The Digital Village. Fighting poverty with technology in India

http://www.businessweek.com/magazine/content/04_26/b3889003.htm

By Manjeet Kripalani



Among the grand gothic columns of Bangalore's colonial-era urban administration office, a couple dozen village dwellers neatly dressed in cotton shirts, sarongs, and turbans wait their turn at what looks like an automatic teller machine. But this machine isn't dispensing cash. Instead, farmers from nearby villages can use the terminal to see computerized copies of the deeds to the tiny patches of wheat, rice, and vegetables they till for a living. Once they've checked their information, they can get a printed copy of their records at a neighboring window for just 30 cents.

That's a big change. Until the records were computerized, the deeds were controlled by powerful village accountants. These men routinely charged poor farmers anywhere from $2 to $22 for a copy -- which they typically need two or three times a year when they ask banks for loans to pay for fertilizer, seeds, and crop insurance. Worse, some accountants would even collude with upper-caste landlords to steal the land by writing over the original names and then tricking illiterate, lower-caste farmers into signing away their property by putting their thumbprints on the deeds.

Five years ago, the Karnataka state government launched a program to computerize the land records of 6.7 million farmers in 30,000 villages. Two years later, all 20 million deeds had been digitized and filed along with information such as the land's productive capacity and any loans that use the property as collateral. Today, the information is available in Kannada, the local language, through 200 government-owned computer kiosks in administrative offices across the state. Muniratnama, a cheerful 45-year-old farmer, traveled 15 kilometers from her village to Bangalore for a copy of her land record so she could get a loan to replant her 1.6 hectares. The new system, she says, is far better than the old way. "The village accountant was corrupt," she says wit h disgust. "He'd delay making any changes, and he made mistakes, too."

Computerizing land records may not seem like much of an achievement; most developed countries did it years ago. But in rural India, where the majority of people are semi-literate and live in remote communities unconnected by road or phone, it's almost a revolution. "With equal access to information, a lower-caste person now has the same privileges as an upper-caste person," says Rajiv Chawla, who oversaw the $3.7 million program, called Bhoomi -- which means "land" in both Hindi and Kannada. In Karnataka alone, for instance, deed fraud once cost poor farmers $20 million a year; today, the problem has been virtually wiped out, according to the World Bank. With all the information digitized, land reform -- which had slowed because limited access to records made it hard to prove ownership -- could now be restarted. And the data can be mined for commercial information: A tractor maker, aiming to better target its marketing efforts, recently asked for the names of communities where most farms are larger than four hectares. Soon, says Chawla, the government will begin charging for that sort of information. Even now, though, the Bhoomi program earns $2.6 million a year from the 30 cents fees.

Such initiatives add up to a digital turning point for India. For the past decade, the country's high-tech sector has boomed, with outsourcing companies and software shops popping up like mushrooms in tech capitals such as Bangalore and Hyderabad. But that growth has largely left India's 700 million impoverished villagers, slum dwellers, and tenant farmers just as poor as their forefathers were for centuries. Jobs are scarce, cash is scarcer, and simply getting water is an immense daily challenge. This hu ge gulf between India's thriving elite and its vast hinterland is one reason the ruling Bharatiya Janata Party lost the general election this spring. The victorious Congress Party has pledged to deliver prosperity to the masses -- a stupendously difficult task in India. Although the BJP planned to shell out $3 billion over the next three years to computerize government services across the nation, it will now fall to Congress to implement the plan and see that it improves the lives of ordinary Indians. "The government's challenge is to leverage India's technological and manpowe r potential to solve our problems of poverty and actually deliver services to the masses," says R. Chandrashekar, who oversees e-governance programs at India's Information Technology Ministry.

In the fight against poverty, the policymakers of Congress may find natural allies among the more altruistic of India's digital generation. Even before the BJP lost the election, many of the educated elite responsible for the success of India's tech and software houses -- or who have helped U.S. multinationals prosper -- decided to turn their energies to helping India's poor. Nasscom, the trade group for India's software houses, estimates that there are hundreds of such programs across India, many of them private initiatives, connected by a common theme: to find cheap, digital solutions to the problems pressing on the poor. They range from a "smart chip" payment card for the working poor to a diagnostic kit for isolated health clinics t o a successful e-commerce initiative that lets farmers buy supplies and get market information online. "it can act as a bridge between the rapidly growing new India and the lagging old India," says Nasscom President Kiran Karnik. "We have to figure a way to take these sparks and turn them into a prairie fire."

