Using E-commerce to fuel rural growth in India
“There are no such things as limits to growth, because there are no limits to the human capacity for intelligence, imagination, and wonder"
-Ronald Reagan
“Incredible India” is a theme which is promoting brand “India”. And sixty percent of India comprises of rural India. Unless you are a good sales executive; it is difficult to pronounce anything incredible happening in the rural part of India.
E-commerce together with Information & Communication Technologies (ICT) holds great promise for the socio-economic development of rural hinterlands in India. The growth of Indian economy depends upon the growth of so-called population that forms the “Bottom of the Pyramid” of which Mr. CK Prahalad speaks of. It is also difficult to attain the 10% growth rate which we strive to achieve every year. The agricultural contribution towards the GDP is on a decline. This paper tries to explore how the use of e-commerce can bring about changes in the lives of the rural population and fuel economic growth & development.
The use of e-commerce by the rural poor leads to efficient price discovery and offers economy of transaction for agricultural trading. Above all it tries to acknowledge the problem of “Asymmetry of Information”. And unless this is not done away with, we cannot provide a level-playing field to the people of rural India.
By this paper, the implementation of a rural e-commerce project has been proposed by using a strategic model. And various rural e-commerce applications have been recommended together with success stories of similar projects. Presently the policy makers, administrative workers and citizens are at a loggerhead while rural businesses are still waiting to take off. To carry forward the “India shining” campaign, all we need to do is to:
“There is one thing which is stronger than all the armies of this world, and that is an idea whose time has come”
-Victor Hugo
1. INTRODUCTION
If wishes were horses, rural India would have progressed far beyond her present state. What we see instead is that policy makers, administrative workers and citizens are at a loggerhead while rural businesses are still waiting to take off. The purpose of this paper is to define the role of E-commerce in fueling rural growth in the country. It tries to identify the contemporary needs and aspirations of rural India and proposes a model to acknowledge the same.
1.1 Why Rural India?
India with a billion plus population holds 600 million of her people in the rural areas. And a hefty 66% of the workforce is employed in agriculture; which is credited to the rural areas. It is therefore, imperative to toil hard for rural growth & development.
1.2 Why E-commerce?
E-commerce has already added many feathers to its cap, and is being viewed as a strategic tool that can fuel rural growth in various developed and developing economies of the world. India has already moved ahead to grab the opportunity and did almost Rs 450 Crores of e-commerce business in 2004. There is no wonder why the same success story cannot be repeated for India’s largest consumer segment i.e. the rural market.
2. E-COMMERCE & RURAL INDIA
E-commerce in India is in the nascent stage, but even the most pessimistic projections indicate a boom. The multifarious benefits offered by e-commerce offers thus make it the preferred choice for possible adoption in rural India.
2.1 What is E-commerce?
It literally means buying and selling of goods and services on the Internet especially using the World Wide Web (WWW). E-commerce provides multiple benefits to the consumers in the form of availability of economical goods or services, wider choices and saves time. People can buy and sell goods or services with a click of a mouse without moving out of their house or office.
2.2 Traditional Rural Setup
Urban & Rural India is categorized based on population, primary employment of males & population density. The rural business encompasses agricultural activities like cultivation, livestock, forestry, fishing, plantation, etc and other non-agricultural activities. Past economic figures suggest rural contribution of 50% (20-30% by Agricultural activities alone) of Gross Domestic Product (GDP).
The agricultural market is inefficient given the asymmetry of price information, as the prices prevailing at the mandis are often not known to them. This is because of the presence of numerous middlemen who siphon off a large part of the price and consequently pass only a small amount to the farmers. They are also duped while making purchases of agricultural resources.
Asymmetry of information is a formidable problem for the growth of rural India; be it agriculture, education or entrepreneurship development.
2.3 Introduction of E-commerce
E-commerce can promise an effective market place for the rural populace which will do away with the traditional roadblocks and asymmetry of information. E-commerce is a wider term and encompasses: e-governance, e-business & e-citizen.
Needless to mention, that to provide such an e-commerce infrastructure would be an uphill task. But, it has been aptly said:
- Jean Vanier
2.4 Benefits of E-commerce
E-commerce is a cost-effective simulation of common-place market operations. It reduces space & time boundaries. It also promotes transparency & accountability and enables swift delivery of information and services. The rural populace can reap the benefits of this medium by actualizing their long-established market operations into this.
