The reason that I have titled my talk .Towards Rural Prosperity. is because I feel that creating equal opportunities for enhancing rural prosperity is the most important task that India has to accomplish in the next eight to ten years. We should be committed to achieving this objective. Everyone here is aware that India is fast becoming an economic force to reckon with. But rural India, which houses a population of 700 million still has a per capita GDP of barely ten thousand rupees per year.
About 5 years back, we, at the TeNet group decided amongst ourselves that we would like to see rural India get a fair share in the economic boom. We also decided that we would like to see Rural India.s per capita income grow exponentially. These are some of the major goals of our group and this is the kind of development that we are trying to achieve.
In 1994, when India had only 8 million telephones and was adding only 1 million telephones per year, our vision was to see India get 100 million telephones. Last mile technology at that time, which used copper wires, cost Rs 40,000 per line. These high costs hindered the rapid expansion of the telecomm network. The TeNet group came up with a method to use wireless technology as a cost effective solution to the last mile problem for telephone lines. The success of this wireless technology translated TeNet.s dream of 100 million telephones into reality. .
Keeping this in mind I.m not here just to talk to you about what is possible. I plan to outline for you the challenges that are present, what we have already done to meet these challenges and what areas we need to focus on to achieve our goal. I believe that this is eminently doable and that we will make it happen. I believe we can use the ICT as a means for enabling this change.
In the early nineties, to get a telephone line into rural areas was a very big challenge. Today, by and large, that challenge has been overcome. It will be a matter of one, two or maybe three years, in which time we will have almost every village in India connected with a reasonable broadband pipe.
Presently, there is an optical fiber going to almost every Taluka in India. This is by and large true for close to 90% of the areas in the country. If we have a wireless system, which covers a 15 to 20 kilometer radius, we can cover every village around the Taluka with broadband. Similar kinds of last mile wireless technology are increasingly coming into existence. One such successful technology, developed in India, is Broadband CorDECT wireless in local loop. It provides 256 kbps internet connection to each village within a 15 kilometer range. So far, Midas, the company incubated by IIT(M) for this WLL technology, has earned Rs.1000 crores in revenues. IIT has received royalties to the order of Rs.15 crores from this venture. These royalties are being reinvested into supporting and incubating other technology development programs.
A key feature of BB CorDECT technology is that the exchange has been designed to work at 55 degrees centigrade while its total power consumption is less than a kilowatt. This is in contrast with simlar products which require 25 kilowatts of power. This difference is critical in rural India where there are constraints in power supply.
There are several other emerging wireless technologies that are going to be made available in years to come, some of which are promising to provide 1-2 Mbps of Internet connectivity to rural areas. For our part, we are striving to provide connectivity at a very affordable cost. Our aim is to be able to provide each village with Internet connectivity at a cost of about Rs.10, 000.
But technology is not enough. What is the right business model for sustainable Internet access in rural areas? The business model that I often refer to is the one that we adopted in mid eighties, when telephones were extremely difficult to access even for middle class homes. In order to meet the demand, PCOs were set up in every street, with entrepreneurs running these shops and keeping them open for 16 hours a day, 365 days a year. Soon, without any government investment, everybody had access to telephones. We propose a similar strategy for rural India, whereby an Internet kiosk is set up by an entrepreneur in every village (not in every block or district headquarter, but in every village). By providing the ICT enabled services in the village, the entrepreneur would become the key source for driving rural business. There are several organizations like n-Logue and Drishtee, which are running such kiosks.
Today, for about Rs.55,000 a kiosk operator can be provided with a multimedia personal computer, a web camera, a printer, power backup, all kinds of software, training material and unlimited Internet connectivity for the first six months. This would help to kick-start the demand for Internet services in rural areas. It is estimated that the average kiosk needs to earn about Rs.4500 per month to break even. Kiosks today provide e-mail, photography, games, astrology, and matrimonial services in addition to browsing services. These services alone help them earn anywhere between one to two thousand rupees per month.
ICT, however, is not just about emails and browsing. It can transform a village and become a center for education, health care and livelihood opportunities. Education and health initiatives are important for capacity building. For income generation; encouraging agriculture, entrepreneurship and outsourcing is the key. In addition, the ICT kiosk can also be used to provide a variety of enabling services, including finance, marketing, trading, e-government services, water management, energy, communication and transport services.
