Orissa has a long history of supplying substantial numbers of migrant workers to various parts of India, including the economically important pockets of Mumbai, Calcutta and Gujarat. Rough estimates put the figure of migrant Oriya labourers in Gujarat at about 800,000. Of this number, about 80 per cent work in the power loom and diamond polishing businesses in and around Surat. The remaining are spread across the state, working in various factories including plastics, textiles, salt manufacturing, pharmaceuticals, brick manufacturing, and fertilisers.

Orissa has been a source for such migration for more than a half century. Some important reasons are frequent cyclones and natural calamities in the state, a substantial reduction in the availability of forest produce, and the lack of employment opportunities, all resulting in heavy indebtedness amongst its peopl. To cope, the poor, mainly from the drought-affected parts of western Orissa, temporarily migrate to other districts and states – Bhubaneswar and Cuttack in Orissa, Raipur and Bilaspur in Chhatisgarh. They come back during the monsoons to plant the kharif crop, and later to harvest it. Migration is more permanent among people from places like Khurda, Nayagarh and Ganjam. These migrants are generally better off economically, with some education. They migrate to other states mainly in search of better employment opportunities, and not so much because of a vulnerability to drought or famine, like people in western Orissa. They migrate primarily to Gujarat, Maharashtra, Punjab, Jammu & Kashmir and neighbouring Andhra Pradesh.

Among the many problems that migrant workers face, a crucial one is the limited scope to save their earnings, which are temporary in nature. When workers do not have any work, they have to return to their homes for money. In the villages, their dependents (wives or mothers) opt for conventional methods of saving when there is some money (purchasing land, jewellery and cash). They cannot address emergency situations. This creates further indebtedness and migration, and the vicious circle continues. Since there is no support system available, the bargaining power of the migrant workers is negligible and they are compelled to work at low wages. It has come out in discussions with migrant workers that most of them return permanently to their places of origin after ten or 15 years, without any savings, and their poverty persists generation after generation. Though at their place of work, workers may earn reasonable wages, they tend to squander their earnings due to the lack of avenues for saving.

The majority of migrant workers who send a part of their incomes to their families back home do it through money-orders of the Indian postal department. A very small proportion of workers send money through bank drafts, because people in villages normally do not have accounts with banks. Even if a migrant worker has a bank account and purchases a bank draft, once the draft reaches his family, it has to be encashed at a branch of the same bank in their village. In case the bank on which the draft is made does not have a branch in the village, the draft is useless. Thus, unless banks expand their operations to every corner of the country, a bank draft as an option for remittance to families has very limited scope.

The families of migrant workers face a number of problems in remitting money through the post office too. A time lag of 20 days between sending money and its receipt by their families back home is typical. Post offices charge a fee of Rs 50 for every Rs 1,000 sent. Sometimes the family in the village is not informed about the arrival of such money – they get to know of the remittance through letters from the migrant worker. The postal staff sometimes uses the money for money-lending activity and do not pay the families for a long time. One postmaster was transferred and sacked for this reason. In many cases, several visits have to be made to the post office to recover the money that rightfully belongs to the family. In a few cases, money orders are not delivered to the designated recipient.

Migrant workers sometimes send money through friends and relatives from their village, but this method is fraught with problems including robbery on the way and non-delivery of cash to families.

Adhikar, a non-government organisation working for more than a decade in parts of Orissa, has identified an opportunity to address, in a unique way, issues related to money remittance from Gandhidham in Gujarat. Adhikar implements a number of activities of micro-finance through women’s self-help groups, legal counselling to villagers, and livelihood generation and restoration. Adhikar staff visiting Gujarat in 2001 to undertake relief assistance for people affected by the devastating earthquake found about 10,000 Oriya people who had migrated and were working in various activities in and around Gandhidham – at the Kandla port, free-trade zone, IFFCO and for the Railways. Most of them were from Khurda district in Orissa where Adhikar operates. In the three blocks of Tangi, Khurda and Kanas in the district, more than 60 per cent of the population lives below the poverty line. Young members of more than 1,500 families of these blocks have migrated to Gujarat to earn their livelihood. During a brief survey, Adhikar found that among other things, a pressing need of the migrant workers is a safe and efficient way of remitting money to their family members, and an avenue to save part of their daily earnings which will be useful during lean periods.

To address the issue of remittances from Gandhidham, Adhikar came up with an initiative with support from the research and innovation fund of CARE India’s CASHE (Credit & Savings for Household Enterprises) project. The mandate of the CASHE project is to identify and promote innovative initiatives in micro-finance such as Adhikar's. The objectives are to establish an appropriate mechanism (safe, fast and cost-effective) for transferring migrant Oriya workers' funds to their places of origin, to provide micro-finance services (primarily savings) to migrant workers and their families back home, to provide the legal counselling whenever required to families of migrant workers, and to organise people in the proposed project area to benefit from government schemes.

