E -Kiosks for Socio- Economic Development

1
E -Kiosks for Socio- Economic Development

• A Critical view of the e-choupal Model

Anil Philip-06808007 Avishek Bose-06808001
2

• The idea of a Village Kiosk as an ICT application
  for socio economic development is centered
  around the idea of Information Dissemination.
• More recently - It has become an engine for
  facilitating the transformation of the rural
  economy through the use of an Active Business
  Model

3
Warana Wired Village

• Origin 1998
• Target Area 70 villages in the Kohlapur
  district
• Organizations involved GOI, Govt. of
  Maharashtra, A Sugar Co operative in Warana
• Objectives
• (1) To make available agricultural, market and
  educational information in local languages
• (2) Provide information on Govt. schemes
• (3) To create a database of villagers on
  various socio-economic aspects
• (4) To establish GIS of 70 villages
• To simplify operations of the Sugar Co operative
• Connectivity VSAT technology UPS backup Dial
  up modem 1 multimedia computer per kiosk

4

• Project cost Rs.25 million borne solely by
  the Govt.
• Reasons for Failure
• Insufficient knowledge among villagers, spl
  women
• Poor back end technical support leading to
  obsoleteness of the technology
• Non updating of information on various services
  provided
• Lessons learnt / A future platform ?
• - Actual needs assessment of the intended
  beneficiaries is required
• - Lack of local participation in content and
  software creation will make a technology
  unsustainable
• Need to include women and other disadvantaged
  groups

5
n-Logue Building a Sustainable Rural Services
Organization

• Status of the Project Operational
• Location of the project area Indian states of
  Tamil Nadu, Karnataka, Andhra Pradesh, Gujarat,
  Maharashtra and Madhya Pradesh
• Type of Application/Service Multipurpose
  telecentres, Community development and
  tele-administration
• Type of Technology Fixed Wireless Access
• Organizations involved in the project TeNet,
  Indian Institute Of Technology, Chennai and
  n-Logue Communications Pvt Ltd
• Challenge To build a model with potential to
  scale half a million plus villages
• Building a scalable model
• Technology used Cost effective, Affordable,
  robust and scalable
• Business Model Each participant should earn from
  the efforts
• CorDECT Technology Jointly developed by the
  TeNet (Telecommunications and Computer Network
  group of IIT Madras) and Midas Communication
  Technologies Pvt Ltd
• Capable of offering simultaneous voice and
  internet access and can deliver around 35/70 kbps
  connectivity to villages

6
Features of the Technology

• An exchange and a base station is installed at
  the taluka or town where fibre is located (Also a
  constraint)
• Doesnt require air conditioning
• Total power requirements for 1000 subscribers is
  only 1KW (can be generated by a small generator)
• Total installation Cost- Rs 13000 Rs 15000

Viable Business Model

• PCO revolution
• Aggregation of demand
• Presence of entrepreneur driven business
• Proximity to a facility for greater access

7
Structure of the n-Logue model
8
Services provided

• Along with telephony, n-Logue also offers video
  conferencing and email. Video conferencing
  software is bundled with the basic kiosk
  operations.
• Offering services to learn computer based
  applications through online modules.
• Works as an agricultural consultant in terms of
  offering advices
• In the area of health care too, n-Logue has set
  up operation by using internet based video
  conferencing for the doctors to see the patients.
• It also offers services pertaining to
  e-governance with services like holding land
  records, online application forms, payments of
  various utility bills, etc.

• Sustainability
• n-Logue derives its revenue mainly in terms of
  usage revenues from the kiosk operator.
• The kiosk operator pays n-Logue a sum of Rs 800
  approx per month which is shared between N-Logue
  and the Local Service Provider
• The kiosk operator breaks even over a period of
  6-8 months and recovers the initial investment
  over a period of 3 years
• n-Logue has thus built a self sustaining model
  which has profitability as its core business
  strategy

9
ITC e-choupal

• Origin 2000
• Target Area So far 38,000 villages, 6500 kiosks,
  9 states
• Organizations involved Wholly funded by ITC. Has
  government officials in the governance process
  and other agricultural institutes have been roped
  in to provide expert information
• Why is this venture so popular right now?
• Only initiative to attempt to combine Services
  and an Effective Business Model successfully
• Designed to address the rural problems of
• Fragmented farms
• Weak institutions
• Involvement of intermediaries
• Information Asymmetry

10
An IT Driven Solution

• Though the IT component constitutes only 20 of
  e-choupals business model, it is the most
  crucial part. There are two goals here
• Delivery of real time information independent of
  the transaction
• Facilitating communication between different
  parties involved to bring about transparency in
  the whole system
• The Business Model
• The idea To saturate a particular sector with
  e-choupals where one choupal would serve 10
  villages within a 5 km radius.

