ICT Agriculture and Rural Development K Balasubramanian Dhirubhai

ICT, Agriculture and Rural Development K. Balasubramanian Dhirubhai Ambani Institute of Information and Communication Technology Gandhinagar 22 nd August 2005

Murphy’s Law on becoming a discoverer Christopher Columbus was the best deal maker in history. He left not knowing where he was going, and upon arriving, not knowing where he was. He returned not knowing where he had been, and did it all on borrowed money and became a famous discoverer

To Start a Business- ( From Doing Business 2005_ World Bank Report) India China Number of Procedures for starting a business 11 12 5 Number of Days 89 41 5 Number of procedures for registering a property 6 3 4 Number of days for registering a property 67 32 12 Number of procedures for enforcing contract 40 25 17 Time taken to enforce contract 425 241 250 0 3 6 Credit Information Index U. S.

“The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have little” President Franklin D. Roosevelt 1944

INDIA’s RANKING 1 st IN WORLD IRRIGATED AREA CATTLE POPULATION BUFFALO POPULATION MILK PRODUCTION PULSES PRODUCTION TEA PRODUCTION JUTE PRODUCTION

INDIA’s RANKING 2 nd IN WORLD PADDY PRODUCTION (CHINA) WHEAT PRODUCTION (CHINA) GROUNDNUT PRODUCTION (CHINA) SUGARCANE PRODUCTION (BRAZIL) ONION PRODUCTION (CHINA) FRUITS PRODUCTION (CHINA) VEGETABLE PRODUCTION (CHINA) TOBACCO PRODUCTION (CHINA)

From 50 million tonnes to 200+ million tonnes Green Revolution Great Achievement

Growth Rate – 7, 8, 9……. %

Central Government Finances Summary (billion of rupees at current prices) 2002/03 Revenue 2, 369 Tax revenue Customs Union excise Income tax Corporate tax Other 1, 642 455 874 373 447 72 Non tax revenue Interest receipts Other Expenditure 728 406 322 3, 858 Non plan expenditure Interest payments Defense Subsidies Other nonplan expenditure 2, 899 1, 160 560 446 733 Plan expenditure 1, 141

Human Development Report Country HDI rank GDP Per Capita US$ Adult Literacy Rate Life Expectancy Rate Gender Development Index Human Poverty Index Norway 1 0. 956 41, 700 100 80. 0 0. 955 0 India 127 0. 595 487 63. 0 63. 9 0. 572 31. 4** Sierra Leone 177 0. 273 150 17. 1 34. 2 0. 278 68. 0 ** 80% of the population earning less that US$ 2 per day

Returns to Rural Investment in India 1970 - 1993 Returns in Rupee Per Rupee Spending No. of poor reduced Per Million Rupee Spending R & D 13. 45 84. 50 Irrigation 1. 36 9. 7 Roads 5. 31 123. 8 Education 1. 39 41 Power 0. 26 3. 8 Soil and Water Conservation 0. 96 22. 6 Health 0. 84 25. 5 Anti-poverty Programmes 1. 09 17. 8 Source IFPRI-World Bank

How to • Convert GDP into development • Translate production & productivity into employment and purchasing power • Make development into sustainable development ?

Number of People to Reach… 127 million farm families 107 million agricultural labourer families

Farmer gets 30% of the price which the final consumer pays…… High Price Spread Market Inefficiency Huge transaction cost

• Capital formation in agricultural sector is Rs. 26, 569 crores among 127 million farmers amounting to Rs. 2092 worth of capital per farmer for further investment

Extension Services…. We require 625, 000 extension personnel to reach people We have only 70, 000 extension Personnel

1. 97 crore out of 12. 7 crore farmers reached by formal banking sector 10. 5 crore farmers yet to be reached We do not know anything about landless agricultural labourers

How will You reach them? …

Can ICT play a role?