3. FEASIBILITY STUDY
The billion dollar question is “Can the success stories of e-commerce be paralleled with rural India?” This would require a lot of introspection: research & analysis. Methodically speaking, it would be wise to first gauge the bottlenecks and then try to find solutions to them.
3.1 The Bottlenecks
There are several impediments which make this endeavor a daunting task. The formidable ones being:
3.1.1 Infrastructure
E-commerce requires the use of Internet and Communication Equipment viz. typically a Personal Computer (PC). On a broader sense, e-commerce requires the use of Telecommunication Infrastructure for connectivity and Power Infrastructure for electricity. At present the rural teledensity stands at an abysmal 1.70 (with negligible contribution coming from mobile services). While only 30.54 per cent of rural households have electricity [HDR 2002].
3.1.2 Technology
Information & Communication Technologies (ICT) has to be looked at the backdrop of e-commerce bottlenecks. Issues relating to content and connectivity have to be addressed.
3.1.3 Finance
Such a model has to be backed with promising monetary funding. It needs to be seen, as to who would be at the forefront of this.
3.1.4 Human Resources
Trainers, motivators, supporters, administrators among other people would be required for such a project to take off.
3.1.5 Diversity
It would be imprudent to consider rural India as a homogenous sector. Perhaps it is very diverse and her culture, dialect, aspirations, economics, environment, politics, etc maybe poles apart.
3.2 The Solutions
We cannot waste another generation to see this project to reality; it’s nor or never. The implementation has to be fast and should be backed by continuous feedback and assessment.
3.2.1 Infrastructure
The Ministry of Communication & Information Technology is looking forward to teledensity of 22 by 2007 (prioritizing rural India). The private companies like Reliance have promised to expand in the rural areas. Prices of PCs are coming down heavily and abridged versions are being created for the rural masses. The concept of Thin Clients and Fat Servers is just another example which can help provide low-cost computing solution. The indigenously made Simputer can also come handy. Various organizations are promoting the use of non-conventional sources of energy like solar energy, biogas, etc.
3.2.2 Technology
Wireless solutions like WiFi, WiMAX, corDECT and VSAT could be preferred over wired solutions. But what is interesting is that the Optical Fiber backbone is not being highlighted in this frame of discussion. Considering the present or proposed OFC Network of BSNL (4,00,000 km), Indian Railways (35,000 km), Power Grid (14,0000 km), GAIL (14,500 km), Reliance Infocomm (60,000 km) among others, the ball certainly seems to be in our court. Today 85% of the taluka headquarters have optic fiber, which can provide the backbone for telecom and Internet connectivity.
3.2.3 Finance
There are various government organizations that support such initiatives. Individual efforts to provide used PCs to the rural populace have also been in the light of all things; also the work done by local NGOs. But it would be the private organizations which can provide a Win-Win solution here. The Government funded projects do not stand much of a chance for successful completion. This can be explained by a simple philosophy. There are four ways in which money can be spent: Money earned by us and we spend it on ourselves; Money earned by us and we spend it on others; Money earned by someone else and we spend it on ourselves; and Money earned by someone else and we spend it on others. We tend to be less and less prudent and lackadaisical in money management as we move from category one through four. The government funding unfortunately falls in the latter category and thus prone to abuse and under-utilization.
3.2.4 Human Resources
Training can be imparted by engaging a group of teachers from the upper primary schools. Rural population has a primary school within 1 km and in 85% of the areas an upper primary school within a distance of 3 km. We have one of the largest elementary education systems in the world.
