Tuesday, September 23, 2008

Minutes of the first day of the workshop named ‘Scaling Up ICT Use for Poverty Alleviation in India’, 26-27 February, 2004




Organised by Indian Institute of Management, Ahmedabad
Sponsored by Nasscom, World Bank and Ministry of IT, GoI

Bakul Dholakia, Director IIM-A
The inaugural session started with an introduction of IIM-A by the current IIM Director Mr. Bakul Dholakia. He informed that IIM-A was established through the joint efforts of Government of India, State Government of Gujarat and Indian industries. IIM-A was the brain child of Dr. Vikram Sarabhai. He said that IIM-A was conceived not to be purely a business school, but a school of management. IIM-A has worked in other areas too apart from business, where principles of management are required and can be applied. IIM-A opened the Centre for Management of Agriculture after its inception. The Public Systems Group was started during the 1970s which looked into the areas of population control, transportation, health care etc. Public Systems Group has also imparted training to the IAS officers and public servants. Research carried out by Public Systems Group is widely recognized today.

The post-graduate programme in management and the fellow programmes are well recognized by the industrial community. He informed that IIM-A ranks first among the management schools in entire Asia according to all the 7 surveys (2 international surveys and 5 domestic surveys) carried out in the year 2003. IIM-A is interested in looking at the future from a global perspective.

Mr. Dholakia informed the audience that IIM-A is interested to compete with management schools of North America. According to a survey of top business schools by The Economist, IIM-A ranks 45th.

IIM-A is not only interested in building institutions but also linking institutions. IIM-A is interested in research and development too. IIM-A has been working on ICT for development for the last 2 decades. IIM-A has done a project on ICTs in the tribal area of Dharampur. IIM-A has also done action research in Surendra Nagar in collaboration with CMC during the mid-1980s. It has also done a project related to ICTs and dairy production in Panchmar district.

Finally during the 1990s, the Centre for Computers was opened in IIM.

Kiran Karnaik, President NASSCOM
Kiran Karnaik opened up his speech by bringing to everybody’s knowledge the enormous growth IT sector has seen over the past 1 decade. The rapid growth in IT exports has made one to think whether India is really shining. He said that IT sector has provided employment to urban youths coming from middle-class background. But he was critical about ICT’s role in poverty alleviation. He said that despite the success of some ICT projects, there has been little scaling up. He questioned why the Bhoomi project was not extended to the entire country. He informed about the issues related to scaling up of ICT projects. He said that extension in rural areas is difficult because of the existing social structure. There are groups with vested interests who will oppose the spread of ICTs. Although corporate sector has taken initiatives but more efforts are needed. He informed about the NASSCOM Foundation which was established almost a month back to create fund for the development and diffusion of ICTs in rural and backward areas.

He added that government has to play a big role in the expansion and scaling up of ICT projects. He informed that Department of Electronics (now Dept. of IT) was established way back in 1970s by the Government of India to promote the development of new technology. He said that government can’t be wished away. Central, state and local governments have to be involved for the expansion of ICT in rural areas. He emphasized that corporate sector and NGOs have to work together with the government machinery for getting desired results. He finished by saying that action oriented projects are needed to spread ICT and to get desired results (poverty alleviation and growth).

Subhash Bhatnagar, Co-ordinator of the Workshop Scaling Up ICT Use for Poverty Alleviation in India
Prof. Subhash Bhatnagar said that the new technology has enormous potential. He was hopeful about the scaling up of ICT because of the positive experiences gathered by the pilot projects during the past few years. Although positive results came up from small projects but there is need for scaling up. He emphasized the need for partnership among government, NGOs and the corporate sector. He said that poverty should not be seen in a narrow sense but in a broader sense. He further added that it is in the interest of corporate sector to remove poverty.

He said that government has now realized the advantages of working with NGOs and corporate sector for promoting the expansion of new technology. He later explained about the structure of the present workshop.

