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Inclusive Growth through Mobiles – II The first part of this two-part paper examined the stupendous growth of mobiles and the opportunity for leveraging their penetration for achieving inclusive growth. The concluding part examines the policy environment around the mobile ecosystem and also takes note of key challenges in the path of achieving this objective Ashis Sanyal
T
he four major stakeholders in the mobile eco-system, namely, Government, Regulator, Private Sector Industry and the Civil Society, do understand the potential of the mobile media. However, an all-out buy-in has been rather slow in coming from them. The need for an effective policy and regulatory framework, aided by innovative business models created for the bottom of the pyramid and improvements in network capacity and utilisation are all necessary in order for mobiles to achieve the potential for becoming tools for inclusive growth.
Financial Inclusion through Mobile Platform One of the important cornerstones of inclusive growth is financial inclusion for which the primary attribute is greater access to capital. Mobile platform can be a very potential tool for the same. We recall that out of 1100 million of Indian population, nearly 70 percent lives in rural locations and over 90 million rural households are on farming. Out of the farm households, approximately 27 percent are indebted to formal sources and 13 percent are availing loans from the banks in the annual income bracket of INR 50,000 or less. Millions of people in rural and remote areas in India March 2012 / www.egovonline.net / egov
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have little or no access to credit, even from non-institutional sources. National Sample Survey recently estimated that approximately 50 million farmer households in India have not taken any bank credit so far. Rural banking does not appear to be a financially viable activity for banks either. Today, the number of mobile phone users is much higher than the number of bank accounts held by the rural citizens in India. Consequently, a large section of the country’s rural population now has access to mobile telephony but not to basic financial services. This network can be effectively utilised for creating a branchless banking system for the communities not having any access to basic financial services. Technology also makes it possible to build commercially viable and scalable banking model to handle many small accounts having micro transactions, dispersed over large geographic areas. Low tariffs and low cost of handset provide a clear value proposition for driving financial inclusion through mobile platforms. Keeping all these in view, Government of India has taken commendable pro-active actions to usher in financial inclusion, by way of providing the framework for delivery of basic financial services through mobile phones. The basic transactions permissible through ‘mobile-based no-frills’ accounts would include cash deposit, cash withdrawal, balance enquiry, transfer of money from one mobile- linked account to another and transfer of money to a mobile-linked account from a regular bank account. The framework would also facilitate the transfer of funds under various government schemes, such as the National Rural Employment Guarantee Act, to a mobile account. The inter-ministerial group set up by the government in November 2009, after extensive discussions among members of the group and with other stakeholders, finalised recommendations in March 2010, ( www.mit.gov.in/ sites/upload_files/dit/files/ReportoftheInterMinisterialGroup.pdf ). These relate to relevant norms and modalities that would make mobile banking an integral part of banking services and were approved by government as the basis for delivering financial services using mobile technology. The service, based on mobile phones and biometric authentication, would form the core micro-payment platform for the transfer of benefits under various government schemes, micro-payment services and financial inclusion for the target groups of social sector programmes.
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Mobile for governance With over 890 million mobile phone subscribers (even with approximately 650 million active users around) , India offers a unique proposition to the authority to reach the citizens and deliver public services. This gains ground for the fact that at least 1 out of 3 villagers in India now would have a mobile connection. The Department of IT issued in April 2011 a Draft Consultation Paper on Mobile Governance Policy Framework which was finalised in January 2012 after due consultations with the stakeholders. The Policy Framework is available online at www.mit.gov.in/content/frameworkmobile-governance. The Framework addresses many essential issues such as making government websites mobile-compliant, developing mobile applications in open standards to become interoperable across various operating systems and devices, use of uniform/single pre-designed numbers in the form long/short codes for mobile services, creation of Mobile Service Delivery Gateway (MSDG) as the core
Government of India has taken commendable proactive actions to usher in financial inclusion, by way of providing the framework for delivery of basic financial services through mobile phones
integrating infrastructure for multi-channel delivery and with metered access for all service providing entities and many others. The Framework is also expected to ensure transformation of delivery of public services through promotion of innovation and fostering multi-stakeholder partnerships. This Framework would be a major step forward to effectively use the mobile platform with all-encompassing technological, organisational, financial, infrastructural and human capacity aspects which are important to bring in inclusive growth.
