Home Asia-Pacific I 2003 Digital Inclusion for Small Businesses in India – A Public / Private Partnership Model

Digital Inclusion for Small Businesses in India – A Public / Private Partnership Model

by david.nunes
J. SatyanarayanaIssue:Asia-Pacific I 2003
Article no.:2
Topic:Digital Inclusion for Small Businesses in India – A Public / Private Partnership Model
Author:J. Satyanarayana
Title:Principal Secretary, IT& Communications Department
Organisation:Government of Andhra Pradesh, Hyderabad, India
PDF size:68KB

About author

Mr J Satyanarayana, 48, holds a Masters Degree in Physics from Andhra University and an MBA from University of Ljubljana. He joined the Indian Administrative Service in 1977 and held several field positions in AP. He worked as the Special Secretary in the Finance Department, Special Commissioner of Commercial Taxes Department and Commissioner of Registration department before taking up the present assignment in 1999. He has been instrumental in implementing a number of e-Government projects in Andhra Pradesh like the computerisation of the Sales Tax department, the CARD project of digital registration of sale deeds, the e-Seva project which provides 46 citisen services across any of 247 counters at 31 service centres in Hyderabad. Others include the SmartGov project – a Knowledge Management and workflow automation product for the Secretariat of the government of AP with 2000 users, the APonline – a comprehensive portal that is shaping to be a one-stop-shop for the citisens of AP, the e-Procurement portal for the state, APNET – a satellite – based network for distance education etc. He has also helped design a comprehensive e-Government blueprint for the state of Andhra Pradesh.

Article abstract

The Fifteen million SMEs in India’s small towns and villages that bill less than US$5000 contribute 15 per cent of India’s GDP. They manage by instinct, not professionally. They need information on markets, to simplify dealings with government agencies, accounting and management support, access to micro-credit and the like. Systems for SMEs in India need to be designed to have low dependence on continuous high-quality power, low dependence on bandwidth and employ highly user-friendly technology. They must also be affordable.