Mr. Robert Schware, World Bank
Robert Schware informed about World Bank and NASSCOM which worked together for a strategy to boost IT exports from $60,000 million in 1990 to over a billion $ in the year 2000. However, due to the competitive spirit of the Indian IT industry, the target of billion $ exports could be achieved in the year 1995 itself. He emphasized that the current workshop should search for a mechanism for moving the pilot projects to their second stage.

Post-Tea First Session
‘Where Does India Stand in terms of the Digital Divide and the Way Forward’

The post tea session was chaired by Mr. R Chandrashekhar, Joint Secretary, Ministry of Communication and IT, Govt. of India. He said that India is quite often compared with a snake, with its head in the 21st century and tail in the 18th century. But India has done well in the area of ICT development and experimentation. The experimentations carried out have led to huge stock of knowledge. However, India is facing the grim problem of digital divide.

‘Digital Divide: Where Does India Stand? And the Way Forward’--Prof. Subhash Bhatnagar, IIM-A
Prof. Bhatnagar’s paper had two parts: one addressing the relevance of scaling up of a large number of pilot projects and another addressing the impact of ICT on rural areas. He said that ICT can play a vital role regarding: (i) procurement of produce; (ii) spread of knowledge and information useful for economic activities; (iii) imparting training and education for enhancing employment and economic opportunities and; (iv) supply of inputs. He said that ICT can help in successful delivery of health and education services.

He informed the audience about the telecenter projects happening around in India. A chart displaying the different telecenter projects is provided above.

While speaking on the lessons learnt from the pilot projects, he said that barring a few cases, in case of most of the projects, success depend on efforts made by individual and experimentation done by NGOs. There are certain disadvantages associated with these pilot projects. First of all, these projects concentrate on one or two things. Most of the pilot projects have narrow objectives and are not multi-functional. They attract few users as services are not valued. There is a problem of narrow customer base as people are illiterate and seldom understand the value for these services. In certain cases, people may not be wiling to pay for the services if there isn’t true value addition. So in such cases, pilots are unviable to begin with or do not sustain after the initial success. He said that there is lack of initiative or leadership in gearing up for the success of projects. Success of a project does not depend necessary on individual effort but on organizational effort. He added that the people involved in a project have to discover what can create value. He said that some early successes, say gainful employment of rural youths in ICT sector, are essential for the projects to continue. For measuring the success of a project one should not only take into consideration the viewpoint of media and those who implemented it, but also those for whom the pilot project has been implemented. Involving big organisations in these projects is essential not only for getting fund but also for gaining the managerial experiences of such organisations.

He said that successful models for scaling up need involvement of big organisations, economic viability of projects, and inclusion of rural entrepreneurs, intermediary organisations and NGOs. He said that large organisations (such as Hindustan Lever dealing in FMCGs) operating in rural areas derive values from efficient business transactions. If the clients are benefited, then they will get attracted to the services provided by such organisations. In such cases, the project will become economically viable. Citing the example of e-chaupal project which is operating in Madhya Pradesh, Karnataka, Andhra Pradesh and Uttar Pradesh, Mr. Bhatnagar said that similar models can be started for trading in milk, handicraft, leather and handlooms. He said that projects like Bhoomi (operating in Karnataka) and Akshaya (operating in Kerala) are economically viable as they charge fees for valued services and consumers too are ready to pay for that. He informed that Drishtee follow a different business model by partnering with providers of valued services and rural entrepreneurs who create access points. He mentioned that the pilot projects carried out by NGOs and individuals need to be scaled up.

While speaking on the economic viability of projects, he said that it is relatively easy to charge fee when individual derive value. But when the society/ community derive value, fee cannot be charged since it is difficult to monetize such values. He cited the examples of various projects some of which are economically viable and some economically non-viable. But hardly any example was available where projects are run through participation or projects which have objectives of empowerment and advocacy. He emphasized that simple publication and content development does not mean empowerment. What we need are grassroots level organisations that can help in capacity building. Later economic value will drive the movement.

