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 Allows us to locate the new village kiosk within the BOP argument ITC’s e-choupaln- Logue

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 (5)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: 1.Insufficient knowledge among villagers, spl women 2.Poor back end technical support leading to obsoleteness of the technology 3.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. An exchange and a base station is installed at the taluka or town where fibre is located (Also a constraint) Doesn’t 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 Features of the Technology 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: 1.Fragmented farms 2.Weak institutions 3.Involvement of intermediaries 4.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: 1.Delivery of real time information independent of the transaction 2.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-ordinator’s 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 installation=Rs 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. ITC’s 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’ doesn’t occur ITC’s 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  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. In absolute numbers, both the farmers and ITC save about Rs 270 per metric ton.

19. 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). ITC’s 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. ITC’s 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. Scalability

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