I am going to present to you the experience of providing these services through ICT kiosks over the last five years. I will rate these initiatives on a scale of 0 to 5 so as to understand where we have domain expertise and where we are still learning
On this scale, I would rate the education domain as the one with the highest level of expertise, rating it as 3 minus on 5. There have been many successful experiments, which can be scaled up. As of now, we are involved in doing three kinds of things; one is curriculum based education . where the focus is on getting children in schools to pass the State Board SSLC examinations. In 2005, we implemented this program in eighteen villages in Tamil Nadu. We were pleasantly surprised when we found that in fourteen of these villages, we had a one hundred per cent pass rate in the examinations. These villages would have never seen more than 40 percent pass results earlier. Clearly, internet based coaching created wonders and consequently improved the confidence of the villagers in their own capabilities. We are now trying to extend this program to about two hundred villages. Our second set of initiatives in Education are the skill development programs such as computer training, training on video editing, animation design and even web based English language training courses. We have also provided online tutorials on how to repair a pump, carpentry and wiring for electricity and so on. We are trying to implement vocational training as an online course to help in skill development. Conceptual education, which tries to enhance the people.s overall knowledge and skills in subjects such as Business, Math and Science, is our third Education based initiative. Some of the kiosks earn five thousand rupees per month to break even on education services alone.
One of the noticeable changes that has happened in urban India in the last twenty five to thirty years is the improvement in self confidence as a result of providing IT and IT enabled services for the world. Previously, we Indians did not think of ourselves as equal. Today almost every youngster, at least in urban areas, thinks herself to be equal to her counterparts in the developed world. This confidence is a major driving force of bullishness of the Indian economy. So, this begs the question, can we take this confidence to the rural areas as well? Can commercially viable rural BPOs be set up so that work is outsourced from urban to rural areas? Experiments are going on in Tamil Nadu, where we are trying to set up BPOs in villages. Not in towns; but in villages with a population of around fifteen hundred people. The size of such a BPO is a 5 seater or a 7 seater. A 50 seater or 100 seater would convert the village into a town. Currently, audio recording, web translation, data entry and even things like CAD are being outsourced to the Rural BPOs. For those who cannot believe that something like this is feasible in rural areas, I will highlight an example of the work that has been done in four villages in Tamil Nadu. It involved out sourcing a particular education lesson. The animation work was done in one village, another village did the translation in Tamil, a third village did the voice recording, and finally a fourth village integrated and delivered the package. These kinds of things can be done in the rural areas. Believe it or not, in a very short time, the youngsters are willing to train themselves and deliver quality output to their clients. I believe that the rural BPO.s will transform Rural India. Today we have close to fifteen such villages where we have BPO.s running. There is going to a significant change in the village income when all kinds of sophisticated BPO services are delivered from the rural areas. I would rate this initiative 2 on a scale of 5.
The next thing that has been tried and I have rated the results very low . 1 minus - is the concept of making a village into a rural production hub. The idea of out-sourcing of production is still at a very early stage. We are trying to explore whether villages can become the production hubs for urban areas. Outsourcing of production to rural areas with markets in urban areas while using the internet primarily for training, co-ordination and quality monitoring, might be a feasible business model to adopt. Today, products like paper bags are made in the villages as per specification of the urban client. Other activities such as soap making and fiber yarn production are being carried out in these hubs. Women working part time for around four to five hours a day, do most of the production work.
Health is the other major sector. I will rank this as 1 plus. We are in the process of trying to provide health services to villages using the Internet. It all started when a woman was complaining about discomfort in her eyes, and the kiosk owner sent the picture of her eye as an attachment in a mail. We sent the picture to an eye hospital. The doctors examined the picture and identified that it was an advanced form of cataract and needed treatment immediately. Soon, the concept became popular and consultation was carried out through video conferencing between doctors in the cities and patients in villages. These services were then extended to veterinary doctors in cities who began treating small animals in villages, online. After the initial euphoria died down, we went to the doctors and asked wat more they would want. They said it was a great thing that they were able to talk to the patient through video conferencing, but it would be even better if they could get information about the pulse or temperature of the patient through the internet. So, we went ahead and developed equipment that would enable this. We created a company that developed a medical diagnostic kit with a remote stethoscope. The patient in the village places the stethoscope on his chest and the doctors in the urban areas, while interacting with her through video conferencing, can hear the patient.s heartbeat, measure the temperature remotely, measure the blood pressure remotely, measure the ECG and take a pulse count. All this can be done by equipment costing just twelve thousand rupees.