What Can ICT DO! Source: John F. Kennedy School of Government, Harvard University, 2001

Transaction Costs In Soya Market-e-Choupal Farmer cost Cost for Company in Open buying Open Market Farmer cost Using ICT Company cost using ICT Commission 0 100 0 50 Transit loss 50 10 0 0 Labor cost 50 70 0 85 Bagging 70 75 0 0 Transport 100 250 0 100 C. K. Prahalad: The Fortune at BOP Farmer saved Rs. 270 per tonne- ITC saved Rs. 300 per tonne

Case Study of Villages in China Villages with Telephone- Prices more stable Source: John F. Kennedy School of Government, Harvard University, 2001

Quick! Hide the colour TV! The anthropologist is coming………. From “The MAD”

Illiterate Camel Cart drivers in Rajasthan use aircraft tires for wheels in camel cart to facilitate the movement in desert conditions. They know various types of aircrafts and changes in the market of aircrafts

• Innovative lassi making in dhaabas of rural Punjab and Haryana using what?

WASHING MACHINES

Rural people can handle very complicated machines, systems and processes with ease once they get a hang of it. Forget your “Keep It Simple” formula. Who taught them managing satellite TV Channel and Cable TV management- 80% of Tamil Nadu has cable TV connection in a period of 10 years- No subsidy, no grants, no projects, no programmes, no advocacy Three decades of research, development, investment, subsidy and promotion – why development is not self-replicating

If annual subsidy of Rs. 250, 000 crores is sent by money order to 60 million poor households, every household below poverty line will get annually Rs. 40, 000, and this will bring every poor Indian household above poverty line. Bimal Deb Roy

ICT enabled development • ICT can bring down the economic transaction cost • ICT can reach rural community and provide human resource development Are the assumptions right?

My arguments • Information society is different from knowledge society • Development requires active utilizer constituency

Knowledge Management Why Ph. D. ? Why not everybody get doctorate in science, doctorate in arts?

Why Ph. D. • Because you are supposed to synthesize through Logic Esthetics Ethics Politics Metaphysics Knowledge is a process of synthesizing. Information is a part of logic

• Information • Knowledge society consolidates synthesizes and analyses Development requires synthesis

Knowledge Management • • • Who created the information? What is the background of the creators of information? Where and when was it created? How long will the information be relevant, valid and accurate? Who validated the information? Who else might be interested or has similar knowledge? Where was it applied or proved to be useful? What other sources of information are closely related? How to test and validate some of the concepts?

Knowledge society…. • Dominated with Dialogues, debates and discourses

Our Society • Knowledge is socially constructed • Differentiated with restricting access • Influenced by ascribed status and not by achieved status • Concept of open source learning limited

To move towards knowledge society Mobilize and organize community

Putnam says • Cohesive social system and social institutions are essential for economic development

How will you … • Cooperatives • Associations • SHGs • Corporatizing

The Process…… No PHASE ACTIVITIES 1 Mobilization Socio-cultural activation, Conscientization, understanding each other Identifying the organization types, helping the communities to build organizations Studying the various options in Technology and choosing the appropriate one and optimizing it – Participatory research Interactive learning, Learning by doing 2 Organization 3 Technology Incubation 4 Capacity Building 5 Technical Support in trouble shooting-linking with experts 6 System Management 7 Withdrawal of MSSRF Co-ordination for extension, interlinking resource persons with various extension agencies Change in the role of MSSRF from active facilitator to observer, and the grassroot organization playing a key role in initiating developmental activities

Mobilizing and Organizing Involves transaction costs -social and economic Who will pay for them? ICT to reduce economic transaction cost requires organizing community which involves a social transaction cost… Till now in “ICT based development” limited attention is being paid to this issue

• Rural credit is only 12 % of the total credit. • Transaction cost in rural credit delivery is high because of lack of scale advantage • NPA (non performing assets) high • Informal credit system ( 60% of the credit market) exploitative reaching upto 3600 % rate of interest Rural credit to SHG movement women is Is one method of mobilization. still low in But banks don’t invest in mobilizing SHG spite of SHG movements

Govt of India has given higher target in rural credit for banks and banks are struggling to reach the target. Foreign competition has made rural sector a new marketing avenue. But how to reach this market? Rs. 2000 billion Market At present less than 50% of the market tapped

SBI’s Expenditure on Ads & Publicity Loan Portfolio Rs. 157934 crores Investment Portfolio Rs. 185676 crores Profit Rs. 9553. 46 crores Priority Sector Lending 12. 79 % as against minimum 18% stipulation of RBI NPA in farm sector 10 to 13 % Advertisement and Publicity Rs. 67. 36 crores % of Advertisement and Publicity to Loan Portfolio 0. 04% Banks don’t invest in mobilizing people.

