1 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 Compendium of Papers 2009-10 Skoch Development Foundation Gurgaon, Haryana 2 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 Published 2010 By Skoch Development Foundation (a Section 25, Not-for-Profit organization under the Companies Act, 1956) A 222, Sushant Lok, Phase I Gurgaon 122001, Haryana India e-mail: info@skoch.org web: www.skoch.org © 2010. Copyright: Skoch Development Foundation ALL RIGHTS RESERVED No part of this compendium shall be reproduced, stored in a retrieval system, or transmitted by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the copyright holder(s) and /or publishers. The views expressed by authors are their own and not necessarily shared by the publication, its editorial team or the organization. 3 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 Compendium of Papers 2009-10 4 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TAB LE O F C O NTE NT Technology 1. Money Laundering: An Insight into The Modus Operandi with Case Studies Arvind Giriraj and Prashant Kumar Mishra 2-10 2. Making India a solar energy economy Prospects & Challenges Ravi Prakash 2-10 Governance 3. Dynamic changes during recent elections in Urban Citizen of Andhra Pradesh Kasturi Srinivasa Vijaya Sekhar and Dr R K Bagga 2-10 4. Srishti - A GIS Framework for Grass Root Level Planning G P Singh /2-10 5. Social Security for Urban Poor Jatinder Singh /2-10 6. E-governance, Social Networks and Public Policy D C Mishra /2-10 7. City-wide Poverty Reduction Strategy Approach Paramita Datta Dey /2-10 8. E-Governance - Efficiency and Challenges in India Hemant Mistry /2-10 9. ICT to enhance the adaptive capacity of the community to water affliction Sakshi Saini /2-10 10. Technology enabled Super-Ecosystem for Inclusive Growth: A super-ecosystem to look at inclusion in totality Srivalsan Ponnachath and Subhro Mukherjee /2-10 11. Good Governance and Employment Generation through NREGA Dipjoy Sen Roy /2-10 5 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 Disaster Management & Security Digital Inclusion 20. Universal Citizen Identity David Gung 2-10 2-10 12. Battling Disasters through Partnering Pawan Desai 2-10 13. Information Security Threats: Implications for National Security Dinesh Pillai 2-10 21. Digital Inclusion at Grassroots Level for Achieving MDG L R Yadav and R S Singh 2-10 14. Information Security using Genetic Algorithm and Chaos Anil Kumar and M K Ghose 2-10 22. Social Security for the Informal Sector in India Shrey Goyal and Varun Singh 23. CRM and Stakeholder Management Ramakrishnan Rasipuram 2-10 24. Digital Divide in India: Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide Sumanjeet Singh 2-10 25. UID - Challenges, Applicability and opportunity Sudhir Aggarwal 2-10 26. Scientific Infrastructure for Inclusive Growth Rajesh Kumar 2-10 27. Assessment of Citizen Empowerment Under E-Governance using Analytical Hierarchy Process Case Study 'Jankari', RTI Call Centre In Bihar S N Mukhopadhyay and Jayanta Chatterjee 2-10 Financial Inclusion 15. Integration of Financial Markets of India: An Empirical analysis of Post Liberalization Period Gargi Sanati 2-10 16. Technology options for financial inclusion K G Karmakar and N P Mohapatra 2-10 17. Issues and Challenges of BC/BFs in Financial Inclusion K G Karmakar and N P Mohapatra 2-10 18. Financial Inclusion through Financial revitalization Bijay Kumar Swain 2-10 19. Reconciling Accelerated Growth with Inclusive Growth through Panchayati Raj Nupur Tiwari 2-10 Urban Development 28. Data Gaps in Urban Informality Nithya Raman 2-10 29. Delhi Metro - Promoting Public Transportation System for sustainable Urban Development Surinder Pal Singh 2-10 30. Resource Mobilisation for Urban Infrastructure Development: Instruments and their Potential Ramakrishna Nallathiga 2-10 31. Urban renewal and infrastructure Spotlight on Housing for the Urban Poor Jatinder Singh 2-10 32. Fiscal Decentralization and Resource Mobilization for Urban Infrastructure K K Pandey 2-10 6 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II MONEY LAUNDERING – An Insight Into The Modus Operandi With Case Studies Money Laundering An Insight Into The Modus Operandi With Case Studies Arvind Giriraj IV Year BA LLB Hons. Prashant Kumar Mishra IV Year BA LLB Hons. Introduction Money Laundering refers to the conversion or "Laundering" of money which is illegally obtained, so as to make it appear to originate from a legitimate source. Money Laundering is being employed by launderers worldwide to conceal criminal activity associated with it such as drug / arms trafficking, terrorism and extortion. But in simple terms it is the Conversion of Black money into white money. Money laundering is the criminal practice of filtering ill-gotten gains or “dirty” money through a series of transactions, so that the funds are “cleaned” to look like proceeds from legal activities. Money laundering is driven by criminal activities and conceals the true source, ownership, or use of funds. The International Monetary Fund has stated that the aggregate size of money laundering in the world could be somewhere between 2 and 5 percent of the world’s gross domestic product. Money Laundering has a close nexus with organised crime. Money Launderers amass enormous profits through drug trafficking, international frauds, arms dealing etc. Cash transactions are predominantly used for Money Laundering as they facilitate the concealment of the true ownership and origin of money. Criminal activities such as drug trafficking acquire an air of anonymity through cash transactions. The most common types of criminals who need to launder money are drug traffickers, embezzlers, corrupt politicians and public officials, mobsters, terrorists and con artists. Drug traffickers are in serious need of good laundering systems because they deal almost exclusively in cash, which causes all sorts of logistics problems. One important aspect of money laundering is the tendency and need for perpetrators to operate cross border schemes for the purpose of concealment and/ or to take advantage of the uneven developments in the national anti money laundering regimes. Banks and financial institutions are vulnerable from the Money Laundering point of view since criminal proceeds can enter banks in the form of large cash deposits. Bank officials therefore need to exercise constant vigilance in opening of accounts with large cash deposits and in checking suspicious transactions. 7 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II MONEY LAUNDERING – An Insight Into The Modus Operandi With Case Studies Historical Evolution Methodological Phases: Efforts to launder money and finance terrorism have been evolving rapidly in recent years in response to heightened countermeasures. The international community has witnessed the use of increasingly sophisticated methods to move illicit funds through financial systems across the globe and has acknowledged the need for improved multilateral cooperation to fight these criminal activities. ‘Money laundering’ as an expression is one of fairly recent origin. The original sighting was in newspapers reporting the Watergate scandal in the United States in 1973. The expression first appeared in a judicial or legal context in 1982 in America. Money laundering as a crime only attracted interest in the 1980s, essentially within a drug trafficking context. It was from an increasing awareness of the huge profits generated from this criminal activity and a concern at the massive drug abuse problem in western society which created the impetus for governments to act against the drug dealers by creating legislation that would deprive them of their illicit gains. The term "money laundering" is said to originate from Mafia ownership of Laundromats in the United States. Gangsters there were earning huge sums in cash from extortion, prostitution, gambling and bootleg liquor. They needed to show a legitimate source for the money1. As a 1993 UN Report noted: The basic characteristics of the laundering of the proceeds of crime, which to a large extent also mark the operations of organised and transnational crime, are its global nature, the flexibility and adaptability of its operations, the use of the latest technological means and professional assistance, the ingenuity of its operators and the vast resources at their disposal. In India money laundering is popularly known as Hawala transactions. It gained popularity during early 90’s when many of the politicians were caught in its net. Hawala is an alternative or parallel remittance system. The Hawala Mechanism facilitated the conversion of money from black into white. "Hawala" is an Arabic word meaning the transfer of money or information between two persons using a third person2. The system dates to the Arabic traders as a means of avoiding robbery. It predates western banking by several centuries. The basic money laundering process has three steps: 1. Placement - At this stage, the launderer inserts the dirty money into a legitimate financial institution. This is often in the form of cash bank deposits. This is the riskiest stage of the laundering process because large amounts of cash are pretty conspicuous, and banks are required to report high-value transactions. 1. http://www.financialcrimeforum.com/public/ last accessed on 8th November, 2008. 2. http://www.amlcft.com/ last accessed on 5th November, 2008. 2. Layering - Layering involves sending the money through various financial transactions to change its form and make it difficult to follow. Layering may consist of several bank-to-bank transfers, wire transfers between different accounts in different names in different countries, making deposits and withdrawals to continually vary the amount of money in the accounts, changing the money's currency, and purchasing high-value items (boats, houses, cars, diamonds etc.) to change the form of the money. This is the most complex step in any laundering scheme, and it's all about making the original dirty money as hard to trace as possible. 3. Integration - At the integration stage, the money re-enters the mainstream economy in legitimate-looking form -- it appears to come from a legal transaction. This may involve a final bank transfer into the account of a local business in which the launderer is "investing" in exchange for a cut of the profits. At this point, the criminal can use the money without getting caught. It's very difficult to catch a launderer during the integration stage if there is no documentation during the previous stages. Following are the various measures adopted all over the world for money laundering, even though it is not exhaustive but it encompasses some of the most widely used methods. • Structuring deposits This method is also known as smurfing. In this method large amount of money is broken into smaller, less-suspicious amount. • Overseas banks underground/ alternative banking Money launderers often send money through various "offshore accounts" in countries that have bank secrecy laws, meaning that for all intents and purposes, these countries allow anonymous banking. A complex scheme can involve hundreds of bank transfers to and from offshore banks. • Shell companies These are fake companies that exist for no other reason than to launder money. They take in dirty money as "payment" for supposed goods or services but actually provide no goods or services; they simply create the appearance of legitimate transactions through fake invoices and balance sheets. • Investing in legitimate business Launderers sometimes place dirty money in otherwise legitimate businesses to clean it. They may use large business like brokerage firms or casinos that deal in so much money it's easy for the dirty stuff to blend in, or they may use small, cash-intensive businesses like bars, car washes, strip clubs or check-cashing stores. It gives an overview as to how this menace has developed into transnational business involving various sophisticated techniques and procedures. The ill-effects of money laundering are unimaginable and have been discussed in next section. 8 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II MONEY LAUNDERING – An Insight Into The Modus Operandi With Case Studies Effects Ill-effects of money laundering are seen all over the world on almost all the sectors of life. More noticeable are economic effects 3 which are on a broader scale. Developing countries often bear the brunt of modern money laundering because the governments are still in the process of establishing regulations for their newly privatized financial sectors. This makes them a prime target. In the 1990s, numerous banks in the developing Baltic States ended up with huge, widely rumoured deposits of dirty money. Bank patrons proceeded to withdraw their own clean money for fear of losing it if the banks came under investigation and lost their insurance. The banks collapsed as a result. Other major issues facing world economies include errors in economic policy resulting from artificially inflated financial sectors. Massive influxes of dirty cash into particular areas of the economy that are desirable to money launderers create false demand, and officials act on this new demand by adjusting economic policy. When the laundering process reaches a certain point or if law enforcement officials start to show interest, all of that money will suddenly disappear without any predictable economic cause resulting in that financial sector to fall apart. Laundered money is usually untaxed, meaning the rest of us ultimately have to make up the loss in tax revenue. The negative economic effects of money laundering on economic development are difficult to quantify. It is clear that such activity damages the financial-sector institutions that are critical to economic growth, reduces productivity in the economy’s real sector by diverting resources and encouraging crime and corruption, which slow economic growth, and can distort the economy’s external sector – international trade and capital flows – to the detriment of long-term economic development. Money laundering also facilitates crime and corruption within developing economies, which is the antithesis of sustainable economic growth. Money laundering reduces the cost of doing business for the criminal element, thereby increasing the level of crime. Money laundering can also be associated with significant distortions to a country’s imports and exports. On the import side, criminal elements often use illicit proceeds to purchase imported luxury goods, either with laundered funds or as part of the process of laundering such funds. Such imports do not generate domestic economic activity or employment, and in some cases can artificially depress domestic prices, thus reducing the profitability of domestic enterprises. 3. Donato Masciandaro, Money Laundering: The Economics of Regulation, 7 European Journal of Law and Economics 238, May 2005 Instances: Case Studies Money laundering is the process that takes place every day in every part of the world. Here are few instances when they were unearthed and resulted in a great lesson for our policy makers. Russian Money Laundering Scandal4 This scandal became public during the summer of 1999, with media reports of $7 billion in suspect funds moving from two Russian banks through a U.S. bank to thousands of bank accounts throughout the world. Two Russian banks deposited more than $7 billion in correspondent bank accounts at a New York bank. After successfully gaining entry for these funds into the U.S. banking system, the Russian banks transferred amounts from their New York bank correspondent accounts to commercial accounts at the bank that had been opened for three shell corporations. In February 2000, guilty pleas were submitted by a bank employee and spouse and the three corporations for conspiracy to commit money laundering, operating an unlawful banking and money transmitting business in the United States. Operation Wire Cutter5 The U.S. Customs Service, in conjunction with the Drug Enforcement Administration (DEA) and Colombian Departamento Administrativo de Seguridad, arrested 37 people in January 2002 as a result of a two-and-one-half-year undercover investigation of Colombian peso brokers and their money laundering organizations. These people are believed to have laundered money for several Colombian narcotics cartels. Laundered monies were subsequently withdrawn from banks in Colombia in Colombian pesos. Investigators seized more than $8 million in cash, 400 kilos of cocaine, 100 kilos of marijuana, 6.5 kilos of heroin, nine firearms, and six vehicles. Wire Remittance Company6 Both a wire remittance company and a depository institution filed SARs outlining the movement of about $7 million in money orders through the U.S. account of a foreign business. The wire remittance company reported various persons purchasing money orders at the maximum face value of $500 to $1,000 and in sequential order. They received amounts ranging from $5,000 to $11,000. The foreign business identified by the wire remittance company also was identified as a secondary beneficiary. The money orders cleared through a foreign bank’s cash letter account at the U.S. depository institution. The Indian cases involved that of Ketan parikh who brought the stock market to fall and many Indian politicians who received kickbacks for performing there executive functions through Hawala channels. The Hawala Mechanism left virtually no paper trail, which would attract investigations7 . The profits generated from Hawala were surreptitiously invested in real estate, gilt edged securities etc., to launder them. The list is unending and there is dire need to control these forces. 4. 5. 6. 7. UNDP, Corruption and Good Governance, Discussion Paper 3, p. 35 (2004). Ibid. Prakash Loungani and Paolo Mauro, Capital Flight from Russia (2000). Objectives and Principles of Securities Regulation at http://newrisk.ifci.ch/144440.htm 9 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II MONEY LAUNDERING – An Insight Into The Modus Operandi With Case Studies Prevention The combating of money laundering presupposes the existence of capacity and resources at national level. In India Prevention of Money-Laundering Act, 2002 has been passed which came into effect since 1st of July, 2005. As per Section 3 of the Act, Offence of money-laundering covers those persons or entities who directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property, such person or entity shall be guilty of offence of money-laundering. Section 4 of the Act prescribes punishment for money-laundering with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine which may extend to five lakh rupees and for the offences mentioned in paragraph 2 of Part A of the Schedule, the punishment shall be up to ten years. Section 12 (1) prescribes the obligation on Banking companies, financial institutions and intermediaries (a) to maintain certain records detailing the nature and value of the transaction which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month; 12 (b) to furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed and to (c) verify and maintain the records of the identity of all its clients, As per Section 12 (2), the records referred to in subSection (1) as mentioned above, is required to be maintained for a period of ten years from the date of cessation of the transactions between the clients and the banking company or financial institution or intermediary, as the case may be. An effective anti-money laundering program will help minimize exposure to transaction, compliance, and reputation risks. Such a program should include account opening controls and the monitoring and reporting of suspicious activity. The Reserve Bank of India's extensive Anti-Money Laundering (AML) guidelines has become effective from March 2006. The AML norms such as "Know Your Customer" emphasize that banks must keep a record of their customers' backgrounds in order to reduce and control the risk of money laundering. The Money Laundering Control Act of 1986 further defined money laundering as a federal crime. The USA PATRIOT Act of 2001 expanded the scope of prior laws to more types of financial institutions. CONCLUSION Money Laundering is a serious threat to financial system of all countries and it leads to destruction of the country’s sovereignty and character. The combating of money laundering has assumed an urgent impetus at both national and international levels as a result of the scale that money laundering has begun to assume, especially with respect to the financing of terrorist acts. The efforts being made to combat money laundering are beginning to bear fruits in that it is now taking centre stage in all jurisdictions. No one wants to be left behind mainly due to the consequences of such a situation – those lagging behind might find it difficult to transact and do business with the rest of the complying world. The negative economic effects of money laundering on economic development are difficult to quantify, just as the extent of money laundering itself is difficult to estimate. Nonetheless, it is clear from available evidence that allowing money laundering activity to proceed unchallenged is not an optimal economic-development policy because it damages the financial institutions that are critical to economic growth, reduces productivity in the economy’s real sector by diverting resources and encouraging crime and corruption, and can distort the economy’s international trade and capital flows to the detriment of long-term economic development. Developing countries’ strategies to establish offshore financial centres as vehicles for economic development are also impaired by significant money laundering activity through OFC channels. Effective anti-moneylaundering policies, on the other hand, reinforce a variety of other good governance policies that help sustain economic development, particularly through the strengthening of the financial sector. Despite the positive developments, the criminals are constantly devising more elaborate and evasive means to circumvent anti money laundering efforts. We have to understand that it is problem not only for the government of the country but for the people at large. Public awareness is necessary as masses do not understand the problem itself. Our education system should be able to inculcate the ideologies that our future generation does not get involved in this process. There needs to be a vigilant mechanism and our judiciary needs to punish these criminals early to send out a message that money laundering is not tolerable to this democratic society. References 1. Nand C. Bardouille, "The Offshore Services Industry in the Caribbean: A Conceptual and Sub-Regional Analysis," Economic Analysis and Policy (September 2001). 2. Mark P. Hampton, "Where Currents Meet: The Offshore Interface Between Corruption, Offshore Finance Centres, and Economic Development," IDS Bulletin , vol. 27, no. 2 (1996) 3. IMF Staff Report on Nigeria, 2001 available at http://www.waado.org/NigerDelta/ Essays/Nigerian Economy/IMFonNigerianEconomy.html 4. Pakistan moves on money laundering, BBC News, Nov. 6, 2001, at http://news.bbc.co.uk/hi/english/ business/newsid_1641000/1641138.stm 5. Prakash Loungani and Paolo Mauro, Capital Flight from Russia (2000). 6. UNDP, Corruption and Good Governance, Discussion Paper 3, p. 35 (2004). 7. Pranab Bardhan, Corruption and Development: a Review of Issues, University of California, Berkeley, Journal of Economic Literature (September 2003). 8. Andrei Shleifer and Robert W. Vishny, "Corruption," Quarterly Journal of Economics, p. 600 (August 2002). 9. Donato Masciandaro, Money Laundering: The Economics of Regulation, 7 European Journal of Law and Economics 238, May 2005. 10. Objectives and Principles of Securities Regulation at http://newrisk.ifci.ch/144440.htm 10 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges Making India a Solar Energy Economy Prospects & Challenges Ravi Prakash 5th Year, B.A.LL.B.(Hons.), Hidayatullah National Law University, Raipur Introduction Renewable energy in India - an overview The electrical and power sector in India has developed significantly over the 65 years of Independence. As the socio-economic pattern of India kept continuously evolving and development reached far off to the remotest village of it, in spite of achieving great strides in electricity sector1, access to power and reliability of power remains the major issues. Currently, India is ranked fifth globally in installed power capacity with nearly 147.965 GW2. The fossil fuel (mainly coal) based power generation contributes to 76 GW of electricity while renewable comprises of 48.6 GW including hydro- power and 12.6 GW without it3. Howsoever, India's fast economic growth comes with a growing demand for energy and it is also predicted that as it propels the path of socio-economic reforms, it will face an acute shortage of power until & unless total generation capacity is increased proportionately. The impact will be most severe on rural masses4. There would be a desperate need for some miraculous energy sources for remote village house -holds. The challenges & problems are manifold (energy security being one) before an emerging economy like India which has millions of it populace below poverty line. A country which faces crisis of energy security and at the same time cannot refrain from contributing positively in averring the impact of climate change is left with no other solution than to switch over to renewable energy production. India has been endowed with a vast pool of renewable energy sources such as hydro, solar, wind, bio-mass etc. At presently renewable energy contributes about 9% (12.6 GW) of total installed electricity capacity in India5. The result achieved in the renewable energy sector during 10th five year plan (2002-07) was positive and it provided the regulatory authorities with the optimism to initiate major reforms in renewable energy power sector6. Even the current five year plan outlines a target of generating additional 14-20 GW of electricity from renewable source of energy7. It identifies solar power generation as one of the means to achieve it. If the trend during tenth five year plan (200207) was to promote & generate electricity from wind power plants then perhaps current five year (200712) plan will be known for generation of electricity from solar power plants. The advantages of renewable energy are expected to contribute significantly in the developmental process. India's recent success in clean energy is just a beginning. The trends and analysis outlines in the following pages provides a glimpse of exciting developments to come, and reveal that with continued policy support, investment and technological innovation, India could become a global leader in renewable energy. A sound legal and policy framework is essential to continue this trend. These policies largely relates to financial, fiscal incentives or special directives aimed to encourage/enforce utilities to buy renewable energy power, promotes companies to set up renewable energy projects, equipment companies to manufacture renewable energy equipment or private and government entities to undertake R&D relating to renewable energy. Solar energy - the promising prospect "The Central power plant, like much bulk electric transmission, will soon become a white elephant, uneconomic to run, and difficult to sell. Such plants are likely to survive in significant number by 2030 in any market economy and would be replaced by more localised electricity generation." - Amory Lovins, Int'l Energy Expert 11 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges The days will not be far off when power plants will shift from large, remote centralised stations to rooftops, basements, and backyards with no fuel cost characterised by quality & reliability. As human civilisation witnesses a gradual shift towards harnessing cleaner form of energy from various sources; the solar energy is going to play an important role. Perhaps, it is the only energy which has absolutely no fuel cost. To tap the infinite energy from the sun and transform as well as to transmit it to each household, the Indian govt. has accelerated promotion of the use of universally available solar energy through its various policies and incentives. India due to its geo-physical location receives solar energy equivalent to nearly 5,000 trillion KWh/ year, which is far more than the total energy consumption of the country today8. But it produces a very negligible amount of solar energy i.e. a merely 0.2 percent compared to other energy resources9. The Govt. of India, in all its recent policies relating to power sector has given due importance to harness the sun's energy in various ways10. Solar energy is harnessed through the available technologies like Solar Photovoltaic (SPV), Solar Thermal (ST), and Concentrating Solar Power (CSP). Some parts of India like western part of Rajasthan (Thar desert) receive the required solar radiation for use of Concentrating Solar Power (CSP) technology. It is estimated that a 60 km x 60 km of area can produce 1, 00,000 MW of power using CSP technology. The advantages which distributed generation of solar energy brings are unique. It provides easy access to power for tail-end users like rural people; it avoids high transmission & distribution (T&D) costs, provides reliable and quality power and is environmentally benign. It also indicates that a decentralised power generation can perfectly complement decentralised development and governance11. Even national electricity policy 2005 (NEP) envisages that in order to ensure better rural electrification infrastructure and to operate and maintain supply system for securing reliable power; the responsibility of operation & maintenance and cost recovery could be discharged by utilities through appropriate arrangements with panchayats, local authorities, NGOs and other franchisees etc12. So, the promotion of generation of solar energy can significantly contribute in attaining the developmental agenda. Such renewable energy power production potential in India can be easily scaled up innovatively in an affordable and sustainable manner. Howsoever, the prerequisite to success of any such massive plan is a comprehensive legal/policy framework for the entire cycle of development for each of these renewable energy resources. Presently, solar energy is facing three fundamental challenges i.e.; cost, its manufacturing procedure (R & D) and the land acquisition for erecting solar power plants. Nevertheless, the Govt. (Central as well as State) through various policy measures has recently attempted to address these challenges. It is also estimated that once the scaling of solar energy is done a greater access to the market will be facilitated13 and its cost will come at par with conventional source of energy. All the policy measures focus on promotion of R&D in the respective technology to enhance the efficiency and viability of the project. As these technologies will be categorised as environmental sustainable technologies (EST's); under the existing international legal framework, the developed economies have an obligation to transfer technology14. The land acquisition policy has been always a controversial issue in India15, but, perhaps one of the viable solutions to it is the acquisition through local bodies, panchayats & municipality. All the existing policies provide for the acquisition of land by involving local bodies and panchayats for the successful implementation of projects. Indian electricity sector (Legal & regulatory framework) The constitutional scheme essentially provides for a federal structure of governance16. Electricity is a subject matter of concurrent list17 in the constitutional scheme which essentially means that both Centre & State can legislate & regulate the subject matter. As the delicate balance of power in legislative field is tilted in favour of Centre rather than federal units (states)18, the central law gains a primacy over state law in situation of conflict. According to article 254(1) of the constitution, in case of conflict between laws made by centre & state over the same subject matter, the state law becomes void to the extent of repugnancy19. Howsoever, presently the most important legislation to regulate power sector is Electricity Act, 2003 by central govt. Electricity Act, 2003 The Electricity Act, 2003 is a major enactment which regulates generation, transmission and distribution of electricity in India. This law is well supplemented with a set of by- laws, policies, codes, rules, and regulations covering all aspects of power sector20. The impact of such a sound legal framework can be easily witnessed by analysing power sector performance post-200321. The Central law provided an enabling framework to stimulate private investments for capacity augmentation in a de-licensed regime22, ushered required competition in the power market23, established regulatory and monitoring agencies/ bodies24 and contained features like open access25, captive generation26, cogeneration27 etc. Various provisions of the Electricity Act, 2003 give a major thrust to the renewable energy sector & put forth the need and priority to promote renewable energy through its enabling provisions The relevant provisions for this are as follows: Under Sections 3(1) and 3(2), it has been stated that the central govt. shall prepare and publish the National Electricity Policy and National Tariff Policy, in consultation with the state governments and authority for development of the power system based on optimal utilization of resources such as coal, natural gas, nuclear substances or material, hydro and renewable sources of energy. The central govt. had notified the two policies viz. National Electricity Policies- 2005 (NEP) & National Tariff Policy- 2006 (NTP) which lay down further policy framework for the development and generation of renewable energy. Section 4 states that the central govt. shall, after consultation with the state governments, prepare and notify a national policy, permitting stand-alone systems28 (including those based on renewable sources of energy and other non-conventional sources of energy) for rural areas. In pursuance of the above mandate, the Central govt. had formulated a policy known as Integrated Rural Electrification Policy- 2006 (IREP). 12 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges Section 61, 61(h) and 61(i) states that the appropriate commission shall specify the terms and conditions for the determination of tariff, and such determination should be guided by the following factors such as the promotion of cogeneration and generation of electricity from renewable sources of energy; and the National Electricity Policy and Tariff Policy. According to Section 86(1) and 86(1) (e); the SERC's shall discharge the following functions in order to harness a cost efficient renewable energy from various sources :(i) promote cogeneration and generation of electricity from renewable sources of energy (ii) to providing suitable measures for connectivity with the grid (iii) sale of electricity to any person, (iv) purchase of electricity from such sources, a percentage of the total consumption of electricity in the area of a distribution license. The Electricity Act, 2003 casts a significant duty upon the concerned various authorities to provide a suitable framework for the generation of power from renewable sources of energy. National electricity policy - 2005 (NEP) The policy formulated by central govt. in pursuance of sec. 3 of the Electricity Act, 2003 aims at laying guidelines for accelerated development of the power sector, providing supply of electricity to all areas and protecting interests of consumers and other stakeholders keeping in view availability of energy resources, technology available to exploit these resources, economics of generation using different resources, and energy security issues. Accessibility to electricity and availability of power by 2012 to all are the twin goal set out in the NEP29. The policy in order to meet its various objectives emphasises in harnessing power from renewable sources of energy. It postulates a decentralised distributed generation facility from renewable sources of energy for establishing a reliable rural electrification system30. It also provides for the necessity & importance of grid connected renewable energy31. The policy outlines following measures for the promotion & generation of renewable energy: To make efforts to reduce the capital cost of projects based on non-conventional and renewable sources of energy by promoting adequate competition within such projects and promotional measures32. To make efforts for research, development, demonstration and commercialization of non-conventional energy systems which meets international standards, specifications and performance parameters33 The spirit of sec. 86 of Electricity Act has been given a new life in the policy by mandating following to the SERC34: :: To specify percentage of RPO (Renewable Energy Purchase Obligation) :: To determine applicable tariffs for renewable energy power :: Such purchase of power by distribution companies shall be through competitive bidding process :: To determine an appropriate differential in prices to promote renewable energy technologies35. The cogeneration of electricity should be promoted to encourage energy efficiency and grid stability. The SERC to facilitate necessary arrangements between co-generator and distribution licensee for purchase of such surplus power36. The policy strengthens the mandate of Electricity Act, 2003 regarding generation of power from various sources effectively. The provision also mandate generation of power based on stand-alone system37. National tariff policy - 2006 (NTP) The NTP has been formulated by Central govt. in compliance with sec. 3 of Electricity Act, 2003 and in continuation of National Electricity Policy-2005. The NTP sets out objectives like assured electricity to consumers at reasonable and competitive rates, financial viability of the sector, promoting transparency, consistency & predictability in regulatory approaches across jurisdiction & encouraging competition38. The policy stipulates that the appropriate commission39 has to determine preferential tariff for procurement of renewable energy power by distribution licensees under renewable purchase obligation (RPO) regime as envisaged under section 86(1)(e) of Electricity Act, 2003. (1) "..It will take some time before non-conventional technologies can compete with conventional sources in terms of cost of electricity. Therefore, procurement by distribution companies shall be done at preferential tariffs determined by the Appropriate Commission. (2) Such procurement by Distribution Licensees for future requirements shall be done, as far as possible, through competitive bidding process under Section 63 of the Act within suppliers offering energy from same type of nonconventional sources. In the long-term, these technologies would need to compete with other sources in terms of full costs." (3) The Central Commission should lay down guidelines within three months for pricing non-firm power, especially from non-conventional sources, to be followed in cases where such procurement is not through competitive bidding. The various SERC had taken an active initiative (either suo- motu or on received application by stakeholders) to determine the tariff for electricity generated from solar power according to the norms and principles set out in NTP.40 Integrated Rural Electrification Policy (IREP) as formulated under mandate of sec. 4 & 6 of the Electricity Act, 2003 supplements the electricity generation from renewable sources as envisaged in the above mentioned policies appropriately. Other Legislations / Statutes Setting up of solar power plant on a commercial basis and increased grid- interactive energy will attract (directly/ indirectly) various other central or state statutes e.g. land reforms, environmental legislations and tax regulations. Perhaps this is one of the reasons why a majority of state policies contain a mechanism of single window clearance41. As the financial incentives are granted and administered by both centre & state respectively, various regulatory authorities at both levels assume an important function. Similarly, even to set up a large grid interactive solar power 13 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges plant under MNRE scheme require basic input such as land; which remains an exclusively state subject. Another set of legislations which is likely to cause more hiccups are environmental legislations. Some state policy proposes to use barren wasteland for the generation of solar power, but by virtue of Supreme court ruling all such wasteland falls within the definition of 'Forest'42 which demands clearance under Forest Conservation Act, 1978. Although, generation of solar energy is a zero-carbon program which hardly has any adverse impact on climate change and environment, the land policy (especially agricultural land) will certainly affect and impact the future of project in several states.43 The advantage with solar power generation is that it neither causes air pollution, nor requires any environmental impact assessment (EIA) as needed in case of hydro power; neither does it cause noise pollution. So, the energy promised by solar power plants generally reflects a win- win situation for all stakeholders. Why not a new renewable energy law With all promising future of renewable energy potential in India, a separate renewable energy law is expected to play the role of a catalyst in the sector. It is important to note that India is one of the few countries that pioneered the development of renewable energy and initiated reforms at institutional and policy framework in early 1990s. The anomaly of the situation lies in the fact that the administrative machinery at the centre as well as at the state level for dealing with the activities of the renewable energy sector has been in place for a fairly long period of time but no concrete legislative policy exists. Moreover, there is a specialized financial agency, the Indian Renewable Energy Development Agency (IREDA)44 to cater the financial requirements of the renewable energy sector in India. So, perhaps a concrete, comprehensive legal framework on renewable energy will stimulate growth and provide greater opportunities in the area. There is a need of a new comprehensive renewable energy law because: :: The use and prospect of renewable energy is not limited to only electricity generation rather extends to important sectors like transport. :: Under the existing regulatory and legal framework there is a divide between the electric power sector and other energy sector (like coal, petroleum, Natural gas)45 :: To make renewable energy an engine of the common man's growth requires a detailing of technological, developmental, legal policy and institutional framework. :: Renewable energy like bio-fuels cannot be regulated under Electricity Act 2003. National policies The Central government's approach to renewable energy is quite clear as it targets for at least 10% of grid-connected power to come from renewable sources by 2012; which indicates an increasing push for clean energy. In addition to the Electricity Act, 2003 and policies outlined above, the central government has provided several specific renewable energy incentives. These are predominantly fiscal incentives, including direct and indirect tax benefits, renewable energy financing and guidelines for solar feed-in tariffs. For the purpose of all these fiscal incentives as well as the monitoring of projects, the ministry of new and renewable energy along with IREDA remains the nodal agency. Other important incentives by central govt. for promotion of renewable energy Direct tax benefits Accelerated depreciation: The Central govt. presently allows for accelerated depreciation at the rate of 80-100% on a written down value46 basis for various renewable energy items under section 32 Rule 5 of the Income Tax Act, 1961.47 Tax Holiday: Under section 80 (I) (A) of the Income Tax Act, the central govt. offers a 10 year tax holiday for all infrastructure projects.48 Indirect tax benefits Specified renewable energy devices (including Solar Energy) and equipment can obtain excise duty exemptions or concessions. Equipment for solar photovoltaic and solar thermal and power generation plant and machinery enjoy a reduction in customs duty. Foreign Direct Investments Foreign investors can enter into a JV with an Indian partner for financial and/or technical collaboration Proposals for up to 100 per cent foreign equity participation in a JV qualify for an automatic route49 Government encourages foreign investors to set up projects on Build, Own and Operate (BOO) basis50 Apart from all these in direct benefits and incentives include: Industrial clearances are not required for setting-up a renewable energy industry No clearance is required from central electricity authority (CEA)51 for generation projects up to Rs 1 billion. Soft loans are available through IREDA for renewable energy equipment manufacturing The project can also enjoy various incentives under Semi-conductor Policy 2007, as silicon used in STP & SPV power plants is a semiconductor. Generation based incentives (GBI) by MNRE for solar power plant (SPV & STP) The MNRE has issued two separate GBI schemes (one for STP and other for SPV) exclusively for promoting solar power generation in the state. The guidelines propose to extend the incentive to a cumulative capacity of 10 MWp in a state and a total of 50 MWp across the country during 11th five year 14 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges plan. The scheme is available to only those solar power project developers who install and commission their eligible project before 31st December 2009. The essential criterions to be satisfied by the eligible projects are: Grid interactive solar power generation plants with a minimum installed capacity of one MWp52 A project developer can set up a solar power project (SPV or STP) up to a maximum capacity of 5 MWp in the country. Captive utilisation of power will not be eligible. If a project developer avails the benefit under sec. 32, rule 5 of the Income Tax Act, 1961 (claiming accelerated depreciation), then is not eligible for GBI incentives. According to the GBI guidelines, all eligible solar power developer needs to furnish specific information in the prescribed format to the IREDA.53 A project developer needs to furnish detail information on technical and performance features, technical specifications, requirement and availability of land, title of the land, capital cost, estimated life of the SPV/ STP power plant, quantum of electricity expected to be generated and fed to the grid, proposed sale price of electricity from PV power plant, duration of power purchase agreement and power purchase rate(s), arrangements for power evacuation and the time frame for installation / commissioning of the grid PV power plant etc.54 The disbursement of incentive will begin only when a minimum capacity of one MWp is commissioned and sold to the grid. Howsoever, the GBI scheme excludes the provision of third party sale, banking and wheeling of power while availing it. Feed-in tariffs for solar power The GBI guidelines have provisions requiring IREDA to pay eligible solar photovoltaic power (SPV) generators a maximum of Rs. 12 per kWh providing they were commissioned prior to 31 December 2009.55 Photovoltaic projects commissioned after this date will receive a maximum of Rs. 11.40 per kWh.56 Solar thermal projects (STP) will receive a feed-in tariff of Rs. 10 per kWh.57 This incentive amount would be in addition to the power purchase rate negotiated with the purchaser of the power. The total amount paid to the generator (power tariff plus incentive payment) would be no more than Rs. 15 per kWh for solar photovoltaic plants (SPV)59 or Rs. 13 per kWh for solar thermal plants (STP)59. This GBI scheme will be available to all qualified developer for a maximum period of 10 years from the date of approval provided that the utility continues to purchase power from that grid interactive solar power project. GBI schemes for SPV & STP power generation is a welcome step towards creating a competitive regime among member states and indicates some progress toward harnessing solar power. Nevertheless, the scheme is available to only a total capacity of 50 MW and that also to a max. of 10 MW in one state. Due to technological deficiency, the cost associated with such power makes it uneconomical; hence such scheme only serves the superficial purpose. Draft national solar mission under national action plan on climate change (NAPCC) Govt. of India60 had formulated NAPCC61 in July 2008 to deal with the global threat of climate change while maintaining a sustainable economic growth. The NAPCC essentially consists of eight diff. missions (National Solar Mission being one); which the central govt. will be formulating and a roadmap will be laid down to mitigate these adverse impact of climate change without having any further negative impact on economic development.62 As a consensus exists among the nation states that increased global carbon emission had led to present state; it becomes imperative for the nation state to adopt cleaner and zero carbon mode of development. A developing economy like India which produces a minimal per capita CO2 emission, nevertheless has attempted to take initiatives to become zero carbon economy. As solar energy is characterised as zero carbon fuel of future, any such policy will have a greater impact on it. The Draft Mission envisions to make India's economic development energy efficient & to move from fossil fuels to non- fossil fuels by depending much upon solar power generation. It also recognises the importance of decentralised distribution of energy in rural India which is in tune with the Electricity Act 200363, National Electricity Policy- 2005 (NEP)64 & Integrated Rural Electrification Policy2006 (IREP)65. The draft mission identifies to bring down cost of solar power generation to Rs. 4-5/Kwh by 2017-2020 taking 2009 as base year as one of its objectives. Although, the policy is presently in draft version, howsoever, if implemented, the next phase of revolution in power sector will be brought by Solar Power Generation. The plan lays down the following as main objectives: Solar Power Generation By 2020 - a capacity of 20,000 MW By 2030 - a capacity of 1,00,000 MW By 2050 - a capacity of 2,00,000 MW 1. Cost reduction to achieve grid tariff parity by 2020 2. Achieve parity with coal based thermal power generation by 2030 3. 4-5 GW of installed Solar manufacturing capacity by 2017. The draft proposes to create Solar Energy Authority of India (SEAI) under MNRE as monitoring agency for implementation of plan. The generation of solar power under the plan is envisioned into three phases with a clear target to be achieved. Phase I (2009 - 12) - This phase will be marked with specific challenges as it involves initial costs and making any plan operational is always an exigent task. It has specific objectives such as driving down cost, spurring domestic manufacturing and making solar energy technologically & economically viable. But, year 2009 is almost over & the mission still in draft phase; thus it seems that plan will have certainly diff. phase duration. Phase II (2012 - 17) - The second phase of the plan is critical because the goal it sets to achieve will mainly depend on the R&D and availability of technologies. The transfer of technology under existing climate change regime is certainly 15 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges going to play an important role. This phase involves the following aims: 1. Scaling up of various validated applications 2. To roll out rural electrification business model 3. Commercial deployment of solar thermal power plants with storage facility. 4. Pilot deployment/ dissemination of next generation technologies 5. Promotion of solar lighting & heating system on large scale through market mechanism but without subsidies. 6. To reach an installed capacity of 6-7 GW by 2017. Phase III (2017-20) - The third phase of plan will mainly depend upon success of first two phases as it mainly seeks to achieve commercialisation of solar power, through the following aspects: 1. Achievement of tariff parity with conventional grid power. 2. Commercialisation of storage technologies through incentives such as subsidies. 3. Commercialisation of indigenously developed PV & solar thermal technologies. 4. To reach installed capacity of 20 GW by 2020. Policy & regulatory framework for solar power generation under draft mission The regulatory framework and scheme which the draft mission envisions are similar to the existing one. Nevertheless, it has some unique mandate to create an environment which will enable large, rapid capital investment in solar energy applications which encourages technical innovations & lowers the cost in solar power generation. The draft policy envisages following incentives for the investors 66 : 1. A proposed feed- in -tariff for various applications based on National Tariff Policy & Electricity Act, 200367. 2. 10 years of tax holiday. 3. Exemption of various duty/ taxes (customs duty & excise duty) on capital equipment & others. 4. Capital subsidy for solar heating applications & rural electrification for limited period. 5. Proposes revision of tariff guidelines & subsidy levels before the beginning of each financial year to facilitate tariff announcement by the regulators. 6. Feed- in - tariff for solar power will be distributed between Centre, State & utility, where utility paying Rs. 3-5/Kwh & the balance by Centre & State in the ratio of (70:30). 7. Mandatory solar power purchase obligation (depending on state's solar resources) for states. Introduction of Renewable (Solar) Energy Certificates Mechanism to allow states to buy & sell certificates to meet this obligation. 8. Single window clearance mechanisms for all required permissions. 9. Standard lease agreement for Solar installation on govt. land 10. State transmission utilities (STUs) mandated to provide connectivity from nearest sub- station to the solar plant in a prompt and time bound manner. For successful implementation of the proposed National Solar Mission, the govt. must speed up the process which must be reflected into suitable action program. With the 2009 coming to an end, and the policy still in its draft phase, the vision has become more unrealistic. Anymore delay in execution of Phase- I plan will significantly affect the success of Phase II & III. State policies "Winning the opportunity to receive the national subsidy is one thing, selecting a winning state is another?" —Debashish Majumdar, Chairman IREDA68 As discussed earlier, electricity is a subject matter of concurrent list, both state and centre has legislative and regulatory power. Many states had formulated respective policies to attract investment and promote generation of renewable energy. In general the leading & favourable states for generation of renewable energy are Karnataka, Tamilnadu, Maharashtra, Gujarat, Haryana, Punjab, West Bengal and Rajasthan. As different states in India have different levels of development & market friendliness and as the scenario keeps changing constantly, it becomes very important to choose a right state for solar power generation.69 The study of policies of five different states undertaken here are nevertheless champions in generation of renewable energy in last 10 years. Gujarat is the leading state which had prepared an exclusive policy for generation of solar power. It is also expected that in the near future many states will follow. Gujarat Gujarat is one of the most industrialised states in the India and hence has an acute demand of power security. In order to sustain this leadership through preventive and other value interventions; which aimed to reduce the spread and depth of externalities and vulnerability in multiple spheres of economic development, Govt. of Gujarat formulated Solar Power Policy-2009 which aims at "efficient use of conventional energy, proactively establish and promote sustained use of new and non- conventional energy sources and applications to reduce emissions and related impacts of climate change70." Solar energy being a non- firm power71 mainly depends on solar radiation as fuel. The state is endowed with a high solar radiation levels i.e. approx. 5.6 kWh/m2 /day72 with 300 days of clear sun in a year with arid condition and minimal sun tracking, especially in the barren wasteland areas. The renewable energy policy introduced in this state is the first of its kind, created exclusively for harnessing solar energy. Solar power policy -2009 The policy seeks to achieve three sets of objective mainly: Energy Security, Socio-economic transformation & technological development (R &D).73 The policy aims to promote generation of clean & green power using solar energy, to lower its dependence on fossil fuels. It proposes to be a vehicle of socio- economic change by generating employment locally, by using wasteland productively, by spreading environmental awareness and putting up an appropriate investment regime for CDM projects74. One of its objectives is promotion of R & D and facilitation of 16 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges technology transfer75. Salient Features of Solar Power Policy 2009 To mitigate the adverse impact of climate change; it restricts use of any form of fossil fuel in Solar Power Projects. Exemption from payment of electricity duty76 Exemption from demand cut77 The wheeling78 of electricity generated from solar power plants is allowed at a rate of 2% of energy fed into grid. The electricity generated shall be metered on a monthly basis & ABT79 compliant meters at the interface point in a grid connected power project.80 The power by the solar power units shall be injected at 66 KV. The transmission of power from solar sub-station to grid Sub-station shall be laid by GETCO. In case of open access obtained for third party sale the developer has to pay applicable open access charges and losses as determined by GERC. Howsoever, if such sale is within the state then cross subsidy surcharge will not be applicable. Imposes penalty for non-fulfilling power purchase obligation on distribution licensee. Benefits of solar power policy-2009 will not be available to projects set up under MNRE incentive scheme81 for solar power generation. In case of any subsidy/ incentive received to the project from any source shall be reduced from the specified tariff except the benefit of accelerated depreciation Only new plant & machinery shall be eligible for installation under this policy All such projects which are set up under this policy can claim accelerated depreciation under sec. 32 of Income Tax Act, 1961. Solar power project developer has to pass on 50% of the gross benefits of CDM to the distribution licensee with whom PPA is signed. The solar energy shall not be covered under scheduling procedure for intra- state ABT. The solar policy -2009 envisages that all solar plants which are installed and commissioned before 31-03-2014 are eligible for various incentives for 25 years from date of commissioning. The minimum capacity of project (either SPV or ST) shall be 5MW each. The power plant can be set by any natural or juridical person (in form of Company/ body corporate/ association/ body of individuals/ artificial person) for the purpose of captive use82 and /or for selling of electricity. It is important to note that central govt. (MNRE GBI scheme) is not available for the captive utilisation. The proposal has to be submitted to the nodal agency (GEDA & GPCL) for approval. Howsoever, for grid interactive solar power projects the evacuation facility from the solar substation to grid shall be laid by GETCO. The Gujarat govt. policy exclusively for solar power generation has been received warmly by the renewable energy sector and developer. Howsoever, the policy remains silent over certain important issues like land allotment / acquisition for setting up of solar power plants, banking of power generated etc. Absence of some specific mechanism like single window clearance for the project and a timebound execution of project can become a hindrance in realising its goal. Nevertheless, giving due account of solar power radiation it receives and availability of barren land, creation of renewable energy SEZ will be a welcome step for generation of solar power as envisaged by the policy. Karnataka Karnataka is a model state in the field of harnessing renewable energy in India. It is leading in the area of green energy as till March 2009; total installed capacity from renewable sources has reached up to 2400 MW. The reason behind Karnataka being a hot spot for renewable energy investor is its initiative towards formulating & concretising comprehensive legal, financial and administrative framework for this sector. Karnataka has formulated a new renewable energy policy-2009 which will remain in force till 2014 or until superseded or modified. The new policy vision is to harness green and clean renewable energy sources in the state for environment benefits and energy security.83 The important mission which it seeks to achieve is to increase the installed capacity from 2400 MW to 6600 MW by 201484 and make renewable energy commercially viable. It not only provides single window service for project clearance but also for technical consultation and sources of finance. Karnataka receives relatively a high solar radiation levels i.e. approx. 5.5 kWh/m2 /day85 with more than 300 days; which make it an attractive destination for development of solar energy. The policy aims a capacity addition of 100 MW grid connected power alone from solar energy (including PV/CSP/Thermal) by 2014 estimating a likely investment of Rs. 1800 crore investment in the sector.86 The nodal agency for implementing renewable energy projects in the state is KREDL, nevertheless the role of various regulatory authorities related with power sector becomes important for the purpose of successful execution of renewable energy (solar power) projects. Salient features of Karnataka renewable energy policy 2009 (relevant for setting up of solar power generation) Creation of special fund for renewable energy :: "Green Energy Cess" of Rs 0.05 (five paise) per kWh on commercial and industrial consumers to generate about Rs 55 crores annually. :: Akshaya Shakthi Nidhi (Green Energy Fund) of Rs. 500 Crores to finance the renewable energy projects. Raising up of govt. renewable energy bonds to the tune of 1000 crores. :: Akshaya Shakthi Nidhi Trust (a public- private investment trust) to raise funds through bonds or scheme out portfolio investment for the purpose of project finance in renewable energy sector. :: Consortium of KREDL, Akshaya Shakthi Nidhi Trust and energy department in collaboration with the Karnataka State Finance Corporation (KSFC) will raise project finance from International Finance Corporation (IFC), Power Finance Corporation (PFC) and External Commercial Borrowings87 (ECBs). Land allotment/acquisition 17 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges :: Land inventory of surplus and unused land will be undertaken district wise and will be provided for renewable energy projects in and accordance to section 71 of the Land Revenue Act to KREDL. :: It proposes a suitable amendment to sec. 109 of Karnataka Land Reforms Act for facilitating private land purchase (mainly agricultural land). Provides equity of not less than 5% to take the land owner farmers as equity partners in the renewable energy project. :: Forest land clearance within 4 (four) months. :: Land development by KREDL to facilitate setting up of RE projects. The project developers will be leased out for a period of 30 years and are not allowed to further mortgage the land to any financial or other agency. Approval or clearance of project :: Various statutory clearances within 90 days and 120 days in case of forest land. :: All SEZs' 10% lands to be reserved for renewable energy projects and creation of Special Economic Zone exclusively for renewable energy. :: Single window clearance mechanism within 90 days of application being submitted. :: Renewable energy developer to complete the project and commission it with grid synchronization within 3 years from the date of statutory clearance. Grid connectivity & misc. :: KPTCL and KREDL to undertake the work of LV, HV and EHV Substations and required transmission and distribution lines necessary for the renewable energy projects. Howsoever, the developer will have to bear the cost of transmission line from the project site to grid connectivity. :: Generation of electricity from renewable energy will be treated as an 'Industry' and all incentives available under Industrial Policy-2009 of Karnataka will be made available.88 :: Renewable purchase obligation- State govt. to procure 20% of the total renewable energy in the state subject to KERC guidelines. :: Wheeling89 charges at the rate of 5% will be applicable whereas banking facility for the power generated shall be allowed for a period of one year at the rate of 2% of the energy banked with the KPTCL/ distribution licensee. :: Roof top grid connected solar power quantum fed to the grid will also receive additional tariff of Rs. 5 per KWh along with Net Metering Facility. :: Exemption of demand cut to the extent of 50% of the installed capacity assigned for captive use purpose. Financial incentives (Tax incentives) :: All the Central govt. incentive and schemes will ipsofacto continue to be passed by the state govt. to the project developer through KREDL. :: Exemption from Entry Tax on energy generation and renewable energy devices/ machinery/ equipments :: Exemption from VAT applicable on various renewable energy equipments/ instruments/appliances under the provisions of Karnataka State Sales Tax Act. :: Facility of Letter of credit to the developer by ESCOMs for realising payment in scheduling period for the renewable energy power sold to the ESCOMs. :: All agreements executed in setting up of renewable energy project are exempted from payment of registration fee under the relevant provision of Karnataka Stamps & Registration Act. :: The renewable energy developer will share 50% gross benefits of CDM, with the KREDL/ distribution licensee with whom the PPA is signed. Besides all these provisions, the Solar Karnataka programme which focuses on rural solar energy program sets out diff. approaches and policies based on stand-alone system.90 :: A target of setting up 25000 solar roof tops of 5 to 10 kw with net metering :: Use of rural solar technologies like Solar PV/ Solar wind hybrid system based on stand -alone systems. :: Mandatory use of solar water heating systems - Local body by- laws to be amended. Karnataka Renewable Energy Policy is comprehensively well crafted and its effect can be witnessed by measuring the performance of renewable energy generation in the state. Rajasthan Rajasthan is one of the first states to kick-start the solar based power projects. Recognising the potential of solar energy, government of Rajasthan had promoted setting up of the Mathania Integrated solar combined cycle power project in the early Nineties.91 However, the said project did not materialize due to various factors. Nevertheless, the recent shift in policy and regulatory framework in the power sector has brought the development of renewable energy agenda to the forefront. The existing policy is known as 'Policy for promoting generation of Electricity through Nonconventional Energy Sources -2004. Rajasthan is an attractive destination for all renewable energy developer (especially for solar & wind energy) as majority of its area receives solar radiation as high as i.e. approx. 6.2 kWh/m2 / day92 while receiving minimum average rainfall. The vast availability of land (especially western part of Rajasthan) makes it best suited for solar power generation. It is estimated that state of Rajasthan is likely to emerge as the power house of the country with the possibilities of setting up installed capacity exceeding 100,000 MW from solar energy alone. It is also estimated that 5% of Thar desert (as part of Rajasthan & Gujarat) if is covered with solar fields, it can meet today's energy demand. The policy makes Rajasthan Renewable Energy Corporation (RREC) the nodal agency for facilitating and implementing renewable energy projects. Salient feature of Rajasthan policy-2004 (relevant for setting up of solar power generation) It defines Solar Plant as a power plant or system utilizing solar thermal energy through solar photovoltaic or 18 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges concentrated solar thermal devices including its integration into conventional fossil fuel for generation of electricity.93 The power producers may use the power for captive consumption or for sale to consumers/ licensee including distribution licensee. Renewable purchase obligation- for the state of Rajasthan has been kept at 12% maximum & 9.5 % as minimum of total energy consumption by Discoms from nonconventional energy sources by 2011-12 as per Rajasthan Electricity Regulatory Commission (RERC's) order dated 29th Sept. 2006 Interfacing arrangements from the points of generation to the pooling station shall be developed and maintained by the power producer as per specification and requirements of other regulatory framework. No grid connectivity charges shall be paid by solar power plants up to total installed capacity of 50 MW in the state. The transmission system from pooling station to the receiving station shall be developed by power producer at its own cost. Execution of Wheeling and Banking Agreement between power producer and Discom for such banking. Except in case of power sold to Discoms, the power producer shall pay wheeling charges at the rate of 10% of the energy billed into the grid irrespective of the distance from the generating station and such charges will be inclusive of the T&D losses.94 The price of power except sell to Discoms will be determined by the agreement between the seller and the purchaser. The power plants commissioned under the Policy would not be subject to merit order dispatch regulations.95 Exemption from electricity duty at the rate of 50% for a period of 7 years from commercial operation date for its captive use or for sale to a third party. Mechanism of single window clearance on proposals received for developing the power plants based on renewable energy sources. Allotment of govt. land on concessional rates viz., 10% of DLC rates.96 The project will be treated as an "industry" and all the incentives available under state industrial policy will be made available. The policy imposes an amount of Rs. 50,000/ - per MW with RREC towards processing fee. The time frame for completion of solar power projects shall be determined by concerned committee. In case of delay of completion of project, the policy envisages extension of time- framework in lieu of payment of certain sum/ MW.97 Rajasthan, as discussed above has an enormous potential to become solar state of India. But, till date it has recorded a very low rate of success. The non- existence of a concrete comprehensive and dedicated policy & over regulation like imposition of fines/ fees are few areas for concern. Haryana Haryana is one of the states which has the potential of becoming the next renewable energy power house (especially in case of solar energy). It receives an average of approx. 5.8 kWh/m2 /day98 solar radiation with more than 320 clear sunny days in a year99. The state has formulated a policy for promoting generation of electricity through renewable energy sources -2005. Through this policy the state govt. aims to add a total generation of 500 MW through renewable energy by 2012. It identifies promotion of solar energy based power projects to meet the specific target set by the policy. Salient feature of Haryana policy-2005 (relevant for setting up of solar power generation) The nodal agency i.e. Haryana renewable energy development agency (HREDA) shall function as a single window clearing agency for facilitating renewable energy projects in the state. The policy does not impose any restriction on legal structure of entrepreneur in generation of power. Grid interfacing will be undertaken by the power producer as per specification and requirements of the utilities at its own cost. For grid interfacing the plant should have a capacity of at least 1 MW or above. The state transmission utilities (STU) / distribution licensee will bear the cost of EHV / HV transmission line up to a distance of 10 km from the point of energy metering. Beyond the 10 km. distance, the balance cost of the transmission line shall be shared equally between developer and STU/ distribution licensee100. The wheeling charges shall be levied at the rate of 2 % of the energy fed to the grid irrespective of the distance from generating station.101 Banking facility shall be allowed during all times of the day and night subject to the condition that surplus energy at the end of the financial year shall not be carried over to the next year102 Renewable Purchase Obligation - Every distribution licensee in Haryana will have to procure electricity generated from renewable source of energy at the minimum percentage specified below of its total consumption of electricity within the area of distribution licensee103: Year Minimum (%) 2007-08 3% 2008-09 5% 2009-10 & onwards 0% Exemption from electricity duty on generation and sale of power from non-conventional sources. Exemption from local area development tax on plant, machinery, equipment for generation of power from solar energy. Setting up of renewable energy power projects in agricultural zones will be permitted without land conversion charges. All renewable energy power projects to be treated as an "Industry" in terms of Industrial Policy, 2005 and all the incentives under the policy will be made available.104 19 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges Punjab Punjab one of the more highly developed and prosperous state of India is also a leader in harnessing renewable energy from various sources. Recently, it has given a major thrust to the power generation from solar energy. Punjab had formulated a New and Renewable source of energy policy 2006 (hereinafter; NRSE) to develop and promote renewable energy technologies. The policy targets to achieve an additional capacity of 1000 MW by the year 2020. The state receives a rich solar radiation equivalent to 4-7 KWh/m2.105 The NRSE policy empowers Punjab Energy Development Agency (PEDA) as nodal agency for the implementation of projects. Salient feature of Punjab NRSE policy-2006 (relevant for setting up of solar power generation) Govt. land will be provided on nominal lease rent of Rs. 1/ m2 for a period of 33 years. To promote manufacturing and sale of NRSE devices/ systems/ equipments. Machinery required for NRSE projects, VAT shall be levied at the rate of 4%. Octroi on energy generation and NRSE devices/ equipments shall be exempted. The developer at his own cost shall provide the evacuation system including transmission lines for purchase of energy from generation site. Single window clearance for all NRSE projects within a period of 60 days. RPO - Punjab state electricity board (PSEB) will purchase electricity in whole or part offered by the power producer. Wheeling charge at the rate of 2% of the energy fed to the grid. Banking facility for the power generated shall be allowed for a period of one year by the licensee. Exemption from electricity duty for the NRSE power projects. The renewable energy power producer will have a option to sell electricity generated by it to the third party within the state of Punjab. Sale of power generation from solar energy - Rs. 7 per unit (2006-07 as base year) with five annual escalations at the rate of 5 % up to 2011-12. Grid interfacing on high transmission side of the generating station and its subsequent maintenance shall be undertaken by the renewable energy power producer. Renewable energy power producer shall be required to lay its own transmission lines from generation facility to the grid sub- station. Renewable energy power producer is required to install two separate meters one for the export of power to the Grid and another for import from the grid on the high transmission side. In comparison to other states, Punjab receives a relatively lower amount of solar radiation. But what makes it an attractive destination to all the developers is the sound existing policy with regard to land allotment, project clearance and fiscal incentive provided to them. The solar policy can make the state even more attractive to the renewable energy industry by following ABT system. Punjab had been one of the leading states in development of other renewable energy like (small hydro power plants and harnessing energy from agro- bio waste). Howsoever, in last two years, the solar power plant of nearly 20 MW had been setup in state. CONCLUSION The future of renewable energy in India is limitless. India's leadership in the clean energy program is scaling new heights which is supported and facilitated by economic & legal policy. Although, the renewable energy scenario in India is in nascent stage; the trend keeps growing. The existing laws and policies have made it easier for this sector to flourish. A developed India fuelled on solar power will be a model state for the world community. Howsoever, a dedicated uniform policy like that of Gujarat for the solar power generation can really help in harnessing solar energy at massive scale. Majority states in India receive a considerable amount of solar radiation; therefore there is a scope for tapping solar energy at the commercial level. Thus, there is a need to have a uniform national policy for the setting up of solar power plants in India. Certainly, India has to walk a mile before it takes a hold. Footnotes 1 For a study on growth and development of Indian power sector refer Rajiv K Mishra, A Report on Rural Electrification in India "Looming crisis of Indian Power sector" available at http://www.ic2.utexas.edu/images/faces/mishra-2008-indianpowersector.pdf 2 As on 31 March 2009, India has a total installed capacity of 147. 965 GW. See, Annual Report 200809, Ministry of Power, available at http://www.powermin.nic.in/reports/pdf/Annual_Report_2008-09_English.pdf 3 ibid 4 The Integrated Energy Policy states that "Access to electricity is very uneven. Around 57% of the rural households and 12% of the urban households i.e. 84 million households (over 44.2% of total) in the country did not have electricity in 2000. Even those who have access to electricity suffer from shortages and poor quality of supply. Unscheduled outages, load shedding, fluctuating voltage and erratic frequency are common. Consumers and the economy bear a large burden of the consequences of this poor quality of supply." See also, National Electricity Policy 2005, available at http://www.powermin.nic.in 5 Excluding Hydro- Power Generation which accounts for approximately 24 % of total capacity 6 During X Five year plan a total of additional 27 GW of electricity was achieved, out of which Renewable Energy accounted almost one-fourth of it. It was mainly due to the scaled installation of wind power generation in various states supported by good policy framework. 7 The XI five year plan envisages a total addition of 80 GW of electricity to the installed capacity from all sources. 8 See, CERC Draft explanatory memorandum for tariff norms for Solar Power Projects, available at http:// www.cercind.gov.in/2009/July09/Draft-Explanatory-Memorandum_Solar-Power-Projects.pdf 9 ibid 10 The solar energy can be harnessed mainly through two roots i.e. Heat & Light. The thermal ( heat) route uses the heat for water heating, cooking, drying, water purification, power generation, and other applications; the photovoltaic route ( light) converts the light in solar energy into electricity, 11 See, 73rd & 74th Constitutional Amendment Act 1992 12 See, Para 5.1.6, National Electricity Policy 2005 20 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges 13 See, Alexandra L Carleton, Mandating Market Access for Renewable Energies in Australia, (2008) 26 JERL 402 14 See, Art. 66.2, TRIPS depreciation and amortization. It is also called net book value. 47 Describe rule 5 & sec. 32 of IT Act 15 Ravi Prakash, Reconsidering law relating to Land Acquisition, (2008) 6 MLJ 83(Art.) 49 See, Policies for renewable energies/biomass in India, available at http://www.nri.org/projects/biomass/ conference_papers/policy_material_section_3.pdf 16 Federalism is one of the basic features of Indian Constitution. See, Kuldeep Nayar v. Union of India (2006)7SCC1 50 See, Guidelines for generation based incentives grid interactive solar thermal power generation projects, MNRE, No.8/1/2007-08/ST, available at http://mnes.nic.in/pdf/guidelines_stpg.pdf 17 Entry 37, List III, VII Schedule, Constitution of India 51 See, Part IX (Sec. 70-75) of Electricity Act, 2003. 18 See, S.R. Bommai v. Union of India (1994) 3 SCC 1. Also see, Kuldip Nayar v. Union of India (2006)7SCC1,44 para 37 52 Such generation of power may be either at single location of may be through modular units. 19 See, Deep Chand v. State of U.P. AIR 1959 SC 648 20 Various policies like National Electricity Policy 2005, National Tariff Policy 2006, National Rural Electrification Policy 2006, respective Grid Code, and rules, regulations made by CERC and SERC held in regulating Electricity sector in India. 53 See, Application format for seeking GBI scheme for SPV/ STP. available at http://mnes.nic.in/pdf/ application_format_spg.pdf 54 See, para 3.5, Guidelines for generation based incentives grid interactive solar photovoltaic power generation projects, MNRE, No.8/1/2007-08/ST, available at http://mnes.nic.in/pdf/guidelines_spvg.pdf 55 See, GBI scheme for Solar Photovoltaic Power Generation projects, available at http://mnes.nic.in/pdf/ guidelines_spg.pdf 21 See, Annual Report 2008-09, Ministry of Power, available at http://www.powermin.nic.in/reports/pdf/ Annual_Report_2008-09_English.pdf 56 ibid 22 See, Objects & Reasons of the Electricity Act, 2003 57 See, Supra 50 23 The electricity Act, 2003 introduces newer concepts like power trading and open access to overcome the ills of existing mechanism cross subsidies & sinking financial status of SEB's under previous regime. Open Access on Transmission and Distribution on payment of charges to the Utility will enable number of players utilizing these capacities and transmit power from generation to the load centre. This will mean utilization of existing infrastructure and easing of power shortage. Trading, now a licensed activity and regulated will also help in innovative pricing which will lead to competition resulting in lowering of tariffs. 58 See, Supra 55 24 See, Electricity Act, 2003, sec. 2 (4) Electricity Act defines 'Appropriate Commission' means the Central Regulatory Commission referred to in sub sec. (1) of sec. 76 or the State Regulatory Commission referred to in section 82 or the Joint Commission referred to in sec. 83 as the case may be. 25 See, Objects & Reasons of the Electricity Act, 2003. Sec. 2 (47) defines 'Open Access' means the nondiscriminatory provision for the use of transmission lines or distribution system or associated facilities with such lines or system by any licensee or consumer or a person engaged in generation in accordance with the regulations specified by the Appropriate Commission. 26 See, Electricity Act, 2003, sec. 2 (8) defines 'Captive generating plant' means a power plant set up by any person to generate electricity primarily for his own use and includes a power plant set up by any cooperative society or association of persons for generating electricity primarily for use of members of such co-operative society or association. 27 See, Electricity act, 2003, sec. 2 (12) defines 'Cogeneration' means a process which simultaneously produces two or more forms of useful energy (including electricity). 28 See, Electricity Act, 2003, sec. 2 (63) defines 'Stand alone system' means the electricity system set up to generate power and distribute electricity in a specified area without connection to the grid. 29 See, Objective, National Electricity Policy-2005. 30 See, National Electricity Policy- 2005, para 5.1.2 31 ibid, para 5.1.2 (d) 32 ibid, para 5.12.1 33 ibid, para 5.6 34 ibid, para 5.12.2 35 See, CERC Draft notification on (Terms and Conditions for Tariff determination from Renewable Energy Sources) Regulations, 2009 Available at http://www.cercind.gov.in/2009/July09/Consolidated-DraftfRegulation_incorporating-Solar-Power-Projects.pdf 36 See, Supra 29, para 5.12.3 37 See, Supra 29 38 See, objective of National Tariff Policy- 2006 available at http://www.powermin.nic.in/acts_notification/ electricity_act2003/pdf/Tariff_Policy.pdf 39 See, Electricity Act 2003, Sec. 2 (4) 40 See, Maharashtra State Electricity Regulatory Commission order dated May 08, 2009 in the matter of tariff for solar based power generation projects within Maharashtra under MNRE scheme. Available at http://www.mercindia.org.in/pdf/PubN_13_02_09_Solar_Eng_Draft_Order.pdf 41 Refer part 4 of this paper 42 T.N. Godavarman Thirumulpad Versus Union of India, WP 202/1995 judgment dated (2005.09.26) 43 See, Respective renewable energy policy of Haryana & Karnataka. 44 The Indian Renewable Energy Development Agency was incorporated as a Public Limited Government Company in 1987 only. The twin objectives are The objectives of IREDA are: 59 See, Supra 50 60 PM's Council on Climate Change was constituted on 6th June 2008, a committee chaired by the Prime Minister called Prime Minister's Council on Climate Change will coordinate national action for assessment, adaptation and mitigation of climate change. Available at http://pmindia.nic.in/pmcommittee.htm 61 Available at http://pmindia.nic.in/climate_change.htm 62 See, Objectives; NAPCC available at http://pmindia.nic.in/climate_change.htm 63 See, Sec. 6, Electricity Act, 2003 64 See. Objectives of the National Electricity Policy 2005. The policy has been formulated by Central Govt. under sec. 3 of the Electricity Act, 2003 65 Objectives of National Rural Electrification Policy 2006, available at http://www.powermin.nic.in/ acts_notification/electricity_act2003/pdf/RE%20Policy.pdf 66 Howsoever, it is pertinent to note that similar incentives and mechanisms do exist under various central / state govt. policies for promotion of renewable energy. 67 Many SERC in India had determined the tariff policy for solar power generation. 68 Alexis Ringwald, India Renewable Energy Trends, Centre for social market , Discussion Paper Series, 2008 69 Presently, the Solar Power Generation is a costly affair and any project developer would afford to fail the plan. 70 See , objectives, Solar Power Policy 2009 available at http://www.indextb.com/solar-policy-09.pdf 71 Non firm power means the power generated from renewable sources, the hourly variation of which is dependent upon nature's phenomenon like sun, cloud, wind, etc. that cannot be correctly predicted. 72 See, Govt. of India, Booklet on Solar Heat, available at http://mnes.nic.in/booklets/Book3-h.pdf 73 See, Solar Power Policy - 2009 & its Objectives, available at http://www.indextb.com/solar-policy-09.pdf 74 mechanism. 75 Art. 66 of TRIPS facilitate technology transfer under the existing international legal regime. It casts a duty upon the developed economies to transfer technology to the LDC's and Developing economies. 76 Electricity duty is a charge paid for the consumption or use of electricity by any user. 77 During the peak load hours, the Discoms had a {demand cut} 78 Electricity Act, 2003 Sec. 2 (76) -Wheeling means the operation whereby the distribution system and associated facilities of a transmission licensee or distribution licensee, as the case may be, are used by another person for the conveyance of electricity on payment of charges to be determined under sec. 62. 79 'ABT' means availability based tariff. ABT is a three-part tariff comprising of fixed charges, variable charges, and Unscheduled Interchange charges. The fixed charges would be linked to availability and variable charges to the scheduled energy. The Unscheduled Interchange (UI) rate shall be applicable for the deviations from the schedule. 80 Interface Metering shall conform to the Central Electricity Authority (Installation & operation of meters) Regulation 2006. 81 The MNRE incentive scheme is mainly for solar power plant (SPV & STP) available for a total of 50 MW and max. 10 MW for a particular state. 82 See, Rule (3), Electricity Rules 2005 which explains captive user as the end user of the electricity generated in a captive generating plant and the term "captive use" shall be construed accordingly. :: To operate a revolving fund for development and deployment of New and Renewable Sources of Energy. 83 See, objectives, Karnataka Renewable Energy Policy 2009 :: To give financial support to specific projects and schemes for generating energy through new and renewable sources and conserving energy through energy efficiency. 85 Govt. of India, Booklet on Solar Heat, available at http://mnes.nic.in/booklets/Book3-h.pdf 45 These do not necessarily apply to the renewable energy sector; nevertheless they underline the need to have a central renewable energy law for India in order to have a clear demarcation of the subject matter, activities, policies and regulations, particularly in the context of portfolio standards and obligations. 46 Written down Value means the net value of an asset, i.e. its original cost (its book value) minus 84 See, Mission, Karnataka Renewable Energy Policy 2009 86 See, Goals, Karnataka Renewable Energy Policy 2009 87 For ECB's the regulatory authority is the Central bank of India (RBI). 88 See, Karnataka Industrial policy -2009, available at http://www.fkcci.in/fkcci_pdf/industrial_policy.pdf 89 See, Supra 78 21 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 TECHNOLOGY II Making India a Solar Energy Economy – Prospects & Challenges 90 See, Supra 27 91 See, Mathania Solar Hybrid Power project, available at http://www.rajenergy.com/mathania.htm 92 Govt. of India, Booklet on Solar Heat, available at http://mnes.nic.in/booklets/Book3-h.pdf 93 See, Policy for promoting generation of Electricity through Non- conventional Energy Sources -2004, 3.1 (xxix) 94 In case of third party sale or captive use of power, the transmission, wheeling and other charges shall be as specified by RERC. 95 Merit order Dispatch - It helps in achieving optimal production of electricity from maximum production. It helps in multiple unit power plant to identify optimum loading for each unit to save on operational costs. 96 The land other than the Govt. land will be procured by the Power Producer/ Developer at his own cost. 97 In case of Solar Power Plant the provision of waiver of extension charges or reduction is possible considering merit of the case and the circumstances beyond the control of the power producer. 98 Govt. of India, Booklet on Solar Heat, http://mnes.nic.in/booklets/Book3-h.pdf 99 See, Policy for promoting generation of electricity through Renewable Energy Sources -2005. 100 See, HERC order on Renewable Energy Tariff & other Issues for FY 2007-08 to 2012-13 dated 15 May 2007. 101 ibid 102 See, policy for promoting generation of electricity through Renewable Energy Sources -2005 103 See, HERC order on determination of tariff for renewable energy sources in Haryana dated 31st Jan. 2007 104 Haryana Industrial Policy 2005 available at http://haryana.gov.in/ip2005website/IP2005.pdf 105 See, NRSE 2006, IV(6). 