Organizational and Policy Challenges of the Rural Frontier

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Nov 21, 2013 (3 years and 8 months ago)

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Organizational and Policy Challenges of
the Rural Frontier

Rekha Jain

rekha@iimahd.ernet.in



Mobile Internet Penetration in IndiaSources: GSM
Association of India


Item

% of Total

Population

70

Income

56

Expenditure

64

Teledensity

17

Savings

33

Consumer goods

30
-
60

Top 20% Rural Households

Profile

%

Land
-
owning farmers

39

Salary/ wage earners

31

Self
-
employed in non
-
agricultural activities.

18

1980

2007

2012

66

40

33

Rural Profile

Item

% Rural
Households

No Land

40

Marginal (< 2 h)

30

Medium (<10 h)

25

Large

5

Farm Income

Relative Size of Rural Markets


There are almost twice as many 'lower middle income'
households in rural areas as in the urban areas.



At the highest income level there are 2.3 million urban
households as against 1.6 million households in rural areas.



Middle and high
-
income households in rural India is expected
to grow from 80 million to 111 million by 2007.



In urban India, the same is expected to grow from 46 million to
59 million. Thus, the absolute size of rural India is expected to
be double that of urban India.







Changing fast


Large, Comparison with urban


Not homogenous mass (
Customized services
)


Services and products may not be directly be
adopted from urban markets


For many rural consumers, first experience of
service
may not

be through physical
infrastructure (banks, health, education)



Emerging Profile Rural Markets

Examples from Banking and Agri advisory


Examples from Banking and Agri advisory

M
Krishi

RML

Extent of Financial Exclusion

91.0%

3.7%

2.3%

2.8%

0.1%

Cash
Credit
Card
Net
Banking
Cash Cards
Others
Source: bda: Overview of Mobile Banking and Convergence,
FICCI Communications & Digital Economy Committee,
September 2008.


Predominantly
cash economy, a
large informal
sector, with many
people employed
casually.




An important
proportion of
overall economic
activity.




Enhancing Services: Policy and Regulation


Business Correspondent model


No Frills Account


Financial Inclusion mandates and Fund (support IT)


NREGS

Rural Banking


Focus on opening “no Frill Accounts” (especially since
banking correspondent model in January 2006)


From 0.5 million in March 2005, at least 33 million
by March 2009, (many accounts non
-
functional).


Only 11% of 25.1 million such basic banking
accounts, opened between April 2007 and May
2009, are operational.


Rural bank branches only 5.2% of the country’s
650,000 villages.


Access to credit: very limited

Retrieving Data Stored Already

mKRISHI


Mobile Agriculture



Provide personalized advice to
the farmers on fertilizers /
pesticide based on the current
parameters like location , crop
image, prevailing environment
condition in the native
language..


Benefits



Accurate Advice based on
facts and prevailing conditions.


Empowerment of farmers with
current market information.


mKrishi knowledge base can be
utilized by universities and
expert to understand crop,
micro and macro pattern in the
Indian context.

Motivation
-

Bridging the Gap

CDMA Network

Government
Servers

Weather Servers

Bank Servers

National Commodities
Exchange

Expert

Advice from
Agriculture Universities &
Research Institutes

Local
Markets

Soil
Sensors

Internet

Village
Knowledge
Center

Process Description

1. Sensors Collect Soil
Data

Data

Consolidation

Unit

2. Consolidate

3. Parse information &
retrieve

accurate advice


4. Prepare and Send SMS
in Local Language

Agriculture
expert
database

5. SMS to Farmer in Local
Vernacular

Challenges of Rural Telecom Service


Integrating

the

physical

supply

chain

with

the

electronic



Converting

the

supply

chain

to

electronic


Last

mile
:

Selection

of

village

level

institutions

and

individuals


Veracity

of

information,

dealing

with

complexity

of

linkages



Supporting

Innovation

in

start

ups



Challenges of Rural Telecom Services


How to link the customers to the services


Technology as the enabler. But is that enough?


Development of an ecosystem


Technological innovations (speech recognition, low cost
ATMs, tele health devices)


Entrepreneurship: Linking the solutions to target village
consumer groups (Seed and angel funding, institutional
support)


Private enterprises (village level entrepreneur), creating
several services on a single platform: Mobile: PC (CSC)


Integrating services and payments


Scaling Up



Innovation Ecosystem

(Incubators
, Seed and Angel Funding)


Rural

Citizen

Business/Informatio
n Ecosystem (what
services, cost,
intermediaries)


R&D (Technical and Market)

(
Speech recognition,

NFC)

Critical Elements: The Two Ecosystems

Regulatory Issues


Publicly funded research USOF support


Facilitating services (banking, proportionate regulation,
NREGS)


Framework for regulation (Interoperability, security )





Thank You