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Volume 14, No. 1, April 2004


Table of Contents

An account of the

Workshop on Scaling up ICT for Poverty Alleviation in India

Indian Institute of Management, Ahmedabad

February 26-27, 2004

Animesh Rathore

Centre for E-Governance, Indian Institute of Management

animesh@iimahd.ernet.in

With inputs from Maitrayee Mukerji (Workshop Rapporteur)

f023@irma.ac.in

 

Introduction: 

The Workshop on Scaling up ICT for Poverty Alleviation in India was organized at the Indian Institute of Management, Ahmedabad (IIMA) during February 26-27, 2004, with an objective of designing a ‘Social eApplications Rollout Venture (SERVE) Fund’ to encourage ICT initiatives aimed at socio-economic development of rural India. Sixty-five participants, including potential stakeholders, from multilateral organizations, Indian and international NGOs, Government of India, academia, NASSCOM (National Association of Software and Service Companies) and financial institutions attended this workshop, organized by the Indian Institute of Management, Ahmedabad, in collaboration with the World Bank and NASSCOM, and funded by the Department for International Development (United Kingdom). The workshop involved two days of presentations and discussions which yielded significant inputs for designing the fund. 

Commencement of the Workshop: 

The participants were welcomed by Prof. Bakul Dholakia, Director IIMA, who briefed them about IIMA and its activities in the area of eGovernance, ICT and Poverty Alleviation. Subsequently, Mr. Kiran Karnik, President, NASSCOM, narrated the significant contribution made by the IT industry to India’s economic growth. However, he pointed that, there is a dark side to this economic development, as the IT expertise has not been exploited up to the potential in the rural areas where it can make a huge difference. There have been efforts made by IT companies at individual level and there have been successful pilots which need scaling up. He then introduced the participants to a newly formed body called NASSCOM Foundation, which represents the IT sector that has now become more concerned about the rural development. He stressed the importance of the role to be played by the government and the academia, industry, community and agencies like World Bank with international experience and expertise. Prof. Subhash Bhatnagar (IIMA) and Dr. Robert Schware (World Bank), the workshop coordinators, then defined the objectives and framework of the workshop. 

In the second session, Prof. Bhatnagar discussed India’s present position in terms of digital divide and the future. He emphasized that bridging the divide is not merely increasing the number of telephone lines or providing improved Internet access, but is about impacting the lives of the people and empowering them through ICTs. He indicated that around 200 ICT enabled development interventions in various stages of implementation are existent across the country, however the telecenter model or community centered information kiosk, over the past few years, has been found to be one of the more effective means to deliver services using ICT. He also discussed four types of telecenters. The first type of telecenters are set up by an individual, could be an entrepreneur or a government official, and are usually confined to one or two locations. The success of such telecenters depends on the individual. The second type includes the telecenters set up by governments for improved service delivery. Such telecenters can be further classified into two categories: One provides a single service, e.g. Issuance of Computerized Land Records by Bhoomi in Karnataka, and the other delivers a number of services e.g. Akshaya telecenters in Kerala. 

The third type of telecenters includes the ones set up by the private sector companies, e.g. eChoupal telecenters set up by the ITC group. These telecenters are capable of creating a win-win situation for the service provider as well as the beneficiaries, however, the scalability and viability of such telecenters is limited to areas having significant economic activity. The fourth type of telecenters are set up by entrepreneurs on a large scale to deliver a number of services, including institutional help to deliver government services, e.g. Drishtee telecenters. 

Some significant issues like merging of two models were also raised, for instance, a Bhoomi kiosk remains idle most of the time and an eChoupal computer can also deliver services like Bhoomi, besides others. Such a combination could also ensure sustainability of the telecenter in regions with low economic activity. The session laid the foundation for the workshop proceedings and was chaired by Mr. R Chandrashekhar, Joint Secretary, Ministry of Communication and IT, India. 