For a decade, such efforts were merely experiments -- small-scale, splintered acts of charity and attempts at business creation. And many have been hindered by government inertia or regulation. But some have become successful and are starting to look like valid business opportunities. Now, the entrepreneurs are starting to discover one another: India has this year been host to three conferences on the use of technology for development in rural societies. So far, most of these ventures have been funded with entrepreneurs' savings because venture capitalists see few prospects of early returns. With the number of success stories growing, though, Nasscom and the World Bank are planning a fund of up to $1 billion to support promising ideas. And other developing nations such as South Africa, Brazil, and Sri Lanka are closely watching India's progress to see whether the projects can be successfully replicated. "India could lead the world in creating the grassroots social experiments that could teach both India and other nations how to use technology for the common good," says Kenneth Keniston, a professor at the Massachusetts Institute of Technology who follows such experiments globally.



Stretching Resources

Many of these efforts are driven by the urge to profit: If a fraction of India's poor logged in or dialed up just once a day -- and paid a minuscule fee to a service provider for the privilege -- then the sheer mass could create a viable business. "If you can conceptualize the world's 4 billion poor as a market, rather than as a burden, they must be considered the biggest source of growth left in the world," says C.K. Prahalad, a leading management theorist who studies developing markets. Other pioneers are purely altruistic -- they want to break India's millennia-long curse of poverty.

It's an awesome curse, and at first look, it's hard to see how digital technology cooked up by some entrepreneurial do-gooders can relieve hunger or thirst or guarantee a better crop. No laptop, however cheap or durable, can compensate for India's lack of a nationwide power grid, or a comprehensive network of highways. But digital technology can deliver information -- information the rural poor desperately need -- about crop conditions, fertilizer prices, health care, and more. Reliable information can help India's poor stretch their resources -- to plant the right crops, deal with bureaucrats more effectively, operate on a level playing field with customers and merchants. The digital revolution in India is largely an information revolution.

Computer kiosks are at the center of all this. These are typically in the front room of an entrepreneur's home, with one or two pcs linked to the Internet via a satellite, phone, or wireless link. The country already has some 7,000 such kiosks, and more than 100 new ones pop up each week. By 2007 there could be as many as 300,000, estimates Nasscom. The giant Indian Tobacco Co. has taken the lead in this movement: The company has funded more than 4,000 kiosks so far, giving them to farmers in a bid to boost sales of everything from seeds to soap via its Web site, e-Choupal. But new players are emerging, offering eager entrepreneurs a chance to open kiosks as a business. N-Logue Communications, for instance, has adopted something of a franchise model. The company arranges a low-interest loan of $1,000 to buy a computer and install a wireless link to the Internet. Then it t eaches the kiosk owner its possibilities: Net-based education, computer training for local children, videoconferencing, photo work, and more.

These kiosks often become the hub of village activity. Take the one operated by Mahesh Patel, a soybean and cotton farmer from Korgala, a speck of a village in the central state of Madhya Pradesh. Although the only place Patel had ever seen a computer was in Bollywood blockbusters screened at the cinema in a nearby town, he jumped at the chance when Indian Tobacco offered him the Korgala kiosk three years ago. Since he gets a small cut of every sale ITC makes via his computer, Patel's monthly income has jumped to $380 from $220 before he got the kiosk. His three-room home is now often crowded with villagers: Early in the morning, Patel and fellow farmers gather to check soy oil prices in Kuala Lumpur and Chicago via the machine's satellite Internet connection before looking into the going rate on local markets. In the afternoon, village children hone their computer skills on the machine. And since the e-Choupal site offers all kinds of goods for sale, Patel's house has become a virtual village store. "I'm just a farmer, but I get a lot of respect in my village now," he says.

Today, entrepreneurs in India are looking to capitalize on the kiosk boom. Many are working on projects that could make kiosks more useful to villagers, or extend their reach to more isolated locales. "India is no longer just a laboratory for these experiments," says Allen Hammond, vice-president for innovation at the World Resources Institute in Washington. "It's out of the pilot stage and ready to scale up."

Some believe kiosks can help ordinary Indians get better access to health care. Already, a handful of rural clinics have satellite video and data links to city hospitals. But Sameer Sawarkar believes the kiosks can serve as part-time clinics as well. The 31-year-old engineering grad from the Indian Institute of Science in Bangalore remembered the lack of medical care in his home village. So in 2002 the former Motorola Inc. (MOT ) researcher joined some friends to develop a portable $200 diagnostic kit the size of a boombox that can check blood pressure, temperature, and pulse, take an electrocardiogram, and work as an electronic stethoscope. The machine can be plugged into kiosk computers to transfer diagnostic information to a city hospital. Sawarkar now has a deal with N-Logue to install them in some of its locations.