3.2.5 Diversity
The cultural diversity is a cause of concern especially the local dialect, but in majority of the areas the national languages (i.e. Hindi and English) are either spoken or understood. The intended audience should be trained on English or Hindi software applications. Software giants like Microsoft has launched a scaled-down and low-cost versions of its Windows XP Operating System (OS) and has been working on its Project Bhasha since 2003. It is also developing Microsoft Windows and Office in 14 regional languages. Similarly, Linux has also launched its Hindi version Linux v4. Usually the village panchayat plays an essential part when projects are government driven; but for Private projects the local human resources are put to use. The success of Broadband in South Korea (having highest connectivity) can be attributed to their government’s initiative to promote the use of Internet and making the use of E-learning mandatory in the schools. Once the rural populace brings the use of Internet into its culture then there would be no looking back for us. The government should promote the National languages at any cost, and may even go a step ahead in making it compulsory throughout India. Needless to mention, the popularity of any languages cannot increase unless there is some commercial aspect to it, English being the befitting example.
4. THE MODEL
Only a strategic model can turn the E-commerce project into a reality. This model would cater to short-term as well as long-term objectives; would be reviewed periodically and subjected to dynamic alterations and/or adaptations. It is here that the “5-Star Model” can be proposed:
The following steps would drive the 5-Star Model:
Step I: Strategize & Setup
Extensive research has to be carried out for selecting the appropriate locations or villages. The various parameters that have to be gauged are: Infrastructure (Electricity, Telecommunications, and Education), Population, Road & Transport, Postal & Courier Services, Primary Employment Activities, Geographical Advantages, Climate, etc.
After the research, the primary or secondary data would be analyzed to identify threshold values for the selected parameters. The villages can be segmented based on several criterion, for example villages near Mahabaleshwar can be classified as Strawberry producing zone; whereas those in and around Nagpur may be classified as Orange producing zone.
These villages would be called as “Hot-Spot” zones, because most of the experiments would be carried out only in this region. The potential customers would also be studied for example: cultivators, distributors, transporters, stock-keepers, agro-based companies, etc.
Once the areas are selected, a proposal would be drafted for setting up the required infrastructure: PCs, Internet, Hot-Spot Kiosks, etc.
Step II: Simplify
Next step would be the process of simplification of the use of e-commerce. It is here that the OS like Linux v4 or Windows XP would come handy. Every Process or FAQs would be well-documented in the local language, for example: “What has to be done when the PC or the Internet connection requires maintenance?” Even trivial things can hinder the smooth flow of any project. Till this step there wouldn’t be any interaction with the target segment i.e. the people who would actually be using the services offered by e-commerce.
Step III: Simulate
The process of selling and buying would be explained to the villagers. They would undergo short trainings for the same; also the concept of electronic money & online bank accounts would be introduced to them in due course of time. A real world simulation of the e-commerce webpage would be provided. The villagers would be given some amount of money (in their online bank account) and they have to trade their produce over the e-commerce portal and simultaneously purchase goods (like fertilizers, seeds, etc) or services. Every villager would we allowed to play the simulation over the weekends, and winners would be given some token gifts. The idea is to make them understand the concept of online transaction, of economics (sell for more & buy for less) and of online banking. This being carried out in a playful mood. And, there is also some reward for performance at the end of the day. Rest would be done by word-of-mouth advertisement which spreads like wild fire in any rural area.
Stem IV: Showcase
The villagers would gradually be introduced to the real world e-commerce portals; where they would be offering their products or services as also request for the same. It should always be remembered that if villagers are not able to make profit out of the e-commerce project; then that would be the end of the story. We expect that the villagers would learn with their experiences and make good money out of it. It would be then that the success stories need to be showcased in upcoming hot-spots or potential areas that can be turned into a hot-spot.
“People need support and motivation to understand why it is worth their time and money to acquire these new tools and learn how to use them”
-Alex ‘Sandy’ Pentland
Step V: Spread
Once the process takes off then the frequency of the hot-spots can be increased in the adjoining or new areas. This would help spread the 5-Star Model thus providing greater reach of e-commerce as also the extent of rural growth.
5. VARIOUS E-COMMERCE APPLICATIONS
All customers identified during the research phase would be motivated to use the common e-commerce portal. Initially it would be very elementary & easy to use. Later on advancements and modifications can be introduced into the portal. A lot of creativity & innovation can go into the e-commerce portals and nominal charges can be levied on the customers. But the benefit that can be derived out of the mass utilization of e-commerce would be immense considering the second most populous country in the world. Some of the rural applications may include:
Job openings
This can help solve the unemployment problem in the rural areas.
Matrimonial
This can help in the selection of suitable bride or bridegroom.
