Blog Past: Transforming Rural India

Given that elections are coming along soon, this paper I had co-authored in 2003 is worth a second read.

Poverty—income poverty as well as non-income poverty—is perhaps the most common characteristic that defines the populations living in the developing world today. Non-income poverty in terms of education, health-care, access to markets, etc., directly produce the income poverty that traps the average citizen of developing countries. The question of how to raise huge populations out of this poverty trap is a formidable challenge that governments, multilateral organizations and policy makers face.

Because income poverty is relatively easier to measure compared to non-income poverty, it is more commonly reported and emphasized. (For instance, about half the world’s population, or about 3 billion people, have an average income of less than $2 a day, and of that about 1.3 billion have a daily average income of $1 a day. For India, the figures are even more stark: about 60% of Indians, or 600 million people, live on less than $1 a day.) Income poverty and non-income poverty are closely related, of course. The problem appears almost intractable because the two kinds of poverty are mutually reinforcing. Any solution that does not address both kinds of poverty is unlikely to be successful in poverty alleviation.

In this paper we focus on two uses of information and communications technology (ICT) that hold the promise of immense benefit to the rural poor, specifically in India, and more generally in other parts of the developing world. We focus on the rural population because the incidence of poverty is higher there than in the urban population.

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.

10 thoughts on “Blog Past: Transforming Rural India

  1. Rajesh – I am no economist,but as I understand from what I have read that government controls have screwed up agriculture industry. Either agriculture productivity needs to be improved or resources need to be reallocated to other sectors to improve rural conditions.
    Given that the rural agriculture industry is in such a mess who will drive the investment in ICT ?
    I would think use of ICT on education will reap greater dividends than agriculture. It need not be either or case but usage of ICT in agriculture should come from the belief that ICT will make them more profitable and efficient and they need to be prepared to foot the bill and not want them as subsidies.


  2. Vishal, broadly speaking, whoever is in control, ultimately must be held responsible for what happens under their control. The CEO, for instance, is in control and whether the firm prospers or fails, ultimately the buck stops at the CEO’s desk.

    The agricultural sector, no less than the other sectors of the Indian economy, is controlled by the government. Each sector performs poorly and eventually we have to recognize that the control was malevolent in its effect, if not in intent.

    Most of all, we must remember that governmental control is exercised by a bureaucracy. It is in the interests of bureaucrats to increase their power by controlling even more severely whatever they can. Bureaucrats are only human. And like all humans have an ingrained lust for power. Couple that with bounded rationality and imperfect foresight, and give allowances for the operation of the law of unintended consequences, and we have the perfect recipe for disastrous failures.

    Addressing the matter of increasing productivity in agriculture, which you raise in your comment, takes us to the matter of linkages between the sectors. Agriculture is tied to the non-ag sectors through labor. Labor that is required by manufacturing, for example, would be primarily those that are released from agriculture. But manufacturing has to absorb that labor, and for that to happen, the manufacturing sector has to flourish first of all.

    If the manufacturing sector is not allowed to expand, then even if you raise the productivity of agriculture (thus releasing labor), you just have a lot of people who have nowhere to go to. It can be plausibly argued that harmful labor laws prevent the manufacturing sector from expanding, thus denying opportunities to the labor that agriculture could release through productivity increases.

    But manufacturing requires some degree of skilled labor. If the education sector cannot train the unskilled agricultural labor, then manufacturing will not be able to absorb them. So once again, government control of the educational sector figures in this part of the story.

    The role of ICT in raising the productivity of ag is an interesting question. No doubt there will be some efficiency gains from removing the information related barriers that impede the working of markets for agricultural inputs and outputs. But it is clear that high-tech ICT tools are neither necessary nor sufficient for improving productivity: the rest of the world had achieved high ag productivity before ICT tools arrived. The barriers to productivity are not related to a lack of ICT, and therefore expecting ICT to improve ag productivity is probably misplaced. A deeper analysis of the actual barriers must be done before mindlessly deciding to put ICT in fixing agriculture.

  3. “A deeper analysis of the actual barriers must be done before mindlessly deciding to put ICT in fixing agriculture”

    Antanu – Your above statement sums it all.
    What may be required is real reforms in agriculture which will make it more productive.
    The major productivity gains will be through core policy reforms in agriculture.

    As for education I think ICT can make difference but there may be requirement of similar reforms like one required in agriculture to make education a success and a profitable venture.

    I agree ICT can help but are no substitute for core reforms required both in agriculture and education.

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