22 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Dynamic Changes During Recent Elections – In Urban Citizen of Andhra Pradesh Dynamic Changes During Recent Elections In Urban Citizen of Andhra Pradesh Kasturi Srinivasa Vijaya Sekhar and R K Bagga International Institute of Information Technology, Gachibowli, Hyderabad 500 032, Andhra Pradesh Introduction In democracy, the election process is corner stone for new leadership. ‘Elections’ are to assist to change the role of citizen from passive to active involvement in country's development. In recent, 15th Lok Sabha general elections held in India, of total 71 crore eligible voters, 40 crore took part for selecting a genuine government; held in five phases both for parliament and few other state assemblies including Andhra Pradesh. Thus, we can see an increase of 4.3 crore voters compared to previous elections held in 2004. Government of India has invested over Rs.10,000 crore for conduct of general elections, which is higher than the cost conducting elections in US. This time, several factors helped in citizens turnout like caste, party agenda, candidate profile and e-Governance etc., This paper highlights how the election reforms worked in Andhra Pradesh in 2009 and covers how e-Governance and technology helped this year elections. The objective is to focus on e-Governance impact, role of a citizen and also covers need of change management in conduct of entire election process. Andhra Pradesh General Elections – Verdict 2009 Our previous experience in elections shows that nearly 60 - 70% of the educated voters were not utilizing their vote in India. People especially educated youth, college students, professionals, software experts, corporate officials are not interested in utilizing their votes, only upper class and lower class people were casting their votes. The lower class people are attracted towards liquor, money and other free offers given by contestants to misuse their vote. Citizens are making a serious mistake by not casting their votes and for democracy to work, every citizen in country must cast his vote during the elections. This message was prominently displayed and shared with the next generation voters through television channels, print media and online blogs. In India, this time elections were held in five separate phases and in Andhra Pradesh (AP) in two different phases. In Andhra Pradesh, election reforms were introduced in the year 2004 and the main objective of these reforms was to deliver decent services to every citizen in democracy. Andhra Pradesh with a population of over 7 crore in 2001 is the fifth most populous state of India. In AP alone, 3.12 crore voters in first phase and 2.66 voters crore in second phase utilized their vote for elections, using 6.80 lakh polling stations, after delimitation by taking Electronic Photo Identity Card (EPIC). Identifying polling stations which is not beyond 2kms distance from any residential house was the main target, this time. The election process scheduled between 0700hrs to 1600hrs though the temperature is in between 37o to 42oC went on till late evening to accommodate latecomers in both the phases. The new eligible voters were given a chance to 23 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Dynamic Changes During Recent Elections – In Urban Citizen of Andhra Pradesh Urban register their names six months prior to the dates. With this, nearly 1.15 lakh between the age 1 Kasturi Srinivasa Vijaya Sekhar and Dr R K Bagga, International Institute of Information Technology, Gachibowli, Hyderabad 500 032, Andhra Pradesh group of 18 – 19 and around 11.00 lakh in the age group of 20 – 29 were registered alone in city of Hyderabad and received 1.20 lakh more applications thru drop boxes which were setup in post offices in entire state. A G2C service called eSeva had setup for submission of Form Nos 6, 7 and 8 for the convenience of citizen by paying a nominal fee of Rs.10/-, six months prior to the elections. Postal ballot facility was introduced for those who were on-election duty. This made a significant mark in increasing number of voters. Voters without voter identity cards had also cast their vote with the help of other sixteen available identity proofs like electricity bill, PAN card, passport etc. The Electronic Voting Machine (EVM), a low cost model machines were setup in all the polling stations and tested, after training the polling officials. Large size countries like America, Germany and small size countries like Ireland and Finland are still following paper ballot system. Using EVMs, where data can be stored up to nearly six months and can be reused whenever necessary, helped in counting after a month on same day for entire election process, both for parliament and states. High security initiatives from local police department helped maintaining law and order and prevented putting up hoardings, banners and posters on private property. There was no defacing of city walls, which used to be common sight in previous elections. Sensitive areas were under complete control under armed police by arranging CCTV cameras, with a view to avoid any unforeseen incidents during the elections and the result was not a single violence case. In some areas around four choppers had been setup for reaching hill areas for providing voting facility to remote villages which will benefit the contestants from different political parties. Three major parties in the race were Indian National Congress (INC), Telugu Desam Party (TDP) and Bharatiya Janata Party (BJP). Other three small parties, a new party called Praja Rajyam Party (PRP) came with a slogan on Social Justice, but could not reach the audience and the vote share was just 5.6% of total polled. More than 120 contestants had to forfeit their caution deposit for not getting their minimum guaranteed votes. The other two parties Telangana Rashtra Samithi (TRS) and Lok Satta Party (LSP) had also the same experiences. Role of e-Governance -Rural In Andhra Pradesh, e-Governance schemes are running successfully and made impact on voters, directly. To state few, the welfare schemes in rural areas like Pavala Vaddi, which was started by the Congress government in the year 2004-05 with the objective of providing interest subsidy on the loans taken by the Self Help Groups (SHG) and for poor farmers, where an amount of Rs.10 crore was allocated by the government. Schemes like Rs.2/- per kg rice and Rs.115/- for household groceries per month; and Rajeev Arogya Sri to give medical aid to common citizen where Rs.680 crores was allocated by the government; National Old Age Pension Scheme for above 65 years of age had helped nearly 75.00 lakh rural poor women; Swarnajayanti Grama Swarojgar Yojana (SGSY) and Girl Child Protection Scheme (GCPS) were few examples for majority turnout. Reforms on irrigation projects also called Jalayagnam attracted voters, heavily. The urban citizens are normally looking for economic, personal freedom, education matters and good governance1. In previous elections, welfare and development schemes were not taken in to account by most of the voters. But this time some of the urban development schemes made impact on urban citizen which helped in getting good turnout from the cities. A couple of schemes under Mega Bharat Nirman Program (an initiative, launched by Prime Minister, Dr Manmohan Singh, in December 2005 is an ambitious plan for strengthening India's rural and urban infrastructure) were also made reasonable outcome this time. Few of those are Aam-Aadmi, Indira Jeevitha Bheema, Jawaharlal Nehru National Urban Renewal Mission, Sarva Shiksha Abhiyan, National Rural Health Mission, National Rural Employment Guarantee Scheme and Integrated Child Development Services. In addition to these, Government of Andhra Pradesh held a Job mela focusing only on urban poor for those who passed out 7th, 8th and 10th class, in Hyderabad city three months prior to the elections. This timely effort had given tremendous benefit to urban poor, thereby people decided to cast their vote without fail. The urban citizen also considered taking issues like Employment, Inflation, Education, Corruption, Law and Order, Poverty, Civic Infrastructure and Health etc., for selecting their candidates. Role of Information, Communications & Technology (ICT) India being IT hub of the world, produced an innovative technology for online debates. Contestants utilized voice mail through emails and SMS through mobile phones were shown major impact this time. Some of important happenings during the recent, past have had impact on India, where ICT was used in better way during the electioneering and following are some of the highlights: (i) Mr Barack Obama, the current President, USA used ICT in a way which swayed the young voter in his favour. This influenced the Indian citizens during the recent elections hence the result is awareness was formed. (ii) Indian politicians also used ICT particularly SMS and Blogs for reaching 1 Atanu Dey’s conviction during his recent visit to Indian School of Business (ISB), Hyderabad during March 2009. 24 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Dynamic Changes During Recent Elections – In Urban Citizen of Andhra Pradesh the technology savvy citizen. (iii) ICTs have the potential to make a change possible in the Indian political culture as was shown by states like Chattisgarh in implementing Public Distribution System (PDS) and e-Procurement applications. (iv) Shri LK Advani of Bharatiya Janata Party web site is another example (http:// blog.lkadvani.in), which was regularly updated to convey his messages to reach citizen. BJP’s main agenda on delivering ICT to a common citizen in India and to Panchayats was detailed in Vision 2020 document. (v) National Election Watch (NEW), collaboration with 1200 NGOs led by the Association for Democratic Reforms (http:// www.adrindia.org). Apart from NEW, ADR had also launched to view the candidates profile of their constituency. The candidate profile includes the party’s name, educational qualifications, criminal record, details of their total assets and liabilities etc. (vi) Vote India (http://www.voteindia.org) is a non-partisan people’s movement launched under the aegis of Lok Satta Convenor, Mr Jayaprakash Narayan where he briefed the poverty in India can be wiped-out within 5 years which is not happening. (vii) The All India Peoples Manifesto (http:// allindiapeoplesmanifest.wordpress.com) is a first of its kind effort made by the Wada Na Todo Abhiyan (http://www.wadanatodo.net), which itself is affiliated to the Millennium Campaign. (viii) Apart from these initiatives, the Jaago Re! One Billion Votes (http://www.myobv.org) is another major initiative taken by Janaagraha Centre for Citizenship and Democracy (http:// www.janaagraha.org), a Bangalore based NGO that has been doing pioneering work in the areas of urban advocacy and governance. The first step of the campaign has been achieved by the Jaago Re campaign (http:// www.jaagore.com) in partnership with Tata Tea. Launched in September 2008, the campaign started a voter registration drive in colleges and corporate in 35 cities across the country. The campaign was driven through an interactive application on their website and kiosks that help people identify their constituency and guide them to the nearest voter registration centre and send updates to them via SMS when their names are added to the voting list. (ix) Lead India (http:// www.lead.timesofindia.com) was launched by the Times of India in 2007 to identify emerging leaders for the next generation of India. Role of Citizen Government The Chief Electoral Officer of Andhra Pradesh censored success stories in all the media channels on government schemes like Indiramma Housing, Paavala Vaddi, Rajeev Arogya Sri, Jalayagnam etc, as a part of code-of-conduct before the elections. The election officials in state were in regular touch with local police personnel and district collectors. ECI instructions on following code-of-conduct, violator’s penalties etc., and even transferring Director General of Police for his statement in favour of the existing government before elections and banning all political campaigns before 48hrs to elections day were good signs of sincerity maintained this time. Police force seized huge amount of money and liquor by thorough checking of vehicles to stop distribution of money and liquor to attract votes. Voting is compulsory in countries like Australia, Singapore, Switzerland, Peru, Greece, Cyprus and Finland. Defaulters are penalized with fines, imprisonment; salary cut cancellation of licenses etc. This system needs to be implemented in our country with minimum conditions. Though, things in large scale countries like India with over one billion population cannot be changed immediately but initiatives can take place now. Voting can make a tremendous difference too, in state, regional, and local elections hence, it is every citizen’s responsibility to bring such a change for participating in healthy voting. Citizens are keen to renew their LPG gas connection, telephone connection, vehicle registration etc when they relocate but will ignore changing their electoral identity for no reasons. Criminalisation and rampant use of money and muscle power in politics have been corroding our political system. Looking at the figures posted on election watchdog websites like www.myneta.info, which contains records of the candidates submitted to the ECI, a number of candidates have criminal investigations or cases pending against them. An option of ‘none of the above’ (NOTA) needs to be included, if no suitable candidate is justified on ballot paper/EVM, though it is negative but in this case so positive. Contestants those who have not qualified for the first two times, may not be given another chance to contest, to be implemented, like in USA. To integrate the attributes for forming up a policy for constructing a beautiful project namely Unique Identity Authority of India (UIDAI), it is every one’s responsibility to contribute their share. A few sectors which must contribute towards building this project is mainly the youth and particularly, women, government, industry, academia and other service sectors are important. Delivering UID to every citizen in next five years is to be planned and previous learning should help in further strengthening the project goals. Resolving issues 25 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Dynamic Changes During Recent Elections – In Urban Citizen of Andhra Pradesh Industry Many Non Government Organizations encouraged the citizen to vote, had edebates with candidates and maintained a database of contestants for reviews. It helped in better planning and coordination of elections, particularly in state of Andhra Pradesh. Social campaigns like Jaago re, Let’s Vote, Lead India ’09 etc have worked efficiently to bring women and youth voters from corporate and large institutions to cast their votes. The main objective of these campaigns was to make ‘Vote’ as compulsion for every citizen. e-Vote using internet/mobile phone option with Universal Identity to be introduced. A minimum eligible requirement on contestant education, age, previous conduct record etc would immensely help. e-Campaigning and website debates using ICT for common citizen must be effectively operated for interacting with several party candidates. The print and electronic media needs to be rationalized for delivering their unbiased reporting and also to highlight corruption, criminal records of the candidates. For example, National Informatics Centre in collaboration with Door Darshan (a television channel) had a better technology tie-up, but in recent elections, the other private channels how fast they declared the results? Income inequality and inclusive growth needs to be addressed, challenges in reducing poverty and literacy issues to be well focused. Change Management model There are various models designed for Change Management in eGovernance applications but the following change formula rests on principle of dissatisfaction, new vision and steps for change should be greater than resistance being offered. It was created by Richard Beckhard and David Gleicher and is known as Gleicher’s Formula. A sample change model to be introduced in further strengthening election reforms is given below2. The factors to be present for changes are: D x V x F > R D = Dissatisfaction with current state V = Vision of what is possible F = First, steps that can be taken towards the vision. If the product of these three factors is greater than R = Resistance, thus, the change is possible. Even if one out of D, V and F, is absent or low, then the product will be low and therefore not capable of overcoming the resistance. The resistance to change is also defined as the cost of change. It is then subdivided into the economic cost of change (monetary cost) and the psychological cost of change. D x V x F > C (e+p). Conclusion In democracy, any political party can be registered but no power to deregister at present. There are nearly 1012 political parties in India including both National and Regional levels. The Act needs to be amended to include clear procedure for derecognizing parties, which do not serve any purpose. ECI has made major efforts by conducting five-phase elections, spreading over a month’s period, there by it has utilized the police and armed services and imposed security levels in each state one after the other. This 2009 elections being seen as unique where awareness has been created for the next generation. It is time to nurture the present climate to ensure that further election reforms are brought to India in very near future. The message of the recent elections is very clear that citizen is well aware of their future and will bring the right type of leaders by using their vote power by making use of the available technology and other resources. when photo identity cards were outsourced to few private agencies some time back in Andhra Pradesh would immensely help. A compulsory option of quoting UID in all citizen-centric services like banks, passport and telecom applications forms etc., would help. Huge investment in conduct of elections needs to be further slashed in future and, limit on campaign expenditure by contestants to be imposed. In a country like India, it is very difficult to punish those who have not cast their vote; hence, we need to implement a stringent policy which will help future generation. 2011 Census is used to see that every Indian gets his long awaited UID and an exclusive toll free number for India on UID project may help in better conduct of next elections. In 2009 elections, voters conveyed their message by casting their vote to a stable government, rather than opting for a change, both in state and centre. Academia Recently MTech IIT (Mumbai) students had started a party named Bharat Punarnirman Dal party and the members were also alumni of IITs. Similarly, in Bits-Pilani there was a movement called ‘Sangharsh, Seva, Nirman’ where five hundred members were taking active part from eight chapters throughout the country. The prime objective of this organization is to motivate educated Indian youth to enter politics and participate in healthy voting like in 2004 elections, where educated candidates were higher than previous years. India contributes maximum share of annual Gross Domestic Product growth rate and the main stakeholders are public sector units, banks, government and educational institutions. Also the 1/3rd of the GDP % rate is mobilized from urban citizen, where e-Governance and technology is moving bit slowly and focus on recent global slowdown trends in Information Technology sector needs to be well taken care. 2 References 1. K C Suri (2005), “The Dilemma of Democracy: Economic Reforms and Electoral Politics in Andhra Pradesh” in Jos Mooij (eds) The Politics of Economic Reforms in India, published by SAGE Publications India Pvt. Ltd., in 2005. pp 130 – 170. Eight models of Change Management in eGovernance by Shri Sameer Sachdeva in his working paper, Nov 2008. 2. National Election Survey Report (2009) on “How India Voted”? 4. 3. R K Bagga & Piyush Gupta (eds) (2007), Transforming eGovernance: eGovernance Initiatives in India, ICFAI University Press. Ritu Srivastava (2009), “Elections go hi-tech” i4d, first monthly magazine on ICT4D Vol.VII No.5, May 2009. 5. Sameer Sachdeva (2008), working paper on “Change Management for e-Governance”. 26 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Srishti – A GIS Framework for Grass Root Level Planning SRISHTI A GIS Framework for Grass Root Level Planning G. P. Singh Technical Director National Informatics Centre, U.P. State Unit Introduction Inter-regional disparities are one of the most critical issues among the persisting problems in the development of State. Even after continuous effort by Government, these problems could not be eradicated. In this context, the Planning Department, U.P., has identified various socio-economic indicators of development that can help us in finding the quantitative and qualitative changes at the village level. Directorate of Economic and Statistics of Planning Department of U.P. is publishing "Sankhyaki Patrika", covering village level amenities and various Socio-Economic indicators using digitization of data at district level, every year from 1995. These indicators also help in comparison of disparities among the districts. Multiple tables and graphs provide understanding of issues involved and accordingly indicate the priority areas for reducing regional imbalance. These hundreds of table and graph based on indicators are published once in a year and become basis of analysis to planners and policy makers. Analytical reports are provided in the books that are based on some pre-defined criteria. Main difficulty in this process is the contents rigidity in these books, since once it is published cannot be changed and if analysis is required on new criteria that can be done manually which is a time consuming process. All these hurdles could be surmounted by a web based GIS (Geographical Information System) framework built-up around the polygon village boundaries. Various data of different departments can be linked with village boundaries, so that thematic maps can be generated for viewing whole area at a glance for appropriate grass root planning. These maps will be available on the fly based on criteria selected. This will help the planners and policy makers for taking decisions timely by seeing facilities on the map up to village level. Also, it is very easy to compare various facilities which are available in different villages of the district on the same screen. 27 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Srishti – A GIS Framework for Grass Root Level Planning Development Approach In the GIS application two kinds of data (spatial and nonspatial) is used. Spatial data creation needs fair experience of conducting GPS based ground survey, analysis of satellite imagery apart from expertise in the GIS tools and technology. Most of the departments in the Government are not capable of doing such kind of activities but collects non-spatial data from MIS (Management Information System) in the form of reports and charts. Most of the planning is based on the reports available with the departments which may not require exact location in terms of Latitude and Longitude. Most important aspect in the development of web based GIS framework was to make it easy for end-users. Anybody can use this framework without any prior knowledge of GIS tools, which has following tremendous features: 1. Seamless maps generation of Districts from Block/Tehsil/ Village level 2. Zoom in, zoom out, panning, etc. of the maps 3. Zoom in up to village boundary level 4. Map generation on the fly based on the parameter selection 5. Village search on the maps 6. Keeping Spatial Data in the Database (RDBMS) 7. Taking village boundary as the base for generating maps of any level (District, Tehsil, Block, Village Panchayat, Division, etc.) 8. Provision of integration of the village layer with nonspatial data of various schemes running in the village Architecture and Design of the Framework Web and RDBMS technologies have been used in the designing and development of the GIS framework. The most important aspect of the architecture of the framework is to give facility to link any kind of non-spatial data up to village level. Design of the framework has been taken in such a way that existing MIS application can be linked with GIS framework so that grass root level planning and monitoring can be done effectively by seeing more and more area at a glance. Web server, Database server and Map server has been used for hosting this frame work. This framework has been hosted on http://gis.up.nic.in use small, cash-intensive businesses like bars, car washes, strip clubs or checkcashing stores. It gives an overview as to how this menace has developed into transnational business involving various sophisticated techniques and procedures. The ill-effects of money laundering are unimaginable and have been discussed in next section. The geographic area of a State is being divided into Districts, Tehsils, Blocks, and Revenue & Panchayat Villages etc for various administrative/development reasons as depicted in Figure below. Districts Administrative Division Development Division Tehsils Block Revenue Village Panchayat Village It is observed and analyzed that revenue village, from 2001 Census and from the village boundary map of Survey of India, can be linked on Village code fixed in 2001 Census by Registrar General of India. It is also observed that Revenue Village boundary is the smallest polygon on the map and that is very rarely divided. Therefore merging village boundaries, in one system, can create Block or Tehsil boundaries, while village and block panchayat boundaries can be created in the same way in other system of Panchayati Raj. Uniform and standard coding pattern for identification of District, Tehsil, Block and Village has been taken from Census 2001. Scanning and digitization of all villages of U.P. from the topology-sheets of the maps obtained from Survey of India and the ground survey were major works consisting more than 1.07 lakhs villages and linking those polygons with standard codes of district, tehsil and block. As above figure depicts that boundaries are different in two divisions of administration and development of U.P., therefore it leads to different map requirements for planning and decision making. Architecture and Design of the Framework Web and RDBMS technologies have been used in the designing and development of the GIS framework. The most important aspect of the architecture of the framework is to give facility to link any kind of non-spatial data up to village level. Design of the framework has been taken in such a way that existing MIS application can be linked with GIS framework so that grass root level planning and monitoring can be done effectively by seeing more and more area at a glance. Web server, Database server and Map server has been used for hosting this frame work. This framework has been hosted on http://gis.up.nic.in use small, cash-intensive businesses like bars, car washes, strip clubs or checkcashing stores. It gives an overview as to how this menace has developed into transnational business involving various sophisticated techniques and procedures. The ill-effects of money laundering are unimaginable and have been discussed in next section. 28 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Srishti – A GIS Framework for Grass Root Level Planning Available layers in the framework: Data of the following sectors from Census-2001 has been linked with village level maps for showing Population and Amenities in the village. a. Education b. Health c. Drinking Water d. Post & Telecom e. Communication f. Banking g. Recreation h. Approach to Villages i. Power Facility j. Irrigation Facilities Above sectors are further divided into multiple classifications, among which some are describe as follows: Education: It is further categorized into different number of Secondary, Senior Secondary, Industrial, Adult Literacy and Primary Schools, Colleges and Other Educational facilities in the villages. Health: This sector is further divided into number of Unani Hospitals, Homeopathic Hospitals, Allopathic Dispensaries, Ayurvedic Dispensaries, Unani Dispensaries, Homeopathic, Dispensaries, Maternity Home, Family Welfare Centres, Child Welfare Centres, Primary Health Sub Centres, Health Centres, Community Health Workers, Other Medical Facilities, T. B. Clinic, Subsidized Medical Practitioners, Registered, Medical Practitioners, Ayurvedic Hospitals, Allopathic Hospitals, Maternity & Child Welfare Centres, Primary Health Centres Basic, Primary, Secondary and Higher education facilities along with technical education, etc in the villages. Similarly other sectors are also categorized into multiple classifications based on the facility level which was surveyed in the Census 2001. Apart from the above data of Census 2001, this framework is being used to link 41 grass root level facilities in the form of distances (in Km) from the Villages from year 2001 to 2008.These facilities are listed in the below table .These Every year Data has been collected from concerned departments and published in the book called Sankyaki Patrika (District level Statistical Book). 1. Agri. Service Centre 2. Allopathic Hospitals 3. Alternative Edu. Centre 4. Animal Care Centre 5. Artificial Breed Centre 6. Ayurvedic Hospitals 7. Bus Stop 8. Cold Storage 9. D Group Animal Hospital 10. Development Office 11. Drinking Water Source 12. Fair Price Shop 13. Family Welfare Centre 14. Fertilizer Store 15. Government Dairy 16. Govt. Agr. & Vill. Dev. Bank 17. Govt. Comm. Bank 18. Govt. Purchase Centre 19. Higher Second. School(B) 20. Higher Second. School(G) 21. Homeopathic Hospitals 22. Letter Box 23. Mandi 24. Market Haat 25. Mother Child Welfare Centre 26. Pesticides Store 27. Post Office 28. Post office Saving Bank 29. Primary Schools 30. Primary Agri. Loan Society 31. Public Telephone 32. Railway Halt 33. Road 34. Sale Purchase Society 35. Second. Schools (Boys) 36. Second. Schools (Girls) 37. Seed Store 38. Telegraph Office 39. Unani Hospitals 40. Veterinary Hospitals 41. VDO Centre 29 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Srishti – A GIS Framework for Grass Root Level Planning Natural Resource Information System (NRIS) Spatial data prepared under NRIS has been linked with this framework, which has following layers: Rail Track Road Canal Forest Structural Lineament Drainage Line Drainage Polygon Land Category Ground Water Lithological Land Use/Land Cover Watershed Geomorphological Soil Settlement Area Advantage of GIS Framework This framework gives you tremendous ability in terms of data relevancy which can further leads to much more ease in planning and decision making: :: Administration and development get easier for decisionmaking authorities when smaller areas need to be handled such as village polygon. Thematic indicators like Census parameters, economic indicators can add value and support decision-making process. :: As one can observed that accessing developments, growth and other factors, without the main geographic component, perception of the data may be difficult. Whereas thematic maps based on criteria of any socio-economic data can give better understanding. :: Developmental activities over period of time can be observed on thematic maps easily. :: Comparative depiction of a theme at various administrative units at a specified level brings forth a healthy competition; facilitate infrastructure planning and other such positive reforms. :: Data from various disciplines can be integrated seamlessly and cross linked to help monitor the growth of the regions in various sectors. :: Overlaying of different layers such as road facility in the form of distance and road network can give better way of planning and sanctioning of road scheme in the area. :: Since performance can be analyzed at various levels on the same parameter it helps to identify the failure or the negative impacts of any system/parameter, too. CONCLUSION GIS is not a newfangled technology in the field of spatial data analysis and planning. Many departments are already using this technology for generating geo-referenced data with the help of costly and cumbersome tools. Development of GIS application is treated as a very specialized activity, which needs prior training and expertise. Due to limited resources in the departments, potential of GIS has not been explored yet, though it can help in better planning and decision making in the government departments. It is also observed that many times, lot of money, time and effort is put by various departments for generating similar kind of spatial data, while this could be avoided by putting the data at a common place. There is a need of some process or method for updating such kind of spatial data by various departments and some mechanism for sharing of data so that latest maps can be timely obtained for decision making. 'Srishti' a GIS framework fulfils all above requirements and helping in the integration of spatial and non-spatial data for various departments. During the development of this framework it was observed in the analysis that spatial data was being generated in a different projection coordinate system and geographic coordinate system. This leads to the problem of overlaying of different maps on each other when a location is analyzed. Therefore, it is requisite that uniform policy of georeferencing should be used in the digitization of the maps so that multiple spatial data can be integrated and multiple layers can be overlaid in the analysis of locations. It is significant to note that most of the departments in the government have multiple MIS reports which consist of non-spatial data. This non-spatial data can be linked with different layers (district, tehsil, block or village) available in the framework and thematic maps can be generated for analysis and decision making. Therefore, prior knowledge of GIS, procurement of GIS software and application development will not be required by most of the departments initially, since precision of the location is not important in most of the cases. 30 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Social Security for Urban Poor Social Security for Urban Poor Jatinder Singh, Professor, Rai Business School, New Delhi Starting with fundamentals, let us extrapolate the meaning of Social Security for Urban Poor and some of the facets associated with this by understanding the meaning of all the closely-related aspects independently. Social Security this refers to social programs that provide set of benefits available from the government or civil society. These meets social needs of the individual against socially recognized conditions like infirmity, unemployment, old age and poverty. These programs may be contributory or non-contributory in nature. Urban Poor these are group of individuals who have constraints to opportunities who are living in absolute or relative poverty in urban areas. Organized sector this is the part of economy which works through legal channels of banking, and tax system which is a determinant of advanced economies. Presently, organized sector constitutes roughly eight percent of Indian economic activity. Unorganized sector this is a part of economic activity which most of the time runs on hard cash with no accountability and tax liability. This sector constitutes roughly 92% of Indian economic activity. Magnitude of urbanization Year % of urban population 1950 30 2000 47 2007 50 2030 60 As evident from the table the urban population is on increasing trend. Such huge influx of people from rural to urban area needs meticulous planning for their settlement with provisions of social security to the masses. It is estimated that by 2015 worldwide there will be more than 60 mega cities. This has to be kept in pace by marinating the standard of living for the urban poor. The migrants generally take shelter in slums and a few of them only, by virtue of their skill and acumen may move to developed part of the city. In Indian scenario, the mega cities grew faster than its infrastructure which manifests as high proportion of industrial overload and the resultant exploitation of the migrants because of their weak position and bargaining power. Since the major chunk of urban poor work in informal sector, so, for sustainable and inclusive development and to appropriate the quality of life of the urban poor requires concentration of benefits of social security in the informal sector. The socio-economic-politico interface has an impact on the dynamics of social security for the urban poor with concerns for urban poverty alleviation programs like affordable housing, slum development, free education, health and related social paradigm for poor and destitute living in urbanized areas. The government sponsored initiatives like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) which was launched in 2005 has not responded genuinely to the cause and concern of urban poor. The critical issues concerning urban poor on above said key areas require adequate concern and deliberations. The fundamental services apart from social security that are most wanted for urban poor and slum dwellers are: Affordable housing Provision of potable water Sanitation Health Education for children. Pension and retirement benefits Medical benefits The urban poverty is not only limited to these wants but cumulative deprivations, where one want is cause of other want. 31 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Social Security for Urban Poor Informal workforce vis-à-vis formal workforce in urban area Since majority of workers in urban area work in informal economy; they are not recognized and protected by labour legislation and enforcements. They have no labour regulations, compensation plans, fixed hours of work, and minimum salary rules. Above all, hawkers or daily wagers in urban areas frequently face harassment from police and other civic agencies. Moreover, banks and other financial institutions do not help them and they have poor access to financial resources because they do not have a permanent residence proof or a guarantor. Ironically, the formal sector cannot accommodate employment to the total workforce; in its absence they are left with no option but to join informal sector for their subsistence and livelihood. Nevertheless, the 11th Five Year Plan aims for inclusive growth by focusing on employment, income generation and inclusion of the poor to be sustainable, but the goals seems to be far and unrealistic. The magnitude of urban poverty is enormous and multifaceted which requires customization of schemes for effective implementation vis-à-vis social security schemes. The Ministry of Housing and Urban Poverty Alleviation, Government of India jointly with United Nations Development Programme (UNDP) launched India-Urban Poverty Report 2009. It reveals that India's urban population is increasing at a faster rate than its total population and 41% of its population will live in cities and towns by 2030. The gap between the urban poverty and rural poverty is reduced which tends to be higher in past. The resultant is the increase in slum population which concentrates on the outskirts of urban boundaries. This urbanrural has resulted in increased informal sector activities which are devoid of social security programs. Coupled with slum intricacies like overcrowding and poor access to basic amenities like potable drinking water and sanitation; this has considerably decreased the quality of life of its inhabitants. Slums are determinants of urban poverty which makes a city sick and unattractive. The definition of slum household according to UN-Habitat is - group of individuals living under the same roof in an urban area who lack one or more of the following: Durable housing of a permanent nature that protects against extreme climate conditions. Sufficient living space which means not more than three people sharing the same room. Easy access to safe water in sufficient amounts at an affordable price. Access to adequate sanitation in the form of a private or public toilet shared by a reasonable number of people. Security of tenure that prevents forced evictions. Migration and Social Security Migration can prove to be beneficial for State economics if the workers are highly paid and highly skilled and working in formal sector. In Indian perspective, migration results in movement of people from backward states to developed states. This is because of employment crunch in rural areas where the economy is more agro based. In the last few decades, there has been phenomenal migration which has witnessed mushrooming of slums and exploitation of masses. Majority of migrants work in informal sector, this adds further vows to the State financial and security programs. Migrants are diverse in terms of culture with high illiteracy level. They are normally low-paid workers with negligible contribution to state exchequer and demanding and vociferous in terms of availing full benefits for their welfare. The unorganized marginalized group is socially discriminated from organized counterparts which increases the gap of social security. Also, they get low wages; if they are self-employed, their wages are inadequate to meet their families physiological, social and security needs. They get entangled in the vicious cycle of low education-low sills-high exploitation web and they never get an opportunity to hone up their skills to secure better jobs in formal sector. They also move from one improvised area to other urban slum with no consolidation of their working status and virtually no increment in spite of long association with their employer. This further degrades their standard of living and makes them susceptible to immoral and illegal practices. With respect to education and health paradigms, urban poor children are forced to work in dhabas, tea stalls, and do odd jobs and sometimes resort to begging and stealing to meet their family basic needs for subsistence. The school attendance rate of students in the slums always remains relatively low despite programs like free meals and free access to primary education. There exists two type of school in urban area - private and Government owned Municipal or Corporation Schools. The urban poor cannot dream of entering a private school which is generally reserved for urban rich. This urban education reflects a dichotomous situation where the under privileged have no or meagre access to quality education making them deprived of their right to quality education. The data of school going population in urban areas reveals that 21% of children from the poorer sections do not get enrolled in the schools. According to UNESCO Education for All Report 2008, India caters to over 35 per cent of the world's total illiterate population with only 66 per cent people literate (76 per cent men and 54 per cent women). This manifests itself as the strong relationship between the between urban poor and social security as illiterate are normally unaware of their rights. Health indices for urban poor are worsening as the data reveals that nearly 57% of children under 3 years of age are malnourished as compared to rural belt where it is less 32 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Social Security for Urban Poor than half. Rural area has a three-tier public healthcare system as sub-centres, primary health centres, community health centres, and districts hospitals. On the contrary the urban poor do not have access to well-designed healthcare system. Though there is a plethora of public and private medical institutes catering to multitude of people; urban poor remains on the mercy of public healthcare services where the quality of service is always a topic of debate. The National Commission for Enterprises in the Unorganized Sector (NCEUS) reports that 47% of all workers in the organized sector are working as informal workers. Industry tends to optimize costs by outsourcing work to unorganized sector like manpower suppliers to save themselves from legal/employment regulations, which does not result in additional job creation; thus becoming a potential deterrent for sustainable development and inclusive growth. Although, Government organizations like NSEWA pass on some social security benefits like Minimum Wages Act, Maternity Benefit Act, Equal Remuneration Act, Building and Other Construction Workers Act, Workmen's Compensation Act, and Contract Labour Act, but they are practically not implemented in totality because of ill-informed workers and lack of awareness. The government has passed the Unorganized Workers Social Security Bill which ensures security of the informal sector too, wherein it covers ten social security schemes like pension, maternity insurance, general insurance, welfare scheme for artisans and weavers and health insurance. There is an ardent need for unemployment insurance too, which should also include retirement and old age pension and some other fringe benefits. Such schemes are prevalent in some of the advanced economies, even some South American and African countries too part some of the social welfare for the marginalized group. This is believed from the fact that the developed economies spend 15 to 30 percent of their GDP on social security, but India meagrely spends close to one percent of GPD on social security. In a step to boost up social security to the poor, the government has passed The Unorganized Workers Social Security Bill which aims at registering 400 million unorganized workers from informal sectors with a unique national identification number. Administration and implementation of this Act will be complex as the registration and keeping a track of migrants will be difficult because of their frequent mobilization. This is revealed from Building and Construction Workers Act which is facing hurdles to register migrant workers for availing social security benefits. Trade Unions in India have primarily represented the workers of organized sector which comprise a merely eight percent of workforce. The rest of them has labour regulations and are totally unprotected with no social security. Moreover, this sector has toothless representation, so any voice or concern is totally unheard and no collective bargaining can be initiated under such circumstances. The initiative by the Government of India to recognize the role of trade unions in the informal economy has not borne adequate representation of the informal sector. With the current global recession, many SMEs, which are concentrated in urban areas, are under constraints for downsizing or closing, which has resulted in loss of jobs to majority of workforce in the urban areas. NSSO's 2002 survey reveals that 52,000 slums in India have eight million urban households representing 14% of the total urban population. This constraint has resulted in depleted social assistance programs. The challenges posed by urban poor vis-à-vis social security are quite knotty and as pernicious as the system is not geared to adapt the improvised workforce. As per the report of 10th Five Year Plan out of 400 million workers, only 50-60 million (12%-15%) are covered by some form of social security. Studies reveal that informal sector where social security is abysmal accounts for 66.7% of total employment in Delhi, 60% in Mumbai and 60.6% in Chennai. In most of these metropolitans, people are self-employed with bare minimum income, poor living conditions, non-existent labour regulation and social security apparatus. Observations and Recommendations The paper deliberates that although urbanization is hailed as an engine or growth and prosperity, it has not kept its pace with its expanding borders. The economic and social security of the inhabitants is worse than the Rural India. The LPG (liberalization, privatization and globalization) has congested the urban areas and consequently made the people poor and vulnerable with deficient or absence of any social security. It has been felt that rural poverty has been addressed by Central government schemes like National Employment Rural Employment Guarantee Scheme (NREGS), but the urban poverty has been sidelined with a conception that urban poor have better access to employment. The livelihood of urban poor is determined by informal employment which has absolute no place for social security programs. The initiatives and administrative approach for formulating the social security plans separately for the urban poor, in fact, requires stupendous policy planning with pan-nation approach. To foster inclusive growth so as to cover urban poor too, some interventions are required to make urban livelihood qualitative. In the light of this grim scenario, the government should extend National Rural Employment Guarantee Scheme to urban areas also to provide job opportunities to the urban poor with adequate social security coverage. 33 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II State of e-Governance: Need for Speed – E-governance, Social Networks and Public Policy State of e-Governance: Need for Speed E-governance, Social Networks and Public Policy Dr. D. C. Misra I.A.S.(Retd.). Former Chairman, Task Force for ICT Policy for Delhi, and Chief Knowledge Officer, Government of Mauritius under the aegis of the Commonwealth Secretariat, London, Dr Misra blogs at http://www.egov-india.blogspot.com/ and is @DrDCMisra on Twitter. Email: dc_misra [at] hotmail.com. Introduction It is the social network sites, spearheaded by Facebook, launched in 2004, which have stolen the march over all other developments in virtual or online life and unleashed an unprecedented phenomenon of epic proportions. Facebook was ranked third among top ten web sites after Google and Yahoo! in August 2009 (Compete 2009). Other social network sites include Flicker, Twitter, You Tube, and Tumblr. (Braiker 2008:10). The evolutionary journey from e-mail in 1972 to Second Life to Facebook to Posterous may be seen in Figure 1. Figure 1. Evolutionary Journey from Email to Second Life to Facebook to Posterous Note: Not to scale; *To be launched by Yahoo! in 2009, currently in beta version. Source: Compiled by the Author The Growth of Social Network Sites (SNS) The power of the networks can be realised by the astonishing growth of social networking sites (Table 1). According to Nielsen, an Internet media and market research firm, "As theories circulate about the actual dollar value of sites like Facebook and Myspace-just last week analysts placed Facebook's worth at $10 billion-there is no question that people continue to gravitate towards social networking and blog sites. In the U.S. alone, total minutes spent on social networking sites has increased 83 percent year-overyear. In fact, total minutes spent on Facebook increased nearly 700 percent year-over-year, growing from 1.7 billion minutes in April 2008 to 13.9 billion in April 2009, making it the No. 1 social networking site for the month." (Nielsen Online 2009)." 34 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II State of e-Governance: Need for Speed – E-governance, Social Networks and Public Policy Examples of Social Network Sites Different types of social network sites exist to meet different social needs. A comparison of top ten social network sites may be seen at http://social-networking-websitesreview.toptenreviews.com/. This comparison is based on the following half a dozen criteria: Profiles, Security, Networking Features, Search, Help/Support, and Legitimate Friend Focus. Fifteen social network sites, by way of example, are described below. Founded in February 2005, and acquired by Google in November 2006, it is a video-sharing site. Any one can, for example, make a video of a public event and post it online. This makes it far faster and at times also more accurate than the work of an official agency. It can make the tasks of official agencies also difficult when private individuals make video of a situation highlighting only the negative aspects of a situation. (ii) Dopplr (www.dopplr.com) (Travel Plans) This is a site for travel plans which can be shared with others. An interesting aspect of this site is that you can know which of your friends or colleagues will be in a particular place on particular dates. This can help, for example, in two people joining and then meeting a third person on official duty. The site has a "social atlas" which enables sharing of information about places for stay, eating places, and other places of interest. (iii) Flicker (www. flickr.com) (Photo Sharing) Launched in February 2004, it was acquired by Yahoo! in March 2005. An online photo management and sharing site, it enables organisation of photographs including use of tags. It has more than 3 billion photographs. It provides both private and public storage of photographs. It can be helpful in sharing photographs of field visits, say, in case of floods, droughts, earthquakes and other natural disasters and can also act as a repository of photographs. Table 1 Top 10 Social Networking and Blog Sites Site Launched in December 2006 and based in Shanghai, China, it is a free language learning website which claims to have more than 450,000 users from over 212 countries speaking more than 100 languages. It is currently available in 14 languages. It has a number of resources and can be helpful while learning a foreign language. (v) Ning (www.ning.com) (Social Network Creation) (i) You Tube (www.youtube.com) (Video Sharing) S.N. (iv) Italki (www.italki.com) (Language Learning) Apr-08 Apr-09 Total Minutes (000) Total Minutes (000) Year-over-Year Percent Growth 1 Facebook 1,735,698 13,872,640 699 2 Myspace.com 7,254,645 4,973,919 -31 3 Blogger 448,710 582,683 30 4 Tagged.com 29,858 327,871 998 5 Twitter.com 7,865 299,836 3712 6 MyYearbook 131,105 268,565 105 7 LiveJournal 54,671 204,121 273 8 LinkedIn 119,636 202,407 69 9 SlashKey N/A 187,687 N/A 10 Gaia Online 173,115 143,909 -17(000) Note: 1. Data relates to U.S., Home and Work, 2. Ranked by Total Minutes for April 2009 and Their Year-over-Year Percent Growth Source: Nielsen Online (2009). Based in Palo Alto, California, and founded by Gina Bianchini and Marc Andreessen in October 2004, Ning, apart from joining existing networks, enables one to set up his own social network. It claims to have 1.5 million Ning Networks and 33 million registered users. One can create, for example, a social network on any aspect of e-government sharing news about new events, discuss issues of common interest, and post information about new publications. (vi) LinkedIn (www.linkedin.com) (Business Networks) Formed in May 2003, it is Mountain View, California-based social networking site promoting creation of business networks. It claims to have over 47 million members representing 170 industries in over 200 countries and territories around the world. Its mission is "to connect the world's professionals to make them more productive and successful." It has a number of features like creating professional profile, a trusted network and asking questions, apart from searching people. (vii) TIG (www.tigweb.org) (Information Technology for Youth) Launched in 2000, TakingITGlobal (TIG) is a "social network for social good" aimed at youth primarily between the ages of 13 to 30 years with members from over 200 countries. It offers "Global online social network and hub for civic participation, Content and tools for educators to facilitate rich, interactive learning experiences, Outreach and Collaboration tools for events, networks, campaigns, and causes, Research, development, and sharing of best practices on youth engagement, and Facilitated learning experiences through workshops, webinars, and e-courses." (viii) BlogTalkRadio (www.blogtalkradio.com)(Citizen Radio Broadcast) Launched in 2006 and claimed to be world's first social radio network, it "allows anyone, anywhere the ability to host a live, Internet Talk Radio show, simply by using a telephone and a computer." It features content in more than 75 categories, with more than 12,000 active hosts, more than 380,000 original shows and more than 25,000 monthly new shows. It also has Mumbai case study in which Sree Srinivasan, a citizen broadcaster and a professor of journalism in Columbia University, covered the terrorist 35 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II State of e-Governance: Need for Speed – E-governance, Social Networks and Public Policy attack on Mumbai on November 26, 2008 (popularly known as 26/11). (ix) Ryze (www.ryze.com) (Business Networks) A business networking site, it has more than 500,000 members in more than 200 countries. One can set up one's own network or join any of the existing networks having specific interests. It also has a section for classifieds and a section for location-specific events. As is typical with many of such sites, more attractive features like "Who have visited you? etc. is paid for. Nevertheless free features do meet the requirements of a member. (x) Plaxo (www.plaxo.com) (Shared Address Book) A shared address book with the remarkable advantage, once you changed your address, every one sharing the address book at once comes to know that your address is changed. It was, and is, thus an excellent tool to keep automatically acquainted with the movement of your friends, relations and colleagues. Acquired by Comcast Interactive Media in July 2008, it hosts address books for more than 40 million people. With its new 'Pulse' feature it has become yet another social network site. (xi) Digg (www.digg.com) (News Sharing) Launched in 2004, it is forum for sharing news. Members submit content (news/video/images) to it which uploads it to "Upcoming Stories." Visitors see the story, and if they like it, they "digg" it. If sufficient "diggs" are received, the story is categorized as "popular" and if more "diggs" are received, the story ultimately makes it to top ten stories, where it is read by millions of visitors. This way reader selects stories which they like best. (xii) Jott (www.jott.com)(Personal Transcription) Launched in 2006 and headquartered in Seattle, WA, Jott Networks claims to be the world leader in mobile voice-to-text applications. Among other things, Jott enables conversion of voice message (voice mail) on a cell phone into e-mails and deliver it to recipients. Known as personal transcription assistant, this can be an asset to a public servant out on inspection and giving on-the-spot guidance for corrective steps to his staff and later on follow it up with recorded emails. (xiii) Shelfari (www.shelfari.com) (Virtual Bookshelf) Based in Seattle, Shelfari was launched in October 2006 and acquired by Amazon.com in August 2008. It is useful for anyone interested, for example, in e-government and makes a virtual bookshelf by selecting books and keeping them at one place (shelf). Additionally, the book shelf can be shared with other members. This way one can keep a track of body of knowledge on e-government being created which can help in improving performance of e-government. (xiv) MySpace (www.myspace.com)(General) Founded in 2003 and headquartered in Beverly Hills, California, it is owned by Fox Interactive Media. The site provides for shared interests like music and politics and has many international versions including one for India and is available in 15 languages. It provides a number of attractive features like forums, groups, and apps. It was No.1 social network site till it was overtaken by Facebook (see below) in 2008 and has the slogan "A place for friends." (xv) Facebook (www.facebook.com) (General) Founded in February 2004, as of September 15, 2009 it had an astonishing number of members- 300 million including 65 million users on mobile devices. It has typical features of a social network sites like photo album, groups (including some on e-government), events, marketplace, links, and applications. Many official organisations have started registering their presence on Facebook. The United Nations Public Administration Network (UNPAN) has a presence on Facebook as a group with 148 members. E-governance and E-government Social Networking Sites The power of social network sites is also being realized in government. Veen (2008) reports that "Steve Ressler, cofounder of a professional organization known as Young Government Leaders, has taken the lead in helping move government squarely into the age of Web 2.0. Ressler recently launched a social networking site designed and built exclusively for public-sector employees." Launched on May 26, 2008, the site GovLoop (http://www.govloop.com), has by now 19,688 members (as on October 1, 2009). Government Functions in Social Media Drapeu and Wells (2009) describe four functions of government in social media: 1. Inward sharing (sharing information within agencies), 2. Outward Sharing (sharing internal agency's information with entities beyond agency boundaries), 3. Inward sharing (obtaining input from citizens and other persons outside the government), and 4. Outbound Sharing (communicating with and/or empower people outside the government). Public Servants and Social Network Sites (SNSs) Many public servants in the developed world and some public servants in the developing world have started joining these social networks. It is not clear as to why should public servants join social networks as they have their own conduct rules to follow in this regard or what do they indeed gain from joining such networks as they have their own clearly defined responsibilities and career paths. Two extreme positions are available on this issue. On one hand, there should be no restriction on the public servants on joining 36 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II State of e-Governance: Need for Speed – E-governance, Social Networks and Public Policy social network sites as at present but it needs to be noted that this position is by default and not a result of any careful deliberation or policy decision. On the other extreme is total ban on public servants on joining social network sites. What should be the policy in this regard? Risks in Social Network Sites (SNSs) The easy availability of personal profile and personal details like, e-mail address, telephone numbers, address, etc. in social network sites (SNSs) make these sites risky for members. The U.S. Federal CIO Council Guidelines provide advice: The decision to embrace social media technology is a risk- based decision, not a technology-based decision. It must be made based on a strong business case, supported at the appropriate level for each department or agency, considering its mission space, threats, technical capabilities, and potential benefits. (CIOC 2009: 6) The Guidelines identify three major risks: 1. Spear phishing ("an attack targeting a specific user or group of users, and attempts to deceive the user into performing an action that launches an attack, such as opening a document or clicking a link" (p-9), 2. Social Engineering ("relies on exploiting the human element of trust," (p-10), and 3. Web Application Attacks (These subject users to new vulnerability. TWITTERSPHERE Twitter (www.twitter.com) is a social network and microblogging site launched in August 2006. It also has a mobile site: m.twitter.com. A tweet is a short message not exceeding 140 characters sent via sms, web, and mobile web. It answers a simple question: what are you doing? and thus enables people to stay connected. A tweeter is one who tweets, that is, posts messages on his site or follows others. Twitter has three types of tweeters: (a) Following: When a tweeter follows other tweeters (for which no permission/intimation is required), (b) Follower: A follower is a tweeter who follows others by automatically getting tweets of the person being followed (American actor Ashton Kutcher has more than a million followers!), and (c) Friend: A tweeter A who follows tweeter B and tweeter B in his turn follows tweeter A. In such a situation tweeters A and B are said to be friends. Third parties have created their own applications as a result of which twittersphere, also called twitterverse, has become a thriving space. Tweetdeck (http://tweetdeck.com/beta/about/), for example, enables one to connect to Twitter, Facebook, MySpace, etc. Twitter Fan Wiki (http://twitter.pbworks.com/WindowsApps) lists a number of applications for Windows. Its three key features are social networks, live searching and link sharing (Johnson 2009: 27) make Twitter a unique and valuable phenomenon. Government Response Some of the governments of the developed countries have been quick to formally recognize the value of Twitter. Department for Business, Innovation and Skills (BIS) in United Kingdom, for example, has come out with a template for Twitter strategy for government departments (Williams 2009). There is a GovTwit (Government Twitter Directory) at http://govtwit.wordpress.com/. In India, some time back Shashi Tharoor, a former United Nations diplomat and now Minister of State for External Affairs, got into controversy by calling economy class air travel as cattle class but subsequently regained ground in popularity by asking people to work on Mahatma Gandhi's birthday and not observing it as a holiday. He had 292,010 followers on Twitter (as on October 6, 2009), probably highest for any public servant in India. E-governance and Twitter There are a number of occasions when Twitter can be very useful to e-governance. Its primary usefulness is that it can help egovernance in real time. For example, in tracking an epidemic in real time, like spread of H1N1 virus. Similarly, it can help in disaster management like road accidents, rail accidents, fires, floods, etc. Likewise it can help in launching a search in case of missing persons and receive feedback in real time and scotching rumourmongering in cases of communal strife, etc., and keeping in touch with each other in group action by public officials. Concluding Remarks A public policy actively encouraging participation of public servants in social network sites (SNSs) will go a long way in speeding up egovernance in India. Additionally it will promote open government and citizen engagement in e-governance. Developed countries like the U.S. and U.K. have already come up with suitable guidelines in this regard opening up new avenues in e-governance and further speeding up e-governance in their countries. It is now for developing countries to take due initiatives in this regard. Let India show the way. References Braiker, Brian (2008): The Technologist: Curse of the Microbloggers, Newsweek, CLII(5)10, August 4. CIOC (U.S. Federal CIO Council) (2009): Guidelines for Secure Use of Social Media by Federal Departments and Agencies, v1.0, http://tinyurl.com/n5agpw (accessed: October 1, 2009) Compete (2009): Compete's Top 10 Sites Ranked By: Unique Visitors - August 2009, http:// lists.compete.com/ (accessed: October 2, 2009). Drapeau, Mark and Linton Wells II (2009): Social Software and National Security: An Initial Net Assessment, Center for Technology and National Security Policy, National Defense University, April, http://www.ndu.edu/ctnsp/Def_Tech/DTP61_SocialSoftwareandNationalSecurity.pdf (accessed: October 2, 2009). Johnson, Steven (2009): How Twitter will Change the Way We Live (in 140 characters or less), Time, Asia edition, June 15, pp 24-29. Nielsen Online (2009): Time Spent on Facebook up 700 Percent, but MySpace.com Still Tops for Video, According to Nielsen, New York, the Author, Dateline: June 2, http://www.nielsen-online.com/pr/ pr_090602.pdf (June 27, 2009) Veen, Chad Vander (2008): Social Networking Site Targets a Government Audience, Government Technology, September 21, http://www.govtech.com/gt/articles/ 413267?utm_source=newsletter&utm_medium=email&utm_campaign=DC_2008_9_22 (accessed: September 25, 2008). Williams, Niel (2009): Template Twitter strategy for Government Departments, Cabinet Office, United Kingdom, Digital Engagement Blog, July 21, Guest post, http://blogs.cabinetoffice.gov.uk/digitalengagement/file.axd?file=2009%2f7%2f20090724twitter.pdf (accessed: October 5, 2009). 37 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Looking Ahead for Inclusive Future for Cities – City-wide poverty reduction strategy approach Looking Ahead for Inclusive Future for Cities City-wide poverty reduction strategy approach Authors Paramita Datta Dey Senior Research Officer National Institute of Urban Affairs, New Delhi Introduction The Urban Poverty Reduction Strategies (UPRSs) revolve around the two moot questions - the reasons 'why people are poor' and how can they be 'brought out of poverty'. Therefore, it is important that strategies for poverty alleviation are appropriately targeted, involve community participation and are innovative. In partnership with UNDP, the Government of India (Ministry of Housing and Urban Poverty Alleviation) aimed to strategically address the various dimensions of urban poverty. Under the broad umbrella of the "National Strategy for Urban Poor (NSUP)", theoretical understanding of urban poverty, statistical projections and on-ground realities were brought together to arrive at citywide poverty reduction strategies for urban poor. These are aimed to strengthen the Urban Local Bodies (ULBs) by facilitating exchange of information at various levels, setting up of urban poverty resource centres and developing an organized institutional framework within the state and ULBs that will lead to proper implementation of the 74th CAA. In addition to the other initiatives under NSUP, Urban Poverty Reduction Strategies were prepared for eleven Indian Cities (10 of which are 'mission' cities) lead by National Institute of Urban Affairs (NIUA). City Development Plans (CDPs) have been prepared for all JNNURM cities. It was felt that CDPs did not adequately promote integrated strategies for the urban poor. In order to address this lacuna, Urban Poverty Reduction Strategies (UPRSs) for 11 JNNURM cities were prepared. These cities comprise two mega cities (Kolkata and Chennai) three cities with 4 million plus population (Ahmedabad, Bangalore and Hyderabad) and five cities with 1 million plus population (Ludhiana, Chandigarh, Jaipur, Pune and Indore) and Ambala (a non-JNNURM city for an alternative perspective). The purpose of the UPRSs' is to improve the living conditions of the urban poor and advance their quality of life through focus on improved basic services and provision of a broader spectrum of livelihood options. This paper presents a synthesis of the status of the access and availability of basic services to the urban poor in the cities. The data analysis presented is an outcome of the secondary and primary data collected as part of the study. This paper begins with a snapshot of the socio-economic profile of slums in the cities studied, followed by a section that attempts to answer questions related to the access and avaialbility of basic services in the city's slums. Further, a brief profile of the livelihood aspects is discussed. The concluding section is a summary of the findings and way forward. 38 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Looking Ahead for Inclusive Future for Cities – City-wide poverty reduction strategy approach Profiling Slums According to the Census of India, 2001, about 42.6 million persons are reported to live in slums of 640 cities/towns spread over 26 states that constitutes nearly 15% of urban population of the country. One in three persons in Kolkata is a slum dweller (about 33% of the urban population). Bangalore has the lowest slum population of 10%. These are the highest and lowest among the cities studied. On an average, in almost all the cities more than one third male slum dwellers are literate and more than 60% female are literate. Primary survey of slums was carried out in all the eleven cities. In some smaller cities, the total number of slums were lesser. They also comprised fewer households. In such instances, attempts were made to survey more slums. In larger and sprawling cities, it was difficult to survey all slums, due to resource constraints. In such cases, when the case study of slums were taken up, larger number of household were surveyed. It may be noted that in Chennai, Hyderabad and Indore, a large majority of slum dwellers are BPL families. But in other cities, the proportion of BPL in slums varied from 12% to 39%, the lowest in Kolkata. Where are most slums located? Slums are concentrated in some wards in most cities. Continuous urban growth, prevailing speculative trends in the urban land market and inadequate formal supply of housing has perpetuated haphazard and informal growth. The poor are then perceived as illegal residents of city. Notification of a slum by local bodies or development authorities under the slum act is an official recognition and bestows significant benefits. Mega cities like Kolkata and Chennai, have reported 80% of notified slums in the city. Cities like Ludhiana and Chandigarh the number of notified slums is very less. An aggregate picture of ownership of slums in the cities surveyed reveals that 53% of land belonged to public sector, 41% to private and 3% to other bodies like temples, mosques, etc. In cities like Chennai, Chandigarh, Pune and Bangalore, most of the slums were situated on public land. River margins, seashores, areas adjoining roads and railway lines, nallahs or drains, valleys, low-lying areas, forests, waterlogged areas, industrial areas, etc. are environmentally sensitive. Land areas adjoining low-lying areas, rivers, waterways and nallahs are prone to frequent flooding and subsidence. On an overall, across cities, a vast majority of slums are located in such areas. In Kolkata, about 20% slums are located on waterlogged areas. Around 8% slums are located on hilltops, along railways lines and are in industrial areas like in Ahmedabad, Hyderabad, Jaipur and Ludhiana. In Chennai, a number of them exist along the seashores. What is the housing condition in slums? Despite the exterior appearance of chaos, slum life is highly structured with many economic, religious, caste and other interests expressed in daily life. Living conditions are extremely difficult and slum dwellers fear a constant threat and feeling of insecurity in "their home". In Chennai, about quarter of the total slum housing stock is pucca in nature. The composition of semi-pucca and kutcha was 52 percent and 26 percent respectively. Across the city, families with own houses ranged from 65 percent to 85 percent. Several house owners (about 84.5 percent) did not enjoy patta (ownership deed) for their houses but this also varied across the city. In Kolkata, the dwellings can barely accommodate the members and most household activities including cooking and washing are performed in very unhygienic environs, thus exposing the members to various health hazards. In Bangalore, those living in kutcha and semi-pucca houses have a greater tendency to defecate in the open. An important point to be noted here is that a number of them realise this and are willing to pay for a new house or improvement of house, and a toilet. In Chandigarh more than two third of slums houses are pucca, nearly one fourth are kutcha and only a slight proportion is semi pucca. How accessible are services? Among all the sources of water, individual tap water is the most preferred. However, due to unreliable and limited supply, people have to depend on other sources. Despite the availability of individual taps in a number of cases, more than 50 percent of the population in slums across the cities surveyed depend upon public stand posts, water tankers, bore well etc. This is because the supply is inadequate, infrequent, erratic and hence unreliable. In most of the surveyed cities, water is supplied to slum areas for less than four hours a day. Among the cities studied, the condition of slum dwellers in Pune is best of the lot. They receive water daily for 10 hours a day. Ludhiana & Ambala are next with regular supply of water for 8 to 10 hours a day. In Hyderabad and Bangalore it's for less than 4 hours a day. Hyderabad is the worst affected city as supply of water is on alternative days and there is no fixed time and most of the people depend on public stand post. Water supply in some of the slums of Ahmedabad, Bangalore, Ludhiana, Pune and Ambala is reliable and there is a daily supply of water to these slums. On an overall, supply of water is available daily or on alternative days. In most cities water supply is available for less than four hours a day. In the case of Kolkata more than half of the slums population do not have proper supply of water. People spent as much as 30 minutes to 4 hours to collect the water. There is a very high rate of wastage of water due to the state of disrepair of public taps. In fact, most of the residents are willing to pay for new facilities. What is the condition of the sewerage system and toilet facility? The sewerage and toilet facilities in slums are very grim. Most slums across cities are not sewered. In many cases even if a network exists, it does not connect to the main trunk line. 39 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Looking Ahead for Inclusive Future for Cities – City-wide poverty reduction strategy approach In six out of 11 cities more than fifty percent slums are connected with city sewerage network system and in four cities more than 25 percent slums have this facility. Only in Pune most slum houses have sewer connection. Mostly slums are not connected with the main network of sewerage system or are partially connected. Majority of slums in cities lack sewerage facility and those that exist are not adequate to cater to these localities. Our analysis revealed individual toilets facility is a preferred choice. However, due to lack of access to a reliable water supply in toilets, people are compelled to defecate in the open. More than 50 percent slums have individual toilets in four cities but in rest of the cities less than fifty percent slums have individual toilets and in the case of Kolkata it is only 9 percent. Despite its ban in India, dry latrines are still in use in Kolkata (13 percent of the samples surveyed still have such toilets in their premises). In most cities, people are hesitant to use community toilets due to several reasons lack of privacy for females, inadequate maintenance due to lack of water and other management issues. People are also reluctant to opt for pay and use toilets on a regular basis. Women expressed a strong need for toilets because of the perceived risk to personal security and infection for them and their children. Many slum residents use the riverfront as a defecation area leading to pollution. Though a large number of female slum dwellers did realized the convenience of a personal toilet and risk of open defecation, many felt that they were constrained by resources - funds, spaces etc. What is the condition of the drainage system? A large number of slums in all the cities lack organised drainage facility. Where the drainage network exists, they are mostly kutcha or semi pucca. Open drains are mostly used by children for defecation due to which its chokes and overflows during rains. Most slums in the surveyed cities have mixed drains. In Pune, Kolkata and Ambala (sadar) more than sixty percent slums have pucca drains as compared to other cities where 10 to 30 percent drains are pucca. On the other hand in Hyderabad, Ludhiana Jaipur and Ambala (city), more than 50 percent slums had kutcha drains. The drainage networks in slums are hardly maintained and are often blocked by solid waste and plastic bags etc. Clogged drains cause flooding during monsoons, especially in low lying and flood prone areas where most slums are located. Stagnant water from drainage becomes the breeding place for mosquitoes & other vectors. Is solid waste properly managed? None of the slums in the cities studied have properly organized solid waste management system. Only in Pune, Bangalore and Kolkata 60% to 90% households used municipal bins for dumping waste. In Ahmedabad nearly 3/ 4th slums used private bins for dumping waste. In most city slums garbage is dumped either in the drains or on adjoining open spaces / vacant plots. Though most slum dwellers claimed waste is collected daily or on alternate days, the culture of disposing off waste just outside the house is a habit, which needs to change. The prolonged dumping of garbage in many areas causes raininduced choking of drains and consequent flooding in slums, particularly those located in low-lying areas. Generally, people felt that the job of keeping the neighbourhood clean was that of the Municipal Corporation's and not theirs. What is the condition of the social infrastructure? The coverage of educational institutions, health facilities and other necessary social infrastructure facilities are grossly inadequate in slums. Larger cities are endowed with a range of educational facilities - primary, secondary and higher secondary schools, colleges and other private institutions. Though adult education centres and vocational training centres are present, they are not proportionate to the population. They are also not adequately equipped in terms of infrastructure. Dropout rates, particularly among girls, are rather high. The Sarva Shiksha Abhyan and Mid-day meal schemes have not achieved the targeted level of progress. This is because the up gradation of infrastructure, human resource and financial support has not kept pace with the targets set. In larger cities, the Urban Local Bodies manage general and some referral hospitals and dispensaries. Distance of health facility centres from slums and chawls on an average is 1to 3kms away. Data on disease pattern reflects high incidence of vector borne diseases like jaundice, typhoid, diarrhoea, malaria, TB etc. Immunization, which is one of the key investments towards child health, can be used as one of the basic indicators to gauge the access and utilization of health services. Immunisation status in slums reveals, less than half of slums dwellers in the age group 0 - 6 yrs are immunized. What are the major sources of livelihood of slum dwellers? Since the formal sector is unable to provide employment to all migrants and local population, people are forced to take up informal employment activities with nominal earnings. The livelihood and settlements pattern have close linkages. Our primary survey in cities revealed, that the most ubiquitous occupation among slum dwellers is that of construction workers followed by daily wage labourers. A substantial number of females and children living in slums also work as domestic servants. Large groups of people are seasonally employed. All these activities do not require any special skills. Since a vast majority of the poor have limited or no professional skills that urban jobs demand they are caught in the vicious cycle of limited skills and low wages and insecure and temporary employment. Those who do not find employment as semiskilled workers and have some degree of entrepreneurial abilities and are able to invest a little more than others, resort to informal activities to earn a living. In most metro cities, the employment opportunities available are not in coherence with the skill set or the interest of the worker. This thus creates another category of unemployed, the "disguised unemployed" adding them to the already swelling population of the "openly unemployed". The problem is aggravated by the high supply of unskilled 40 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Looking Ahead for Inclusive Future for Cities – City-wide poverty reduction strategy approach labour commanding low wages. On the other hand, the demand for specific skills is very high, and often, unmet. For instance, in spite of the boom in the construction sector, simple skills like waterproofing, fencing or scaffolding are in short supply. It is this mismatch - large amount of unskilled and unemployable labour where there is a huge demand for those trained in simple skills that need to be corrected Finally, what should be the guiding principles for a strategy to reduce urban poverty? The data gathered and feedback received on various indicators from the slum survey aids in identifying interventions required to improve the situation. The set of interventions however has to be customized based on a set of parameters - the location, socio-economic and cultural fabric of any city. This holds good both for housing as well as provision of infrastructure for urban poor, although the scope and degree of specific interventions would vary from city to city, as shown by the data. Clearly, to achieve the ideal situation of a 'slum free' city, it is not possible to have pan - Indian solutions. But, certain broad guiding principles have to be kept in mind while formulating and carrying forward the strategy for poverty reduction of any city in India. One, the network of physical infrastructure required in slums has to be linked with the citywide network. No city level investment in infrastructure should be considered unless it is linked with all slums. Only thus can development of the city be inclusive. The second important principle is that this improvement through inclusion in the citywide network has to be demand driven which means that the citywide infrastructure must include the demand of all slums. Demand driven signifies that the service delivery will have to be in response to requests from consumers rather than targeted by the Municipal Corporation. The above-mentioned guiding principles will be rooted in the strategy once the slums have been alleviated up to a basic minimum level. Thirdly, the strategy has to be physically and financially sustainable. Financial sustainability means that the funds required for operating and maintaining each of the services shall be based on recovery of costs. This can be undertaken through a twin approach - on one hand, ensuring crosssubsidy between the poor and non-poor and on the other hand, having a system of token payment amongst the poor. This may be illustrated with the following example - cross subsidy means, if the cost of operation and maintenance of a service is Rs.10 per unit, the urban poor may be subsidized and they may pay Rs. 6 per unit as running cost. Token payment means, if the cost of providing connection for a particular service is Rs. 150, it will be Rs.100 for the slum dwellers and the poorest section of the poor e.g. BPL will be charged Rs. 50 only. Physical sustainability means as long as the land tenure issues are resolved between the slum dweller and the municipality, the municipality should be allowed to tax the slum dwellers for the services provided. Fourthly, partnership of the stakeholders will have to be built in into the strategy. In order to ensure partnership, the existing institutional structure to deal with slums will have to be strengthened. Having a formal coordinating body, which will have suitable powers and community level representation, can ensure this. This body can then hold regular meetings to ensure that all partners are working collectively towards the same objectives. The following model may be suggested for ensuring community mobilization for housing and basic services for the slum dwellers: At the lowest level, there may be a neighbourhood group at the slum level comprising 20 to 40 women. A team leader will head the group; the second level may be the ward level. For every ward, depending on the number of slums in the ward, there may be a single Community Based Organization (CBO) for a large slum and a congregation of a few small slums may create one CBO. The secretaries heading these CBOs should have a representation in the ward committees. The CBOs can also act as vehicles to support cross-community experience sharing and capacity building; at the third level or municipal level, there may be a Community Development Society (CDS). 41 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II e-Governance – Efficiency and Challenges in India e-Governance Efficiency and Challenges in India Hemant Mistry Head - Finance & Accounts Mahindra Special Services Group Introduction "Electronic Governance (e-Governance) is the application of information & communication technologies to transform the efficiency, effectiveness, transparency and accountability of informational & transactional exchanges with in government, between govt. & govt. agencies of National, State, Municipal & Local levels, citizen & businesses, and to empower citizens through access & use of information"1 e-Governance is the application of Information Technology to the Government functioning in order to bring about Simple, Moral, Accountable, Responsive and Transparent (SMART) Governance. e-Governance is a highly complex process requiring provision of hardware, software, networking and re-engineering of the procedures for: Improving effectiveness and efficiency of delivery of services by using the information and communication technologies (ICT) like internet, mobile, etc.; Increasing the accountability and transparency in informational and transactional exchanges between various sources (e.g. Government agencies, etc.) and users (e.g. Public, etc.) of information and transactions; Empowering the public with easy, speedy, cost efficient and real time information access so as to increase citizen participation in the democratic process Curbing the misuse / unauthorized use of information and transactions by filling in the gaps of availability, access and communication of information Thus, e-Governance is more than just a Government website on the internet. Political, social, economic and technological aspects determine the scope and success of existence of e-Governance. It may include a broad range of services for many segments of society. The most common areas of e-Governance application are electronic commerce and business regulations, taxation and revenue, law enforcement and courts, education, health and transport. Components of e-Governance and requirements for such components There is a general consensus between government and private sector officials on the main components of e-Governance: Government to Government communication (G2G); Government to Business communication (G2B) and Government to Citizens communication (G2C) 1 Source:www.eivc.org Key requirements for e-Governance components can be broadly classified into: Highly efficient, User friendly and Cost economical Infrastructure; Extensive human capacity development; Legal, Administrative and Political framework to support ICT environment and Holistic approach and sustained efforts in implementation and maintenance within Government agencies, Business communities and Citizens 42 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II e-Governance – Efficiency and Challenges in India Evolution of e-Governance technologies The global shift towards increased deployment of IT by governments took place in the nineties, with the advent of the World Wide Web. Amid an increase in Internet and mobile phone connections, global citizens started expecting and accessing more and more information and services online from governments and corporate organizations to further their civic, professional and personal lives. This development provides us with abundant evidence of a new "e-citizenship". The concept of e-governance originated in India during the seventies with a focus on development of in- house government applications in the areas of defence, economic monitoring and planning. The deployment of IT was aimed to manage data intensive functions related to elections, census, tax administration etc. The efforts of the National Informatics Centre (NIC) to connect all the district headquarters during the eighties was a very significant development. Early nineties onwards, IT technologies were supplemented by ICT technologies to extend its use for wider sectoral applications with policy emphasis on reaching out to rural areas and taking in greater inputs from NGOs and private sector. Present Scenario of e-Governance in India The e-Governance scenario in India has come a long way since its origin. A large number of initiatives have been taken by the Union and the State Governments that initiatives can be broadly classified into the following categories: Computerisation of Land records and their online delivery (e.g. Project Bhoomi implemented in Karnataka and Project CARD implemented in Andhra Pradesh) Online registration, disposal and monitoring of public grievances (e.g. Project SETU implemented in Maharashtra and Project Gramsampark implemented in Madhya Pradesh) Online availability of information on administrative procedures and forms (e.g. Project STAMPS implemented in Maharashtra and Project WebCITI implemented in Punjab) Providing essential, important and useful information of public interest (e.g. Project Gyandoot implemented in Madhya Pradesh and Project JAN MITRA implemented in Rajasthan) Online facility to pay all statutory dues and taxes as well as utility payments (e.g. Project FRIENDS implemented in Kerala and Project MUDRA implemented in Bihar) Online facility to make applications and avail various types of services (e.g. Project Vidya Vahini implemented at national level and Project FAST implemented in Andhra Pradesh) Facilitating all procurements by online tenders and evaluation of bids (e.g. Project Lok Mitra implemented in Himachal Pradeshand Project Mahiti Shakti implemented in Gujarat) Providing easy and secure online access to registry/ compliance related services (e.g. Project MCA21 implemented at national level) Every state government has taken the initiative to form an IT task force to outline IT policy document for the state and the citizen charters have started appearing on government websites. Challenges in implementing e-Governance A vast geographical landscape, India comprises of 36 states with population of over one billion. Out of this population, around 60 percent live in rural areas and rest in semi urban and urban areas. Literacy and language are immense challenges, in a multicultural and multilingual country. Following are the major challenges in implementation of eGovernance, because of which the speed of implementation of e-Governance initiatives in India is very slow. This has negatively affected the use of e-Governance: Lack of sufficient and proper planning Leadership failures resulting in slow and patchy progress of e-Governance initiatives Financial inhibitors limiting the flow of investment to eGovernance projects Digital divides and choices, where socio-economic and physical inequalities lead to differences in motivations and competences that constrain and fragment eGovernance take-up and fail to address particular user needs. Poor coordination across jurisdictional, administrative and geographic boundaries and lack of proper coordination of between government machineries and solutions developers that holds back e-Governance networking benefits. Workplace and organizational inflexibility impairing adaptability to new networked forms of information sharing and service provision. Lack of trust heightening fears about inadequate security and privacy safeguards in electronic networks. Poor technical design leading to incompatibilities between ICT systems or difficult-to-use e-Governance services Lack of IT literacy and awareness regarding benefits of eGovernance Underutilization of existing ICT infrastructure and lack of infrastructure for sustaining e-Governance projects on national level Strategies/Action plan for achievement of eGovernance objectives Government leaders in India are starting to realize that egovernance is the key to drive today's economy with an increased citizen participation. Providing services online is no longer going to remain optional for local and central government as demand for providing services at internet speed from the citizens has increased in the recent years. How do government agencies overcome the obstacles and build a strategy to facilitate the transition to successful online or "e" service delivery. If the government waits, it is perceived as being ignorant or unaware of the citizen needs and loses an opportunity to realize the tremendous benefits of online service delivery and larger citizen participation in overall service delivery. However, if the e-governance projects are started and implemented in haste, they are doomed to fail. 43 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II e-Governance – Efficiency and Challenges in India CONCLUSION Following are some of the strategies/action plans for a successful implementation of an e-Governance system for one billion people of India: Create literacy/awareness and commitment to e-Governance at high level Conduct usability surveys for assessment of existing eGovernance projects and act upon the results of such assessment, wherever required Start with the implementation of pilot projects and replicate the successful ones Follow the best practices in e-Governance Build nationwide Resource database for e-Governance projects Have clearly defined objectives and interoperability policies to achieve such objectives Effectively manage and continuously update the content efficiently and regularly 44 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II ICT – To enhance the adaptive capacity of the community to water affliction ICT To enhance the adaptive capacity of the community to water affliction Authors Sakshi Saini, Pursuing Ph.D. from 'The Institute of Home Economics', DU Background Water is one of the most essential commodities for the survival of human beings. That is why most of the civilisations of the world have grown and prospered around perennial rivers. It is the basic necessity of life, not only for human beings, but also for plants and animals. Life began in water and it is a basic component of every living cell. Water accounts for 65% of our body weight. It is required for domestic, irrigational, industrial and other purposes, which are very relevant for survival and progress of society. We need water in almost every domestic activity, from cooking and washing to bathing and sanitation. With rapid growth of population and development of modern technologies in various fields, the requirement of water has substantially increased. Water availability is neither adequate nor equitable to all human beings in all regions of the country as well as in the world. The global fresh water consumption has raised many folds between 1900 and 1995. Decreased availability of water, as water resources shrink, is adding to the numbers that are living under conditions of water stress. . In addition to the problems of limited availability of water, there is the problem of water quality due to the biological and chemical contaminations in water. One such chemical contaminant present in water is fluoride. Fluorine is the thirteenth most abundant element found in the Earth's crust and can easily react with other particles and/or chemicals to form fluoride. It can contaminate ground water when water percolates through rocks rich in fluorine, absorbing the fluoride. In areas like Rajasthan, which is mostly composed of desert land and very little annual rainfall, the ground is the main source of water for rural inhabitants. Here the demand for water exceeds supply and ground water is overexploited causing water supplies to fall and a subsequent increase in the concentration of fluoride in the remaining ground water reserve. As a result, inhabitants in many districts of Rajasthan drink this water daily and, over time, develop permanent illnesses. Excess fluoride in drinking water causes serious problems. A prolonged intake of high levels of fluoride can lead to a disease known as fluorosis. Fluorosis manifests itself in three forms i.e. Dental fluorosis where teeth will develop brown/yellowish horizontal permanent streaks, skeletal fluorosis includes pain and stiffness in bones and joints and non-skeletal fluorosis affecting the body's soft tissues. The World Health Organization (WHO) labels up to 1.5 mg/l as a safe limit of fluoride in drinking water for human consumption (UNICEF). The Bureau of Indian Standards permits 1.0 mg/l. The illness is irreversible, but can be prevented by proper nutrition and by drinking fluoride-free water. 