enhancement of the network capacity is required. Total cost of ownership for state-ofthe-art mobile handsets has to come down further. Tariffs and access charges for use of mobile applications and content also need to be rationalised. Innovative business models and appropriate policy are key requirements for this to take root. In the current highly competitive space for the mobile service providers, the average revenue per user (ARPU) for voice services is steadily shrinking. A recent White Paper released by PWC India painted a bleak picture for the mobile ecosystem in the coming 2-3 years. One feels that in the forthcoming years, mobile value-added services (m-VAS) should lead the growth from the front. Further, the m-VAS content developers should explore innovation opportunity from the service providers, especially for the content for rural India, as the citizens there would need information on health, education, weather, market and various policies and schemes of the government that would benefit them. It would definitely take few years to saturate this eco-system as the content space is very large and diverse, due to language, culture, knowledge-base and other specificities. However, there are bumpy roads ahead for developers in the mobile VAS as the applications are required to be developed for various handsets in various platforms, tools formatted in various standards, interoperability among many Operational Systems. The content management system would have to be complex as the developer would have to understand needs of rural citizens and select appropriate content keeping the constraints such as low literacy, local language in mind. The other alternative may be to create IVRS-based delivery systems. There is an essential requirement for complete integration of mobile delivery infrastructure with the core e-Government backbone infrastructure. Also mobile-based financial inclusion applications should be interoperable with the banking IT infrastructure. The mobile-payment gateway needs to be established. And there should be robust e-authentication application also which can ride on mobile system.
Closing Remarks Issues to be Resolved There are many challenges to realise acceleration in the diffusion of mobile services. To improve the current low usage of mobile internet with mobile-3G services, substantial
Mobile platform is already exhibiting its potential for paradigm shift in the quality of life, leading to inclusive growth in developing countries, especially in South Asia and good governance through mobile platform is becoming a reality.
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March 2012 / www.egovonline.net / egov
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Governments’ pro-active initiatives in creating the enabling eco-system, entry level handsets with affordable price, many text-based VASs, highly competitive market environments, are all in favour of mobile platform as a formidable channel for delivery of government services to realise Inclusive Growth. In rural remote locations, with no OFC-based telecom connectivity presently, mobile can be established as a primary channel, till wired Internet connectivity is implemented in such places. To usher in effective inclusive growth through mobiles, it is very much necessary to fast establish robust mobile infrastructure for remote locations. It is heartening to observe that Government of India has appreciated the fact that telecommunication connectivity is not to be seen in isolation from other elements of developmental process and currently limited physical infrastructure is going to constrain harnessing of potential benefits of high growth in mobile eco-system. Therefore
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government has taken a concrete view on how the Universal Service Obligation Fund (USOF) can be better used for proliferation of rural broadband connectivity. Since the inception of this USO Fund and binding on the telecom service providers to connect the rural India, the private operators, in absence of a viable revenue model for them, have eventually chosen to pay the penalty for not going to the rural areas. This situation, over the last few years, added significantly to the USO Fund. Time has come to utilize this fund for quick proliferation of rural broadband connectivity. Obviously, once the towers are established, it would be easier to meet the target for mobile broadband also, should the cost of the relevant handsets be affordable. Government may consider taking a coherent policy for both the connectivity and the handset, even for a short term, to facilitate this option. In another context, notification for an appropriate content policy is also overdue. Interestingly there
is no specific mention about the content policy in the new draft telecom policy announced by the government. This needs to be addressed. To facilitate mobile governance, essentially there should be a thought for incentivized, revenue sharing business model, especially, for the content and applications in the social sectors like education, health, social welfare etc. As of now, immediate need is for a systematic and integrated set of development policies, to sustain the benefits currently visible from the mobile platform and the possibilities offered by it towards inclusive growth.
the author last served as Senior Director in DIT, GoI. He now works as an Independent Consultant