Presentations: 

To draw learning from the experiences of successful ICT pilots in rural areas, five projects were selected for presentation during third and fourth sessions on Day 1 of the workshop. These included: Akshaya Program (implemented by the Government of Kerala), eChoupal (implemented by ITC), Bhoomi (implemented by the Government of Karnataka), Drishtee (implemented by Drishtee) and n-Logue (implemented by n-Logue Communications). The projects were selected from various parts of the country as they have shown some promise towards scaling up. The eChoupal model, however, is an exception as it indeed has been able to scale up to such a degree that has seldom been matched by any other ICT initiative. It has no funding and runs on a market driven principle. Without any financial support from the government, the eChoupals (eChoupal telecenters) have increased to 3500 within two years of its implementation. The project has been a profitable venture not just for the company but for the farmers as well. The presentations demonstrated that irrespective of the type of telecenter, the value addition in the services for consumers (rural as well as urban) was a key success factor. The challenges in scaling up ICT projects for poverty reduction, education, governance, health and environment were discussed in sessions following the presentations. The description of projects and the challenges identified by the implementers are as follows: 

Akshaya

Presented by: Ms. Aruna Sundararajan, IT Secretary, Government of Kerala 

Akshaya has been piloted in Malappuram, a backward district of Kerala state in India, where 80 percent of the population is Muslim and 25 percent of the families have at least one member who works in Gulf. This project aims at ensuring a broad-base access to ICT, development of skills in using a computer, and providing locally relevant content in local language to a large number of rural citizens. Akshaya offers a unique public-private-community partnership model in which capacity building is as important as service delivery. Before launching Akshaya, a 19-indices survey was done to determine the ideal location of ICT/ Internet kiosks/ centres. Once the locations were found, advertisements were given in local newspapers. A campaign also helped spread awareness about the concept of Akshaya. The Akshaya centres, each covering 800-1200 households, are planned to be set up throughout the state. Almost every centre can provide five jobs, and thus, with 617 centres serving 600,000 households, over 3,000 jobs can be generated for the local people at Malappuram. The potential entrepreneurs from the local communities have been trained at the Akshaya centres to run these centres which have also taken up the task of providing e-Literacy to one person in every family to make Kerala a cent-percent e-Literate state. As a part of the initiative, at least one person in each of the 6.5 million families in the state will be made IT-literate. The project is currently operational only in Malappuram district. Since June 2003, around 500,000 people have been trained in Malappuram. 

According to the presenter, 40 percent of the capital invested by the kiosk owner would be recovered by the end of training 1,000 members. While encouraging entrepreneurship, the government has limited its role to that of a facilitator. The stakeholders include various sectors of IT industry, political parties, NGOs, intellectuals and opinion builders, educational institutions, government and other officials, who have been linked with the Akshaya at various phases. The Akshaya centres are also expected to support the e-governance initiatives, communication advancements, e-commerce and information dissemination in the state. In phase II Akshaya centers will 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. However, the poor power supply in Malappuram remains an issue. 

Challenges in scaling up:

§            An appropriate business model that can contribute to social development.

§            An appropriate management model and defining government’s role.

§            Institutionalizing the public-private-community partnership model at the grassroots.

§            Appropriate and affordable technologies that can be adopted across the state.

§            A supportive policy environment to facilitate scaling up.

§            Viable partnerships. 

For further information on Akshaya, please visit: http://www.akshaya.net/ 

eChaupal

Presented by: Mr. S Sivakumar, CEO (ITC, IBD) 

EChoupal is an initiative of ITC (a large agricultural processing company in India) to link directly with rural farmers for the procurement of agricultural/aquaculture produce like soya, coffee, and prawns. EChoupal was conceived to tackle the challenges posed by the unique features of Indian agriculture, characterized by fragmented farms, weak infrastructure and the involvement of numerous intermediaries. Traditionally, these commodities were procured in ‘mandis’ (major agricultural marketing centres in rural areas of India). ITC has now established computers and Internet access in key rural areas where the farmers can directly negotiate the sale of their produce with ITC. The PCs and Internet access at these centres enable the farmers to obtain information on mandi prices, good farming practices and place orders for agricultural inputs like seeds and fertilizers. This helps farmers in improving the quality of produce, and also helps in realizing a better price. 

Each ITC 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 eChoupal. The warehouse hub is managed by the middle-men called samyojaks. The samyojak acts as a local commission agent for ITC. 

ITC has invested $ 22 million to set up 3,500 eChaupals serving 20,000 villages and 1.8 million farmers in five states of India. Transactions worth $100 million were carried out through these chaupals in the first year. ITC is adding 7 new eChaupals a day and plans to scale up to 20,000 eChaupals by 2010 covering 100,000 villages in 15 states, servicing 25 million farmers. Transactions through these eChaupals may rise to about US $ 2.5 billion by 2010. 