45 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II ICT – To enhance the adaptive capacity of the community to water affliction Intervention A survey conducted by the Public Health and Engineering Department (PHED) of Rajasthan in 2001 identified over 23,000 hamlets with fluoride levels above 1.5 mg/l (Development Alternatives). Results led to government discussion over developing piped water supply networks throughout the state. However, the large-scale infrastructure project would take years to plan and implement, not to mention the large amounts of funds it would require to take on such an endeavour. UNICEF stepped in to take interim measures by initiating a small-scale project in one district of Dungarpur where it provided all families, regardless of caste or economic class, a Domestic Defluoridation Unit (DDU) at an affordable cost of around 200 Indian Rupees (Rs-). Description of Domestic Defluoridation Units DDUs are designed to have two containers. The containers are either made of plastic or stainless steel. The bottom container has a tap to drain out the filtered defluoridated water. The top container holds about 4 kg of Activated Alumina, kept in a nylon bag that is used to adsorb fluoride. Activated alumina is highly porous and has tremendous surface area to weight ratio. Due to this it is a good absorbent of arsenic and fluoride. It is non-toxic and prolonged use of Activated alumina in adsorbing fluoride from water can reduce its adsorbing efficiency. This happens as more and more fluoride gets deposited on its surface. Then it is said to be exhausted. Exhausted Activated alumina can be regenerated by chemical treatment DDU with one plastic and can be used again. and one clay container Regeneration is a process of treating the exhausted activated alumina by chemicals mainly sodium hydroxide Na(OH), sulphuric acid and water (Yang). After the AA granules get saturated with fluoride and get exhausted, it needs to be regenerated for further use. The bottom of the upper container has a hole of 25mm diameter that is fitted by a micro filter assembly to reduce the cost; the bottom container can be replaced by a clay pot. The Rajasthan Integrated Fluorosis Mitigation Programme (RIFMP) The pilot project started by UNICEF was formulated in three phases; the first one was to increase the awareness level and knowledge of the community regarding fluorosis, convincing them about the benefits of using the DDUs and motivating them to use the technology. Training sessions on health and nutrition management were provided. ICT material such as banners, street plays, films, posters etc was used to increase the awareness and knowledge level of the community thus increasing their adaptive capacity. Adaptive Capacity being a function of income, wealth, education and awareness needs to be increased to help the community deal with any problem. Enhanced knowledge and awareness level created a demand for the DDUs ensuring active participation of the community in the pilot project. Community participation towards active usage of DDUs, health and nutrition management activities made UNICEF's pilot project a success. To expand UNICEF efforts, PHED together with support from UNICEF and non-governmental organizations (NGOs) launched the Rajasthan Integrated Fluorosis Mitigation Programme (RIFMP) in 2004 (Development Alternatives, 6). RIFMP's mission is to provide safe drinking water to the community through four successive components. First, animators that represent the local NGOs would carry out several activities raising awareness about the dangers of fluorosis and communicating preventative methods. Secondly, the awareness would be coupled with trainings on health and nutrition management. Thirdly, animators would promote alternative/traditional water collection methods such as rainwater harvesting. Finally, families would then have DDUs installed into their homes for use. RIFMP provided free DDUs to families living below the poverty line (BPLs) and charged a small fee for DDUs to families living above the poverty line (APLs). The Programme is being implemented in three phases based on the levels of fluoride found in the local water supply. Phase I was ended in February 2008 and included areas with a level of fluoride in the drinking water above 5.0 mg/l. Phase II, which is now in process, focuses on the affected villages and hamlets where the concentration of fluoride ranges from 3.0 to 5.0 mg/l, while Phase III will work in communities with fluoride levels from 1.5 to 3.0 mg/l. RIFMP Phase I started in March 2005 by covering 500 hamlets with a population of less than 100, and fluoride level more than 5 mg/l. In May 2006, the program was extended to 2,143 villages (regardless of size) in 12 districts. In Phase II of RIFMP, an expected number of 5,056 villages and hamlets will be covered (Development Alternatives, 6). Conducting FGD in The villages covered Rathwaloka Kheda 46 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II ICT – To enhance the adaptive capacity of the community to water affliction during the phase I of the project had proper ICT interventions before distributing the DDUs to the community, while the villages covered during the extension of the Phase I of RIFMP had negligible amount of ICT activities due to time and economic limitation. Primary research was conducted in a total of five villages and hamlets covered during the two phases of the RIFMP including Rathwalo Ka Kheda, Balapura, Unkhaliya, Prahalad Ka Badia and Devipura. On an average two days were spent with each habitation. Semi-structured interviews, focused group discussions and observation were used as a tool to collect the data. BPL families living in hamlets that were covered under Phase I of the Programme have received DDUs free of cost, irrespective of caste, colour and creed in both the Phase I and its extension phase. But, in spite of the fact that people are having access to the DDUs in few areas they were reluctant to use them as they fail to understand its importance. Observations from the field and results from the surveys conducted lead us to conclude that there is greater usage and value placed on the DDUs in areas where there are high levels of social awareness activities. Moreover, we observed that APL families tend to purchase more DDUs in areas where there are numerous awareness activities. In hamlets or villages covered during the extension of RIFMP Phase I with few or no awareness activities it was observed that villagers would rarely use the DDUs and lack the understanding about the benefits the filters bring. For example in Unkhaliya several households and even in a discussion with the sub-Sarpanch it was discovered that many families Conducting interview felt uncomfortable using the DDUs in Unkhaliya because they had a misconception about its function. People believed that the DDUs were part of a government scheme to sterilize or decrease the fertility among women of the community. Other reasons for not adopting the use of the filters included arguments that by drinking the fluoride water people would develop a natural resistance to Fluorosis. Also, people felt that as the animals are consuming the same water and not getting impacted, so would they. Analysis of the data collected lead us to conclude that there is a direct relationship between the extent of awareness and the usage of DDUs. There is a positive correlation between those hamlets and villages that have received high levels of social awareness activities and use DDUs. Hamlets such as Rathwalo ka Kheda in Banera Block and Bhojpur in Asind Block have had frequent IEC activities, such as documentary films, banners, wall paintings, and puppet shows. In these villages it was observed that the beneficiaries of DDUs use it daily and moreover, APL families are Wall Painting in Bhojpura more willing to buy DDUs. Thus, it becomes clear that just by providing technology or a solution to the community the success of a project cannot be assured. The project needs an active participation of the community to make it successful. Making the community realize the unfelt need is the first necessary step towards the success of any plan. Information communication and Technology plays a very important role to provide knowledge to the community, making them aware of the problem and motivate them towards the action to adapt. CONCLUSION Water crisis is one big problem the community is facing at large. Due to rapid industrialization and urbanisation both the quantity and quantity of water is deteriorating. Various programmes and policies have been implemented by the government to ensure proper access and management of water resources. However, in order to ensure better success rate of any project it is quintessential to involve the community to which the project is targeted. Increasing the knowledge and awareness level of the community about their unfelt needs, the problems prevalent in the area and the possible steps that can be taken to solve the issue ensure the active participation of the community. Adaptive Capacity being a function of income, wealth, education and awareness among others can not only be increased by providing technology or a solution to the community for their problem. Adaptive capacity needs to be increased by creating awareness and giving knowledge to people so that they themselves are aware about the problem motivated enough to take steps to deal with it. Dissemination of knowledge and information are essential for people to successfully respond to the opportunities and challenges of social, economic and technological changes. ICT is a tool that can be used to identify problems, encourage participation, invite innovation in problem solving, and promote adaptation and mitigation. References Meena, B. and Mistra S.K. (2006). Rajasthan Integrated Fluorosis Mitigation Programme - Policy, Planning, Strategy and Issues. Child Environment Programme. (2007). International Learning Exchange: Module D - Madhya Prahdesh & Rajasthan, Wise Water Management & Fluoride Mitigation. New Delhi: UNICEF India Country Office/Rajiv Gandhi National Drinking Water Mission. Development Alternatives. Strategic Support Mission to Rajasthan Integrated Fluorosis Management Programme (RIFMP) Final Report. Dr. S. S. Dhindsa. (2004). Ground Water Quality Status of Rajasthan - 2001 (Validated up to 31-032003). Jaipur: Public Health Engineering Department (PHED). Manish Dhingra. (2001). Fight Fluorosis and Save Our Children. Jaipur: Hindustan Times/UNICEF. UNICEF. Draft Specifications for Domestic (household) Deflouridation Filter Unit (DDFU/DDU). UNICEF. Regeneration Manual for Activated Alumina used in Domestic Defluoridation Units. UNICEF. Mitigating Fluorosis through Safe Drinking Water. (Pamphlet) UNICEF/PHED Rajasthan. (2007). Rapid Appraisal 1: Rajasthan Integrated Fluorosis Mitigation Programme - a collaboration between PHED, Rajasthan, 19 NGOs and UNICEF. UNICEF/PHED Rajasthan. (2007). Second Rapid Appraisal of Rajasthan Integrated Fluorosis Mitigation Programme. 47 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Technology Enabled Super-Ecosystem for Inclusive Growth – A super-ecosystem to look at inclusion in totality Technology Enabled Super-Ecosystem for Inclusive Growth A super-ecosystem to look at inclusion in totality Srivalsan Ponnachath & Subhro Mukherjee Sun Microsystems India Pvt. Ltd. It's about the "Opportunity Divide" A typical definition of inclusion has the connotation of "Have's and Have Not's", it is about the "Divide". There is a "Divide" in almost all ecosystems. Digital ecosystem has the "Digital Divide" [Only 376 million Mobile subscribers, 5.55 million Broadband subscribers, teledensity at 36%], Financial ecosystem has the "Financial Divide" [Approximately only 34% of population has bank account ownership, active banking relationships are still less and best estimated at 20%], Healthcare ecosystem has the "Healthcare Divide" [Only 11% of the population has access to primary healthcare within a radius of 8 kms], Education ecosystem has the "Education Divide" [ less than 20% of the population can read and write beyond their own names, and a smaller percentage can do simple arithmetic ] and so on, All in all, there is "Opportunity Divide". Inclusion is about bridging these divides. Before we began the journey to identify the alternative approaches to bridge the divide, we started with analyzing the aspirations and needs of the people in the BOP. Our key findings were as follows: 1. BOP's primary focus is to increase their income. They therefore, aspire for: a. Financial Services b. Accesses to affordable education 2. In addition to the above their next big need is access to affordable health care 3. Beyond the above, they are seeking all other services that the rest of us enjoy including, Entertainment, and other modern facilities 4. Contrary to popular wisdom, BOP is not looking for dole or upliftment. They are highly self motivated and entrepreneurship is their mantra. They are merely looking for the opportunity These finding set the context for us as we began to look for alternative approaches to address the "Opportunity Divide" and facilitate Inclusive Growth. The next big discovery for us was when we found that there are myriad of initiatives across the country, and that most of them are quite effective. However, we observed that the different ecosystems are attempting to bridge this divide in Silos, through various inclusion projects. Our approach is to look at inclusion in totality, across ecosystems, and build a technology enabled super-ecosystem to bridge the opportunity divide. 48 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Technology Enabled Super-Ecosystem for Inclusive Growth – A super-ecosystem to look at inclusion in totality The key issues hindering inclusion We believe the Bottom of the Pyramid (BOP) is deprived of the common services due to two main reasons: Accessibility - Service not being available at the right location at the right time and in a manner desired/understood by the consumer/community Affordability - Even if services are accessible they need to be at an affordable price. In other words it's about the ability to deliver services at much lower cost Our approach is to look at inclusion in totality, across ecosystems, and build a technology enabled superecosystem to bridge the opportunity divide. We recognize that there are multiple service providers (NGOs, Government, and other for-profit organisations) attempting to meet the BOP needs through innovative means. In our research, we have numerous examples that substantiate this fact. However, they are unable to achieve the much needed Reach and Scale. So, at best, these efforts have remained localised and sometimes restricted in scope. However, when one looks at the numbers, it's obvious that there is a business case for going deep in the BOP and leverage the opportunities presented by the huge proportion of people in the other side of the divide. The Solution 1. He is a free-agent who can represent one or more services ranging from Financial Services to any other service (Insurance, Healthcare, Education, Entertainment) 2. On the flip-side, he represents specific communities to the Service Providers through the bridge. He accomplishes this by registering BOP folks on the bridge with their needs/aspirations At a broad level, the scope of the bridge backbone starts as back-end to the Business Connectors and ends as the frontend for the Service Providers. The bridge will enable: 1. Aggregation of business connectors across the nation 2. Aggregation of demands of BOP, and facilitate Service Providers to address the same 3. Aggregation of "supply" (Services from the service providers) and provide choice to the BOP With the above, we believe the "Bridge" will significantly transform the existing value chain making it more efficient and effective resulting in tackling the key issues of access and affordability while facilitating reach and scale for the Service Providers. In essence there we see a tomorrow with More People with accesses to a Service, and More Services (and choice) available to People. Key Technology Components Our approach is to evolve an ecosystem for inclusive growth (or Opportunity Inclusion), powered by business interests and held together by technology. The picture below depicts the concept behind the solution. It is a hypothetical "Bridge". On one end there is Service Providers (SP) and on the other end of the bridge are BOP communities. The "bridge" includes a shared technology platform and core processes that many of the SPs from different verticals could leverage to reach the BOP consumers. The model borrows heavily from the business correspondent model in Banking to enable the BOP community reach the "Bridge" and vice-versa. The business connector here is similar to a business correspondent with a few additional/modified characteristics. These include: The bridge primarily will support core services such as, user/ business connector registration, user profiling, community grouping/selection, identity management, content creation and management, and other fulfilment services to help SPs and so on. These services will be Open-Source based and will continuously evolve as the bridge matures and new verticals participate on the bridge. Beyond the bridge the business connector will require front-end technologies such as smart card readers and other devices to access the bridge remotely to carry out registration of BOP users and their needs, and par-take in the fulfilment process. 49 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Technology Enabled Super-Ecosystem for Inclusive Growth – A super-ecosystem to look at inclusion in totality Making it workable While as a concept, the Bridge appeals to most people, the key difference lies in ensuring that it is implementable. To achieve this, we need to start from two ends - (i) the BOP community and (ii) the Service Providers (SP), with the Open Source philosophy On the BOP end, we are urging the different verticals (SPs serving BOP) to collaborate, and open up the last mile connection (Business Connector) to be independent and allow them to represent multiple services across verticals. Parallely, we set up a common infrastructure at this end based on open-source where the Business Connectors get enabled to register and derive the core services. On the SPs end they should create their bridge or become part of super ecosystem to accesses target users and communities in the BOP and leverage the Business connectors to fulfil their transactions. Note, the bridge will require additional nuances depending on the needs of the SP and the vertical it serves. It is expected that these nuances will be added to the Open-Source Bridge and can then be leveraged in an integrated fashion to service the BOP. We believe an Open Source (OS) platform for SPs will enable them to leverage technology to deliver services at a much lower cost. Additionally, as we expect this platform to interact with other OS Platform/Processes that facilitate registration of BOP individuals/communities and their needs (and further integration/collation). Through this interaction, SPs will have the much needed scale and reach. On the front-end, as alluded to above, the OS platform/ process model which will incorporate independent business correspondents (BC) as touch points who leverage an OS platform for registering BOP individuals/communities. The super ecosystem would seamlessly connect these two sides through integration capabilities across devices leveraging different kinds of technology. Thus, different SPs would leverage the same ecosystem to reach out to BOP communities. Clearly, the economies of scale, use of common infrastructure & resources, and OS philosophy will help lower cost of delivery and hence make the services affordable for BOP. Additionally, the ability to add independent BCs with the ability to interact with the frontend platform will significantly improve accessibility of the much desired services by the BOP. 50 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Good Governance and Employment Generation through NREGA – A case Study of Gram Panchayat in West Bengal Good Governance and Employment Generation through NREGA A case Study of Gram Panchayat in West Bengal Dipjoy Sen Roy Industry Analyst with Frost & Sullivan Debabrata Samanta Research Scholar, Humanities and Social Science Department, Indian Institute of Technology, Kharagpur Introduction The National Rural Employment Guarantee Act (NREGA), 2005 is landmark legislation in Indian history of social security legislation after independence. Enacted after a successful struggle for an employment guarantee legislation, this legislation is a partial victory towards a full-fledged right to employment in any developing country context. For the first time, right to work has been made a legal compulsion and entitlement for unemployment allowances in case of non-allotment of employment assured through this act. What is considered to be crucial is the empowerment of the poor through the provision of a right-based law, which would act as a strong safety net in the lack of alternative employment opportunities for poor people. The other key attributes of this scheme are time bound guarantee, labor-intensive work, decentralized participatory planning, women empowerment, work site facilities, and above all, transparency and accountability through the provision of social audits and right to information. NREGA is a unique and unprecedented effort in strengthening grass-root democracy in India. For the first time, the Indian state has legally mandated the implementation of mechanism that strengthen transparency and accountability at every step of the delivery chain, by creating platform for citizens to articulate their voice and directly engage with the state. This legal mandate has been the catalyst for state government across the country to innovate with different tools to strengthen accountability (Aiyar & Samji: 2009). In west Bengal, Gram Panchayat is the primary program implementing agency of NREGA, along with other PRI bodies and line departments. Potential implementation of NREGA needs adequate capacitated governing body and motivation. In this backdrop, the paper attempts to examine how the institutional features, which are components of Good Governance, are being practiced through the institutional framework of grass-root level self government institution of West Bengal, viz. Gram Panchayat. Along with this, attempts had been made to explore the relationship, if any, between the components of good governance and performance of NREGA. Accordingly, the paper has been organized as follows: Section I: Brief of NREGA Section II: Explores the role of Gram Panchayat as main implementing agency of NREGA. Section III: States the concept of Governance and Good Governance. Section IV: Discusses the methodology and dataset. Section V: Presents the results and conclusion. 51 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Good Governance and Employment Generation through NREGA – A case Study of Gram Panchayat in West Bengal Section I Salient Features of NREGA Evolving the design of the wage employment programs to more effectively fight poverty, the Federal Government formulated the National Rural Employment Guarantee Act (NREGA) in 2005, a paradigm shift from earlier wage employment programs. With its legal framework and rightsbased approach, NREGA provides employment to those who demand it. This is the largest ever public employment program visualized in human history. The successful implementation of NREGS can improve the safety nets and eliminating hardcore poor (Rao: 2007). Major objectives of NREGA are: To enhance livelihood securities through the provision of minimum 100 days of employment to a rural household based on their demand To create durable assets and strengthen the livelihood resource base of the rural poor Strong social safety net for the vulnerable groups by providing a fall-back employment source, when other employment alternatives are scarce or inadequate Growth engine for sustainable development of an agricultural economy Empowerment of rural poor through the processes of a rights-based law New ways of doing business, as a model of governance reform anchored on the principles of transparency and grass root democracy. The design of the NREGS program is unique in being largely demand driven and the introduction of entitlement of unemployment allowances in case of non-allotment of employment. Undoubtedly, the NREGA has addressed many of the weaknesses of the earlier programs through the introduction of rights-based framework, time bound accession to fulfill guarantee, incentive and disincentive structures, demand based resource availability and accountability. Section II Role of Gram Panchayat in Implementation of NREGS: As grass roots institution, Gram Panchayat - the lowest tier of the three-tier system - is closest to the people and the locality. Section 19 of West Bengal Gram Panchayat Act, 1973, describes that "A Gram Panchayat shall function as a unit of self-government and, in order to achieve economic development and secure social justice for all, shall, subject to such conditions as may be prescribed, or such directions as may be given by the State Government,"(West Bengal Gram Panchayat Act, 1973). It is the implementing agency of most of the development programs and also monitors and evaluates programs as well as it is the main service providing agency at the ground level. At this level, Gram Panchayat is a very powerful and influential body, wielding effective control over substantial resources and political power (Ghatak & Ghatak, 2002). Gram Panchayat is also one of the most responsible stakeholders in successful implementation of NREGS program. Gram Panchayat is responsible for creating awareness about the scheme, receiving application, register names, issue of job cards, provide employment to the job seeker and also keeping records of the works under NREGS. Along with this, Gram Panchayat has to prepare self schemes to provide employment within the stipulated 15 days of demand, and to provide timely wage. It also has to make arrangement for enough funds for wage payment. Gram Panchayat is also responsible for redress complaints lodged by people. Gram Panchayat has to publish and update the data related to implementation of NREGA in the specified hoarding in proactive disclosure format. The practice of Good Governance is intrinsic in performances related to NREGA. In the next section, we will discuss about the concept of Governance and Good Governance. Section III Concept of Governance and Good Governance: Nowadays, the terms 'Governance' and 'Good governance' has become catchword in the development discourse. 'Governance' is defined as a process of decision making and the process by which decisions are implemented. It denotes both political and administrative functions to ensure moral behavior and ethical conduct in the task of governing (Singh and Singh, 2004). Good governance is, among other things, participatory, transparent and accountable, effective and equitable, and it promotes the rule of law. It ensures that political, social and economic priorities are based on broad consensus in society and that the voices of the poorest and the most vulnerable are heard in decision-making over the allocation of development resources (UNDP, 1997). Absence of good governance acts as a formidable hurdle in the achievement of proper development. It is necessary to provide the best benefit to a large number of people (Bagchi). UNDP recognizes the following 9 core characteristics of good governance, which are: 1) Participation 2) Rule of law 3) Transparency 4) Responsiveness 5) Consensus oriented 6) Equity 7) Effectiveness and Efficiency 8) Accountability and 9) Strategic vision. The implication of good governance is manifold as good institutions beget good governance. Institutions matter for both long and short term because they form the incentive structure of a society and provide the underlying determinants of economic performance (North: 2005). Sharma (Sharma: 2007) rightly pointed out that, many of the items listed on the good governance agenda as preconditions for development are actually consequences of it. The implications of good governance are profound as institution building and the promotion of good governance demand simultaneous commitment to economic development. Finally, measuring good governance and overall governmental performance, generally, requires measuring the "outcomes" not just "inputs" (Rotberg: 2004). This paper 52 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Good Governance and Employment Generation through NREGA – A case Study of Gram Panchayat in West Bengal We have formed a linear regression model by taking average persondays created per Household (PdcHH) as dependent variables and above five components of good governance as independent variables. Following the OLS method (Robust standard Error), we have run the following regression model in STATA. The model is PdcHHi= ?1+ ?2PrtRTi+ ?3Eqtyi+ ?4Trnspri+ ?5Accncti+ ?6Efcncyi+ ui attempted to measure the outcome of good governance practiced by Gram Panchayats of West Bengal through the employment generated under NREGS. The next section shall discuss about the methodology regarding the measurement of good governance practices and explore the relationship, if any, between characteristics of good governance and performance of NREGA. Section-IV The variables in the model are defined below: Research Design, Data Set and Methodology Variables The study has tried to explore a relation (if any) between the core characteristics of good governance and performance of NREGS by considering the case of Gram Panchayats of West Midnapore district in West Bengal. Methodology Following the UNDP measures of good governance, we have considered the following components of good governance: 1. Participation 2. Transparency 3. Accountability 4. Effectiveness & efficiency 5. Equity (N.B: out of nine parameters as recognized by UNDP, we will restrict our study only to the above mentioned parameters and this is the limitation of our study.) The Dependent Variable Dependent variable measure the average no. of persondays created, which is the ratio of total persondays created and number of household provided employment under NREGS in a Gram Panchayat. Primary objective of NREGS is to provide 100 days of employment to each household on the basis of their demand. Hence, average number of persondays created is the most sought-after indicator for reflecting NREGS performance. Independent Variables Independent variables are classified into five categories corresponding to various components of good governance. Sample framework & Data Set: There are 29 blocks and 290 Gram Panchayats in Paschim Medinipur district of West Bengal. Following a random sample methodology we had selected 5 Gram Panchayats per block with total sample size of 29x5=145, which is 50% of the total population. But due to unavailability of data, we Table1 Variable Type Description Proxy Variable Symbol Used Participation All men and women should have a voice in decision-making, either directly or through legitimate intermediate institutions that represent their interests. Such broad participation is built on freedom of association and speech, as well as capacities to participate constructively. To measure participation we have taken average attendance in last half yearly gram sansad1 (village constituency) meeting held in November-December, 2007. PrtRT Transparency Transparency is built on the free flow of information. Processes, institutions and information are directly accessible to those concerned with them, and enough information is provided to understand and monitor them The arrangement or availability of data and information for people's inspection, if any, help us to measure the transparency. We used two different variables to measure transparency level of a GP. These two variables are: arrangement for accessing different data and information at GP and provision of inspection of Muster Roll in the GP by common people2. Trnspr Effectiveness and efficiency Processes and institutions produce results that meet needs while making the best use of resources Share of own source revenue utilized in local contingent development activities related to education, health, nutrition etc., measure the effectiveness of GP in our model. Efcncy Accountability Decision-makers in government organizations are accountable to the public. Availability of complain register. (yes=1, no=0) Accnct Equity Equality of men and women in decision making to improve or maintain their wellbeing To measure equity we have taken share of participation of women in the same gram sansad meetings. Eqty 53 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Good Governance and Employment Generation through NREGA – A case Study of Gram Panchayat in West Bengal dropped one block (Keshiyari) and also data for five Gram Panchayats per block are not available for all the blocks. Considering this problem, we have taken 5 Gram Panchayats per block wherever it's available (selecting Gram Panchayat s which have provided data in all the required fields) and for other blocks we have taken maximum number of Gram Panchayat where data are available. Considering the above constraint, we finally get our sample size of 120, i.e. 41% (approx) of the total population. Aforementioned data has been collected from Self Evaluation formats of Gram Panchayat for the year 2007-083. Corresponding to our selected Gram Panchayats, data for NREGS performance, i.e., average persondays created for the year 2007-08 has been collected from district NREGS cell, Paschim Medinipur. Section-V Details of Some variables: Before going to measure the relation, if any, between NREGS performance and components of good governance, we would like to see the performance of our variables through some descriptive statistical measure. As per the Panchayat and Rural Develoment Depertment Report on the performance of NREGA in 2007-08, the average number of persondays created per household in West Bengal was 25; whereas in the study area it is 19 (approx) clearly shows under performance. The average Participation rate of 19% with maximum of 40% and minimum of 5% shows a good performance compared to 13.1% state average rate (WB Human Development Report 2004). Average women participation rate (22%) is slightly better than the overall participation rate; showing good equality among genders. RESULTS & CONCLUSIONS Following the methodology described earlier, we have regressed persondays created per household on a set of variables. These variables are described in Table 1, which reflect characteristics of good governance. R-squared value shows that approximately 17 % of the variability of dependent variable has been explained by the independent variables. Equity, which states the equality of men and women in decision making procedure found statistically significant. Thus participation of women in gram sansad meetings will increase the persondays created per household, which is in conformity with our economic logic. Accountability, which we measure through the presence of complains register, also found significant and shows positive relation with the NREGS performance. Utilization of own source revenue in local development has significant positive impact on persondays created per household as per economic logic. This represents Efficiency and effectiveness of government plays a positive role in successful implementation of NREGS. Two most distinct results we got in this regression analysis are insignificance of participation variable and negative relation between transparency variable with dependent variable, which is not consistent with our economical logic. Can we conclude that participation is not significant in explaining NREGS performance? And lesser transparency of government will tend to improve NREGS performance? Possibly no, as from our economic logic we can justify that more transparency will tend to increase average persondays creation. Likewise more participation, i.e., the more is the attendance in gram sansad meeting the more average persondays will be created. Given that our economic logic is correct, the anomalous behavior of the regression coefficient can be justified by considering econometric issues involved in the estimation methodology. This creates scope for another study. Other things can be noted that R2 value is low, which can be justified by omission of other relevant variables. From the following discussion we can conclude that, though good governance is important in generating employment under NREGS, but there are other variables, which are responsible for good performance of NREGS. Coming back to our hypothesis we can say that there exists a relationship (though two of our independent variables show different results) between average persondays created and components of good governance. Therefore, we can conclude that increasing the performance of governing body (here Gram Panchayats) can improve the NREGS performance, hence helps to reduce the poverty level. 54 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Good Governance and Employment Generation through NREGA – A case Study of Gram Panchayat in West Bengal APENDIX Descriptive statistics of dependent and independent variable: Variable Name Descriptive Statistics Mean PdcHH Median Mode Standard Deviation Minimum Maximum 18.65367 16.68 17.91 10.14518 3 73.89 PrtRT 0.199644 0.175 0.125 0.087895 0.0545 0.4 Trnspr 3.1 3 4 0.901912 1 4 Efcncy 0.276134 0.25215 0.445 0.171959 0 0.7821 Accnct 0.891667 1 1 0.312104 0 1 Eqty 0.222242 0.175 0.145 0.135582 0.02 0.55 Regression results: Note: Independent Variable Regression method -OLS (Robust standard Error) Coefficient t-value PrtRT 3.341557 0.28 Trnspr -2.195693 -2.58** Efcncy 12.13276 2.62** Accnct 7.148823 3.57** Eqty 18.57024 2.25* Const 10.94147 2.99** Total Observations: 120 F(5,114)=4.90 Prob.>F=0.0004 1: 1: There are two institutions called Gram Sansad (Village Constituency) and Gram Sabha, which exists below the Gram Panchayat level in West Bengal. All the voters in a village constituency are members of Gram sansad. Gram sansad meetings, at the village constituency level are held twice in a year. Objectives of holding Gram sansad meeting are to select beneficiaries of different schemes, raise proposal for planning and review the proposed budget and previous year's performance. 2: The two variables are (X1) whether Gram Panchayat has arrangement to provide data or information as per RTI act, 2005 and (X2) whether there is arrangement for inspection of Muster Roll in the Gram Panchayat. Values taken by the above variables are follows: X1 = 2; if the arrangement is available and information has been accessed by people = 1; if the arrangement is available but no one has accessed any information = 0; if no arrangement available. X2 = 2; if Muster Roll had been inspected by people = 1; if arrangement for inspection of MR is there but no one inspected. = 0; if no arrangement available. Transparency = X1+ X2 R-squared=0.1713 **,* indicates significance at 1% and 5% level respectively. Without * represent insignificant. 3: Self Evaluation format is a format prepared by Panchayats and Rural Development Department of the Govt. of West Bengal and circulated to each PRI body every year. The PRI bodies require to put the scores in different parameters to evaluate their own performance. References 1. Aiyar, Y. & S. Samji (2009): Guaranteeing Good Governance: Understanding the Effectiveness of Accountability Mechanism in NREGA ; NREGA e-Knowledge Network; UNDP, New Delhi. 2. Bagchi, K.K : Good Governance and Sustainable Local Development: A Case Study of Gram Panchayats in West Bengal; (www.ignou.ac.in) 3. Governance for Sustainable Human Development, A UNDP policy paper UNDP 1997. 4. Islam, Nazrul Md (2004): Decentralised Governance Transparency and Accountability:Empirical Evidence from West Bengal; ISEC Working Paper144; Institute for Social and Economic Change. 5. Maitreesh Ghatak and Maitreya Ghatak: "Recent Reforms in the Panchayat System in West Bengal: Toward Greater Participatory Governance?"; Economic and Political Weekly, Vol. 37, No. 1 (Jan. 5-11, 2002). 6. North. Douglass C. (2005) Understanding the Process of Economic Change (Princeton, NJ: Princeton University Press, 2005). 7. NREGA Sahayika (in Bengali) 2008: State Institute of Panchayat and Rural Development, Panchayats andRural Development Department, Government of West Bengal. 8. Panchayati Raj (2008): Panchayats and Rural Development Department, Government ofWest Bengal, May 2008. 9. Rao; V.M (2007): 'Making Safety Nets Effective for Hardcore poor'; Economic and Political Weekly; August 18, 2007. 10. Report: "The Appraisal of Procedures and Processes of NREGA in ORISSA: A case study of Balasore and Mayurbhanj District"(2009): HSS Department, IIT Kharagpur, Sponsored by MoRD, Govt. of India 11. Robert Rotberg, "Strengthening Governance," Washington Quarterly 28, no. 1 (Winter 2004): 71-81. 12. Sharma. Shailendra. D (2007): Democracy, Good Governance, and Economic Development; Taiwan Journal of Democracy, Volume 3, No.1: 29-62 13. Singh and Singh (2004). "Governance and Developmen Deprivation in India", The Indian Journal of Public Administration, Vol. L, No. 1, January-March, pp.277-284. 14. West Bengal Panchayat Act, 1973, Government of West Bengal, Law Department. 15. West Bengal Human Development Report 2004, (http://data.undp.org.in/shdr/wb/WBHDR.pdf) 55 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Battling Disasters through Partnering – Battling Disasters through Partnering Battling Disasters through Partnering Battling Disasters through Partnering Ltcdr. Pawan Desai CISA, CISSP, BCCP Head - Business Continuity Management Mahindra Special Services Group Mitesh Shah ISO 27001 LA Associate Consultant - Business Continuity Management Mahindra Special Services Group Introduction In this ever changing threat environment, it is imperative for organisations to constantly remain alert in order to fight new security threats. Challenges may vary from fire to flu but their long term impact is enormous. The ability of organisations to weather disasters, decides their sustainability and future. Hence, it is critical for organisations to fight disasters rapidly with the best technological equipments. The big question arises on the level of investments and preparedness since there is no certainty of disasters. The best method to deal with challenges is to PARTNER. This paper focuses on the challenges organisations face while dealing with disasters & how partnering can help resolve these issues. Roadblocks for corporate when preparing for contingencies Operated from multiple locations For organisations with multi site operational facilities, the biggest challenge is replication of disaster management facilities for all sites, as the threat prevailing at these locations shall be based on geographical and political stature of the locations. Currently organisations are operational from multiple locations & also in multitenanted arrangements. The challenge that an organisation faces is to have the same disaster management arrangements replicated over each of these locations since the threats it might face would be according to geographical & political stature of the location. Also, while operational from multi-tenanted scenarios, the entire control is ideally cannot with one party. It becomes very difficult to replicate all the disaster management arrangements in different the locations. Budget constraints Mitigation of these risks involves cost of allocating additional resources, which acts as a support function without adding any value to the bottom-line of the organisation. Also it becomes impractical to station these resources at all the locations. The resources that an organisation requires to mitigate or fight disasters in terms of people, technology, equipments come with a cost. Also, these resources are virtually acting as support functions and adding no value to the bottom-line of the organisation. On top of this, organisations operate from multiple locations so allocating the same budget for all the offices becomes unfeasible. Scarcity of skilled personnel Skilled personnel with the expertise to fight or mitigate disasters are inadequate. A person having special skills in fire fighting specifically or personnel from the armed forces willing to join corporate sector are rare. Although we can train them but to have personnel who have had real life experiences in dealing which such scenarios are hard to find. Practicing real life disasters scenarios While mock drills and simulation exercises are good ways to practice disasters assuming ideal conditions. Organisations assume that everything outside would be normal, but in real life transportation may be affected, communication may be at fault or emergency supplies 56 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Battling Disasters through Partnering – Battling Disasters through Partnering might be unavailable. Also sometimes it is difficult to practice real life scenarios may be due to its affect on the neighbourhood. For instance, in a manufacturing firm if a plant & corporate office are together, an evacuation drill might disrupt the floor shop. Truth behind disasters Seldom atomic Organisations always prepare for specific incidents, for instance organisations prepare for incidents like fire, terrorist attack, bomb threat or flood in isolation. They have predefined procedures to respond in such scenarios and they expect everything around would be in ideal condition. In reality disaster seldom strikes in isolation, one event may spark another event. Off late it has been observed that one disaster kicks off the other like a terrorist attack might sparks a fire in the warehouse of a manufacturing firm. Complications multi-fold when one disaster gives rise to another. Disasters are like ripples, one giving rise to other. Organisations generally prepare for atomic incidents, and forget that these atomic incidents combine to form a crisis situation. Our disaster recovery plans fail during such scenarios since they are used to prepare for only atomic incidents. Hence it is important to have a comprehensive plan which involves all the parties so that organisations can have speedy resolution of the incident. Magnitude unknown until over The magnitude of disaster is difficult to judge by viewing the scene. Many times organisation fails to estimate the magnitude of the disaster due to incomplete information from the sources. Due to this, they are unable to speculate regarding what disaster management resources & activities would be required. For example, during heavy rains it is difficult to predict all areas would be flooded unless informed by the authentic sources and authorities and therefore it becomes difficult to take a call on whether to stay in office or leave outside. Also during such situation, there is a spur of speculations about disasters from all around making it difficult to identify what information is correct & reliable. The fact is that the impact of disaster is unknown until it ends, so the resources that provide information & emergency supplies have to be in loop constantly so that they can fight it. Stressful - Long lasting mental affect Disaster scenarios are stressful; they take a toll on the mental state of the people involved, so it becomes critical for the persons involved in rescue and response operations to have a strong head. Since while practicing, one cannot have the exact feel of what actually would happen in a disaster scenario. Decision making is critical during such situations and disasters leave a long lasting mental scar which is difficult to heal immediately. To help counter this problem, organisations should partner with counsel with medical agencies which would help in curing such problems Spill over affect Disaster spills over other channels such as communication and transportation. The resources one might possess might get affected during crisis scenarios and therefore it would need support of other resources. For instance, during floods it might happen that your organisations communication channels are at fault and therefore it would require support for other organisations to provide resources to deal with floods. The Solution The corporate world-alone cannot completely fight disaster. It needs skilled human resources, valuable information and specialized tools to combat disasters on face. To possess all the elements is difficult by one organisation, so the best method is to partner with private and public bodies. By partnering with public bodies we can have access to priceless information directly from the source, expensive equipments and skilled personnel. Partnering makes partnering units stronger and therefore it helps in better building of armoury to face disasters. Partnering with PUBLIC units Organisations hesitate to partner with public bodies either because they treat them unreliable or due to traditional perception of public bodies. Also sometimes there is a fear of public agencies using age old conventional approach to respond during contingencies. But in reality, the public agencies might be the best equipped with latest tools & technologies to fight disaster. The liaison has to be build between public authorities & private firms so that together they can better fight disaster. Partnering with PRIVATE units When partnering with private units, it is important to understand the nature of business and culture of the partnering firms. Also trust plays an important role while partnering. Since the resources would be shared amongst partnering organisation, it should be made available whenever required. The fear of critical information getting leaked also has to be removed and a sense of belongingness should be present. Ownership is a key issue while partnering with private units, it is best that organisations themselves divide resources and take ownership for each one of them. How to partner? Identify the organisations that can collaborate Collect disaster management requirements of each partnering unit Analyze the criticality and accordingly plan Identify and gather resources in terms of which would be required Identify Single Point Of Contact which will disseminate information Include govt. authorities delegates Practice together as one unit and discover shortcomings Work on the shortcomings Share experiences to improve Win-Win Situation Sharing reduces INVESTMENTS Organisations needs to invest heavily in people, technology and equipments to fight disasters. Sharing these elements while partnering will help divide the investments and help build a structure which is more strong and robust. For instance, a common ambulance in a SEZ shared amongst ten organisations, will cut down the investments. Also it would bring a sense of comfort amongst employees that will get 57 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Battling Disasters through Partnering – Battling Disasters through Partnering Case Study immediate medical attention during time of adversities. Rapid support Many times it is the time of the support provided during disasters that determines the impact of the disaster. Hence it is important that you the sources that can provide help are in near vicinity. A next door neighbour can provide you on time support which can in-turn result drastically reduce the impact of disaster. Positive assurance can be provided due to the geographical closeness of one another. Expertise getting shared Expertise gets shared as it is not feasible for one organisation cannot to have all the expertise. Professional technical support can be sought to whenever required. Also the partnering units are aware of the arrangements present at each unit. Relation building When you partner, you build relations. Relationship can be further used for getting business benefits. Also when you build relation, the level of trust grows and you are better prepared for such incidents. Brand value also grows once you partner. Neutral assessment of strengths & weakness While partnering organisations get to know each another's strengths and weakness. Self assessment on areas of concern can be done and subsequently measures can be taken for improvement. In July 2009, Bombay Chamber of Commerce and Industry (BCCI), India's oldest Chamber, in partnership with Mahindra Special Services Group and Municipal Corporation of Greater Mumbai (MCGM) unveiled a broad strategy to prepare the citizens of Mumbai to overcome flood related crisis and transform Mumbai into a safer place for its citizens and businesses. The MCGM had indicated the possibility of a high tide of 5.01m & 5.05m on 23rd and 24th July 2009 respectively that could have caused massive flooding in the city. In response to this warning, this Flood Preparedness Session for Mumbai citizens jointly conducted by public and private sector aimed to prevent Mumbai from facing a reenactment of the catastrophe that devastated life and property in July 2005. While the severity of the flooding would probably be unabated, better preparedness was supposed to help public and private sector employees to overcome the crisis. While MCGM had undertaken measures to improve the city's disaster management capabilities, the training session showed that it is imperative for individuals & corporate to review their preparedness for responding effectively. The Flood Preparedness Session on 16th and 21st July 2009 in Mumbai covered the following:Lessons learnt from 2005 floods: Do's and Don'ts during floods. Analysis of the current situation in Mumbai and assessment of risk exposure of the organisation in terms of physical, personnel and information assets. How well are you prepared? Preparations done by Government Agencies and expectations from Corporate & individuals (especially in flood prone areas). At the end of the session, all participants were provided with a CD of the entire training presentation and flood advisories with emergency contact numbers and Do's and Don'ts during floods. This initiative was highly appreciated by the Mumbai citizens and helped build a strong partnership between the public and private sector organisations. CONCLUSION "United we stand, divided we fall" - The proverb aptly justifies the need for partnering against disasters. The challenges that today's corporate faces due to disasters are huge but with partnering organisations can be better prepared to face those challenges. 58 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security Threats – Implications for National Security Information Security Threats Implications for National Security Dinesh Pillai CEO, Mahindra Special Services Group Priyashree Andley Associate Consultant Public Relations and Marketing Mahindra Special Services Group Introduction Increasing threat of Information Warfare: Implications for National Security Global interconnectivity is making states vulnerable to new threats. Computer-based assaults or acts of information warfare, on state's systems such as nuclear establishments, energy grids, telecommunications and financial facilities could severely disrupt national defense and social services. Cyber force is a form of intervention that can produce harmful or coercive effects, and put national security at risk. It is commonly understood as structured intercepting or manipulating of industrial, military, economic and social data and information systems. Even realizing the new forms of computer-generated weapons and changing concepts of sovereignty and territory brought about by global interdependence, international law is likely to rely on UN Charter principles to define the legal boundaries of cyberspace. In a growing electronic economy, cyber attacks are increasingly being used for political, financial and military reasons. States or non-state units can use cyber attacks to extract critical information about strategic developments. This form of warfare can be highly anonymous and more economical given the low cost of R&D. The paper identifies various ways in which states are targeted by cyber warfare. It highlights the risks states' face in countering this form of warfare. The final section explains how public-private partnership can neutralize cyber attacks by adopting the suitable techniques. 59 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security Threats – Implications for National Security Indian Scenario There are three trends that make a state or non-state enterprise transparent and vulnerable. These are: Internet enabled connectivity, Wireless networking and Mobile computing. Increasing cases of identity and data theft are becoming a major cause for concern across state and private organizations. They're causing financial loss, data loss, and loss of credibility and reputation. Critical infrastructures such as telecommunications, transportation, energy and finance can get affected by attacks on Information infrastructures. Investigations reveal that attackers are not confined to geographical boundaries Exploiting network interconnections and moving easily through the infrastructure Becoming more skilled at masking their behaviour Tracking them is becoming difficult The common targets of cyber attack include: 1. Military networks 2. Government websites 3. E-Commerce and Financial Institutions 4. Telecommunications In 2007, Indian police acting on an intelligence lead arrested a suspected Kashmiri militant near Jalahalli, a village north of Bangalore. Authorities confiscated an assault rifle and 300 rounds of ammunition from the suspect, Bilal Ahmed Kota, as well as -- significantly -- a satellite phone, a cell phone, multiple cell phone SIM cards and a map of Bangalore that marked the airport, offices of Wipro Technologies Ltd. and the complex operated by Infosys Technologies. The Kota case highlighted the increase in incidents and threats to the high-tech industry, and underscores that militant groups are paying greater attention to economic target in India and to this important sector. However, the danger of attacks by cross border militants, Maoists or Naxalites is not the only threat that corporations and state authorities now face in India. These units are confronting what is effectively a multi-pronged security threat that also includes growing concerns about personal security and kidnappings, a greater recognition of risks to intellectual property that stem from corporate espionage, and issues related to privacy and the risks of criminals stealing sensitive customer information. Security managers today have a very different perception of the risks associated with doing business in India than they had few years ago. Significantly, dealing with each of these individual threat categories brings with it an associated business cost. As the risk environment -- or perceptions of it — shift, a new question emerges: At what point will the costs of doing business in India begin to outweigh the benefits? The demand for better methods to enforce cyber security has grown stronger since the 26/11 attacks in Mumbai.1 India has a dedicated organization, CERT-In — which operates under the department of communication and information technology — to tackle cyber crimes. Generating India Specific Information providing Threat reports Impact of major worms and viruses Current state of security in Indian Industry- Surveys SPAM - India specific data Cyber Crime, India as Target/Origin Proactive action and effective collaboration aimed at security incident prevention, prediction & protection and security assurance. However, the agency is not a prosecuting body as it does not have the legal power to examine cyber crimes. Cyber Security Threats Organised cyber attacks have been witnessed at the Pentagon, US in June 2007, Estonia in April 2007, Computer systems of German Chancellery and three Ministries, E-mail accounts at National Informatics Centre, India and Highly classified Govt. computer networks in US, New Zealand & Australia. A few of the Indian sites defaced by Pakistani hackers are: 1. Indian Science Congress 2. National Informatics Centre 3. Videsh Sanchar Nigam Limited (State-run international voice carrier) 4. External Affairs Ministry 6. Ministry of Information Technology 7. Asian Age newspaper 8. Official site of Gujarat Government 9. GlaxoWellcome India 10. Engineering Export Promotion Council, Ministry of Commerce Few of the Pakistani sites defaced by Indian hackers are:2 1. The Nation (newspaper) 2. Pakistan Television 3. Pakistan Tourism Development Corporation 4. Official site of Punjab Government 5. Shaheed Zulfiqar Ali Bhutto Institute of Science and Technology 6. Prime bank 7. Hamdard University Types of Cyber Weapons The software used to carry out these attacks indicates that they were clearly designed & tested with much greater resources. Increasing use of pendrives, CDs, mobile phones equipped with Bluetooth technologies make it difficult to keep a tab on employees and third parties. USB ports are used to connect devices like Internet data cards. While this makes it easy for state's mobile workforce to connect to the corporate network, or use the Internet when on the move to check important mail, it also makes it easy to leak information. 1. In March 2005, when a police raid in New Delhi turned up evidence of plans for attacks against IT companies in Bangalore, many private security companies and security directors for multinational corporations assumed the threat was being exaggerated by the Indian press. In March 2006: The police presence around high-tech businesses in Hyderabad was increased, and authorities called for companies to review their security measures, after Indian authorities said they had received what they characterized as a credible threat against customer service and support centers in that city. Source: Fred Burton, "Corporate Security: Risk and Cost Tolerance in India,' Jan 10 2007, http://www.stratfor.com/corporate_security_risk_and_cost_tolerance_india 2. Cyber Wars between Pakistan and India," 31 March 2008 http://www.ar ticlesbase.com/internet-articles/cyber-wars-between-pakistan-and-india-373872.html 60 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security Threats – Implications for National Security USB ports could be considered as a security threat. If you do plan to block all USB ports, first look for alternatives. Users are a key asset for every organization, but they're also the most vulnerable point of entry. It's easier to cajole a user into delving important information than breaking through a firewall. This makes educating users of various security threats extremely important. Laptop thefts are at the top of the security incidents list. Users have to be more careful and stronger focus needs to be put in training users on how to protect their laptops. Theft of confidential information could be caused by weak passwords or authentication, but they could also be caused by disgruntled employees walking away with confidential data on USB drives. The fourth one is another direct link to users-identity theft. Likewise, every user in an organisation may not go through the security policy every time they want to check an email or access the Internet. So there is a need to strike a balance between user expectations and an organization's security policy. Try to remove the hazard of leaving it to the user to figure out whether the attachment in an email is legitimate or not. In early October 2009, Intelligence agencies have asked the government to consider blocking Skype as operators of the popular global VoIP (Voice over Internet Protocol) engine are refusing to share the encryption code that prevents Indian investigators from intercepting conversations of suspected terrorists. The Cabinet Committee on Security has accepted the recommendation in principle but has not set a date for initiating action. The urgency to track Skype calls stems from the fact that terrorists – as the 26/11 attacks in Mumbai showed – are increasingly using VoIP services. The shift to VoIP has been prompted by the growing ability of intelligence agencies to intercept mobile and other calls. Since Skype is not registered here, Indian authorities have been forced to mull the drastic option of blocking its gateways here. This, however, may not be entirely effective as Skype can route traffic through other service providers. Need for a Legal Framework: Governments cannot control the internet in their country There is need for modern international law to precisely define the criteria used to distinguish what state actions are permissible as normal computer-generated transborder data theft from those cyber activities that might qualify as an 'armed attack' against a state. Clearer rules are also needed for what responses are permissible as self-defence by a state targeted in an information warfare situation and how international institutions might help to attain these objectives. Indian agencies are also keeping their fingers crossed, not sure whether the department of telecom – with a stake in sectoral growth – would like to lean on VoIP service providers on the issue of sharing encryption code. Besides, there's also a feeling that the government would be wary of people's response to the snapping of Skype. The free service is used by a vast majority of urban middle class Indians for communicating with families and friends spread across the world. Trends suggest an increase in safe havens for cyber criminals and hence the need for International cooperation arrangements. It is an inevitable reality that some countries will become safe havens for cyber criminals and international pressure to crack down won't work well. Governments are likely to get aggressive and pursue action against the specific individuals/groups/companies, regardless of location It is also likely that Governments will start putting pressure on intermediary bodies that have the skills and resources, such as banks, ISPs and software vendors to protect the public from malware, hacking and social engineering. Compliance regulations will drive upgrades and changes and also increase system complexity and legal wrangles increase in civil suits for security breaches Trained investigators To avoid data inaccuracies and the potential for cyber crimes, there must be a state-corporate awareness of data quality and recognition of the importance of data. There are three critical success factors that need to be identified before moving forward with the issue of data quality: 1. Commitment by senior management to the quality of corporate data 2. Definition of data quality 3. Quality assurance of data. Senior management commitment to maintaining the quality of corporate data can be achieved by instituting a data administration department that oversees data management standards, policies, procedures, and guidelines. Are the Indian police provided with trained cyber crime investigators and the technology facilities to handle cyber crimes or cyber warfare? The Cyber Crime Investigation Cell (CCIC) of Mumbai police arrested a former employee of a multi-national company for stealing confidential data of the firm. The company was involved in online trading of NSE and BSE stocks.3 With growing usage of cyber space to plan and execute actions against institutions or state, such specialized units who can gather data and convert it to actionable intelligence are more in demand. Public Private Partnership? In India, private security agencies investigate cyber crimes, but the Union government has not made full use of their services as in other countries. The government should seek the skills of private agencies in select cases. However, these are often sensitive issues as such cases often involve national security. We need to bridge this gap and prevent cyber threats to national security. Industrial espionage by corporate spies in India is practiced in the information technology industries, although the KGB-trained IB and the Indian foreign intelligence service-RAW also conduct physical surveillance of Western diplomats and high-profile Western business executives and foreign companies. Electronic eavesdropping is also practiced in India. Foreign businesses that partner with Indian firms are at risk if they do not have full control over the vetting and hiring process. Additional vulnerability 61 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security Threats – Implications for National Security comes when Indian partners outsource tasks to third-party contractors. The risks from industrial espionage exist worldwide, but technology companies can find they are greater in India than many other regions because of the research and development (R&D) work that often is conducted there – and because of the work of the IB and RAW, which are more aggressive than many intelligence services when it comes to stealing proprietary information from foreign companies for domestic purposes. In addition, there have been several well-publicized cases in which Indian workers have stolen information – such as bank account numbers, PIN numbers for automatic teller machines or birthdates and Social Security numbers (from American customers) – for criminal purposes. For example, a worker at an Indian call centre allegedly sold the bank account information of 1,000 British customers to an undercover reporter at $7.68 per account. The call worker boasted that he was able to steal and sell up to 200,000 accounts each month.4 The Indian government is working to pass laws giving police greater enforcement powers. Employers can take steps to mitigate these risks – but, costs are an important consideration. Monitoring employees' activities is expensive, and conducting background investigations on potential hires in a place like India can be very difficult, since public records (such as birth and death certificates) are not readily accessible or verifiable in many municipalities. Here, a public-private partnership can be useful to reduce risks. Hackers eye workers/employees to steal data from organizations. Protecting State and Corporate Property and Investments Increasing security risks in the environment, particularly those from targeted intrusions by experienced hackers, emphasize the requirement to implement effective security solutions using database assurance technology. Software security solutions are now available which enable organizations to re-evaluate their systems to determine the best methods for protecting assets. CONCLUSION The end goal behind cyber attacks -could be political, to damage the Indian economy, national interests, or revenge etc. These can be accomplished, by directly targeting the firms and state units that drive large business related investments into India. Attacks must be viewed, reviewed and responded to intelligently. Standard measures used by public and private corporations -such as security perimeters around office buildings, access controls and vehicle inspection points -- can help to mitigate physical/terrorist threats to individual enterprises, but proactive measures to influence or change the political environment that drives the threats are necessary. There is a need to conduct regular assessments of the security of your network. Is the state or private sector IT infrastructure static? If not then how can your security remain the same? Security threats are increasing, and so is your IT infrastructure. Beyond a certain point, even policies and re-assessments may not work. There is a need to start exploring security standards. Today, two key security standards exist for information security. These are BS7799 and ISO27000 series out of which the ISO standard seems to be more popular. India is an attractive location for multinational IT corporations for a number of reasons. Notably, it has a large pool of highly trained, technically competent and workers who are willing to work for less pay than their counterparts in the United States or Europe. Furthermore, establishing or outsourcing customer service and support issues to call centres in India, with the time zone differences, makes it possible for companies based in the United States and Europe to offer support virtually around the clock. However, of all these reasons, the biggest motivator for multinationals to establish R&D and customer support operations in India, or to relocate those operations from other countries, has been cost. To retain this edge over other countries, Indian state and private enterprises need to successfully manage cyber threats that hamper national security. A strong public private partnership can help create an effective cyber defence. Significant benefits of a strong cyber security management system State and Corporate management needs to have a wellpresented and well-documented business case, spelling out in detail the key requirements, business considerations and other elements of the proposal to obtain approval for the necessary expenditures for the selected security solution. There are significant benefits to be achieved for an organization which conducts the proper analysis and assessment of the risks and develops an appropriate security solution for database assurance, which takes account of these risks. These are the steps which have the potential for putting an organization ahead of any intrusion attempt. 3. Source: "Ex-employee steals confidential info held," DNA 10 October 2009 4. Source: Fred Burton, "Corporate Security: Risk and Cost Tolerance in India," Jan 10 2007, http://www.stratfor.com/corporate_security_risk_and_cost_tolerance_india 62 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security using Genetic Algorithm and Chaos – A Implications for National Security Information Security using Genetic Algorithm and Chaos A Implications for National Security Anil Kumar Reader in Computer Engineering Department, Sikkim Manipal University, Sikkim M. K. Ghose Head of Department of Computer Science & Engg, Sikkim Manipal Institute of Technology, Sikkim Introduction In the advent of greater demand in digital signal transmission in recent time, the problem of huge losses from illegal data access has become a burning issue. Accordingly, the data security has become a critical and imperative issue in multimedia data transmission applications. In order to protect valuable information from undesirable users or against illegal reproduction and modifications, various types of cryptographic schemes are needed. Cryptography "sciences of the secret" has been reserved strictly to diplomatic and military surroundings (for more than 3000 years). But with the rapid advances in data processing and the evolution of the networks of communications, cryptography has become a vital process in all domains. Cryptography offers efficient solutions to protect sensitive information in a large number of applications including personal data security, medical records, network security, internet security, diplomatic and military communications security, etc. through the processes of encryption/decryption. Encryption is used to convert a plaintext (original message) into cipher text (the coded message), which can be decoded back into the original message. An encryption (or ciphering) algorithm along with a key is used in the encryption and decryption of data. The degree of security offered by the algorithm depends on the type and length of the keys utilized. There are two types of cryptographic schemes: symmetric cryptography [1-2] and asymmetric cryptography [3]. The symmetric scheme uses the same key for encryption and decryption. Two keys is used in asymmetrical cryptography , one for encryption, known as the public key, and the other for decryption, known as the private key. Asymmetric cryptography is often used for key distribution and digital signature but its processing speed slow. The symmetric cryptography is normally used to encrypt private data for its high performance. However, there have been various data encryption techniques [4-6] on multimedia data proposed in the literature. Only few works has been done exist on genetic algorithm [7-12] based information security. In Section 2, a brief introduction to cryptography is given. Section 3 gives overview of genetic algorithms and its general sequence of events such as selection, reproduction and mutation operators. Section 4 gives overview and generation of the pseudorandom sequence, conventionally used for generation of encryption/decryption keys. Section 5 covers the various cryptography techniques based on genetic algorithm as available in the literature in chronological order. In section 6, a new approach of genetic algorithms (GA) with pseudorandom sequence to encrypt data stream is proposed. Section 8 represents the analysis of the security. Finally, section 9 gives the overall conclusions with special emphasis of highlighting the areas of further research. 63 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security using Genetic Algorithm and Chaos – A Implications for National Security Overview of Cryptography Cryptography is a science which is used from thousands of years. It concerns about the encryption as well as decryption of secret data in such a way that valuable information will remain safe from unauthorized users. Earlier the cryptography used in military and government. Due to advent of internet technology over the past few years, people are now using internet as to share information and for communication purpose. For this reason, secure communication is main requirement for online trading because internet is an unsafe channel. Cryptographic techniques are used to protect individual privacy as well as commercial secrets. Nowadays security, integrity, nonrepudiation, confidentiality, and authentication services are the most important factors in the field of the Cryptography. The main objective of the cryptography is to ensure secure communication over insecure channel (like Internet). Private-key cryptography It is referred as symmetric key cryptography because encryption and decryption are performed using the same key. The key should keep secret between sender and receiver. A block diagram is shown below using DES Figure Taken from Stalling: Figure 2: Symmetric Encryption and Decryption Model Figure 1: Basic Encryption and Decryption Model The message which is normally a plaintext is encrypted using the encryption key. The encrypted data (Cipher Text) is sent over the communication channel to the receiver. On the receiver side the cipher text is decrypted using decryption key. The cipher text can be generated in the stream or block form. In stream cipher the plaintext is encrypted bit by bit while in the block cipher data of the plaintext is divided into blocks of specific size. Goal of Cryptography 1. Confidentiality means to keep secret the content of information from all unauthorized users. 2. Data integrity is to deal with the unauthorized modification of data. In order to assure data integrity, one must have an ability to detect data manipulation (i.e. insertion, deletion and substitution) by unauthorized parties. 3. Authentication means identification. It is applicable to both users and information itself. When two users start communication then they should identify each other. Information delivered over a channel should be authenticated as to origin, date of origin, data content, time sent, etc. 4. Non-repudiation is a service which prevents an entity from denying previous commitments or actions. Now a days the cryptography is classified into two categories, private-key and public-key cryptography. In private-key cryptography, the encryption and the decryption are same. In public-key encryption and decryption are different. There are various types of the encryption algorithms. Block ciphers are now widely used in industry. Data Encryption Standard (DES) was adopted in 1977 by National Institute of Standards and Technology. The architecture of DES is based on Feistel cipher (developed by IBM), with 16 rounds of identical operations. In each round of DES, substitution and permutation are performed by S-Boxes and P-Boxes. It is to provide confusion and diffusion in the encrypted data. Now DES is no longer a secure encryption standard because of the short key and various types of attacks. Advanced Encryption Standard (AES) is issued by National Institute of Standards and Technology in 2001 to overcome the problem of the DES. It is intended to replace DES. It supports key lengths of 128, 192, and 256 bits and a block size of 128 bits. It does not use Feistel Cipher structure. Here, each round uses byte substitution, permutation, arithmetic operations over a finite field, and XOR technique. Public-Key Cryptography This concept was introduced by Diffie and Hellman in 1976. This technique is referred as asymmetric cryptosystem in which encryption and decryption is done using two different keys (Public and Private Key). The private is secret and public key is open which anyone can use. The pair is selected in such a way that private key determination on the basis of public key is infeasible. Figure 3: Asymmetric Encryption and Decryption Model 64 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security using Genetic Algorithm and Chaos – A Implications for National Security The main advantage of the public-key cryptosystem is that there is no needs of transmission of secret key because private key is never transmitted hence there are any chance of interception because secret key is not transmitted. The main disadvantage is that the speed of encryption is very slow compare to private key cryptography. Second the Certification Authentication is required those who are using Public key. No public-key encryption has been proven to be secure. Integer Factorization Problem (IFD), Discrete Logarithm Problem (DLP) and Elliptic Curve Discrete Logarithm Problem (ECDLP) are the mathematical tools which are used in public-key cryptography system. Rivest, Shamir and Adleman (RSA) uses the IFD concept for public-key cryptography such as, is equivalent to find the prime factors p and q given a very large number n. Recently RSA, depicted by a new hardware implementation. Diffie and Hellman used the concept of DLP. Digital Signature Algorithm (DSA) issued by the NIST to provide the authentication mechanism that enables communication parties for proving and verifications. ECDLP concept used in Elliptic Curve Cryptography (ECC) is an emerging technique alternative of RSA and DSA. Solving of the elliptic curve discrete logarithm problem is infeasible. Genetic Algorithms The genetic algorithm is a search algorithm based on the mechanics of natural selection and natural genetics [13-14]. The genetic algorithm belongs to the family of evolutionary algorithms, along with genetic programming, evolution strategies, and evolutionary programming. The set of operators usually consists of mutation, recombination, and selection. The main idea is that in order for a population of individuals to adapt to some environment, it should behave like a natural system. The survival and reproduction of an individual being is promoted by the elimination of useless traits and by growing the useful behaviour. Genetic algorithms (GAs) consider an optimization problem as the environment where feasible solutions are the individuals living in that environment. The degree of adaptation of an individual to its environment is the counterpart of the fitness function evaluated on a solution. Similarly, a set of feasible solutions takes the place of a population of organisms. An individual is a string of binary digits or some other set of symbols drawn from a finite set. Each encoded individual in the population may be viewed as a representation of a particular solution to a problem. In general, a genetic algorithm begins with a randomly generated set of individuals. Once the initial population has been created, the genetic algorithm enters a loop. At the end of iteration, a new population has been produced by applying a certain number of stochastic operators to the previous population. Each such iteration is known as a generation. A selection operator is applied first. This creates an intermediate population of n "parent" individuals. To produce these "parents", n independent extractions of an individual from the old population are performed. The probability of each individual being extracted should be (linearly) proportional to the fitness of that individual. This means that above average individuals should have more copies in the new population, while below average individuals should have few to no copies present, i.e., a below average individual risks extinction. Once the intermediate population of "parents" (those individuals selected for reproduction) has been produced, the individuals for the next generation will be created through the application of a number of reproduction operators. These operators can involve one or more parents. An operator that involves just one parent, simulating asexual reproduction, is called a mutation operator. When more than one parent is involved, sexual reproduction is simulated, and the operator is called recombination. The genetic algorithm uses two reproduction operators - crossover and mutation. To apply a crossover operator, parents are paired together. There are several different types of crossover operators, and the types available depend on what representation is used for the individuals. For binary string individuals, one-point, and two-point, and uniform crossover are often used. For permutation or order-based individuals, order, partially mapped, and cycle crossover are options. The one-point crossover means that the parent individuals exchange a random prefix when creating the child individuals. Two-point crossover is an exchange of a random substring, and uniform crossover takes each bit in the child arbitrarily from either parent. Order and partially mapped crossover are similar to two-point crossover in that two cut points are selected. For order crossover, the section between the first and second cut points is copied from the first parent to the child. The remaining places are filled using elements not occurring in this section, in the order that they occur in the second parent starting from the second cut point and wrapping around as needed. For partially mapped crossover, the section between the two cut points defines a series of swapping operations to be performed on the second parent. Cycle crossover satisfies two conditions - every position of the child must retain a value found in the corresponding position of a parent, and the child must be a valid permutation. Each cycle, a random parent is selected. After crossover, each individual has a small chance of mutation. The purpose of the mutation operator is to simulate the effect of transcription errors that can happen with a very low probability when a chromosome is mutated. A standard mutation operator for binary strings is bit inversion. Each bit in an individual has a small chance of mutating into its complement i.e. a '0' would mutate into a '1'. In principle, the loop of selection-crossover-mutation is infinite. However, it is usually stopped when a given termination condition is met. Some common termination conditions are: 1. A pre-determined number of generations have passed 2. A satisfactory solution has been found 3. No improvement in solution quality has taken place for a certain number of generations The different termination conditions are possible since a genetic algorithm is not guaranteed to converge to a solution. The evolutionary cycle can be summarized as follows: 65 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security using Genetic Algorithm and Chaos – A Implications for National Security generation = 0 seed population while not (termination condition) do generation = generation + 1 calculate fitness selection crossover mutation end while Many of these application areas are concerned with problems which are hard to solve but have easily verifiable solutions. Another trait common to these application areas is the equation style of fitness function. Cryptography and cryptanalysis could be considered to meet these criteria. However, cryptology is not closely related to the typical GA application areas and, subsequently, fitness equations are difficult to generate. This makes the use of a genetic algorithm approach to cryptology rather unusual. The crossover is the process in which the strings are able to mix and match their desirable qualities in a random fashion. Crossover proceeds in three simple steps: Two new random strings are selected in Figure 4a. A random location in both strings is selected in Figure 4b. The portions of the strings to the right of the randomly selected location in the two strings are exchanged Figure 4c. In this way information is exchanged between strings, and portions of two strings are exchanged and combined. Chaos Theory Chaos is a pseudo-random process produced in nonlinear dynamical systems. It is non-periodic in nature, non-convergent and extremely sensitive to the initial condition. The chaos theory has been developed, since early 60's from many research disciplines (such as Mathematics, Physics, Biology, Chemistry and Engineering). There exists relationship between the chaos and cryptography [15-16] such as 1) Ergodicity and confusion. 2) Sensitivity to initial condition and diffusion with a small change in the secret key or plain text. 3) Mixing property and diffusion. 4) Deterministic dynamics and deterministic pseudo-randomness. 5) Structure complexity and Algorithm complexity. As a result of the above relationships, a good number of chaosbased cryptosystems has been proposed [17-19]; some of them lack robustness and security [20-22]. The general chaotic system model is given as below (1) where the is a chaotic sequence generated by the nonlinear is the initial condition. A simple and well-studied example of 1D map that exhibits complicated behaviour is the logistic map from the interval [0,1] into [0,1]. (2) where and . The Tent map, sine map, and cubic map are other chaotic map used by Pareek et al. and Tent map (3) Sine map (4) Cubic map (5) The control parameters of the above chaotic map are assigned as respectively. The PWLCM (piecewise linear chaotic map) denoted as following equation (6) Or (6a) where p is the control parameter and Figure 4: Illustration of the Crossover Operation . The PWLCM has uniform invariant density function and correlation. It can be easily realized by both hardware and software, since its iterations only involve divisions and additions. 66 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security using Genetic Algorithm and Chaos – A Implications for National Security Literature Survey Only few genetic algorithms based encryption have been proposed. A. Kumar et al [7] in 2004 describe encryption using the concept of the crossover operator and pseudorandom sequence generator by NLFFSR (Non-Linear Feed Forward Shift Register). The crossover point is decided by the pseudorandom sequence and the fully encrypted data they are able to achieve. A. Kumar et al [8] in 2005 extend this work also used the concept of mutation and after encryption. Encrypted data is further hidden inside the stego-image. A. Tragha et al.[9, 10], in 2005 & 2006 describe a new symmetrical block ciphering system named ICIGA (Improved Cryptography Inspired by Genetic Algorithms) which generates a session key in a random process. The block sizes and the key lengths are variable and can be fixed by the user at the beginning of ciphering. ICIGA is an enhancement of the system (GIC) "Genetic algorithms Inspired Cryptography" [10]. ICIGA is a block cipher system whose secret key is generated during each session using a random process. The user can fix the size of the blocks as well as the length of the key. The operation of ICIGA depends on the length of the secret key selected by the user. ICIGA uses this length to divide the plaintext into parts of equal size. During the ciphering, the first part is broken up into blocks of the same size which are used to generate the secret key. This key will then be used to cipher the other parts of the message. If the user did not set the length of the secret key the plaintext is composed of only one part and ICIGA generates a key of maximum length. The genetic operations of crossover and mutation used for ciphering in GIC are improved by the new system ICIGA as follows: A left shift is added to each block that is processed, and Another left shift is added to the part being processed after the processing of its last block. The number of bits to be shifted is determined by the parameters of the genetic operations. The goal of these shifts is to reinforce resistance to cryptanalysis, and in particular to techniques of exhaustive search. M. Husainy [11] in 2006 proposes Image Encryption using Genetic Algorithm based Image Encryption using mutation and crossover concept. A. Tragha [12] at al in 2007, proposed a new encryption algorithm using genetic algorithm approach. The only related work is the attack of the asymmetric ciphering "Knapsack Cipher". This is inspired by the resolution of back bag problem. Thus efficiency genetic algorithms have been proven in cryptanalysis. The problem of ciphering a message M is modelled as a combinatorial optimization problem. Then a genetic solution based on the method used to solve the travelling salesman problem (TSP) is also proposed. In the second system SEC-EX, for scrambling plaintext, they introduce a new technique, which consists to encode plaintext in binary, chooses randomly an integer k and cuts plaintext into blocks of size k. These blocks are treated in the same way that the characters constituting the plaintext in SEC. The Proposed Method Figure 5: The Block diagram of the proposed Method. The block diagram of the proposed method is shown in figure 5. It consists of pseudorandom sequence generator, crossover operator, and encryption and decryption modules. The Encryption Process The encrypting process emulates the working of the crossover operator using pseudorandom sequence. The steps for the data encryption as follows: 1. Generate the pseudorandom binary sequence using the chaos as Yn. 2. Convert the binary pseudorandom sequence into decimal pseudorandom sequence ranging from 0 to 7 as Zn. 3. Read 16 consecutive bytes from the data file. 4. Initialize j=0 5. Initialize i=0 6. Modify the consecutive bytes using byte substitution for creating confusion, as per AES standard. 7. Take two consecutive bytes of the data stream as A1 and A2 8. Perform crossover on two consecutive bytes of the data stream as B1 and B2 by using the number Zi 9. Encrypt data as C1 and C2, where X1 = ZiØ(zi«4) 7(a) Xi+1 = Zi+1Ø(zi+1«4) 7(b) C1 = B1Øxi 7© C2 = B2Øxi+1 7(d) 10. i=i+2 and j=j+1 repeat steps 6 to 9 until i<16. 11. Repeat steps 5 to 10 until i<5 12. Again perform the byte substitution over the encrypted 16 consecutive bytes for further creating confusion. 