Tapan is a middle-aged resident of Bhogpur village in district Purba Medinipur, 75-km from Kolkata, involved in his traditional family business of farming. For several years he had been visiting his nearest bank branch for withdrawing or depositing money, travelling over 15-km; similarly, to make electricity bill payments, he would need to go every month to the nearest collection centre, again time-consuming. However, things have changed rapidly in the recent past with a new Digitalised Common Service Kendra opening up in his neighbourhood, where not only are his banking and bill payment needs are getting conveniently fulfilled, but he can also now get top-ups for his mobile and DTH, book rail tickets, and get online motor insurance for his two-wheeler—all digitally and literally at his doorstep. This is the new rural reality.
The Indian economy is predominantly rural with over two-thirds of its population and workforce residing in rural areas. Rural India contributes a substantial part of the total net value added in many sectors, with an overall 46% contribution to our national income. With a population of 833 million people (which incidentally is larger than rural China) residing in 640,867 villages, it is projected that, by 2050, more than half of India’s population will still be rural, despite rising urbanisation. Thus, the growth and development of the rural economy is imperative for inclusive development and overall growth of the country.
With increasing contribution to development and exposure to needs, the buying capacity of rural Indians has taken a sharp upward turn. However, rural consumers have a strong value-for-money orientation, significant local cultural affinity, and a more conservative financial outlook. Their purchasing aspirations are often constrained by easy availability. Digitisation and technology can facilitate access and availability of more and more services and products be made available to meet the rising aspirations of the underserved and unreached rural India. This is being driven strongly through the government’s Digital India programme. One of the key enablers is the growing internet penetration, expected to grow from 25% in 2016 to 55% by 2025.
Rural India is expected to leapfrog urban India and constitute nearly half of all Indian internet users by 2020. Digitisation can facilitate some of the key needs of rural India including e-governance services, banking and financial services, educational and healthcare services, mobile/DTH recharge, e-ticketing services, online shopping, etc. Over 10 years ago, the government, through its flagship National e-Governance Plan, envisaged to empower rural citizens by making available various government services to them via electronic media and created access points, i.e. common service centres run by village-level entrepreneurs (VLEs) at the village and gram panchayat level.
These ‘brick and click’ centres act as one-stop digital outlets providing both government and business services to rural citizens. Keeping in mind the evolving needs of rural citizens, the service portfolio available at these centres has gradually expanded beyond government services to banking, financial services, mobile top-ups, electricity payments, railway bookings, e-learning and e-commerce. Financial inclusion is an important priority of the government. Only 38% of the 117,200 branches of scheduled commercial banks are working in rural areas, and a meagre 40% of the households have bank accounts. Thus, India is home to 19% of the world’s unbanked population.
This gap at the last-mile is being filled by banks through a combination of finance and technology enabled by business correspondent agents at these kendras where customers can open accounts and do normal banking transactions. To further enable mass transactions, AePS (Aadhaar-enabled Payment System) has been launched wherein rural citizens can perform simple banking transactions like deposit and withdrawal through their biometric ID and Aadhaar number at any of the AePS kendras. Adoption of financial services like life, motor and health insurance by rural consumers is a challenge, considering their difficulty in understanding the need and importance of such an insurance cover; it is also time-consuming.
But with technology and processes becoming easier online, common service centres are playing an important role in furthering the adoption of financial services. Digital payment is another basic need—for mobile phones, DTH or electricity bills. With options being available at their doorstep through common service centres, villagers can do top-ups or pay bills at the click of a button. Besides, with growing awareness of e-commerce, rural consumers are seeking such online shopping options that are currently available only to their urban counterparts.
E-commerce portals with a focused approach to cater to the needs of rural population are gaining popularity. This is only the beginning of a new wave that is impacting the bottom of the pyramid. While on one hand demonetisation paved the path for quicker adoption of digital payments, on the other there are several start-ups with novel solutions in digital learning and tele-medicine knocking on the doors of the rural consumer. This rural awakening is also creating fresh opportunities for rural entrepreneurship, wherein the rural youth are seen providing digital services to their brethren, ensuring quicker adoption of such services.
Sanjay Nandrajog
CEO, Sahaj e-Village Ltd
