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Online service brings 'peace of mind' to rural India

Jul 10, 2009

A unique public-private enterprise has democratised information services in a south Indian state, providing easy access to digitalised records from birth certificates to pension documents. The initiative is not only bringing e-governance on the doorsteps of millions of rural poor but also empowering them with language and IT skills.

Bangalore: It's a sweltering day in May, the hottest time of year in the South Indian town of Sathanur. In the shade of a whitewashed storefront, a rugged, mustached man named Nagabhushana Achalu is filing his first application for a certificate that will help his children go to school.


Within minutes the kiosk operator behind the counter has logged on to the state government's intranet and sent Nagabhushana's application to a server in the state capital, 40 miles away.

That may not sound remarkable, but in rural India it's a revolutionary act.
As a member of the Adi Karnataka, one of India's Scheduled castes, formerly called untouchables, Nagabhushana has limited employment options. He earns a meager Rs 5,000 rupees a year from rice and millet farming.

But there is a ray of hope in his life: Private schools in his state, Karnataka, have abolished fees for members of scheduled castes. His two children can go to a good school for free – so long as their father has the official "caste and income" certificate to prove his poverty.

"Sriram Raghavan intends to prove that the world's billion-plus rural poor can be a lucrative market for online services"

The process of getting one – and the bribery involved – was too costly until the man with the kiosk came along.

India, famous for its bureaucracy, is where entrepreneur Sriram Raghavan intends to prove that the world's billion-plus rural poor can be a lucrative market for online services.

Raghavan, 36, once built software for US corporate clients. Now, backed by US venture capital and undeterred by acts of violence against his outlets, he is succeeding where others failed: providing Internet services that villagers actually need and making a profit from their micro-payments.

"We're democratising information services," he says.

Cutting costs

Raghavan's company, Comat Technologies, runs 800 kiosks (called Nemmadi, "peace of mind" in Kannada, the state's official language) out of Bangalore, in southeast Karnataka. Though customers like Nagabhushana rarely pay more than Rs 15 at a time for Comat's services, its revenue has grown from less than $1 million to $15 million in the past five years.

Raghavan says the company turned a modest profit in 2008.
Similar "telecentres" exist in poor countries all around the world. What matters is how they are used.

"If a centre is there to provide access to e-mail and the Internet, there is no future for it," says Florencio Ceballos, programme manager at, a research group sponsored by Microsoft and the Canadian and Swiss development agencies.

"For Indian small farmers, obtaining vital documents is a laborious and pricey ordeal"

"If the centre is able to offer public and private services and sell products – that's a completely different story."

For Indian small farmers, obtaining vital documents is a laborious and pricey ordeal. In Nagabhushana's case, merely getting to the nearest government office, a 14-mile bus ride away, costs Rs 30.

Those who are illiterate must spend around Rs 100 to hire one of the form-filling brokers who loiter outside government buildings all over India. They might spend an additional Rs 200 greasing the palm of an official to speed up the process, then return to the government office up to three more times before the certificate is ready.

None of that is necessary at the Nemmadi centre, a Rs 5 bus ride from Nagabhushana's home. The line is short, the operator is helpful, and no bribes are required. Nagabhushana can always check the status of his application with a simple visit or phone call to the Nemmadi. Once the certificate is issued, the operator will be able to access it online and print a copy within minutes – all for Rs 15.

Multiply that by 700 million, the size of India's rural population, and you start to see Comat's dizzying opportunity.

For years development pundits pushed Internet connectivity as a cure-all for poverty. But numerous entrepreneurs have learned, to their cost, that what we think of as core Internet services – e-mail and the Web are of little use to illiterate farmers living below the poverty line.


When Raghavan co-founded Comat in 1996, selling to the rural poor was far from his mind. The company started out as an international software outsourcing firm specialising in network support.

In the 1990s Raghavan set up a branch of the company in Dallas that brought in $3.5 million a year at its peak. He later sold the Indian outsourcing business to Atlanta-based Software Paradigms International.

Then came a 1999 contract from the Karnataka state government in South India. The project, called Bhoomi ("land" in Hindi), was to computerise the state's land-record system.

Previously, records had been held by village accountants, who often took bribes to make favorable adjustments to farm boundaries. Bhoomi was designed to create a digital trail of any alterations, making fraud easier to spot.

Comat employees spent four years digitising more than 20 million paper land records in some 20,000 villages.

By 2004 the state's land records were online and accessible in 177 local government offices. But the project wasn't particularly profitable for Comat, and getting paid by the state took as long as 12 months.

So in 2006 Raghavan made Karnataka an offer it couldn't refuse. Through a public-private partnership Comat would open hundreds of centres in the state's rural areas and digitise other records – everything from birth certificates to pension documents – at no charge.

Comat would pay the government a share of the Rs 15 fee it charged citizens for each certificate: Rs 9 for land records already digitised, Re 1 for certificates that it was in the process of putting online.

The government didn't need much convincing. By 2008 Comat had rolled out 800 centres, positioned so that most rural Karnatakans wouldn't have to travel more than seven miles to reach one.

Each centre was equipped with a computer, printer, backup power and satellite hook-up. Together they now process more than 50,000 government transactions a day.

This has provided relief for officials as well as citizens. The annual school admission season used to be a nightmare for Ravi Tirlapur, head of a government office in southern Karnataka. Thousands of applications for different kinds of certificates would pour in, forcing Tirlapur to spend long nights signing every one.

"I used to get a pain in my hand," he says. These days he simply inserts a card into a reader to place a bar code on each document.

Disrupting the old order

Since 2007 there have been several small-scale attacks on the Nemmadis. Computers and printers have been stolen. Kiosk operators have been harassed. A mysterious fire destroyed one centre; an unidentified assailant smashed a truck into another.

Raghavan suspects that the culprits were the information brokers who profited from the old system. "It's part of the game," he says with a shrug.
Raghavan is working hard to expand his product line. "You need to offer a range of different services to be viable," says Basheerhamad Shadrach, Asian programme manager of

Here Raghavan is following the lead of one of India's biggest rural-business success stories, Drishtee. Since 2000 Drishtee has set up more than 4,000 franchises across 12 states, providing health care and microfinance services – but not in Karnataka.

Raghavan is betting that Comat's unique e-government service has won him enough consumer loyalty that Drishtee will find it impossible to compete in that state.

For the past year Comat has been offering vocational training such as English lessons and IT classes, which together generate a third of the company's revenues. This year Comat signed a deal with India's Life Insurance Corporation to become its agent, collecting premiums and settling claims.

Raghavan is also looking to bring mobile ATMs to Karnataka villages and set up bank accounts for state pension payouts, so the money can be deposited automatically.

"But it's a matter of time before they come around. We're making government better"

Comat can expand only so far in Karnataka, a state with 52 million residents. Some observers doubt there's enough political will elsewhere in India.

Raghavan says that he's in talks with local governments that might be persuaded to emulate Karnataka's system. "Poorer states are more interested in subsidizing rice or sugar," he admits, "but it's a matter of time before they come around. We're making government better."

Source : CNN Money
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