13. Repeat steps 3 to 12 until end of the data. The Decryption Process The steps for decryption are just reversal of the encryption. First, generate the pseudorandom sequence using chaos and then use the pseudorandom sequence and crossover operator to decrypt the data. 67 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DISASTER MANAGEMENT & SECURITY II Information Security using Genetic Algorithm and Chaos – A Implications for National Security Experimental Results In the simulation, ten images are used. As representatives, only the images of "lena", "it_logo" are shown in figures 6(a) and 6(d), respectively. The most direct method to decide the disorderly degree of the encrypted image is by the sense of sight. On the other hand, the fractal dimension can provide the quantitative measure on the randomness of the encrypted image. The encrypted result of the two representative images by this method is shown in figures 6(b) and 6(e). According to the figure 6, the encryption results of the method are completely disordered and cannot be distinguished from the original image. The figures 6(c) and 6(f) respectively are the decrypted image of "lena", "it_logo". Since the proposed method is losable, we can find that there would be no encryption/decryption errors in using the proposed technique. Analysis of Proposed Approach It is of interest to know if the proposed technique is easily decrypted or not. Since there are 8 combinations for crossover of 2 consecutive data bytes and for XOR (exor) the number is 64, thus the number of possible encryption result is (128) (N/2), where N is the total number of the data bytes to encrypt . For example, consider a 256 color-image of size 256*256 pixels and color depth of 8 bit per pixel. In this case N equals 65536. All the possibilities are 12832768=2229376 Statistical analysis of the encryption An ideal cipher should be robust against any type of statistical attack; because many ciphers have been successfully analysed with the statistical analysis and various types of attacks have been devised on them. Figure 6 (a)Lena Image (b)Encrypted Image (c)Decrypted Image (d)It Image (e)Encrypted Image (f)Decrypted Image As an example, we consider two consecutive bytes of the data stream after byte substitution A1 and A2 as A1 = 11100010 A2 = 11001001 Histogram analysis We analysed the histograms of several encrypted as well as original images. Figure 7(a) original image and its histogram figure 7(c). Figure 7(b) encrypted image and its histogram figure 7(b). It is clear from figure 7 histogram of the encrypted image is nearly uniform and quite different from the original image and hence it does not provide any clue to employ any type of statistical attack on the proposed image encryption. The secret key is μ=3.57 and x0 = 0.7. Figure. 7. Histogram analysis: The pseudorandom sequence is generated as follows: 1. If the value of µ=3.57 and x2=0.7, and threshold t=0.5 then the output pseudo random binary sequence generated by chaos is as: 010011.......... (a) Original Image 2. The decimal value sequence is than calculated using equation 1 as: Zn = 2,3,1,5,.......... (c) Histogram of Original image 3. The value of Zi=2 and Zi+1 =3. Now, perform crossover operation with the generated pseudorandom sequence, In the operation the various values generated are B1 = 11100001 (b) Encrypted image (d) Histogram of Encrypted image Xi+1 = 00110011 Time analysis of the encryption: The speed of the algorithm is the important factor for a good encryption algorithm. We have measured the encryption/decryption rate for several gray scale images of different size. The average time taken by the algorithm for different size of images is shown in table Image size Bits/pixels Average encryption/ (in pixels) decryption time(s) C1 = 11000011 128 x 128 8 0.009-0.012 C2 = 11111001 256 x 256 8 0.036-0.042 512 x 512 8 0.071-0.108 B2 = 11001010 Xj = 00100010 The values of C1 and C2 are two consecutive encrypted data. Average ciphering speed of a few different sized grayscale images Without the knowledge of the pseudorandom sequence no one will be able to extract the message. 68 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 GOVERNANCE II Information Security using Genetic Algorithm and Chaos – A Implications for National Security Acknowledgement: This work is part of the Research Project funded by All India Council of Technical Education (Government of India) vide their office order: F.No:8023/BOR/RID/RPS-236/2008-09 CONCLUSION TIn this paper, the various genetic algorithm & chaos based of information security has been discussed, and a new approach has been proposed. For transmitting the secured data over the channel there is requirement of the high throughput, in these cases the conventional encryption techniques are not a feasible solution for this reason a high throughput and secure encryption technique is proposed for real time data transmission like over the telephone link or video transmission. The concept of Genetic Algorithms used along with the randomness properties of chaos. This total way of transferring secret information is highly safe and reliable. The simulation results have indicated that the encryption results are (1) completely chaotic by the sense of sight, (2) very sensitive to the parameter fluctuation. In the future work, we are planning to design a sophisticated hardware based on this technique which will be targeted to use in highly secure multimedia data transmission applications References 1. J.Daemen and V.Rijmen. The Design of Rijndael, AES - Advanced Encryption Standard}, ISBN 3540-42580-2 (Springer-Verlag Berlin Heidelberg, New York). Network Security, VOL.7 No.2, February 2007, pp 181-190 2. "Data Encryption Standard (DES)," National Bureau Standards FIPS Publication 46(1977). 13. C.W. Wu and N. F. Rulkov, "Studying chaos via 1-Dmaps-atutorial," IEEE Trans. on Circuits and Systems I: Fundamental Theory and Applications, vol. 40, no. 10, pp. 707-721, 1993. 3. R. L. Rivest, A. Shamir, and L. Adleman, A method for obtaining digital signatures and public key cryptosystems, Commun. Assoc. Comput.(1978)120-126. 14. D.E. Goldberg, Genetic algorithms in search optimization & Machine Learning, Addison-Wesley. Publishing Company, Inc 1989. 4. Menzes A. J., Paul, C., Van Dorschot, V., Vanstone, S.A., Handbook of Applied Cryptography, CRS Press fifth Printing 2001. 15. Gr¨undlingh, W. & van Vuuren, J. H. (Using Genetic Algorithms to Break a Simple Cryptographic Cipher. Retrieved March 31, 2003 from http://dip.sun.ac.za/˜vuuren/abstracts/abstr genetic.htm 5. Douglas, R. Stinson, Cryptography- Theory and Practice, CRC Press, 1995. 6. Wenbo Mao, Modern Cryptography: Theory and Practice, Publisher: Prentice Hall PTR, Copyright: Hewlett Packard, 2004. 16. R. Brown, L. O. Chua, Clarifying chaos: Examples and counterexamples, Int. J. Bifurcation and Chaos 6 (2) (1996) 219-249. 7. A Kumar, N Rajpal, "Application of Genetic Algorithm in the Field of Steganography", in Journal of Information Technology, Vol. 2, No.1, Jul-Dec.2004, pp-12-15. 8. A Kumar, N Rajpal, A. Tayal, "New Signal Security System for Multimedia Data Transmission Using Genetic Algorithms" NCC'05 Held in the IIT Kharagpur, pp-579-583, 28-20 Jan 2005. 9. A. Tragha, F. Omary, A. Kriouile, "Genetic Algorithms Inspired Cryptography" A.M.S.E Association for the Advancement of Modeling & Simulation Techniques in Enterprises, Series D : Computer Science and Statistics, November 2005. 17. J. Fridrich, Symmetric ciphers based on two-dimensional chaotic maps, Int. J. Bifurcation and Chaos 8 (1998) 1259-1284. 18. R. Lozi, L. O. Chua, Secure communications via chaotic synchronization. II. Noise reduction by cascading two identical receivers, Int. J. Bifurcat. Chaos 3 (5) (1993) 1319-1325. 19. S. Li, X. Mou, Y. Cai, Improving security of a chaotic encryption approach, Phys. Lett. A 290 (3-4) (2001) 127-133. 20. T. Yang, A survey of chaotic secure communication systems, Int. J. Comput. Cognit. 2 (2004) 81130. 10. A. Tragha, F. Omary, A. Mouloudi," ICIGA: Improved Cryptography Inspired by Genetic Algorithms", 2006 International Conference on Hybrid Information Technology (ICHIT'06). 21. G. ´Alvarez, F. Montoya, M. Romera, G. Pastor, Cryptanalysis of a chaotic secure communication system, Phys. Lett. A 306 (4) (2003) 200-205. 11. M. Husainy, "Image Encryption using Genetic Algorithm", Information Technology Journal 5 (3): pp 516-519, 2006. 22. G. ´Alvarez, F. Montoya, M. Romera, G. Pastor, Cryptanalysis of a discrete chaotic cryptosystem using external key, Phys. Lett. A 319 (2003) 334-339. 12. F. Omary, A. Tragha, A. Bellaachia, And A. Mouloudi," Design and Evaluation of Two Symmetrical Evolutionist-Based Ciphering Algorithms" IJCSNS International Journal of Computer Science and 23. S. Li, X. Mou, Y. Cai, Z. Ji, J. Zhang, On the security of a chaotic encryption scheme: problems with computerized chaos in finite computing precision, Comput. Phys. Commun. 153 (2003) 52-58. 69 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security Technology options for Financial Inclusion A Implications for National Security Dr KG Karmakar Managing Director, NABARD NP Mohapatra Assistant General Manager in Financial Inclusion Department, NABARD. The views expressed here are of Authors and not necessarily the organisation they belong to. Introduction Recent developments in banking technology have transformed banking from the traditional brickand-mortar infrastructure like staffed branches to a system supplemented by other channels like automated teller machines (ATM), credit / debit cards, Internet banking, online money transfers, etc. The moot point, however, is that, access to such technology is restricted only to certain segments of the society. Indeed, some trends, such as increasingly sophisticated customer segmentation technology - allowing, for example, more accurate targeting of sections of the market - have led to restricted access to financial services for some groups. A sizeable majority of the population, particularly the low income groups, continue to remain excluded from the opportunities and services provided by the financial sector. An immediate need was felt to extend financial services to these sections of the society and financially include them. Financial inclusion may be defined as the process of ensuring access to timely and adequate credit and financial services by vulnerable groups such as weaker sections and low income groups, at affordable costs. To address the needs of such sections of society a Committee on Financial Inclusion was set up by the Government of India (GoI) chaired by Dr. C. Rangarajan. The Committee observed that in the field technological developments in the recent past have provided the perfect launch pad for extending banking services to remote locations without having to open costly bank branches. This can be achieved by leveraging technology to open up channels beyond branch network and create the required banking footprints to reach the unbanked so as to extend banking services similar to those dispensed from branches. The Committee in its Interim Report recommended the establishment of two Funds, namely the Financial Inclusion Fund (FIF) for meeting the cost of developmental and promotional interventions for ensuring financial inclusion and the Financial Inclusion Technology Fund (FITF), to meet the cost of technology adoption. The Hon'ble Union Minister of Finance, in his Union Budget Speech for 2007-08, announced the constitution of the Financial Inclusion Technology Fund (FITF), with an overall corpus of Rs. 500 crore, to be contributed by the Central Government, RBI and NABARD in the ratio of 40:40:20. Constitution of Fund In November 2007, GOI approved the guidelines on the objectives, constitution, contribution, eligible activities, monitoring of the fund and issued a notification setting up the Advisory Board of the Fund. Based on these instructions, NABARD has issued guidelines to Commercial Banks, Regional Rural Banks (RRBs), State Cooperative Banks (SCBs) and State Cooperative Agriculture and Rural Development Bank (SCARDBs) in 14 May 2008 and to Commercial Banks in June 2008. 70 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 Objectives of FITF The objectives of the FITF are to enhance investment in Information Communication Technology (ICT) aimed at promoting financial inclusion, stimulate the transfer of research and technology in financial inclusion, increase the technological absorption capacity of financial service providers / users and encourage an environment of innovation and cooperation among stakeholders. Corpus and Source of Funds The Financial Inclusion Technology Fund (FITF) consists of an overall corpus of Rs. 500 crore, with initial funding to be contributed by the Central Government, RBI and NABARD in the ratio of 40:40:20. The funding would be contributed in a phased manner over a maximum period of five years, depending upon utilisation of funds. As for funds utilisation, annual replenishments may be made by GoI, RBI and NABARD and from other stakeholders / institutions as decided by the Government. Phasing The FITF is in operation until financial inclusion to the extent of 100% of rural families in all districts is achieved, over a period of five years from the date of commencement of the Fund or for such enhanced period as may be decided by the Government. Eligible Activities / Purposes The FITF would be used for the following activities / purposes: a. Encouraging user friendly technology solutions; b. Providing financial support to technological solutions aimed at providing affordable financial services to the disadvantaged sections of the society; c. Creating a common technology infrastructure with comprehensive credit information; d. Funding support to technologies facilitating the documentation for processing of loans; Providing viability gap / pilot project funding for unproven but potential technological interventions; e. Conduct of studies, consultancies, research, evaluation studies relating to technological interventions for financial inclusion; f. Promoting seminars, conferences and other mechanisms for discussions, dissemination relating to financial inclusion technological interventions; g. Publication of financial inclusion technology literature, publicity material, etc.; h. Capacity building of personnel of Banks, Post Offices, State Government departments, MFIs, NGOs, VAs and other stakeholders; and i. Any other activity as may be approved by the Advisory Board. 1.7 Eligible Institutions j. Financial Institutions, viz., NABARD, Commercial Banks, Regional Rural Banks and Cooperative Banks; k. NGOs, MFIs, SHGs, Farmers' Clubs, Local Level Associations (LLA), etc.; l. Technology Service providers and other service providers like Insurance Companies (providing micro insurance services), Post Offices, Railways, etc.; m. Any other institution / organisation whose objectives are in conformity with the overall objectives of the FITF and are approved by the Advisory Board. Nature, Quantum and Terms of assistance The nature, quantum and terms of assistance to eligible institutions / organisations for various promotional and developmental interventions for promoting financial inclusion will be decided by the Advisory Board for the FITF. Monitoring System The institutions / organisations will undertake to monitor the programmes / projects closely with a view to achieving and realising the objectives and purposes of FITF and keep NABARD informed of the same. The institutions / organisations seeking assistance under the FITF may also submit periodic Progress Reports to NABARD, in the format prescribed for the purpose. Management of FITF The programme sanction, implementation, monitoring and administration of the FITF are vested with NABARD. The interest accrued / income earned from the FITF is to be ploughed back into the FITF as per the investment policy approved by the Advisory Board. The administering charges incurred in conduct of meetings of the Advisory Board and other expenses (except salaries / allowances of personnel involved in the sanction, implementation and monitoring of FITF) of NABARD in connection with discharge of its functions related to FITF are to be met out of the FITF as decided by the Advisory Board from time to time. Constitution of Advisory Board An Advisory Board has been constituted by the Government of India which will guide and render policy advice on various aspects relating to the FITF. The Advisory Board will determine its own procedures for day to day functioning in respect of FITF, including constitution of committees, sub-committees, task forces, etc., for examination, implementation and monitoring of various issues. The Advisory Board would meet at such intervals as deemed necessary, but in any case at least once in six months to review the status and progress of outflow from the FITF and to render policy advice. 71 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security Encouraging user friendly technology solutions; still exists the problem of the 'Last Mile' connectivity. Fortunately, there are alternatives which help to overcome the Last Mile connectivity problem. Funding support to technologies facilitating the documentation for processing of loans; Financial Inclusion Technology Architecture One of the fundamental aims of Financial Inclusion is to increase the outreach of the formal banking system so as to reach the unreached and bank on the unbanked. The objectives of financial inclusion are as follows: i. To mop up micro deposits. ii. To provide affordable credit. iii. To provide micro insurance covering not only life and death but also crops, assets and accidents. iv. To provide safe money transfers. v. To provide financial advice and counselling. vi. To provide add-on services like agriculture-portal, etc. Based on the current initiatives taken by various stakeholders, the fundamental architecture for financial inclusion works out as follows: CBS: Core Banking Solutions TBA: Total Banking Application ASP: Application Services Provider BC: Banking Correspondent BF: Business Facilitator SHG: Self Help Group The essential elements of this structure are as follows: Though Commercial Banks, RRBs and Cooperatives have made inroads into the rural areas of our country on account of their expansion over the years, there is still a vast segment of the rural population, which are yet to access banking facilities. There may be many reasons as to why a large portion of our population has no access to the formal banking services. These may be on account of geographical constraints, individual needs, issues relating to the banks, etc. With the advancement in technology especially in data processing and communication, these issues have to be economically addressed. Accordingly, a goal for providing access to financial services to 50 per cent (56 million) of the excluded rural cultivator and non-cultivator households across different States by the year 2012 and 100 per cent coverage (111.55 million) by the year 2017, has been stipulated. The interface between banking and Information Communication Technology (ICT) has resulted in financial service providers having access to technologies, which help them to reach new customers, track their operations to increase transparency, thereby improving the efficiency of financial services for the new customers. It has ensured the need for a paradigm shift in banking business fundamentals so as to enable implementation of innovative delivery channels for financial services. Due to availability of a plethora of technologies, it is essential to select the right technology so as to get the most out of the investments made in such technologies. Till the recent past, the conventional 'brick and mortar' banking systems adopted information technology to enable providing better services and products to their existing clientele. But with the symbiotic amalgamation of Information Technology and Communication Technology, the conventional banking system is now equipped with a wide range of force multipliers. These force multipliers are in the form of mobile banking, conventional cards, smart cards, common service centres, low cost ATMs, hand held devices, etc. Even in this explosion of technology, many a time, there Financial Inclusion Technology Provider ICT is the only viable option assisting banks to increase their outreach at low costs. The various technology options available range from mobile banking to Smart Cards, Conventional cards, Hand held devices, Biometric security tools, etc. Financial Inclusion Technology (FIT) Provider is that entity that provides the most suited technology solution to a Bank. The FIT Provider should provide the necessary technology support to the Bank for implementing the solutions and ensure its smooth functioning. The FIT Provider could also function as an Application Service Provider, providing end to end solutions to a Bank or a group of Banks. Transaction Processing Software (TPS) The software that will maintain the data of the clients serviced by a Bank is called Transaction Processing Software (TPS). This could be a Core Banking Solution (high end or low end), TBA software or any system provided by the FIT Provider. The database of TPS would either be housed with the Bank or with the FIT Provider depending on the solution chosen by the Bank. If the TPS is an existing system in 72 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security operation in the Bank or a new system to be put into operation, then it will have to be customized to synchronize with the output provided by the FIT Provider. The Banks should also have the necessary Hardware to host the TPS with necessary disaster recovery and redundancy so as to ensure that the clients are serviced without loss of time. Financial Inclusion Technology Models Field Level Device Application Service Provider Model This is the device that links the Bank with its client. It could be a Smart Card, Conventional Card, mobile phone, Hand held devices, Rural ATM, etc. The device should have all necessary security features to keep the necessary confidentiality of the client and ensure secure transactions for the client. The technological solutions for financial inclusion are highly technology intensive and therefore, the deployment of the technology would be appropriate if the Application Service Provider (ASP) model is adopted. This is mainly on account of complexities of software / hardware and the costs in distributing the software / hardware to end-users. Through this model, the complexities and costs of the software / hardware can be cut down and it will also take care of timely upgradation of the system. Through a Public Private Participation wherein a symbiotic amalgamation can be brought about between the Banks and ASP, technology solutions for financial inclusion can be a reality. The ASP will provide end to end solution to the Banks so that they could focus on business and servicing clients rather than on technology details and its implementation. If multiple Banks have a common ASP there will be tremendous reduction in costs of software / hardware and in reducing implementation time. This will ensure maintenance of up to date services, 24x7 technical support, and security, etc. However, it is possible that ASP could share data with other entities identical to the client. It is possible that the ownership of the data may be with Banks, but the data could be housed at different locations. Field Level Agents The Field level Agent could be a Field functionary of the Bank or a Business Correspondent (BC) who approaches the client or is approached by the client for conducting transactions with the Bank. The Field agent will be able to communicate with the Bank's database through the FIT Provider. This could be on-line or off-line depending on the communication channels that are available in the area of operation. The following entities could operate as BCs of the Bank, subject to the guidelines of DBOD, RBI: The various models of Financial Inclusion Technology considered for implementation are: S.No. Entity S.No. Entity 1 NGO 7 Corporates 2 Accredited Money Provider 8 PACS 3 Post Office 9 FIT 4 Agri Clinics / Agri Business Centres 10 ASP Owned Model 5 NBFC 11 Branch Staff 6 MFI 12 Individual Entrepreneurs In this model, the Bank has a Transaction Processing Software (TPS) through which it services its current clients. The Bank now can increase its outreach so as to provide services to the unbanked remote clients. This could be achieved by the usage of FITs. In order to do so, the FIT Provider would have to integrate the available FITs with the existing TPS for which modifications to the existing TPS would be necessary. In case, the Bank already has a CBS tailor made to suit mobile banking, modifications to the TPS are not necessary. The Field level functionaries of the Bank would access the TPS through field level devices provided by the FIT Provider. The field level devices could either be owned by the Bank or could be leased out by the FIT Provider to the Banks. Incidentally, M/s. Zero-mass Foundation - SBI, M/s. Tecways India, M/s. Samtech Infotech, M/s. FINO are some of the FIT Providers who can provide FIT support to Bank. Advantages/Disadvantages: Optimum utilization of the investment made by Banks in its hardware and software for the existing TPS is ensured while the data is under the full control of Banks. The field level devices could either be owned by the Banks or could be leased to it by the FIT Provider. Application Software Providers could function as FIT Provider for the Bank. They would provide the necessary field level devices and integrate them with the TPS of the 73 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security Bank. However, the TPS of the Bank will have to be integrated with the output of the FIT Provider. This is a crucial element which would determine the success or failure of the model and the Bank should have a well developed TPS in operation. Stand-alone Model (People's e-branch) Many Regional Rural Banks and Cooperative Banks have not achieved the desired level of computerization and hence they would find it difficult to implement either of the two models indicated above. This is also on account of the fact that these two models would force them to invest heavily in software/hardware. Banks with low level of computer usage do not have CBS or TBA in place and use information technology for consolidating manual outputs received from various branches of the Banks. However, even for these Banks, the basic premise of financial inclusion i.e. increasing outreach holds true. In order to enable such Banks to use FIT to increase their outreach, the 'People's ebranch model' has been evolved. The Banks will be provided with a TPS and the necessary hardware to implement the TPS. This would then form the "People's e-branch" and the clients of this branch would be the remote unbanked clients of the Banks in its area of operation. These remote clients could transact business with People's e-branch through FIT Provider. The field level devices of the FIT Provider would either be owned by the People's e-branch i.e., the Banks or would be on lease. The branch staff or agents of the existing branch network would approach the remote clients with devices provided by the FIT Provider so that they could transact business with the People's e-branch. As an alternative, individual entrepreneurs can become BCs of the People's e-branch and provide services to the remote clients. The remote clients of the e-branch could also be serviced through Common Service Centres (CSC) and PoS units which are connected to the People's e-branch. Incidentally, M/s. Zero-mass Foundation-SBI, M/s. Tecways India, M/s. Samtech Infotech, M/s. FINO are some of the FIT Providers who can provide FIT support to develop People's e-branch model. Advantages/Disadvantages: It is a low-cost model and could be implemented immediately in those Banks which do not have CBS / TBA in position. People's e-branch would be an addition to the existing branch network of the Banks. The output (Trial Balance, P & L A/c., etc.) obtained from the People's e-branch could be integrated into the manual consolidation of such outputs received from the remaining branches of the Banks. In future, when the Banks are in a position to implement a fully fledged CBS, the People's ebranch could be merged with it. However, a reconciliation mechanism will have to be devised to take care of the transactions between the People's e-branch, HO of the Bank and the existing brick and mortar branches. A brief overview of the various Financial Inclusion Technology Providers and Last Mile solution Providers is given in paragraphs below: Choice of Technologies Mobile banking (embanking) Since 2002, the availability of mobile phone services has dramatically increased and services are provided in the remotest corner of the country. Therefore, it provides an excellent platform for providing low cost solutions for increasing outreach of the financial service providers. The mobile phone is used as a device to connect the village to the back-office operations of the conventional bank. The remotely located client is approached by a business correspondent with a mobile phone. The client can access their account with the bank through the mobile phone of the business correspondent. The transactions made by the client are sent through an encrypted sms via a router to the solution providers' server. After a process of encryption / decryption, this transaction is forwarded through a virtual private network to the core banking solution of the bank. The response from the bank follows the same path and reaches the client at the remote location. Every client in this system is provided with a unique id and password which helps the client to lock and unlock his account. For additional security, the server remains at the bank's HO. Some advantages are i. The only necessary handle device is a mobile phone with business correspondent ii. Clients through their individual mobile phones can transact business and transfer funds to merchants, insurance providers who are a part of the mobile network without carrying cash. iii. Complexities associated with card based technologies can be avoided. iv. An excellent and robust cellular network is needed at the remotest location. v. However, a central core banking solution should be in operation in the bank so as to effectively interact with the solution provider to handle such transactions. M/s. Tecways India is one of the solution providers for the mBanking technology. Card and Mobile Technology This is a hi-tech technology consisting of a smart card and mobile phone. The smart card contains the account details of the client and it communicates with the bank through the mobile phone. In order to provide security to the transaction, biometric security has been put to use by keeping finger print details of the client in the smart card. The Business Facilitator (BF) when visiting the account holder carries three devices viz., a biometric device for recognising finger prints, a mobile phone with an add-on circuit and a handheld printer. If an account holder wishes to deposit or withdraw an amount from the account, the Business Facilitator will place the mobile phone over the smart card and the account holder will place the index finger over the biometric device. The add-on circuit on the mobile matches the finger prints obtained from the biometric device 74 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security contained in the smart card and on matching it, unlocks the account. The amount to be deposited or withdrawn is done through the mobile and once the transaction is completed, the details of the transaction are printed and given to the account holder. The smart card is updated and the mobile sends an SMS to the Central Server which updates the account at the Central Server also. Some advantages are Clients beyond the range of the cellular service can be accessed and transactions can be carried out off-line. The smart card can be used for other add-on services like e-governance, etc. but central core banking solution should be in operation in the bank so as to effectively interact with the business correspondent to handle such transactions. The Bank will have to provide smart cards to its clients. M/s. Zero-mass-Foundation-SBI is the solution provider for the Card and Mobile technology. Handheld devices - Remote Banking Terminals One of the major hindrances faced by biometric cards is the lack of fingerprints in rural India especially in the Adivasi belt. This has been overcome by technology comprising of normal card (similar to credit card / debit card) and a remote banking terminal. The account holder is provided with a card containing information of the account holder as also the Personal Identification Number (PIN) for security. The BC is provided with a remote banking terminal which is taken to the remote client. The remote banking terminal will then access the Central Server through TCP / IP connectivity (Internet). The client would then swipe the card on the remote terminal and conduct normal banking services. Some of the remote banking terminals are preloaded with the data of the client from the Central Server before it is taken to the remote client. The client swipes the card and conducts normal banking transactions with the details stored in the remote terminal. At the end of the day, the transactions stored in the remote terminal are loaded up to the Central Server. This is an off-line banking solution. M/s. Samtech Infotech is the solution provider for Internet enabled Remote Banking Terminal. Aurangabad DCCB has implemented the off-line Remote Banking Technology. Some advantages are that problems faced in Biometric cards on account of lack of proper finger prints are overcome and the cost of investment in this card is much lesser than smart cards and hence cheaper. However, central core banking solution should be in operation in the bank so as to effectively interact with the business correspondent to handle such transactions while on-line remote terminals will demand, good Internet connectivity at remote locations. District Transaction and Information Exchange The banking sector, insurance sector, mutual funds, etc. currently have their outreach at the National level, State level right up to the taluka level and also sparingly at village levels, while Post Offices, PACS, SHGs have heavy penetration at lower level i.e. village level. The remote clients have access to universal financial inclusion hubs such as Post Offices, PACS, SHGs, etc. These remote clients could be serviced through smart cards, hand held devices, mobile phones, etc. The district transaction and information exchange is an intermediary stage between the financial service providers at the higher tiers and the universal financial inclusion hubs at the lower tier. The district information exchange stationed at the district level provides connectivity to the remote client to various financial service providers across the platform. It would be the repository of information for the remote clients from which institutions of higher tier would source their information. Some of the advantages are that the district centre has transaction exchange interfaces with multiple heterogeneous systems. The current technology investments and innovations are protected, enhanced through usage through linkages of all stakeholders. However, various stakeholders would have to share a common tech platform at the district and a central core banking solution should be in operation in the bank so as to effectively interact with the district exchange to handle such transactions. M/s. SUUTI TechOptions Ltd. is the solution provider for the District Transaction and Information Exchange technology. Last Mile Solution Providers The various technologies discussed earlier have a common theme i.e. the communication channel. It is this communication channel which is the proverbial "slip" between the "cup" and the "lip." However, because of some of the recent initiatives, these slips can be avoided. Broadband access is now available through the RailTel 75 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security network to the nearest railhead and the technology of providing Broadband through Power Lines ensures the availability of broad band to the nearest electric pole. If these technologies are harnessed to the full potential, connectivity to the remotest location will cease to be an issue. Apart from these two options, the "Revolutionary Mobile GSM to villages" technology ensures the availability of GSM connectivity to the far corners of the country. Wi-Max and CSCs are expected to provide last-mile connectivity. 7. NABARD as the nodal agency for FI Technology Fund As our Commercial Banks are financially sound and have already invested in core banking solutions, they could also invest in technologies for financial inclusion on their own. This cannot be said to be true in the case of SCBs, DCCBs and RRBs. Many of these Banks are yet to progress into implementing Core Banking Technology for their daily banking operations on account of various reasons, one of which is paucity of funds. Therefore, it would be most appropriate if the Financial Inclusion Technology Fund is utilised to take care of the needs of the Cooperative sector Banks and RRBs and gap funding commercial bank initiatives. As NABARD is the mentor and supervisor of these Financial Service Providers, it is most appropriate for the onus of utilisation of the FI Technology Fund rests with NABARD. In this connection, it needs to be noted that NABARD is in the vanguard of implementation of the Vaidyanathan Committees I & II recommendations, where computerisation of PACS is one of the cornerstones. The computerisation of PACS would make them an ideal universal financial inclusion hub and hence this needs to be dovetailed along with the financial inclusion initiatives. This once again strengthens the issue as to why NABARD be the nodal agency for FI Technology Fund. Besides, placement of the FI Technology Fund with NABARD also ensures synergy with operations of FI Fund, being placed with NABARD as per Hon'ble Finance Minister's announcement in the Union Budget speech for 2007-08. NABARD's Strategy for FI Technology Implementation Some FIT Providers have already conducted pilots on technology solutions for financial inclusion, it would be appropriate if these pilots are first studied thoroughly. Once we obtain a detailed knowledge of the advantages and disadvantages of the various pilots being implemented, it would be possible to zero in on some of the best options. As these options have been already tested, they can be then immediately replicated in a manner analogous to the pilot. For those technologies for which pilots have not been conducted, but are robust enough to be considered, a test run of these technologies could be conducted. The outcome of these test runs after due evaluation, can then be considered for further roll out across the country. The implementation strategy will therefore, first focus on evaluating the plethora of available technologies that could help in financial inclusion. The best cost-effective technologies would then be selected so as to have a basket of implementable solutions. Depending on the area, implementing bank and the clientele to be covered, suitable technologies and processes would then be picked from this solutions' basket and implemented. In order to monitor the progress of the implementable solutions, various review committees would be set up at the National, State and District levels. The National Level Committee could consist of representatives of GoI, RBI, NABARD, IRDA, Post Office and representatives from Banks. This Committee will be entrusted with policy formulation, reviewing and strategising. The State level committee will be formed for coordination and review. Constant monitoring of the implementing strategy would be done and mid course corrections would be resorted to whenever necessary. "People's e-branch" NABARD's initiative for implementing Financial Inclusion Technology The People's e-branch model is being field tested as a pilot in various places in India, by NABARD in Andhra Pradesh, Sikkim, Tripura, Arunachal Pradesh, Tamil Nadu, Madhya Pradesh, West Bengal and Maharastra. In the places indicated above, NABARD will select a Bank (RRB or CCB) with low levels of information technology usage. The identified Bank would then be provided with a TPS and the necessary hardware to implement and operate the TPS. NABARD would then identify a suitable FIT Provider from the basket of viable solutions and processes as indicated earlier. NABARD would then develop synergy between the FIT Provider and the Bank and help in roll out of financial inclusion solutions to the remote clients of the Bank. 76 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security Fall-out of implementation of Financial Inclusion Technology Solutions The various Government initiatives with regard to egovernance could be dove-tailed with the technologies being used for Financial Inclusion, the smart card that would be issued to the remote client could also be developed as a National identity card containing details of the client's land records, subsidies being received by the remote client through various government programmes, as a PDS card, etc. This could be considered as part of a larger canvas of the Financial Inclusion endeavour. It would be worthwhile to review the appropriate recommendations of the Dr. Rangarajan Committee Report on Financial Inclusion (Annexure 11). Optimization of Infrastructure - Business Meet of Technology Service Providers The Rangarajan Committee has recommended for optimisation of existing infrastructure. The recommendation number 126 states that the existing banking infrastructure and NGOs which have already made extensive inroads in rural areas should be made optimal use of for enabling outreach of banking services. The BF / BC models backed by technology applications should encourage a role for the small players and integrate them with the national system. The Committee is of the opinion that the State Governments should make payments under National Rural Employment Guarantee Scheme and Social Security Payments thru' such technology based solutions. Besides, recommendation number 127 emphasises on building database. The creation of a national database with sectoral, geographic and demographic reports, and also a payment system benefiting the card holders from the under-privileged / unbanked population will not be possible without the extensive use of IT. This alone can bring down the costs of the small ticket transactions of the poor and make nationwide financial inclusion a reality. Besides, recommendation 128 states that the technology suppliers and banks should evolve common minimum standards for ensuring inter-operability between their systems. The eligible activities / purposes under FITF are given below: 1) Providing viability gap / pilot project funds for unproven but potential technological interventions; 2) Conduct of studies, consultancies, research, evaluation studies relating to technological interventions for financial inclusion; 3) Promoting seminars, conferences and other mechanisms for discussions, dissemination relating to financial inclusion technological interventions; 4) Publication of financial inclusion technology literature, publicity material, etc.; and 5) Capacity building of personnel of Banks, Post Offices, State Government Departments, MFIs, NGOs, VAs and other stakeholders; NABARD Initiatives In order to address the above activities and to create a common technology infrastructure with comprehensive credit information system, work has been already been initiated by convening a Business meet of the Technology Service providers to explore avenues for financial inclusion of the vast unserved population through technological interventions. Some of the possible solutions which emerged out of the deliberations during the meet are: There is a need for a national level platform in order to address the issue of seamless exchange of information relating to rural financial transactions. The information hub should be available to all the agencies involved in financial inclusion. As Core banking Solution has evolved for Commercial Banks, a similar concept may be developed for agencies / institutions / departments like MFIs, Post Offices, Insurance companies, NGOs, State Government Departments and the like may be developed so that all these bodies are on intolerable platform. A hierarchical integration at the State, Region and National levels may be well suited for this scale of networking where regional differences do exist. Above all the end user should be empowered to use all related services. Approach to Financial Inclusion through ICT various options An eligible activity is to provide financial support to technological solutions aimed at providing affordable financial services to the disadvantages sections of the society, for which, various initiatives have since been taken to explore the possibilities of launching pilot projects under FITF. The proposals received for pilot projects from different Technology Service providers / banks can be categorised into the following broad categories; 1) DCCB for implementing Smart Card Technology - 'ebranching' in Maharashtra. 2) PACS as "e-Branch" for inclusive growth in Andhra Pradesh. 3) Up scaling the Project on Smart Cards from Andhra Pradesh Gramin Vikas Bank. 4) Mobile Banking Solution for Cooperative Banks in Tamil Nadu. 5) Broadband enabled Rural and Financial Inclusion in Hill districts / tribal districts of the country. 6) Financial inclusion in Sunderbans and Darjeeling Hills in West Bengal through Biometric Cards. 7) Proposals to connect SHGs, NGOs and Banks in Tamil Nadu. 8) Proposals from North Eastern Region. 77 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security 9) Funds Transfer and Financial Inclusion A brief write up on these projects is given in Annexure II. Besides, the highlight of field visits undertaken by the members of subcommittee of FITF as well as NABARD officials is given in Annexure III. Besides, NABARD had organised a seminar on Experience sharing of Commercial banks on ICT solutions for Financial Inclusion and the highlights are given in Annexure IV and V. including the right to sell their works. Financial inclusion can facilitate inclusion of various strata of society from other perspectives. In this context, it was discussed that there is a strong need to implement the financial inclusion initiative in an accelerated fashion in the north - eastern parts of the country. Following is a brief of discussions on each of the sessions conducted during the workshop: Inter operability-Issues Interoperability of Smart card solutions for financial inclusion In the recent IDRBT-IBA seminar on open standards for Financial Inclusion and inter operability held in February 2009, certian issues were highlighted; Financial services' industry is innovating and ideating at ' a fast pace and is leading to many innovations in the form of Information and Communications Technology (ICT) interventions in Financial Inclusion space. Many pilots have been undertaken by public sector banks in the areas of smart card issuance and mobile payment solutions, etc. Technology in this area is in the process of evolution and thus, there is risk of faster obsolescence of technology innovations. Also, we see different institutions launching different products and solutions to cater to this market. The unbanked segment is a huge market and various players like government, insurance companies, fund houses, are looking at efficient ways of tapping into this segment for NREGP, Insurance and fund subscription products. This effectively means that if not planned, the end customer could end up receiving six to eight smart cards from each of these players. Therefore, there is a need to ponder over the issues of handling of these smart cards, infrastructure duplication and quality of service delivery. In view of the diversity and disparity in solutions currently available and the fact that transaction costs are high are in the current context, it becomes imperative to develop open standards through a collaborative and consensus driven approach amongst the various stakeholders. As the industry dwells upon developing these standards, it must keep in mind the following: Collaborative process - follow a transparent consensus driven process that is reasonably open to all interested parties Service provider neutral - ensure that the process is not dominated by any particular interest group Intellectual property rights - respect the rights of intellectual property owners while ensuring adequate service, flexibility and freedom to the users. Quality and level of detail - sufficient to permit the development of a variety of competing implementations of interoperable products or services Publicly available - easily available for implementation and use Should discourage free riders - in unequivocal terms, it should not encourage groups which want all information to be free, and thus deprive copyright holders of their rights, Key points of discussion: There are constraints of different institutions launching different products, culminating in different solutions. It was understood that interoperability does not even exist within the banks and thus, the same across geographies and operators is a long way. An imperative need to develop open standards through a collaborative and consensus driven approach amongst the various stakeholders, was agreed upon. It was discussed and reiterated that common data standards would not amount to death of innovation in technology. In fact, this will reduce the overall costs of operations for banks and solution providers. The challenges faced by the Indian mobile operator industry were similar on costs and operations and through coordinated efforts within the industry outside [there are examples to learn from like Cellular Operators association of India and NIC who have handled similar challenges in the Indian context], the cost of delivery in case of mobile telephony in India, is one of the lowest in the world. Following key points were discussed: Existing infrastructure and investments made by the banks should be leveraged upon. Though the investments may not be huge in the overall context; writing off the existing work for new open standards, could form a hindrance for institutions that have made headway in this space and made considerable investments. Need for interdependence in the way standards are defined, for e.g. how to standardize the smart card will determine how to standardize the POS machine The smart cards or modes of product delivery should be open enough to embrace new products and applications that are launched to target the segment later. There was debate on the very need for interoperability for the target segment in the financial inclusion space. Does the end customer really demand it across geographies across products? In view of the same, need and scope of interoperability needs to be discussed in detail. The industry may have to follow a modular approach. Interoperability for mobile payments would be a strong boost. Need for a certifying agency that could test the various components of a financial inclusion solution. These standards for various components could then be tested and certified for interoperability and openness. One of the points of discussion was if an institution of the stature of IDRBT could play this role of the certifying agency. The delivery model should aim at delivering not just any frills savings accounts but credit delivery to the customer, 78 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security remittances, insurance, pension disbursements, and other government scheme disbursements. Multipurpose National Identity card for financial inclusion Key points of discussion: NIC has earlier taken lead in similar initiatives while drafting standards on Smart card driving licenses. The banking industry could take a leaf from NIC experience and work towards its objectives rather than reinventing the wheel again. NIC's initiative on unique identification for each citizen could boost the efforts towards inclusive growth. The universal national ID could be used by banks as a customer identifier and satisfy KYC requirements. The same could also be used as a single reference number for credit reference agencies or bureaus. Once the database is in place, that is a national registry, as a result of this initiative, the same could be shared with the banks. International Standards for Financial Inclusion Some of the international initiatives like WIZZIT Bank, MPesa and Bankserv were referred to. Leading technologies in Japan on biometric identification were discussed and debated. There were discussions on vein authentication technology in Japan; which is extremely difficult to forge and is unaffected by the surface of the skin. Interoperability for Mobile payment solutions Need for the solution to be telecom operator agnostic and bank agnostic. Having a payment services platform Non repudiation for payments over mobile Learning from the ATM revolution over the last 15 years. Banks had built silos on their own which constrained interoperability. Business Models for Financial Inclusion Need for effectiveness of infrastructure, state support, skill availability and maturity of distribution channels, is important to make any business model succeed. Cost of delivery today is more than cost of capital. Scalability should not be at the cost of sustainability; the business model has to make commercial sense. Regulatory perspective: Need for appointing MFIs and NBFCs as Business Correspondents and a thought to encourage branchless banking through regulations. Credit, savings and insurance to reach the end customer and increase the overall relationship value. Securitization of the portfolio of MFIs can help banks meet their priority sector lending obligations and meet the overall financial inclusion goal. Shared Infrastructure and Delivery channel integration An entity that could be trusted to build this shared infrastructure - IDRBT or IBA could take up this initiative. Even though service levels are agreed to, there is an element of mistrust in entrusting this activity to third party vendors. ASP Models like FINO already exist in the market; there could be learning from the same. New technologies like virtualization and cloud computing could be used to drive down costs. The core banking solutions already have a common platform, common protocols; and thus collaboration amongst the leading core banking solution providers will not be a hindrance to achieving the objectives of financial inclusion.· Shared infrastructure not from an IT perspective but from a facilities perspective like Indian post office, railways infrastructure, needs to be explored as well. 79 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security Perspectives 1.It may be mentioned that as part of the capacity building process, NABARD had organised the State Level Seminar in Arunachal Pradesh on 30th January 2009, in which, technology providers were requested to make presentations on financial inclusion initiatives/ initiative required in North Eastern region particularly Arunachal Pradesh. One of the BCs has indicated that it is not possible to handle a single bank on standalone basis in NER and necessarily a common source platform has to be created with support from State Govt., Banks & NABARD. Therefore, there is a need to take a view to have a common resource platform in NER. 2. Future roadmap to financial inclusion could be on the following lines: Need and scope for interoperability needs to be clearly defined. No reinventions on the common data standards. There are benchmarks available in India and abroad. There should be customizations only for specific new requirements. A strong business case needs to be put forth before these common data standards are defined. Need for an ongoing working group for testing and benchmarking new developments There has to be a modular and step by step approach; so that interdependencies are taken care of. There is consensus on mobile banking enabling financial inclusion to a great extent. 3. Need for certifying agency There is need for the set up of a certifying agency which tests and certifies components for these open standards. This will enable quicker implementation of financial inclusion using new technologies. 4. Infrastructure and forums Banking industry must take a leaf from the e-governance initiatives undertaken by the state governments and leverage them to the best possible extent. Other initiatives that could be leveraged are the ones of NIC and COAI. Also, mobile banking given the reach of telecom infrastructure, could give the necessary head start to the financial inclusion initiative. 5. Use of existing Infrastructure There is need to leverage existing infrastructure of banks and facilities like post offices, etc created for reducing the cost of delivery to the end customer References 1. Strategy paper of NABARD for Financial Inclusion Technology Fund, August 2007 2. Concept paper of NABARD on ICT solution for Financial Intervention, February, 2008 3. Field visit Report of Sub Committee of FITF Advisory Board, February 2009 4. Presentation of Commercial Banks on experience sharing on ICT solutions, Feb 2009 5. Proceedings of the IBA-IDRBT workshop on standards of Financial Inclusion, Feb 2009 6. Recommendations of Committee on Financial Inclusion, 2008 80 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security ANNEXURE - I Recommendations of the Dr. Rangarajan Committee on Technology Applications - Technology - The Driving Force for Low-cost Inclusion Initiatives Technological developments in the recent past have provided the perfect launch pad for extending banking outposts to remote locations without having to open bank branches. This could be achieved by leveraging technology to open up channels beyond branch network and create the required banking footprints to reach the unbanked so as to extend banking services similar to those dispensed from branches. benefits and also enable effortless transfer of funds between the card holders of various banks. The Committee, while concurring with the RBI's advisory group for IT-enabled financial inclusion, is of the view that nearly all pilot models converge on certain essential components and processes to be followed in technology application. The essence of a majority of the models under consideration features the issue of a smart card to the farmer on which all his transactions are recorded, a hand-held terminal with the BC at the village level and a Central Processor Unit (CPU) linking the smart cards and BC terminals with the banks. There are also other models where smart cards are dispensed with and mobile telephones, etc., are used. Optimisation of Existing Infrastructure The Committee is of the opinion that the existing banking infrastructure and NGOs which have already made extensive inroads in rural areas should be made optimal use of for enabling outreach of banking services. The BF/BC models backed by technology applications should encourage a role for the small players and integrate them with the national system. The Committee is of the opinion that the State Governments should make payments under National Rural Employment Guarantee Scheme and Social Security Payments thru' such technology based solutions. The fundamental outlines of the existing technology-based models may be examined for application in such manner and to such extent as may be deemed fit. The operating costs of the various models are expected to be minimal and can be easily absorbed by banks as the increase in business volumes will justify the incremental operating costs. Also, the costs are substantially lowered if the infrastructure is shared. It is, therefore, recommended that shared infrastructure among different banks enabling nationwide financial inclusion would confer large scale Essentially, the starts up costs are the initial investment costs comprising cost of the smart card, terminals with the BC and the CPU. The Committee is of the view that the Financial Inclusion Technology Fund can provide the necessary support for defraying part of the costs. Building database The creation of a national database, sectoral, geographic and demographic reports, and also a payment system benefiting the card holders from the under-privileged / unbanked population will not be possible without the extensive use of IT. This alone can bring down the costs of the small ticket transactions of the poor and make nationwide financial inclusion a reality. The technology suppliers and banks should evolve common minimum standards for ensuring inter-operability between their systems. 81 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security ANNEXURE - II 1. Project Brief Pilot Project - Implementation of e-Branch banking The Committee on Financial Inclusion has recommended (Recommendation No. 68) Cooperatives as eligible institutions under the BF / BC model. RBI has already listed Cooperatives as eligible institutions under the BF / BC model. Further as per recommendation no. 122, "The essence of a majority of the models under consideration features the issue of a smart card to the farmer on which all his transactions are recorded, a hand-held terminal with the BC at the village level and a Central Processor Unit (CPU) linking the smart cards and BC terminals with the banks." The Committee has also recommended that, "The existing dispensation of subsidy under SGSY and payouts under NREGP could be routed thru' bank accounts, with suitable technology support" as per recommendation no. 88. A DCCB has submitted a proposal to implement e-Branch model at two of DCCB Branches, which accommodates all the above three recommendations. The DCCB had tied up with the agency to implement the project in all its branches. The model was tested with the staff members of the bank as a pilot project during the period of May 2007 to Oct. 2007 and as on date all the salary accounts and related activities are being successfully carried out on the technology platform. In parallel, the bank carried out a retail sales effort and has issued more than 20000 cards. Efforts are now on to activate the accounts of over 10000 teachers by tying up with their schools / organisations for salary administration. With the help of a magnetic strip card, a PoS (Point of Sale) terminal and a robust backend system, the model provides the facility of deposit, withdrawal and money transfer from any of the branches (ANYWHERE) to the customers. The key objective of the project is new delivery channels, i.e. Mobile Vans, ATMs, BCs, PACS, etc., as a means of providing financial inclusion services in areas, which are remote from the branch network of the bank, to provide Kissan Credit Card service and bill payment services using the technology and to tie-up with and linking into the networks of banks like HDFC bank so as to offer ATM access and PoS access to Customers. They have selected two branches for further implementation of this pilot to achieve the following: a. Target Milk Societies, Primary and Secondary Schools, Sugar Factories, Petrol pumps, etc. for quicker adoption b. Motivate PACS to participate in this exercise. c.Cover 6 villages, which are at least 5 Kms. away from the branch through a mobile van. c. Install 1 ATM at the branch and 1 at, the district HQ, to provide access to cash 24x7. d. To sign up merchant outlets, this would accept the card. The duration estimated for the implementation of this project is estimated to be 12 months. A field visit was taken up on 05 Feb. 2008 by NABARD. The service provider is having a data centre at Dhirubai Ambani Knowledge Centre in New Mumbai, which is having a mirror server at Head Office of DCCB. The bank has provided PoS at few branches and these branches cater to the concept of Anywhere Money. Basically, this is a concept of e-branching in which, currently, employees as well as salaried class are serviced. The bank charges Rs. 200/- per card in which 50 free transactions are allowed. In other words, per transaction, it costs Rs. 4/-. NABARD has ascertained a detailed break-up of costing which includes 1 Telephone Charges Re. 1.00 2 Service Charges for the vendor Rs. 1.50 3 Service Charges for Bank Rs. 1.50 If the volume of transactions increases to a considerable level, with a tie-up of telephone service provider on further negotiation, costs will come down further. 2. Project Brief: PACS as "e-Branch" for inclusive growth The Committee on Financial Inclusion has recommended (Recommendation No. 68) that PACS and other Primary Cooperatives can be used as Business Correspondents (BCs). As per recommendation no. 174, "The Committee is supportive of efforts to establish a chain of authorized warehouses throughout rural India, to provide such services, particularly when such warehouses are linked to PACS." The proposal for PACS has the scope for implementing the above recommendations. The proposal is to invest in establishing PACS as e- branch has presented the scope of work as below: a. Invest and establish 2000 Financial Inclusion (FI) hubs in PACS identified by the State in 18-24 months and get 1 Crore rural population under Financial Inclusion. b. Make every FI hub an e-Branch to enable Credit for Commercial banks, insurance, etc. through our Technology Platform. c. Provide mechanisms for Mobile Banking to integrate into e-branch located at the PACS. Create a District level and state level repository of rural borrowers. The project is to be done in 3 phases. Phase 1 will cover 500 PACS in 4 districts. Phase 2 covers 750 PACS of 8 more districts. Phase 3 covers the remaining PACS in 12 more. The total implementation period for this project is over 15-18 months. A field study was undertaken to evaluate the effectiveness of the project and to study the quality of data 82 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security warehousing, data transfer from PACS, its security and disaster management in place, and the role of CCB in the same and to have first hand assessment of the smart card project for making payments under the NREGS. Observations recorded based on the field study: 1 143 PACS have already been computerised and are being maintained by the agency @ Rs. 3.45 lakhs for five years per PACS - one PC in four districts. Most of them are already under AMC with the agency and the AMC cost is equally shared by DCCB and PACS. 2 The software has been in use for the last 5 years and the staffs trained to use the software is comfortable with the usage of the software. 3 Common Accounting System (CAS) has been rolled out in all of these PACS w.e.f. 01 April 2008. All reports required by DCCB, the apex bank and PACS are available in the software. Any demands for new reports are met immediately by the vendor. Statutory auditors insist upon maintenance of loan ledgers manually. 4 The concept of ASP (end to end solution provider) has been a successful model in these PACS and has ensured a single window solution provider for all problems faced by PACS with regard to software and hardware. Backup of the database is being taken every 15 days. 5 A PoS device was linked to a version of the present software for use in a Fertiliser / Pesticide godown in one of the PACS. It was observed that PoS were not able to handle the different combination of purchase made by the customer. 3. Project Brief Up scaling of projects on Smart Cards As per recommendation no. 122, "The essence of a majority of the models under consideration features the issue of a smart card to the farmer on which all his transactions are recorded, a hand-held terminal with the BC at the village level and a Central Processor Unit (CPU) linking the smart cards and BC terminals with the banks." The committee has also recommended that, "The existing dispensation of subsidy under SGSY and payouts under NREGP could be routed thru' bank accounts, with suitable technology support" as per recommendation no. 88. Further, "The Committee endorses the creative use of the NREGP payments thru' bank accounts to enhance financial inclusion, as practiced in Andhra Pradesh. In Andhra Pradesh, the beneficiaries / depositors will be issued smart cards to enable transactions at several locations besides the bank branch" as per Recommendation No. 162. In their recommendation no. 125, "The Committee is of the view that the Financial Inclusion Technology Fund can provide the necessary support for defraying part of the costs." The project submitted by the RRB supports all the above recommendations. This project sought support under FITF for implementing a Technology Project of Smart Cards. This project is initiated by the State Government of Andhra Pradesh for making payments to the beneficiaries of NREGP and pensioners through banks using Smart Card Technology. The smart card provides a Biometric proof of identity so that bogus claims can be eliminated and payments can be made by leveraging technology. In addition to making these payments, the govt. also envisage that the cards can be used for providing other financial services also to the rural population with active involvement of banking institutions. The project for payment to NREGP beneficiaries was launched in five villages of Warangal on 30 April 2007 and for Social Security Pensions on 01 July 2007 in five villages of Karimnagar. The Govt. has proposed to take up the project in six districts initially and cover the entire State by 2010. Under pilot project, the cost of a Smart Card issued is Rs. 115 per beneficiary and Rs. 20000/- per terminal and 29 terminals were provided at village level. The govt. is reimbursing Rs. 90/- per card and Rs. 10000/- per terminal and the balance is incurred by Bank. Now, the State Govt. has upscaled the project in three districts for which the cost estimated is Rs. 8.12 crores and there will not be any reimbursement of expenditure by State Govt. The entire cost is to be borne by Bank. In addition to the present services, the bank is planning to open "No Frill Accounts" for all household system in all 6309 villages of eight districts under FI. The total cost estimation made by the bank for implementing this project in 8 districts in area of operations, would be around Rs. 65 crores. 4. Project Brief Proposal on Mobile Banking Solution for Cooperative Banks in Tamilnadu to achieve Financial Inclusion Recommendation No. 37 shows that "Banks may facilitate easy rollout of this mobile banking model through simplification and rationalization of back-end processes and front-end procedures so that banking operations are made more customer-friendly." Moreover, Reserve Bank of India has already issued a circular on Mobile Banking. This proposal leverages the existing mobile telecom infrastructure in Tamilnadu. With this telecom infrastructure, the vendor proposes that full connectivity between Head Office and the branches would be in place on day one without having to wait for the roll out of the wireless mesh network and at no additional capital cost for the 83 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security communication. Using the existing mobile infrastructure, it is proposed to immediately connect all rural branches with mobile handsets to a back-end financial processing system. All banking transactions will be captured with the mobile handset and via SMS sent to the back-end system. The backend financial transaction processing system, will check and confirm the transaction if found correct, together with a unique transaction code. This transaction code will be automatically generated by the back-end system to enable customers as well as bank staff to uniquely identify each transaction. Otherwise an error message will be returned to the branch. All confirmation of transactions can be printed as a receipt for bank customers to ensure documentary proof of the transaction. 5. Project Brief Proposal for Pilot Project for Financial Inclusion under FITF in tribal and Hill district having connectivity problem The Committee vide its recommendation No. 122 recommends the use of other technologies, which uses hand-held devices and connectivity with host computers through General Packet Radio Service (GPRS) / Global System for Mobile Communications (GSM) / Code Division Multiple Access (CDMA) / landline networks. The devices also come in several forms like Simputers (Simple In-expensive Multilingual Computers) / Personal Digital Assistants (PDA), programmed mobiles, etc. This proposal envisages coverage of Common Service Centres (CSC), ASP based financial inclusion, e-Agriculture, e-education, Rural Broadband Connectivity are the key areas where the above consortium has taken up projects over a period of time. The proposed pilot project is to cover 2 districts, connecting about 14 clusters (Points of Presence) per district, providing residual connectivity to the various end points of rural interest (Banks, FIs, MFI's CSC, GP, Post Office, SHG, etc.) within the distance ranging from 5-20 km radius. They will host the Financial Inclusion and other rural applications as a hosted service out of their Data Centre and these applications can be accessed by Banks, DCCB, PACS, CSC, Post Office, MFI's SHG's, etc. via Mobile phones as well as PC / Laptops / PDAs, etc. The duration taken from the inception to accomplishment of this project is envisaged as 24 months. The complete rollout will get completed by the 9th Month and operations and Maintenance will begin and continue till the 24th month as per the implementation plan. It is proposed to build a district wide Wireless Backbone (WiFi) and Point to MultiPoint (PMP) connectivity POP's for both the districts above. Basically, use of wi-fi / wireless technology in communication integration will be the innovation in this project. The investment to build wireless backbone and multiple connectivity hubs is estimated to cost Rs. 6 crores per district, which does not include costs for the following in this proposal: Cost of PC / Laptop / PoS / PDA / Mobile Phones or any other computing end point that would be required at the rural / village point. To be procured by the end users. Power / UPS at the customer premise. Any Video / Audio Conferencing equipment VAT / Service Tax or any other statutory government levies. 6. Project Brief Proposal for Pilot Project for Financial Inclusion through Biometric cards As per the Recommendation No. 75, "the spread of SHGs in the hill regions, particularly in the North-Eastern Region, is poor. One of the reasons for this is the low population density in hilly areas and weak banking network". Further, Recommendation No. 122 supports the use of other technologies available to enhance financial inclusion to the hilly and sub terrain areas. A proposal to launch a pilot project to bring 5000 members in an interior area and 2500 members in Hill areas into formal banking fold by using "Biometric cards" technology as a secured device for financial transaction. These Biometric cards are operated through handheld devices called POD. This project will be implemented through RRBs. The total cost estimated for the implementation of this pilot project would be Rs.15.10 lakhs, which also includes the Taxes, Lodging and boarding expenses of FINO team during the implementation period of 6 months. The cost of 5 PC units (a PC unit will compromise of 1 PC with latest configuration, 1 entry level laser printer, 1 UPS with 500 VA capacity) each for 5 branches of both the Banks may be provided under the pilot project for internalising the process. 84 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security 7. Project Brief Proposal on integrated ICT intervention As per recommendation no. 32, RBI has permitted banks to use the services of NGOs / SHGs, MFIs and other civil society organisations as intermediaries in providing financial and banking services through the use of BF and BC Models. Further, recommendation no. 92 states that Resource centres can be set up by various stakeholders such as NGOs, banks, Government departments, NABARD at the State / district level to play an important role in preparing training modules, developing a cadre of trainers, conduct of field studies and in promoting interface between SHG members and service providers. In continuation with this, the committee in its recommendation no. 126 is of the opinion that the existing banking infrastructure and NGOs, which have already made extensive inroads in rural areas, should be made optimal use of for enabling outreach of banking services. The BF / BC models backed by technology applications should encourage a role for the small players and integrate them with the national system. Recommendations no. 134, 154, 165 emphasizes that NGOs will be used for implementing micro insurance, livestock insurance, asset insurance and for productivity enhancement. Technology being used in this project is a web based solution, which adopts the latest technologies such as images scan, smart card, biometrics and deployable in both desktop and handhelds. When a group of rural people wish to form a SHG, they visit a NGO; the technology application enrols their personal details, scans their photos and captures their finger prints in a Biometric template. This data is secured and stored in a central database and a smart card is issued to each of the SHG member. A unique registration number is generated for each SHG member. The Biometric technology prevents fraudulent registrations during the registration process itself as it verifies for any existing registration of the same individual. The Biometric template is retrieved when an individual needs to be identified. Depending on the context, a Biometric system can operate either in verification (authentication) or an identification mode. Then the SHG shall approach a Bank as directed by the NGO for opening a Savings Account. When the SHG approaches the Bank for availing a loan, SMART CONNECT helps the bank officials to verify the details of SHG by reading their Smart Card details and sends an online requisition to authorize the SHG to the concerned NGO. Based on the online approval from the NGO, the bank sanctions the requested loan amount to the SHG. The budget proposed for this project is Rs.15 lakhs which includes all software, hardware, the customisation efforts, implementation efforts and management efforts by the vendor. All costs associated with INFOTECH customising the application and the cost of deploying of the application to make the application live is also included in the budget. This budget includes the smart card charges, finger print Biometric devices, image scanners, handheld devices with printers for 3 NGOs excluding the travel, boarding / lodging expenses which would be incurred by the implementation staff online. The duration of the project as proposed is 10 12 weeks depending upon the start of the project, efforts and system requirements study. 8. Project Brief Proposals from North Eastern Region Recommendation No. 6 of CFI emphasizes on Financial Inclusion in NER. It states that per branch annual coverage under the Plan would be quite high in some of the NorthEastern, Eastern and Central States, needed support including financial assistance may be provided to banks operating in the above regions. In continuation with this, for the North-Eastern Region, the Committee on Financial Sector Plan has already identified such centres and branch expansion plan as indicated therein may be implemented as per recommendation no. 12. Further, vide recommendation no. 31; the Committee suggests that NABARD may defray the cost of technical staff, particularly, in the North-Eastern Region. The Committee vide its Recommendation no. 60 suggests that, "With a view to facilitating the seamless integration of RRBs with the main payments system, there is a need to provide computerisation support to them. Banks will be eligible for support from the Financial Inclusion Funds on a matching contribution of 50% in regard to districts other than tribal districts and 75% in case of branches located in tribal districts under the Tribal Sub Plan. In view of the above, the proposals received from the North Eastern States may be considered. Three proposals have been received from three North Eastern States, requesting financial support from NABARD under Financial Inclusion Technology Fund (FITF). The details of the above proposals are given as below: 85 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security 9. Project Brief Funds Transfer and Financial Inclusion Project Rangarajan Committee has recommended that remittance needs of poor is one of the important areas that needs to be emphasised for financial inclusion recommendations 129, 130 and 131 advocates a system of low cost anywhere banking solution, which has a facility of card to card transfer. Savings / current account holders at all its branches have a choice to keep their savings bank account or a part thereof in a separate account at the bank's head office. Customers can have access to this account from all the bank branches. It was learnt that the customer is charged only Rs. 4/- per transaction. Such experiments may be studied for replication. A low value card linked to a bank account, which can be encashed at PoS and which allow, transfer of small amounts from one card to another would alleviate remittance problems. This would substantially increase banking outreach as at present there are about 3 lakh PoS as compared to around 70,000 scheduled commercial bank branches and 22,000 ATMs. However, a majority of PoS machines are now located in urban and semi-urban areas. It is expected that as the system takes root, more PoS will come in rural areas, facilitating such transfers. The e-kiosks in villages could be yet another source for operating a remittance system that is accessible to the poor. The Project The agency has proposed to use PCOs as financial service delivery points in the rural areas. The project envisages a bouquet of services to be offered at each outlet. A risk analysis is carried out to identify, manage and control risk that may arise throughout the project life cycle. The pilot project is planned to be implemented in 4 states two phases. Technology to implement services such as E-pin recharge and distribution, Micro finance and insurance, Banking access, Money order and Post-office Services, Agri Business Development, Marine Farming, Disaster Management, Parcel Services, NREGS payments, Women Emancipation, Telemedicine and Health Insurance, Education, Community Networking, Bill payments, Rail / Bus / Air bookings, E-gov services, employment services, survey services have been created and are ready for deployment. All the services have been deployed on the mobile and cut out the need to retain a PoS terminal and hence reduce the entry barrier for a prospective or existing PCO holder. Capacity building, new product training, monitoring the revenues of the channels, ensuring that the logistics and supplies are available, liaison with the service provider, product suppliers and authorities within the defined territories and daily MIS generation will be taken care by the service provider. Revenue earnings from commissions on transactions that can be outsourced at these existing outlets are estimated @ 0.5% on assets and liabilities; 2 % on govt. Payouts such as NREGS; 1% as part of BCs, 3% on insurance premium, 3% on e-recharges of mobile phones; 3-5% on remittances; 2-4% on microfinance collections, etc. 86 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security ANNEXURE - III Extract of Field Visit of Members of Sub - Committee / Advisory Board of FIF and FITF to ICT Intervention initiatives of Banks Visit to Indrakannu village, Smart Card project of Andhra Pradesh Grameen Vikas Bank (APGVB) 1.1. Technology Radio Frequency Identification and Near Field Communication technologies are used in the Smart Card Operation. 1.2. ZSN Cards This is based on the new technology operated through mobile phone. A Zero Serial Number (ZSN) Card is a plain card that carries a unique nine digit serial number on the Zero Platform. The key features of the card are: " It bears a unique identifier of the customer, allotted at the time of enrolment. " This number remains a key identifier for the purpose of doing transactions and points to the authentication profile of the customer that is securely stored in the mobile of the CSP. " This number is additionally bar-coded on the card for ease and accuracy. " It results in shorter time for making a transaction operational on opening of the account at the backend. " In case of government beneficiaries, this card is given to customers at the time of enrolment with a provision for the name and address of the customer. " Comes at a minimal cost thus reducing the replacement cost in case of loss. " Front top part of the card: i) logo of APGVB and ii) logo of ZERO - Technology Provider. " A nine digits number is prominently displayed across the lower part of the card, the corresponding barcode appears below the number, and the central part has a provision to capture the name of the beneficiary. 1.3. Process " Government issues instructions to the Banks / FI authorising payment. " List of beneficiaries and authorised amount are given and individual accounts of beneficiaries are credited. " Business Correspondent withdraws the cash from the Branch and delivers it to Customer Service Provider. " BC / CSP sits at pre-designated government premises usually Gram Panchayat building etc. " To perform transaction, the customer is required to undergo a finger print verification. " CSP flashes the customer card against the NFC mobile. The mobile reads the content of the card and verifies if the finger prints verification status is successful. " Only if the verification is successful does the NFC mobile enables the debit transaction options. " Thus, a fool proof identity authentication is established. " Based on the balance in the account of the beneficiary, as displayed on the screen, cash is paid. " Receipt is generated in duplicate. " The data in Central Server is automatically updated with the transaction. " Alternatively uploading of data can be done at the end of the day. " Unspent amount is returned. 1.4. Reporting A list is generated at the end of the day which includes the following details: " List of members " List of new members " List of Transactions " Reconciliation List 1.5. Preparatory Work Enrolment a. The department provides the list of identified beneficiaries under Social Security Pensions and NREGS. b. The Bank conducts enrolment on campus at village level. c. GPs, VOs assist the enrolment teams for identification and enrolment of beneficiaries. d. Finger prints, photo and demographic details of the beneficiary are captured. e. The banks open S.B. Account (Zero Balance) in respect of all beneficiaries of the schemes as identified by the department. f. Every beneficiary will be issued a Smart card to establish proof of identity. Appointment of Business Correspondent / Customer Service Provider a. Bank appoints a Business Correspondent (BC) to deliver service at Gram Panchayat level through CSP. BC is the extended arm of Bank - logically he is like a Branch appointed by the Bank. b. BC appoints CSP at the village level. The CSP can be an SHG with a literate member leading the group or a Village Organisation (VO). CSP is the delivery point like an Extension Counter of a Branch. c. Required hardware like finger print reader, printer, mobile phone etc., are positioned in the village. d. The BC / CSP are also given a card with his / her biometric information encrypted in it. The terminals are activated only if it is authenticated with the card of the BC / CSP. e. Adequate training is provided to BC and CSP. 1.6. Role of various stake holders 1.6.1. Role of Government a. Formation of State and District Implementation 87 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security Committee for overall coordination & supervision. b. Orientation to govt. officials and public representatives. c. Issue list of beneficiaries under NREGS & SSP to the banks. d. Facilitate awareness campaign in all villages e. Facilitate VOs in identification of customer service providers 1.6.2. Role of Banks a. Enter into MoU with Government b. Identifying and finalising Technology Provider for grounding the project c. Appoint Business Correspondent as per RBI guidelines and provide training. d. Facilitate BC to appoint, train and enter into contract with CSPs. e. Conduct enrolment camps at village level f. Open SB account and issue Smart Card to beneficiaries. g. Credit pensions / wages to the account of the beneficiaries and disburse cash at village level. h. Maintaining centralised database and provide MIS 1.6.3. Role of Technology Provider a. Train the Business Correspondents and CSPs on technology. b. Provide a hand held NFC mobile phone based device fitted with a printer. c. Biometric identification device and related software. d. Equipment for connectivity. 1.6.4. Role of Business Correspondent a. Identify the CSP, appoint and enter into MoU with CSP. b. Training and continuous hand-holding of the CSPs c. Responsible for money evacuation. d. Payment to the CSPs on behalf of the banks. e. Coordinate between the bank, technology provider and CSP. f. Ensure smooth operation. 1.6.5. Role of Customer Service Provider a. Operation of the terminal. b. Disbursement c. The beneficiaries can collect the amount as and when they require as the CSP is expected to be available in the village on all working days and make disbursements throughout the month during the specified dates. d. Provide status of disbursement to the Business Correspondent. e. Upload information on a daily basis. 2. Visit to Shankarpally village, FI project of Corporation Bank The Bank provided hand held devices to the Business Correspondents. Individual customers are provided with Smart Cards / Radio Frequency Identification Cards (RFID). The device has optional backup for power source and communication links in case of power shortage / link failures. The Business Correspondent card stores the photograph and the characteristics or transaction parameters of the Business Correspondent and the Customer Card contains the photograph and the basic details of the customer on the face of the card and the chip inside contains the account details of the customer with the fingerprints of the customer. In both the devices, there is a provision for day-begin day-end details of account which could be synchronised and used for downloading the modified / changed balances on the card. The transactions done by the customers are captured by the device in an off-line mode and then uploaded to the central server during day end settlement for updating the various customer accounts. 2.1. Account Maintenance 2.1.1. Corporation Bank has opened all the accounts in its Core Banking server and these accounts do not reside with the Technology Service Providers. The Technology service providers only maintain the transaction history so as to serve as routing point for transactions. Presently, the transactions are received through secure mails for directly updating the data on to the Core Banking Server. On completion of the product development process, which is underway, the server would be interfaced to the Core Banking Server for direct updation. 2.1.2. Under the system, the detail of the client, the presanction credit appraisal and the loan sanctioning discretion lies with the Bank. The Business Correspondent only assists in filling up the application forms, obtaining photographs and in recovery of interest or over dues. Transaction Limit & Risk Mitigation" Per Transaction Limit (Amount that can be remitted or withdrawn by a cardholder) " Per Day (Amount that can be remitted or withdrawn by a cardholder in a day) " Total Day Limit (The maximum amount the Business Correspondent can hold before doing a settlement) " Interval between Settlements (The maximum number of days the Business Correspondent can transact without doing settlement) [Presently it is 72 hours or 3 Days] No transactions are permitted without the presence of the Business Correspondent's Card and the Customer Card and their respective fingerprints. 2.2. Devices Characteristics The Bank has purchased the hand-held devices from two vendors namely FINO (Financial Information and Network Operations) Mumbai and from Integra Micro Systems Pvt. Ltd., Bangalore. Both the devices have a fingerprint scanner, key pad for entering the information, a display unit for visual verification, a thermal or impact printer for receipt printing and connectivity options to upload the data. The printout given to the customer contains the date and time of the transaction along with the merchant ID and the Transaction ID to facilitate reconciliation and dispute resolution. The connectivity is possible through the PSTN lines, GPRS, Wi-Fi, WAN or Internet. The device supplied by Integra has the voice guidance for the users in the local language. Both the devices work on AC Power supply and they also have an internal lithium ion battery so as to 88 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security function during power outages. The device provided by Integra can be connected to a Car battery also for handling longer power outages. 3. Visit to FI project of Axis Bank It was observed that the Bank had availed the services of FINO for ICT solution. During our visit it was observed that the enrolment process was going on in which both the laptop and mobile with hand held device were used. FINO basically uses a chip based card for access control system. In brief, the technology specifications are as under: POS Terminals " Smart Card Terminal Services " Providing data upload / download, to FINO's switch and back-end system, through locally available PSTN network " Processing of data at Central server and a daily transaction interchange " MIS reports as mutually agreed upon " Dispute resolution of transactions " Data management services " Smart Card terminals contain the following features : " Fingerprint Reader with Built in Smart card reader & printer " Built in security co-processor " Min. memory 32 Mb Flash + 8 Mb SDRAM " EMV compliant Smart Card reader " SAM (Security Access Module) slots " Swipe card reader: Track I, II " Acquisition Time < 1 sec " Recording < 256 bits " Power backup through rechargeable batteries " Terminal Software The terminals application is a user-friendly menu-driven interface and can be used for all types of and authentication of the Smart Card holder through biometrics (fingerprint). 4. Summary Name of the Bank Technology Service Provider Accessories Access Control Card Cost of Card (Rs.) Business Correspondent 1. APGVB A Little World 1. Mobile 2. Hand held device Biometric Foundation Non - chip 15 - 25 Zero Mass (Section 25 2. Corporation Bank Integra Hand held device operatable with Backup Battery Biometric Chip based 80 - 100 SHG Members 3. Axis Bank FINO 1. Hand held device 2. Lap Top /Mobile Biometric Chip based 100 - 125 FINO FINTECH Foundation (Section 25 Company) Company) ANNEXURE - IV ICT Solutions for Financial Inclusion Experience Sharing by Commercial Banks - Learning from the Presentations 1. More and more banks are adopting technology and taking initiatives for Financial Inclusion. 2. It is observed that the cost of cards and other devices such as handheld device and laptop etc. have reduced noticeably over a period of time. Besides, these devices used for financial inclusion have been technologically improved / upgraded. 3. While bigger banks have aggressively adopted the ICT solution for Financial Inclusion, smaller banks like UCO bank operating in difficult areas such as Orissa, Bihar, North Eastern region are facing difficulties in leveraging technology to financial services. Some of the banks view the technology intervention as a financially viable proposition and a business opportunity. 4. In Karnataka, some of the banks have joined hands with SLBC to float a common tender process for technology adoption, as a result of which they have been able to adopt and use the ICT technology in the field in a record time of two months. 5. While some banks have a plan to establish e-kiosk with VSat connectivity in order to reach last mile clients, some have adopted the strategy of using its own employees as provider of financial services instead of BC/BF model. 