According to Prof. Bhatnagar, four major steps required for bridging the growing digital gap are:
(i) Technology that makes rural access inexpensive and robust.
(ii) Applications that draw a large cliental who are ready for paying, thus ensuring the economic viability of the kiosks.
(iii) Content that empowers rural citizens, thus enabling the formation of communities.
(iv) NGOs and grassroot organisations that catalyze and manage the community building process.

While speaking about the major ingredients of success, he said that the presence of four elements are required: access (presence of access points providing cheap services), content (which is lucid and valuable), intermediaries (like Drishtee) and killer application (which is useful and produces value). He said that building up of partnership among corporate sector, NGOs, civil society and various levels of governments, is one of the major requisites for success. He said that telecom regulatory policies and privatization policies of the power sector are vital ingredients behind the spread of ICT. The onus of creating the right kind of value for a service falls on the implementing organisation. The onus of creating awareness and building capacity falls on the NGOs and other civil society organisations. A strong political will of the government and a positive business attitude by the corporate sector are needed for building up an efficient institution. Involvement of big and major organisations is needed for managerial skills and to channelize funds.

While analyzing the strategies to be followed for bridging digital divide, he provided a four quadrant chart. He said that there are 4 different routes to spreading ICT depending on the size of village and economic potential/ viability of the project. In the case of projects taking place in big villages and which have high economic potential/ viability, private sector should enter first, to be followed by the government. In the case of projects taking place in big villages and which have low economic potential/ viability, government should provide the leadership and the private players can create access points. In the case of projects taking place in small villages but having high economic potential/ viability, private players and NGOs can enter and work hand-in-hand. In the case of projects taking place in small villages but having low economic potential/ viability, individual entrepreneurs should be encouraged and the content can then be provided by few private players.

Since the workshop was meant to raise fund for the NASSCOM Foundation for the spread of ICT in rural areas, a glimpse of the social applications fund was provided in a chart form, as shown above.

Some of the comments which were made after Prof. Bhatnagar finished his presentation are:
(i) Involvement of corporate sector in the projects should be given more priority compared to the involvement of government and the NGOs.
(ii) Use of ICT should target raising the productivity levels.
(iii) Venture capital should be given a chance in the pilot projects.
(iv) There should be movement from public private partnership to multi-sector partnership. More stress should be given on institutional partnership and less on individual relationship.
(v) Mr. Kiran Karnaik while replying to a comment said that NASSCOM is very much a part of the corporate sector and in no way anybody is undermining the role of the corporate sector. He said that working with other agencies is essential.
(vi) Chetan Sharma (CEO of Datamation) said that kiosk owners earn less. He said that issuing of land certificates is a one time revenue earning affair for the kiosk owners. He emphasized the need for developing multilingual and multicultural content for the rural citizens. He asked why the content of Development Gateway (a World Bank driven website) is not in Indian languages. He asked for starting ICT pilot projects for the benefit of urban poor.
(vii) Other questions raised are: Who will pay? Who will provide the services? Who should project what? Who should be the driver of projects? Are the citizens really ready to pay? What percentage of revenue will make the application viable? Are we looking for a programme or a paradigm?

Post-tea Second Session:
‘Challenges in Scaling up ICT Projects for Poverty Reduction and Education: Learning from Experience’

This session was chaired by Rashid Kidwai of Digital Partners, India. He said that initiatives can be taken up by the government, private sector and individuals. He said that projects should identify needs. He asked whether infrastructure developed by somebody can be used by anybody else. He spoke about the Bhoomi project’s sustainability where villagers pay Rs. 25/- for getting a land certificate. Out of this Rs. 25/-, the kiosk owner keeps Rs. 10/- and pays the rest Rs. 15/- to the government.