Handhelds and Wi-Fi

Others believe that handheld computers offer a way to extend the benefits of technology beyond the reach of typical desktops, or even laptops. Microsoft, for instance, is exploring the possibility of a $150 handheld device for the Bhoomi land records program, and the government of Andhra Pradesh has bought palmtops from Casio for school officials to keep attendance records. A high-profile Indian initiative is the Simputer, a simple, robust handheld computer that even illiterate farmers can use to pay bills, send e-mail, and keep records of their business using symbols or any of the 17 official Indian languages. It even has education programs in five languages and can turn text into speech. The device was developed under a public license not unlike the Linux operating system it uses. The professors at Bangalore's Indian Institute of Science who came up with the idea have posted the machine's plans on the Internet for anyone to use, and charge only $25,000 for a manufacturing license in India. One company, Bangalore-based Pico Peta, is selling the machines for $200 to $450. Simputers haven't exactly been jumping off the shelves. Since 2002, the Karnataka government has given Simputers to 200 village accountants and farmers to maintain its Bhoomi land record program. About 25 governments around the world have shown interest in the machines, and inside India Pico Peta has sold 200 more since March. But the promoters are optimistic, keeping their eye on a potential order for 9,000 more handhelds from the Karnataka government, as well as the possibility of sales to other India n states, which must have their land records computerized by 2006. "When we developed the Simputer, our aim was to bridge the digital divide," says Vinay Deshpande, a co-creator of the device. "Other [Western] companies did it for commercial purposes."

Anurag Gupta, meanwhile, has developed a payment card that can plug into either a handheld or a kiosk -- and make it easier for the poor to establish a credit history. Today, it can be tough for many Indians to get loans because they use cash to buy virtually everything, and few have bank accounts. Under Gupta's plan, poor Indians could establish a bank account linked to the card, which contains a smart chip with personal information. Gupta hopes to install card readers in public phone booths and distribute the readers to kiosk owners, who would accept the card as a form of payment for computer time. Cardholders could also use it to pay bills or buy goods online. Banks could then monitor the user's spending patterns and decide whether he or she is a good credit risk. Gupta, a slight, intense man who studied architecture, has been working on the idea for four years. It wil l finally launch commercially under the name "Zero" on July 7 in Andhra Pradesh with the backing of ICICI Bank. Says Gupta: "It's been a long slog, but we've finally got the support that'll bring success."

At the same time, Praveen Bhagwat wants to extend the reach of kiosks with Wi-Fi. Bhagwat, a former wireless researcher for IBM and Bell Laboratories in the U.S., returned to his native India to adapt the wireless standard for rural use. By rewriting some software and redesigning antennae, he made a system that could send signals some 23 kilometers rather than the 100 meters typical for standard Wi-Fi -- meaning that it could provide Internet and phone service to several adjoining villages or a large town. "It's just not economic for large companies to do this. They wouldn't make any money on it," say s 35-year-old Bhagwat. "We have to do it for ourselves."

Unfortunately, innovators often spend more time struggling against India's bureaucracy than they do coming up with products. Bhagwat, for instance, needed just a month to create his first Wi-Fi system. But then it took nine months to get permission to build six 12-meter towers between the city of Kanpur and neighboring Lucknow, and he still hasn't gotten a permit to extend the system. And P.G. Ponappa, N-Logue's chief executive, says getting permission to put government services such as income and birth certificates online routinely takes a year. The government's "intentions are good, but they're just too slow," he says.

Can these projects transform India? Not by themselves. But if, bit by bit, they can make India's poor a little healthier, a little richer, and a little more literate, the cumulative effect on the country's fortunes could be enormous. The poor are eager for a wave of digital change. Young people across the country -- even in many villages -- are familiar with computers and keen to learn how to use them. These days, education and computers are primary items in every rural family's budget. In the poor, dusty village of Shahpur in Uttar Pradesh, for instance, impoverished farmers save their rupees to send their children to school in the neighboring town of Barabanki. There they can study English and computers, which are considered key to prosperity. Among India's poor, there's no shortage of ambition to learn them both. And no shortage of ideas on how to harness technology to give the poor a fighting chance to improve themselves.