Land Record Maintenance
This can help in ending disputes over ownership (which is very common) by means of digitization of records.
Agricultural & Technology
New agricultural equipments/hybrid seeds or any other technological advancement can be introduced to the rural farmers.
Rural Telephony
Economical voice services (using Internet Telephony) can be provided to the villagers who want to communicate to their friends or relatives outside India (still illegal inside India).
Travel
Information on travels and tours. As also, online booking or reservations.
TeleMedicine or TeleDoctor
Medical consultations can be sought by means of emails or video conferencing via economical webcams.
Agriculture Consultancy
Online consultancy can be sought regarding farm productivity, soil requirements, nourishments, plant diseases & remedies.
Talent Search Contest
Participation in various talent search events by means of online registration.
Online Banking
This would come much to the respite of insurance and others companies involving bill receipt and payments like electricity, telephone, etc.
Rural E-lance
The rural populace can outsource their products or services to any 3rd party and vice versa. Example: Producing potatoes for use in French Fries by MNC or big retail food outlets like Pizzahut or Nirulas.
Auctioning
Rural products can also be auctioned over the Internet, for example: used farm equipments, etc. Courier Service
Local courier service would grow with the growth of e-commerce transactions.
Market Research
A population of 600 million is a potential market especially for FMCG companies like HLL. To understand the diverse moods and aspirations of this market, paid market researches can be conducted.
In fact, there may be numerous applications that can get a berth in the rural e-commerce portal.
6. SUCCESS STORIES
There are several projects that have been introduced with the prime objective of fueling rural growth. Its’ not important to know if they succeeded or failed, what’s important is to know why they succeeded or failed? Here are a few to quote:
Bhoomi
Bhoomi is a self-sustainable e-governance project for computerizing land records and making them available to the people of Karnataka for a nominal fee.
TaraHaat
It is an e-marketing portal for the rural populace.
Gyandoot
The goal of the project is to establish community-owned, technologically innovative and sustainable information kiosks in the rural areas of Madhya Pradesh.
eSeva
It has been initiated by the Andhra Pradesh government to provide “one-stop non-stop Government-to-Citizen (G2C) services”.
Information Village
It is a MS Swaminathan Research Foundations’ experiment to electronically deliver knowledge to the rural masses in Pondicherry.
Drishtee
It is an organizational platform for developing IT enabled services to rural and semi-urban populations through the usage of state-of-the-art software.
ITC’s eChoupals
eChoupals have been set across the agricultural belt to offer the farmers all the information, products and services they need to enhance farm productivity, improve farm-gate price realization and cut transaction costs. All these information are received through their Hindi portal.
Akashganga
Based in Gujrat, it has been conceived with the objective to spread IT among dairy cooperatives. Setu
It is an initiative by the Maharashtra Government to create a foundation for citizen centric e-governance at district as well as taluka headquarters.
Shristi
It is a NGO setup to strengthen the creativity of grassroots inventors, innovators and ecopreneurs engaged in conserving biodiversity and developing eco-friendly solutions to local problems.
Other Technology-related initiatives
Media Lab Asia (MIT Media Lab & Indian Govt.), Warana Wired Village (Sugarcane Cooperatives, Maharashtra), SARI (Tamil Nadu), FRIENDS and Akshaya (Kerela), Mahiti Shakti Kendras (Gujrat)
Other Educational IT initiatives
Headstart (Madhya Pradesh), AP Schools (Andhra Pradesh & NIIT), Vidya Vahini, Community Learning Centers (Azim Premji Foundation)
7. CONCLUSION
E-commerce can fuel rural growth. But, for it to succeed, we have to first step into the shoes of the rural populace and strategize from all angles. To put it straight, if they are not able to make money out of it, then the project is doomed to fail. Administrative reorganizations occur in the political tenures, red-tapism still persists and government processes aren’t time-efficient. Thus the initiative should come from the private players; it is they who can provide a Win-Win model. And there should be continuous monitoring and assessment to make it succeed.
“The line between failure and success is so fine that we scarcely know when we pass it; so fine that we are often on the line and do not know it”
-Elbert Hubbard
posted by Mastermind Sohag Sarkar at 10:52 PM
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