Due to the eChoupal services, farmers have seen 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. Customized knowledge is offered to the farmers despite heterogeneity. Farmers can get real time information despite their physical distance from the mandis. The system saves procurement costs for ITC. The eChoupal model is quite different from the other models, as the farmers do not pay for the information and knowledge they get from eChoupals. The eChaupal model runs without any subsidy. There is no government money involved in this project. ITC has extracted value in four steps: (a) elimination of non-value adding activities; (b) differentiating product through identity preservation; (c) value added products traceable to farm practices; (d) e-market place and support services to future exchange. One of the success factors is ITC’s managerial competence to execute a complex project and manage cost. The ITC bottom line is –roll out, fix it, and scale it up. The principle of the eChaupals is to inform, empower and compete. 

Challenges in scaling up:

  • Developing entrepreneurial capacity of rural community to take up the role of sanchalaks and samyojaks is difficult and plenty of training is required. Also, there is a need to enhance management capacity of ITC frontline by developing a new cadre of agricultural graduates.

  • Lack of infrastructure, such as power and broadband.

  • Slow policy reform (e.g. modification of the Agricultural Marketing Act).

For further information on eChoupal, please visit: http://www.echoupal.com/,

http://poverty.worldbank.org/files/14647_E-choupal-web.pdf 

Some suggestions for the SERVE fund were made during the eChoupal presentation. It was indicated that the risks pertaining to funding unviable models and misuse of the fund should be minimized. It was suggested that some grants could be provided for procuring relevant items like solar battery or VSAT. The fund should also support technical research (e.g. wireless broadband) that can help reaching remotest areas. It was also suggested that the fund could provide special subsidies for replicating successful pilots and for the poorest of users. 

Drishtee

Presented by: Mr. Satyan Mishra, CEO, Drishtee 

Drishtee is a private sector initiative to scale up Gyandoot type kiosks (http://www1.worldbank.org/publicsector/egov/gyandootcs.htm) based on a tiered franchise and partnership model. Drishtee provides technical expertise and management consultancy to build the IT infrastructure and the human capacity to link service providers (government departments and private firms) with the rural citizens. The kiosks are owned and operated by small rural entrepreneurs. Presently 180 kiosks are operational across four states and five districts where the majority of population is rural. Drishtee is providing computer education, commercial services, BPO and Photo studio and other services like rural employment, e-health, etc. For 25 to 35 cents, villagers can apply for various services such as a caste certificate, copy of land title, electronically through the Drishtee kiosks. For another 25 cents, any citizen can send a complaint to the government by e-mail regarding their pensions, health services, water facilities etc. Most of the earnings is non-network dependent. In offering these services Drishtee is partnering agencies like RCSM, ICICI and DRDA. Existing kiosks are sustainable. Drishtee is planning to open another 6000 kiosks. Identifying entrepreneurs is important, as true entrepreneurs may not be those who have money or who come forward initially. 

Challenges in scaling up:

  • Rich farmers own more kiosks.

  • Services limited by bandwidth and poor power supply.

  • Unavailability of Venture funds.

  • Lack of research (that can help planning) in rural areas – research conducted by organizations at individual level is costly and imperfect.

For further information on Drishtee, please visit: http://www.drishtee.com,

http://poverty.worldbank.org/files/14646_Drishtee-web.pdf 

Bhoomi

Presented by: Mr. B P Kaniram, Government of Karnataka 

Bhoomi has offered an alternative model for creating rural telecenters. Bhoomi delivers a signed copy of land title in 15 minutes for a user fee of Rs. 15 at 177 on-line Bhoomi centers in Karnataka. It is estimated that between Rs. 90 and Rs. 100 million would be collected each year from user fee. Bhoomi will now permit rural telecenters operated by private entrepreneurs to access the Bhoomi database on land ownership and issue the land titles. Owners of private kiosks will be able to charge an additional fee of Rs. 10 from the farmers. Monthly income from issue of land titles will make a 1000 telecenters economically viable in Karnataka. Thirty such centers are already operating in one district. The revenue department was able to take up the Bhoomi project because a grant was available from the central government to cover the investment of $ 5.0 million. After the implementation of the project Bhoomi has recovered the investments in two years. An investment of $ 2 million will be needed to set up a thousand kiosks. 

Challenges in scaling up:

  • Insufficient number of distribution points (177), as a result farmers need to spend on traveling and lose a day’s income.

  • Inability of government to open a thousand kiosks in a sustainable manner – need for private participation.