Shramika Sahajoga was incorporated in August 2002 exclusively to look after remittance services for migrant workers. Shramika Sahajoga has its head office in Tangi in Orissa and a project office at Gandhidham. At both ends, bank accounts have been created in the name of Shramika Sahajoga in Corporation Bank. Through these accounts the money is transmitted from Gandhidham to Orissa. The most difficult part of the initiative is convincing workers at Gandhidham about the credibility of Shramika Sahajoga, especially in the initial stages. Mr Amin, the secretary of Adhikar, along with his staff conducted door-to-door meetings at Gandhidham, to build awareness about the initiative, its objectives and how it will help workers. The advantage Adhikar had was that Oriya workers in Gandhidham are from places where the organisation has had microfinance operations in place for quite some time. By cashing in on the goodwill of their Ma Bank (women’s bank), Adhikar won the confidence of Oriya workers.

Subsequently, workers have been registered as members of Shramika Sahajoga and money has been transmitted from Gandhidham to Orissa using a well-thought and assured plan. (See box "Money walks") Shramika Sahajoga mobilises family members of migrant workers to form self-help groups to provide micro-credit for small income generation activities. At the time of remitting the money to the family, with the family’s consent, Rs 100 is set aside by the organisation as savings of the family with Shramika Sahajoga. Apart from that, there is an option of voluntary savings by the members. The savings thus mobilised from the members are used as a revolving loan fund for lending to needy members. Currently Shramika Sahajoga is mobilising savings only in the form of voluntary deductions in Orissa and will start lending once the groups are strengthened in terms of organising regular group meetings and understanding the basics of savings and lending. In Gandhidham, the organisation offers recurring deposit and voluntary savings products to the members.

- Oriya migrant workers get their names registered as members with Shramika Sahajoga. At the time of registration their address, details of family members, etc. are collected along with three passport size photos.

- A passbook is issued to each member. The field coordinator enters savings and remittance details in it, with a signature against each entry. This acts as record as well as receipt for the member. The field coordinator enters the same details in the Shramika Sahajoga ledger.

- Money meant for transmittal from the members is sent twice a week through bank transfers from the Shramika Sahajoga-Gandhidham bank account to Shramika Sahajoga-Tangi bank account. Initially the money was sent through bank draft, which resulted in delays as the draft was sent by ordinary post. Later, Corporation Bank agreed to provide, free of charge, instant credit in Orissa against a cheque deposited in Gandhidham.

- Along with these transfers, Shramika Sahajoga-Gandhidham sends to Shramika Sahajoga-Orissa by email, the list of families in Orissa and the corresponding amount of money that they must receive. At Gandhidham, a transmittal fee of Rs 20 for every Rs 1,000 transmitted (plus Rs 10 per transmittal for door delivery) is collected from members.

- In Orissa, the money is delivered by Shramika Sahajoga’s field staff. A receipt signed by the recipient and sometimes accompanied with a small message, is sent back to the member at Gandhidham.

- Thus, the money gets transmitted in between three and seven days and the receipt reaches the member within 10 to 15 days.

So far, progress on the initiative has been encouraging. The membership has grown from a mere 13 at inception in September 2002 to 280 at the end of December 2003. Cumulatively, Rs 1,650,000 has been remitted, with an average remittance of Rs 3,400 per remittance per member. The growth in membership, and thereby remittance, has been very steep in the last four months, as a result of the demonstration effect. There is scope to expand the service to other pockets of Gujarat, especially Surat, where a large number of Oriya migrants from Ganjam district live. Shramika Sahajoga with seven staff members (two in Gandhidham and five in Orissa) will break even by February 2005 if it continues its current performance, coupled with lending operations in Orissa.

In the long run, a number of benefits are expected from the project:

• Smooth, safe and cost-effective transfer of money of migrant workers to their families back home.
• Establishment of a viable micro-finance institution for the families of migrant workers of Orissa.
• Family members of migrant workers will undertake income-generating activities.
• Economic development of migrant workers and their families as a result of savings promotion among them.
• The associated improved understanding of families of migrant workers of various social and economic issues.

If this model of remittance succeeds, money transfer will attract the imagination of many development agencies that aim to serve migrant workers in a meaningful way. It must be noted, however, that remittance alone will not be sufficient for an initiative to be effective in the long run. It must be supplemented by other micro-finance services like savings and credit, and most important, insurance for workers. In collaboration with mainstream insurance companies, Shramika Sahajoga offers insurance free of charge to about 35 members.

The choice of areas for remittance service is important. As in the case of Shramika Sahajoga, it is desirable to choose places where people from a pocket or a couple of pockets have migrated. It would otherwise become an unwieldy service, both at the source and destination of migration. The choice of the category of migrant workers to be covered under money transfer services is crucial because the average remittance per member per remittance is critical for the organisation providing these services to recover its costs.