Agriculture has for long been the main source of livelihood in Rural India. Recently it has attracted negative attention because of the large numbers of suicides by farmers. The high risks and low productivity associated with agriculture have become deterrents to a successful future for small players in this field. There was even an editorial in a newspaper, which claimed that Agriculture was no longer an economically viable enterprise.
Now what makes agriculture risky? What are the uncontrolled variables and what the controlled ones? We believe that there are three uncontrolled variables - crop disease, rainfall risk and market risk. Variables such as how much input to provide, how much tilling to be carried out are somewhat controllable.
So, can Internet help in managing these risks? The first experiments we carried out were with respect to controlling of crop diseases. We linked the farmers in the village by video conferencing to agriculture experts and found that information was flowing smoothly. When something went wrong, the farmers came quickly to the video conferencing session and showed the experts the leaves and crops which were infected. 95% of the time, the experts were able to provide them with timely solutions. Almost all the time, the solutions helped to reduce the pest infestation or remove it completely. Sometimes the farmers would inform experts that the suggested chemicals were not available even in near- by markets. The expert would then provide the farmers with alternative solutions. Though the success of the initiative might be threatened by new crop diseases for which solutions may not be available, at least this way, a significant number of diseases can be identified and treated well in time.
The risk associated with the rainfall was the second major concern. We started collecting data on rainfall patterns across the country and found that typically, rainfall fails badly once in eight years. Other years one can at least recover the costs of the inputs. This presents us an ideal case for risk insurance. The insurance is purely based on rainfall. The payouts can be made when the rainfall falls below a minimum amount or exceeds an amount. The problem was that the rainfall could vary from village to village and we needed accurate data at each village to determine payouts. We took the initiative in developing a weather monitoring kit that could be mounted on the Internet kiosk. The kit measures the rain fall, temperature, pressure and wind speed and direction continuously, and passes the data to a centralized data base. Thus, information on the rainfall in the villages can be tracked for pay outs. The kit can also be used for Micro - weather predictions. The cost of the weather monitoring equipment is only about fifteen thousand rupees.
The third risk is associated with markets. Even when everything else goes right, i.e. the crop output is great, market prices could suddenly collapse. How does one prevent farmers from suffering due to the volatility of prices of agricultural commodities? Fortunately, India today has commodity exchanges like MCX and NCDEX, which have introduced forward prices and trading in options for agricultural commodities to hedge this risk. This commodity exchange system needs to be taken down to the small farmer level using ICT.
What else can be done to enhance agriculture productivity? The productivity growth has decelerated to less than 1% over the last decade and our agriculture productivity is very low as compared with international levels. Until now, most scientific inputs in agriculture have been region specific and have not taken into account the micro - requirement of a specific plot or land. The land is a living system and its productivity significantly depends on specificities of a plot such as the specific soil condition and the crop grown on the plot in the last season. A Land heritage and Information system that records water usage, soil conditions and other parameters for each plot of land at the village level, could revolutionize the advisory systems. The crop to be grown in the coming season and the inputs to be put in could now be determined as per the specific condition of the plot. Thus, through online interactive video sessions with experts, farmers could get plot specific advice on improving the productivity of their land. I would rate our initiatives in agriculture as a 1 minus.
We have also started experiments on the use of mobile phones for providing post harvest services such as pricing information, booking of transport for crops and scheduling delivery information. The latter is particularly useful for crops like sugar cane. Sugar cane gives the best output when crushed within five hours of threshing. If the delivery truck is stuck in a queue at the factory, significant value loss may result. The scheduling delivery information system could help reduce this wastage.