7. The banks which are yet to adopt technology intervention for financial inclusion were getting exposed to the initiatives taken by other banks. 89 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Technology options for Financial Inclusion – A Implications for National Security ANNEXURE - IV ICT Intervention - Experience sharing by CBs - 17 Feb 2009 Sr. Name of the Bank No. Technology Provider (s) Technology Adapted 1 Andhra Bank i) A Little World Pvt. Ltd. ii) Access Development Services & Atyati Technologies. iii) FINO Biometric cards with mobile connectivity 184000 beneficiaries covered. 2 Bank of India Biometric smart cards 16.34 lakh accounts opened. a) GCC, KCC cards b) Rural Mobile ATMs c) E - grama 3 Corporation Bank Biometric cards i) 426711 - No frill SB accounts opened. Automation ii) 19463 GCC cards have been issued. a) Survey b) FLCC has been set up 4 Indian Bank i) FINO ii) Financial Softwares & Systems Pvt. Ltd. i) Biometric smart cards ii) Biometric ATMs 15 lakh No Frills SB accounts opened. a) Establishment of Rural Internet Kiosk Centres to serve sugarcane farmers b) 11 Biometric ATMs installed c) Online commodity price tickers d) Financial Literacy & Credit Counseling Centres 5 Punjab National Bank 1) 9 different technology providers are being used i) Biometric smart cards i) 2510000 customers. covered a) Opened 7 FLCCs in Punjab and 2 FLCCs in Haryana. b) Kabongram Asa Kashung Shang Social Upliftment Society (KAKSSUS), an NGO appointed as BC in the states of Assam, Arunachal Pradesh, Mizoram, Meghalaya and Manipur. c) Training programme for BC agents. 6 State Bank of India i) A Little World ii) FINO iii) EKO iv) TCS i) Smart Card & POS ii) PC-Kiosk iii) Mobile Phone 18 lakh cards have been issued. a) Organise campaigns at village level. b) Organising road shows, skits, etc. c) Announcements on two wheelers and other vehicles. 7 State Bank of Mysore i) A Little World ii) Integra Micro Systems Pvt. Ltd. i) Simple Plastic Card ii) Smart Card with chip i) 1.73 lakh No frill accounts in Karnataka a) Live Demos for enlightening the features of Smart Cards around 15 Grama Sabhas 8 UCO Bank Cards with mobile phone technology 9 Union Bank of India Biometric smart cards 18,617,438.00 355700 cards issued a) CBS implemented in 2 RRBs - KGSGB and RSGB. b) 200 VKCs, 90 Union Mitr Centres c) Micro life insurance is provided. 10 Vijaya Bank Biometric smart Card accounts opened. i) Rs. 90/- i) 600 No Frill SB a) ATM enabled KCC cards ii) Rs. 3/- per transaction per card per month with a max. of 3 months. iii) Rs. 35/- as AMC per active card per year iv) Rs. 2600/- per BC per month. 11 Canara Bank (Presentation received later on) Smart Card provided with Cost of HHM magnetic strip card that can be used in Biometric ATMs. Integra Micro Systems Pvt. Ltd. per card. Cost Profile (In Rs.) Area / No. of accounts covered Initiative taken a) Biometric voice enabled ATM. b) Mobile voice enabled Biometric ATM Cost of Smart Card - Rs. 125/at predetermined places in Bangalore. c) Two Financial Literacy Booklets "Money" and "Savings" have been published. d) Three FLCCs have been set up. 90 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Issues and Challenges of BC/BFs in Financial Inclusion – Business Correspondent and Business Facilitator Outreach Model for Banks Issues and Challenges of BC/BFs in Financial Inclusion Business Correspondent and Business Facilitator Outreach Model for Banks -Issues and Challenges Dr KG Karmakar Managing Director, NABARD NP Mohapatra Assistant General Manager in Financial Inclusion Department, NABARD. The views expressed here are of Authors and not necessarily the organisation they belong to. Introduction India has a rural population of about 780 million with limited or no access to financial services. The branch banking route apparently is not very practical due to the huge cost of opening the branches vis-à-vis volumes expected, high costs of operations, limited banking hours, illiteracy, non-availability of alternate channels in rural centres, etc. Therefore, it is pertinent that for the banks to move beyond the 'brick and mortar' set up, they have to provide technology driven products such as, ATMs, internet kiosks for successfully implementing financial inclusion. For the rural clientele, the stages of financial exclusion are complex with financial illiteracy leading to financial discrimination, leading to financial exclusion and finally leading to financial exploitation. The banking needs of the financially excluded people are restricted to limited transactions of low value in nature. Operating a full-fledged rural branch is not a viable proposition considering the huge operational costs and limited business volumes initially. The Business Correspondents (BCs) / Business Facilitators (BFs) model is ideally the alternate viable business model in order to ensure greater coverage of rural clients in far-flung areas with reduced costs. Under the setup, the banks are permitted by RBI to outsource selected banking services through BCs and their authorized agents. The customers should have the freedom to use branch banking facilities even though the business correspondents are available in their locality or they were clients initially sponsored by the BCs. Requirements for the Business Model i) A proven and tested software solution to lower operational costs ii) Robust hardware and other equipment compatible to software application iii) Financially sound, established, experienced and reputed BCs with adequate expertise and manpower iv) Uninterrupted tele-connectivity with solar / battery back-up v) Sound monitoring of all transactions using ICT solutions vi) Insurance for cash transactions as per requirements These are the basic requirements of the BC / BF model which banks would opt for. 91 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Issues and Challenges of BC/BFs in Financial Inclusion – Business Correspondent and Business Facilitator Outreach Model for Banks FEATURES OF THE ICT SOLUTION Low operational costs Scalable quickly User friendly systems Secure access and transactions Inter operable systems Compliant to legal requirements Standardised system accessibility anywhere for Viable and Profitable operators Sustainable for banks depending on savings model Technology The objective in the present day context is to ensure early financial inclusion. The important question is increasing rural outreach and deepening customer penetration to enhance rural business significantly. This can be achieved through outsourcing all the functions to a Business Correspondent (BC) or Business Facilitators (BF) in a particular area. Large scale rollout and rapid scaling up again, is not possible without suitable technology interventions which are easy to use, robust, dependable and, at the same time, cost efficient. The banking solution to financial inclusion is in simple terms defined as a "Bank in a Box". The entire set up consists of a cell phone, which serves as a POS machine, a finger print reader and a tiny printer, all of which can be packed into a 10-inch box. All these work on rechargeable batteries. No Frills Accounts are opened with the help of smart cards. There are various types of smart card depending on their capacity ranging from chip less to 32 KB memory. The 32 KB smart card is akin to an "e-purse" and stores information about the customer, the account number, finger prints as well as the balance in the account. The smart card can handle up to 16 accounts including loan accounts. This card works on the Radio Frequency Identification (RFID) technology. Banks are using this technology in the smart cards which work in conjunction with a mobile or a hand held connectivity device which works on Near Field Communication (NFC) Technology. Transactions are possible both for online and off line mode which permits real time updating of bank balances in the card. By issuing a smart card to the rural customer, the transaction cost is reduced as it dispenses with paper based transactions with savings in transaction costs, both for the bank and the clients and envisages shifting the actual operation of transacting on the account away from the branch to the Customer Service Point / Provider (CSP) at the outlet in the location of the rural customer, Generally, the model has been adopted by most banks as set out at ANNEXURE - I Cost Matrix for BC / BF model As per the analysis of state-wide extent of exclusion in the country and plans for covering excluded households, by the Committee on Financial Inclusion, a population of 5,57,77,000 excluded households are to be extended financial services by the year 2010. NABARD has since received some proposals from banks, which have implemented financial inclusion through BC / BF model, for financial support from the FIF / FITF. Based on the experience of these two banks and the above essential cost for covering the 5, 57, 77,000 excluded households, Rs.8.70 crore will be required. While arriving at the costs, it has been assumed that " One Customer service point (CSP) whether of BC or BF will cover 1000 excluded household in 5 - 10 villages i.e. 55777 BCs and 55,777 BFs will be required " Each CSP of BC will require one Point of Service (POS) equipment i.e.55,777 POS will be required Considering modest cost estimates, per account cost for 5, 55, 77,000 households works out to be Rs.158.37 or, say Rs.160/-. The support from Financial Inclusion Technology Fund (FIF) per smart card works out to be Rs.49.52 and Rs.110.48 from Financial Inclusion Technology Fund (FITF). This will culminate in an estimated expenditure of Rs.270 crore from FIF and Rs.699 crore from FITF. The component wise break-up is given in the following table set out below is based on the State Bank model, set out at 92 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Issues and Challenges of BC/BFs in Financial Inclusion – Business Correspondent and Business Facilitator Outreach Model for Banks ANNEXURE - II Table : Cost Break-up for smart card (components) Sr No. Purpose Factors influencing cost A 1 Enrolment/Survey of the Customer Depends on the location 2 Personalisation of the customer including the card cost Depends on volume, specification 3 Maintenance cost of the card Depends on volume, specification B 1 Selection of the BC/BF for 250 regions As per RBI guidelines 2 Cost of POS (one per agent of BC i.e. one per 1000 excluded household) Depending the smart card /data requirement/biometric requirement 3 Training cost for BC and BF (4 days programme)(one agent of BC and one BF each for 1000 excluded household) Location specific 4 Publicity material to BC and BF One time expenditure C 1 Banks / Institution Server and Switch (one for 1 crore excluded household) As per bank specification 2 Other cost (cabling/wiring/telephone etc.) (one for 1 crore excluded household) As per bank specification 3 Software (for 5.57 crore excluded household) As per bank specification/available existing systems 4 Space for housing the server/switch (one for 1 crore excluded household) As per bank specification/available infrastructure TOTAL A+B+C The Corporation Bank Model This is an excellent indigenous model, which does not need funding from any agency and has been inbuilt into the rural banking model of the bank. The components depend on the Financial Inclusion survey, depend on branches to open a large number of small value accounts with computer facility for branches to upload data and exception reports when the balance exceeds turnover or exceeds the cut off limits of Rs.10, 000 per BF. Survey details directly generate an uploadable file and all accounts maintained in the bank's server. The details of each district where the bank has been given Lead Bank Status, has been surveyed for inclusion. Survey Details The survey format is segregated in three sections i) Village information ii) Family information iii) Details about family members a) Village information The village information ensures that each village is linked to a bank branch and many villages are linked to a specific branch. The initial but detailed village survey ensures that the village profile is captured once, with details of all members of each village household and availability of infrastructure. b) Family information The survey generates a unique number for each family and facilitates the capture of photographs of each family member with details for information relating to religion, centre, extent of land owned and assets owned. Data is captured on-line or off-line with ability to query the database and safe storage of data and consolidation and easy access to data from anywhere. The Corporation Bank surveyed 327 branches covering 1459 villages with 4, 31,655 households surveyed. The bank opened 4, 26,711 no-frill SB a/cs while 26,938 persons had applied for the GCC of which 19463 cards have issued. c) Technology Initiatives 93 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Issues and Challenges of BC/BFs in Financial Inclusion – Business Correspondent and Business Facilitator Outreach Model for Banks The high level of security features built in affords reduced transaction costs with increased efficiency. Basic banking services are provided at the village household level, throughout the day and without hassles as there are challans/vouchers being generated. Familiarity in dealing with the service provider enables reduced transaction costs for both bank and the clients. The bank branches are also able to handle large volumes of cash with very few staff and extend good customer services. The basic technology is a card-level device with support for fingerprint authentication and battery back-up for continuous operation during power cuts. The device is light and easy to carry, has vocal guidance in local languages and support for multiple communication channels and storage of minimal essential data with scalable architecture and ability to support multiple products and services with attached printer for receipt printing. d) Available Banking Service The facilitator enables cash deposits and withdrawals, balance enquiries + statements, transfer between own account, loan repayments and withdrawal from GCC a/c, SHG A/cs (Loan & Savings), Recurring Deposits, Multi-Society payments, NREG payouts and Social Service Payouts all at the clients doorstep. Other products and services under development are (i) person to person remittances using mobiles, insurance premia collection, utility bill payments, pre-paid mobile recharges and remittance from one card to another. These are all user-friendly services and have enabled the bank to mop up rural deposits suitably. The transactions are generally off-line and online when it is foreign card or when there is a balance mismatch. The client is given a printed receipt using compact printer in local language at GPS provided for greater comfort. e) Risk Mitigation Measures The need for customer security is taken care of with several innovative measures. Per day transaction limit of Rs.10, 000 is applied with a two-factor authentication (Card + Fingerprint). There is also a customer limit for daily withdrawal/receipt as also on number of daily transactions. The BC agent is generally a middle aged lady member of the village based SHG or leader of SHG, settled in the village and individual limits are fixed on a per day basis as also limit on total number of daily transactions. Branches also have a computer terminal exclusively for BC/BF transactions. Customers are also encouraged to insist on impact printer receipts. Web Access is possible to monitor card balances and BC balances. Whenever transactions have a balance mis-match, transactions are faxed on-line. Data storage policies ensure that account information remains only with the Bank and only transaction data is routed through the technology service provider. Periodic reconciliation process to tally balances is a must. Besides, minimum standards for identifying and engaging BC are enforced as is the methodology and standards for data storage as cards. Fingerprint storage and relevant standards are set as are card numbering standards and risk mitigation criteria. f) Spread of Branchless Banking The model has enabled reduction in transaction costs in 4 States as under: Sr No. State Village Branches 1 Karnataka 160 99 2 Andhra Pradesh 61 07 3 Tamil Nadu 29 16 4 Goa 02 02 Total 252 123 Several protocols & security transactions have been developed to ensure technology absorption, at all levels. (i) Policy framework (Cards issue, BC selection, Services delivery) (ii) Legal and statutory framework (iii) Security framework (iv)Transaction processing framework (v) Conveyance with existing technologies is a must The Corporation Bank opines that financial inclusion should not be a regulatory directive but a viable business proposition to facilitate outreach and reduce cost of services delivery and ensure s credit delivery with low transaction costs. This enables BC/BF to provide new products/services and linkage to the economic activity or income generation activity with functional costs to the branch. Implementation Over a period of time the number of banks adopting ICT solutions and taking initiatives for financial inclusion is increasing. The BC/ BF model is being implemented with Government supported NREG programme and Social Security Pension as well as on Bank's own initiative. Technology Architecture The cost of cards and other devices such as handheld device, Point of Service (POS) and laptop etc. have reduced noticeably over a period of time. Besides, these devices used for financial inclusion have technologically been upgraded over the period. Banks are increasingly adopting technology intervention for financial inclusion. In order to achieve economy of scale the State Level Bankers Committee (SLBC) played role in floating a common tender process for technology adoption, in Karnataka. Enhancing outreach - BC/ BF Model The BC/ BF model helps banks to expand their outreach. BFs can undertake the following activities on behalf of banks which will enable reduction of transaction costs for banks / clients and also enable revenue sharing for BFs. (i) identification of borrowers and fitment of activities; (ii) collection and preliminary processing of loan applications including verification of primary information/data; (iii) creating awareness about savings and other products and education and advice on managing money and debt counselling; (iv) processing and submission of applications to banks; 94 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Issues and Challenges of BC/BFs in Financial Inclusion – Business Correspondent and Business Facilitator Outreach Model for Banks (v) promotion and nurturing Self Help Groups/ Joint Liability Groups; (vi) post-sanction monitoring; (vii) monitoring and hand holding of Self Help Groups/ Joint Liability Groups/ Credit Groups/ others; and (viii) follow-up for recovery. In addition to activities listed above under the BF Model, BC can undertake following activities: (i) disbursal of small value credit, (ii) recovery of principal / collection of interest (iii) collection of small value deposits (iv) sale of micro insurance/ mutual fund products/ pension products/ other third party products and (v) receipt and delivery of small value remittances/ other payment instruments. All these services can easily be provided using ICT solutions and enable banks to invest in the BC / BF model, for greater rural outreach and increasing rural business levels. Issues and Challenges 1. As per the Reserve Bank's Working Group Report, the following issues have been raised by various stakeholders: (i) Cash handling As almost all BC transactions are cash based, the flow of cash with BCs has been highlighted as the biggest issue. Besides the logistics of handling large volumes of cash, it leads to increased costs and added operational risks. These assume greater importance in the context of the North Eastern region of the country, on account of higher security risks, vast and difficult terrain and poor connectivity. (ii) Client Profile Beneficiaries of BC services are mostly illiterate and susceptible to misguidance. Further, at times, clients tend to perceive the BCs themselves as banks and as not functioning on behalf of the banks. Lack of proper financial education of the clientele was a barrier to the effective utilisation of the banking facility provided to the clients through the BC model. (iii) Viability issues (a) The viability of the BC model has remained the most critical issue which has led to the model not taking off as envisaged. There have been various factors which have contributed to this issue. A majority of no-frill accounts opened by BCs have remained non-operational. As such, opening of the accounts to provide deposit services to begin with and subsequently widen the coverage of activities, with a view to making these accounts profitable, have not made the desired progress. Retaining customers after the initial transactions proves to be a big challenge. The Group has received feedback that there is a mismatch between the revenues earned and costs incurred while undertaking the BC operations, resulting in non-viability of the model. (b) It has been reported that banks charge interest to BCs for the temporary accommodation / overdraft provided by banks to them. This adds to the operating costs of the BCs. Moreover, the insurance costs as well as security costs for the cash-in-transit are also passed on to the BCs, which affect their viability. (c) Where the BCs have to cover large distances, the transport cost often becomes prohibitive. Further, where power supply is a problem, the BCs have to move with generator kits / batteries. (d) The commission paid by banks to the BCs is not considered adequate for a viable business model. There are costs involved in staff salaries, training, etc for which the current compensation structure is not at all adequate. A majority of BCs have reported losses and some of them have even suspended their operations. This, in turn affects the banks as it becomes difficult for banks to substitute these BCs with others. (e) From the bankers' perspective, it was pointed out that as the banks were not allowed to pass on to the ultimate customer / beneficiary the compensation / commission paid by them to the BCs, they were not able to bear the various other costs incurred by BCs. (iv) Regulatory issues (a) Current regulations mandate BCs to settle cash with bank branches by the end of the day or next working day. Given that the area of operation of BCs predominantly extends to rural areas with erratic connectivity, it becomes difficult to complete the settlements within the prescribed timeframe. This issue assumes considerable importance in the North Eastern Region. (b) Reaching unbanked areas warrants higher delivery costs. (v) Multiple risks associated with the BC model The engagement of BCs by banks for delivery of banking services exposes banks to multiple types of risks: (i) credit risk (ii) operational risk (iii) legal risk (iv) liquidity risk and (v) reputational risk, to mitigate which banks need to take appropriate action. 2. It is apparent that BC Model can be successful only if sufficient business is generated and the compensation structure of BCs has to be reworked. 3. It has been experienced that the banks are using BCs for opening "No Frills Accounts" through which various Government payments like NREGA, Pensions and other social security payments are routed. However, if the BCs are merely used for these purposes, the income generated by the BCs will not be sustainable over a period. For a BC to become viable, the range of services to be delivered by the BC should include small savings, micro credit, micro insurance and small valued remittances, etc. 95 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Issues and Challenges of BC/BFs in Financial Inclusion – Business Correspondent and Business Facilitator Outreach Model for Banks CONCLUSION Therefore, it is considered necessary to route micro insurance products through these No Frill Accounts, so that the BCs may become viable. It may be recalled that the Committee on Financial Inclusion (CFI, 2008) has recommended that in order to reach the last mile client various initiatives may be taken to appoint BCs so that Financial Inclusion can be achieved. Therefore, it is felt that BC / BF Model envisaged by Government of India and RBI may be implemented widely. Other recommendations of the Rangarajan Committee have also to be examined to address the viability issue of the BC/BF Model. ANNEXURE - I ANNEXURE - II Adetails Regarding Number of BCs Appointed and Accounts State Bank's solution for Financial Inclusion through BC / BF model PUBLIC SECTOR BANKS Sr. Banks No. No. of BCs appointed No.of accounts opened NIL NIL 1 ALLAHABAD BANK 2 ANDHRA BANK 3 405000 3 BANK OF BARODA 3 33827 4 BANK OF INDIA 10 71000 5 BANK OF MAHARASHTRA NR NR 6 CANARA BANK 1 1603 7 CENTRAL BANK 1 1210 8 CORPN BANK 3 456655 9 DENA BANK 1 14146 10 INDIAN BANK 2 23000 11 IOB 3 1131 12 OBC 3 21433 13 PNB 14 2704345 14 P & S BANK NIL NIL 24 2574139 15 SBI 16 SBBJ 17 18 NIL NIL S B HYD 1 16057 S B INDORE 1 61632 19 S B MYSORE 2 2159 20 S B PATIALA 1 1140 21 S B SAURASHTRA NIL NIL 22 S B TRAVANCORE 1 699 23 SYNDICATE BK 5 695 24 UNION BANK 3 1654464 25 UNITED BANK 1 998 26 UCO BANK 1 1048 27 VIJAYA BANK Total 1 626 85 8047007 PRIVATE SECTOR BANKS 1. The Federal Bank Ltd 2. ICICI Bank Ltd 2 68 38 136659 3. Lakshmi Vilas Bank Ltd NIL NIL 4. Nainital Bank Ltd 1 532 5. Axis Bank Ltd 3 676000 Total Grand Total 44 813259 129 8860266 Advertisement for recruitment of BC/BF Done at National and Regional level Selection of BC/BF at National and Regional level Done after due diligence by inhouse committee. Channel Management Advisor (CMA) comments on qualitative aspects independently. This is a contract management and not an employer-employee relationship Agreement with BC / BF Listing of duties / responsibilities code of conduct/agreement signed by Chairman of Committee 04 days Training of BC / BF Trainers and in many cases infrastructure provided by Learning Centres (LC) Adoption of BC / BF POS earlier provided by BC, now they themselves bear the cost. BC/BFs identity created in the software Management of BC / BF Done through Channel management Advisors (generally bank's retired officer) support of special software linked to the CBS Dispute resolution procedure A procedure from a complaint register at BC to the Regional Manager to be formulated 96 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Financial Inclusion Through Financial Revitalization Financial Inclusion Through Financial Revitalization Dr. Bijay Kumar Swain; Professor & Head Centre for Rural Credit & Development Banking (CRCDB), National Institute of Rural Development (NIRD), Rajendra Nagar, Hyderabad - 500 030. Introduction No solution to hunger and rural poverty can be found without providing secure and gainful employment to people, whether on farm, off-farm or urban employment. Developmental studies focuses largely on the rural areas where the bulk of poverty and hunger persist, despite it is clear that there are many crucial linkages between urban and rural areas through employment, trade and migration. In this respect, it is important not to neglect the strategies to empower those who are forced into the informal sector in both these places. Informal sector employment is a response to the constraints encountered by the poor, especially and most exclusively in rural areas. However, informal economy is also situated in the urban localities through activities of squatters or unlicensed street vendors struggling for survival in environments constrained by extreme poverty and deprivation. Credit availability is one of the strategies by which rural poor can be revitalized and change their living standards faster than any other methods. With few exceptions, experience with rural credit to the poor has not been very successful. Most banks do not lend to the rural poor, but limit themselves to the urban, formal sector. State-run development banks have typically been expensive, loss making, bureaucratic, and accessible only to the non-poor segments of rural society. Foreign aid funded credit schemes targeted at the poor who have suffered from the same risks of deviation to the not so poor, and have usually collapsed after the departure of the foreign funds. State-run credit cooperatives have often left only bitter memories for the poor, as corruption and outright theft diverted the promised money. In short, for the poor, access to credit has proven to be difficult, costly, and often ineffective. Moving one step beyond, some may argue that credit is not as important to many of the rural poor as is commonly held. For those who hold this view, the issue of credit really distracts attention from more important questions, related to the retention of surplus production by households and communities and to the general capacity of the poor to access market and public institutions. Both these aspects bring us to larger questions of revitalization of rural people for a sustainable living. Further, given the success of credit as a tool for the organization of the poor, most governmentsponsored programmes are used as entry points for larger social change. Many credit programmes involve the creation of lenders' organizations and increase the self-confidence and capacity of mobilization of lenders. Interesting experiences are noted where credit programmes have opened 97 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Financial Inclusion Through Financial Revitalization doors to the abolition of dowry, supported the fight against landlords and promoted improvements in literacy and infant nutrition. As credit programmes work especially well with women, the revitalization of women should be one of the explicit objectives. Similarly, lack of public infrastructure facilities, particularly of roads and market outlets, may limit income-generating possibilities. As a result, even if potentially profitable activities are promoted, people can still be incapable of benefiting from them. The cost of providing such infrastructures is usually vastly beyond the capacities of poor communities and local organizations, necessitating state and donor involvement. Defining Financial Inclusion: Financial inclusion is delivery of banking services at an affordable cost to the vast sections of disadvantaged and low-income groups. As banking services are in the nature of public-goods, it is essential that availability of banking and payment services be made to the entire population without discrimination. The Scope of Financial Inclusion: The scope of financial inclusion can be expanded in two ways i.e. either through state-driven intervention by way of statutory enactments or through voluntary effort made by the banking community itself for evolving various strategies to bring large section of population within the ambit of the banking sector. When bankers do not give the desired attention to certain areas, the regulators have to step into remedy the situation. This is the reason why the Reserve Bank of India is placing a lot of emphasis on financial inclusion. The focus of the financial inclusion at present is confined to ensuring a bare minimum access to a savings bank account without frills, to all. Internationally, the financial exclusion has been viewed in a much wider perspective. Just having a current account or savings account on its own, is not regarded as an accurate indicator of financial inclusion. There could be multiple levels of financial inclusion and exclusion. It is the paradox that at one extreme there are customers who are actively and persistently courted by the financial services industry, and who have at their disposal a wide range of financial services and products. At the other extreme, we have the financially excluded, who are denied access to even the most basic of financial products. In between are those who use the banking services only for deposits and withdrawals of money. But these persons also have only restricted access to the financial system, and do not enjoy the flexibility of access offered to more affluent customers. Consequences of Financial Exclusion: Consequences of financial exclusion will vary depending on the nature and extent of services denied. It may lead to increased level of harassment, higher incidence of crime, general decline in investment, difficulties in gaining access to credit, getting credit from informal sources at exorbitant rates and increased unemployment, etc. The small business may suffer due to loss of access to high middle-class and higher-income consumers, higher cash handling costs and delays in remittances of money etc. According to some research study, financial exclusion can lead to social exclusion. Steps towards Financial Inclusion: In the context of initiatives taken for extending banking services to the small customers, the mode of financial sector development until 1990's was characterized by an expanded bank branch network, cooperative banks and new organizational forms like Regional Rural Banks (RRBs); " a greater focus on rural credit rather than other financial services like savings, insurance etc. though banks & cooperatives; " lending targets directed at a wide range of 'priority sectors' such as agriculture, small business and weaker sections of the population, etc; interest rate ceilings, imposed mostly in case of directed lending; significant government subsidies channelled through cooperatives and banks in connection with related government programmes; " based on a perspective that credit for rural poor people was a social obligation and not a potential business opportunity. It is absolutely beyond any doubt that the financial access to masses has significantly improved in the last two and a half decades. But the basic question still remains, whether it has been good enough. The quantum of deposit accounts held, as a ratio to the adult population has not been uniformly encouraging. There is a tremendous scope for financial coverage to improve the standards of life of those deprived people. As a pro-active measure to enhance the financial inclusion, the Reserve Bank in its Annual Policy Statements, while recognizing the concerns in regard to the banking practices that tend to exclude rather than attract vast sections of population, urged banks to review their existing practices to align them with the objective of financial inclusion. The Reserve Bank, time and again exhorted the banks to achieve greater financial inclusion, to make available a basic banking 'no frills' account either with nil or very minimum balances as well as to take minimum charges that would make such accounts accessible to vast sections of the population. The nature and number of transactions in such accounts would be restricted and made known to customers in advance in a transparent manner. All banks are urged to give wide publicity to the facility of such no frills account so as to ensure greater financial inclusion. Further, in order to ensure that persons belonging to low income group both in urban and rural areas do not face difficulty in opening the bank accounts due to the procedural hassles, the Know Your Customer (KYC) procedure for opening accounts has been simplified for those persons who intend to keep balances not exceeding rupees fifty thousand in all their accounts taken together and the total credit in all the accounts taken together is not expected to exceed rupees one lakh in a year. The Way Forward for Expanding Credit: The banks should come out of inhibited feeling that very aggressive competition policy and social inclusion are mutually exclusive. As demonstrated elsewhere, the mass banking with no-frills accounts can become a win-win situation for both. Basically banking services need to be marketed to connect with large population segments and these may be justifiable for incurring promotional costs. In this regard, the opportunities are plenty. " In the context of India becoming one of the largest micro finance markets in the world especially in the growth of women's savings and credit groups and the sustaining success of such institutions, which has been demonstrated by the success of Sewa bank in Gujarat. Thus, justifying low cost banking is not necessarily an unviable proposition. " The Indian Banks Association may explore the possibility of a survey about the coverage in respect of financial inclusion keeping in view the geographical spread of the banks and extent of financial services 98 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Financial Inclusion Through Financial Revitalization available to the population so as to assess the constraints in extension of financial services available hitherto unbanked sections and for initiating appropriate policy measures. It may be useful for banks to consider franchising with other segments of financial sector such as Cooperatives, NBFCs, and RRBs etc. so as to extend the scope of financial inclusion with minimal intermediation cost. Since large sections of low-income groups transactions are related to deposits and withdrawals, with a view to containing transaction costs, 'simple to use' cash dispensing and collecting machines akin to ATMs, with operating instructions and commands in vernacular would greatly facilitate financial inclusion of the semiurban and rural populace. It is becoming increasingly apparent that addressing financial exclusion will require a holistic approach on the part of the banks in creating awareness about financial products, education, and advice on money management, debt counselling, savings and affordable credit. The banks would have to evolve specific strategies to expand the outreach of their services in order to promote financial inclusion. One of the ways in which this can be achieved in a cost-effective manner is through forging linkages with micro-finance institutions and local communities. Banks should give wide publicity to the facility of no frills account. Technology can be a very valuable tool in providing access to banking products in remote areas. ATMs cash dispensing machines can be modified suitably to make them user friendly for people who are illiterate, less educated or do not know English to carry out the transactions. Further, banks need to redesign their business strategies to incorporate specific plans to promote financial inclusion of low-income group treating it both as a business opportunity as well as a corporate social responsibility. They have to make use of all available resources including technology and expertise available with them as well as with the Micro-finance Institutions (MFIs) and Non-Governmental Organizations (NGOs). It may appear in the first instance that taking banking to the sections constituting "the bottom of the pyramid", may not be profitable but it should always be remembered that even the relatively low margins on high volumes can be a very profitable proposition. Financial inclusion can emerge as commercial profitable business. Revitalization Through Self Help Groups In this background, formation of Self-help Groups are one such process, which consists of members who are poor, having low savings capacity and generally depending on moneylenders or private sources for meeting their consumption and emergent needs. A typical Self Help Group will comprise like-minded individuals who volunteer to save small amounts of money in a common pool, out of which, need based loans are given to members for meeting their emergent credit requirements based on the priorities decided by the group members. They exercise close supervision on utilization of loans and exert peer and moral pressure on members to continue savings and repay loans promptly on time. In other words, Self Help Group can be referred to as a group of poor persons who own, manage and control a micro level bank of their own, virtually revitalizing themselves to meet their emergencies. Micro Finance programme of Self Help Groups does not by itself provide succour to various deprivations that obstruct the ability of the poor to lead a dignified life that a human being is entitled to. Deprivation in terms of education, nutrition and health-care, electricity, water and sanitation facilities, roads and communications, all add to the complexity of struggle of rural poor. The greatest contribution of Self Help Group in the face of their fight against deprivation and poverty is that it revitalizes the poor by their increased self-awareness. This gives them a feeling of self-confidence, solidarity and social security to control and guide their own destinies. The opportunity cost for poor in Self Help Group mechanism is quite high as they put in their stakes from out of their hard earned savings. It is, therefore, necessary that innovative, imaginative and efficient approaches be used to channelize energies of rural poor to secure all those conditions that encourage their well being, particularly those relating to minimum consumption for life, health and efficiency. An inefficient micro- finance system is in fact a tax novelty on the poor. The idea of isolating best practices in Self Help Groups and promoting wider appreciation among various practitioners is to enable them design and structure micro-finance programmes that conform to high standards of performance. Revitalization Through Participatory Approach Community participation is endogenous to Self Help Group approach and must always be consciously encouraged. Participatory methods are also found to have lasting impact on long-term group survival and growth. Some of the important steps in participatory, which may apply to Self Help Group, include i.e. promoting consensus around group action among community members, enabling communities make choices and help prepare their plans, revitalization by providing control to community over allocation of resources, and giving responsibility to community for monitoring of programmes. A process approach for community development will entail sequence of events that must be undertaken to realize the end goal. Considering the cost of time, energy and resources involved in participatory approach, a high degree of 99 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Financial Inclusion Through Financial Revitalization Revitalization Through Best Practices Getting a group formed takes time and skills. Development workers must pay frequent visits to the community where the group is to be formed and devote time to talk to the people and getting to know them. Some sort of investigation into the problems of people and their response patterns beforehand will surely help. There is no single best way to form groups. However, the sequence of events has been found to be consistent in yielding good results. For example, a meeting with local opinion leaders and elders to build confidence and use of rural mass media like street plays, puppet shows, folk songs, etc. for sensitizing and motivating community members are quite useful. Revitalization Through Good Governance Strong savings and credit groups, owned and managed by the community itself, need competent and committed development facilitators, strong cadre of leaders, and enlightened and alert members. Hence, the governance of Self Help Groups that promotes revitalization through democratic traditions is crucial for overall success. Evolution of norms or rules and regulations for self governance, participatory decision making, and diligence and selfdiscipline among group members coupled with strong enforcement mechanism are sufficient conditions for transparency in group operations. These rules and regulations are not mere statements but reflect the understanding of group norms by members through their conduct in-group activities. Rules and regulations of the groups, therefore, need to comprehend conflict situation in day to day functioning of group and provide ready solutions. While stability of group membership is strongly encouraged, it is possible that a few members could be coopted into the groups to attain optimality in-group size. Alternately delinquent members could be expelled, in which case the groups could undertake a situational analysis and take appropriate decision. However, core objectives of the group to revitalize and rule for self-governance should not be lost sight of. Revitalization Through Effective Leadership It is apt to realize that leadership in Self Help Group is a Verb and not a Noun. The range of leadership responsibilities includes providing guidance for group activities, assisting in information sharing among group members, helping define problems and identify solutions, facilitating appraisal of group performance, resolving conflicts and disputes among group members, organizing, implementing and coordinating group plans and rendering truthful and correct accounts to members. Considering the wide-ranging responsibilities of leaders in Self Help Groups, responsibility-sharing mechanism by assigning different leadership roles to several members must be worked out. Revitalization Through Model Objectives Self Help Group is a novel revitalization approach in development economics. Self Help Groups envision human development perspective in their scheme of things. The clarity in goals and objectives of Self Help Group determine the pace and direction of their development. Hence, the groups among rural poor must be facilitated to achieve revitalization based on long-term goals rather than for shortterm gains. For example, poor look for saving services from formal financial institutions. Without a safe place to put their savings, the poor tend to invest it in "assets" such as gold, silver, livestock, etc. which can be pawned or sold in times of need. Thrift contributions by members to the group must be perceived as a savings product serving long term financial security needs. As such poor households generate savings either by refraining from consumption or postponement of their not so urgent needs. The thrift contributions reflect confidence of members on the group and are seen as an index of their stake in the process. Thrift management is, perhaps, the most important function in a Self Help Groups. Some of the best practices in this include periodicity and quantum of thrift decided by group members themselves, keeping in view the ability of poorest member among them to pay the agreed amount at predetermined internals and minimum compulsory thrift contributions to be made by all members. Members do not permit withdrawals against compulsory thrift contributions unless the member withdraws from primary membership hence groups must insist for on-time contribution. Groups must collect thrift contribution in the presence of all members and thrift collections must be utilized for lending to groups members. Therefore, penal provisions like fines; penalties must be enforced against late payment. Revitalization Through Credit Facility Providing credit access to members of poor households on sustainable basis is the primary objective of a Self Help Group. A well-conceived loan programme in a Self Help Group will enhance its attractiveness to the members. These loans are often given for various purposes without insistence on collateral but are available at a cost. There is no compulsion to avail of loan facility. As such those who avail loans have to make a choice to pay the cost, or have no credit at all. Self Help Groups typically offer small, short-term loans for meeting emergent and consumption requirements only to their members. So the internal lending must commence from the date of first pooling of savings. Need based lending is strongly recommended by active groups. Loans are extended keeping in view the nature of need of particular member. Preference in borrower evaluation is, however, given to those who are regular in attendance at meetings and timely payment of thrift amounts. So, group must have a system of giving differential priorities to several purposed for taking loaning decisions. Here urgency of purpose is given precedence while selecting a borrowing member. Similarly, groups must establish a process to assess the credit requirement for arriving at loan quantum an efficacy of such system need to be seen in the context of Self Help Group concerned and all credit decisions must be taken at the meetings only after giving due consideration to opinion 100 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Financial Inclusion Through Financial Revitalization of all members. Chronic default in on-time loan repayment by members is generally discouraged by withholding or delaying pecuniary benefits to members. At times penalties for late or nonpayment include fees, denial of higher loan amounts, or longer waiting periods for further loans. As continuity of need based internal lending will strengthen and revitalize Self Help Group processes, any attempt to obstruct or discontinue it after receipt of subsidy, grant or even a bank loan can only be a self-destructive move. CONCLUDING REMARKS Facilitating access to productive resources, ranging from land and water to infrastructure for the poor is not a single time event, but an institutional process requiring permanent adaptation to changing circumstances of power, economics and culture. Without the participation of the rural poor in the implementation of programmes and without the establishment of effective organizations of the rural poor that act as countervailing forces to vested interests, it is unlikely that much progress will be made in increasing the access of the poor to productive resources. Throughout the world, organizations of civil society have initiated promising actions in this field such as access to land, management of common property resources, provision of credit and savings facilities, access to markets, etc. They have clearly demonstrated that they have the potential to play a crucial and innovative role in gaining access for the poor to productive resources. However, their actions have remained limited in impact and unknown to people elsewhere struggling with the same problems. There is a need to learn from these experiences to see if they can be replicated and scaled up to revitalize the hundreds of millions of poor and hungry people mostly living in the rural India. References Arunachalam. Ramesh: Alternative Technologies in the Indian Micro Finance Industry, Published by Action Aid, New Delhi, 1999; Bhatt Nitin, Thorat. Y.S.P: India' Regional Rural Banks: The Institutional Dimension of Reforms, Journal of Microfinance, Vol. 3, No.1, 2001; Fisher. Thomas, Sriram. M.S: Beyond Micro-credit: Putting Development back into Micro-finance, Vistaar Publications, 2000; Greening. H, Bikki. Randhwa: A Framework for Regulating Microfinance Institutions, Published by the World bank, 1999; Joshi. Deepali Pant: Organization of Microfinance, Economic & Political Weekly, April, 2004; Joshi. V.C, Joshi. V.V: Managing Indian Banks, Published by Response Books, 2002; Kurum. F, Narayan. Sadagopan: Microfinance Regulation in India, Sadhan Publication, 2001; Littlefred. E, Martin Hollman: Microfinance overtake their Commercial peers, The banker, 2005; Robinson. Marguerite.S: Microfinance, the paradigm shift from credit delivery to Financial intermediation, Ashgate publication, 1998; Thingalaya. N.K: The Other Side of Rural Banking, BIRD Publication, Lucknow, 2000. 101 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Reconciling ‘Accelerated Growth With Inclusive Growth’ – Through Panchayati Raj Reconciling ‘Accelerated Growth With Inclusive Growth’ Through Panchayati Raj Nupur Tiwari Faculty member, Centre for Federal Studies, Jamia Hamdard University, New Delhi (The views expressed in the write up are personal and do not reflect the official policy or position of the organization.) Introduction NIndia stands at a crucial juncture in its quest for inclusive growth. India represents a paradox where on the one hand the GDP growth rate have been rising to 7-8 per cent in the last four years, rural-urban divide, regional divide and rich-poor divide has became glaring,. While the world and its financial hubs applaud the countries impressive annual GDP growth, other indicators such as poverty reduction, employment growth, health and education are less encouraging. The latest UNDP Human Development Report 2009 highlights the very large gaps in well-being and life chances that continue to divide our increasingly interconnected world and the HDI for India is 0.612, which gives the country a rank of 134th out of 182 countries. According to the Report of the National Commission for Enterprises in the Unorganized sectors , August 2007on "Conditions of work and promotion of livelihood in the unorganized sector," the stark fact is that 836 million people in India live on less than Rs. 20 a day; yet we have the second richest billionaires in the world in dollars and we have the fourth largest number of billionaires on the planet1.The state of food insecurity in the world report of the FAO of the United Nations shows us that in less than five years leading to the turn of the century, India added more newly hungry millions than the rest of the world taken together. Hunger grew at a time when it declined in Ethiopia1. Long before planning commission endorsed the HCR approach, Amartya Sen, after examining the theoretical and practical problems of conceptualization and measuring poverty, held that the head count measure is "quite unacceptable as an indicator of poverty". Family getting less than two meals a day is probably the most important criterion of poverty. We in India have more than 300 million people still living in deep poverty at less than a dollar a day, while another 350 million live on less than two dollars a day. Nearly two-third of the population is still dependant on agriculture activities and, about 67 percent of the total crop land is rain fed, hence subject of the vagaries of climate. 1. http//www.forbes.com/fdc/welcome_mjx.shtm 2. World Food Programme 2008 www.wfp.org 102 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Reconciling ‘Accelerated Growth With Inclusive Growth’ – Through Panchayati Raj In Bihar, Orissa, M.P where poverty is acute, growth is not located neither in sectors like Agriculture, where labour is concentrated. Despite impressive advances in human and economic development, regional and inter-state disparities are increasing and natural calamities such as floods, earthquakes, and droughts reverse the development process to a great extent and worsen the situation of the disadvantaged and vulnerable groups. Among the states, the North-Eastern and the Central regions, which have large tribal populations, are lagging behind. Among sectors, agriculture has fallen behind industry and the service sector. Although some of the poorest states are rich in natural and forest resources, the predominantly tribal population is unable to take advantage of this. Religious minorities, large sections of Scheduled Castes (SC) and Scheduled Tribal (ST) groups, and women still do not have access to many job opportunities and human development. The informal sector has emerged as the largest job creator, characterized by low wages and income insecurity while wage growth is concentrated only at the top end. India's educational inequality is one of the worst in the world. India stands at a crucial juncture in its quest for inclusive growth that will bring prosperity across the spectrum. Large amounts of public funds are spent to address these issues but their implementation and the quality of services delivered leave much to be desired. It is well recognized that the programmes to solve these problems are not performing well. They are too centralized, fragmented in concept as in implementation, insufficiently responsive to varying local needs or accountable to ensure efficient service delivery. The existing mechanism for the delivery of services is not effective, efficient or economical Long before planning commission endorsed the HCR approach, Amartya sen, after examining the theoretical and practical problems of conceptualization and measuring poverty, held that the head count measure is "quite unacceptable as an indicator of poverty".Family getting less than two meals a day is probably the most important criterion of poverty.3 We in India have more than 300 million people still living in deep poverty at less than a dollar a day, while another 350 million live on less than two dollars a day. Nearly two-third of the population is still dependant on agriculture activities and, about 67 percent of the total crop land is rainfed, hence subject of the vagaries of climate. In Bihar, Orissa, M.P where poverty is acute, growth is not located neither in sectors like Agriculture, where labour is concentrated. Despite impressive advances in human and economic development, regional and inter-state disparities are increasing and natural calamities such as floods, earthquakes, and droughts reverse the development process to a great extent and worsen the situation of the disadvantaged and vulnerable groups. Among the states, the North-Eastern and the Central regions, which have large tribal populations, are lagging behind. Among sectors, agriculture has fallen behind industry and the service sector. Although some of the 3. The Farm Crisis: why have over one lakh farmers killed themselves in the past decades by P. Sainath, Rural Affairs Editor, the Hindu) poorest states are rich in natural and forest resources, the predominantly tribal population is unable to take advantage of this. Religious minorities, large sections of Scheduled Castes (SC) and Scheduled Tribal (ST) groups, and women still do not have access to many job opportunities and human development. The informal sector has emerged as the largest job creator, characterized by low wages and income insecurity while wage growth is concentrated only at the top end. Such unequal opportunity structure weakens the positive role of growth in reducing poverty and making growth inclusive. Local self-government, as elaborated in our Constitution, provides the essential means of reconciling 'accelerated growth' with 'inclusive growth' Article 243-G endow the Panchayats with such powers and authority as may be necessary to enable them to function as institutions of selfgovernment for preparation of plans and the implementation of schemes for economic development and social justice. It is the effective empowerment of the disadvantaged through the effective devolution of Functions, Finances and Functionaries to representative institutions of local selfgovernment such as Panchayats (where part IX of the Constitution applies) and Village Councils, Village Development Boards and similar such institutions elsewhere, on the principle of subsidiarity, which states that anything which can be done at a lower level should be done at that level and no higher level, that will pave the way to the effective implementation of other measures of inclusive growth . However, the constitutional provisions have not been an effective trigger for the Panchayats to function as institutions of local self-government. It is important that Panchayat Raj be brought centre-stage as the principal governance reform to reinforce economic reform in such a manner as to secure inclusive growth. That this should be so is an anomaly caused by: (i) Inadequate effective devolution of functions, finances and functions by State legislatures/governments to the Panchayati Raj Institutions; and (ii) Inadequate provisions for planning and implementation by PRIs in the guidelines issued by Central Ministries for Centrally Sponsored and Central Sector schemes that directly impinge on inclusive growth. New schemes launched by the UPA government, such as the Backward Regions Grant Fund and the Planning Commission's guidelines for the Eleventh Five-Year Plan make Panchayati Raj the sine qua non of planning and implementation of economic development and social justice at the grassroots. The National Rural Employment Guarantee Act not only designates the Panchayats as the "principal authority" for the planning and implementation of the National Rural Employment Gurantee Programme (NREGP), the Act itself spells out the specific duties of the Panchayats at each level with respect to the Programme, thus rendering the provisions of the Act itself the Activity Map for the Programme. Equally, the Rural Electrification Policy, the Rajiv Gandhi Vidyutikaran Yojana, the National Rural Health Mission and the Jan Kerosene Yojana have a significant and central 103 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Reconciling ‘Accelerated Growth With Inclusive Growth’ – Through Panchayati Raj Panchayati Raj component. There are also some pre-UPA programmes which have now introduced the most telling amendments to bring Panchayati Raj centre-stage, such as the Sarva Shiksha Abhiyan, the Mid-Day Meal Scheme, the National Literacy Mission, the Rajiv Gandhi Drinking Water Mission and the Total Sanitation Campaign. The question of Panchayats and agriculture, particularly agricultural extension services which, by and large, have fallen into disarray and without which a Second Green Revolution will be difficult to attain, especially bearing in mind the great significance of extension to the success of the first Green Revolution. There also remains considerable scope for increasing the involvement of Panchayats in Bharat Nirman programmes Disaster Management is yet another area where Panchayats could be more fully utilized and trained to meet emergencies. Slowly but surely, Panchayats appear to be accepted in the implementation of schemes of line ministries .New programmes such as the Rashtriya Madhyamik Shiksha Abhiyan, a programme which aims to do for secondary education what SSA has done for primary education and a basket of three programmes aimed at comprehensive agricultural development, namely, the National Food Security Mission, the Rashtriya Krishi Vikas Yojana and the Planning Commission driven Comprehensive Agricultural Development Programme are all based on the concept of grassroots level planning through Panchayats, culminating in the dovetailing of the agricultural plan into the district plan developed by the District Planning Committee Undoubtedly, these Sector-specific approaches are demonstrating considerable success, at least as evidenced in the accelerated progress in bridging the rural infrastructure gap. However, there is another important dimension to rapid local development that must be kept in mind. Unless we strengthen local governance by addressing the need for cross-cutting systems of participatory planning and decision-making, local taxation, audit, financial management and procurement, these impressive gains will begin to rapidly fall away. We will build expensive roads, water supply schemes and irrigation systems, but in the absence of strong Panchayats that can maintain and protect them, they will inevitably deteriorate and a few years later, we will be rebuilding them at considerable expense. Similar would be the case with programmes that focus on soft inputs rather than on infrastructure, such as the ICDS, the Sarva Shiksa Abhiyan Since implementation of Panchayati Raj is dependent on policies that cut across several sectors of economic development and social justice, the Government of India will now need to look at how its fiscal relationships with States through CSSs and regulatory interventions pertaining to these sectors can be used to encourage a progress on strengthening Panchayats, across the range of differing state contexts. The most important issue and the area of concern is how to ensure the CSSs and ACA relating to functions in the realm of PRIs are actually implemented by them In order to ensure that the vast resources that GOI is making available to the CSSs would be correctly used, the responsibility of recognizing the beneficiaries must be allocated to PRIs. The broad activities that pertain to the involvement of PRIs could be as follows: Identification of beneficiaries; Enumeration of the target group using household registers of Village Panchayats; Verification of data collected from other sources against data available with PRIs; PRIs/Gram Sabhas as nodal agencies for building data bases and constant revision for maintaining updated database; Determination of optimal sites for construction through PRIs; Distribution of publicity material to PRIs and use of PRIs functionaries for awareness campaigns; Selection of projects by PRIs where micro level solutions are required; Operations, future maintenance and management (post project) by PRIs; Monitoring and vigilance should be the responsibility of PRIs; Periodical reporting of implementation officer to PRIs; Recommendation of PRIs to be considered for training purposes; Devolution of funds through PRIs. If each CSS clarifies what lies within the domain of local government, and if this is supported with appropriate devolution of the 3 Fs, there will be significantly less infirmity in the outcomes and impacts of the CSS. It is important to leverage the Centrally Sponsored Schemes to demarcate the tasks, responsibilities and activities that lie within the domain of local governments (rural and urban). This will encourage and motivate state governments to systematically engage in appropriate devolution of functions, finances and functionaries. More significantly, CSSs will then serve to further strengthen (for their own implementation and oversight) the third tier of elected local bodies with reference to the 73rd & 74th Constitutional amendment. A key instrument available to Gol is thus to provide fiscal incentives to state governments that can encourage them to strengthen local governance, in pursuance of the national strategy. The Panchayat Empowerment and Accountability Incentive Scheme have been proposed as such an instrument. The outputs of the proposed Panchayat Empowerment and Accountability Incentive Scheme are to provide a well-designed system of incentives, which is hoped, would provide an effective mechanism for the Government of India to undertake the following measures: Incentivise and support States to effectively devolve more functions, functionaries and finances to the Panchayats, apart from constituting effectively empowered District Planning Committees to fulfil their Constitutional functions. Encourage and facilitate States to restructure the system of self-government at the Panchayat level to achieve the Constitutional objective of making them 'institutions of selfgovernment'. Incentivise Panchayats to be transparent in their transactions and accountable to their respective Gram Sabhas and then to motivate and assist Panchayats to use their newly enlarged responsibilities in an efficient, honest, focused and productive manner so that a much larger share than at present of the vast resources being made available 104 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 FINANCIAL INCLUSION II Reconciling ‘Accelerated Growth With Inclusive Growth’ – Through Panchayati Raj for rural development and welfare reaches the targeted beneficiaries and attains the targeted objectives, including, particularly the Bharat Nirman targets and the National Millennium Development Goals. Ensure that Panchayats achieve standards that meet norms set out for public accountability including public financial accountability, both upward as well as downward to the people. This would particularly cover responsibilities and obligations under various legislations such as those relating to Right to Information, Social Audit, and Fiscal Responsibility. The Outcomes of the Scheme would be the greater effective devolution of, functionaries and finances by the States to the Panchayati Raj Institutions and making the DPCs and PRIs the fulcrum for the planning and implementation of economic development and social justice. Moreover, the Scheme aims at empowering Gram Sabhas to effectively monitor and exercise vigilance over the work of their elected representatives to secure both effectively gains in service delivery by the Panchayats and promote transparent, responsive and accountable grassroots development through grassroots democracy. There can be an overall incentive based grant to states linked to their movement along a panchayat empowerment index. Operating and monitoring, a competitive CSS approach could be a main activity of the central ministry of PR. The present pattern of growth has the potential of widening the inequality. Such unequal opportunity structure weakens the positive role of growth in reducing poverty and making growth inclusive. If this inequality increases further, social displacement will result and it will be a major obstruction to higher growth .Active participation of people in grassroots planning and implementation is bringing about the desired transformation of the region by establishing peace and setting in motion the wheels of progress towards prosperity. So to achieve inclusive growth, it is crucial that the poor are integrated with the dynamic sectors of growth. These are not easy tasks but by no means impossible. The solutions are also well-known; however, problems lie in their implementation. So, moving from a model of central provision to that of decentralization to local governments will introduce a new relationship between national and local policy makers, while altering several existing relationships; such as that between the citizens, elected politicians and the local bureaucracy. Such inclusive governance, besides ensuring political empowerment, through enabling people to control their own destiny, would also yield significant inclusive growths. When grass-roots planning processes strikes deep roots, economic empowerment is both strong and sustainable. Social empowerment through inclusive governance would help safeguard social, ethnic and cultural values of people, which in turn would lead to building trust of their governments in tribal communities. Active participation of people in the political processes and in grassroots planning will bring about the desired transformation of the region by establishing peace and setting in motion the wheels of progress towards prosperity. References (April 2008) Fifteenth Anniversary Charter on Panchayati Raj. MoPR (November 2006) Guidelines for the Backward Regions Grant Fund Ministry of Panchayati Raj. (December 2004) Compendium of resolutions of the Seven Round Tables of Ministers in-charge of Panchayati Raj; MoPR (August 2006) National Capability Building Framework MoPR (December 2004). Report of the Task force of officials in charge of Panchayati Raj in States to examine the Centrally Sponsored Schemes, "MoPR (November 2006) The State of Panchayats Report; 2006-07: MoPR, IRMA (April 2008). The State of Panchayats Report 2007-08, An Independent Assessment; MoPR. (March 2006) Report of the Expert Group on Grassroots level planning; MoPR (August 2007) Report of the Expert Committee on Grassroots level planning in areas not covered by Parts IX and IXA of the Constitution; MoPR, Planning Commission. (November 2008) Report of the Empowered sub Committee of NDC on Financial and Administrative Strengthening of PRIs; MoRD (August 2001) Report of the Task Force on Devolution of Powers & Functions upon Panchayati Raj Institutions. MoPR-GoI (2008). Note on Devolution of Powers to Standing Committee on Rural Development. New Delhi, Ministry of Panchayati Raj. MoPR, Planning Commission. (January 2009) Manual on District Planning, Planning Commission. (August 2007) Report of the Committee to review modifications to be made in the existing guidelines of Centrally Sponsored Schemes on identifying a domain for the Panchayati Raj Institutions PC-MoPR (2006). Report of the Working Group on Democratic Decentralisation & PRIs. New Delhi, Planning Commission - Ministry of Panchayati Raj. Planning Commission: Eleventh Five year Plan, Ch-10 (Decentralization and Strengthening of PRIs Rao, M.G. and U.A. Vasanth Rao (2008) Expanding the Resource Base of Panchayats: Augmenting Own Revenues, Economic and Political Weekly, January. Sethi, Geeta (2004) Fiscal Decentralisation to Rural Governments in India, The World Bank, OUP, New Delhi. Second-ARC (2007). Local Governance: An inspiring journey into the future. New Delhi, Second Administrative Reforms Commission, Govt of India. 105 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Universal Citizen Identity (UID) Universal Citizen Identity (UID) David Louey GUNG Director Justice & Public Safety Industry Business Unit Asia Pacific Oracle Corporation, Australia Introduction Worldwide, citizens are demanding from government greater efficiency, shared services, and a single way to view personal identification information. Yet, such demand is offset by the need for privacy and the need for appropriate access rights to personal data. In a similar way to how governments have minimised the cost of maintaining address or location descriptions for a parcel of land by establishing a Land Information System that has created a unique identifier (geospatial coordinates) for each parcel, and a central agency responsible for its maintenance and dissemination to other agencies. A unique or universal identifier for each citizen managed through a similar process can generate the same substantial savings or expenditure avoidance for governments and taxpayers This paper examines the challenges and solutions for governments implementing electronic identification (e-ID) technology. It high-lights the importance of incorporating governance, business processes, and a service-oriented architecture (SOA) into this technology-transforming secondgeneration e-ID-based government approaches into the next generation of government solutions To address the provisions of the privacy laws and concerns from Civil Liberties groups, the Universal Citizen identifier (UID) has to be managed in a secure and trusted environment. The same technology and security solutions that are being used in the sharing of highly secret intelligence data across network infrastructures to ensure a trusted environment and access by legitimate users only can also be adopted for this purpose. Driven by citizens' rising expectations and fluid movement of goods, services, and citizens across regional and even global borders, governments are being challenged to boost efficiency, share services, and provide a single view across government departments via joined-up portals. Where consolidated core services exist within and across government departments, there remains the need for an information sharing and management framework. This framework must allow everyone to access services to the maximum extent appropriately yet dynamically set -and it's here that the identity issue arises. If government is serious about offering citizens, businesses, and employees shared services; each participant needs to have an identity to access the services they are entitled to. Consequently, the drive for shared or joined-up services also becomes a need to authenticate and authorize users for specific services as a function of the UID role provided. This drive for new technology places UID management at the centre of a new wave of Transformational Government. UID management is a collection of processes, procedures, policies, and technology that together provide services and features that include: Registration Enrolment Simple single sign-on Provisioning 106 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Universal Citizen Identity (UID) Authentication and Authorization Identity propagation Audit and Governance UID Management offers a secure and trusted environment within which citizens, businesses, and employees are registered against a single identity for dealing with government and, likewise, for government employees in their roles with respect to these constituencies. A common, enterprise-wide approach to UID management supports wider access to public and private services; moreover, it enables authentication and single sign-on (SSO), access management, and directory services in support of joined-up government and breaks down technical silos which may hinder the transition to eGovernment. One of the key drivers for government to adopt UID management strategies is e-ID. Up until now, citizens have identified themselves with an official visual document, such as a passport or driver's license, entitling them to government services. With e-ID, users are identified and authenticated using digital documents. Depending on the application, e-ID can be used for identification, authentication, electronic signature, and data storage and retrieval. Among a plethora of electronic IDs that e-ID can encompass, here are a few examples: eHealth records and ePrescriptions ePassports eNational ID eVehicle Registration eDriver's License eResident Card eVisa eCitizen ID Historically, the issue with these examples is that they only elevate UID management from the issued official visual document-to the generation, an e-ID on-ramp to the silo services associated with that e-ID card. For example, not much is gained with an e-ID that acts as an eHealth card that just gives access to insurance details. After all, how many e-ID cards would you want in your purse or wallet? However, today's technology enables much more in a single UID. It supports tighter border security, protection for the vulnerable and enhanced crime detection. Moreover, UID is effective in combating financial and social benefit fraud and in offering citizens access to additional public services. Belgium-a country at the cutting-edge of UID-provides a barometer for the demand for UID in government. The Belgian government estimates that by the end of 2009, 8.2 million citizens age 12 years and older will have Belgian UID cards. But, for UID to become a key part of 21st century eGovernment transformation, it must support joining up services as an on-ramp for the new-wave scenarios described above. Benefits of UID to Citizens Benefits of UID to Governments Benefits of UID to citizens include the following: The smart chips within an UID card act as a secure vault that protects the personal information of the citizen, thereby ensuring the owner is in control of their e-identity In a transaction environment, UID can quickly verify and authenticate a citizen so that travelling is easier and safer and so that citizens can securely access government online services The solution enhances citizens' privacy by allowing access only to specific authorized e-identity information Smart chip technology prevents unauthorized hijacking of an UID when lost or stolen Simplified processes and procedures-citizen verification and identity authentication can be done off-line In the event that the card is stolen or hacked, information residing on the chip can be kept to minimum and requirements can be put in place for this "on-ramp" information to be used in tandem with other information prior to divulging any additional information or delivery of services Benefits of UID to governments include the following: UID smart chip technology protects the individual's privacy while securely assuring their identity with PIN codes or biometrics-further strengthening authentication UID proven security increases confidence in any national credentialing system UID cards are extremely difficult to counterfeit, thereby providing a strong countermeasure against identity theft UID digital signatures will contribute to the accountability of government officials and employees UIDs enable citizen authentication and accountability UID can reduce government expenses by eliminating multiclaim benefit fraud UID in combination with digital signatures can streamline and speed services delivered UID management in the new wave of eGovernment services takes this endeavour a step further: it collects the necessary information about an individual's identity and role from multiple data steward's repositories, scattered across multiple agencies, builds a composite identity and role, federates it, and then propagates that role across the various agencies involved in delivery of services to that individual. This effort is facilitated by the proper up-front inspection and tailoring of the business process during service construction and the establishment of the proper governance model to ensure policy adherence. Once the service is deployed, identity federation is supported within the orchestrated process by embedding security and governance into the run-time, identity-driven service delivery. 107 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Universal Citizen Identity (UID) UID or e-ID for Transformational Services in Government UID is a key to transforming government services. There are a number of drivers behind this: Public Safety & Emergency Response The U.S. Homeland Presidential Directive No. 12 (HSPD12), for example, is a policy to develop a common identification standard for federal employees and contractors. Its primary objective is to enhance security, increase government efficiency, reduce identity fraud, and protect personal privacy. Not only will the directive allow users to instantly access the physical identity of federal employees and contractors, but it will also cater to emergency situations, where an individual may need access to services that would not normally be available to them. However, the impact of the directive extends far beyond its effect on the 1.8 million federal government employees or its extension to the millions of military personnel and contractors: the directive has accelerated a convergence of demand for e-ID with that for physical and logical security in the commercial sector as much in as the government sector. Shared Services Driven by the need for efficiency and modernization, government organizations are extending the shared services concept: instead of merely consolidating services on the back end, they are seeking to join front-end services across multiple organizations to create new and improved end userfacing services. With shared services, they can address issues such as how to share information among law enforcement, public safety, and intelligence communities; how to affordably deliver new government services; or how to deliver employment, welfare, and other citizen services. Governments are now becoming federated digital communities that share information and offer 24/7 selfservice. They have to support applications, directories and data repositories for services that are delivered across multiple government and private enterprise boundaries. Clearly, all of this requires the correct identification, authorization, administration and lifecycle management of user identity. Regulatory Compliance Government agencies are required to comply with evolving regulatory and privacy movements-particularly those that monitor cross-agency or inter-border processes and service agreements. As a result, UID or e-ID is a key to government agencies' ability to track and audit all user and administrative activity across multiple organizations enabling them to satisfy regulatory and legal mandates. Fraud Prevention Fraud costs governments worldwide millions. For example, in the U.K., the Department for Work and Pensions (DWP) estimates that £20 - £50 million of benefit fraud arises as a result of identity fraud. The U.K. government estimates that the use of false identity information currently costs the U.K. more than £1.7 billion per year. Although much is debated regarding the relative cost benefits of introducing e-ID cards, or even whether e-ID cards would solve the identity fraud issue (more than likely, the highest resolution to this problem would need to couple e-ID with Business Intelligence software to analyze anomalies and pinpoint fraudulent transactions and behaviour and visibility into process orchestration with the appropriate business process management and activity monitoring to define process fixes to avoid future fraud), there is no escaping the fact that identity fraud is a significant national cost. Technology Challenges in the Journey to e-ID-Driven Services There are many challenges surrounding the technology requirements for e-ID. In order for a government to transform the way it delivers services, the following challenges need to be taken into account: Figure 1. Challenges facing a build-out of services based 108 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Universal Citizen Identity (UID) Securing Identity Firstly, there is the issue of authenticating and authorizing users for access to shared services. The security and reliability of authentication mechanisms may vary, depending upon the desired authentication level. Further, the stronger the authentication, the greater a government's confidence will be that an entity corresponds with the claimed set of attributes. Authentication is typically subdivided into two separate classes. Data authentication is the e-ID technical process of verifying that a claimed attribute corresponds to the actual attribute held by an entity. Entity authentication can be identified by factors, including knowledge (such as a password), possession (such as a token), a personal characteristic (biometrics), location (network address or phone number), or a combination of these factors, often referred to as strong multifactor authentication. The use of PIN numbers is the most common means of securing identity, although biometrics is increasingly used as an additional security feature to the PIN. Where biometrics is not available or insufficient, one would want to use software like Oracle Adaptive Access Manager to provide real-time risk scoring to identify potential fraud or identity theft. Securing Services The challenges in securing services are related to ensuring compliance with laws, and deploying travel and border control tools for improving national security. A further challenge concerns how to maintain up-to-date, secure e-IDs in a climate of potential theft and fraud. The difficulty of securing services is compounded because applications within government organizations are frequently built using distributed architectures, which makes it a challenge to manage security consistently across multiple government organizations. Governments need to manage security in many different places, where data is often stored in multiple, independent-security silos. In order to foster reuse of existing information and encourage transactional resources as services, they must resolve the issue that most existing services are built in a different application environment and may utilize different security technologies. Data Privacy Who should get access and across which multiple services? Citizens and businesses require full control of their data with select access to specific data. They also need to be educated regarding their personal data for example, who, how, when and to what extent they should delegate control and view of their personal data. Government organizations as stewards of their citizens' personal data would then need to build policy and automate processes. This would support granular sharing of pieces of their citizens' personal data for eGovernment services across organizations and even across borders. More specifically, e-ID requires Role Based Access Control (RBAC)-connecting users to resources while controlling access to those resources-determining who can access what. However, it gets more complicated when the system must also control who can access what from where (when they are in a different country) or with which e-ID (when they are requesting information with an e-ID card for a siloed government service). For example, could an electronic driver's license be used to access electronic health records when a citizen is abroad-either for routine health care or in an emergency scenario such as a vehicle accident with a critically injured driver? Although an e-ID may remove some of the technical challenges in accessing disparate sets of data, government policies will still determine how securely and efficiently information will flow across governmental data silos. While data sharing challenges across silos have always existed, eID combined with SOA will enable joined-up service scenarios that force policy decisions in the near-term. Examples of these policy decisions include the following: " From an organizational perspective, governments need to decide which authorizations are required in the system, who may give and hold them, and what they meanbased on how and when they are propagated to additional government and commercial entities; " From a technical perspective, governments need to decide how to model this into their systems. Do they create a central authorizations database? Or do they send referrals to related, trusted systems? Who may manage the authorizations? How should their validity be checked before an authorization is exercised? " From a governance perspective, governments need to be aware of the legal requirements for authorization. For example, does it require a written contract, signature, or acceptance of the receiver? What are the legal issues for cross-border activity? For example, is the authorization valid in the country where it is given, where it is received, or where it is exercised? Shared Services Interoperation The fact that governments across the globe are striving to have a single sign-on (SSO) for their online services for each citizen and business demonstrates how e-ID needs to be a shared, integrated cross-government service. While software components for SSO provide unified SSO and authentication across multiple government agencies and departments, they are the tip of the integration iceberg; several other components necessary for e-ID-driven shared services interoperability are required and must also take an SOA approach for Identity as much as SOA is currently thought of for the underlying infrastructure e-ID-Driven Services Portfolio Orchestration Within the brave new world of shared services, government IT has increased its value but also has a higher profile. IT is now in charge of delivering a scalable, adaptable architecture for the delivery of government services to meet the ultimate demand of having to do more with less. Doing more with less isn't just about less expensive new infrastructure; it is about securely reusing and aggregating legacy data and leveraging the existing infrastructure. Just as there is a need to build composite applications that reuse existing application infrastructure as a cost-effective means 109 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Universal Citizen Identity (UID) of building shared services, e-ID and its associated single sign-on will require composite records that are dynamically created and altered based on the specific set of services delivered to an individual citizen or private business. Service Management and Governance As mentioned above, the key to successful sharing of services based on an e-ID will be agreement and coordination among several government organizations. Again, the technology will provide the basis for a minimum set of information about an individual to be stored in electronic format and for this information to be dynamically aggregated and filtered for various disparate data records-to ultimately determine how and what services to deliver to that individual. However, this cannot be done without strictly adhering to existing regulations that each organization must follow or without complying with the guidelines of their respective data stewards. In some cases, laws will need to be rewritten to allow the information to be shared and for new auditing routines to ensure compliance. While e-ID is indeed a cultural, organizational, and political issue, there are still elements of business process management (BPM) and SOA that can facilitate efforts. These technologies can align stakeholders within each government's line of business operations, within IT organizations, and across multiple organizations, and help build service level agreements (SLAs) among them. Service-oriented Architecture-the Heart Of Service Delivery The fundamental issue for government agencies considering e-ID is to look at it as the 'on-ramp' to delivering shared services. So what does 'onramp' mean? In essence, once Role base Access Control (RBAC) has been achieved, e-ID can act as the secure gateway to providing online citizens, businesses, and other communities with a wealth of services. Unlock the authorization and access issue, and online communities have a ramp into federated portals and services. Service Oriented Architecture (SOA) enables government agencies to bridge the gap and make e-ID a type of on-ramp to next-generation eGovernment services. It represents an IT strategy that encourages the creation of loosely coupled government services that are interoperable and technology-agnostic. These can be combined and reused quickly to flexibly meet citizens' and businesses' needs. The 'service' part of the SOA acronym relates to government services, such as authenticating the identity of an individual, making a tax payment online, or updating a record in a database. SOA isn't a new strategy, but the advent of emerging standard technologies-such as Web Services-makes it significantly easier to implement. An SOA solution consists of a composite set of services that comprise an end-to-end business process. Each service provides an interface-based service description to support flexible and dynamically reconfigurable processes. SOAs provide general, reusable interfaces at the business level rather than at the component level. Within this scenario, the public sector IT manager becomes less like a plumber racing to fix a leaky pipe and more like an orchestra conductor, composing free-standing services into smoothly flowing workflows that model business processes. The secure and appropriate exchange of identity-related information between users, applications, and service providers (both internal and external) is the basis of providing deeper and richer functionality for SOA. SOA enables e-ID to deliver the next generation of eGovernment services as it Provides a single, shared view of services Allows communities access to legacy and multiple heterogeneous platforms across different government departments Enables government to build secure, host-based e-ID services Removes security from the application to the service level Applies governance to services Manages the lifecycle of the services Citizen-centric Online Services Figure 2. SOA makes e-ID the on-ramp to nextgeneration eGovernment services SOA requires a new set of technical standards and design patterns as well as new strategies for design, implementation, testing, operation, and governance. In fact, the definition of what comprises an application changes too. It requires a shift from a standard programming model based on applicationspecific APIs to a higher-level integration model closely aligned with joint business process analysis by government management. In some cases, these processes might be generic core services, identical to those in the commercial space. Government agencies have the same needs for document management, e-mail, enterprise resource planning (ERP), and other more generic functions. In other cases, public sector IT managers must deal with stricter e-ID security requirements, 110 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Universal Citizen Identity (UID) the need to deliver actionable real-time information, or the need to provide public access to government services to allow citizens to, for example, vote, register as a driver, or pay taxes. Centralized Security in a Service-Oriented Architecture Environment Organizations can no longer hard code security inside their applications. They need to leverage security as a service and extract security out of their applications. Why is it so critical to manage security as a service? When implementing an e-ID approach, government needs to enforce a common security policy across a whole community. Therefore, if security remains at the application level, it will not be possible to have a common and consistent approach. Solutions such as Oracle Access Management Suite enable government to centralize security as a service and remove the need for security at the application level. CONCLUSION TService-Oriented Architecture improves how e-ID cards are managed and used, offering the following benefits: identification, collection, publishing, and subscription to a set of public and privately built shared services. Single view of services: e-ID delivers federated portals and identity services to users of the e-ID. Increased return on investment (ROI): Leverage BPM into SOA planning and execution to ensure all policies are properly implemented and the underlying processes to execute these policies are optimized. Leveraging of existing services: Using SOA to leverage existing applications and data as reusable building blocks, new business processes and applications can quickly and easily be combined. Identity propagation: e-ID can be used as a federated ID mechanism by threading ID and associated privileges and restrictions on use through to and between each service entity and government organization. Centralized policy management: Ensure compliance with regulations for cross-border, cross-organization, and other multi-party agreements around services delivered to e-ID credentialed end users. Managed service growth: Service governance and lifecycle management to optimize In the central and local government spheres, trust will be the necessary foundation for secure interoperability, and will be central to the successful realization of what's possible with online services. From the user perspective as well as that of the deploying organization, it's an issue of who is trusted with what. Ensuring trust in the system requires the proper organizational culture, policy, business, technology, and infrastructure that can adapt to changing needs and improve understanding of requirements. Sharing and interoperating among agencies and government departments creates opportunities to simplify processes and unify work, as well as improve the overall transparency and efficiency of government. Secure interoperability, based on identity management solutions, enables substantial cost savings, streamlined processes, and faster communication of vital information to the benefit of governments and citizens of all nations. 