1. lq'kkl u School of Good Governance And Policy Analysis National Workshop on Disseminating Information on Good Practices in Public Service Delivery June 5, 2009 ITC's e-Choupal Movement: Transforming Lives and Landscapes -Shri Rajnikant Rai, Executive Vice President, ITC-Agri Business Division, Secunderabad

2. Scope of My Presentation  What is Governance? 7What constrains Good Governance in rural India?  What is ITC eChoupal? How does / can ITC eChoupal play a role in Good Governance in rural India?

3. What is Governance? (the people perspective – a subset relevant to this presentation) Expanding people’s freedom of choice and action Enhancing people’s capabilities to shape their own lives Economic Empowerment Connecting People to Markets, Policy for favourable Investment Climate, Quality Infrastructure Social Empowerment Issues of Exclusion, Access to Assets & Basic- Services (Health / Education), Accountability Political Empowerment Access to Government Regulation with minimum controls

4. What Constrains Good Governance in Rural India (e.g. Farmers)?  Fragmentation, Dispersion, Heterogeneity Most of them are small (1.5 ha average holding) oThey do not have bargaining power All of them live in hinterlands (600,000 villages) oThey do not have access to real time information The circumstance of each one is very different (agro-ecological conditions, resources) oThey cannot get customized knowledge advise  And, all this is further compounded by weak infrastructure oPhysical, Social, Institutional

5. The ITC eChoupal Proposition  Step 1: Leveraging Information Technology for empowered access to markets (inputs & outputs)  Step 2: Economic viability of IT infrastructure investments through Win-Win business model, hence scaleable  Step 3: Customer responsive IT infrastructure in the villages facilitate access to supplementary Education, Health, eGovernance services

6. VILLAGE TOWN Farmer Mandi Price Discovery @ Sell Transaction Video PRODUCT & SERVICE PROVIDERS Money Lender Financing Market Transaction Extension Center Knowledg e (Use) Traditional Transactions Sell: Buy: Middleman sunk costs, inconvenience, other losses high prices, spurious goods, information not timely Information (Aggr)

7. TOWN Mandi Samyojak Choupal Saagar VILLAGE Farmer Sanchalak Transactions Transactions through ITC eChoupal Sell: Buy: Information (e.g., Price Discovery) Video Knowledge (Customized) PAN-INDIAN PRODUCT & SERVICE PROVIDERS Price discovery @ village, choice, efficiency Information + Customized Knowledge @ village, high quality, competitive prices, superior service

8. Transaction Costs in Mandi Chain Soybeans Example Farmer Incurs Trolley Freight to Mandi = 120 Labour = 50 Kacchha Adat = 150 Handling Loss = 50 Rs per MT 370 Processor Incurs Commission to Agent = 100 Cost of Gunny Bags (net) = 75 Freight to Factory = 120 Handling at Mandi = 40 335 Total Chain 705

9. Transaction Costs in Choupal Chain Soybeans Example Farmer Incurs Trolley Freight to ITC Hub = 120 Labour = 50 Kacchha Adat = 150 Handling Loss = 50 Rs per MT 370 Processor Incurs Commission to Sanchalak = 100 Cost of Gunny Bags (net) = 75 Freight to Factory = 120 Storage & Handling at Hub = 40 335 Total Chain 705 120 50 Cash Disbursement Costs = 50 215 335

10. The eChoupal Infrastructure  ICT Kiosk with Internet Access In the house of one trained farmer, Sanchalak Within walking distance of target farmers  Warehousing Hub Managed by the erstwhile middleman, Samyojak Within tractorable distance of target farmers

11. The Privileged Assets of eChoupal 1.ICT Infrastructure: a.Computer b.Internet c.VSAT d.Power Backup : Solar Cells and UPS 2.Physical Reach: a.Choupals within walking distance b.Multipurpose WH hubs within tractor able distance 3.Key Intermediaries: a.Sanchalak (1 per cluster of 5-6 villages) 2000/state b.Sanyojak (1 per group of 30-40 choupals)

12. Key Success Factor Self Sufficient Infrastructure Power Connectivity Training

13. The structure HUB eChoupal(40/hub) Catchment village (5/choupal) Tier 2 Tier 1 Tractable distance HUB – Planned to graduate to a Rural Superstore

14. 24 Hubs upgraded to Malls

15. The eChoupal Services  Relevant & Real-time Information Commodity prices, Local Weather, News  Customised Knowledge Farm Management, Risk Management  Supply Chain for Farm Inputs & Screened for Quality, Demand Aggregation for Competitive Prices & Efficient Logistics  Direct Marketing Channel Lower Transaction Costs, Better Value through Traceability Products access @ door step @ reasonable prices

16. Bottomline for the Farmer  Higher Incomes through Increased Yields Improved Quality Reduced Transaction Costs :Power of Scale to the Small Farmer :Customised Knowledge despite Heterogeneity :Real-time Information despite Distances

17. CSR Initiatives through e Choupal : Sunerha Kal Sunerha Kal (CSR) Initiatives focus on Improve Farmer Livelihoods Long Term Community Impact programmes Livestock Management programmes Water Management Self Help Groups focusing on women Leveraging capability of ITC ‘s management skills, “e-choupal “reach, human and physical Infrastructure The knowledge & experience of NGO’s

18. Causeway cum Stop Dam, Nalkui

19. Livestock Management

20. Earthern Dam – Morewani,MP

21. Women SHGs -Chikankari

22. What’s in it for ITC?  Better supply chain for ITC’s Food & Agri Businesses Costs, Quality, Traceability  Access to the Underserved Rural Markets Through a Virtuous Cycle created by “Larger Incomes”, and founded on “Trust” that is built  New Business Opportunities Health, Education, Entertainment, eGovernance

23. Scale Today Kiosks: 6,200 Villages: 31,000 Farmers: 3.5 million

24. Thank You ITC Limited