11

• The village e -choupal is housed in the
  Sanchalak/ Co-ordinators house.
• The sanchalak is central to the business model.
  Such a role helps ITC by
• Providing trust among the farmers on behalf of
  the community
• Removing the need of a physical infrastructure
  such as the kiosk
• As a communication channel between the illiterate
  farmers and ITC
• The sanchalak is paid a commission on each
  transaction undertaken (0.5). The main
  attractions for such a post are
• Increased social standing among the community
• Willingness to help the village
• Profit motive

12

• Technology used in the E-choupal
• Power constraints- Sporadic availability of power
  (unreliable) and substandard quality of power
• ITC overcame this constraint by installing
  battery based UPS backup. Now solar battery
  chargers are used. 1 charge 70 to 80 minutes of
  computer usage.
• Telecom Infrastructure Usually poor
  infrastructure. As of now rural
  telecommunications infrastructure is designed to
  carry voice traffic only. Transmission speed
  being slow-?restricts internet access
• Initial solutions to this constraint was to help
  C-DOT improve their RNS kits to allow for
  increased transfer up to 40 kbps from the earlier
  12 kbps (Dial-Up connection)
• Dial-Up to VSAT Dial-up connection was not
  sufficient to drive future proposed applications.
  In order to support transactional capabilities
  and multimedia applications, ITC adopted a
  satellite based technology? VSAT. Now has speeds
  up to 256 kbps. (Cost per installationRs
  120,000)
• Applications The Web site www.soyachoupal.com
  is the gateway for the farmer. The Web site is
  protected and requires a user ID and password to
  login. As of now sanchalaks are the only
  registered users.
• Weather .Localized weather information is
  presented on regions within a 25 kilometer range.
  Typically 24- to 72-hour weather forecasts are
  available along with an advisory. Weather data is
  obtained from Indian Meteorological Department

13

• Pricing The e-Choupal Web site displays both the
  ITC procurement rate and the local mandi rates.
  ITCs next day rates are published every evening.
  The prices are displayed prominently on the top
  of the Web page on a scrolling ticker.
• News For the soyachoupal Web site, relevant news
  is presented from various sources. In addition to
  agriculture related news, this section also
  includes entertainment, sports, and local news.
• Best practices Best farming practices are
  documented by crop. Here again, the information
  presented is action-based. For instance, this
  section not only highlights what kind of
  fertilizers to use but also how and when to use
  them
• Q A This feature enables two-way
  communication. Here a farmer can post any
  agriculture related question he needs answered.
• System Support ITC has about 15 engineers who
  provide field infrastructure support to the
  e-choupals. They average about one or two calls a
  day. Each e-choupal is visited about twice a
  month for infrastructure support. The support
  cost is estimated at Rs. 300 per visit. In the
  future ITC proposes to improve service and lower
  costs of infrastructure support through remote
  help desk tools and network automation.

14
Disadvantages- Long distances between mandis
- Monopolization of information by the trader
communities - Fragmented payments by traders
to framers


Mandi Operation Process
15
Benefits- Able to differentiate between
Risks in Farming and Financial risks in
Trading
Possible by correcting the information
asymmetry - Also allows the farmer an
enlarged choice set whether he wants to sell to
ITC or to the mandi
E Choupal Supply Chain
16
Farmer Gains