111 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Universal Citizen Identity (UID) e-ID in the Real World e-ID has been implemented in various forms by governments around the world: Finland-Katso France-GIE SESAM-Vitale eHealth Insurance Card Finland is spearheading work on SOA-driven shared services delivery. The Finnish government was challenged with the need to create a flexible means of issuing and authenticating identities to customers, organizations, or citizens. It also needed to reduce the cost of supporting customers at the point-of-service and implement a solution for RBAC and organizational authentication. The outcome is Katso. Katso is a nationwide identity management, authentication, and authorization system, and it is already used by the Finnish Tax Administration and The Social Insurance Institution. As part of the development of eGovernment services, both of these institutions required a solution for rolebased identity management and organizational authentication. The Katso system will become the de facto authentication and authorization solution for eGovernment services in Finland. New government agencies and services are joining Katso in growing numbers and more than 300,000 organizations will be using Katso when fully deployed. It is also estimated that up to 30 large-scale eGovernment services will be using Katso by the end of 2008. Katso will undoubtedly be in the forefront of standard adoption in the world among large-scale government infrastructure services. The Groupement d'Intérêt Economique (Economic Interest Group) SESAMVitale is a service provider whose mission is to provide the technical expertise, to develop and promote the SESAM-Vitale program. The GIE SESAM-Vitale was created by the partners of the French Health Insurance to develop common solutions to meet the needs of all its members-whether they are part of the compulsory systems or the complementary insurance organizations. SESAMVitale currently links more than 223,000 health care professionals in France with the health insurance system, for the benefit of millions of insured persons who have the Vitale card. It is an innovative project comprised of new technologies to simplify and accelerate exchanges, thereby doing away with any paperwork. Oracle WebLogic Server is being used within this project, named 'Frontal Chaine d'Administration des Cartes' (FRONTAL CAC), to manage the main functionality on the Vitale card. The smartcard is the most used in France (and is circulated to all insured persons and beneficiaries age 16 and above). The application server helps process more than 900 million claim reimbursement forms per year and has reduced the time taken to reimburse insured individuals from three weeks using the paper-based system to five days. Belgium-BELPIC e-ID Card Italy-Ministry of the Interior eID Card The Belgian Personal Identity Card (BELPIC) is a highly secure, easy-to-use and affordable digital identity system for all citizens to use to file taxes, open bank accounts, and make purchases online. Citizens can use their e-ID through the Beligan eGovernment portal (runs on Oracle WebLogic Portal) and the Oracle Service Bus provides the underlying services orchestration bus to back-end platforms across the various government agencies. Belgian citizens can already use the new e-ID card for identification, authentication, and authorization for many public services, including secure online tax form declaration, official document requests (including marital status and birth certificate), electronic submission of court case conclusions, as well as access to the public library, swimming pool, and other community services. The Belgian government estimates that by the end of 2009, 8.2 million citizens age 12 years and older will have national e-ID cards. The challenges facing the Italian Ministry of the Interior were to develop a national identity card, the Carta d'Identità Elettronica-or CIE. The solution needed to offer a greater degree of security and availability than the previous methods of identification. Simultaneously, the solution also needed to combine previous identification and social services cards. The solution supports, integrates, certifies, and tracks more than 70 million national identity cards. To obtain the CIE, Italian residents in the municipalities simply provide identity information that is checked against a central infrastructure at the Ministry of the Interior, which authenticates the information, generates a signature and digital certification, and then the municipality produces the actual e-ID card. The Italian Interior Ministry is now able to identify and authenticate all citizens on the Web using digital certificates. Initially delivered by 80 municipalities, the e-ID card can now be requested in any Italian city. Local municipalities will be able to install services on microchips and offer them to all citizens. Germany-eHealthcard Germany has begun trialing an electronic healthcare card (the 'Gesundheitskarte'), which will contain basic patient data such as name, age, next of kin, and insurance details, as well as electronic prescriptions. The concept is based on distributed broker services, which guarantee message switching on the basis of request chains between the telematic infrastructure and connectors, professional services, and other services-including identity verification. Italy-Ministry of the Interior Residency Permit The Italian Ministry of the Interior initiated a project to deliver a new electronic version of residency permits called Permesso di Soggiorno Elettronico, or PSE. The objective of the new PSE is to provide a standard document that conforms to European Union directives, to enhance security in the process of production and delivery of the PSE, and to provide the individual with a clear and secure document. PSE works via an infrastructure similar to CIE, although extra checks are completed automatically-for example connection for checking with the Automatic Fingerprint Identification System (AFIS). PSE went live in July 2006 across six police forces and across Italy in December 2006. 112 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Digital Inclusion at Grassroots Level for Achieving Millennium Development Goals Digital Inclusion at Grassroots Level for Achieving Millennium Development Goals Dr. L.R.Yadav Senior Technical Director R.S. Singh Senior Systems Analyst National Informatics Centre, Department of Information Technology, MCIT, Government of India, Yojana Bhawan, Lucknow - 226001 Introduction Digital technologies developments have generated a period of extraordinary social and cultural change. They can improve how we work, how we are entertained, how we communicate with each other, the healthcare, education available to us, how information and knowledge can be brought together and used for our benefits. There is a strong correlation between digital exclusion and social exclusion. It is worth mentioning here, what Sood (2002) had said about the preliminary experience of rural connectivity projects in different parts of rural India. He concludes that nonelite, rural, artisan, downtrodden and adivasi communities do not, and will not, use ICT in the same way as urban elite do elsewhere in the country. Therefore, Sood emphasizes that far from replicating the online behaviour of highly connected and cosmopolitan societies, digital development in India warrants the design of products, services and technologies that solve local problems and ameliorate local socio-economic conditions. Digital inclusion has two strands. Firstly, it is about ensuring that all citizens have the opportunity to enjoy the direct benefits which digital technology has to offer, through both accesses to technology and the skills, motivation and confidence to use it to improve the quality of their lives. Secondly, it is about ensuring that the indirect benefits of technology to improve all aspects of service planning and delivery are fully exploited. Over the past two decades, there have been islands of e-Inclusion initiatives in India at the national, state, district, block and even gram panchayat level. Some of them have been highly successful. Experiences from successes as well as the failures of the various initiatives played an important role in shaping the e-Inclusion strategy of the country. The basic lessons learnt are; need for political ownership at the highest level, a dedicated team with a stable tenure, PublicPrivate Partnership (PPP), defined architecture, standards and policies, to develop the basic core and support infrastructure, start with small pilots before scaling-up and issues of re-engineering and management of change. Hence, there is a need for taking a holistic view towards the entire e-Inclusion initiative across the country. Increasingly , it was perceived that if e-Inclusion has to be speeded up across the various arms of government at the national , state and local government level, a programme approach would need to be adopted, which must be guided by a common vision, strategy and approach to objectives. This approach would add the advantage of enabling savings in cost, in terms of sharing the core and support infrastructure, enable interoperability and the citizen will have a seamless view of government. 113 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Digital Inclusion at Grassroots Level for Achieving Millennium Development Goals Millennium Development Goals The eight Millennium Development Goals (MDGs) of the United Nations, September 2000 reaffirmed its commitment to the right to development, peace, security and gender equality, to the eradication of many dimensions of poverty and to overall sustainable development. The MDGs are; eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower women, reduce child mortality, improve maternal health, combat HIV/ AIDS and other diseases and ensure environmental sustainability and develop a global partnership. India's First Country Report on MDGs captures achievements, challenges and policies with reference to the goals and targets and reveals that there have been substantial improvements in the lives of people of the countries over the years. This has been possible due to the planned implementation of programmes despite the enormous, complex and diversified problems of our nation. Our country has already undertaken measures towards globalization, liberalization and decentralization at grassroots level to achieve vibrant economy, growth and development. The benefits of digital technology revolution need to permeate at grassroots level, which calls for a Bottom-Up approach. The on-going decentralization process initiated by the 73rd & 74th Amendments of the Indian Constitution which gives greater responsibilities and powers to the Panchayats and Nagar Palikas as a third-tier of governance, offers a new era of opportunity for local planning, effective implementation, monitoring of various socio-economic development programmes and services. This will in turn help the weaker sections of the society to share the responsibility of governance at least at the lower level and to achieve MDGs by the year 2015. and catalyst for the implementation of NeGP and is tasked with providing assistance to the Departments & also serves as the secretariat to the Apex NeGP Committee and assists it in managing the programme. The vision of NeGP is to make all government services accessible to the common citizen in his locality, through common service delivery outlets and ensure efficiency, transparency & reliability of such services at affordable costs to realise the basic needs of the common citizen. NeGP components are; Common Services Centre (CSC), State Wide Area Networks (SWAN), State Data Centres (SDC), Capacity Building, Standards, Awareness & Communication and Assessment. Indian Government has approved a CSC Scheme for providing support for establishing 100,000 CSCs in 6,00,000 villages of the country. CSCs will function as the front-end delivery points for government, private and social sector services to rural citizens of India, in an integrated manner. The CSC Scheme has a 3-tier implementation framework: Village Level Entrepreneur (VLE), to service the rural consumer in a cluster of 5-6 villages at the 1st level. Service Centre Agency (SCA) to operate, manage and build the VLE network and business at the 2nd level. State Designated Agency - to facilitate implementation of the Scheme within the State and to provide requisite policy, content and other support to the SCAs at the 3rd level. The SWAN Scheme for 29 States & 6 UTs, at an estimated outlay of Rs. 3334 Crores, has been approved by GOI, in March 2005 to set up SWAN, interconnecting each State/UT Head Quarter with District Head Quarter and below each District Head Quarter with the Tehsil/Block Head Quarters with minimum 2 Mbps leased line. The objective of the Scheme is to create a secure close user group government network for the purpose of delivering G2G and G2C services. State Data Centre (SDC) has been identified as one of the important element of the core infrastructure of NeGP. SDCs are being created for the States to consolidate services, applications and infrastructure to provide efficient electronic delivery of G2G, G2C and G2B services. These services can be rendered by the States through common delivery platform seamlessly supported by SWAN and CSC connectivity extended up to the village level. Digital Inclusion Framework and Drivers Mission Mode Projects and Inequality in the use and application of digital technologies is a new driver of social, regional and economic exclusion in Development Impact the 21st century, which risks accelerating existing social, regional and economic divides and creating new ones. The drivers of digital inclusion varies from state to state, region to region and across different segments of market, but most commercial and government market research suggests that the three key factors which drive people first to become digitally engaged and subsequently to become more sophisticated in their digital engagement are: Access to ICT, Confidence and Motivation. Considering the multiplicity of agencies involved in the implementation of digital inclusion project and the need for overall aggregation and integration at the national level. Department of Information Technology (DIT) is the facilitator The need for efficiency in government processes and service delivery mechanism is a long-felt one. GOI has recognized this need and hence included the same as a core Mission Mode Project (MMP) under the NeGP. It has targeted that more than 2 lakh users will be benefited trough MMPs. This project will significantly improve the operational efficiency of the government by transitioning to a less paper office within next five years. States have been given flexibility to identify a few additional state-specific projects, which are very relevant for the socio-economic development of the State. NeGP is being promoted as a Centralised Initiative to the extent necessary, to ensure citizen service orientation, to realise the 114 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Digital Inclusion at Grassroots Level for Achieving Millennium Development Goals objective of interoperability of various e-Governance applications and to ensure optimal utilisation of ICT resources. However, the actual implementation of the various MMPs is decentralised, with the line ministries concerned being responsible for its implementation. PPP would be promoted wherever feasible to enlarge the resource pool without compromising on the security aspects. MMPs have been classified in the following 3 categories; Central MMPs, State MMPs and Integrated MMPs. Some important projects such as PRERNA, NLRMP, e-District, e-Scholarship, ePension, SPIDER, Road Transport, Treasuries, eProcurements, e-Courts, e-Trade, e-Police, e-Panchayats, eAgriculture, e-Municipalities bringing the transparency in the local governance. Property Evaluation & Registration Application (PRERNA) System Property Registration has been taken as a State Level MMP under NeGP and PRERNA System was designed and developed to eliminate the maladies affecting the conventional registration system by introducing electronic delivery of all registration services through a client- server based technology. It has become very easy and has reduced the registry time to 30 minutes. There are 355 Sub-Registrar Offices (SROs), 305 Tehsils, 71 Districts in the State. More than 1.50 crore persons visit the SROs and nearly 23 lakhs documents are registered every year. PRERNA features are; circle rate list district, ward/pargana, mohalla/village wise, online market valuation of property, calculation of stamp duty & registration fee and downloadable deed formats. Sankhyikiya Patrika : Internet-based Data Entry & Retrieval (SPIDER) System SP having information on more than 3500 parameters of village, block, district and divisional levels in the form having more than 100 tables and sub-tables are updated and published annually. It covers information related to major sectors like Agriculture and Allied Activities, Industry, Social Sector, Power, Transport and Communication, Banking, Urban Facilities, Rural Infrastructural Facilities etc. A web enabled SPIDER system has been implemented for data feeding/updating directly from the districts from the year 2004 and dissemination of information from the year 2000 on 24x7x365 basis. More than 2-3 MB data is being generated per year per district and till today more than 3 GB data is available in digital form for the years 1995-2007 and update for the year 2008 is in progress. After its implementation, there is a saving of about Rs.1.5 crore per year of the state government. e-Scholarship e-Scholarship is a web based solution implemented by the Government of Uttar Pradesh to streamline the distribution of Scholarships to more than two crore students belonging to OBC, SC/ST, Minority and weaker section of the society. The project also provides a comprehensive MIS to the State Government for monitoring and analysis of the Scholarship distribution in the state with an annual budget of about 2000 crore. It assigns a unique identification to each student getting scholarship, tracks the performance of the student till he/she gets proper employment opportunity. Different processes have been simplified as students do not need to fill form every year and are assured of timely transfer of funds into their bank accounts, chances of fraudulent schools/ colleges claiming scholarships has been reduced considerably, timely and accurate information is available to the decision makers and planners & chances of under utilization of funds reduced. National Land Records Modernisation Programme (NLRMP) Maintenance of land records has now become more vital for administrators and creation of a land information system is one of the key issues facing governance today. Land records itself is a generic expression and could include records such as the register of lands, records of rights, tenancy and crop inspection register, mutation register, disputed cases register etc. It also includes primary information about land presented in terms of its geological information like the shape, size, landforms, soils; economic information related to land use irrigation and crops and the information pertaining to the legal rights, registration and taxation. For modernization of land records system in the country, a modified programme, NLRMP has been formulated by merging two centrallysponsored schemes of computerization of land records and strengthening of revenue administration and updating of land records. The ultimate goal of the NLRMP is to usher in the conclusive titling system with title guarantee, to replace the current presumptive title system in the country during the eleventh five year plan. e-District Districts are the de facto front-end of government where most G2C interaction and bulk of citizen centric services are delivered. As such, there was a felt need to improve this experience and enhance efficiencies of the various departments at the district level to enable seamless service delivery to the citizen. The project scope is to integrate various departments of the districts to provide seamless services to the citizens. For successful implementation of edistricts, the redesigning of the existing processes and delivery mechanism to facilitate an efficient and effective service delivery structure, has been identified as a key activity. The objectives of the MMP include backend computerization to enable efficient delivery of government services and to proactively provide a system of spreading information on the government schemes, planned developmental activities and status of current activities. Front ends under the scheme are only to be built at District, Tehsil and block level, in the form of citizen facilitation counters. Village level linkage would be established through CSC and issuance of Certificates, Licenses, Ration Cards, old age pensions, family pensions, widow pensions etc 115 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Digital Inclusion at Grassroots Level for Achieving Millennium Development Goals CONCLUSION Digital Inclusion is the growth mantra for policy-makers today, not just in India but the world over. The concept of digital divide is frequently employed to discuss and analyze the socio-economic inequities that exist in relation to the use of ICT. These disparities occur across local, regional, state and national levels of society and consequences include the reduction of people's ability to participate in the knowledge economy. This exclusion limits the ability of people to participate economically, politically, educationally, socially and therefore presents an obstacle to the maximization of human wellbeing. The Framework for inquiry into the digital divide is a socioeconomic framework for understanding the ICT divide that employs different levels to show that digital exclusion is both socioeconomically generated and has socio-economical and individual consequences. The vision of NeGP is to make all government services accessible to the common citizen in his locality, through common service delivery outlets and ensure efficiency, transparency & reliability of such services at affordable costs to realize the basic needs of the common citizen. Acknowledgement We are thankful to Dr. B.K. Gairola, Director General, NIC and Shri S.B. Singh, State Informatics Officer, NIC Uttar Pradesh for their constant support and encouragement. References 1. Department of Land Resources, GoI website http://dolr.nic.in/. 2. Directorate of Economics and Statistics website http://updes.up.nic.in/. 3. Knowledge Economy : The Indian Challenge (2009) edited by Ashoka Chandra and M.K. Khanijo. 4. National e-Governance Plan of India available online at http://www.mit.gov.in/ . 5. Planning Department, Government of Uttar Pradesh website http://planning.up.nic.in/. 6. Sood, A.D.(2002) : "Towards a Knowledge Society". Available on line at sttp:// www.indiatogether.org/openions/ictdiary.htm. 7. Stamps & Registration Department, Government of Uttar Pradesh website http:// registryoffice.up.nic.in/. 8. The United Provinces Panchayat Raj Adhiniyam, 1947, 1994 Sanskaran. 9. Uttar Pradesh Kshettra Panchayats and Zila Panchayats Adhiniyam, 1961, 1994 Bilingual Sanskaran. 10. Yojana : September 2009, Published by Ministry of Information & Broadcasting, GoI. 116 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Social Security for the Informal Sector in India – Achieving Millennium Development Goals Social Security for the Informal Sector in India Achieving Millennium Development Goals Shrey Goyal Student - Indian Institute of Technology, Kharagpur, India Varun Singh Student - Indian Institute of Technology, Kharagpur, India The results from a sample survey carried out by the National Sample Survey Organisation (NSSO), showed that out of the total workforce of 397 million in India, only 28 million workers are employed in the organised sector, and the remaining 93 % in the unorganised sector. It reveals that over a decade, the employment in the organised sector has been almost stagnant or slightly declined. The informal sector in India, found to be generating upwards of 60% of the total NDP, is broadly characterized as consisting of units engaged in the production of goods and services typically operating at low level of organisation, with little or no division between labour and capital as factors of production and on a small scale. Labour relations, where they exist, are based mostly on casual employment, kinship or personal or social relations rather than contractual arrangements with formal guarantees. Notwithstanding its impressive share in the total employment and increasing prominence in terms of national income generation, it may be pointed out that this impressive growth is without any corresponding increase in productivity, real wages, or improvement in working or living conditions. Further, the sector is characterised by excessive seasonality of employment (especially in the farm sector), preponderance of casual and contractual employment, atypical production organisations and work relations, absence of social security measures and welfare legislations, negation of social standards and worker rights, denial of minimum wages and so on. Poor human capital base (in terms of education, skill and training) as well as lower mobilisation status of the workforce further add to the vulnerability and weaken the bargaining strength of workers in the informal sector. Thus, the sector has become a competitive and low cost device to absorb labour, which cannot be absorbed elsewhere, whereas any attempt to regulate and bring it into more effective legal and institutional framework is perceived to be impairing the labour absorbing capacity of the sector. Workers in the informal sector are generally not unionised, have low earnings and poor working conditions, and are characterised by absence of any form of social protection, whether it be employment security, pension, or coverage for risks such as ill health, accidents or death. In fact, for most of these the most basic protection, that is minimum wage, is also not ensured. Rough estimates shows that less than 3 per cent of informal sector workers are covered by any social security measures. Liberalisation reforms, while being hailed for benefitting the economy, have actually been found to hit the informal sector workers negatively, and it is being 117 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Social Security for the Informal Sector in India – Achieving Millennium Development Goals realised that there is a need for social security programmes particularly for neutralising some of those negative consequences. Minimum security needs to be ensured for those unable to gain from the post-liberalisation economic growth process. Besides, the case for any changes to labour laws can be strengthened if all workers have at least a minimum of social security. The process of development in India become more socially and economically inclusive if it is not to generate severe social tensions that can lead to disruption and violence. The social security problems of workers in the unorganised/informal sector may be divided into two sets of problems. The first category arises out of capability deprivation in terms of inadequate employment, low earnings, low health and educational status, among other factors, that are related to the generalised deprivation of the poorer sections of the population. The second category arises out of adversity in the sense of an absence of adequate fallback mechanisms (safety nets) to meet contingencies such as ill-health, accident, death, and old age. The fact that a majority of workers from the socially backward communities find themselves in the unorganised/ informal sector imparts a certain social dimension to the characteristics of these workers. In this context, the social security needed to be offered to these workers should also be seen as a force of social upliftment. In addition, there is the economic argument in favour of such protection - a consensus has arisen internationally that the absence of social security debilitates workers, affects labour productivity and thus has implications that extend far beyond the workers and their families themselves. The indirect costs of the absence of social security might as well be expressed in the greater social costs of policing and management of illegal and criminal activities, widespread illhealth and various other social and economic problems. Studies by agencies such as the Ministry of Labour and Employment show that implementation of measures to bring the informal sector workers under regulatory and social protection instruments requires huge infrastructural and institutional arrangements involving financial implications beyond the capacity of the Government. The state has already faced much criticism for the enormous burden placed by the ambitious National Rural Employment Guarantee Scheme (NREGS) on the exchequer, besides the wide condemnation of the reprehensible implementation and limited effectiveness of the scheme. Thus, besides the financial implications, effective implementation and actual benefits reaching the poor are also issues of contingency as far as government schemes for social security of the working poor are concerned. Hence, while provision of very basic social security, essentially covering health insurance, maternity benefits, life insurance and old age pension, which can go a long way in improving the conditions of the informal sector workers, not only has huge financial implications, the scale of the formalisation process also poses challenges for implementation. As noted earlier, the absence of a meaningful social security arrangement does not merely pose problems for individual workers and their families. It also has wider ramifications for the economy and society. From an economic point of view, it debilitates the worker's efficiency and his/her ability to contribute meaningfully to increasing production and productivity. The informal sector in India has widely been reported to suffer from a "low productivity syndrome", compared to the formal sector. Provision of social security benefits to workers can be expected to act as an incentive for them to improve their skills and hence productivity. Thus, formalisation of workers can generate greater profits for their employers. Hence, while the involvement of the state is unavoidable at present in India, the informal employers can give a hand in the process by facilitating social security implementation for their own employees. Such a speedy formalisation process may be implemented by their collaborating with the government, possible under a hybrid model consisting of state-sponsored benefits to workers coupled with incentives to informal enterprises. This helps limit the cost to the state as the enterprises assume the role of welfare providers. Essentially, the problem of formalisation of 300 million informal workers can be reduced to a relatively simpler, quicker and lesser expensive process of converting informal enterprises to formal employers. The financial implications of the minimum basic social security scheme, as described above, amount to Rs.1,095 per worker per year, as calculated by the National Commission for Enterprises in the Unorganised Sector. Of this, Rs. 380 will go as premium for health insurance, Rs. 150 for life insurance and Rs. 565 towards old age security. Thus, basic social security can be provided at a cost of Rs.3 per day per worker. Since this provision would have direct as well as indirect benefits in the form of increased productivity and profitability for the employer, they can be expected to bear the major of the financial brunt of the scheme for their own employees. Besides that, much of the institutional burden of the scheme can be eased by partnering with the Unique Identification Development Authority of India (UIDAI) to access a reliable database of informal workers equipped with Unique Identification numbers, which has already been sought after to improve effectiveness of NREGS. Thus, the proposed scheme need not waste substantial institutional and financial resources on smart cards and biometric identifiers as the NREGS did. Several barriers to participation by enterprises and employers do exist. Additional transaction costs and harassment by officials, resulting in lower profitability, can be 118 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Social Security for the Informal Sector in India – Achieving Millennium Development Goals expected to be the major discouraging factors for enterprises, who may seek workarounds and loopholes in the scheme. It might thus limit the applicability of the programme, falling in the same trap as the NREGS. However, this can be overcome by undertaking policy initiatives to reduce red-tapism in the process. Once again, provision of UID numbers to workers shall be helpful in reducing bureaucratic hassles. Keeping the large positive implications of the successful implementation of the scheme on the economy, a reduction on tax rates and employing other measures that can help reduce transaction costs on the employer should be feasible for the state, and can further enhance implementation efforts. The fact that provision of Social Security benefits to workers incentivises them to improve their skills and productivity, thus enhancing the employer's profitability, needs be highlighted amongst informal enterprises. unorganised sector is ensured, which can be done by collaborating with employers in the informal space, and by giving them the necessary incentives to encourage participation. For successful implementation, lessons need to be learnt from past experiences of similar schemes such as NREGS and those by state governments. The further challenge is to extend social security to 300 million workers covering all States and all groups of workers. As India has not implemented protective social security schemes on a large scale, more debate and discussions are needed for better implementation. Lessons learnt from the NREGS implementation illustrate the need of continuous monitoring of the scheme. For this purpose, civil society organizations and professional institutions having technical competence and resources can be identified and roped in for the same purpose. Involvement of Panchayati raj institutions may also enhance feasibility. Special emphasis has to be laid on prevention of corruption and targeting errors, for which strict law-enforcement and penalizing structures shall need to be created. Legislation alone would not be enough for effective implementation. Unless adequate infrastructure is present to actually deliver the promised benefits from the scheme, most of the provisions will end up being essentially useless. Spending needs to be increased at the grassroots level, especially in critical areas such as rural healthcare facilities, to enhance infrastructure and ensure availability of proposed social security benefits. The experiences of previous attempts by state governments and welfare boards need to be studied and lessons learnt for implementation of social security measures in the future. Kerala's stint with social security for the informal sector provides many valuable lessons. Kerala has made considerable progress in extending Social Security coverage through the mechanism of tripartite welfare fund boards. However, a lack of clear perspective has been felt, for which the schemes are being restructured. Delivery mechanisms have been found to be inefficient and expensive. The fund management of the welfare fund boards has shown a need for improvement, for which deployment of professional expertise has been suggested. Most importantly, it has been concluded that the expenditure by the Government to support the Social Service system needs to be limited to ensure sustainability, and community and non-governmental organizations have been seen as important resources. To conclude, 93 per cent of the workers in the unorganised sector do not have any social security in India. It should be an important concern of public policy to ensure that a certain minimum measure of social security in the References and Bibliography 1. Chandrasekhar, C. P. and Ghosh, J. (2006), "Providing social security to unorganised workers", The Hindu Business Line, 27 June 2006 2. Choudhury, C. (2009), "India's success story bypasses its unorganised sector", Hindustan Times, 14 May 2009 3. Dev, S. M. (2005), "Social security for unorganised workers", The Hindu, 26 September 2005 4. Government of Kerala (2009), "Labour Policy", available at: http://www.kerala.gov.in/annualprofile/ lab.htm (accessed 9 October 2009) 5. Kannan, K.P (2002), "The Welfare Fund Model of Social Security for Informal Sector Workers: The Kerala Experience", The Indian Journal of Labour Economics, Vol. 45, No.2. 6. Ministry of Labour and Employment, Government of India (2007), "INFORMAL SECTOR IN INDIA: Approaches for Social Security", available at: http://labour.nic.in/ss/INFORMALSECTORININDIAApproachesforSocialSecurity.pdf (accessed 9 October 2009) 7. Naaraayana, N. (2005), "Indian Govt tightens monitoring NREGA works", Microfinance Focus, 15 September 2009 8. Narayan, D. (2009), "Let's Get Organised About It", Forbes India Magazine, 28 August 2009 9. National Commission for Enterprises in the Unorganized Sector, Ministry of Small Scale Industries, Government of India (2006), "SOCIAL SECURITY FOR UNORGANISED WORKERS", May 2006 10. National Commission for Enterprises in the Unorganized Sector, Ministry of Small Scale Industries, Government of India (2007), "Report on Comprehensive Legislation for Minimum Conditions of Work and Social Security for Unorganised Workers", July 2007 11. Remesh, B. P. (2007), "Social Security for Unorganised Sector Workers in India: Alternative Approaches and New Initiatives", Proceedings of the 5th International Research Conference on Social Security, Warsaw, 5-7 March 2007 12. The Hindu: Special Correspondent (2009), "Unique ID numbers will help target benefits better: Nilekani", The Hindu, 29 September 2009 119 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management CRM and Stakeholder Management Dr. R. Ramakrishnan PhD Scholar, under the guidance of Dr. R Perumal, Reader in Management, DDE, Alagappa University, Karaikudi India A fundamental truth for any venture is that people are ultimately our only means to the end. Taking a stakeholder focus to any business ensures a higher probability of completion and success of such a venture. A stakeholder is anybody who has a claim, stake or vested interest in the issue at hand, or in an organisation, or in his or her relationship with a product, service or brand. Obviously the 'importance' of a stakeholder is directly associated with his or her ability to influence the project through their network of relationships; the difference in the analysis is in the way this is assessed. Customers are one of most important type of stakeholders. They hold the key to the value in the company and in fact, the company itself. There is a momentum-gaining awareness of the importance of effective stakeholder engagement, be it at the level of social/community participation, corporate reputation management, or at the level of marketing, branding and engaging with the consumer. Organisations cater to different sets of people with different needs and demands. They market their products based on the demands of the customers to maximize their satisfaction. An organisation will succeed only when customer needs are satisfied. The focus of every organisation has gradually shifted from customer satisfaction to customer delight. Business and society are interrelated. They both need each other to advance current corporate social responsibility thinking and execution. The interdependence of business and society implies that both business decisions and social policies must follow the practices of shared value exchange. A business must integrate social perspectives into its business and competitive strategy to put these principles into practice. Almost in every activity a business's value changes, touches on the community in which it operates. This interaction can create a positive or negative social consequence though the consequences may vary by location and other factors. Good stakeholder management is fundamental to the ability of a business to deliver enduring change. But there are different groups that need to be accommodated in a stakeholder management plan. Engaging with a number of individuals and organisations about multiple initiatives and issues can be a complex process for a company to undertake. Communication is the key to successful stakeholder relationships. Communication with the right people at the right time can improve a valuable relationship, minimize an issue, or ensure a sale. A transparent engagement process can ensure accountability and justification for decisions, which will strengthen trust within the community. The resulting benefit is a community where citizens have a sense of empowerment because they are directly engaged in the decision making process and share ownership on the decisions that are made. From an operational perspective, Stakeholder Engagement entails the creation of 120 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management effective linkages between the management of the stakeholders and the business objectives in order to achieve cumulative benefits. This means there has to be strategic synergy not only between costs and business objectives, but that synergy also has to include the company or organisation's relationships with its various stakeholders. Creating meaningful interactions between various stakeholders enable the identification of shared objectives, design of solutions that account for various perspectives, and creation of representative program strategies required to scale up important high-impact capacity development strategies. The key objective therefore in Stakeholder Management, is to identify stakeholders, measure their relative and absolute influence on organisational or project performance and on one another and then to manage the linkages between these influential relationships. It is an important discipline that successful organisations use to win, measure and manage support. It helps them ensure that they and their projects succeed where others fail. There are three basic approaches used to visualize map and understand stakeholders (1) CRM (2) Influence and social networks and (3) Techniques for listing and mapping stakeholders Customer relationship is based on experiences. Customer Relationship Management (CRM) is a process or methodology used to learn more about customers' needs and behaviours in order to develop stronger relationships with them. It helps businesses use technology and human resources to gain insight into the behaviour of customers and the value of those customers. CRM approach requires substantial data sets to be gathered about a key segment of the business stakeholder community( typically customers) followed by the use of data mining techniques that allow trends and opportunities to be identified graphed and communicated. These reports help the business to prosper as it helps the management to take the right decisions. CRM works effectively in situations where the business is relatively stable and there is a large class of stakeholders interacting with the business in a reasonably consistent way. Its focus is to build and maintain a customer centred enterprise cost effectively and generate a good ROI (Bligh 2004)1. Running a successful CRM project requires a high degree of stakeholder management. For projects to be successful, it is vital to understand the stakeholders' values and issues, in order to address them and keep everyone on board for the duration of the project. Today and in the future, CSR oriented Financial Institutions (FI) will have robust stakeholder engagement programs to solve complex sustainability challenges, provide input into business strategy, and keep abreast of stakeholder concerns. Organisations would want customers to trust them. The organisations need to be fair and open with the customers, 1 Bligh, P & Turk D. (2004) "CRM unplugged: Releasing CRM's strategic Value" Joh Wiley & Sons, New York and empower them to make informed financial decisions. The staffs are to be trained to determine the individual needs of the customers and communicate clearly with them. They must strive to offer helpful, professional service and offer them relevant, simple-to-understand products that they can trust. Responsible selling starts with clear, open and honest dialogue with customers, hence every interaction with a customer is as an opportunity to deliver the best customer experience. Organisations must consistently aim to offer customers a range of sustainable products and services that meet real needs. In order to have a better stakeholder management especially in the rural areas which is the bottom of the pyramid, there is a necessity for corporates to work towards financial inclusion for the same technology and communication are the prime moves. The seven C's of Stakeholder Management are very much relevant in this case: Concern Communicate Contribute Connect Compound Co-Create Complete Financial access was the most frequent mention of the social issues, with many commenting upon the role of Financial Institutions to help close the growing gap between the rich and the poor. Depending on the region, this is referred to as financial exclusion/social inclusion; serving the underserved, community development, etc. Typically, financial inclusion in India is characterized by the following: Lower outreach by financial institutions/MFIs/SHG Bank Linkage Programme in comparison to below poverty line (BPL) and low income population. Priority Sector Lending norm of 18% advances to agriculture is not met in many states. Also, agriculture's share in Priority Sector Lending has been declining in some states. Financial inclusion is characterized primarily as either general access to loans (mostly consumption or consumer loans rather than livelihood loans) or access to savings accounts. Very few risk management and vulnerability reducing products are available to small holder producers. Access to finance is primarily a bridging resource for many low income groups. A majority of the poor are engaged in agriculture and allied activities. Market imperfections and other factors (like poor infrastructure and production practices) severely constrain them in their effort to build sustainable livelihoods, This results in their often falling into a cycle of being financially included and excluded at various times. These market imperfections and related aspects have impacted the livelihoods of the poor in several ways, 121 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management including: (1) Increased vulnerability and reduction in livelihood security (2) Forced movement towards other types of livelihoods including migration to urban areas where they neither have the survival skills not a distinctive competence (3) Entry into perpetual debt traps, which they cannot come out of even when assisted by well meaning SHGs/MFIs, and (4) At the extreme, in a few cases, bondage and/or suicide. According to Ms. Usha Thorat (2007)2 on an all India basis, only 59% of adult population in the country has bank accounts which leave the 41% of the population as unbanked. In rural areas, the coverage is 39% against 60% in urban areas." Thus a majority are excluded from the payments system, which means not having access to a bank account and formal credit markets, forcing them to approach informal and exploitative financial markets. "Small farmers are forced to borrow money from moneylenders at high rates of interest, since less than 60% of the credit requirement of farmers is met by institutional sources." (Dr M S Swaminathan, Chairperson, National Commission on Farmers, 2006). These financially excluded sections largely comprise marginal farmers, landless labourers; those engaged in self employed unorganized sector enterprises, urban slum dwellers, migrants, ethnic minorities, socially excluded groups, senior citizens and women- all the vulnerable sections of the society. The barriers to access to formal banking system have been identified as relating to Culture, Education (Especially Financial Literacy), Gender, Income and Assets, Proof of Identity, Remoteness of Residence etc. Efforts are being made by the authorities- especially banking regulators to improve access to affordable financial services through financial education, leveraging technology, and generating awareness. Microfinance has enhanced their outreach over the period 2001-2007 in India. This growth is visible not just in terms of the number of active borrowers but also gross loan portfolio and total assets. While performance in terms of outreach and financial performance has been spectacular, the following three factors require attention 1. There is still a paucity of accurate data with regard to the absolute number of clients and poor women served. 2. While institutions have done well in terms of extending access to financial services to low income women clients, the focus has largely been in terms of delivery of credit. And 2 Thorat, Usha, 'Financial Inclusion - the Indian Experience', HMT-DFID Financial Inclusion Conference, London 19 June 2007 within credit, at least over the last few years, the emphasis has been on consumption or consumer loans and very small production loans. In reality, several critical financial needs are yet to be satisfied. Hence, the gap in terms of access to other financial services like formal/flexible voluntary savings (the most basic insurance product), health, asset, accident and life insurance, larger production and livelihood credit etc. remains to be addressed for a large majority of clients. 3. Low income clients everywhere have a range of evolving needs as they are more vulnerable and face a large number of risks. They need continued access to the wide range of financial services to counter the vulnerabilities that they and their families face in their daily struggle for survival. This is where CRM can play an active role. Indeed, there is a great business opportunity and social obligation in facilitating ongoing delivery of these risk mitigating financial services for low income clients at the required scale. Access to a wide range of risk mitigating financial services at affordable cost is very critical especially as it enlarges livelihood opportunities and empowers the poor to take charge of their lives. While several models to promote financial access exist, the three major ones are: The SHG Bank Linkage Programme (SHGBLP) and its variants These are supported by NABARD and Public Sector Commercial Banks. Self Help Group (SHGs) represents a unique approach to financial intermediation. The approach combines access to low cost financial services with a process of self management and development for the women who are SHG members. SHGs are informal associations of up to 20 women who meet regularly, at least once a month, to save small amounts. They are formed and supported usually by NGOs or government agencies. SHGs are seen to confer many benefits, both economic and social. They enable women to grow their savings and to access credit, which would otherwise not be easily accessible to them. SHGs can also be community platforms from which women become active in village affairs, stand for local election or take action to address social or community issues (abuse of women, alcohol, dowry system, schools, water supply etc). As the group consolidates and matures over time, the banks step in to lend money to the SHG through the SHGBLP. The Institutional MFI Model of SIDBI, commercial banks and other stakeholders; This model has its origins in the work of SIDBI/SFMC in 1997, which pioneered term lending to MFIs with many banks following suit. The growth story of the MFI model has been greatly facilitated by the sharp increase in bank credit to MFIs. Apart from SIDBI, a larger number of private sector banks are now financing the sector, with the private sector banks lending mostly to the MFIs while the public sector banks and RRBs of rural branches financing the SHGs through their wide network. While the initial lending to the MFIs by the private sector banks was mostly to meet the central bank requirement of PSL, of late the banks have also recognized MFIs as good credit risk - a compelling business reason to look at this sector. Under the MFI model, the MFIs borrow money from banks and then onlend to their end customers. Even under the MFI model, most 122 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management MFIs ask the borrowers to form groups of 5-10 members and lending is done to the individual member with group guarantee (Joint Liability Group - JLG). While the MFI tracks individual loans, the JLG ensures that the group dynamics and peer pressure from group members result in regular and timely repayment of loan amounts by all members. As of March 2007, there are an estimated 900 MFIs of various sizes operating all over India with over 10 million borrowers with a loan book size in excess of Rs. 3000 crores. The Partnership Model of ICICI and other private commercial banks: Since banks face substantial priority sector targets and microfinance is beginning to be recognized as a good business opportunity for institutions, a variety of models have been tested between banks and MFIs. All types of banks - international, domestic, national and regional - have become involved at the forefront of some of the following innovations: Lending wholesale loan funds directly and based on guarantees. Assessing and buying out microfinance debt (securitization). Testing and rolling out specific products such as the Kisan Credit Card. Engaging microfinance institutions as agents, which are paid for loan origination and recovery, with loans being held on the books of banks. Equity investments into newly emerging MFIs. Banks and NGOs jointly promoting MFIs. Adopting new technological solutions to enable speedy and cost efficient delivery of services - Biometric ATMs, computerization of book keeping activities of MFIs/SHGs etc. With the initial success of these pilots, more banks are now keen to explore this area. However given that only a handful of MFIs have achieved scale and reach, competition is increasing amongst banks reaching out to same set of MFIs. This could lead to over exposure and its resultant fall outs. The use of IT is inevitable to improve the usage of existing branch infrastructure. Increasing outreach and up scaling number of accounts at each branch will require bankers to move out of their branches and source clients and then look at low cost delivery alternatives once the account relationship is established. Opening a no frills account with a small overdraft or GCC is only the first step in building the relationship which would require sustained efforts to ensure that the banking relationship with the customer is fashioned to meet his needs. IT can reduce cost and time in processing of applications, maintaining and reconciliation of accounts and enable banks to use their staff at branches for making that critical minimum effort in sustaining relationship especially with new accountholders. In rural areas customers cannot be expected to come to branches in view of opportunity cost and time and hence banks will have to reach out through a variety of devices such as weekly banking, mobile banking, satellite offices, rural ATMs and use of Post offices. In urban and even in rural areas where mobile phones have penetrated, banks could use mobile technology for facilitating banking transactions. Mobile phones can be used to transfer funds real time from and to bank accounts and could make remittances and payments at very low cost. Once the data base and track record is established, a multitude of financial services can be offered including savings, remittance, and transaction banking such as receipt of salaries, pensions and payments for utilities, loan including home loans, insurance and MF products. Here the branches can render more business and variety of products to existing clientele as also source new customers within the area of operation. Financial inclusion offers a huge potential for business in terms of resources and assets and banks therefore need to take aggressive steps to use technology, business processes and personnel to be able to exploit this potential in innovative and creative ways. Use of technology is critical in building up a reliable credit information system, build up data base on customers for a variety of purposes, thereby reducing the transaction cost involved in checking encumbrances and collaterals and also facilitating better pricing of risk. In India, branchless banking has to be able to ensure effective penetration into underserved cc areas -an example of this is the SHG-Bank linkage program. Up-scaling this program for financing productive activities and synergizing local entities for providing ancillary and collective services required for improving bankability of activities has to be the focus. While up scaling the SHG -bank linkage program, care must be taken to ensure integrity of accounting and protection of member's interest. In addition up scaling requires knowledge enhancement and capacity building. For example Village knowledge centres set up by a public sector bank at some of its rural branches has enabled more productive lending and increased good business at such branches. Banks should focus on relatively unbanked and underserved areas rather than competing aggressively in already well served areas. There is a clear need to vastly increase the numbers served by existing branches for savings loan and remittances. Financial inclusion should be led by understanding the needs of the customer rather than achieving targets. The focus for rural areas should reach out rather than the number. Delivery of financial products must be preceded by improving financial literacy and credit counselling. The focus should be on customizing products for transactions, remittances, savings, loans and insurance. Instead of having a single size fit for all, a localized approach is required. Communication should be in local language and in tune with local culture to remove barriers. Technologies like mobile phones, internet etc can be leveraged to increase delivery channels at lower cost, and have better internal control systems. A reliable credit information system that will enhance the efficiency safety and integrity of the payments and remittances system can be developed using CRM. It would also provide all the required MIS reports. A well functioning payments system itself 123 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management improves economic activity and its efficiency. Further financial services need to be supplemented by organizing support for ancillary activities and knowledge dissemination. Farmers training centres, village knowledge centres for ensuring sustainable development. The SHG program has become quite widespread, There is need for up scaling to cover productive loans while ensuring that the process of group formation and capacity building is given sufficient time to allow social capital and democratic processes to take root. Transparency in accounting and book keeping and financial education of members should be part of due diligence undertaken by banks. The real value of NGOs and MFIs lie in their role as providing "credit plus" services and not just functioning as an intermediary for on lending. Banks with their resources and scale have greater cost advantages but linking with community based organisations and local persons /entities would help them get over the information gap and access barriers. Last but not the least, the role of the State Governments in facilitating financial inclusion is critical. Land settlement rights, computerization of land records, and providing economic and social infrastructure with pro-active agricultural extension machinery will greatly help in using financial inclusion for sustainable development. 124 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide Digital Divide in India Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide Dr. Sumanjeet Singh Assistant Professor Department of Commerce Ramjas College University of Delhi Delhi-7, India Introduction The Information and Communication Technology (ICT1) is one of the important driving forces for modern civilization. The rapid development and proliferation of ICTs has accelerated the economic and social change (Nandi, 2002), across all areas of human activity worldwide-and continues to do at the rapid pace. ICTs enable interactive communication unhindered by distance, volume, medium or time and also reduce the cost of co-ordination (Fletcher et al, 2000), communication and information processing (Dean, 2002; Gordon, 2000). ICTs hold great promise in derive for development and poverty reduction in global south. In many instances, poor people have experienced benefits in the form of increased income; better health care; improved education and training; access to job opportunities (Kuhn and Skuterud, 2000; Sumanjeet, 2008; Hecker, 2001; Motohashi, 2001); engagement with government services; contacts with family and friends; enterprise development opportunities; increased agricultural productivity (Poole, 2001; Hooker et al, 2001), and so on (Sumanjeet, 2009). The issue of transparency is easier to manage with ICTs, which may result in monetary savings in addition to stakeholder confidence in the development process and system (Jesus, 2003). ICTs have radically changed the way of doing business. Internet and its enabled business technologies like e-commerce have opened up vast business avenues and transformed the whole business world into a global village. Further, it is expected that ICTs will play a crucial role in the socio-economic development process, and change the pattern of people's economic models and lives. But, the potential to exploits the benefits of ICTs largely depends on the access and adoption of these technologies. In fact, the status of ICT adoption of an economy is an indicator of its potentiality to exploit the economic opportunities affordable by the new technologies-more generally, its prospects for the transition to the 'new economy'. But, as expected the adoption of ICTs vary significantly across countries. Table 1: Status of ICTs Adoption among Different Regions (Per 100 Inhabitants) Regions ESCAP Fixed Telephone Cellular Subscribers 16.2 31.5 11.9 2.9 6.6 13.3 4.0 0.1 2 LLDC LDC 0.9 9.3 0.5 11.8 SIDS 15.4 39.5 15.0 0.5 ASEAN 8.6 33.8 10.2 0.2 SAARC 3.3 15.3 5.0 0.1 Central Asia 11.1 20.1 6.3 -- Low Income 4.0 14.5 5.4 2.8 Middle Income 23.5 40.2 11.4 22.0 High Income 46.7 84.6 68.4 -- 3.1 20.9 4.7 -- Latin America & Carib. 17.7 54.2 18.2 2.7 North America 57.8 75.0 69.0 19.7 Europe 45.0 101.4 43.1 15.6 Other Asia Pacific 22.5 51.2 19.3 7.1 World 19.4 40.9 17.4 4.3 Africa Notes: Data for year 2006, complied by researcher; LLDC (Least Developed Countries); LDC (Least Developing Countries); SIDS (Small Island Developing States) Source: Statistical Yearbook for Asia and the Pacific, 2007; Internet Users Broadband Subscribers 125 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide METHODOLOGY From the above discussion it is clear that the concept of digital divide has many dimensions. Many technological and nontechnological gaps can be considered. Added to this, there are many ways to measure the gap of digital divide. The present paper is focused on India and tries to explore the macro aspect of digital divide in India. The paper tries to explore the problem of digital divide within India. Thus, in the context of the present paper digital divide essentially means teledensity, mobile and Internet divide between the rural and urban areas. The main objective of the present paper is to study the problem of digital divide in the Indian context and address the challenges in bridging the gap of digital divide. The study also makes an attempt to identify the causes of digital divide in India. Further, in the end, an attempt has been made to suggest the policies to address the challenges of bridging the gap of digital divide in India. The present paper has been divided into five sections. Section 1 deals with the concept of digital divide. Section 2 discusses the present status of digital divide in India. In section 3, an attempt has been made to study the causes of digital divide in India. Section 4 tries to address the problem of digital divide by suggesting some policy options. Section 5 deals with the concluding remarks. Table 1 indicates that highincome economies have twice as many fixed telephone lines per capita as middle-income economies, and 11 times the number in low-income economies. In the low-income countries and SAARC member countries-the number of fixed telephone lines per 100 people was just 4.0 and 3.3, respectively. In the least developed countries the number did not even reach 1 in 2006. At the same time, the number of mobile phone per 100 people was 14.5, 15.3 and 9.3, respectively, in low-income economies, SAARC member countries and least developed countries. In high-income economies in the region, there are, on average 68 Internet users per 100 inhabitants, compared with 0.5 in LDC, 11 in middle-income economies and 5 in low-income economies. In 2006, there were 3 broadband subscribers per 100 inhabitants in low-income economies, compared with 20 in North America and 16 in Europe. The global disparities in the access to these technologies are more clear with figure 1and 2. As illustrated above the adoption level of ICTs is highest among the developed countries. In these countries, more people have access to Internet and at a higher speed, many more have mobile phones. Developing countries are trying to keep pace with the changing technologies and adopting ICTs at faster rate; however the overall adoption rate is much lower than the developed world. Asian countries have experienced a rise in the use of ICTs in the recent years, though the degree of expansion has varied among the countries. Internet adoption rate is very slow among developing countries. From the above analysis, it is clear that there are millions of peoples in this world who do not have access to Internet, telephone, mobile phone etc. due to various reasons. Their inability to access ICTs deprives them to reap the benefits of ICTs. This has led to a serious issue 'Digital Divide' between those who are participating in information technology revolution and those who are not (United Nations, 2006). In the recent past, the digital divide has attracted the attention of both scholars and policy makers for its economic, social and political consequences. Graph 1: Mobile Phone Users per 100 Inhabitants 1997-2007 Graph 2: Internet Users per 100 Inhabitants 1997-2007 126 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide Concept and Measurement of Digital Divide There has been much discussion and debate about the concept of digital divide3 and of the empirical analyses of its components (Chen and Wellman, 2004; Companies, 20014; Cooper, 2002; Dewan and Riggins, 2005; Norris, 2001; Nohan, 2000). The notion of a digital divide gained attention in the 1990s with recognition that some people and institutions were not going online or were not going onto broadband. The concept of a "digital divide" between technological "haves" and "have-nots" has been a useful tool in efforts to bring greater, more equal access to powerful new information and communication technologies like the Internet. The term 'Digital Divide' is used to describe situations in which there is a market gap5 in access to the use of ICT devices measured by, for example the number of fixed line phones per inhabitants, or the number of mobile users or the internet connections in the population. According to OECD (2001) the term 'digital divide' refers to "the gap between individuals, households, businesses and geographic areas at the different socio-economic levels with regard to their opportunities to access information and communication technologies (ICTs) and their use of Internet. It reflects differences among and within countries". This definition is exclusively focused at national and international level. Nevertheless, digital divide exists in variety of other levels; sector, community, and individual level. For example many communities within nation-states are far removed from the rest of the country with regard to information and communication technologies access and use. Such communities reshape ICT to their culture and norms (Barziliani and Barziliani, 2005). Further, digital divide is also referred to as "the spiral of uneven access to and usage of information and communication technologies and the socioeconomic rebound causes that have caused the emergence of information inequality throughout the world, both in and between the countries and also locally in communities. Hanimann and Ruedin (2007) the term 'digital divide' essentially describes three distinctive divides: a geographical digital divide (between regions and countries), a social digital divide (between social classes), and an upgraded digital divide (between technology and humans). Norris (2001); Mark, (2003) and Branko (2005) suggest that there are at least three major divides: A global divide between the developed and undeveloped worlds A social divide between the information rich and the information poor A democratic divide between those who do and those who do not use the new technologies to further political participation Thus digital divide can be defined as economic, social or cultural deprivation generated by missing ICT access and skills. This definition goes beyond conventional definitions and it has a number of practically important characteristics. First, it explicitly spells out the three different dimensions where digital divides are important and where ICTs make a difference. In the modern knowledge- and information-based world, economic opportunities, such as employability, depend on ICT access and skills. ICTs, however, also play an increasingly important role in all social relationships, ranging from political participation to connecting local communities, friends and the family. Second, in the global and culturally diversified world, ICTs are also increasingly important for access to cultural resources and expression. Third, the definition also replaces traditional technology-focused characterizations of digital divide, noting that lack of technology, per se, is not always a problem. It is clear that technology remains inert and useless with knowledge and capabilities to use them, and when they are embedded in social without necessary human skills and competences. Technologies become real when they are combined practices. Figure 1: Measurement of Gap Elements for 'Digital Divide' Element 1 A gap in access to use ICT: Measured by the number and spread of ICTs (first order digital divide) Element 2 A gap in the ability to use ICTs: measured by skills base and presence of numerous complementary assets (second order digital divide) Element 3 A gap in actual use: measured by the telecommunications for various purpose, the number and time of online users, the number of internet hosts and the level of e-commerce, e-business and e-governance Element 4 A gap in the impact of use: measured by financial and economic returns. Based on these four elements, many international organizations have defined development policies aimed to reduce the digital divide. However, in spite of the evolution in the concept, these principally emphasize development of a technological infrastructure. National investments and policies for the reduction of the digital divide continue to principally target connectivity development. Digital Divide in India: The State of Art ICT infrastructure is the backbone of modern society. It is the biggest enabler of change and process reforms with minimum resistance. Various studies (Lawrence and Lee, 1999; Leizero, 2000; Pastor et al, 2004; Norris, 2000; Sumanjeet, 2006) revealed that good governance is not possible without the ICTs. The information and communication technologies are being increasingly used by the governments to deliver its services at the locations convenient to the citizens. Further, it brings effectiveness, efficiency and transparency is the system. Therefore, the governments around the world are busy in developing the ICTs infrastructure. India is one of the countries where telecommunication development activities have gained momentum in the past decade or so7. Efforts have been made from both governmental and non- 127 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide governmental platforms to enhance the telecommunication infrastructure. The idea is to help modern telecommunication technologies to serve all segments of India's cultural diverse society, and to transform it into a country of technologically savvies Various studies (Huberman, 2001; DiMaggio et al, 2001; Guillen, 2006; Servon, 2002) showed that the problem of digital divide is starker in the developing countries like India. The gap of digital divide is significant between the rural and urban India (Dasgupta et al, 2002;, Nath, 2001; Singh, 2007; Mahajan, 2003; Dutta, 2003). The major metropolises are at par with some of the developed countries, but rural areas in states like eastern Bihar and Orissa are worse off than several of the least developed countries. The problem can be more understood by studying it under three sub-sections: Teledensity divide, mobile phone divide and Internet divide between rural and urban India. Table 2: State-Wise Urban and Rural Teledensity in India (In %) (As on 29/02/2009) Circle/StatesTeledensity Rural Urban Overall Andaman & Nicobar Islands 13.89 24.77 17.94 Andhra Pradesh 10.15 72.44 27.34 3.85 72.46 13.67 3.1 89.13 12.13 Assam Bihar Chhattisgarh 1.31 14.27 4.18 Gujarat 15.57 58.15 32.34 Haryana 16.06 57.67 29.45 30.5 118.64 39.9 Himachal Pradesh Jammu & Kashmir 7.35 59.4 20.99 Jharkhand 1.14 11.38 3.49 Karnataka 11.14 73.38 33.68 25.5 97.46 43.98 4.96 58.34 19.54 11.66 55.16 26.18 26.32 Kerala Teledensity Divide8 Teledensity is low throughout the countries of the South Asia. Pakistan has highest teledensity in Asia and Bangladesh has lowest. India is by far the largest South Asian country, in terms of population, economy and telecommunication network. However, there are huge disparities extant within the country, and this is evidenced in the uneven distribution of telecommunication access. The recent extraordinary growth in telecommunication connections in India9, which topped 15 million per month in January 2009, has understandably grabbed the headlines. These huge numbers, however, disguise a disturbing reality, which is the enormous variation within India. Many of the less developed states have state-wise average penetration rates of below 20 per cent, including Bihar (12.13), Assam (13.67), Andaman & Nicobar Islands (17.94), Uttar Pradesh (15.58), West Bengal (13.78) Orissa (14.28), Madhya Pradesh (19.54) Uttranchal (10.37) and Bihar (12.13). Teledensity in some states like Jharkhand (3.49), Chhattisgarh (4.18) and North East-II (8.71) are less that 10 per cent (Table 2) Madhya Pradesh Maharashtra (-) Mumbai North East -I 6.65 89.45 North East - II 3.06 27.47 8.71 Orissa 6.66 53.64 14.28 Punjab 24.83 80.63 46.85 Rajasthan 12.07 57.98 22.98 Tamilnadu (-) Chennai 15.37 56.8 34.01 5.03 24.43 10.37 6 50.36 15.58 7.02 55.43 13.78 Uttaranchal Uttar Pradesh West Bengal (-) Kolkata Kolkatta # 57.43 62.3 Chennai # 100.13 101.62 Delhi # 107.96 107.96 Mumbai # 81.41 81.41 9.03 64.48 25.34 India Source: TRAI, 2009 Graph 3: Urban & Rural Teledensity (Per 100 Inhabitants 1997-2008) Source: ICRA More perilous, however, is the inequality between rural and urban India (Graph 3). Despite several policy initiatives to promote rural penetration, growth in teledensity continues to be skewed in favour of urban India. In fact, the rural population is much worse than it was, a few years ago compared to its urban counterpart. 128 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide Internet Divide Internet came to India in the early 1990. Videsh Sanchar Nigam Limited (VSNL) introduces Internet in India via dial up in the 6 cities on August 14, 1995. At that time, there was limited Internet access only in a few major cities, all in the hands of the government. VSNL, the agency responsible for Internet activities, and the DOT (Department of Telecommunications) provided an agonizingly erratic connectivity, with miserly bandwidth and far too few phone lines. Connection rates ran as low as 5% (for every 20 dialups you might get connected once) and users were frequently cut off. And the rates for this pathetic level of service were among the highest in the world. Domestic users paid about $2 per hour, and lease lines, for the few companies that could afford them, ranged over $2000 per month for a 64 Kpbs line. By the end of 1998, after three years of government monopoly, there were barely 150,000 Internet connections in India. But, today the government monopoly is largely over. Many small to large Internet Service Providers have set up shop, triggering a price war and an improvement of service. Users are now estimated (57 Million claimed users) at over 49 million (42 Million as on September 2008) and, with a growth predicted to reach 1 billion in the next five years (Graph 4 and 5). Small Internet kiosks have set up even in small towns, and the governments, both State and Central are pushing for growth in the Internet sector. Internet is the new buzzword. But data shows that Internet seems to be on a move in the metros of India and not the buzzword for small towns too. Today almost 70% of the total Internet users in India are coming in from the top 7 cities-Mumbai, Delhi, Bangalore, Hyderabad, Chennai, Kolkata and Pune. Only 30% access is happening from all other cities put together. Added to this disparity among the rural and urban Internet users is also very high (Table 3). Table 3: Urban-Rural Internet Users in India (In Millions) Internet User-ship in India (Rural-Urban)2005 2006 Urban individuals Regular 2007 2008 17.63 21.95 25.17 30.03 5.20 1.65* 5.15 10.31 22.83 23.60 30.32 40.34 Urban individuals Occasional Urban-Internet individuals Total Rural-Internet using individuals Regular 5.06 Occasional 4.00 Regular+Occasional Total 9.06 All India-Internet using individuals Regular 35.09 Occasional Graph 4: Active10 Internet Users in India 14.34 Regular+Occasional Total All Urban internet users All Rural internet users (% of Indian Population) (% of Indian Population) All India internet users (% of Indian Population) 49.40 7% 7% 9% 12% 1.2% 4.5% Note:*May have been underestimated because of relatively less deeper coverage of SEC 'D' and 'E'in the land survey. Source: Juxtconsult India Online, 2008 Note: Figures in Millions Source: IAMAI Graph 5: Claimed Internet Users in India In rural India only 1.2 per cent people have Internet access whereas it is 12 per cent in the urban India. Urban users continue to dominate Internet use contributing to 40.34 million of the 49.40 million odd users. 30.3 million urban people are using Internet on regular basis where only 5 millions are in rural areas. In September last 2007, the number of active Internet users in urban India was 30 million. Disparities within the Indian states are huge. State like Delhi, Maharashra and Tamilnadu have highest number of Internet subscribers followed by Kerala, Karnataka and West Bengal. Assam, North East-II, Orrisa, Andaman and Nicobar and Uttranchal have lowest Internet subscribers States of India. Mobile Divide Note: Figures in Millions Source: IAMAI Far from being a lifestyle product, Mobiles have now become a necessity. India has seen a huge spur in mobiles in the past 5 years and it has penetrated even to the rural areas of India to a good extent. With entrants of CDMA11 (Code Division Multiple Access) like Reliance communications and Tata Indicom the call rates have been reduced and usability has been increased. The launch of the revolutionary offer of a mobile phone along with a connection by Reliance for Rs.500 boosted the mobile sales to sky soaring limits. Over and above with the STD rates and the call rates reducing day-byday and new competitors entering, the mobile market has 129 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide flung open high growth prospects. Globally in terms of mobile subscriptions, India is the world's second largest wireless market after China. At the end of June 2008, the total wireless subscribers (GSM12, CDMA & WLL (F)) base was 286.86 million (Graph 6). Table 4: State Wise Mobile Users (Urban and Rural) in India Figure 6: All India Mobile Subscriber Base Himachal Pradesh Top 15 States in Terms of Rural Mobility Rural Mobile Connections (in Millions) Total Rural Population (in Millions) Penetration in Rural Areas (in %) 2.24 10.83 20.69 1.0 5.85 17.09 Kerala 2.66 25.03 10.63 Haryana 1.66 16.27 10.20 Gujarat 3.20 34.42 9.31 2.8 32.86 8.52 Punjab Tamil Nadu Note: QE stands for Quarter End; E stands for Estimated; Figures in Millions Source: TRAI A total of 8.94 million wireless subscribers were added during the month of June 2008 as against 8.62 million wireless subscribers added during the month of May 2008. As a result the overall tele-density rose to 28.33% by end of June 2008 as against 27.59% in May 2008. This growth of the sector can be clearly attributed to the favourable and improved regulatory structure, declining handset prices and innovative pre paid tariff structure. It is expected that by the end of the year 2010, India will have 500 million mobile phone subscribers and the break up could be: out of the 500 million subscribers, 60 million would have video capabilities, 10 million music, 200 million radios, 250 million camera capabilities, while 250 million will have net connections. Thus, India has become the fastest growing mobile market in the world. The only country with more mobile phones than India is China. But, there is huge divide between mobile phone users in urban and rural areas. Still, rural mobile penetration is pretty low-just 4.92 percent (Table 4), though it has touched double digits in some prosperous states like Punjab, Kerala and even Himachal Pradesh. However, overall rural penetration remains far away below the 43.88 percent mobile density in urban areas. Andaman & Nicobar Islands 0.02 0.27 8.27 Rajasthan 3.27 48.66 6.72 Maharashtra 3.79 59.67 6.35 Karnataka 2.25 36.56 6.15 Andhra Pradesh 3.27 59.27 5.52 Jammu & Kashmir 0.43 8.24 5.21 West Bengal 3.01 62.48 4.81 Orissa 1.28 33.06 3.88 Uttar Pradesh 4.60 147.00 3.13 Total 35.51 580.47 6.12 All India (Total) 39.46 802.00 4.92 Source: Voice and Data, 2008 But, it is expected that the gap will narrow down in the coming years. Mobile industry players are eyeing rural India as their new area of opportunity. Cellular service providers seem to be answering the call of the wild as they are entering the so far ignored rural market. Although a huge market in the urban segment remains tapped, most of the cellular operators have turned towards Rural India to broaden their base and reach. So the real growth is expected from this geography in near future. The low population density in rural areas has necessitated more towers of higher altitudes raising the costs further. Rural India, experts say, that the next phase of mobile phone growth would come from the hinterland. Determinants of Digital Divide in India From the above discussion it is clear that there is huge gap of digital divide between rural and urban India. However, this gap varies from State-to-State. In some States like North East, Uttaranchal, Bihar, Jharkhand, Orissa and Andaman and Nicobar Island the gap of digital divide is really very significant, in some other states it is narrow like Punjab, Maharashtra and Kerala. Added to this, the gap also varies from technology-to-technology. Some States are not able to adopt even one technology but others have adopted very efficiently. In some states overall adoption of technology is high, but, adoption rate is rural areas is very low. In some cities like Delhi, Mumbai, Kolkata, Bangalore, Hyderabad, Noida etc, ICTs adoption rate is very high, whereas in some other cities like, Patna, Lucknow, Ahmadabad (even these are the capital of States)etc, adoption rate is very low. The undeniable fact is that there is noticeably problem of digital divide in India. It is a massive problem and a very complex problem too. It is not just about people who have access and those that do not; it is not just about haves and have-nots. It is about people becoming knowers and know-nots; and doers and do-nots; those who can communicate with the rest of the world and those that cannot. In this light it is also important to find out some of the important reasons behind the digital divide in India. There are many reasons, which can be held responsible for digital divide in India. Compared to many developing and developed countries, India's capacity to bridge the digital divide is very 130 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide poor. Table 5 clearly indicates India's ICTs adoption capacity at international level. Table 5: India's ICTs Adoption Capacity among Different Countries (Ranking) Countries India China Singapore Hong Kong Japan Korea Malaysia USA UK Israel Germany France Denmark Sweden Finland Internet Broadband Users* Subscribers** 55 52 13 7 12 29 10 14 15 19 13 28 1 - 51 41 21 14 3 42 17 12 15 20 6 1 - Computers Communication In Use* Technology 12 2 41 29 3 7 21 1 5 31 4 22 - 31 47 1 3 17 20 30 12 24 15 6 - IT Skills Computers Per Capita 10 54 2 22 18 23 4 25 3 24 20 1 13 55 51 19 21 18 32 2 10 17 13 1 - Note:*Rank for 2007; **2006; Internet Users and Broadband Subscribers per 1000 inhabitants) Source: Voice and Data; IMD World Competitiveness Yearbook, Various Issues It is clear with the table 5 that where India stand at international level as far as various capabilities to measure the gap of digital divide is concerned. In case of broadband subscriber, India has lowest rank of 51 among the selected countries, same in the case of computer per capita and Internet users. As India is a multicultural, multi-language and multireligion country with complex socio-economic conditions, there are six main difficulties in serving rural communities, each one of which has appeared insurmountable: poverty, unemployment, age and education. A Nation Online Survey (NTIA, 2002) found computer and Internet use correlate with poverty13 (family income), employment status, and educational attainment. Even age14 is also a major factor (Lenhart, 2000). Rural India has more than 70 per cent of Indian population. 75% of the poor are in rural areas, most of them are daily wages, self-employed householders and landless labourers. Graph 7: People Below Poverty Line in Rural-Urban India The Planning Commission of India uses its own criteria and has estimated that 27.5% of the population was living below the poverty line in 2004-2005, down from 51.3% in 1977-1978, and 36% in 1993-1994. Again unemployment rate is high in the rural India than the urban. Unemployment rate in agriculture sector is 62 per cent (Planning Commission, 2007) whereas it is only 16 per cent in manufacturing sector, 10 per cent in the services sector and 12 percent in other job sectors. The better educated are statistically more likely to have and use connected PCs. In particular those with college degrees or higher, are ten times more likely to have access. Literacy rate is high in the urban India (79.9 percent) whereas it is only 58.7 percent in the rural India. Overall literacy rate in India is 64.8 percent. There is also huge difference in male (75.3 percent) and female literacy rate (53.7 percent). Another important reason of digital divide in India is knowledge divide15. Knowledge divide is directly related with digital divide. More educated people16 with computer knowledge and English language are able to access new technologies. Rural India had 368 million literate people out of whom only 63 million were found to be English-speaking as on March 2008. Given the high levels of literacy in rural India and very low levels of English speaking population and computer savvy population17, IMAI , 2008 made a clear case of content and applications in local languages in order to ensure higher and faster adoption of internet in rural. Internet use is primarily associated with a large section of the English-knowing urban population-though they account for only 31 per cent of the total urban population of 250 millionas many, as 84 per cent of them are PC literate. Internet penetration extended to only 0.6 per cent of the population in rural areas, with the number of active Internet users estimated at 3.3 million. Electricity is the most basic condition for using ICTs and many studies established that relationship between the level of electrification and digital divide. Rural India has low electricity coverage (Table 6). Almost 10 per cent villages of India have no electricity. Some areas may get 'agricultural power- two hours in the morning and evening-but even this is the exceptional. Added to this the cost of electricity is very high. In this situation, one cannot even think about using computers and Internet. Table 6: Reported Status of Rural Electrification (As on March 2004) States Note: Percent of population living below poverty line, which is 356.35 rupees or around $7 a month in rural areas. Electrified Electrified Villages (%) Households (%) States Electrified (%) Electrified Villages (%) Households (%) Punjab 100.00 91.90 Madhya Pradesh 97.43 70.00 Haryana 100.00 82.90 Rajasthan 98.38 54.70 Gujarat 100.00 80.40 Chhattisgarh 94.00 53.10 Maharashtra 100.00 77.50 West Bengal 83.63 37.50 Tamil Nadu 100.00 78.20 Orissa 80.15 26.90 Kerala 100.00 70.20 North-East 75.32 33.20 Andhra Pradesh 100.00 67.30 Uttar Pradesh 58.73 31.90 Himachal Pradesh 99.38 94.80 Bihar 50.00 10.30 Karnataka 98.91 78.50 Jharkhand 26.00 24.30 Source: Planning Commission, 2005 131 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide The digital divide is not simply an issue of access, but also of obstacles to use ICTs. Various studies (Tracy et al, 2003; Winter and Huff; 1996; Spender, 1997; MacKenzie and Wajcman, 1985) revealed that even when women and men have equal access to the internet either through home, work or school, they may not have the opportunity to access the Internet or engage in a wide variety of uses. Women have been online less than men (Kennedy et al, 2003). They have been online for fewer months and when they do go online, they spend less time. The gender issue is highly relevant in the developing countries like India. Women have less access than men in India due to various social and personal factors. Added to these, the growing population, insufficient funds, affordability18, and delays in implementation of government policies and programmes have been some of the challenges that have lead to unequal development in the society, which is responsible for digital divide. Policy for Addressing the Challenges in Bridging the Digital Divide Despite India taking significant steps towards acquiring competence in information and technology, the country is increasingly getting divided between people who have access to technology and those who do not. India has around half a million software developers and is second only to the US, but 300,000 Indian villages do not have a phone connection, 70 per cent of the Indian population have no access to any form of technology, 26 per cent of the population lies below the poverty line and 35 per cent illiterate. There are only 5 PCs per 1000 people, 9 mobile lines per 1000 and 37 fixed lines per 1000 people in India, which is extremely low when compared to China. The challenge in front of the Indian government is to bring down this digital divide and ensure development and adoption of technology. The government has made encouraging steps to bridge the gap of digital divide in India. Most of the initiatives19 are directed towards bridging the gap of rural and urban digital divide. The Indian government has passed Information Technology Act, 2000 to make to e-commerce and egovernance a success story in India. Recognizing the potential of ubiquitous Broadband service in growth of GDP and enhancement in quality of life through societal applications including tele-education, tele-medicine, egovernance, entertainment as well as employment generation by way of high-speed access to information and web based communication. The government has announced Broadband Policy in October 2004. In the field of international telephony, India had agreed under the GATS to review its opening up in 2004. In an effort to strike a balance between a purely market driven system of allocation which would tend to concentrate on main cities and on the largest and wealthiest customers) and a social consideration reducing the rural-urban disparity and improve teledensity in rural areas, the Government of India had designed a Universal Service Obligation (USO)20 fund . The 'USO' facilitates redistribution of resources to 'unprofitable' rural areas. Complementing this is the access deficit charge21 (ADC) regime put in place by the Telecom Regulatory Authority of India to help service-providers Bridge the gap between cost of supply and provision of access, especially in rural areas. Since the costs of expansion and maintenance of rural networks are high compared with dense urban areas, the USO funding was extended for mobile services and rural infrastructure in 2006. This was expected to provide incentives for private operators to break into the rural market. Recently, the regulator Telecom Regulatory Authority of India22 (TRAI), in its recommendations on growth of telecom services in rural India, had prescribed infrastructure sharing as the solution for improving rural teledensity. In 2007, the Telecom Regulatory Authority of India (TRAI) further lowered the Access Deficit Charge (ADC) rates to push mobile growth in rural areas. With all these development in place, the ministry of telecommunication went ahead with a bid call for subsidy for rolling out the mobile networks in 2.5 lakh villages. Recently Indian government has decided to push WiMAX technology23 especially for broadband connectivity in rural areas. The Government has announced the guidelines for Mobile Number Portability24 (MNP) Service Licence in the country on 1st August 2008 and has issued a separate Licence for MNP service w.e.f. 20.03.2009. The government has in a pioneering decision, decided to auction 3G & BWA spectrum 25 . The broad policy guidelines for 3G & BWA have already been issued on 1st August 2008 and allotment of spectrum has been planned through simultaneously ascending eauction process by a specialized agency. Apart from the 123.51million fixed and WLL connections on March 2009 provided in the rural areas, 57167 uncovered VPTs have been provided as on March 2009. Thus, 85% of the villages in India have been covered by the VPTs. More than 3 lakh PCOs are also providing community access in the rural areas. Further, Mobile Gramin Sanchar Sewak Scheme (GSS) - a mobile Public Call Office (PCO) service is provided at the doorstep of villagers. At present, 2772 GSSs are covering 12043 villages. Also, to provide Internet service, Sanchar Dhabas (Internet Kiosks) have been provided in more than 3500 Block Headquarters out of the total 6337 Blocks in the country. The target of 80 million rural connections by 2010 has already met during year 2008 itself. USOF subsidy support scheme is also being utilized for sharing wireless infrastructure in rural areas with about 19,000 towers by 2010. 