‘Akshaya Program of Kerala’—Aruna Sundararajan, IT Secretary, Kerala
Ms. Aruna Sundararajan initiated her talk by saying that the objective of the Akshaya project, which started in June 2003, is to provide unlimited opportunities. She said that Akshaya is not a uni-dimensional but a multidimensional project. Its goal is not only to spread digital literacy but also to bridge digital divide. The Information Technology Department, Govt. of Kerala started Akshaya project for ensuring broad-based access to ICT, for providing e-literacy and for making available content relevant to the local population in the local language. As a part of the initiative, at least one person in each of the 65 lakh families in the state will be made IT-literate. However, the Akshaya project is currently operating in Malappuram district (one of the most backward district in Kerala in terms of literacy) only. Eighty percent of the Malappuram’s population is Muslim. Twenty five percent of the families in Malappuram have at least one member who works in Gulf.

The Akshaya centres are run by private entrepreneurs. Akshaya centres are being set up within 2 km of every household. Malappuram has a robust network of 617 e-centres catering to over 6,00,000 households in the district. Each Akshaya centre educates at least 1 person from each of the 1000 families.

Before the Akshaya project was launched, a survey was conducted to find the penetration of computer and Internet. A 19 indices survey was done to find the ideal location of ICT/ Internet kiosks/ centres. Once the locations were found, advertisements were given in local newspapers. IEC campaign also took place to spread awareness about the concept of Akshaya. Ms. Sundararajan informed that by the end of training 1000 members, 40% of the capital invested by the kiosk owner would be recovered. According to Ms. Sundararajan, scaling up is not possible without talking about access points. She complained that the Government of India has not taken into consideration STD/ PCO booth models while doing the pilot projects in India. She said that infrastructure is a bottleneck for the diffusion of ICT. She said that electricity situation in Malappuram is quite poor.

She said that Internet can be used for: (i) communication; (ii) continuing education; (iii) public services provided by government—e-governance; (iv) services provided by the corporate sector such as health etc.

There are two key things related to scaling up which she mentioned in her speech:
(i) The key to scaling up is economic viability of the project. In India, cost of accessibility is too high;
(ii) Existing content may not be useful. Today, 98% of the content available is irrelevant for the rural people.

She also mentioned about the challenges regarding scaling up:
(i) Government has to play a sensitive role. Government should not appropriate private sectors space.
(ii) There is need for convergence of ideas which will be provided by the corporate sector, the NGOs, the civil society and the government.
(iii) Political commitment is required for scaling up ICT projects.
(iv) The partners in a project should not go for a piecemeal type of effort.
(v) There is need for killer applications. Projects should produce some early results.

‘e-Chaupal’—S Sivakumar, CEO, ICT-IBD
Mr. Sivakumar informed about the e-chaupal effort taken up by ITC (Indian Tobacco Company) which places computers with Internet access in rural farming villages. The case study discussed by Mr. Sivakumar focused on only one crop i.e. soybean. At first he talked about the e-chaupal infrastructure. He said that ITC make investments to create and maintain its own IT network in rural India and to identify and train local farmers to manage each e-chaupal. Each ICT kiosk having an access to Internet is run by a sanchalak—a trained farmer. The computer housed in a farmer’s house is linked to the Internet via phone lines or by a VSAT connection and serves an average of 600 farmers in 10 surrounding villages within about a 5 km radius. The sanchalak bears some operating cost but in return gets commissions for the e-transactions done thru his e-choupal. The warehouse hub is managed by the middle men called samyojaks. The samjojak acts as a local commission agent for ITC. His/ her location is within tractorable distance from the farmer’s crop field.

The e-choupal services include relevant and real time information about commodity value and local weather news. The customized knowledge which is available can help in effective farm management and risk management. A supply chain for farm inputs could now be created which can be screened for quality. Prices offered are competitive and thus can help farmers as well ITC. Because of the direct marketing channel, transaction costs have come down and one gets better value due to traceability.

Due to the e-choupal services, farmers have faced a rise in their income levels because of rise in yields, improvement in quality of output and a fall in transaction costs. Even small farmers have gained too. Customised knowledge is offered to the farmers despite heterogeneity. Farmers can get real time information despite their physical distance from the mandis.

