private, government, for-profit or not-for-profit entities. This needs a collective effort from the part of all the kinds of institutions just mentioned here. HVC is a concept to create framework for working together of multiple kinds of entities for solving common social issues in a sustainable way

Housing for Bottom of the Pyramid

In a country like India with widening inequality over past 30 years of globalization since 1991, it is important to start a discussion on possible ways to bridge this gap of inequality. According to World Bank’s poverty and shared poverty report 2016 Gini coefficient, which is regarded as the gold standard for measuring wealth or income inequality saw steady increase though out 19th and 20th century. India’s Gini coefficient stands at 0.48 as per 2018 calculations, which indicated that about 48% of Indian population accounted for the entire wealth created in the Indian economy in 2018. Just to put things into perspective, it also means that 52% of Indian citizens were not actively participating in the formal economic activities as they have no or limited access to the wealth creation process of the nation.

Let’s take the case of housing industry in India. It is a classic case of lack of access for the bottom of economic pyramid section of the society. Most of the housing stock in India is targeted at the middle and upper middle-income groups. This is evident from the ticket size of those houses ranging from 25 Lakhs to over a Crore in their 1 and tier 2 cities. This price points are beyond the reach for the bottom of economic pyramid people. Also, it is fact to be notices that, their needs are also entirely different. A study conducted by Housing For All initiative of Ashoka reveled that housing becomes affordable for bottom of pyramid target customers when the ticket size becomes less than 10 lakhs. Their aspirations are also restricted to owning small multipurpose space which can change the utility of infrastructure at different times of a day. They were conformable in doubling up the living area as sleeping space at night and use kitchen as space for income generating activities etc. These latent needs and aspirations become very important in developing a viable product for this target segment.

 

The process of identifying, preparing and converting these BOP customers into bankable consumers need the efforts of multiple entities who can work cohesively with each other. An NGO who works among such target segment and intervene in their problems can do the role of a demand aggregator and disseminator of information. A construction company can use its expertise in construction to create aspirational living spaces for the target people. A banking institutions who can view them as bankable assets can create viable financial products to serve their needs. This collaborative environment is what we call a Hybrid Value Chain (HVC).

Author is a former consultant to Ashoka’s Housing for All (HFA) initiative

More resources and information available at

https://www.ihf.in

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