132 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide From the above discussion it is revealed that most of the government initiatives are directed towards developing the sound telecom infrastructure in the rural area. But, this is only aspect of addressing the problem of digital divide in India. Added to this, government should adopt the following policy to bridge the gap of digital divide in India: First, as our earlier analysis suggests that relationship between education and ICT is critical. International evidence suggest (Pluss, 2004; Rheingold, 2000; Smith, 1998) that education is strong complement to use of technologies like Internet and that the relevant education levels are secondary and tertiary levels as they are expected to upgrade the national capacity for adaptation and innovation26. Like many other developing countries, the main emphasis of Indian government is boost primary education that yields the higher rate of social returns. But, to bridge the gap of digital divide government should introduce some innovative policy measures to encourage students to go for further education in the rural areas. The expenditure, which Indian government is doing for rural education, is far below the level of satisfaction (Table 7). Table 7: Expenditure on Education (Rural vs. Urban) Components of Education Books and Journals Monthly Household Expenditure (In Rs. At 2004-05 Prices) Rural Urban 1993-94 2004-05 1993-94 2004-05 8.9 12.6 21.3 21.7 Newspapers & Periodicals 1.7 2.9 16.7 Library Charges 0.2 0.1 0.6 0.1 Stationary Articles 7.2 14.9 15.5 21.8 Tuition Fees 7.5 29.1 67.7 118.3 Private Tutor 5.4 10.3 25.8 41.7 Others 6.1 2.8 13.7 5.5 37.0 72.7 161.3 227.7 Total Education 20.5 Source: Consumption Expenditure Data from 50th and 61st Rounds of NSS Table indicates that there is huge difference between expenditure on education for rural India and urban India. Prime Minister of India also realized the need to increase the level of investment in education in rural India. Nevertheless, one does not need to rely exclusively on the government for promoting secondary and tertiary education. Many individuals who would like to take advantage of ICT opportunities are economically well off and may not need government financial assistance. For others, improve availability of education loans from the financial institutions can be a major held in financing their educational expenses. In addition to formal education, there is need to promote technical education in rural India and among the women of India. Information technologies should be introduced when (and only when) they constitute the most effective available way of meeting basic human needs and fulfilling fundamental human rights. ICT's can have a positive role in development. But ICT's are neither a panacea nor necessarily the first line of attack in combating poverty, misery, and injustice. The utility of ICT's must always be judged against the role they can play in meeting core human needs. There is need to promote technologies which are best suited for the rural India. For example to bridge the gap of digital divide in its real sense there is need to increase PC penetration. The reason is very simple; mobile cannot do everything a PC can. But, mobile are cheaper, more portal and their extended battery life is suited to regions where access to electricity is lacking or non-existent. The infrastructure needed to connect wireless devices to the Internet is easier and less expensive to build. There are also no learning curve, no literacy barrier and no technical-support challenges to overcome. There are no costly and burdensome applications to load, maintain and update. Thus, mobile is best suited for the rural people. Therefore, not only government but also private players should encourage mobile penetration in India. The main barrier in Indian rural society is the fact that people do not associate the benefits of the Internet and other communication technologies with their personal needs, believing that "computers are not for them". As a result they behave very passively towards the ICTs. In order to bring 'passive people' to the Internet and ICTs, a broader understanding of the 'ICTs for everyone' notion has to be promoted, the motivational barriers being the main barrier to passive people. To remove this barriers, media productions such as T.V. serials etc. enjoying great popularity among 'passive people' to be exploited. Only after the broad social barriers have been removed, more specific services will become more attractive to the current non-users. There is need to develop innovative strategies to address constraints the world's women face in their access to and use of ICTs. For women, content is directly linked to use. If women are to be able to make use of the Internet for income-generation, education or advocacy, there must be more relevant content. This includes both substance and languages. Women are producers as well as consumers of information and knowledge and this is an important area of support. Like many other developing countries, in India as well great attention has been paid to ICT training in the recent years. Government schools across the country are making use of the computer literacy programmes funded by giant transnational companies like Microsoft Corporation and IBM. In an ironical twist, it is the world's largest technology companies who have taken it upon themselves to help bridge the "digital divide" in India. Microsoft Corp, the world's largest software maker, has signed MoUs with nine governments around the country, and has committed $20 million to promote computer literacy among disadvantaged kids in rural areas. The Confederation of Indian Industry (CII), and the Global Leaders Of Tomorrow (GLT) of the World Economic Forum (WEF), have launched an initiative called 'Shiksha India' in December 2001 during the India Economic Summit primarily to bridge the digital divide and promote better quality education in Indian Schools. There are many more examples. It is expected that these project will undoubtedly play a great role in overcoming the lack of interest and will help in bridging digital divide. However, the problem that is likely to arise with the elderly population is that the newly emerged interest may wane if one sees barriers rapidly appear, particularly if the language problems inhibits 133 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide coping with the user interfaces of computers and one's relatively poorer ability to memorize hampers learning the necessary operations. Psychological obstacles may be the unwillingness "to reveal one's lack of skills". Therefore the effectiveness of the training programmes will have to be evaluated (to make sure that the trainees have become convinced Internet users) and improvements made where necessary. Promotion of telecommunication infrastructure in the rural India is the most important condition for bridging the rural-urban digital divide and Indian government can play a very significant role in creating the IT infrastructure in the rural India. A special expenditure should be marked for bridging the digital divide among the regions. It is clear for international experience (Rowan et al, 1998; Wahid, 2006; Mwesige, 2004; Mosse and Sahay, 2003) that bridging the digital divide is impossible without additional expenditure from the national budget. India should learn from China. In China, government has not only invested heavily in the creation of IT infrastructure, but also in the universal telecommunication access in rural and remote areas. To bridge the widening Internet connections gap between rural and urban areas, the Chinese government has launched 'every village has a phone, 2004' and 'Gold Farm Engineering, 1994' projects which promoted telephone access and Internet applications in the rural areas. Linguistic issues are of major policy importance in India, given the dominance of English language in software and Internet. The desire to promote cultural diversity is one reason behind interest in linguistic issues, but so is the avoidance of social exclusion among non-English speaking population of India. Hence, these matters are critical to various aspects of digital divide. How can they be addressed? One roundtable example came from New Zealand, where language especially Maori-is a prominent feature of political, cultural and educational life. The New Zealand web portal for teachers is bi-lingual, with the Maori contents presented before the English version. As far as provision for early childhood learning is concerned, there is Maori ICT network across different centres, characterized by strong focus on family and inter-generational learning. It would be useful to compile similar examples from other communities and countries in policy framework. Further, there is need for greater resources and investment by the private sector; as funds from governments and developed countries in implementing the ICT projects have been on the decline due to budget constraints and global economic slowdown. Last but not the least, with the effective deployment of ICT applications in the core areas of education, healthcare, and connectivity for redressing the grievances of the people in the countryside, the digital divide can be narrowed as wireless and satellite links have made them economical and affordable. Concluding Remarks The explosive development of ICT, its applications, and the emergence of a global information society are changing the way people live, learn, work and interact. Enhanced access to knowledge is rapidly becoming a potent tool for empowering the people and communities in their quest for new opportunities, dignity and a better life. The divide between technology's haves and have-nots threatens to exacerbate the gaps between the rich and poor, within and among countries. Unfortunately, in India all people have access to the Internet and ICT, and an amazingly large number of people especially from the rural areas does not have abilities to use the ICTs in a proper way and, therefore cannot draw the advantages from its usage. The issues of "digital divide is posing a herculean task before the Government of India to provide the maximum benefits to the stake holders. However, some IT experts believe that digital divide is vanishing myth from India. But, the present paper clearly highlights the problems of digital divide in rural India. Added to this, the paper revealed that the problems of digital divide also exist within and among the various States of India. While some people are rich and have many resources, others do not. The educational system of India also has been slow to achieve the set target framed by various commissions and committees and schemes launched from time to time. The lack of sound ICT strategies and policies in India is the main cause of these troubles. Added to this, Inadequate Internet and telephone connectivity to India's rural areas, where more than 70 percent of India's population lives, is a key challenge for a number of government agencies, NGOs (non-government organizations), and multilateral aid agencies. The corporate sector too is discovering that bridging this digital divide could translate into new market opportunities. Therefore, obstacles such as illiteracy, lack of skills, and infrastructures in rural areas must be tackled if India is to diminish the gap of digital divide. At the government front, it should put thrust towards: connectivity provision, content creation, capacity augmentation, core technologies creation and exploitation, cost reduction, competence building, community participation and commitment to the deprived and disadvantaged would definitely help in bridging digital divide. It is evident that many projects have failed to address to bridge of the gap between rural and urban India. In order to increase the benefits of its projects for women, who constitute a huge mass of people; efforts have to be made by the Government to bridge the "gender digital divide". There is also need to strengthen the capabilities of local communities and organizations to create, communicate and exchange their knowledge, through the use of ICTs. As far as future of digital divide is concerned in India, it is really very difficult to predict it. But, it is true that the present situation in India is not alarming (if not highly satisfactory). The gap of digital divide is getting narrower. It is expected the government policies and public private partnership will help in bridging the digital divide. But, it is not possible to completely bridge the gap of digital divide in India, as gender, age; culture, language, sex, etc. are all fundamental components that often affect daily activities and experiences including the virtual world. 134 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide Acknowledgment While bearing full responsibility for any mistakes, I wish to thank Prof. L. N. Dahiya; Prof. S. D. 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The American Sociologists, 27 (1), 30-54. 135 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II CRM and Stakeholder Management – Measurement, Determinants and Policy for Addressing the Challenges in Bridging the Digital Divide Endnotes 1. Information and communication technologies in an umbrella term which is currently used to refer to a wide ranges of services (telephony, FAX, Internet etc.), applications (such as distance education and management information systems etc.), and technologies (anything from old technologies such as Television to new technologies such a cellular phones), using various types of equipment and software, often running over telecoms networks. 2. The United Nations the Economic and Social Commission for Asia and Pacific (ESCAP) is the regional development arm of the United Nations for the Asia-Pacific region. With a membership of 62 Governments, 58 of which are in the region, and a geographical scope that stretches from Turkey in the west to the Pacific island nation of Kiribati in the east, and from the Russian Federation in the north to New Zealand in the south, ESCAP is the most comprehensive of the United Nations five regional commissions. 3. Just about a year prior to the turn of the century, the concept of the digital divide was dramatically catapulted onto the world stage with disturbingly striking statements such as: "80 percent of the world's population have never made a phone call;" "There are more telephones in Manhattan than in all of rural Asia;" and "There are more Internet accounts in London than in all of Africa." About almost the same time that the dotcom frenzy had reached its height, concern was also being expressed in different circles that the information revolution was in fact bypassing the vast majority of people inhabiting planet Ear th. 4. According to Ccompaine "the digital divide refers to the perceived gap between those who have access to the latest information technologies and those who do not". 5. Such gaps have narrowed and in some cases, even reversed over time, but other disparities have risen. This suggests that: the digital divide is a dynamic concept, which evolves over time; older technologies tend to be more evenly diffused than newer ones. For example, TV sets are more evenly distributed than 3G mobile phones; there is not a single divide, but multiple divides: for instance, within countries, between men and women, between the young and elderly, different regions etc, and the main factor underlying these divides is differences in wealth, between countries and between individuals. While disparities in wealth continue to exist, the digital divide will persist. 6. As one can deduce, the concept of the digital divide has changed over time. In the beginning, it basically referred to connectivity problems (gap in access to use of ICTs). Later, it began to introduce the concern for the development of capacities and skills required to use ICTs (capacity-building and education), and finally, there is also reference to the use of integrated resources in the technology. Thus, the concept of the digital divide basically focuses on three areas: Infrastructure, capacity building and focus on resource usage. 7. After 1995, the government set up TRAI (Telecom Regulatory Authority of India) which reduced the interference of Government in deciding tariffs and policy making. The DoT opposed this. The political powers changed in 1999 and the new government under the leadership of A.B Vajpayee was more pro-reforms and introduced better liberalization policies. They split DoT in two- one policy maker and the other service provider (DTS) which was later renamed as BSNL. The proposal of raising the stake of foreign investors from 49% to 74% was rejected by the opposite political par ty and leftist thinkers. Domestic business groups wanted the government to privatize VSNL. Finally in April 2002, the government decided to cut its stake of 53% to 26% in VSNL and to throw it open for sale to private enterprises. TATA finally took 25% stake in VSNL. This was a gateway to many foreign investors to get entry into the Indian Telecom Markets. After March 2000, the government became more liberal in making policies and issuing licenses to private operators. The government further reduced license fees for cellular service providers and increased the allowable stake to 74% for foreign companies. Because of all these factors, the service fees finally reduced and the call costs were cut greatly enabling every common middle class family in India to afford a cell phone. 8. The number of landline telephones in use for every 100 individuals living within an area. A teledensity greater than 100 means there are more telephones than people. 9. Whether the country has adequate teledensity commensurate with its development can be best judged by reference to a table prepared by the United Nations some years ago in which the corelation between the per capita income and teledensity was worked out. According to the table, for a per capita income of $1000 an annum, a teledensity of 3 per cent is considered adequate. So, India has adequate teledensity, as we have not reached the per capita GDP of $1000 (it is about US$ 400). 10. Active Internet users are those who have used the Internet at least once in the last one month-this is an internationally accepted benchmark for enumerating Internet users. 11. Shor t for Code-Division Multiple Access, a digital cellular technology that uses spread-spectrum techniques. Unlike competing systems, such as GSM, that use TDMA, CDMA does not assign a specific frequency to each user. Instead, every channel uses the full available spectrum. Individual conversations are encoded with a pseudo-random digital sequence. CDMA consistently provides better capacity for voice and data communications than other commercial mobile technologies, allowing more subscribers to connect at any given time, and it is the common platform on which 3G technologies are built. 12. Shor t for Global System for Mobile Communications, one of the leading digital cellular systems. GSM uses narrowband TDMA, which allows eight simultaneous, calls on the same radio frequency. GSM was first introduced in 1991. As of the end of 1997, GSM service was available in more than 100 countries and has become the de facto standard in Europe and Asia. 13. Although Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas. Between 1999 and 2008, the annualized growth rates for Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%).Poverty rates in rural Orissa (43%) and rural Bihar (41%) are among the world's most extreme. 80% of Indians live on less than half a dollar a day. 14. The Oxford's research finds that age is the primary factor determining Internet usage patterns in developed Western countries, not money. Almost 98 percent of students in Britain regularly use the Internet, while only 22 percent of British retirees' surf the Web. All youngsters, whether or not they are numerate or illiterate, appear capable to access the Internet. Professor Richard Rose, the lead researcher on the project, indicates that the idea of wealth-based divide is wrong. It is all about age and not so much about social class. Rose's observed pattern of Internet usage is similar across Western Europe. Russians under 30, for example, are 10 times more likely to surf the Web regularly than Russians over 60. 15. Usually the concept of digital divide is used to relate the technological aspect of knowledge gap. 16. Literacy rate (2001) in Kerala was 90.86 per cent against 47.00 per cent in Bihar. Life expectancy at birth (2001-2006) is 71.61 for males and 75 for females in Kerala. In Bihar, it is 65.66 for males and 64.79 for females. Infant mortality (per 1,000 live births, 2002 provisional data) was only 10 in Kerala against 61 in Bihar. Birth rate (per 1,000, provisional) is 16.9 in Kerala against 30.9 in Bihar. Death rate (per 1,000, provisional) is 6.4 in Kerala against 7.9 in Bihar. The differences clearly indicate that literacy is the key to improvement in quality of life 17. According to I-Cube 2008, a survey jointly undertaken by IMRB International and Internet and Mobile Association of India, there were 3.3 million active internet users in rural India as on March 2008. 18. "Unfortunately telecom networks are designed for people who can afford to pay around US$35 in monthly bills, and very few people in the rural areas can afford that," said Ashok Jhunjhunwalla, a professor at the prestigious Indian Institute of Technology (IIT). 19. For example Microsoft has announced a slew of initiatives to accelerate IT literacy and enable egovernance to bridge the digital divide in the country. The low-cost device, developed jointly by the Indian Institute of Technology (IIT), Chennai, and Indian Institute of Science (IISc), Bangalore, for the human resource development (HRD) ministry, is aimed at bridging the digital divide and making access to computer literacy affordable to the masses. 20. The Universal Service Support Policy came into effect from 01.04.2002. The guidelines for universal service support policy were issued by DoT and were placed on the DoT website www.dot.gov.in on 27th March 2002. Subsequently, the Indian Telegraph (Amendment) Act, 2003 giving statutory status to the Universal Service Obligation Fund (USOF) was passed in December 2003. The Fund is to be utilized exclusively for meeting the Universal Service Obligation by providing access to telegraph services to people in the rural and remote areas at affordable and reasonable prices. The USO Fund was established with the fundamental objective of providing access to 'basic' telegraph services. Subsequently, an Act has been passed on 29.12.2006 as the Indian Telegraph (Amendment) Act 2006 to amend the Indian Telegraph Act, 1885 to enable provision of all types of telegraph services. 21. The Telecom Regulatory Authority of India (TRAI) has phased out Access Deficit Charges (ADC) on domestic calls and slashed ADC on international calls to 50 paise from the present Re 1, effective April. 22. TRAI's mission is to create and nurture conditions for growth of telecommunications in the country in a manner and at a pace, which will enable India to play a leading role in emerging global information society. One of the main objectives of TRAI is to provide a fair and transparent policy environment, which promotes a level playing field and facilitates fair competition. In pursuance of above objective TRAI has issued from time to time a large number of regulations, orders and directives to deal with issues coming before it and provided the required direction to the evolution of Indian telecom market from a Government owned monopoly to a multi operator multi service open competitive market. 23. WiMAX stands for Worldwide Interoperability for Microwave Access. It is a telecommunications technology providing wireless data over long distances in a variety of ways, from point-to-point links to full mobile cellular type access. It is based on the WirelessMAN (IEEE 802.16) standard. WiMAX is a highly scalable, long-range system, covering many kilometers using licensed spectrum to deliver a point-to-point connection to the Internet from an ISP to an end user. WiMAX can be used to provide a wireless alternative to cable and DSL for broadband access, and to provide high-speed data and telecommunications services. WiMAX can also be used to Connect many Wi-Fi hotspots with each other and also to other parts of the Internet. 24. The Department of Telecommunication (DoT) has already issued licences to two global companies (M/s Syniverse Technologies Pvt. Ltd. and M/s MNP Interconnection Telecom Solutions India Pvt. Ltd.) for implementing the service. MNP is to be implemented in Delhi, Mumbai, Maharashtra & Gujarat service areas of Zone - 1 and Kolkata, Tamil Nadu including Chennai, Andhra Pradesh & Karnataka service areas of Zone - 2 within six months of the award of the licence i.e. by 20.09.2009 and in rest of the service areas within one year of the award of the licence i.e. by 20.03.2010. 25. The 3G will allow telecom companies to offer additional value added services such as highresolution video and multimedia services in addition to voice, fax and conventional data services with high data rate transmission capabilities. BWA will become a predominant platform for broadband roll out services. It is also an effective tool for undertaking social initiatives of the Government such as eeducation, telemedicine, e-health and e-Governance. Providing affordable broadband, especially to the suburban and rural communities is the next focus area of the Department. BSNL & MTNL have already been allotted 3G & BWA spectrum with a view to ensuring early roll out of 3G & WiMax services in the country. They will pay the same price for the spectrum as discovered through the auction. While, Honbl'e Prime Minister launched the MTNL's 3G mobile services on the inaugural function of 'India Telecom 2008' held on 11th December 2008, BSNL launched its countrywide 3G services from Chennai, in the southern Tamil Nadu state on 22nd February 2009. 26. Much of the Internet based information is textual and in English. In India, significant portion of the rural population is either illiterate or has an education no higher than the elementary level. Therefore, a large segment of the Indian rural population may not be able to access and comprehend the webbased information. 136 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II What is UID (Unique Identification)? What is UID (Unique Identification)? Sudhir Aggarwal Senior Vice President and Head Government initiatives, Sify In simple terms, it is about allocating a UID number to each Citizen in India. It can be extended to allocate the UID to each legal migrant at the time of entry into the Country till the person resides in India. UID (with whatever the name) is used by the governments of many countries and it is issued as per their own respective thought process & purposes. Each of them envisaged and conceptualised UID with a purpose and could extend the same for other purposes as well. Each Country has developed their own algorithm and strategy to generate, allocate & maintain their respective UID. Some Countries have been able to implement successfully, while some have been able to achieve partially. In fact, partially achieved is as good as not achieved. Few Countries to name, who have implemented their UID: USA (Social Security number), People's Republic of China, Republic of China (Taiwan), Singapore (National Registration Identity Card [NRIC]), Hong Kong, Indonesia, Iran, Islamic Republic of Iran, Israel, Macau, Malaysia (Identification Card number [IC]), South Korea (Resident's Registration Number), Thailand, Turkey. The ways in which such a system is implemented is dependent on the country, but in most cases, a citizen is issued a number at birth or when they reach a legal age (typically the age of 18). Noncitizens are issued such numbers when they enter the country. Many countries issued such numbers ostensibly for a singular purpose, but over time, they become a de facto national identification number. Purpose of UID The primary purpose of creating and allocating the UID/ Citizen ID is twofold: Identification of Citizens (also legal migrants, if applicable) against the illegal migrants into the Country Using UID for passing-on social and/or economical benefits under various schemes of GoI (Government of India) to the entitled citizens/ beneficiaries This can further help identifying Citizens Vs legal migrants on term basis Vs illegal migrants For some, it might be patriotic reason to hold National-id. In small way, we need to value and respect the emotions of them. Government can also, in a small way, track their citizens in terms of their socioeconomic patterns like Taxation. Citizens can use UID to avail various benefits like healthcare, banking and financial transactions, availing utility services… In the current context, UID of residents (Citizen Vs Legal Migrants Vs Illegal Migrants) has become more significant & relevant. Lately, there have been series of challenges being faced by India like Border security, internal security, Terrorism, socio-economic benefits to entitled Citizens by Government of India under various schemes, exercising constitutional right like right to vote; hence, the identification of citizen has become most significant to effective manage all such acts. 137 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II What is UID (Unique Identification)? Background There have been series of initiatives tried in the past to allocate UID for each Citizen. These initiatives and pilots have been undertaken by different agencies & bodies, using multiple tools & technologies, with varied objectives & purposes, basis different databases. All these initiatives have not been conclusive as they were conceived and perceived with limited scope, perspective, and objective. Also possibly these initiatives were undertaken with select leadership support and commitment of individuals. Government of India has recently launched UIDAI (Unique Identification Authority of India) under the leadership of Industry legend Shri Nandan Nilekani. Mr. Nandan has accepted the responsibility to envisage and conceptualize UID. UIDAI was set up on 27 January 2009. The initial phase of the project is expected to cover nine States and four Union Territories. The UID will be issued to people living in the coastal villages of Gujarat, Maharashtra, Goa, Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, Orissa and West Bengal. The Union Territories of Dadar and Nagar Haveli, Lakshadweep, Puducherry and Andaman & Nicobar Islands shall also be covered in this first phase expected to deliver the identity cards by early 2010. UIDAI is expected to provide UID to around 60 crores people in 4 to 5 years. Potential Challenges 'Easier said than done' is quite relevant and applicable in case of UID. It is a huge task but not because of number of people involved or geographical spread across the Country or selection of codification scheme for UID; but it is a marathon task due some of the reasons like First and foremost to clearly demystify that challenge of creating and allocating UID is more of a socio-political (may be >90%), and technology role is in single digit (< 10%). All the earlier half-hearted attempts on UID collapsed not due technology, but as they were initiated without proper background work. As of date, there are multiple databases (manual or digital or combination of two) exists in the Country like Passport, Census, Election Commission, BPL (Below Poverty Line), Ration card, Driving License, Border area id card, …). Each of these databases have been created over time with certain perspective, hence each database is influenced by certain factors. Hence one of the challenges is to decide the base database to build UID. Creating onetime UID database is one challenge, but managing such a database on continuous basis will be yet another challenge. As India has border conditions with various neighbor countries right from North to South and East to West, India has a challenge and history of illegal migrants and pseudo citizens living in India from these countries over the years. One of the main reasons for illegal migrants into India is 'India's better socio-economic' status Vs these Nations. Yet another challenge and big question: Should the process of allocating Unique Id be Centralized or Decentralized? Top-Down or Bottom-Up? Different people in the system have their own strong views and reasons wrt. pros and cons to each model & approach. It has been a long standing debate, should Unique Id card be just Unique Id card or multipurpose ID card? Over time, there has been opinion to have multi-purpose ID card covering various identity factors of citizens. How to identify current illegal migrants and how continue to track illegal migrants? Identification and isolation of illegal migrants onetime and on continuous basis will continue to be a challenge from Border security and political perspective. How to allocate and maintain the Unique Id card to the people, who do not even have roof for themselves; there is a large population in this category in India. This is a huge challenge from the perspective of being misused, accused & abused by power centres. Even in the current context, there is a massive mafia in the Country managing the system to mismanage the socio-economic benefits. One of the challenges would be to control issue of duplicate/ multiple UID for same individual, esp. in the current scenario where practically every identity document (even currency) is duplicated. UID is expected and envisaged to be the core database to establish the identity of Citizens (Vs legal/ illegal migrants). Will UIDAI stand accountable wrt. legality and authenticity of its data, esp. if some data is found fraudulent and the said database was created basis UIDAI database. As UIDAI database is not expected to be SINGLE database at Country level for all purposes and rightly so, i.e. various departments (like passport, transport, BPL,…) are expected to have their respective databases. What will be the mechanism to keep UID database and other databases up-to-date and in sync? There will be situations, where Citizen Details will be differential across various databases, hence one of the challenges would be to establish 'which is the latest data' and it may differ from citizen to citizen. The above-mentioned challenges are non-technology. Tools and Technology will not be a major challenge and limiting factor in conceptualization of UID; however there would be few potential Technology challenges as well. Some of them are articulated as mentioned below: De-duplication of data as the records of same citizen may appear differently across databases of same and/or across departments (like Brahm Prakash Gupta, Brahm P Gupta, BP Gupta is same name represented differently). At times, even the name and details of a citizen may exist differently across databases of same department (assuming person had stayed in different States at two point of times) Existing databases may be available in different template & formats. 138 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II What is UID (Unique Identification)? Indian language support. Some of the perceived technology challenges like managing database size, scalability to suit the growth, replication requirements, multi-purpose UID card, Centralized Vs Decentralized databases, … will not be challenges with current set of available tools and technologies. The debate on open source Vs commercial products may exist for some time; however this shall primarily get addressed by the choice of final solution selected by UIDAI. The factors mentioned above primarily depend upon the solution architecture and other technical aspects. Implementation Model There could be two models for creating and allocating Unique Id, i.e. Evolutionary or revolutionary. In case of India, it has to be revolutionary, yet evolutionary in nature as it will evolve over time through various iterations; Had this task been done immediately post independence, it could have been evolutionary; but in current times, it has to revolutionary still evolutionary. Another critical discussion point is should the process of allocating Unique Id be Top down or Bottom up. There are merits and limitations of both models, but it needs to be evaluated very carefully and be monitored closely. Some of the CSF (Critical Success Factors) As mentioned above, 'easier said than done' is quite much applicable here, on the same lines, there are set of things which must go right to ensure the success. In another words, if some of these factors are taken care of pro-actively during evolution of UIDAI, certain challenges can be minimized (if not eliminated). First and foremost, UIDAI (Unique Identification Authority of India) must run as an independent autonomous body and be independent of political structure. It must have endorsement and support of political setup beyond party in power, but outside the clutches of political system. Even the required political involvement shall be on merit and qualification, and not basis current position/ portfolio. At times active support of political setup can certainly ensure the required push, but it would be significantly important to draw thin line between support and intervention/ influence. The political support shall not touch with the independence and autonomy of UIDAI. As it would be required for UIDAI to operate in revolutionary manner and still be evolutionary in nature, one of the most critical success factors would be to regularly and periodically review the provisions and progress. It may require changes, amendments, course correction during evolutionary process; it must be deliberated and supported within required timeframe to ensure implementation with minimum limitations and challenges. UIDAI must setup an effective feedback mechanism such that UIDAI do incorporate feedback, but does not get carried away by varied inputs. UIDAI may face the situations of contradictions and clash of interests, but those would be test situations for UIDAI. Continuous effective & meaningful legislative and judiciary support would be among the key critical success factors. In current context, judiciary system itself is overdue for reforms for its effectiveness and resultoriented. Legislative steps have been triggered, but effective judiciary support will be a BIG MUST! The process to keep UID database up-to-date and the process of implementing UID as the mother database of all databases across various agencies would be yet another challenges. Even one time synchronisation of departmental databases with UID would be a huge challenge. Subsequently on-going synchronisation of various databases with UID and vis-versa would be yet another challenge. Not too sure, but UIDAI may require to interact and interface closely with various industry representative institutions like Assocham, CII. This could be one mechanism to bring Industry on board with the caution to restrict the influence and interests of the specific industry players. There is one factor little outside the scope of allocating and managing Unique Id, but very critical to make UID meaningful, i.e. mandating accumulation of funds across socioeconomic schemes into one fund and disbursement around UID In the current form UID database is expected to serve the disbursement of socio-economic benefits (other than identity for the Citizens) and serve other political agenda. If so, the interested parties will be too many and complications for creating UID number could be too many. Right at conceptualisation, there will too many interested parties to ensure that their interest is served in basic design. One thought: would it be a good idea to implement creating & issuing UID in two phases: Step I: Create and allocate UID for each Citizen with the sole objective to identify each citizen Step II: Link socio-economic benefits to UID in gradual and/or revolutionary manner This is to ensure that the job of identifying and allocating UID for citizens can be completed without too many interested parties influencing right in the beginning. This will also give breathing time for other socio-economic schemes to align with UID database. It would be quite critical to implement and rollout the project within given timelines, but the entire process shall not be hurried up to meet the deadlines and compromise on fundamentals as any error & omission would have farreaching implications. All throughout, it would be absolutely critical to remember that UID has impact and implications from Internal and Border security perspective. Last but certainly not the least in any manner, UID has to be declared under ZERO tolerance Zone. Again easier than done, but this will be one the most difficult, but significant and equally critical requirements. This cannot be achieved without absolute commitment of top 139 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II What is UID (Unique Identification)? leadership and till it is run like an absolutely independent autonomous body in all respects and free from any kind of FUD (Fear, Uncertainty, Doubt). The word 'absolutely' is used here repeatedly, just to reiterate absolutely means 100%. Background and supporting information Legal amendments made to facilitate the project The Citizenship Act, 1955, has been amended and now a specific section on registration of citizens & issuing cards has been included. In addition the Citizenship (Registration of Citizens and Issue of National Identity Cards) Rules, 2003 has been notified in the Government of India Gazette Vide GSR No. 937(E) dated:-10 December, 2003. Important amendments to the provisions of the Citizenship Act, 1955 Section 14A (1) The Central Government may compulsorily register every citizen of India and issue national identity card to him. (2) The Central Government may maintain a National Register of Indian Citizens and for that purpose establish a National Registration Authority. (3) On and from the date of commencement of the Citizenship (Amendment) Act, 2003, the Registrar General, India, appointed under sub-section (1) of section 3 of the Registration of Births and Deaths Act, 1969 shall act as the National Registration Authority and he shall function as the Registrar General of Citizen Registration. (4) The Central Government may appoint such other officers and staff as may be required to assist the Registrar General of Citizen Registration in discharging his functions and responsibilities. (5) The procedure to be followed in compulsory registration of the citizens of India shall be such as may be prescribed. In sub-section(2) of section 18 (ia) has been inserted after clause (i) the procedure to be followed in compulsory registration of the citizens of India under sub-section (5) of section 14A; In sub-section (3) of section 18 the following proviso has been inserted "PROVIDED that any rule made in respect of a matter specified in clause (ia) of sub-section (2) may provide that a breach thereof shall be punishable with imprisonment for a term which may extend to three months, or with fine which may extend to five thousand rupees, or with both".DDWDW Source: http://en.wikipedia.org/wiki/Multipurpose_National_Identity_CardMultipurpose National Identity Card Source: http://en.wikipedia.org/wiki/Multipurpose_National_Identity_Card http://en.wikipedia.org/wiki/ File:Linking-NIN.gif 140 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Scientific Infrastructure for Inclusive Growth Scientific Infrastructure for Inclusive Growth Rajesh Kumar Scientist, DSIR Ministry. of Science &Technology Anusandhan Bhawan, 2 Rafi Marg New Delhi 110001 The Author, Rajesh Kumar, is Scientist with Department of Scientific & Industrial Research (DSIR) and Ph.D student of IIT Delhi. The author is associated with Soleckshaw project and responsible for commercialization inclusive financial intervention for societal impact. The author sincerely acknowledge CSIR and CMERI particularly Prof. Samir K.Brahmachari, DG, CSIR for his genesis & continuous encouragement and Prof. Biswas, Director CMERI, who encouraged the development of different variant of Soleckshaw provide sustainable vehicle to different segment of people, to fulfill implied need of transport system. This article is the result of the experience gained during development of Soleckshaw and transfers the technology to the people domain. The author is thankful to Dr. Arun Agarwal and Dr. Saravanan for sharing their work to include in the article. Globalisation of trade and investment demands that countries upgrade their technological capabilities as a source of competitive advantage. The era in which country like India's development was defined largely as a matter for discourse is coming to an end. The traditional focus on relief and emergency activities is being replaced by new focus on competence-building to enable India transition from developing to developed country. With intervention of science, more attention is being paid to investment in people and infrastructure rather than simply provide short-term palliatives aimed at reducing the visible symptoms of low levels of economic productivity. Globalisation, with the intervention of information communication technology (ICT), is connecting the hither to unconnected Geographies, Nations and Communities. Internationally, awareness levels are now much higher about natural foods, organically cultivated and processed fruit products and the market has grown 23 times in the past 5 years. Western countries are enthusiastic to give fair trade to the primary producers through fair trade buyer seller linkage with premium that should help the primary producers better their quality of lives. The major objective of Indian scientific infrastructure deployment is to providing opportunities to motivated scientists and field level workers to take up action oriented and location specific projects aiming towards socio-economic upliftment of poor and disadvantaged sections of the society through appropriate science and technology interventions especially in the rural areas. The Indian government plan scheme namely Bharat Nirman and National Rural Employment guarantee Act (NREGA) are the flagship programme for the inclusive growth. Bharat Nirman plan is time bound for 4 financial years 2005-2009 in the areas of irrigation, road, rural housing, rural water supply, rural electrification and rural telecommunication connectivity with specific targets. These flagship schemes are mainly for creation of infrastructure in the rural network with integration of other plan schemes run by other ministries. Department of Science & Technology has been working under its plan scheme 'Science For Equity Empowerment and Development (SEED)' with target mission on "Working for technological empowerment and sustainable livelihoods at the grass root levels". Council of Scientific and Industrial Research (CSIR) have recently launched CSIR-800 to provide "scientific & industrial R&D that maximises the economic, environmental and societal benefits for the 800 Million people of India, who are at the bottom of the pyramid of quality of life". The ministry of health, rural development and agriculture are also working on collaborative projects by their scientist with other agencies for diffusion of technologies. In the following pages, the efforts are to explore the steps initiated by Indian government, specifically to strengthen scientific infrastructure as to reach out masses for benefit sharing on technologies. Indian science main emphasis science, technology and innovation capacity in order to make demonstrable progress in achieving the Millennium Development Goals (MDGs) and also target through India vision 2020. These programmes attention to 141 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Scientific Infrastructure for Inclusive Growth achieve through raise productivity, wealth, and standard of living by developing new; competitive economic activities to serve local regional, and global markets; and address social, economic, and ecological problems specific to India. Through implementation of Indian science policy- 2003, the government achieved more investment resources into targeted science development programme reflecting inclusive growth. Indian Government is in process to release Innovation policy for more inclusion and benefit sharing for the unrewarded citizen. The innovation policy will target building of local science, technology and innovation capacity, developing Indian for better absorb and adopt technologies along with developing social solutions for local problems Scientific infrastructure for inclusive growth enables one and all to share the benefit from scientific and industrial growth, which may results from the national laboratories, academic & research institute and traditional science throughout the geographical map. The main deliverables in implementing this infrastructure are improved life style, better healthcare, equalization of education, water & food security, road, electricity and economic empowerment through entrepreneurship. The countries resources deployment intention reflected from the percentage of gross national product (GNP), which has risen above 0.9% for research & development, during financial year 2007-08, total amounting Rs. 377779 million. The R&D expenditure figure indicate the growth of science among formal set up in India and for inclusive growth of country through scientific intervention need multifold expenditure on conversion of science in technologies and diffusion among the end user. The country has different approach to develop capacity around specific problem. Take the example of 'Soleckshaw' , solar power assisted motorized rickshaw which reduced the drudgery to puller, exploiting green energy. To make this happen, S&T capacity is needed at various points; scientists to develop technologies, engineer to manufacture vehicle and rickshaw driver to ride new technology vehicle. The Soleckshaw business plan is under preparation at Indian school of Business, Hyderabad with and without intervention from government and spread of technology for inclusive growth. Initiative on inclusion from Council of Scientific & Industrial Research (CSIR) CSIR-800 is a flagship programme of CSIR launched to provide scientific & industrial R&D that maximises the economic, environmental and societal benefits for the 800 Million people of India, who are at the bottom of the pyramid of quality of life. S&T Inclusion Mission of CSIR -800 to increase per capita income by Rs. 15/- per day (Approximately US$ 110 per year) through S&T interventions. The indicator for Indian economy to target family of 5 members Rs 75/- per day per family. The initiatives taken in this direction are Affordable Health Potable Water Sustainable Energy Secondary Agro & Food Processing Low-cost Housing Waste to Wealth IT Intervention for Improving Quality Life The following contents give insight into CSIR success to implement of 'Soleckshaw' programme for inclusive growth. Soleckshaw -Sustainable Energy and Affordable Health The survey conducted by Indian Council of Medical Research (ICMR) on rickshaw puller to study tuberculosis (TB) disease, highlights shady picture of the spread of disease due to high drudgery and low intake calories. CSIR recognized that the rickshaws in use leave much to be desired in terms of efficiency, ergonomics and aesthetics. This is hardly amazing considering that the design has scarcely changed since it was introduced in India, without sharing the benefit scientific research. CMERI, Durgapur organized a workshop with participants from local city, plying rickshaw to fulfil there daily needs. Therefore actual rickshaw pullers were invited to submit their wish list for a better rickshaw. The following common points emerged: Provision for motorized assistance for haulage, Brakes on both front and rear wheel Larger tread width with better tyre Reduction of rickshaw deadweight Protective cover above the puller's head Energy efficiency through better designs of controllers The existing rickshaws design results from low scientific input and without considerations of design engineering on mechanical propulsion system, driver seat, wheel alignment, load sharing on front and rear wheel, pulling /pushing force and the drudgery bear by the rickshaw puller. The conventional poorly design impact on life style of a rickshaw puller and takes a heavy toll on the health of a rickshaw puller. Indian rickshaw era, start with the invention of Kolkata model in 1920 by fixing cycle wheel in the front with a pedal, in place of human pull and the existing cycle rickshaw has hardly changed. The present design without any gearing and the mechanical advantage of the pedal is very poor. Hence the rickshaw puller has to work very hard while climbing even a slight slope and this is very common sight is of the rickshaw puller getting down and pulling on foot the rickshaw with passengers. The braking system is also very poor with only front brakes on the rickshaw. Thus when going downhill at high speeds sudden braking produces a catapult affects which results in overturning of the rickshaw. Similarly the seating arrangement is very uncomfortable and the aerodynamic drag of the system is very high. It is therefore humanly degrading to pull the existing inefficient cycle rickshaw. Yet because of poverty and no other source of income, migrant labourers do become rickshaw pullers and suffer adverse consequences to their health. In India, presently the rickshaw manufacturing is an unorganized and low technology industry segment, without quality standard. The rickshaw design is available in different variants and these design changes with every city. Soleckshaw Era eminence after assessing needs to improve 142 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Scientific Infrastructure for Inclusive Growth the existing rickshaw to make it user friendly and bring quality control in its manufacture. The rickshaw to Soleckshaw Era started in India in the start of 21st century and many scientist, technologist are working on improved design of rickshaw. The major work is undertaken by different IITs, engineering laboratory, engineering college and many NGO like NARI. The cycle's maximus emerge as one of the world leader in innovation on rickshaw for different variant covering the different application. The modular designs are highly manoeuvrable, large and variant capacity, powerful braking on all wheel, extremely reliable heavy duty tyres, excellent rider visibility and safety of driver & passenger. CSIR Soleckshaw vision and achievement: High Science for deprived 800M Indians To reduce human drudgery Mass popularization of zero carbon vehicles Business Model for Designer, Manufacturer, Driver, VC Value engineering for Affordable and Sustainable 'Soleckshaw' Sensitization about Societal need for 'Soleckshaw' Excessive levels of pollution manifest in most of cities and towns in India. It primarily owes its origin to air and noise pollution caused by transport vehicles, a large majority of which are two and three-wheelers powered by diesel or petrol. A conservative estimate puts their number close to 25 million, and even this is growing annually at an alarming rate of about 18%. These vehicles are not only affecting adversely people's health through the emission of noxious fumes, but are also consuming huge quantity of petrol and diesel, thereby negatively influencing the nation's foreign exchange balance. In order to obviate these detrimental factors, it is essential that India devises a policy and means to contain this through at first partial, and then total replacement of the offending vehicles with environmentally sound means of transport. The common 'rickshaw', which is found in large numbers in any part of the country, perhaps constitutes the ideal choice for providing this solution. Systematic introduction of 'rickshaws' or their various human powered variants (Pedicabs) is expected to have four major societal impacts as under: 1. Systematic Introduction of dual powered (human & solar) vehicles will help in conserving huge quantities of petroleum based fuels, 2. Being non-polluting, these will help in controlling pollution, 3. Widespread dispersion of human powered vehicles will ensure large scale livelihood for the urban and rural poor, and 4. The measure will help elevating the dignity of human labour and generate employment for millions of Indian. However, present design of rickshaws leave much to be desired in terms of efficiency, ergonomics, ease of driving and aesthetics. In fact, the design of the existing cycle rickshaw has hardly changed since it was introduced in India. In the absence of proper design attention, the present models remain as inefficient as it was in the early 1920´s. As a result, the average rickshaw puller suffers from a number of diseases caused by continued usage. With the increasing cost of petroleum fuel, interest in using renewable energy including human power without drudgery and exhaustion has been renewed, and with it has been rekindled the interest in developing efficient rickshaws, or pedicabs as they are currently called, for urban micro transportation. This scenario has prompted CSIR to design and promotion of efficient pedal powered, motor assisted machines through benchmarking, design iterations and on road trial for introducing these systems in the urban transportation ecosystem of the nation. The new means of downtown urban transportation is also being proposed by CMERI for pollution mitigation and promotion of renewable energy usage in India. This means, designated 'Soleckshaw', is basically an optimally designed pedal operated and motor assisted three-wheeler that is expected to find wide application in downtown urban transportation and freight. Genesis on Soleckshaw To change the lives of pedicab (rickshaw) puller, by reducing drudgery, with improved design of the vehicle, with technology intervention. The assignment was given to country one of the excellent mechanical engineering research laboratory, Central Mechanical Engineering Research Institute (CMERI) and the prototype was designed in record time of less than 6 month by August, 2008. The goal was given to develop an optimally-designed, pedal-operated and motor assisted, zero-carbon emission, urban and rural transport vehicle. Soleckshaw is the flagship program of CSIR-800 initiative focused on improving the quality of life of 800 million Indians who are at the bottom of the quality of life pyramid. Common Facility Centre create Scientific Infrastructure through Self Help Group in Nagaland Nagaland state has its geographical advantage of rich in natural resources and forest with highest per capita growth of fruit. The latecomer advantage needs to be captured by 143 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Scientific Infrastructure for Inclusive Growth developing vegetables (121%) and dehydrated fruits & vegetables states through (24%). target Block level Canning and Processing centre will be the strategies. The common facility centre where the following equipment will be potential made available for processing and packaging. The equipment advantage and hardware are sourced through Government Planned consists of allocations. this: a state 1. Slice cutters and knives arriving late on 2. Air circulation driers industrial 3. Testers and Brix meters scene is able 4. Packaging machinery to access 5. Pulverisers Canning the processed pine apple in the advanced 6. Grinders Processing centre (courtesy Nandi technologies 7. Juicers that have been 8. Boiling and cooling equipment foundation) developed 9. Refrigerators elsewhere and put them to business use at lower cost than 10. Cutting tables and furniture, cup boards advanced firms themselves- sometime at lower cost, and It is common facility centre wherein processing, grading faster, than the very firms that developed the technologies in quality control and packaging activities will be carried out. In the first place. due course mobile training centres shall be introduced Nagaland State is emerging as a force in SHG movement in keeping in mind the difficult terrain of the Hill State NER due to sustained effort by society in rural areas. There is need to consolidate the gains and the people need a Resource Centre with common facilities where they can walk Non Governmental Organisation (NGO) support for in and find solutions for their livelihoods, social and health Inclusive Growth - Uttaranchal issues. Small states like Uttaranchal, with little domestic demand for With this vision, Block level SHG Resource Centre is technology, developed unique approaches exporting planned in every block of total 52 blocks in Nagaland State in knowledge creation with excellent outcomes. Developing 3 years period. The Resource Centre is governed by the states NGO in partnership with government and local Federation of SHGs in the Block and administered by the line community are working to create technology capacity and functionaries and para professionals. The Resources Centre ensure their future in a knowledge- based economy. is proposed to be supported for one year with a sustainable plan to ultimately self-support by the Federation from the Rural women of the hill region are employed in different second year onwards. In three years progressively all the 52 activities in crops and livestock enterprise such as sowing, blocks in the State are covered. The activities and services weeding and hoeing, harvesting, threshing and winnowing, encompass, capacity building, livelihoods, health services, grass cutting, feeding and mulching of animals, etc. Faming processing and marketing. In addition, an amount of Rs.25, in the region is regarded as a subsistence activity and use of 000/- is envisaged as revolving fund grant for each SHG for purchased input is very low. The major share of farm input is livelihood promotion activities. Community Mobilisers will be contributed by family labour (almost exclusively by women the grassroots facilitators involved in formation and workers) using locally made traditional implements and tools, stabilization of groups. household seed and farm yard manure. The activities are monitored through carefully designed This project, supported by department of scientific & CBMS (Community Based Monitoring Systems) and base line and performance impact studies. Critical Rating Index will be developed to select the best performing centres and will be awarded. Each centre will develop its own community centric micro strategic business plan with sustainability projections by the end. India equally is becoming popular destination very fast for processed fruits. The fruit production in India has recorded a growth rate of 3.9%, whereas the fruit processing sector has grown at about 20% per annum. However, the growth rates have been Preparation of tomato puree by beneficiary Shield winning sale by beneficiaries in extensively higher for frozen fruits & group (Courtesy SEED, Uttrakashi) Magh Mela (Courtesy SEED) 144 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Scientific Infrastructure for Inclusive Growth industrial research (DSIR), is implemented for the technology transfer through training for the development of fruit processing activities among the selected beneficiaries from their horticultural produce for market. A total of three hundred beneficiaries were trained through technology transfer in semi-processing and preservation of produce for selling their produce during lean period when fruits are not available in the market to fetch good prices and for producing final products like jam, squash, syrups, pickles etc. for their own consumption and for the market during tourist season. The beneficiaries of the project have established one semi and final processing unit in their own area for processing their own horticultural produce. The unit established by the beneficiaries providing direct employment to 25 people and indirect benefits to whole area as surplus fruits, that left after marketing as raw, are utilized by this unit and all are getting benefits of it. During last three fruiting seasons, the beneficiaries process a total 1500 kg apple, 2500 kg tomato and 500 kg Rhododendron and produce apple pulp, tomato puree and rhododendron juice for the supply to other final processing units and generate the additional economy worth Rs. 1,25,000/-. The income generated from final processed fruit products amounting to Rs. 45,000/-. Thus, a total of Rs. 1,70,000/- additional income was generated by the beneficiary group. A total of 25 person got direct employment through processing and marketing of the material. Average additional income was amounting to Rs. 2500/- per season per beneficiary. By selling the fruits, the farmers, who supply their produce got additional income and save their resource from spoilage. Now another group of 25 beneficiaries is establishing another small scale semi-processing unit to supply their horticultural produce for other final processing units already working in nearby areas. The inclusive growth of beneficiaries includes additional income, employment generation and living standard upliftment through project activities. They are generating additional income and employment of Rs. 2500/- - 3000/- in one month fruiting season and through final processing, round the year employment and income generation. The entrepreneurship was also developed among the beneficiaries for marketing. Their living standard is also uplifted through this activity. Now organization is trying to link these interested beneficiaries with small industry department to setup their own small units and showroom development along the tourist line for marketing. ICT Applications in Arunachal Pradesh India's North-East is endowed with rich natural resources for development. The average rainfall in the region is the highest in the country. However, the region has exhibited most backwardness. The economic upliftment of the entire region depends, to a large extent, on the progress of agriculture sector. The non-income poverty in terms of inadequate information on advanced farm technologies, market intelligence and rural development schemes produces the income poverty in the region. The limited technical manpower, lack of transport and communication facilities, inadequate financial support to the technology transfer and less Farmer facilitator sharing crop infrastructure condition using mobile phone facility creates huge technological gap among rural tribal farming community. Further, difficult terrain, mountainous periphery and frequent natural disasters hinder the development of Computer trainees at e-Arik village the region. Due to knowledge centre at Yagrung village non-availability of improved technological information to the tribal farmers, agriculture exhibits low unstable productivity, which makes agriculture become less remunerative and also creates food insecurity problem. In this existing scenario, it is expected that application of Information and Communication Technologies (ICTs) in agricultural information provision to the tribal farming community of Arunachal Pradesh State of North East India will helps to foster the socio economic empowerment of tribal farming community. Hence, e-Arik ("Arik" means "Agriculture" in the Adi tribal dialect of Arunachal Pradesh State), a research project supported by DSIR to experiment the application of ICTs in agricultural extension services provision and also to measure its impact on the tribal farmers has been implemented in "Yagrung" village of East Siang District of Arunachal Pradesh State. This two years research project is funded by the Department of Scientific and Industrial Research (DSIR), Ministry of Science and Technology, Government of India to Central Agriculture University (CAU), Imphal. The project proposes single window system for the improved agricultural information and technology delivery to the tribal farmers by using computer, internet, phone, radio and television. The project also aims to provide all time expert consultation on agriculture production, protection and marketing aspects through ICTs. The project also promises to provide the training on ICTs and capacity building among the rural tribal children, youth, women and others. 145 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Scientific Infrastructure for Inclusive Growth Summary The government mechanism has been initiated to exploit the natural resources and tradition knowledge of different community across the map, as scientific tool for the inclusive growth. Indian conservationists, scientists and rural communities have joined hands to promote conservation through science and technology. The scientist and government institution hold discussion at various platforms about the impact of using ICTs such as cell phones, global information system (GIS), global positioning system (GPS), cameras, and two way radio to promote conservation and development. The flagship programme like Bharat Nirman and NREGA has been engineered for the sharing of scientific infrastructure and R&D outcome in the national laboratories. Reference 1. 2. 3. 4. 5. 6. 7. 8. 9. Technology Review: a MIT magazine on Innovation, July, 2009 Infrastructure Development, 'Yojana', Vol. 53, July, 2009 Agenda for inclusive growth, 'Yojana' Vol. 53, August, 2009 Research and Development statistics at a glance 2007-08, DST, GOI India Development Policy Review: Inclusive Growth and Service delivery: Building on India's Success http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/DPR_overview.pdf Development Outreach, January, 2007, published by World Bank Institute World Bank, Inclusive Growth Consultations - India, New Delhi, 29 August, 2007 http://go.worldbank.org/DKVN94JT50 Project proposal on 'Soleckshaw'by CMERI, Durgapur to CSIR Annual report 2007-08 of Nandi Foundation, Hyderabad 146 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Assessment of Citizen Empowerment – Under E-governance Using Analytical Hierarchy Process Assessment of Citizen Empowerment Under E-governance Using Analytical Hierarchy Process Case Study ‘Jankari’ A RTI Call Centre In Bihar S N Mukhopadhyay, Chief Operating officer, Infrastructure Leasing & Financial Services, PhD Student, IIT Kanpur. Prof. Jayanta Chatterjee Industrial & Management Engineering Department IIT Kanpur Introduction The challenges faced by the government of India today are quite steep. The dependency of a very high proportion (about 60%) of people on agriculture, which is even today dependent on the monsoons, world's highest number of illiterates, poor health infrastructure, widely spread corruption with 170 or more districts having only a token presence of government are just to name a few. India being the largest democracy in the world faces growing difficulty in making its democracy inclusive and transparent. India, with people from diverse language, caste and creed, rich and poor, rural and urban, literate and illiterate, makes it a formidable task to make the democracy allinclusive. All these challenges at the backdrop of growing recognition of India as a potential superpower, makes it imperative for the government and its services to be effective, efficient, transparent and reliable to really live up to the expectations. These are the objectives arrived in this paper based on literature review, past research and case study in the area of good Governance. There is no argument about the fact that Information and Communication Technology (ICT) can really change the way the government provides its services to its citizens. There is no denying the fact that use of ICT can really enhance and improve the functioning of the government making it more efficient and transparent. But can using the technology alone, really make the government services reach the masses that have remained un-served until now? In other words, can the technology really make the government services effective? Can the technology alone make the people trust and make them rely on the government services? In other words, can technology make the government services reliable? These are some of the questions being addressed in this report. The objective of this paper is to find out the importance of the three pillars- People, Process and Technology for the realisation of the goal of e-Governance using the ICT. The goal of e-Governance as defined by the Government of India is: "Make all Government services accessible to the common man in his locality, through common service delivery outlets and ensure efficiency, transparency & reliability of such services at affordable costs to realise the basic needs of the common man". A hierarchy of the goal, objectives and implementation steps for each objective of e-Governance was created based on literature study and field study and then a survey was conducted among the various stakeholders to assign importance to each objective and implementation steps. The survey results were then incorporated and calculations were made to arrive at the final priorities for People, Process and Technology. 147 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Assessment of Citizen Empowerment – Under E-governance Using Analytical Hierarchy Process Literature Review Within the past few years, there has been much debate (e.g. Accenture 2009, Asgarkhani 2004, Heeks 1999, Nath 2003 and Reschenthaler et al 1996) over the effectiveness of e-Service in the public sector. Technology is undoubtedly the backbone of the infrastructure that is required to support electronic government initiatives. Yet there is a danger in placing too much emphasis on the technology aspect of eServices. What's more, political and financial support for eService projects can be accompanied by political rhetoric and hype. The potential benefits of e-Technologies in the public sector can only materialise when they are introduced as part of a well-planned and properly supported social, cultural and political environment (Asgarkhani M 2005).Just placing a technological infrastructure in place without the required support will never result in realisation of the benefits and the cost of such setups could never be justified. Further, to fulfil the development needs of ICT projects, those involved in the design, implementation and management of IT-related projects and systems in the developing countries must improve their capacity to address the specific contextual characteristics of the organisation, sector, country or region within which their work is located (Avgerou and Walsham 2000). Without the specific contextual characteristics, such ICT projects will fail to gain the confidence of the beneficiaries and will not be reliable enough to gain the popularity to accrue the true benefits of such projects. So, clearly the literature suggests that though it is relatively easy to make the government services efficient and transparent using e- Technologies, but clearly without the services being effective and reliable the true benefits eServices could never be realised. Gupta &Jana (2003) suggested a flexible framework to select appropriate strategy to measure the tangible and intangible benefits of eGovernment.' When the e-Government literature is reviewed, it is understood that a numerical tool for the evaluation of the criteria and the strategies is needed' (Kahraman et al 2006). CASE STUDY Jankari-RTI Call Center In Bihar, India Bihar government's e-Governance 'Jankari' project has bagged the National award for e-Governance. This Jankari project envisages Call Centre facility under Right to Information Act (RTI). This award has been given away on February 12, 2009 at the national conference on eGovernance in Goa, by the Department of Administrative Reforms and Public Grievances, Ministry of Personnel, Public Grievances and Pensions, Government of India. Bihar is the first state to start the Jankari type citizen facilitation centre, which enables people living in remote corners of the state to make applications under RTI through a telephone call. The operators receiving the calls in call centres draft the applications under RTI and send it to the public authorities for providing requisite information to applicants. Right to Information-general Perspective Since early 1990's, civil society and grassroots level Non Governmental Organisations (NGOs) in India have been demanding a legislative framework for right to information. Such movement resulted in Government of India passing the Freedom of Information Act, 2002(FOI Act).It was rather unfortunate that the Act never came into force and consequently citizens could not exercise their rights under this new law. By 2004 the United Progressive Alliance (UPA) Government came into power with promise to make the right to information more "progressive, participatory and meaningful". The National Advisory Council (NAC) set up by the UPA Government for oversight of its promises included prominent personalities of the National Campaign for People's Right to Information (NCPRI). By August 2004, NAC tabled a set of recommendations to Government of India with due consideration of submissions received from Commonwealth Human Rights Initiative (CHRI), NCPRI and some active civil society groups, seeking amendment to FOI Act. By end December, 2004 the Right to Information Bill 2004 introduced in the Parliament incorporated many of the recommendations of NAC. The Bill sailed through rather quickly from Lok Sabha to Rajya Sabha before the Right to Information Act, 2005 received presidential assent on June15, 2005. While some provisions came into force immediately, the RTI Act became fully operational and effective from October 12, 2005. The RTI Act has incorporated penal provision for not providing Government held information to the public within stipulated time from receiving the request. In fact, imposition of such penalty for non-performance of civil servants has become quite common under the RTI Act. Challenges Of Rti Service Provisioning Service Provider Perspective Information Archive and Retrieval -Under the RTI Act, the citizens can seek information on functioning of all government bodies in India. From service organisation perspective, the challenge is to meet citizenexpectation on a diverse and non-standard query that in most cases evoke non-standard response on a large canvas of both service and geographical coverage. -The RTI Act enables citizens to access diverse range of information held by public authorities in various forms. Citizens have recourse under the Act to get hold of 'records' including any document, manuscript and file; microfilm, microfiche and facsimile copy of a document; any reproduction of image or images embodied in such microfilm and any other material produced by a computer or any other device. Information under this Act means any material in any form while deliverables under RTI Act service provisioning is immensely diverse, non-standard and heterogeneous in nature the required information archive is equally diverse in terms of storage medium and the data format -The Act has been broad based to an extent that the Citizens 148 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Assessment of Citizen Empowerment – Under E-governance Using Analytical Hierarchy Process have right to obtain information in the form of diskettes, floppies, tapes, video cassettes or in any other electronic mode or through printouts where such information is stored in a computer or in any other device. Hence, the service offering need to provide for multiple media capability. - RTI service is designed to provide for response on nondeliverable information because the Act stipulates the following type of information exempt from disclosure. Supervisory Intervention The aforesaid exemptions are not absolute. In case the information requested by a citizen is covered in the exempted list, a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Consequently, RTI service organisation to be 'citizencentric' needs to provide for 'supervisory intervention' to meet 'public interest override'. The RTI Act stipulates all Public Authorities covered under the law to routinely publish 17 categories of information on proactive basis on their own, even if no one has specifically requested such information. Consequently, while processing service request, the designated Public Information Officer (PIO) / Assistant Public Information Officer (APIO) need to determine and categorise whether the information requested (i) is available in the office or else transfer the request to concerned public authority and notify the citizen of such transfer; (ii) is in the nature of confidential third party information that would require consultation with the concerned party before a decision can be taken; and (iii) falls under the exempted category and whether there is a 'public interest override'. Payment Processing A citizen has to pay the prescribed fees along with the application. Different fees have been prescribed by the Centre and the States. Payment of fees can be made by cash while submitting the application in person to the designated PIO/ APIO or to the counter directed by the PIO/APIO. In case the application is sent by post the requisite fees can be paid by demand drafts, bankers' cheque or money order. Hence, the service needs to be organised to accept various modes of payment. The Act further stipulates that citizens below poverty line (BPL) do not have to pay any fees against production / submission of copy of BPL card as a proof. The designated PIO has to put on record BPL status of the applicant in case the application is submitted in person. Citizen Perspective Transparency Due to lack of transparency, citizens often are oblivious or ignorant of the Government decision making process .Such lack of transparency prevents large section of citizens and business community to actively participate in the process of Government functioning leading to tacit acceptance of ill-advised or impaired decisions. An appropriate implementation of e- Governance project can bring higher transparency in Government policy and processes.-Non - transparency facilitates official graft and favouritism User-friendliness Many citizens cannot fill the requisite form or draft application. Due to illiteracy, RTI cannot be used by a large number of citizens. Many citizens are not aware which Department to approach for his matter and consequently it is all the more difficult to file an RTI application. Even if one knows the Department, there are multiple Public Information Officers (PIOs) in a Department and it is indeed quite difficult for a common citizen to know the relevant PIO for his matter. For an illiterate citizen in remote areas of a state like Bihar, where many variations of different languages like Maithili, Bhojpuri, Magahi, Angika etc. are spoken, there was a need to have an interpreter/ intermediary to facilitate such applicants in drafting the application in Hindi, Bihar's official language. Logistics Meeting government officials face -to-face and ask for information in most cases is not an easy experience. Introducing an opaque level, that of a Facilitation centre, provides comfort level to the applicants. Sending the application by post is not always a convenient option as the applicant is not sure if it would reach its destination in time. Seeking acknowledgement would mean extra cost implications. Payment of Fees Depositing application fee of Rs.10 is another nightmare. One has to either go in person to the concerned office to deposit cash, make a Demand Draft or a postal order. Apart from a financial implication, it also involves time consuming process in Bank or post office With a population of approximately 85 million, Bihar is spread over an area of 94163 sq km. Many district headquarters are located more than 200 kilometres away from the state headquarter, at Patna, which has a repository of State held Information. Travelling to Patna for submitting an application also involves money & time. Filing Appeal If one does not get "right" information, filling an appeal is even more complicated and tiring process. 149 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Assessment of Citizen Empowerment – Under E-governance Using Analytical Hierarchy Process Need For Service Innovation RTI Act to be effective Government and Public Administration (G&PA) need to promote e-literacy, especially among the poor and disadvantaged sections of the civil society. To achieve this objective the issue of accessibility to citizen and civil society is the first move forward. G&PA as service provider need to be sensitive to the special requirements of poor physically challenged and disabled citizens. To overcome the digital divide and illiteracy incapacities, Government of Bihar decided to extend the reach of the service through voice communication over phone line for generating the service request (RTI applications).. Appropriate provisioning for monitoring and qualitative analysis were also put in place. Bihar Government's RTI Facilitation Centre "JANKARI" for filing RTI application with the concerned State government Department works on premium rate (PRI) services of BSNL. System designed to enable a citizen wishing to file an application for seeking any information under RTI Act, without any hassles of physical movement for purchase of postal order ( for the requisite RTI application fee of Rs.10/-) or going to the designated RTI Officer of the concerned department. The primary and mandatory requirement was to charge RTI application fee (Rs.10/-) from the citizen without physical transaction of money. This could be fulfilled with the help of Bharat Sanchar Nigam Limited's (BSNL) - the telecom operator- Premium Rate Services. BSNL's Premium Rate Service is basically a special offering for subscribing premium services like Doctor's Advice, Fortune Telling, and Examination Results etc over telephone, on payment of higher than the normal Call tariff. Later the Premium Service Provider gets his share of revenue from BSNL consolidated over a month Quality And Performance Of Government And Public Administration Regulatory Change The State Government promptly initiated and put in place the relevant rules to lower the fees for filing first and second appeal to Rs. 10/- each, to enable e-transactions, to receive payments through phone call. Executive Orders were issued and the Facilitation Centre "JAANKARI" was designated and authorised to receive phone calls from public at the pre arranged premium rate of Rs. 10/per call (Rupees ten per call) to take care of the prescribed application fee and generate RTI application on behalf of the caller. State Designated Agency State Government designated agency Beltron facilitated to have such premium lines of BSNL dial code (155311) terminated at the Facilitation Centre. In addition to premium rate call number, another dial code (155310) was assigned as help line on normal tariff for general enquiry on RTI and application status etc. Both these numbers have been widely publicized for public knowledge and awareness building. Assignment of Facilitator Since information requested is likely to vary with each request it is not easy to identify the relevant PIOs dealing with the issue, one senior administrative officer was made available to Facilitation centre to facilitate co-ordination with PIOs and departmental heads. The official is well versed with the governmental system and its "Rules of executive Business" which assigns specific work to a department and also mentions its delegated powers. This is the first and unique experiment aimed at RTI empowerment of people. Quality And Performance Of Technology Infrastructure To make the RTI Facilitation Centre facility accessible to every citizen of Bihar from all telephones, special 6 digit code of level 1 i.e. Dial 155311 has been allotted. A special protocol was evolved for extending the premium rate services without involving IN Platform. Premium Rate charge was generated by the Local/ Trunk Automatic Exchange (TAX) itself. This required a huge effort in enabling the "RTI Call Centre Code" in all the main exchanges of Bihar. In the present network architecture, the RTI Facilitation Centre Dial Code 155311 (and also the RTI enquiry dial code 155310) has been routed to Patna Tandem Exchange. From Patna Tandem Exchange all Calls originated throughout Bihar, are routed to EWSD local exchange, Patna from where a PRI (Premium Rate Interface) line has been terminated in RTI Facilitation Centre EPABX, For all the RTI application filing Calls CDRs (Call Detail Records) for code dial 155311 are being generated at EWSD exchange Patna. The Facilitation Centre executives were trained and sensitized. They were to receive calls and convert the voice demands into "electronic format", compatible with RTI, Act. Key Lessons 1. The variety, scope, complexity and size of e-Governance projects are very large. Consequently, it is not possible to develop a single e-Governance service quality assessment tool that would be applicable to all e-Governance services. It is therefore imperative to classify e-Governance service designing into appropriate categories / clusters. 2. Management of Services offering modular outcome / response to non standard input / query would require a set of specialised organisational capabilities for providing comprehensive response or output. Services under this category would mean delivering value to citizens by facilitating outcomes citizens want to achieve without the ownership of costs and risks. e-Governance services like Right to Information (RTI), Grievance redressal would fall under this category. 150 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 DIGITAL INCLUSION II Assessment of Citizen Empowerment – Under E-governance Using Analytical Hierarchy Process The Hierarchy for Analytical Hierarchy Process (AHP) Based on the literature review and the case study the Survey Among Stakeholders AHP requires pair-wise comparison among the factors and then derivation of priority scales. The priority scales are then synthesised step by step to arrive at the final prioritisation of the alternatives. The pair-wise comparison and derivation of the priority scales requires the judgment of all the stakeholders who are involved. The challenge here was to get the opinion of the experts as well as any citizen, on the importance of various objectives and implementation steps and then to derive the priority scale based on the results. A survey was created which was distributed using the online channel and also the manual channel. Based on survey responses the results were collated to get the final relative importance of each pair of factors. The pair-wise relative importance arrived was in turn used to derive the priority scales for all the factors involved which was used for further calculation. Following table shows the priority of the objectives w.r.t. the goal as calculated using the survey results. Effective Efficient Transparent Reliable Priorities Effective 64 123.3622261 229.7396191 117.7970087 0.427226068 Efficient 33.20303248 64 119.188313 61.11277978 0.221643766 Transparent 17.82887957 34.3657855 64 32.81544815 0.119015033 Reliable 34.77168092 67.02362443 124.8192614 64 0.232115133 Table 1: Relative Importance of Objectives w.r.t. Goal following hierarchy was created for applying AHP: Fig -1: Hierarchy for determining priority of People, Process and Technology for achieving goal of e-Governance Table 2: Final calculation of Relative priority of People, Process and Effective Efficient Technology for People 0.469351346 0.519358973 realising the goal Final Evaluation of Priorities The table below shows the final synthesis to get the priority of people, process and technology w.r.t the goal of eGovernance. After the synthesis the final priority of People, Process and Technology was arrived. Transparent Reliable Objectives Priority 0.504849075 0.380992816 Effective 0.427226 Efficient 0.221644 Transparent 0.119015 Reliable 0.232115 Process 0.275323195 0.249441155 0.256064086 0.319338138 Technology 0.255325459 0.231199872 0.239086839 0.299669047 X Final Priority People = 0.464150636 Process 0.277511013 Technology 0.258338351 CONCLUSION Within past few years there has been a lot of debate over whether the use of ICT in the public enterprises or government will really work as it has for the private enterprises. The research done by many in different countries and the results by some of the recent government initiatives taken with respect to using ICT for Governance, clearly establishes this as major challenge. However, the lesson to be learnt from failure of some of the recent initiatives clearly is, not to over-rely on technology for solving all the problems. The fact that people are most important for the success of eTechnologies in the government stands vindicated by the results arrived at by the application of AHP. The result of the AHP distinctly establishes the domination of people for the success of eGovernance. People are by far the most important factor and should be given the due importance for realising the true benefits of etechnologies. Without giving proper emphasis to the people related activities and designing them keeping in mind the social, cultural and political aspects of the country, state, or community involved, the success of ICT in government sector will remain an illusion. The example of the ICT initiatives taken by the Government of Bihar in 'Jankari' is a clear testimony of this conclusion. References 1. 