• Farmers have access to prices and can make
  critical decisions of when and where to sell
• Saving on transportation costs from the field to
  the mandi
• ITCs electronic weighing scales and transparent
  checks ensure intentional spillage doesnt
  occur
• ITCs agricultural inputs cost substantially less
  than those offered at the mandi
• Farmers save almost 2.5 over the mandi system (
  Rs.400 500 per ton of soy) thanks to a more
  efficient market system e.g. cultivation of soy
  has increased from 50 90 in e choupal areas
• They can take advantage of services provided by
  the e-choupal to improve their crop output and
  farming practices
• Increased self respect as they are treated as co
  partners in a business relationship

17
ITC Gains

• Lower transaction costs
• ITC pays only a 0.5 commission to the Sanchalak
  as compared to the 2.5 3 paid to the agents
  under the mandi system (including true cost of
  inefficiency and intermediary costs)
• Has found it cheaper to reimburse farmers
  transportation costs that pay agents for
  transportation. (managed to save almost RS. 200
  per ton)
• Direct virtual vertical integration through e
  -choupal allows ITC to communicate directly with
  the farmers
• It gets excellent bottom up information on
  pricing, product quality, soil conditions etc.
  from the Sanchalak
• Allows them to develop a long term supplier
  relationship with the farmers, ensuring supply
  security over time
• By providing quality agricultural inputs and
  buying quality crops, ITC can ensure a satisfied
  customer base

18
Sustainability
In absolute numbers, both the farmers and ITC
save about Rs 270 per metric ton.

• Each e-Choupal costs between Rs 120,000 and Rs
  200,000 to establish and about Rs 5000 per year
  to maintain.
• Using the system costs farmers nothing, but the
  sanchalaks incurs some operating costs(
  electricity and telephone charges)
• Farmers also use the computer to order seed,
  fertilizer, and other products (such as consumer
  goods) from ITC or its partners, at prices lower
  than those available from village traders.
• Farmers selling directly to ITC through an
  e-Choupal receive a higher price for their crops
  than they would if they sold them through the
  mandi system, where the intermediary makes all
  the money.
• ITC also benefits, saving about 2.5 percent in
  commission fees and transport costs that it would
  otherwise pay to buying agents at the mandis. The
  company reports that it recovers its equipment
  costs from an e-Choupal in the first year of
  operation.

19
Scalability

• The e-Choupal network reaches more than 3.5
  million farmers in nearly 31,000 villages through
  5,200 e-Choupals in six states (Madhya Pradesh,
  Karnataka, Andhra Pradesh, Uttar Pradesh,
  Maharashtra, and Rajasthan).
• ITCs vision for the next decade is to expand
  from nine to 15 states, to reach 100,000
  villages, and to benefit a total population of 10
  million.
• e-Choupal is also expanding the range of its
  activities to support rural communities, using
  its network to deliver a broader range of
  services and working in partnership with
  government agencies and civil society
  organizations in watershed development, animal
  husbandry, human-capacity development, education,
  health care, and gender empowerment.
• ITCs model identifies two sources of value that
  help scale the model
• Crop Specific Intervention ITC recognized that
  agrarian systems vary by crop. For example, the
  systems, and consequently the e-Choupal models
  and payback streams, for coffee and shrimp are
  very different from those for soy.
• Low-Cost Last Mile The same system of physical
  and information exchange that brings produce from
  the village can be used to transfer goods to the
  villages. Products such as herbicides, seeds,
  fertilizers, and insurance policies, as well as
  soil testing services are sold through e-Choupal.
  E-Choupal as a distribution channel begins in
  agriculture but extends well into consumer goods
  and services.

20
Challenges

• Radical shifts in computing access could
  fundamentally alter community based business
  models causing social and economic repercussions
• Possible danger that Sanchalaks may unionize like
  the traders and attempt to extract illegitimate
  leverage over the villagers. If they grow
  displeased with the commission arrangements, this
  could be a reality
• This venture has proved that ICT projects and
  business opportunities at the BOP are possible
  with innovative ideas. Other companies may be
  interested in competing at the BOP
• Field study reports indicate that an hierarchy
  of access is developing around the e -choupal
  and other similar ventures where certain
  sections are restricted access to the computer
  and even the Sanchalak

21
Summary

• The ITC e-choupal model shows that the
  sustainability of such projects is strongly
  dependent on the ability of the organization
  involved to effectively combine services
• A creative business model is required to spur
  economic growth at the village level, mere
  dissemination of information may be inadequate in
  certain contexts