TECH TALK: Transforming Rural India: Indian Pyramid Economics

Consider the Indian pyramid from the needs of technology. Right at the top are todays computer users, numbering about 10-15 million. They have computers at home, or at the workplace, or use them from cybercafes across the country. India’s present computer base is about 8 million. The last 3 years have seen computer sales stagnate between 1.5 and 2 million.

In the pyramid, the middle tier is the one which wants computers they understand its value, but cannot afford the Rs 30,000 (USD 600) price point. This segment consists of about 40-50 million households or about 160-200 million people they are the ones who have access to telecom (either a landline or a cellphone) and cable television. This is Indias aspirational middle class.

This segment needs computing for which they are perhaps willing to pay Rs 500-700 a month, which is about half of todays EMIs (equated monthly installments) of Rs 1,000-1,500, over a 36-42 month period. They could get access to consumer finance, but probably feel that the cost of the computer is still too high to justify a purchase. These users need English and support for at least one other Indian language.

The bottom of the pyramid in India is the one in its 600,000 villages, numbering about 150-200 million households (600-800 million people). Few among them have seen or heard of a computer. For the most part, they live on less Rs 50 (USD 1) day. This is a segment which could use computers for getting land record details, for grievance redressal, for getting commodity prices, for literacy, and many other reasons. This segment presently has little or no access to computing cybercafes cannot be found in villages.

This is a segment which can pay a few rupees each time they access a service. But very quickly these rupees start adding up, limiting usage. The question is: how much money can be invested by a household in this segment for access to computing? This answer will determine what is required to make an economically sustainable model. The assumption we will make for now is that they are convinced that like health insurance, paying for computing is necessary because it will guarantee a better future.

Assume on an average each Indian village has about 1,000 people (or about 250 households). The per capita income for Rural India is perhaps no more than Rs 1,000 a month (Rs 12,000 or USD 240 a year). For a family of four, this works out to about Rs 4,000 a month. Let us halve that for the bottom of the pyramid. This gives us a figure of about Rs 2,000 a month. Will this household spend Rs 20 a month (1% of their income) on technology?

Let us for a moment assume they will. (We will come back to why they will do so a little later.) This gives us an income of about Rs 5,000 per month from the 250 households in the village. Over three years, this gives us a total of Rs 180,000 for a village. This is the economic base on which we have to build out TeleInfoCentres connected into a Village InfoGrid and complemented with Intelligent, Real-Time eGovernance to transform Rural India.

Next Week: Transforming Rural India (continued)

TECH TALK Transforming Rural India+T

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.