MIT MAS 965 - Study on the Financial Sustainability of Village Internet Centers

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MIT OpenCourseWarehttp://ocw.mit.edu MAS.965 / 6.976 / SP.716 NextLab I: Designing Mobile Technologies for the Next Billion UsersFall 2008 For information about citing these materials or our Terms of Use, visit: http://ocw.mit.edu/terms.eChoupals: A Study on the Financial Sustainability of Village Internet Centers in Rural Madhya Pradesh – Richa Kumar Class Discussion - by anonymous MIT studentSustainability Sustainable Development - A form of progress that ensures human development and that “meets the needs of the present without compromising the ability of future generations to meet their own needs”1 1World Commission on Environment and Development Financial Social/Cultural Technological Political/Institutional Sustainable Development - A form of progress that ensures human development and that “meets the needs of the present without compromising the ability of future generations to meet their own needs”1FinancialSocial/CulturalPolitical/InstitutionalTechnologicaleChoupal Overview • Commercial ICT project by ITC’s International Business Division in 2000 • Enable Efficiencies in agricultural sector o Greater information exchange. Future’s price Information o Create alternate market structures o Pooled Purchasing at Wholesale prices for Inputs o Weather InformationBusiness Model • Network of eChoupals (Centers in villages with computer and Internet connection) • Local Farmer acts as an Coordinator o Receives commission of 0.5% for every transaction • ITC provides a collaborator for logistics • Startup and training costs borne by ITC • Operation cost – electricity, telephone borne by Coordinator • Access to Price Information, email is FreeeChoupal Supply Chain1 Pricing (Sauda) Inbound Logistics Lab Inspection Weighing & Payment Hub Logistics • ITC Price Quote • Transaction slip given by Coordinator • Arrange transportation • Transport Cost reimbursed • Sometimes coordinators transport materials at own expenses • Crop tested using electronic machine • Farmers can contest test results • Agree upon Price (for inferior products) • Weigh on large automated scale • Immediate Payment • Processing plants • Warehouses 1Adapted from “What works Case Study:ITC's e-choupal and profitable rural transformation” By Kuttayan Annamalai and Sachin Rao, World Resources Institute. • Arrange transportation• Transport Cost reimbursed• Sometimes coordinators transport materials at own expenses• Crop tested using electronic machine• Farmers can contest test results• Agree upon Price (for inferior products)• Weigh on large automated scale• Immediate Payment• Processing plants• WarehousesTransaction Costs (Rs./MetricTon) Source: Kumar, Richa. "eChoupals: A Study on the Financial Sustainability of Village Internet Centers in Rural Madhya Pradesh." Information Technologies and International Development 2, no. 1 (2004): 45-74. Courtesy of the USC Annenberg School for Communication..Financial Analysis • Only 16 months of data available. Analysis based on extrapolation of existing data • Cost Recovery in 3.9 to 5.8 years o Opportunity cost of 10% to 20% o Probability of monsoon failure 20% to 50% • Replacement cost of equipment may make project unsustainable. • However calculation based only for Soybean procurementDiscussion 1.What can be some of the challenges in implementing the eChoupal model in other countries? 2.Can the model be evolved with the availability of low cost Mobile Technology? 3.Can the portal be used for other purposes – retail/information/farming best


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MIT MAS 965 - Study on the Financial Sustainability of Village Internet Centers

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