  • Merging the Bhoomi system with kiosk services: This will mean if the kiosk owner is not doing a proper job then it can falter the Bhoomi system. And if the Bhoomi services by the government are unsatisfactory then the kiosk owner might lose the credibility as well. The issue of mutual interdependence needs to be taken care of.

  • Training of government officials.

  • Training of kiosk operators on government processes.

For further information on Bhoomi, please visit:

http://www1.worldbank.org/publicsector/egov/bhoomi_cs.htm 

n-Logue

Presented by: Mr. Gautam Mukherjee, Sr. VP, nLogue Communications 

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, developed 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. 

Challenges in scaling up:

  • High overall cost.

  • Inefficient bureaucracy.

For further information on n-Logue, please visit: http://www.tenet.res.in/nlogue.html 

Some suggestions for the SERVE fund were also made during the presentation. First, the fund should be directly disbursed to private players rather than a routed investment coming through the governments. The fund investments should primarily be soft term-loans and grants should be restricted to scaling up in economically unviable instances. An annual review of investments should be done and fund should be diverted to superior performance projects. A part of the fund can be used as venture capital for enterprises involved in creating software, technology or hardware useful in the rural economic system. 

Learning from the experiences: 

The reasons behind the success of the projects presented vary significantly. In case of Akshaya, affective awareness campaign supported by pre-existing high literacy levels and the involvement of local self-governments were driving factors, whereas in case of Bhoomi it was the ‘killer application’ that worked and farmers are willing to pay Rs. 25 (approx 60 cents), which is higher than the earlier fee of Rs. 2 (approx 5 cents), but is much lesser when compared to the bribes, ranging from Rs. 100 to 2000 (approx $ 2.3 to 45), and delay in the earlier system. N-Logue’s strength has been its technology that enables it to enter the remote areas. Technology, however, has remained an issue of concern even for a highly successful project like eChoupal. Yet eChoupal has been able to find value propositions which create a win-win situation for the beneficiaries as well as the stakeholders. The availability of managerial competency and learning from failures has contributed to the scaling up of eChaupal. 

The eChoupal model has demonstrated its superiority in scaling up over the other models. However, certain issues that eChoupal is facing, like lack of power and infrastructure can be addressed through innovative technological solutions as shown by n-Logue. Another aspect is the presence / absence of supportive policy environment. In case of eChoupal, the slow pace of modification of Agriculture Marketing Act poses a challenge in scaling up. The success of eChoupals in economically active areas also points at the risk that is involved in venturing in economically less active areas. In such areas, a killer application like Bhoomi can optimize economic sustainability of the telecenters. The Bhoomi project also faces a big challenge in scaling up, as the present number of telecenters (based at local administrative offices) or access points seems insufficient. Thus, combining the eChoupal and Bhoomi models seems a good option. The combination of services offered by Drishtee has been its major strength and other projects can take learning from this, however Drishtee faces a big challenge in scaling up due to the lack of venture capital. 

Various issues like slow policy reform, high cost of implementation for governments / private sector, etc can be dealt with by building effective partnerships across governments, private sector and the community, as demonstrated by Akshaya. Some other important issues like need for research, training, and development of relevant content were also raised during the presentations and discussions. 

Scope, size and management of the SERVE Fund: 

During the fifth and the final session on Day 1, the participants were briefed about the initiatives taken by the World Bank to support eGovernment projects in India. A UNDP fund of US $ 5 million for ICT pilots in India was also discussed in brief to clarify that while the UNDP fund would work for pilots, the SERVE Fund is intended to deal with the issue of scaling up. The session was coordinated by Dr. Schware and it laid basis for discussions on the Scope, size and management of the SERVE Fund on Day 2. 

On Day 2, the criteria for selecting ICT projects for scaling up was prioritized along with the methodology for evaluating projects, and the method of scaling up worthwhile projects. To discuss the design of the fund, the participants were divided in two panels. The first panel discussed the Scope of Activities and Size of the Fund. The second panel discussed the structure and administration of the Fund. A basic Draft Paper prepared by IIMA that provided various alternatives for designing the SERVE Fund was discussed at length during the above sessions on Day 2. 

The third session of the Day 2 ‘Design of the Fund: Freezing Various Parameters’ began with the presentation made by the representatives of both the panels and was followed by a discussion focusing on the nature of the fund and the organization designated for its management and administration. 

The final session of the workshop focused on formulating an Action Plan on the basis of proceeding of the workshop. The Draft Paper incorporating the recommendations of the workshop can be accessed here.

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