Our Argument; Banks should invest in mobilization and capacity building for better business Our Argument; Group farming, contract farming , crop insurance coupled with mobilization and capacity building using ICT based ODL can strengthen rural credit, reduce NPA and reach larger audience

Life Long Learning (L 3) among Farmers and Villagers Project Vision • Using ICT based Open and Distance Learning (ODL), the project aims at building the capacity among farmers, landless labourers and extension officials which could help them in developing valueadded farming, encourage more sustainable use of natural resources, strengthen their ability to face globalization, and ensure food and livelihood security.

Pilot Project in 5 villages Partner: State Bank of India Other Stakeholders: ICT Company, Universities, Marketing agencies under contract farming Primary Stakeholders: Village community

Objectives 1. 2. 3. 4. 5. 6. • To enable the smallholders and agricultural labourers to enhance the options for sustainable livelihood through capacity building using ICT based ODL in the blocks of Theni and Thiruppathur in Tamil Nadu. To enlarge the ‘information space” available for smallholders and the agricultural labourers and facilitate the self-directional learning To develop an institutional base for such a process through partnership with international, national and local research institutions and extension agencies through which relevant generic research information are consolidated and converted into a locale-specific learning package for the agricultural community To define a pattern of interactive learning through which research institutions and the agricultural community learn from each other To evolve a self-sustaining and self-replicating process in which rural community, credit, insurance and marketing institutions perceive the potentials of capacity building through ICT based ODL To internalize the learning from the project and redefine the pathway for L 3 Farmers Project to emerge into a major programme. To act as a reference point for State Bank of India for studying the hypothesis that capacity building would improve the performance of rural credit

Premises • If rural agricultural credit is blended with appropriate capacity building the performance of rural credit would be much better vis-à-vis productivity, returns and non-performing assets (NPA) levels. • Capacity building would also enlarge the market for bank credit among small and marginal farmers and among other marginalized section of the rural poor. • The modern information and communication technologies though structures such as rural internet kiosks, rural telecentres etc can facilitate the capacity building process in a spatial-temporal context which are financially viable, economically feasible and socially acceptable – rural kiosk with bank’s lending becoming financially viable

L 3 Approach • Facilitate Self-directed personal-strategic learning as a part of knowledge management in rural community • Use formal learning to promote self-directed learning • Self-directed learning requires learning community • Mobilizing learning community is an important process in HRD

Strategy in L 3 • Learning around agricultural credit • Mobilize the learners – link with contract farming • Win ( Villagers) Win ( SBI) Win (Kiosks) Win ( Buyers) situation hypothesized

Tech MODE- ICT based Learning • N-Logue – internet kiosks in 400 villages in Tamil Nadu • Internet kiosk run by village youth-with loans from banks • Internet- with video conferencing facilities – intra-net in Tamil • Internet moving towards broadband

Roling, Neils. (1988). Extension Science, Information system in Agricultural Development. Cambridge, Cambridge University Press.

Rural poor are not mere learners or consumers of information but partners in knowledge management

Towards Knowledge Management …. Structure, Institutions, Process • • Structure: Agricultural Knowledge System, Agricultural Information System Institution: Active Utilizer Constituency in the form of associations, groups etc Source: framework from Roling(1988) Providing weather forecasting is information system Partnering in weather forecasting, blending traditional knowledge and frontier science is knowledge management

Epistemology. . How do we know that we know what we know

Example of Knowledge Management • “Providing weather forecast to villagers” is information • Villagers participating in weather forecasting exercise is knowledge management • Example : An interior village in South India- in the periphery of highlands-participating in • hi-tech weather forecasting excercise

• Villagers manage their own ICT • They have a weather station-collect data on 23 parameters- send them to Department of Science and Technology, New Delhi by email in the morning- By evening DST forecasts weather for 15 km radius for next 5 days-sends it to the villagers by evening • Villagers discuss the forecast-translates the scientific information in English to local language. • Compares the information with forecasting under traditional wisdom-enters into dialogue with DST • Using the weather station-observes the validity of forecast- gives feedback to DST