Availability of finance at reasonable interest rates is another very important factor that will drive Rural Prosperity. An urgent need exists to bridge the gap between credit needs and availability in rural areas. Now, Micro-finance has been in the news over the last few years and micro-finance has indeed done a lot in financing rural areas. But the interest rate of 24% to 30% prevalent for micro-finance is a killer. Even an urban industry cannot survive with such interest rates. So how can one believe that rural industrialization can happen at such interest rates? An interest rate of 8% or 10% is required for rural ventures to be economically feasible. So, what can we do? We need to take the Banks to the villages. Can an Internet kiosk be used as a mini Bank? Sure, but the rural economy thrives on cash and cash delivery has to be an integral part of any banking services that are provided. One could conceive of an ATM being installed in each village. At the current initial capital investment of Rs. 5 to 8 lakhs per ATM machine, this would be impossible. IIT(M) therefore took it as a challenge to develop a low cost Rural ATM. Along with Vortex, it developed the ATM which is now available at a price point between 55,000 to 75,000 rupees. Fingerprinting has traditionally been used by rural people for identification and it has worked well for them. The rural ATM machine therefore uses fingerprint authentication as the primary mode of identification; cards etc. are secondary.
Further, financing in Rural India has been impacted by a high rate of default in the past. It is important to work towards a credit rating for individuals or eligibility criteria which can be used to provide loans. We are gathering complete details of every family through the Kiosk operator. Information on the names of family members and their photographs, particulars about their education and health, details of property and land owned by the families, the number of animals (cows and hens) are being captured Also, one can find the number of times they visit a doctor, number of times they make a call and the number of times they visit a town. Banks can utilize the data to carry out credit rating for individuals who need loans. This would facilitate improved credit availability in villages. Since our initiatives in this field are at an early stage I would rate it as 1.
The other Internet enabled service is E-governance: I rank it at zero plus today. This is surprising since the concept of the village Internet Kiosk started with the promise of e-governance. But almost all the programs have faded away. The success of the program depends on the District Collector. A good District Collector can make things happen. When that person gets transferred, every thing else gets transferred. It is sad that still we have not been able to crack it. There have been good programs that were implemented. Bhoomi is one of them, but even Bhoomi is struggling to reach villages.
The other services that have the potential of being driven using ICT include - promotion of Rural business, transportation and energy. They are mere concepts and are in the early stages of development. We are in the process of determining if ICT enabled services can facilitate the development of food processing and other small businesses in rural areas? Can this technology play a significant role in the supply chain management? Can it help tighten market linkages and disseminate information on pricing mechanisms? Can the kiosks be used for finding jobs? These are kind of things to which we need to find answers in the next year or year and a half.
Decentralized energy is another important area. Very often we hear that we are providing power to the farmers for free. The problem is complicated. Peak power requirements of urban India exceed our power generation capacity. So during the peak hour, everything is consumed in urban areas and no power flows on the grid to the rural areas. The power provided to the rural areas is only the leftover power, when the generation exceeds the urban requirement. No industry in rural India can therefore depend on the grid supply. In fact, in one of the villages that I went to, there was an old woman who said .if we had assured electricity, I could get an idly grinding machine, set it up and use it to earn a decent income. But there is no electricity, especially when I need it that is in the afternoon.. My understanding is that a 30 to 100 kilo watt power supply would be adequate for a village with a 3000 population. Therefore, decentralized power generation is the only answer. Can Solar, Bio Mass, Bio Diesel or Biogas power be used for this objective? When can we make it viable? Can these be set up as a small business in villages, especially as a back-up supply? These are tough questions and we need to find the right answers.
Encouraging trading through Internet kiosks can make a difference. But it is not enough to do buying and selling on Internet without a mechanism for goods delivery and money transfer. Courier services are available up to the Taluka level. A business model needs to be developed which can facilitate goods transportation beyond the Taluka using the bus service, which goes once or twice a day to the villages. Can an Internet kiosk help in this regard? These are the kind of things that need to be resolved if we are to create wealth in rural areas. Also, community oriented programs such as water and soil management; road construction and programs like National Rural Employment Guarantee Scheme need to be strengthened using ICT.. I don.t think that we have all the answers but I believe that that answers can be found in the next few years, if we put our heads together and work hard.
Lastly, There is large market for ICT Kiosks in India. Today, the government is talking about setting up 100,000 such kiosks around the country. The success of the program, however, will depend entirely on the kind of applications and services we offer through the kiosks. Today 50 percent of the ICT kiosks set up in the country do not work. The Kiosks may be subsidized by different organisations but we cannot expect that the subsidy can be scaled up. The key learning is that there should be enough viable and profitable applications to support the kiosk business model. We need to really bring all these applications to the level 4 and only then can the Kiosks facilitate rural prosperity. Business models need to be evolved. Clusters need to be developed. New opportunities would create new markets. This would begin the transformation of rural India.