The e-choupal model is quite different from the other models. In fact, the farmers do not pay for the information and knowledge they get from e-choupals. Transactions take place at the will of farmers. The e-chaupal model runs without any subsidy. There is no government money involved in this project. The latent value is extracted from unevolved market in emerging economies which means there is elimination of non-value adding activities at the first instance. There is, in fact, creation of new value through traceability.

While discussing about the running of the e-choupals he said that the network orchestration is done through public-private partnership. The objective is to deliver the benefits of a near perfect market to the disadvantaged, in an otherwise incomplete market. The usage of ICT has helped in breaking the vicious circle of low risk taking ability, low income and low investment of the small farmers. Competition is enhanced through partnership.

Speaking on the issue of scaling up, he said that in the e-chaupal project a flexible business model is followed to suit the varying dynamics of different goods and changing condition of evolving markets. He informed that the four steps which are required for scaling up: (a) elimination of non-value adding act; (b) differentiating product through identity preservation; (c) value added products traceable to farm practices; (d) e-market place and support services to future exchange.

He also explained about the potentials of ICT. He said that ICT can create better supply chain by reducing transactions cost and improving quality. ICT can help to access the underserved small market. ICT has created new IT enabled business services in the area of health, education, entertainment and e-governance. The ICT infrastructure can be used for reliable delivery mechanism for resource development.

He informed that there are 3500 e-chaupals working in 5 states of India of covering about 21,000 villages. Madhya Pradesh has the largest network of e-chaupals. e-chaupals are mostly used for marketing and sourcing a range of agricultural goods. In the year 2003-04, the transactions which took place via e-chaupals amounted to about US $100 million.

ITC expects 20,000 chaupals in 15 states covering 100,000 villages by 2010, servicing 25 million farmers. ITC expects that transactions through e-chaupals may rise to about US $ 2.5 billion.

While speaking on the financial viability of the e-chaupals, Mr. Sivakumar said that the wave 1 has been proven to be successful. Waves 2 and 3 are beyond pilot projects. Wave 4 is ready for pilot. He informed that waves 5 to 7 (rural marketing) tests were successful. The scaling up of the projects and the amount of transactions was in line with the plan. During the project, there has been capacity building of people and processes (to deal with scale) as per the schedule.

While commenting on the key success factors he said that in the past insights were gained about the agricultural value chain in India. The value addition of IT in the distribution business was also looked into. At present, managerial competence of ICT is used to execute the complex model and to manage cost. In the future, emphasis will be given on experimentation and learning culture. The bottom line will be---roll out, fix it, scale it up. The principle of the e-chaupals will be to inform, empower and compete.

The major challenges while scaling up are:
(a) Developing entrepreneurial capacity of sanchalaks and sanvahaks
(b) There is need for a management capacity of ICT frontline by building a new cadre of agricultural graduates.
(c) There is a strong need for infrastructure such as power and broadband
(d) There is the requirement for policy reforms which includes laying out and passing the designs of the Agricultural Marketing Act (to be able to buy directly from the farmers) and to moderate taxes for a level playing field and for revenue build up.


The specific suggestions made by Mr. Sivakumar are:
Type I: Offset the cost of inefficient infrastructure
Type II: Subsidise cost of replication experiments
Type III: Support scale-up of successful models
Type IV: Subsidise services to the poorest.

‘Bhoomi Project’--- Mr. B.P. Kaniram, Deputy Commissioner, Bangalore (Rural) on behalf of Rajiv Chawla (Secretary, e-Governance, Govt. of Karnataka)
Mr. Dhaniram informed that the Bhoomi project is taking place in Karnataka and there are 35 million beneficiaries of which 7 million are farmers. 20 million land records have been gathered through this project. It has been found that 0.6 hectare is the average size of land holding in Karnataka. There are 177 project locations, from where Bhoomi project is carried out. These project locations serve 27,000 villages. There is online maintenance of land titles.

