CSC: future bright, present a bit tight

The viability of telecentres in rural India will depend on the workable business models in delivering health, agriculture extension, education and training services


Pratap Vikram Singh | August 29, 2013

The approximately 1 lakh rural internet kiosks set up by the government are soon going to be one-stop shops for government-related services. Be it opening a bank account, applying for voter ID card, updating Aadhaar database or applying for a skill development programme – it’s all going to happen there.

As per plans, these kiosks will deliver services for banks, unique identification authority of India (UIDAI), direct benefit transfer, election commission and educational and skill development agencies.

In the past, common service centres (or CSCs), set up under the public-private partnership mode, remained largely inactive in the absence of public and business-to-consumer services. It primarily owed to the lack of efforts on the part of government and private organisations running the network.

Thanks to the initiatives undertaken by the government and private agencies, CSCs could become an integral part of village infrastrcuture. According to CSC Special Purpose Vehicle (SPV), set up by the department of electronics and information technology (DeitY) to oversee implementation of the CSC scheme, 25,000 CSCs will soon be made business correspondents (BCs) – offering savings, withdrawal and micro-loans. About 5,500 CSCs offer financial inclusion services at present. The CSC SPV has signed MoUs with 26 banks for this purpose.

“In future, you will have all 1 lakh CSCs (operating) as business correspondents because banks are realising that a CSC is a more stable and reliable agent,” says Dr Dinesh Tyagi, CEO, CSC SPV (see interview in following pages). He says the ultimate aim for providing banking services through CSCs is to facilitate the direct benefit transfer (DBT) scheme, through which the government aims to distribute '3 lakh crore annually.

“Ultimately, we are eying for roll-out of DBT through CSCs. If every CSC could become a BC (business correspondent), each village-level entrepreneur (VLE) will be able to do business of '3 crore.” In Jammu and Kashmir, CSCs are also helping citizens get loans, apart from being just BCs, Tyagi says.

“Last year’s commission earned by 460 of the total 700 VLEs was '5 crore,” he adds. CSCs have also emerged as permanent enrolment centres for UIDAI. As of now, 800 CSCs have become permanent centres. The CSC SPV plans to scale this to 5,000 enrolment centres by December. The election commission, too, has tapped the CSC network for outreach in rural areas.

“One simply can walk in to get a voter’s ID card, updating voter ID database and taking printouts of electoral rolls and list of polling booths,” says Dr Alok Shukla, deputy election commissioner. The roadmap for the roll-out of these services is being worked out. “We get reports of officials asking for bribe for making a voter’s ID card. (But) this monopoly of officials will be over very soon when the services are extended to the 1 lakh CSCs,” he says.

The ministry of women and child development is also using services of CSCs to reach e-literacy among women. Under its ‘Innovative Project for Empowering Rural Women’, the ministry plans to train 25,000 women on basic digital literacy in Chhattisgarh, Maharashtra, Punjab, Tripura, Uttar Pradesh and Rajasthan.

DeitY’s own organisation – the national institute of electronics and information technology (NIELIT) – runs a digital literacy programme to make one person from each family e-literate through the network of CSCs.

According to experts, rural internet kiosks have fared badly in the past due to multiple challenges. Only 19,000 centres (of the total 1 lakh, as claimed by the government) are transacting, or providing services, once in a month, according to data provided by the CSC SPV. The transactions are monitored through a web portal which registers the transactions at the centre when accessed by the VLE.

According to Tyagi, the number of centres could be more, as the anti-virus software being used by some VLEs does not allow the web portal programme to function. Some 70,000 centres are operational across the country at present, according to reports collected by DeitY from the states. The figures, however, are not very reliable as they are provided by the SCA. There is no mechanism put in place by the states to cross-check the figures.

The major challenge with running the centres has been the lack of financial support for VLEs, which becomes necessary in the complete absence of the government-to-citizen services that are the main attractions of any CSC. In the tendering process, the government had provided for a support of '4,000 per centre (the amount was higher in the northeast states, Jammu and Kashmir and a few Maoist-affected areas) for the initial four years. This funding is distributed between the SCA and VLE – primarily to compensate for the unavailability of online government-to-citizen services, as NeGP was still at a nascent stage of implementation.

However, during the tendering process, many companies won projects by making their bids as zero, even negative, in the expectation that these centres will be a golden goose as they saw huge amounts invested in social sector programmes, the MNREGS being one of them.

According to CSC SPV, 50,000 centres were set up based on zero bidding. But private players who won CSC projects through negative bidding, like 3i Infotech and Comet, backed out in the initial two or three years itself. Amid all this, VLEs found themselves in a fix. They neither had fiscal support from the government in the form of funds nor online services through which they could offer certificates and licences.

Making the kiosk viable became their priority, which ideally should have been the delivery of public services. Another challenge is the failure of the authorities in evolving a standard model for delivering government to citizen services. Aruna Sundarajan, principal secretary with the Kerala government and former DeitY official, says that over the years DeitY has not been able to ensure a minimum number of services that could be delivered from CSCs.

There is a need to create a standard, national model for specific services in the fields of health, education, financial inclusion and PDS that can be delivered across all 35 states and UTs from the CSCs, Sundarajan says. Apart from unavailability of services, the centres have been largely inactive in the absence of business-to-consumer services catering to requirement of the local community.

Only SCAs that have been able to cater to the needs of the community have achieved modest success. These SCAs are specialised in either delivering education, agriculture or e-governance-related services. Take, for instance, Basix, a leading name in microfinance too. The SCA, which operates in five states, is into promotion of development enterprise in rural areas.

VLEs under Basix are offering soil testing and selling high-value butlow-volume agro-products, such as vegetable seeds and micro-organism. According to Vijay Mahajan, founder and chairman of Basix, the rural-urban divide is shrinking in the context of aspirations and purchasing power of the people. But this divide is present in terms of distribution and infrastructure – hindering the accessibility to a wide range of services. The CSCs could be a leveller, says Mahajan.

While Basix is yet to earn profit in the CSC business, Mahajan is optimistic and is willing to have a long break-even period. So has been the case with Bhopal-based AISECT, which specialises in IT training and education services. AISECT operates in Madhya Pradesh, Chhattisgarh and Punjab at present. CMS Computers, which operates in Maharashtra, Madhya Pradesh, Uttar Pradesh, Rajasthan and Andhra Pradesh, is one of the SCAs that has been able to break even, according to the firm’s officials.

The company has experience in providing e-governance solutions since the days of e-seva – one of the earliest e-governance initiatives launched in Andhra Pradesh in 2003-4. In Maharashtra, CMS went ahead and developed applications for a semi-automated process for delivery of services, after government approval. According to CMS officials, the company sought participation of district magistrates in initiating e-governance at the district level.

As network connectivity improves – perhaps after the national optical fibre network reaches every single 2.5 lakh panchayats – CSCs can actually become an enterprise where facilities like telemedicine, tele-education, agri-extension and training could be offered in villages.

But this will not be a cakewalk for DeitY and SCAs, as these facilities would require industry participation and can only be feasible with a workable business model – a model in which the applicants are willing to pay for the virtual delivery of health, education and training. But as of now, the government and SCAs are yet to reach clarity about such workable business models.



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