ICTs – The Village Kiosk

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					E -Kiosks for Socio- Economic
     A Critical view of the e-choupal

                          Anil Philip-06808007
                       Avishek Bose-06808001
• 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
                 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
(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
• 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
-    Need to include women and other disadvantaged groups
    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
           Capable of offering simultaneous voice and internet access and can deliver around
            35/70 kbps connectivity to villages
    Features of the Technology

•   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
    Viable Business Model
    PCO revolution
    Aggregation of demand
    Presence of entrepreneur driven business
    Proximity to a facility for greater access
Structure of the n-Logue model
    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.

    •    n-Logue derives its revenue mainly in terms of usage revenues from the kiosk
    •    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
                             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
Designed to address the rural problems of:
1.    Fragmented farms
2.    Weak institutions
3.    Involvement of intermediaries
4.    Information Asymmetry
                    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.
•   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
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
    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.
           Mandi Operation Process


- Long distances between mandis

- Monopolization of information by the trader communities

- Fragmented payments by traders to framers
                        E Choupal Supply Chain


- 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
                           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
                                 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
                        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
                 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
•   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

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.
•   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
• 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