Consortium 1. 2. 3. 4. 5. • Tamil Nadu Agricultural University (TNAU) will provide agricultural knowledge and materials relevant to the agroecological zone. Tamil Nadu Veterinary and Animal Science University (TANVASU) will provide animal husbandry and livestock materials relevant to the agro-ecological zone. M. S. Swaminathan Research Foundation through Reddiarchatram Seed Growers Association will facilitate a structure for horizontal transfer of knowledge in the project area. Tamil Nadu Open University (TNOU) will help in converting these knowledge into appropriate learning materials. Anna University will help in areas such as remote sensing and infrastructure development. University of Madras will contribute in the areas of Geographical Information System (GIS) and social sciences

Formal Learning • Video conferencing- CDs- synchronous and asynchronous learning-blended learning • Formal learning may motivate villagers for more use of ICT kiosks for self-motivated , self-directed learning • Better productivity-better returns

Budget • Rs. 1. 526 million • Period- 18 months • Needs at least Rs. 60 million of credit for justification • Cost of mobilization and learning: 2. 5% of total credit • NPA rate less that 2% expected. .

Associations • 4 L 3 Villagers associations already formed. • 60% women members • 1000 learners identified

Project Management Group • • • A PMG will be constituted in the block or district headquarters of each of the project area: at Thiruppathur (Sivagangai) and at Theni. The PMG will consist of the following members: Local Service Provider of ICT Secretary The kiosk operators: Members President of village associations Members One representative of the Consortium: Invited Member A representative of N-Logue Pvt Ltd: Invited Member Manager of the State Bank of India Invited Member The PMG meets once in a month and discusses the progress of the project and takes suitable corrective actions in case of any problem. It monitors the fund flow according the budget provided by the perspective plan. The monthly report will be sent to the consortium.

• • • • Outputs · 24, 000 person learning days using ICT based ODL · 30 CD based materials · 24 issues of news letters · 48 internet, intranet based learning materials Outcomes · Credit under contract farming for the farmers and labourers in 5 villages- better credit performance in the village in terms of borrowing and repayment Rs. 6 crores worth of credit at 8. 5% s. i · More interaction of the village community with ICT kiosks (through self- directed personal-strategic learning)-measured in terms of increased income to kiosks: Rs. 2000 additional income per kiosk thru internet browsing Better productivity in crops and dairy and better income; Less anemic persons among borrowers · Internalization of learning – in State Bank of India, in COL and among various members of consortium Impact • Strengthening of livelihood security • Banking Sector investing in Tech MODE

Bottom Line Stakeholder Stake State Bank of India Increase in rural credit- Lower NPAbetter performance of rural credit N-Logue and kiosk Operators Better utilization of ICT resources – increasing income-more customers for ICT for self-directed learning Village community More credit at lower rate of interest, higher productivity – better returnsmore employment, More income

Self-Sustainability and Self-Replicability • Bank says- if capacity building using Tech MODE helps in improving the performance of credit ( Lower NPA- More demand for credit)- then the bank will encourage Tech MODE as part of its business strategy. • Bank says it will focus on gender sensitive human development- since it is important for the survival for banking system.

Rural Credit in 5 villages • Known area- Dairy – upto Rs. 1. 5 crores feasible- Rs. 50 lakhs loan already applied • Goat- Rs. 50 lakhs possible • Known area- Unknown practice- Rainfed Maize- Rs. 50 Lakhs potential • Unknown Area- Jatropha, Aloe Vera, Coconut coir products Rs. 2. 00 crores feasible

• • • Learning Materials from Consortium- Vertical & Horizontal Transfer of Knowledge; till now TANUVAS on Dairy and Fodder TNAU on Fodder Marketing agents on quality of milk Samiarpatty village on the importance of nutrition for women Reddiarchatram Farmers Association on markets and contract farming

Gender Sensitivity • Better Targeting • Focus on Income enhancement with drudgery reduction • Stronger role in decision making in the project- decisions on credit, learning and market linkages • Gender sensitive learning materials

Every information • Debated, dialogued, analysed and synthesized-ICT plays a crucial role expanding the network for debate and synthesis • SBI says that social transaction cost would be worth investing if it reduces economic transaction cost and performance of credit

Will it succeed?

Placing ICT in a village involves social transaction cost? Are we costing it?