ITC’s e-Choupals

The Economist profiles Yogi Deveshwar, ITC’s chief, and discusses its rural foray with e-Choupals. ITC is India’s largest tobacco company.

Shaded by the generous boughs of an ancient neem tree and overlooked by the village temple is the traditional choupal, or meeting-place, of Badamungalaya in the Indian state of Madhya Pradesh. A few narrow lanes away, in the spartan front room of Rajesh Nagodia, a local farmer, is the e-choupal: a desktop computer, with an internet connection and revolutionary implications for Badamungalaya and 4,150 other villages. The upset in India’s recent general election was seen as a rebuff from such villages to a ruling party that boasted of shining successes. They had passed the countryside by. The e-choupal initiative is an attempt to join the urban India of rapid growth and a world-beating information-technology industry, to the rural one, where 72% of Indians live, many of them in feudal poverty.

In Badamungalaya, farmers use the e-choupal to check prices for their soya beans at the nearest government-run market, or even on the Chicago futures exchange. They look at weather forecasts. They order fertiliser and herbicide, and consult an agronomist by e-mail when their crops turn yellow. Some buy life insurance. The local shopkeeper orders salt, flour and sweets. Two wealthy villagers have even bought motorcycles. Others club together to rent tractors. School children check their exam results. Distance has been killed, says Mr Nagodia. The village is only about 40km (25 miles) from Madhya Pradesh’s capital, Bhopal. But it is a spine-jolting journey along a dirt road.

[ITC’s] chairman, Yogesh Deveshwar, is fired with missionary zeal. The e-choupal will transform the rural life of India. In May it won the inaugural World Business Award, for corporate do-gooders in poor countries, bestowed jointly by the International Chamber of Commerce, the United Nations Development Programme, and the Prince of Wales’s business forum.

. ITC establishes them where it is already buying agricultural produce. There are websites for each of the crops covered: soya, wheat, coffee and aquaculture (shrimp). Locations are mostly chosen from the 87% of India’s 600,000 villages with under 5,000 inhabitantstypically, over 1,000 and fairly accessible. To the obvious shortages, of phone lines, electricity and literate farmers, the answers are VSAT satellite links, solar batteries and carefully chosen sanchalaksor conductorswhom ITC equips with the technology.

The sanchalak is usually an educated local farmer (ideally with children soon to become computer nerds) from the dominant local casteso some worry that such schemes reinforce local elites. He earns a commission for any ITC procurement, as well as for sales by third parties. For Badamungalaya’s Mr Nogadia, it has become almost a full-time business. The farmers gain market knowledge and, if they wish, sell their product online. They can haggle better with the middlemen, who have tended to skim a huge proportion of rural revenue. And by bundling together demand, farmers can secure better prices for inputs.

Two of the big difficulties faced by the rural economy are mitigated: virtual aggregation disguises the tiny size of most landholdings; better information helps overcome the uncertainty that translates into a reluctance to spend. The possibilities are endless. Once a commercially viable way is found to put a computer in a village, there are plenty of potential users: state governments, putting their services online; consumer-goods firms, whose distribution networks rarely get to smaller villages; microcredit-providers; and so on. Mr Deveshwar’s jubilation is that we will be owners of the road! and, of course, charge a toll.

ITC’s e-Choupals are the spokes in rural India. They need hubs built around the RISC to be more effective.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.