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TECH TALK: Transforming Rural India 2: The Two Applications

July 29th, 2003 · No Comments

The first application is the use of ICT in providing education. Specifically, primary and secondary education, increasing literacy, and providing vocational education. The current system is unable to deliver due to number of reasons primary among which is its reliance on mostly individual content creation and delivery, essentially through the public sector. The economies of scope and scale attainable through the use of ICT tools would make education accessible and more affordable.

The second application relates to expanding market access for agricultural and non-agricultural products. This would increase rural incomes and thus alleviate income poverty. The internet can efficiently provide access to a vast market for traditional handcrafted goods which can be sold worldwide, for instance. This would be an effective way of integrating the rural population with the globalised marketplace.

Poverty can be considered to be the result of two gaps: one, the ideas gap, and the other, the objects gap. Poor people have less material goods at their disposal as compared to rich people. Hence the objects gap. The ideas gap arises from the inability of poor people to most effectively and efficiently use the limited material resources they have. For any level of objects gap, an ideas gap amplifies the problem. Knowledge goods, efficiently produced and distributed by ICT, can bridge the ideas gap.

The two applications are complementary. Primary education has tremendous social welfare implications but the return on investment is long term. Being a public good, the returns cannot be fully captured and consequently private investment is unlikely to provide primary education. In contrast to that, creating market access increases the incomes even in the short run. Thus provision of market access can be commercially sustainable through user fees and so the private sector can be relied upon to invest in that application.

Both activities require a common infrastructure in terms of power, telecommunications, human resources, etc. Therefore, the common provision of these two can lead to lower average costs. Given resource constraints, a mechanism for efficiently delivering the two would require some degree of concentration of investment in rural areas rather than thinly distributing the resources.

The paper discusses the economics of the two applications with respect to the costs, and the benefits. The need for joint provision of the two applications is shown to be commercially sustainable. We show that information technologies can potentially overcome the market failures that have so far not brought the benefits of globalization to the rural poor. The paper concludes with a brief description of a mechanism which efficiently delivers the applications in a commercially sustainable way.

Tomorrow: Solution Building Blocks

TECH TALK: Transforming Rural India+T

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