Full Article

Much has been said about the way ICT could positively impact the way citisens, governments and businesses function. The dotcom era created the euphoria whereby the Internet was touted as the all-powerful panacea that could provide a ready solution to the plethora of information and business needs of all these sectors and even transform the way they are managed. However, we have seen very few success stories where any of these sectors have been impacted in a significant way. While isolated and sporadic successes have been reported, they relate to the fortunate minority that has rich digital assets. Very little is heard of any positive impact that ICT could make on the millions of citisens and small businesses, especially in the developing world. What are, then, the possible initiatives that could help the small businesses and micro-enterprises in India to enhance their profitability by using the tools of ICT? Small business in India contributes about 15 per cent of the GDP. There are an estimated 15 million small businesses in India, with annual turnover below 5,000 US dollars. These are spread in India’s small towns and villages. They are typically occupied in business activities like the grocery shops, cloth stores, electrical stores, repair and maintenance shops, medical shops, small-time restaurants, book and video shops, public call offices and the like. The proprietor, aided by members of the family, typically mans them. The management is by instinct and far from professional. In this context, the needs of the small businesses can be visualised to be in areas like – information on commodity markets, simplification of interactions with government agencies in filing of various returns (relating to sales tax, income tax, labour laws), obtaining benefits under various government schemes meant for small businesses, enhancement of awareness in accounting and management, securing micro-credit, lodging complaints and grievances etc. Appropriate interventions in these areas would result in enhancement of the profitability of small businesses. Assuming ICT could come to the rescue of the small business sector in the developing countries, what are the attributes of an ICT system that would be technologically and commercially viable and therefore result in a sustainable development of this sector? Technology issues Technology arguments in favour of scalability, interoperability, and security are too well known. They are certainly required at the aggregate level or the data centre from where the services are provided, but the requirements at the delivery point are different. We need to look at systems, especially access devices, which have the following attributes:  Low dependence on continuous and high quality power: Given the shortages of power in the vast rural areas of India, and the overriding priority of allocation of power to the agriculture and domestic sectors, it is necessary to design access devices that have low dependence on continuous power. Systems that consume low power and are operated by solar power become the obvious choice. Devices like the simputer, PDA, palmtop etc are increasingly being tried out in this context. The solar-powered backpack digital photo unit, being promoted by HP in their ‘World e-inclusion’ project in the Kuppam community in Andhra Pradesh (described below) is an example in point.  Low dependence on bandwidth: The availability of reliable bandwidth at affordable cost is still a far cry in rural India. With internet penetration at a low level of less than five per thousand, even the massive efforts by the new generation service providers would take at least a decade to spread the benefits to the small business sector. It is necessary in this context, to look at partly offline systems that transmit and receive information in relatively short spells and synchronise the data at both ends on a need-based approach. The work of Indian Institute of Technology, Chennai in promoting a low-cost wireless technology (CORDECT) and its field trial in the villages in Tamil Nadu, Madhya Pradesh and Andhra Pradesh is noteworthy. “The biggest single reason for the large spread of telephone services in the rural India in the last two decades is the fact that the Public Call Offices operate on the principle of sharing the low-cost infrastructure …”  User-friendly technologies: Given the low levels of literacy among the target population, the need for development of systems in the local language and systems that are voice-driven cannot be over-emphasised. While the efforts of IT companies like Mithi and CDAC in the local language interface and academic institutions like International Institute of Information Technology in the area of HCI (Human Computer Interaction) are noteworthy, they have yet to reach the levels of affordability needed for mass replication. Commercial Issues Affordability of the ICT-enabled services is a key determinant of their commercial viability. Typically, a small business would be attracted towards a set of ICT-enabled services, perceived to be otherwise beneficial, if the cost does not exceed about INR 50 per month (about US$ 1). This can be brought about by a variety of arrangements and interventions described below.  Sharing of ICT assets: The biggest single reason for the large spread of telephone services in the rural India in the last two decades is the fact that the PCOs (Public Call Offices) operate on the principle of sharing the low-cost infrastructure among thousands of infrequent-users that pay trivial user charges. Taking the PCO example further, the Government of Andhra Pradesh has embarked on a scheme of converting 2,500 of these rural PCOs into Internet-enabled kiosks (RSDPs – Rural Service Delivery Points) that can provide a bevy of services to the rural citisens, small businesses and artisans at affordable costs. The scheme is expected to go live during 2003. The enhancement of the PCO to an RSDP is done through an INR 50,000 (US$ 1,000) micro-financing, INR 7,500(US$ 150) of which is subsidised by the Government and the rest provided as a soft loan by the commercial banks.  Service centre approach: Given the low level of literacy and the desirability of providing a bunch of services at a single location, the idea of an Integrated Citisen Service Centre becomes quite relevant in the Indian context. The eSeva <http://www.esevaonline.com> is one of the biggest success stories in India today. Initiated as a small pilot to prove the concept of one-stop-shop for G2C services, the project has become a large movement today. It serves about a million transactions a month currently in the city of Hyderabad. Besides common services like the payments of utility bills and taxes, eSeva offers over 40 services including services like renewal of trade licenses and filing of sales tax returns and income tax returns that are quite useful to the small businesses. “Affordability of the ICT-enabled services is a key determinant of their commercial viability. Typically, a small business would be attracted towards a set of ICT-enabled services, perceived to be otherwise beneficial …” The benefit is in the form of a 50 per cent reduction in the cost of transacting with the Government agencies, at times that do not cut into the otherwise productive hours of businesses (the service centres of eSeva are open from 8 am to 8 pm on almost 360 days a year). The current phase of expansion of eSeva to 116 towns in Andhra Pradesh will go a long way in helping the small businesses become more productive and profitable. It is noteworthy that the extra convenience, comfort and higher quality of service are provided at no extra cost to the customer, as the Government meets the transaction cost. The project has been implemented using the PPP (Public Private Partnership model) and has proved its sustainability over the last two years. Case Study of HP’s iCommunity project As part of its ‘World e-Inclusion project’, HP has taken up an ICT project in the Kuppam community, situated in the southernmost part of the state of Andhra Pradesh, jointly with the state Government. The motive is creation of an eco-system that can ensure that the benefits of ICT percolate to the inhabitants of over 200 villages in the Kuppam area. The benefits envisaged include provision of timely advice to the farmers on the right farm practices, educating the artisans and small businesses through functional literacy tools, providing better access to market information, enabling self-help groups of women and self-employed youth to manage their accounts and affairs more efficiently and the like. The pilot, which is at its initial stage, is expected to sow results towards the end of 2003. The project has plans to establish a series of Community Internet Centres using 802.11b technology in the last mile. Each centre would have a facility for training of the target groups and awareness building. Other possibilities Among the many initiatives of the Government of Andhra Pradesh in using ICT for the benefit of the society, there are a few that can be customised to help the small businesses. The case of eSeva has already been explained above. It is quite possible to include in the eSeva centres a number of services and applications that are beneficial to the small business community at a marginal cost. A second possibility is to extend the e-Procurement portal set up by the Government in partnership with C1 India to provide a host of B2B services for the small businesses that could make them more competitive. The third possibility is to design a single-window for serving the small businesses and deliver the same through the official portal . Both these initiatives use the PPP model. The range of possibilities for helping the small businesses through ICT interventions is quite wide. The window of opportunity is open. The key to success is leadership and vision.

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