Bhoomi project is about agricultural land record reforms. Moreover, it is a farmer friendly mechanism. The presence of data on land records can help in stopping encroachment of land by powerful landholding people. Bhoomi has become an instrument of social justice in two respects:
(a) Poor records lead to litigation and social unrest. With the beginning of Bhoomi, this has stopped.
(b) Bhoomi can indirectly help in good governance.
(c) Bhoomi can also help in economic growth as now it is difficult to evict somebody from his or her own land.


The earlier manual system had infirmities since it was an opaque type of system where patwaris used to have the monopoly of keeping land records. So there used to be manipulation of records. Farmers used to get discriminatory type of behaviour from the patwaris and the powerful people under the manual system. This has reduced now. Scope of harassment has come down. Manual system was ill suited for the civic needs. Seldom land records were updated. Even getting the desired information was a difficult task earlier.

Mr. Dhaniram informed that under the Bhoomi project, 10,000 plus officials were employed for data entry after they were trained properly. It took 20,000 man-months for accomplishing the data entry.

Under the Bhoomi, transparency has led to ensuring social equity. Gone are days of village accountants. People now the right to information. The Bhoomi project is run by multiple stakeholders i.e. citizens, government, administration and other stakeholders like bank and judiciary.

There are certain problems associated with Bhoomi:
(a) There are only 177 distribution points as against 10,000 delivery points in manual system serving 30,000 villages.
(b) Farmers have to travel an average distance of 25 kilometers.
There is need for private participation since government does not have the capacity to open and operate village kiosks. The Bhoomi project, however, plans to increase the number of kiosks so that kiosks can become the delivery channels.

‘Drishtee- connecting India village by village’---Mr. S. Mishra, CEO Drishtee
Drishtee is working for the development of rural economy and society through the use of ICTs. Drishtee is providing services in the field of computer education, commercial services, BPO and Photo studio and other services like rural employment, e-health etc.

Mr. S Mishra said that Govt. is the enabler in the case of Drishtee project. Most of the earnings is non-network dependent. He informed that kiosks are sustainable. Drishtee is planning to open another 6000 kiosks. He said that entrepreneurship is the key behind success of the Drishtee project. Although the entrepreneurs has to partner with the government, but they have to keep a safe distance. One has to categorize kiosks operators into various segments. He said that Drishtee should focus on service development. He said that true entrepreneurs may not be those who have money or who come forward initially. Then, it becomes important to identify entrepreneurs.

Drishtee has moved from model prescribed by the government to a model which is more participatory by including health dept., education dept. etc. The service development process, according to Mr. S Mishra, looks into the certain broad questions such as: What to sell? Where to sell? How to sell? Whom to sell? The partnering agencies in the Drishtee are: RCSM, ICICI and DRDA? He said that in a typical village consisting of 1000 members, where 25% of families do not have the ability to pay, the target market consists of 750 members. He informed that due to vertical penetration, there has been growth in the number of kiosks under the Drishtee project.

‘n-Logue’---Mr. Gautam Mukherjee, Sr VP
Mr. Gautam Mukherjee of n-Logue said that the N-logue project is using the least cost technology. The aim of the project is to develop all necessary support devices. Efforts have been made to develop robust, profitable and sustainable business models. About 150 towns have been targeted for the growth of kiosks under the N-logue project. About 1024 installations have been made by the end of January 2003. N-logue’s effort has been to prepare a business model which is technology based and cost the least. corDECT technology which is prepared by the TeNet Group of IIT, Chennai is used in the current project. The company goes to the local service provider which in turn goes to the help of village kiosk operator during the n-Logue operation.

The business model of n-Logue emulates the success of the public call operators (PCOs). In every village that n-Logue ventures into, it identifies an entrepreneur and help him/ her set up a kiosk equipped with a PC with multimedia and web camera, a corDECT Wall set and accessories to connect to the Internet, printer, an uninterrupted power supply and a suite of local language applications among others.

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