The case highlights the struggles that rural businesses and people face in many aspects of technology driven modern life in India. Nachiket’s difficulty in managing ATM business in rural areas is a typical case. High cost of operation due to difficulties in logistics, controls, checks as well as small size operations, and the risk of doing business can often reach break point and is sometimes saved only by the belief of people like Anna who tried to urge people to think about the black money menace and pacify them on demonetisation hassles. People have to go through life threatening ordeal for reasons (like black money) they feel are not relevant to them. Demonetisation has been a bolt from the blue for them. They are also perplexed as to why the government cannot identify the black money hoarders who flaunt their assets openly. However, like the people in KD village, there is a tendency to seek comfort in self-containment.
The dualism of ‘Bharat’ and ‘India’ has been accentuated since the era of economic reforms. While economic liberalisation created infrastructure, markets, industrial growth and employment opportunities in urban areas, rural India is, more or less, untouched. Hardware infrastructure such as road, power, connectivity are grossly inadequate and of poor quality making it high cost and risky to set up any business. Software infrastructure such as education and health facility are also of very poor quality. The agro-based manufacturing type industries set up by the rural investors bear the brunt of lack of quality infrastructure. With the decreasing size of land holding coupled with cumbersome land market processes, farming is also becoming unviable. As a result, rural folk remain poor and resigned to their fate. Which also explains why demonetisation in villages like KD seemed life threatening.
Poor quality education facility and support systems fail to provide the experience that help in acquiring knowledge, skills and attitudes that are conducive to social participation; hence rural youth are ill-prepared. Results: a) Lower achievement levels in literacy and life skills; b) Rural students seek less rigorous degrees, (local language courses are simpler) and c) As a result, not employable in the private sector; d) Many poor rural youth migrate to cities and commonly take up manual jobs. The older folk with limited education/ exposure are hesitant to adapt to new systems, processes and technology. People like Nandi are in every village and in plenty.
While focus since economic reforms has been mainly on overall economic growth, it did not matter whether the growth originated from the rural or urban areas. While increased urbanisation created employment opportunities, rural areas remained stagnant, and able-bodied rural youth migrated, leaving behind the older folks. The schemes that governments floated to help rural India, suffer from ineffective implementation. A large number of bank accounts were created to enable direct transfer of benefits, but the money flow to these accounts have been dismal. The poor access to banking facilities and the attitude of the bank staff inhibits the banking habit, the common practice being, ignoring the rural poor or treating them with suspicion and neglect. Treatment of poor in government offices is no different, so that the rural poor always view these institutions as unfriendly.
To them, the perceived transaction costs in dealing with these formal institutions are high. Even the banking correspondent facility is seen with distrust. People are left to the mercy of money lenders and commission agents/dealers who charge exorbitantly like in the case of Anna, who incurred a discount of Rs 3,000 on Rs 25,000. Therefore, the transactions in white label ATM are also low. Mandatory banking needs transformational change which can happen with only external assistance. As evident in some villages, village-level banking correspondents run by a progressive NGO can help create accounts and transaction, and overcome the current difficulty in the rural areas, as also stepping up of basic infrastructure like power and connectivity.
The writer is is Professor in the Economics and Social Sciences area in the Indian Institute of Management Bangalore. His research interest is in the area of agribusiness and rural development
Guest Author
The writer is is Professor in the Economics and Social Sciences area in the Indian Institute of Management Bangalore. His research interest is in the area of agribusiness and rural development