2. 3. 4. 5. Asgarkhani, M. (2004) "Digital Government: From Vision to the Reality of Strategy Implementation", Proceedings of the International Conference on e-Governance, Sri Lanka, pp36-46 Nath, V. (2003) "Digital Governance", [online] www.cddc.vt.edu/digitalgov/gov-cases.html. Reschenthaler, G.B. and Thompson F. (1996) "The Information Revolution and the New Public Management", Journal of Public Administration Research and Theory, Vol 6, No. 1, pp125-143., 1996. Heeks, R. (1999) Reinventing Government in the Information age: International Practice in IT-enabled Public Sector Reform, Routledge, London, 1999. Accenture (2009) Leadership in Customer Service: Creating Shared Responsibility for Better Outcome 151 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Data Gaps in Urban Informality Data Gaps in Urban Informality Nithya V. Raman & Kalpana Karunakaran Centre for Development Finance, IFMR Chennai, India Introduction There has been a recent push to think about how India can create more inclusive cities. As a result, urban policymakers have begun to think more deeply about urban informality. They have done so by necessity because so many of the urban poor work in what is known as the informal economy and live in informal settlements. By some estimates, close to 70% of urban workers work in the informal sector,1 and 22% of urban residents live in slums,2 which are usually informal settlements on which residents do not have land tenure. Yet, attempting to plan for urban informality leaves planners in a difficult situation: a lack of useful data to make decisions. This is no insignificant or surmountable problem, but a problem that systematically plagues city planning agencies and planners. Despite a new attention among planners to the importance of the informal sector,3 the lack of official data leads to an extremely superficial treatment of urban informality in plan documents.4 Clearly, understanding and documenting informality is a key to improving the lives and opportunities of a large section of urban residents in India.5 But exactly what kind of data would help planners to better plan for urban informality? Re-conceptualizing Urban Informality Informality is a loosely defined term.6 It refers to different things depending on the context in which the term is used. In the literature, the conceptualization of urban informality focuses on one of two things, either the informal economy or informal residential settlements.7 The first strand, which looks at the informal economy, uses the nature of the work and size of the workplace or unit to determine formality or informality. Work that is labour intensive, takes place in unregulated markets and characterized by low barriers to entry, reliance on indigenous resources and low levels of capital investment is usually classified as informal sector work.8 Since informal sector enterprises are usually unregistered, they are not covered by national enterprise surveys, and household surveys do not ask questions about production. As a result, researchers continue to grapple with the question of how to accurately measure the informal sector economy using available statistics and how to classify and count informal sector workers and enterprises.9 Literature on informality also looks at the question of informal or 'slum' settlements. Much of this research is concerned with how to define and identify a slum, how to accurately count numbers of slum residents, and how to improve slum residents' access to basic services. The lack of a consistent definition of what constitutes a slum across countries has made it difficult to compare trends over time and across the world.10 Although informal work and informal settlements closely overlap - residents who work in the informal sector often live in informal settlements and vice versa - debates on urban informality rarely make any explicit connections 152 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Assessment of Citizen Empowerment – Under E-governance Using Analytical Hierarchy Process between the two.11 There is currently inadequate basic data collected about urban informality in the Indian context, both about informal sector work and workers and about informal settlements. In India, as in many other countries, different surveys use different definitions of informal sector work, which can make aggregating and comparing data very difficult. For example, the National Sample Survey Organization counts all manufacturing units not covered by the Annual Survey of Industries and all non-public sector service enterprises as unorganized, while the Directorate General of Employment and Training counts all establishments employing less than 10 workers as unorganized.12 As for informal settlements in India, there is no consistent definition of what constitutes a slum across cities or states, nor is there systematic collection of this information at the state or city level.13 The Census began counting slum-dwellers in all Indian cities since 2001, but these numbers suffer from a number of problems,14 and sometimes do not tally with city level counts of slumdwellers because of definitional differences.15 Thus, the basic enumeration of urban informal sector workers and of informal settlements remains inadequate and inconsistent across India. It is important to note two things here about data on urban informality. Firstly, no systematic collection of spatial data on informal settlements currently takes place in Indian cities. Secondly, and perhaps more importantly for this paper, no spatial data, either within India or elsewhere, is systematically collected on informal workspaces, even permanent or semi-permanent ones like street vendor stalls in established market places or neighbourhood based industries. Whither Urban Informality in City Planning? The paucity of data on the informal sector is reflected in urban planning, which tends to privilege the needs and aspirations of the formal economy. According to the Chennai Master Plan, "the process of modern city planning seeks to steer market forces in the city…towards citizen welfare and public good16." The National Commission on Enterprises in the Unorganized Sector has estimated that 50% of the country's GDP comes from the informal sector as a whole, including agricultural work17. If planning seeks to improve the economic development of cities, clearly the informal economy must be fore grounded. The primary tools of urban planners to affect economic development are spatial interventions like zoning laws and the provision and planning of transportation networks. These interventions seek to re-configure city spaces with a view to improving the productivity of formal sector industries and economic activities. The new Chennai Master Plan, for example, suggests creating exclusive freight corridors connecting the port to the central business districts of Chennai as well as to the National Highway system,18 among other interventions. Yet, unlike in the case of the formal sector, there are no spatial interventions planned by city authorities that aim to enhance the growth, productivity and livelihood-related requirements of the informal sector. However, cities across India are making interventions into the informal sector, primarily by eliminating its traces in the heart of cities. In Chennai, recent headlines have suggested a crop of evictions of hutments and street hawkers with more planned in the coming months.19 The Centre for Development Finance organized a public consultation for informal sector workers in the city of Chennai in February 2009 to understand their needs for a new city development plan. The most emphatic demand among informal sector workers was an end to evictions of workers' homes, industries, and shops, a plea to stay put in informal settlements and workspaces throughout the city - a spatial demand fuelled by livelihood compulsions. The research question: Interfaces between people, economic activities, and urban spaces Our experiences with planning practice at the Centre for Development Finance suggested that supplementing existing data about urban informality is a necessary, but not sufficient condition, to incorporate the informal sector's needs and aspirations within city planning. While the literature on informality - both conceptual and empirical - has focused on the size of the informal economy and workforce and the nature of informal settlements, as already discussed, it has not sufficiently engaged with the challenge of documenting the organization and movement of informal sector workers across city spaces, even though such documentation exists in some form for the formal sector. This paper argues that we need data that capture the dynamic interfaces between city spaces and informal sector workers, interfaces that are shown to be central to the economics and conditions of informal sector work. This paper makes this argument by using detailed interviews with key organizers of informal sector workers in Chennai from the Centre of Indian Trade Unions (CITU) to delineate some of the deep-rooted spatial relationships between the urban working poor, their residences, and their work-spaces in the city.20 We argue that these relationships are integral to preserving the availability of informal sector work and to maintaining and improving working conditions in the informal economy. Currently, urban planning - decisions about transport, infrastructure, basic services, housing, and the design of city spaces - happens in a vacuum of information about the informal sector. We also document in this paper the severe disruptions in lives and livelihoods caused by city planning decisions which have not taken cognizance of the importance of spatial relationships in the informal economy. While urban planners and city authorities have called for more data about the informal sector, they have not called for 153 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Data Gaps in Urban Informality the sort of spatial data needed to adequately redress urban planners' existing systemic blindness towards the informal sector. An important caveat - our study does not comprehensively map the informal workforce. All we aim to do is to identify some patterns in the city in terms of organic linkages between work spaces and residences of workers. Our aim is to use this data to impress upon planners and policy-makers that we need to: (a) gather this data on a more extensive scale, be more systematic fashion and (b) feed the key learning / insights from this data into urban planning. The paper calls for collective deliberation on creative methodologies that can document these inter-linkages and capture data that has historically proven difficult to map. Spatial Patterns among Informal Sector Workers This study sought to understand whether specific economic activities or worker groups were spatially concentrated in certain parts of the city,21 and whether the location of worker residences, work spaces or the relationship between the two was central to the economics of particular livelihoods. Table 1 provides this information for the worker groups as provided by our interviewees. Table 1: Workers and space in the city Sl Work Type No Spatial concentration of workers in the city? 1 Loading & Unloading Yes 2 Appalam making Yes 3 Petty mechanical work / Yes scrap metal recycling 4 Domestic work No 5 Construction work Yes 6 Fishing Yes 7 Fish vending Yes 8 Street vending Yes (fixed & mobile over short distance) 9 Heavy vehicle driving No Work space - residence overlap?(within home or neighbourhood) Yes Yes Yes Is location central to work? Yes Sometimes No Sometimes Sometimes Yes Often Yes Yes Sometimes No No Yes Yes Yes The above table shows that several economic activities in the informal sector were indeed concentrated in specific parts of the city. Since the majority of professions about which we received information had an overlap between residence and work locations (both were usually located in the same neighbourhood) we noted this as well in the chart. Nearly all the union organizers of informal sector workers to whom we spoke claimed that the location of the workplace, the residence, or both was central to the success of the informal economic activity, as the last column notes. Two interesting points emerged through our research. Firstly, that location was integral to different aspects of work for each occupation. Secondly, that in some forms of informal economic activity, relationships between city spaces, economic activities, and / or residences changed over periods of time, sometimes even over the course of a single day. These changes are noted below, if relevant. For most informal sector workers, proximity between workplace and residence was essential to their work. A case in point is the appalam-making industry which is concentrated in certain neighbourhoods of Chennai in which the Malayali community, which introduced appalam making to the city, initially settled. Today, large appalam companies like Popular, Radha or Ambika have large stores in parts of the city, each of which is surrounded by a cluster of informal, neighbourhood based appalam making units to whom all appalam making is subcontracted by the large companies. These informal units are usually owned by Malayalis, who also work there with their families, and staffed by Tamilians who live in the surrounding neighbourhood. Since appalam making requires at least 6 - 8 months of training, workers tend to be those who learn the trade when they are young when they can afford the time to learn. These units have few amenities, and workers bring their own drinking water and food, and often rely on private sanitation infrastructure (i.e. in their nearby homes). Thus, in this neighbourhood based industry with low profit margins, employers rely on the neighbourhood to provide skilled workers, and workers rely on the workplace's proximity to their homes to maintain minimum working conditions (i.e. access to water and sanitation, as well as child care) that their employers cannot afford to provide. Proximity between workplace and residence also characterizes work at the petty mechanical shops and scrap metal dealerships that line the banks of the Cooum in Pudupet. Workers in these units were largely concentrated in the same neighbourhood as their workplaces till a recent eviction drive. This work is highly irregular for the least skilled workers; workers may be employed one out of three days a week depending on the amount of business the dealer gets, and resort to coolie labour or stay at home the days they do not get work from the dealers. Similar to the appalam units, scrap metal and petty mechanical units in Pudupet with low margins depend on the availability of flexible labour to maintain low costs and sustain their businesses. Workers are dependent on the co-location of their workplaces and residences and lack of travel costs to make such irregular work into a viable livelihood. Proximity between workplace and residence also makes domestic work viable. Domestic workers, estimated to be the second largest sector of urban informal sector workers after construction workers, are not concentrated in any one part of the city. Rather, they are found in any low-income neighbourhood which abuts or is walking distance from a middle-income neighbourhood. Women are able to take up domestic work near their own homes because proximity allows for a schedule that gives them the time and flexibility to take care of their own children and household demands. The majority of domestic workers walk to work, and workers are able to provide such cheap services because of their own minimal travel costs and because of the flexibility of work timings. Indeed, the existence of this form of employment opportunity for poor women is contingent on the cheek-by- 154 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Assessment of Citizen Empowerment – Under E-governance Using Analytical Hierarchy Process jowl existence of slums and middle-class neighbourhoods. In all of the three professions detailed above, we were told that such work disappears when slums are resettled far from the city, i.e., that proximity is central to the existence of such work. The relationship between fish vendors and city spaces is somewhat different. Fish are sold primarily by women from the fishing community. Fishing community homes are concentrated in coastal villages near the harbour where catches are brought in from the sea and auctioned off to vendors, usually in the morning. From here, fish vendors usually travel, either by train or by private, rented minilorries, to the places where they regularly sell their wares. Most vendors go to regular fish markets, or travel to neighbourhoods where they have regular routes along which they sell fish. Thus, according to our interviews, fish vending depends on residential proximity to the harbour for buying high quality fish in the mornings, depends on access to public or cheap private transport to reach market areas, and depends on the existence of market areas or neighbourhood routes where fish is known to be in demand and where vendors can sell their wares without being hassled. Other street-vendors similarly depend on access to regular public transport and access to market areas for their livelihoods. However, all street vendors, including fish vendors, reported facing high levels of police harassment at market places and on their vending routes, a consequence of using public spaces for economic activities for which they were not legally zoned. In the case of construction workers, overlap between workspace and residence is sometimes present, but it is neither constant nor as essential to the work itself. While construction workers are spread throughout slums in the city, large concentrations of construction workers do exist in places like MGR Nagar and Ambattur. This is because workers were brought into Chennai to work on large-scale Tamil Nadu Housing Board projects, and settled in cheap land near the construction sites. Construction workers are all in the informal sector. A contractor will employ engineers who maintain relationships with masons (maistry) who, in turn, command teams of workers, usually gathered from a neighbourhood. An engineer will contact a mason, who will bring his workers as needed for a project. Some construction sites have workers living on the site during the period of construction activity, meaning that workplaces and homes overlap for the period of the construction project. However, most local construction workers use either public transport or private non-motorized transport to travel to construction sites. For these workers, their neighbourhoods are important for accessing regular work through relationships with masons, and they require access to timely and cheap public transport or safe routes for bicycles and pedestrians to maintain their livelihoods. The situation of workers in Parry's Corner, long the centre of the city's wholesale trading, presents an extremely interesting case for how space, economic activities, and residences are related. Many workers who work as cleaners, shop-assistants, and loading and unloading workers in the shops along certain streets in the area also live on the streets in front of the shops, often with their entire families. According to our informants, these workers carry ration cards with the address of the shop as their home address, and cook and sleep at night in the area in front of the shop. For these workers, only the passage of time over the course of a day separates their work spaces and residences. While discussions of informal sector work often evoke images of home-based work, our interviews revealed that informal sector workers are actually enmeshed in complex, organic, neighbourhood-based networks that support the viability of informal sector businesses and help to maintain minimum working conditions. Having suggested the existence of strong linkages between the urban working poor, informal sector livelihoods and city spaces, linkages that change over time, we review in the following section the consequences of development and city planning initiatives that have ignored the implications of these linkages. City Policies that Disrupt Informal Sector Work Our interviews revealed that informal sector workers in the city faced severe disruptions to their work from city policies and decisions that had likely been crafted without thought to their impacts on workers' lives and livelihoods. We list some of these below to highlight the disastrous impact of making spatial policies without taking into account linkages between spaces and economic activities. Displacement of Residences Our interviewees discussed several instances of displacement of slum dwellers. Re-settlement, if provided by the government, was in areas at considerable distance from their original places of residence. A total of 12 fishing villages located between Kasimedu and Ennore are slated for eviction by the construction of a highway that aims to enable greater connectivity between the Ennore port and the National Highway network. Evictions have taken place on the Ambattur lake-banks where large numbers of construction workers lived, as part of a lakebed-cleaning project. Resettlement has been promised, but not given, in a rural and remote location without access to public transport connections to the rest of Chennai. A settlement of 1,500 families along the banks of the Coovum river in Pudupet was cleared by the Public Works Department, and residents were moved to Kannagi Nagar, also on the outskirts of the city, resulting in the near elimination of informal sector work in the scrap metal industry and domestic work. Residents have organized repeatedly to block impending evictions in the city, and have occasionally succeeded, such as in the fishing communities south of Marina beach after the tsunami. Displacement of Workplaces Our interviewees mentioned numerous locations in the city in which street vendors faced eviction or threats of eviction.22 Organizers spoke about a class bias in enforcement of laws that govern public spaces. For example, hawkers and auto 155 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Data Gaps in Urban Informality drivers are frequently evicted from streets while private cars are permitted to park in the same places. The eviction of street vendors and petty hawkers from central market places in the city has evoked strong protests from street vendor organizations that have engaged the courts in their battle to re-claim city spaces. In response to an appeal by street vendors, the Madras High Court passed a judgment in September 1997 directing the Chennai Municipal Corporation to identify hawking and non-hawking zones in the city and to grant licenses to hawkers. While the Court decision legitimized hawkers' legal claims to public spaces, the implementation of the court order has been unsatisfactory. However, street vendors who have been issued licenses by the Chennai Corporation have been able to protect themselves to a greater extent than before from police harassment and extortion. Traffic Rules Changes in traffic rules to ensure the smoother flow of traffic have negatively impacted conditions of work and livelihoods in the informal sector. Rickshaw pullers and bullock cart drivers, who are largely drawn from the most socioeconomically vulnerable communities, are banned from plying their vehicles in several parts of the city, although they provide a critical low-cost transport service that continues to be in demand. The banning of heavy vehicles within the city between 5 AM and 11 PM has resulted in longer working hours for lorry-drivers, and night work for loading and unloading workers, which renders them vulnerable to extortion from the police. Neglecting Workers' Basic Needs Our interviews revealed that the neglect by city planners of critical links between the informal economy and city spaces is also reflected in the inadequate or skewed provision of transport, infrastructure and services. Most basically, planners have not legally allocated spaces in the city for informal economic activities. Although the National Policy on Urban Street Vendors demands it, few cities have actually demarcated spaces for legal street vending.23 There are few authorized parking spaces for heavy vehicles or auto rickshaws, leaving individual heavy vehicle and auto drivers to negotiate regular police harassment. Zoning laws also largely do not permit mixed-use areas, which would legally permit residential, commercial and industrial functions to take place in the same location, as it often does in the informal economy. The absence of adequate sanitation and solid waste management facilities in market places is another instance of how city planning can remain impervious to existing patterns of worker use of city spaces. Our interviews revealed that women workers who worked outside the home or neighbourhood relied heavily on public conveniences built and maintained by the Chennai Corporation. Increasing the numbers of public toilets in the city, particularly in places known to be fish, vegetable and fruit markets, would considerably improve working conditions for women workers. Policy priorities have also been skewed in the absence of good data. For example, our interviewees claimed that the majority of informal economy workers use private nonmotorized forms of transport (i.e., they walk or cycle to work). However, the bulk of new transport spending in cities that has not gone for roads or flyovers has gone towards improving motorized public transport like Metro rails and bus fleets.24 A transport policy which took into account the informal economy might instead prioritize pedestrian and bicyclists' needs in cities. More Data, But How? We have tried to argue in this paper that more and better data needs to be gathered about urban informality to improve urban planning practices. Certainly, existing measures of enumerating informality need to be improved. At a minimum, all informal residential settlements in the city, identified according to a consistent and globally accepted definition (such as the one used in the Millennium Development Goals), should be mapped on a regular basis. But simply mapping slum settlements does not do justice to the complex ways in which space, time, and economic activity are related in the informal economy. We argue here that data needs to go further than that; it needs to represents the links between workers, homes, and workspaces, data that reveals more about the way in which these residents use city spaces and how these relationships between workers, city spaces and economic activity change over time. Creating such data presents three real challenges for researchers. The example of Parry's Corner is illustrative: Between the hours of 5 am and 10 am, the streets are populated by fruit and vegetable vendors. After 10, these vendors leave, and the shops that line the streets open for the day's business. At night, these shops close, and shop employees live with their families on streets in front of the shops, cooking meals and setting up tarpaulins for sleeping. The case of Parry's Corner underscores important challenges about this sort of data. Firstly, how do you gather information about how people use city spaces for informal economic activities in a systematic manner? Secondly, how do you represent this level of fluctuation in land use over the course of a single day? This is a major challenge for people who collect and map data, particularly because such fluctuations are common in the informal economy. The third challenge may actually be the most important. How do you make this data speak to the way in which planners and city authorities currently make decisions? This is an important question because the reason why the formal sector's needs are frequently addressed directly by planners may not be because of the availability of good data. It may be because they make their demands known to planners and put pressure on them through lobbyists. In this situation, an increase in data about informal economic activity may not make much of a change in policy without simultaneous advocacy efforts. 156 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Assessment of Citizen Empowerment – Under E-governance Using Analytical Hierarchy Process One example of professionals who have grappled with informal uses of city spaces are urban designers, particularly a group of urban design firms who have emphasized a concern for informal uses of city spaces. Collectively, the groups that share these concerns have been termed the "Ditch School of Urban Design," and their work has spanned countries from Latin America to East Asia.25 One such firm, Atelier Bow Wow, has made detailed drawings of buildings that have responded in unusual ways to Tokyo's hyperdensity, by defying conventional notions about building shapes, sizes, and uses. They have used this documentation of informal architectural solutions to inform their projects, including constructions for street vendor clients such as a vegetable kiosk and a food stall.26 The Urban Think Tank has mapped and analyzed informal uses of city spaces in Caracas, Venezuela, and has used this information to inform their projects. One such project is a community centre built on a field previously used for playing football. The community centre contains space for a wide range of offices and uses, including a health centre, space for hosting entertainment events, and a rooftop soccer field, echoing the multiplicity of uses for which city spaces are frequently informally used. The strategies that these urban design firms have used to map urban informality and city spaces are still nascent and relatively untested. However, they do highlight an important point, namely, the need for creative thinking about how to gather data about urban informality. Even low income urban residents have access to telecommunications technology, which means that new means of counting people and tracking their movement across space exist that were not previously available to researchers. Access to such technology means that workers themselves could provide researchers information with negligible costs. Indeed, it could be the case that such data could be collected not through top-down projects or government agencies, but by the collective efforts of workers themselves, who will use the existence of such data to more effectively lobby the government for better policies and directed services. References 1. Srivastava, Rahul, “The informal sector and urban poverty,” Urban India Backgrounder, Infochange India, January 2005, available at: http://infochangeindia.org/200502056108/Urban-India/ Backgrounder/The-informal-sector-and-urban-poverty.html 14. Tewari, Vinod, Usha Raghupathi, and Jamal Husain Ansari, "Improving Housing and Basic Services for the Urban Poor in India," in The Inclusive City, Aprodicio A. Laquian, Vinod Tewari and Lisa M. Hanley (eds.), Baltimore: The Johns Hopkins University Press, 2007. pp 45- 6 2. This figure is taken from Census figures on slum populations, and reported in “Factsheet on the India Urban Poverty Report 2009,” available on the UNDP website at http://data.undp.org.in/ poverty_reduction/Factsheet_IUPR_09a.pdf 15. 3. JNNURM documents repeatedly mention the need to get more information about the informal sector. 4. In the final Master Plan for Chennai 2026, informality is only mentioned in a handful of places, twice to give the same definition but there are no specific projects or provisions to improve the functioning of the informal sector economy. I visited with a deputy planner at the Chennai Metropolitan Development Authority in 2007, when the agency was still finalizing their new Master Plan, finally approved in 2008. When I asked the planner about the kinds of information they used to make policy for the urban informal sector, she leaned forward and asked me whether I had any useful data that she could use. 5. Srinivas, Smita, “One in six globally, but is India counting its own workers?,” India in Transition, Centre for the Advanced Study of India, University of Pennsylvania, February 2008, available at http://casi.ssc.upenn.edu/node/129 6. For an excellent discussion on why the definition of informality has continued to remain loosely defined, see Lisa Peattie's paper "The Informal Sector: An Idea in Good Currency and How it Grew," World Development, (Vol. 15, No. 7, 1987). 7. This point is well articulated by Karen Tranberg Hansen and Mariken Vaa in their book on urban Africa entitled Reconsidering Informality: Perspectives from Urban Africa, published by the Nordiska Afrikainstitutet (2004). 8. This comes from early ILO classifications of the informal sector taken from the introduction to Reconsidering Informality, by Hansen and Vaa. 8. For example, an upcoming conference at the South Asian Institute of Management, Kathmandu, Nepal organized jointly by them and the International Association for Research on Income and Wealth in September 2009 takes as its topic "Measuring Informal Sector in Developing Countries." 10. "Metadata on Series: Slum population as percentage of urban, percentage," Millennium Development Goals Indicators: The official UN Site for the MDG Indicators, available at: http:// mdgs.un.org/unsd/mdg/Metadata.aspx?IndicatorId=0&SeriesId=710 11. Reconsidering Informality, 8. For example, in Chennai, the definition of a slum comes from the Slum Areas (Improvement and Clearance) Act, which states that buildings are slums if they are "unfit for human habitation, [or] are by reason of dilapidation, overcrowding, faulty arrangement and design of such buildings, narrowness or faulty arrangement of streets, lack of ventilation, light, sanitation facilities, or any combination of these factors which are detrimental to safety, health and morals." In contrast, the Census counted all areas notified as slums by the city or state government, all areas recognized as slums by the city or state governments, and a "compact area of at least 300 population or about 60 - 70 households of poorly built, congested tenements, in unhygienic environment usually with inadequate infrastructure and lacking in proper sanitary and drinking water facilities" (from http://www.censusindia.gov.in/Metadata/Metada.htm#3). This results in a difference in counts. The census counted 1,079,414 slum dwellers in Chennai, while the Chennai Master Plan, using numbers provided by the Tamil Nadu Slum Clearance Board, lists a slum population of 819, 872, a difference of more than 200,000 people. 16. Master Plan for Chennai 2026, i. 17. National Commission for Enterprises in the Unorganized Sector, "Contribution of the Unorganized Sector to GDP Report of the Sub Committee of a NCEUS Task Force," Working Paper No 2, June 2008. 18. Master Plan for Chennai 2026, 36. 19. For example, Vidya Venkat at The Hindu quotes a Public Works Department official as saying that "A total of 9,000 encroachments have been identified on the Ambattur Lake, and we will remove them gradually." Venkat, Vidya, "Encroachments along water bodies being removed," The Hindu, 1 Dec 2008. A Frontline states that approximately 75,000 families who live in "objectionable slums" will be removed. Dorairaj, S, "On the Margins," Frontline, Vol 26, 10, May 9 - 22, 2009. 20. A list of interviewees and their names and positions has been appended. 21. The appended map of Chennai city shows the spatial clustering of these economic activities in specific par ts of the city. 22. This includes places like NSC Bose Road in Parry's Corner, along market areas in Pursawalkam, Connur High Road, and CSIR Road in Taramani. 23. Srivathsan, A, "New Policy for Street Vendors," The Hindu, 11 Jun 2009. 24. For example, the Jawaharlal Nehru National Urban Renewal Mission, which has provided a great deal of funding for cities for infrastructure improvements, focuses on improving and increasing the bus fleet. 12. These definitions come from the discussion on "Re-defining of Unorganized Sector in India," by G. Raveendran, SVR Murthy, and Ajaya Kumar Naik, National Commission on Enterprises in the Unorganized / Informal Sector, May 2006. 25. Provoost, Michelle and Wouter Vanstiphout, "Facts on the Ground," in Urban Design by Alex Krieger and William S. Saunders (eds.), St. Paul: University of Minnesota Press, 2009. 13. Chandramouli, C, "Slums in Chennai: A profile," in Martin J. Bunch, V. Madha Suresh and T. Vasantha Kumaran, eds., Proceedings of the Third International Conference on Environment and Health, Chennai, India, 15-17 December, 2003. Chennai: Depar tment of Geography, University of Madras and Faculty of Environmental Studies, York University. pps 82. 26. McGuirk, Justin, "Atelier Bow-Wow," Icon Magazine, 022, April 2005, available at http:// www.iconeye.com/ index.php?view=ar ticle&catid=324%3Aicon+022&layout=default&id=2634%3Aatelier-bowwow--icon-022--april-2005&option=com_content 27. Urban Design, 192. 157 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Promoting Public Transportation System For Sustainable Urban Development – The Case of Delhi's Mass Rapid Transit System Promoting Public Transportation System For Sustainable Urban Development The Case of Delhi's Mass Rapid Transit System Surinder Pal Singh Professor, Rai Business School Introduction Delhi, the capital city of India, is one of the fastest growing cities in the world with a population of 13 million as reported in the Census of India Report for the year 2000. Until recently, it was perhaps the only city of its size in the world depending almost entirely on roads as the sole mode of mass transport. The total length of the road network in Delhi has increased from a mere 652 km in 1981 to 1122 km in 2001 and it is expected to grow to 1340 km in the year 2021. This increase in road length is not at par with the phenomenal growth in the number of vehicles on these roads in Delhi. The cumulative figure of registered private and government buses, the main means of public transport, is 41,872 in 1990 and it is expected to increase to 81,603 by the year 2011. The number of personal motor vehicles has increased from 5.4 lakhs in 1981 to 30 lakhs in 1998 and is projected to go up to 35 lakhs by 2011. With gradual horizontal expansion of the city, the average trip length of buses has gone up to 13 km and the increased congestion on roads has made the corresponding journey time of about one hour. Delhi has now become the fourth most polluted city in the world, with automobiles contributing more than two thirds of the total atmospheric pollution. In this context, the decision of the Government of India to develop a mass transport system for Delhi providing alternative modes of transport to the passengers was most appropriate. The first concrete step in the launching of an Integrated Multi Mode Mass Rapid Transport System (MRTS) for Delhi was taken when a feasibility study for developing a multi-modal MRTS system was commissioned by the Government of the National Capital Territory of Delhi (GNCTD) at the instance of the Government of India in 1989 and completed by Rail India Technical and Economic Services Limited in 1995 (RITES, 1995a, 1995b). The Delhi Metro (DM) planned in four phases is part of the MRTS. The work of Phase I and part of Phase II is now complete while that of phase III is in progress. The first phase of DM consists of 3 corridors divided in to eight sections with a total route of 65.1 kms, of which 13.17 kms has been planned as an underground corridor, 47.43 kms as elevated corridors and 4.5 kms as a grade rail corridor. The second phase covers 53.02 kilometers of which the underground portion, grade and elevated section are expected to be 8.93 kilometers, 1.85 kilometres and 42.24 kilometres respectively. The construction of the first phase of DM was spread over 10 years during 1995-96 to 2004-05 while that of the second phase, which started in 2005-2006 is expected to be complete by 2010-11. The total capital cost of DM at 2004 prices for Phase I and Phase II are estimated as Rs. 64,060 and Rs. 80,260 million, respectively. Phases III and IV of DM will cover most of the remaining parts of Delhi and even extend its services to some areas such as Noida and Gurgaon belonging to the neighbouring states of Delhi. Table 1 provides some of these details. 158 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Promoting Public Transportation System For Sustainable Urban Development – The Case of Delhi's Mass Rapid Transit System Findings & Discussion Evaluation The Problem Transport situation in most Indian metropolitan cities is rapidly deteriorating because of the increasing travel demand and inadequate transportation system. Indian cities of all sizes are facing the crisis of urban transport. Despite investments in road infrastructure and plans for land use and transport development, all face the problem of congestion traffic accidents and air pollution and the problems continue to grow. Large cities are facing an unprecedented growth of personal vehicles (two wheelers and cars) and in medium and small cities different forms of intermediate public transport provided by informal sector are struggling to meet the mobility demands of city resident. In Delhi, number of two wheelers and cars continue to rise. Despite construction of flyovers and roads, the roads continue to face congestion at peak hours. In spite of the roads occupying 21 per cent of the total city area, this large number of motor vehicles causes extreme congestion on roads, ever slowing speed, fuel wastage, environmental pollution and an unacceptable level of road accidents. Delhi metro has been planning to reduce congestion on Delhi roads and augment the current public transport, which are primarily buses. When RITES recommended a railbased system, comprising a network of underground, elevated and surface corridors, aggregating to 198.5 kms, to meet the traffic demand up to the year 2021, the whole project, was estimated to cost Rs. 15000 Crores at 1996 price level and expected to handle 12.6 million commuter trips. First two phases of metro are almost on the verge of completion. DMRC web site indicates a number of benefits to metro. These are: Time saving for commuters, Reliable and safe journey, Reduction in atmospheric pollution, Reduction in accident, Reduced fuel consumption, Reduced vehicle operating costs, Increase in the average speed of road vehicles, etc. The following section presents analyses of Delhi metro system. a) Influence zone Public transport service has to meet the needs of commuters. This includes accessible stations, minimum affordable time loss at interchanges, safer and reliable services. Since 500 m. is an ideal walking distance, population residing along the metro within walking distance has the highest accessibility to metro. The area within 500 m from the metro corridor is 31% (198.5 sq.km. out of the 640 sq.km. of total urban area) of Delhi thus, after the implementation of the complete system 69% area of Delhi will remain beyond walking distance of metro. Expansion of metro influence zone beyond 31% will have to rely on feeder system. This is not easy because of the inherent transfer costs and wait times at interchanges. The Methodology This paper is an exploratory case study to evaluate Delhi Metro in terms of capacity, travel time and accessibility to the system and evaluation indices reflecting commuter's perspective. Limit of access to metro is based on the assumption of most comfortable walking distance as 0.5 km. When this distance increases passengers have to use feeder system, which requires a transfer. A transfer has major impact on passenger journey. Generally, simple long trip is preferred over short journeys involving transfers because each transfer implies added impedance in terms of time, cost, inconvenience and uncertainty. Transfer requires a good coordinated scheduling 159 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Promoting Public Transportation System For Sustainable Urban Development – The Case of Delhi's Mass Rapid Transit System of feeder and main service, combined ticketing and waiting time. A journey made without any transfer and a journey with one or more transfers always plays an important role in modal choice. To compare bus and metro as a transit service, both are considered without any transfers and in that case influence zone is the area within the distance of 0.5 km (walking distance) is taken. Shukla (2004) has estimated that population residing within a distance of 0.5 km, 1 km and 2.5 km from the metro station and trips originating from these regions for phase 1, Shahadara - Barwala metro line of length 23.8 km. Population residing within 0.5 km can reach metro by walking but people residing at more than this distance have to use rickshaw or feeder bus. Population residing within the area of walking distance is 346560 for the corridor length of 23.8 km. Total length of metro line is 198.5 km, applying the same methodology for accessible population as line 1, total population residing within the distance of 0.5 km is 2890426. This is approximately 2.2 % of the total population of Delhi. Figure 2 shows total number of trips originating in the region for different catchments radius. A trip originating in the region of 0.5 km distance i.e. walking distance is approximately 374939 for metro length of 23.8 km. Applying same weight to the total length of 198.5 km, number of trips originating in the region of 0.5 km distance is 3127117. This shows that only 3127117 trips can be shifted to metro if all the persons have destination along the metro corridor. This may not be true. construction.' The Washington, DC, metro rail system was built at a cost of $12.5 billion. Today, its managers say that over next ten years they will need to spend another $12.5 billion renovating roadbed, replacing cars, and refurbishing stations. (americanderamcoalition.org). The federal transit administration calls these "capital costs" but really they are maintenance costs, and as such they make rail much costlier to maintain than buses. Total length of 198.5 km of metro rail will cost Rs.10751/- Crores (excluding taxes and duties) and metro has not mentioned anything about the maintenance cost. As mentioned above, maintenance cost of metro rail is as much as the original cost. It should have been considered in the cost evaluation, as it needs a large amount. Already 100% cost overrun is estimated for first phase of the metro (Rs. 12000 crores instead of Rs. 6000 crores estimated for first phase in 1996). Table 2 evaluates DMRC statements, which are published in different newspapers articles. DMRC officials have often used these statements for justifying and highlighting the benefits of metro system. Therefore it is important to analyze these statements. The analysis questions the basis of benefit assessment methodology for metro. Table 2: Evaluation of DMRC statements b) Feeder service and an integrated ticket If a very good, coordinated, well-organized feeder system is provided to the Metro, accessibility of metro will increase. DMRC is planning for an integrated ticket. If the integration works out, the same ticket will be valid in metro trains as well as buses. However, this will translate to higher rider-ship only if commuters are willing to accept the added transfer time and transfer costs. c) Luggage One of the Metro stop is Sahadra railway station, it is at walking distance from Sahadra railway station and Sahadra bus terminal but people travelling through this may not take benefit of metro due to restrictions on carrying luggage in metro trains. Many passengers coming and going through railway station and bus terminal have a luggage with them as it is connected to long distance travel. Metro is not available to them. d) Parking Parking place outside the Metro station has been provided but non-metro user can also use it. To encourage people to use Metro there should be a separate parking place for the monthly pass holders. Initial and Maintenance Cost of Metro American Dream Coalition fact sheet presents that a myth is 'pay no attention to the high construction cost, because once rail lines are built they will last forever' and the reality is 'Rail lines must be rebuilt and equipment replaced every 20 to 30 years. Reconstruction often costs much as the original Wendell (1998) presents that Roadway Congestion Index (RCI) i.e. Ratio of number of vehicles per lane and capacity of lane) doesn't get affected much more by the metro implementation. Figure 3 indicates that RCI is not reduced in most cities of the world, except a marginal reduction at Washington D.C. after introduction of metros. 160 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Promoting Public Transportation System For Sustainable Urban Development – The Case of Delhi's Mass Rapid Transit System There are other important issues, which should be considered while evaluating and comparing services provided by metros and buses. Who will use the metro? When DMRC expects that in 2021, 12.6 million commuter trips will be handled by metro, it means some passengers travelling by other modes at present will be shifted to metro. Who are these people - do they use cars or buses or they use two-wheeler? Percentage of trips by mode and length wise 1. Flexibility In any case if demand of route pattern changes it is very difficult to change the Metro route accordingly. But in case of bus, it is very easy to change the route in a short time and at low cost. 2. Convenience to reach stop/station Generally, people living within walking distance of metro stations or bus stops can reach the system conveniently. This requires high-density residential areas near the metro stations. When 198.5 km corridor of metro is completed, 31% area of total urban area of Delhi will be within walking distance of the metro corridor, however only 2.2% of the total population will reside in this area. Since bus stops are on all arterial roads, which are about 1000 km long. Therefore bus stops will serve higher accessibility compared to metro stations. 3. Speed Metro has stops at average distance of 1.0 km and average distance between bus stops is 500 m. Because of more stops, buses run at lower speed. If distance between bus stops is increased and a separate lane is provided to run the buses, speed of buses also can go up. If metro has to stop at every 500 m, average speed of metro will go down. As per ORG-MARG survey (table 3), 62% trips are by buses with an average trip length of 10 km (table 3). About 18% trips are by two wheelers, which have similar average trip length. Remaining 20% trips are by other modes like cars, taxi and three wheelers. Since cars provide door-to-door service, car users are not likely to shift to metros. Therefore in the following section we analyze trip profile of bus and two wheeler users to understand the probability of these trips changing to metro. Bus users A home to work trip is considered as presented by figure 4(a). If direct bus is available one has to walk up to bus stop, which generally lies at less than 500 m and takes bus to reach the bus stop near the work place and again walks for less than 500 m and reaches work. In case of metro, person living within the 500 m distance from metro walks up to metro station and take ride in metro and again walks little to reach work. However, for person who lives away from the metro station trip by cycle rickshaw or auto-rickshaw or by a feeder bus is required to reach the metro station. Each type of transfer has its own characteristics and impact on the person. Possibility of person to shift the mode includes all these transfer impacts. Figure 4(b) presents a trip from home to work which needs a transfer in-between. A person has to change a bus to reach his destination area if it is not covered by any direct route. In that case the waiting time at transfer bus stop and the distance and convenience from bus stop where one has alighted to the bus stop from which one can get the next connecting bus is important. In the case of metro, time at transfer points and convenience of changing trains is an important factor which 161 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Promoting Public Transportation System For Sustainable Urban Development – The Case of Delhi's Mass Rapid Transit System will influence modal shift. Thus, instead of just comparing available travel options by total time, fare, distance, etc. one should consider this influence of transfer activity (waiting time at transfer point, convinces at of changing trains) for the total trip comparison. Table 4: Issues affecting two wheeler users for mode shifting Two - wheeler users If two-wheeler users want to use the public transport then the question is why they have not used Buses, when metro was not started and what will attract them to shift to the metro? Table 4 presents different issues affecting two wheeler users for mode shifting. CONCLUSION References Metro systems have been planned to reduce congestion on the roads. However systems planned in India show cost overrunning and under utilization of capacity. Methodology and arguments used to justify these systems need careful analysis. High capacity system does not necessarily generate high demand. Estimation of passenger demand for transit services should consider complete journey of commuters including access time. Moreover, the success of the Delhi Metro has encouraged other Indian cities to seriously attempt to introduce Metro systems. DMRC has already been appointed the Prime Consultant for Hyderabad and Kochi Metro and is the in-house consultant for Mumbai Metro. DMRC has also submitted Detailed Project Reports (DPRs) for Metro systems in Bangalore, Kolkata (East-West Line), Mumbai, Ahmedabad and Chennai. DPRs are being prepared for Pune and Ludhiana. In fact, work has already begun on the Bangalore and Hyderabad Metros. 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Feb 4, 2006, pg 1. Simms, A. 2004. Would You Buy a Car That Looked Like This? New Statesman, 17 (845), 10. Research Library Core. Suess, M. 1993. Air Pollution: Issues and Solutions. Environmental Management and Health.Bradford, 4 (4), 27-30. The World Bank. 2001. World Development Indicators. Pp 174-5. Table 6. Tiwari, G. 2003. Transport and Land-Use Policies in Delhi. Bulletin of the World Health Organization 2004; 81: 444-540. Tumlin et al. 2003. How to Make Transit-Oriented Development Work. Planning, Chicago,69 (5), 14. Welch et al. 2005. The Effects of Ozone Action Day Public Advisories on Train Ridership in Chicago. Urban Transportation Center, Graduate Program in Public Administration,University of Illinois at Chicago. Zhao et al. 2004. Exposure to Hazardous Volatile Organic Compounds, PM10 and CO While Walking Along Streets in Urban Guangzhou, China. Atmospheric Environment, 38. 162 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Resource Mobilisation for Urban Infrastructure Development – Instruments and their Potential Resource Mobilisation for Urban Infrastructure Development Instruments and their Potential Ramakrishna Nallathiga Knowledge Manager Centre for Good Governance Dr MCR HRD Institute Campus Road No. 25, Jubilee Hills Hyderabad Introduction TIndia has been moving towards becoming a predominantly urban nation. The share of urban to total population has been steadily rising from around 10% at the beginning of 20th century to 28% by 2001 (which would have crossed 30% by now). Figure 1 shows the rise of total population, urban population and urban to total population in India during 1901-2001. The rise in urban population is much more than the rural population throughout this period (except during first decade), which is evident from the annual growth rates of the two shown in Table 1. Table 1: Growth in Population of Urban Agglomerations/Towns: 1901-2001 CensusDecade Source: Based on Census of India (2001) 1901-11 Average Annual Exponential Growth in Population of UAs/Towns Total Rural Urban 0.6 0.6 0.0 1911-21 0.0 -0.1 0.8 1921-31 1.0 1.0 1.7 1931-41 1.3 1.1 2.8 1941-51 1.2 0.8 3.5 1951-61 2.0 1.9 2.3 1961-71 2.2 2.0 3.2 1971-81 2.2 1.8 3.8 1981-91 2.1 1.8 3.1 1991-2001 1.9 1.7 2.7 Source: Census of India 2001 Apart from sheer rise in population, the number of urban agglomerations/ towns has also been on rise. Table 2 shows a steady growth in number of urban areas and their share of urban population in total population. A significant feature of Indian urbanisation scenario has been an increasing concentration of urban population in large towns i.e., Class I towns or 'cities' (with 100,000 or more), whose share has steadily risen from about 50% to 70% of total urban population. 163 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Resource Mobilisation for Urban Infrastructure Development – Instruments and their Potential Table 2: Class-wise Number of Towns and their share of Urban Population Class No. of Towns Percentage of Urban Population (%) of Town 1961 1971 1981 1991 2001 1961 1971 1981 1991 2001 Class I 102 148 218 300 393 Class II 129 173 270 345 401 51.42 57.24 60.32 64.89 68.67 11.23 10.92 11.63 10.96 9.67 Class III 437 558 743 947 1151 16.94 16.01 14.30 13.33 12.23 Class IV 719 827 1059 1167 1344 Class V 711 623 758 740 888 6.87 4.45 3.66 2.62 2.36 Class VI 172 147 253 197 191 0.77 0.44 0.62 0.31 0.23 12.77 10.94 9.47 7.89 6.84 Source: Kundu, A. (2005) Accompanying the growth of the number of cities, many cities are joining the league of metro cities i.e., cities with more than a million population. The data on metro cities reveal that 32.5 per cent of the urban population lived in metropolitan urban agglomeration/towns in 1991 and by 2001 the figure went up to 38.6 per cent; also, the population increased at 3.25% annual growth during 1981-91 and 2.83% during 1991-2001 (Kundu 2005). Table 3 shows a steady growth in number and percentage of urban population living in metro cities. The mega cities i.e., cities with more than 10 million population, have also been rising from about 24.61 % of total urban population in 1981 to 32.54% in 1991 and 37.81% in 2001 (ibid). Table 3: Growth in number and share of Urban Population of Metro Cities Census Year Number Population (in millions) Population per Metro City (in millions) Percentage of Urban Population 1901 1 1.51 1.51 5.84 1911 2 2.76 1.38 10.65 1921 2 3.13 1.56 11.14 1931 2 3.41 1.70 10.18 1941 2 5.31 2.65 12.23 1951 5 11.75 2.35 18.81 1961 7 18.10 2.58 22.93 1971 9 27.83 3.09 25.51 1981 12 42.12 3.51 26.41 1991 23 70.66 3.07 32.54 2001 35 107.88 3.08 38.60 Source: Census of India 2001 The emerging trends and patterns of urbanization and urban population growth depicted above have some important implications and challenges to urban development in India, especially with respect to provision of urban infrastructure. Although urbanisation is the sign of economic growth and large cities contribute to national economic development, the large variations in population concentration, particularly in larger cities, pose greater challenges to civic managers. This phenomenon has led to a tremendous pressure on civic infrastructure systems. There is inadequate provision of civic services like water supply, sewerage and drainage, roads, solid waste management, parks and open spaces, transport, etc. In several cities, the problems of traffic congestion, pollution, poverty, slums, crime, and social unrest are leading to deterioration in the quality of city environments. An important reason for the poor state of urban infrastructure development is the low importance given to it in three-tiered system of government. Urban Local Governments (ULGs) in India have greater number of functions but inadequate financial resources to meet the requirements of urban infrastructure. At less than 1% of country's GDP1 , the revenue base of ULGs in India (as a whole) is negligible when compared to that of State and Central governments; the expenditure incurred by them is far less than service delivery norms (Mathur and Thakur 2004). The 74th amendment to constitution contributed to the rise in mismatch of revenue resources and expenditure, as it specified only functional base (expanded the list) but remained silent on the fiscal resources to meet the same (Mohanty 1995). Resource Requirements of Urban Infrastructure Estimates of Resource Requirements The resource requirements for the development of urban infrastructure in India are colossal, when urban population keeps growing at such pace. Estimates of fund requirements for urban infrastructure are available from several varied sources based on the estimates made from time to time. (a) Rakesh Mohan Committee Report The Rakesh Mohan Committee Report (1996) had estimated the total fund requirements of urban infrastructure are in the range of Rs.79,300 crores to Rs.94,000 crores for the period 1996-2001. The fund requirement of water supply and toilet facilities in urban areas was estimated at Rs.21,000 crores for 2001-2011 and Rs 22,800 crores for 2011-21. It had assessed the total annual investment needs of water supply, sanitation and road sectors in urban area at Rs.28,036 crores per year for the period 1996-2006. (b) XI Five Year Plan estimates The XI five year plan (2007-12) estimated the urban infrastructure requirements based on the norm of 100% population coverage of services like water supply, drainage, sewerage and solid waste management, which are as follows: S. No. Sub-sector Estimated Amount (Rs crores) 1 Urban water supply 53,666 2 Urban sewerage and sanitation 53,168 3 Solid Waste Management 20,173 4 Drainage 5 Management Information Systems 6 R&D and PHE training TOTAL 2,212 8.5 10 1,29,237.5 Source: Report of Steering Committee on Urban Development for Eleventh Five Year Plan (2007-12) (c) Other Estimates 164 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Resource Mobilisation for Urban Infrastructure Development – Instruments and their Potential The Central Public Health Engineering Organisation (CPHEO) estimated the requirement of funds for 100 per cent coverage of urban population under safe water supply and sanitation services by the year 2021 at Rs 1,72,905 crores. Estimates by Rail India Technical and Economic Services (RITES) indicate that the amount required for urban transport infrastructure investment in cities with a population of 1,00,000 or more during the next 20 years would be of the order of Rs 2,07,000 crores (RBI-DRG 2008). Resource raising capacity of ULGs The resources of the above magnitudes cannot be easily mobilised within the budgetary resources of Urban Local Governments (ULG). The total receipts and expenditure of ULGs in India itself was Rs 15,149 Crores and Rs 15, 914 Crores in 2001, and less than 25% of it i.e., Rs 3,710 Crores were capital expenditure. Most of the ULGs use taxes, charges and fees (apart from grants of Central and State government) to provide and manage the civic infrastructure services2. The fixation of rates of these taxes and charges was done long time ago and is under the control of State governments. The finances of Urban Local Governments reflect a sorry state of affairs - the revenue receipts grow at a slow pace with a declining contribution of own sources, whereas the total expenditure grows at the rate equal or more than revenue. Much of the expenditure goes towards staff salaries and O&M expenses.3 Several ULBs do not have any revenue account surplus to transfer to capital account. This situation needs to be corrected through augmentation of resources at ULB level using alternate sources of finance. The move towards 'off-budget instruments' that provide financial flows from unconventional sources is now considered to be a worldwide phenomenon (Wegelin 2005). Resource Mobilisation Options for Financing Urban Infrastructure The following major 'off-budget' approaches have been emerging towards mobilising financial resources for urban infrastructure in India. (a) Inter-governmental Partnerships The Central Government, having observed the large resources requirements associated with providing civic urban infrastructure, has worked out a partnership based funding arrangement, with a majority coming from it. This change in approach has come not only in the wake of seriousness of urbanization pressures but also after having understood the importance of urban areas in promoting economic growth. This was started with setting up National Urban Renewal Mission (NURM) with a modest size of Rs 4,000 crores to assist ULGs, which was later renamed as Jawaharlal Nehru National Urban Renewal Mission (JNNURM) while augmenting the size to Rs 50,000 crores over 7 years. (b) Non-Conventional Resource Mobilisation at ULG level The recently concluded RBI-DRG Study (2008) pointed to several inadequacies in raising resources by ULGs. Tax and non-tax resources have not been tapped up to their potential by several Indian cities, which requires some major reforms. As these sources have been stagnant over time and are not subject to revision and levy to the discretion of ULGs, it has become imperative that they make special efforts to mobilize the resources within their jurisdiction using nonconventional instruments and channel them effectively towards laying down the urban infrastructure services and their maintenance. Table 4 shows some non-conventional resources that can be tapped by the ULGs. Table 4 Non-conventional revenue sources for ULGs S. No Service Category Non-Conventional Revenue Sources 1 Property Vacant Land Tax, Service Taxes, Surcharge on Land Registration Duty 2 Water Supply Water Supply Deposits, Water Supply Connection Charges, Water Benefit Tax Cess, Water Betterment Charges 3 Sewerage Sewerage Deposits, Sewerage Connection Charges, Sewerage Benefit Tax/Cess, Sewerage Betterment Charges 4 Solid Waste Management Bulk Garbage Collection Charges; Domestic waste collection charges 5 Town Planning Betterment Charges; Land and Space Contribution; Impact fee; Transferable Development Right; Sub-division charges; Planning Permission Charges 6 Engineering Road Cutting Charges, Frontage Tax, Motor Vehicle Tax/Surcharge on Petrol/ Diesel 7 Trade Licensing Business License Fee 8 Advertisement Hoarding Charges, Advertisement Placement Fees, Cable TV Registration Fee Source: Mohanty (2003) (c) Public Private Partnerships Public-private partnerships (PPP) are potentially important means of involving private sector in the provision of civic infrastructure services. The partnership model ensures leveraging public sector strengths with those that of private sector. PPP refers to a spectrum of possible relationships between public and private sectors for a cooperative or joint provision of infrastructure services. Private sector may include private businesses/firms, non-government organizations (NGOs) and community based organizations (CBOs). Table 5 shows sharing of various aspects of service generation between public and private sectors. Table 5: Salient features of key variants of public-private partnerships PPP Option Asset Ownership Operation Capital & Maintenance Commercial Investment Risk Duration Management Contract Public Private Public Public 3-5 Lease Contract Public Private Public Shared 8-15 Concession/ BOT Public Private Private Private 25-30 Public/Private Private Private Private 20-30 BOOT/BOO Source: World Bank (2006) Private sector participation in civic service delivery could 165 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Resource Mobilisation for Urban Infrastructure Development – Instruments and their Potential Summary help to bring technical and managerial expertise, improving operating efficiency, large scale injection of capital, greater efficiency in using the capital, rationalization/ cost based tariffs for services, better responsiveness to consumer needs and satisfaction . Table 6 provides an account of how these strengths are built into various PPP models/options discussed above. In India, with the rising urban population and growth of urban areas, the development pressure on cities is increasing and metros are particularly sharing more burden. The development of cities itself is critically dependent upon the availability and delivery of good urban infrastructure services. However, the resource requirements of urban infrastructure services are quite large and hence pose a great challenge. Also, the creation of urban infrastructure - basic civic amenities and other support services is itself expensive and time consuming; in other words, infrastructural investments are essentially lumpy in nature that require investments primarily by government. Table 6: Levers of Partnerships under different PPP options PPP Option Technical Expertise Managerial Expertise Operating Invest Efficiency in Bulk Invest in Distribution Service Contract Yes No No No No Management Contract Yes Yes Some No No Lease Contract Yes Yes Some No No Concession/ BOT Yes Some Some Yes No BOOT/BOO Yes Yes Yes Yes Yes The Central government has allocated one time support by creating JNNURM, which provides a substantial funding. The State and Urban local governments have to take a lead role so as to sustain the resource flow from the new assets and from their sources. The cities have to show a resolve to increase the resources for urban infrastructure development by exploiting the potential non-conventional means of resource mobilisation and using PPPs for service delivery arrangements. Given that most of the cities show little or no revenue surplus to match the capital expenditure required for providing basic infrastructure services, they may resort to accessing finance from market through floatation of bonds. Source: Kumar and Prasad (2004) The relevance and importance of PPPs in infrastructure is well documented5. Their application in the context of municipal services in the US, in particular, led to not only investment inflow in capital intensive projects but also flow of cost-effective services that would have been very difficult to provide (Greene 2002). The experience of services under PPPs has been satisfactory in a majority of local governments, which perceptibly feel gained from improved technology and management services that came together in the PPP contractual model (ibid). Indian cities have also started making use of them successfully but more and more ULGs should explore the possibilities of PPP in the provision of municipal services. (d) Accessing Market Finance It was held earlier that there was a need for massive funds to create urban infrastructure. Urban local bodies could resort to borrowing from financial markets including banks to finance the infrastructure projects. Although it is the legitimate reason to resort to borrowings, considering the sustainability of local finances, it should be ensured that these borrowed funds are devoted to projects which have adequate, explicit and identifiable revenue stream to service these borrowings. Invariably the projects undertaken by local bodies are such where user charges are inadequate. Under these circumstances, State government should fill in the gap by providing the equivalent grants. In the context of borrowings, the instruments are important. A limited number of Municipalities have issued Municipal Bonds to raise finances. There is a need to promote this channel as it can be an effective instrument of fiscal reforms and will induce credit-rating. Bangalore Municipal Corporation was the first local government in India to access debt market through non-convertible bonds (private placement) in 1997 with the State Government guarantee and the Ahmedabad Municipal Corporation (AMC) became the first ULG in Asia to issue bonds without government guarantee in 1998 (Vaidya & Vaidya 2004). However, thereafter it has been very nascent with no issuers after 2005. Endnotes 1. In other countries they account for about 5% of the national GDP 2 Composition of revenue sources can vary across ULGs. Some of the conventional sources include: (a) Proper ty Tax (b) Water Charges (c) Sewerage Charges (d) Conservancy Charges (e) Building Permit Fee (f) Trade Licensing Fee (g) Advertisement Tax (f) Shop Room Rent 3 This was revealed in the RBI-DRG (2008) study. 4 Detailed discussion is made in Nallathiga (2007) 5 World Bank (2006) provides a good review of the same References Greene, J. D., (2002), Cities and Privatisation: Prospects for the New Century, Pearson Education Inc., New Jersey. Kumar, S. and Prasad, C. J., "Public-private partnerships in urban infrastructure", Kerala Calling, February, (2004), pp 36-37. Kundu, A., (2005) Handbook of Urbansation in India, Oxford University Press, New Delhi. Mathur, M. P., (2004), "Municipal Finance and Municipal Services in India: Present Status and Future Prospectus", Second International Conference on Financing Municipalities & Sub-National Governments, Washington DC, September 29-October 2. Mathur, O. P. and S. Thakur (2004), India's Municipal Sector, A Study for the Twelfth Finance Commission, National Institute of Public Finance and Policy, New Delhi. Mohanty, P. K. (1995), 'Defining the functional domain of Urban Local Bodies: Some Suggestions in the context of India's Decentralisation Initiative', Urban India XV(1) (January-June). Mohanty, P. K. (2003), 'Financing Urban Infrastructure: Some Innovative Practices of Resource Mobilisation', CGG Working Paper, June 2003. Nallathiga, Ramakrishna (2007), 'Off-budget approaches to the delivery of urban services: the potential of public-private partnerships', ICFAI Journal of Public Finance, Volume V (2): 53-64. Rakeshmohan Committee Report (1996): Report of Expert Committee on Infrastructure, Government of India, New Delhi. RBI-DRG (2008), Municipal Finance in India- An Assessment, Development Research Group, Reserve Bank of India, Delhi. Wegelin, E., (2005), "Off-Budget Financing Strategies for Urban Development", Urbanicity. World Bank (2006), Reforming infrastructure: Privatization, regulation and competition, World Bank, Washington DC. 166 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Resource Mobilisation for Urban Infrastructure Development – Instruments and their Potential Urban Renewal and Infrastructure Spotlight on Housing for the Urban Poor Jatinder Singh Professor, Rai Business School, New Delhi. Introduction The urban sector has been facing critical challenges with regard to affordable shelter, growth of slums, and disparity between demand and supply for the provision of basic services to the urban poor. The urban housing shortage upsets the socio-cultural aspirations of people hampering inclusive growth. Reports reveal that by 2051, the urban rural population will be approximately same with disproportionate load on major and metro cities; escalating the problem of urban housing further. In this grim scenario, the urban poor are the major sufferers. According to the Ministry of Housing and Poverty Alleviation the urban population in year 2001 was 286.1 million (27.8% of total population of country) while the land occupied by urban India is only 6%. Disarrayed urbanization has focused more on the larger cities with less attention to medium and small towns. The process of migration resulting from urban pull and rural push is estimated to occur unevenly and so is the growth of urban areas. This has resulted in reactive planning resulting in congestion and spread of slums. Slums degrade the social fabric of our nation because of its subhuman conditions and lack of basic and essential services. Services like potable water, sanitation, sewerage and waste disposal mechanism are either poorly maintained or do not exist in these areas. This results in abound infirmities and degrades the health and social life of inhabitants. Rising income signifies urbanization but that is not visible profoundly in India. The islands of prosperity in the sea of poverty are quite visible in urban areas because of social and demographic stratification everywhere. On one side of road we can see sprawling malls with all major brands trying to make their mark and on the other side one can see rows of unauthorized crammed structures with the people living sub humanly. Also, Indian cities have the unplanned infrastructure and poor public services as compared to the world. This all has resulted in urbanisation of poverty which is a grave issue highlighting cruel disparity and inequality within the society. Needless to say that infrastructure is the key constraint for economic growth, but it always has got lopsided treatment from the Government with more doles to the rural areas. The Government is under sclerotic notion that urban poor have better employment opportunities and steady income, but most of the urban poor work in informal sector with paltry or non-existent social security. Percentage of poor in different classes of cities/towns City/Town Size 1993-94 1999-2000 Large towns/cities 18.4 14.2 Medium towns/cities 27.6 20.4 Small towns 33.2 24.2 All urban areas 27.4 19.9 Rural areas 35.7 23.9 Source: UNDP - India Urban Poverty Report, 2009 Notwithstanding, sixty percent of India's GDP is contributed by urban population, but the Government is more inclined for the development of rural areas. The data of 2001 census counts Indian population to be 1,027 million of which 28% live in cities. By 2021, it is expected that this would increase to 39% and by 2051 it is estimated that half of Indian population is expected to live in cities. This rapid pace of urbanization does not commensurate with the urban economy and its development thus putting spotlight on the urban sector development. 167 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Resource Mobilisation for Urban Infrastructure Development – Instruments and their Potential Government Initiatives Government has launched the most prestigious scheme for the concern of Housing the Urban Poor - National Urban Housing and Habitat Policy 2007 (NUHHP) which has been integrated into the objectives of Jawaharlal Nehru Urban Renewal Mission (JNNURM). The focus of this scheme is for sustainable development of habitat in the country to ensure equitable supply of land, shelter and services at affordable prices to all sections of society. Keeping in mind the housing and financial constraints, the NUHHP 2007 relies on multiple stake-holders - private sector, cooperative sector and industrial sector in its zeal to actualize its goal "Affordable Housing for All". To attain its objectives the NUHHP 2007 emphasizes on urban planning, increasing floor area ratio (FAR), Transferable Development Rights (TDRs), increased flow of funds, effective solid waste management and use of renewable sources of energy. For furtherance of its goals, NUHHP 2007 has conceptualized the idea of micro finance to be promoted at state level to expedite flow of finances to urban poor. It also encourages integrated townships and special economic zone in which 10-15 per cent of land in every new public/private housing projects or 20-25 per cent FAR whichever is greater, will be reserved for EWS/LIG Housing through suitable spatial incentives. The Jawaharlal Nehru Urban Renewal Mission (JNNURM) was launched by Government in 2005 for catering to the provision of housing and basic services to urban poor in 65 specified cities and towns. JNNURM has two programmes Basic Services to the Urban Poor (BSUP) and Integrated Housing & Slum Development Programme (IHSDP) which is aimed at the integrated provision of basic amenities and services to the urban poor and slum-dwellers like: Security of tenure at affordable prices Improved housing Water supply Sanitation Education Health Social security The aim of this programme is to create economically productive, efficient, equitable and responsive cities. JNNURM is planned to operate on a mission mode, facilitating large scale investments in the urban sector with goal for sustainable socio-economic growth in the urban areas. Along with JNNURM the Government has initiated some other urban poverty alleviation programmes like Swarna Jayanti Shahari Rozgar Yojana is implemented in convergence with other Government initiatives. Delivery of quality healthcare, primary education and social security for the urban poor will be go along with converging programmes with the schemes of Health Mission, Sarva Siksha Abhiyan, Aam Aadmi Bima Yojana, Rashtriya Swasthya Bima Yojana and Prime Minister's Employment Generation Programme. One of important organization for the urban housing is Housing and Urban Development Corporation Limited (HUDCO). This finances housing and urban development projects, finance building material industries and setup new townships. HUDCO finances development projects which are formulated by State Housing Boards, Development authorities, Improvement Trusts and Co-operative Housing Societies. The other organizations that have a vital role in providing housing are National Housing Bank, Building Materials and Technology Promotion Council (BMTPC). Urban housing trends According Urban Poverty Report 2009, fifty per cent of India's population is expected to be urban-based by 2030. This projection is based on the assumption that growth rate of 8 and 9 per cent of the population over the next decade and also anticipated shifts from agro-based to nonagricultural jobs and from rural to non-rural employment. The urban poor are trapped in urban poverty due to irregular income, deplorable housing conditions and absence of social security which has resulted in mismanagement of slums. Although many large areas of habitation are occupied by Government and transferred to private corporate for making commercial complexes and development of residential areas. According to ASSOCHAM report, India's urban poor need 40 million houses. The Ministry of Housing and Poverty Alleviation has estimated that total housing requirement during the 11th Plan period (2007-2012) stands at 26.53 million. Out of this shortage of dwelling units, 21.78 million pertains to EWS and 2.89 million to LIG. Collectively, these two groups accounted for 99% of the deficit. Quality Housing A good quality and sustainable housing development should be customized to the needs and habits of the inhabitants. Moreover, the dwelling type and size should adequately support social and environmental sustainability objectives. The primary emphasis should be the affordability. It is envisaged that the houses should be built and maintained at a reasonable cost with an adequate funding mechanism substantiated with microfinance schemes. The design of the housing infrastructure should corroborate with safety and security of its people. Proper provision for vehicular circulation and service lanes should be made to make people and vehicular movement easy and safe. The emphasis should be on making 'green' and 'intelligent' buildings. To reach these objectives there should be optimum use of infrastructure with full exploitation of solar energy. The architectural design of dwellings should optimize the benefits of sunlight and solar energy use. This will facilitate mobility and improve the quality of air and water thus making the city smarter which will enhance the social and security status of the community at large. Furthermore, this will envisage more prosperity with inclusive and sustainable growth. 168 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Resource Mobilisation for Urban Infrastructure Development – Instruments and their Potential Current Challenges The Government initiatives like JNNURM covers only 65 cities; contrary to this India has numerous small cities and town where the urban population resides. So there is an imperative need to concentrate on these small cities and towns where the most of the Urban India resides. The primary predicament for urban housing policy planners is that land is a State subject. Secondly, there is lack of credible statistics. The housing shortage calculated is not actually State specific. Moreover, Government is infested by bureaucratic hurdles or red tapism that has critically dwarfed the endeavour of private players to start new projects enthusiastically. The current challenges of housing in urban India are poor financing mechanism, lack of strategic planning and unfriendly Government regulations. Most of the urban poor migrate for search of decent livelihood, but they land up in a system of irregular and informal sector employment with total absence or marginal social security cover. This further compounds the problem and they get entangled in the vicious cycle of poverty as cost of living is substantially higher in urban areas than rural areas. They are also subjected to pay for every petty thing, like cot, quilts during winters, even for water and toilet facilities which are relatively free in rural areas. In order to save the money they mostly defecate in open and bath less frequently. This unhygienic practice coupled with nutrition deficient diet weakens their immune system, particularly of old people and children. They become easy victim for many infectious diseases one after the other. Homeless people constantly come across antisocial and immoral behaviour from civic authorities or the antisocial elements; they are more likely to become the victims of crime. They continuously face threats from robbers and the vulnerable section like old people; children and women are affected most. Furthermore, many housing schemes are plagued by land scams or building scams where the poor pay the money to the promoter, and some of them become victims of deception. The housing and land corruption is rampant and the situation has not become better over the years. The recent scam of Delhi Development Authority (DDA) which is the city's largest land owner is the example of corrupt practices. DDA has announced the draw of 5,238 flats under the 2008 Housing Scheme; the flat owners have yet to see the light of the day to get a house for them. Many urban poor who have sold their land in their native villages have applied in this scheme. The delay in getting allotment is causing undue harassment for the successful allottees, as many of them are paying interest to banks for the loan they have taken to pay the Rs 1 lakh registration money. If such examples are quoted from the Government organizations, one can make assumption that the private players can go to any extent for the miscarriage of Housing Schemes for the poor. Conclusion and Recommendations The Government should not delay in granting industry status to the real estate development activity as real estate is nothing but infrastructure. The real estate activity should be included in the category of industry so as to ease financial inflow to the developers. From last many years, the Government has been making efforts to provide shelter to people belonging to Economically Weaker Sections (EWS) and Low Income Group (LIG) group of families, but the gap has steadily widened year after year as more people migrate to urban areas. Apart from the suggestions mentioned in the paper the major recommendation is for microfinance of housing as it can support the incremental building process and support the low income population. Microfinance of housing has a potential for scope that is far beyond providing shelter to the urban poor and also a determinant for social engineering and inclusive growth. References www.undp.org.in/index.php?option=com_content data.undp.org.in/poverty_reduction/Factsheet_IUPR_09a.pdf urbanhealthupdates.wordpress.com/2009/ planning.up.nic.in/landuseboard/lub_main.htm mhupa.gov.in/programs/upa/nsdp/sjsry/Nodal-Officers-SJSRY mhupa.gov.in/ www.pib.nic.in/release/release.asp?relid=52587 169 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure Prof. K K Pandey Chairman, Centre for Urban Studies, Indian Institute of Public Administration Summary This paper examines the adequacy of fiscal decentralisation and resource mobilisation for urban infrastructure to suggest actions for expansion and up gradation of urban infrastructure in India. In the light of accelerated flow of funds now available for urban infrastructure ( due to economic liberalisation, specific government. schemes, bi-lateral and multi-lateral funding.) , this paper is confined to non plan municipal income which is expected to fund O&M and debt servicing /depreciation on municipal assets. It is also a determinant of borrowing capacity to take up capital projects or investments. It is particularly important in the context that despite accelerated flow of funds city governments are not in a position to seek funds for investments. It is observed that the fiscal gap for both the investments and operation and maintenance requirements is fairly wide and has serious implication on (i) quality of life, (ii) urban environment and (iii) productivity (iv) income and employment generation. It is also observed that Urban Infrastructure has multiplier effect on each of these four indicators of urban livelihood. Thus, sky is the limit for investments in the sector which is stated to be in a range of Rs 73000 Crore per annum at 2004-5 prices for utility infrastructure only not including distributive functions such as environmental protection , poverty alleviation etc. The benefits of urban infrastructure, on the other hand accrue to local community/ direct users, city as a whole, state (province) and national economy as well. At the same time, it is also noted that most of the items of urban infrastructure are also in the form of Public Good, not directly priced and non excludable in terms of users. However, there is a high degree of vertical and horizontal imbalance caused by mismatch between municipal functions and funds and (2) municipal inability to tap local economy to fund urban infrastructure. At the same time it is also noted that national and state economies have high potential to fund urban infrastructure provided fiscal decentralisation is promoted in the true spirit of fiscal federalism. Similarly empirical evidence suggests that city economy also have untapped potential to significantly bridge the gap in the funding of urban infrastructure. Therefore, suitable instruments need to be devised to promote fiscal decentralisation and resource mobilisation to generate accelerated flow of investment funds and O & M funds for urban infrastructure. It needs to be noted and underlined that city governments hold the key to develop sustainable and equitable delivery of urban infrastructure. In line with the true spirit of decentralisation and subsidiarity, as envisaged by 74 CA Act of 1992, the empowerment of local governments in terms of fiscal, functional & political decentralisation should be completed on a priority bases. Devolution of funds from centre and state, access to loan finance, powers to levy and decide municipal taxes and levies, and autonomy to decide partnerships and institutional arrangements need to be streamlined as per requirements at municipal level. In this regard (i) Quantum jump is needed in the fiscal devolution, (ii) local fiscal instruments need to be devised to improve liquidity, (iii) local institutions dealing with services of land and services need to be made accountable to city government to link their accountability with the grass root level and develop a transparent system of transfer of assets and functions to local government for equitable and sustainable delivery of urban infrastructure. Finally, it appears that municipal finance in India is suffering from vertical and horizontal imbalance. At the same time innovations are also emerging to promote vertical and horizontal balance. Institutional authority of central finance commission and state finance commissions need to devote more attention to induce fiscal decentralisation in the municipal system. It should also generate municipal actions to raise more resources at local level. This is particularly important in the context of local potential and elasticity available for municipal finance. In the light of local democracy and increasing emphases on local solutions for national issues of poverty, productivity, environment and quality of life, fiscal decentralisation is emerging as a necessary tool to promote overall welfare and socio economic development in India. 170 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure Magnitude of Fiscal gap The fiscal backlog, up gradation and expansion needs of urban infrastructure covering the core municipal functions in cities and towns in India far exceed the resources at the disposal of Urban Local Bodies (ULBs). The additional requirement of funds by ULBs to meet the challenges of urbanisation, congestion, service deficiency and environmental degradation and to discharge redistributive functions like poverty alleviation and slum development as envisaged in the Constitution (74th Amendment) Act, is huge. Strategic fiscal gap in the municipal sector covering the difference between demand and supply of funds to provide and operate mandated services is substantially high. As per a recent study by RBI (2007), the projected investment requirement of funds for urban infrastructure in the country is estimated at about Rs. 63,000 crore per annum for the next ten year period at 2004-5 prices. This does not include the needs for redistributive functions like urban poverty alleviation. The figure constitutes about 1.5 per cent of the country's GDP only. It is also estimated that assuming a status quo in the federal fiscal relationships in the country, municipal bodies can at best be able to raise up to about Rs.27, 285 crore per annum or about 0.5 per cent of the country's GDP in 2008-9. Within this, the resources available for asset creation after meeting current expenditure would at best be of the order of Rs 17,736 core, implying an annual shortfall of at least Rs 10,000 crore (2004-05 prices) even for providing core urban services. On the other hand, given the size of urban sector, 3-5 per cent share of GDP, can be spared for urban infrastructure as experienced among other forward looking developing nations such as Brazil, Colombia and countries in South East Asia. This means that Indian economy has a potential for a quantum jump in the size of funds available for urban infrastructure. As the investment requirements, the gap for O&M requirements is also increasing at a faster rate. Analysis of municipal budgets indicates wide variations in the estimates, revised estimates and actual which specially affect O&M commitments as payment of salaries is non-discretionary (Pandey, DFC 2007). After implementation of VIth pay commission implementations the gap would increase nearly by 100 percent which is already significantly high. The symptoms of O&M gap are commonly visible in the municipal inability to meet financial and functional commitments covering a constant decline in the normative base of services and municipal inability to clear dues and payment of contractual savings on time. Nature of Fiscal Stress Devolving of a formidable list of mandatory functions notwithstanding, the institutions of urban local government in India are not very different from their counterparts in south Asia, Africa and Latin America. They are in a position to "manage (only) a fraction of the tasks assigned to them" (GuruGharana and Adhikari 1999). They, as well, lack in institutional capacity to perform the functions entrusted to them. The literature on municipal capacity building suggests that capacity building is driven by addressing three important dimensions viz. (i) human resource development; (ii) organizational development and (iii) institutional and legal framework (Pellenburg et al 1996). Fiscal capabilities and financial wherewithal are critically important for addressing all the three dimensions mentioned above. Putting in place a sustainable financing system calls for strengthening local democracy through fiscal decentralisation that has several useful spin-offs. It improves over-all revenue mobilisation by broadening the tax-net, enables the sub-national governments to capture tax base, which is below the thresholds of taxes of higher levels of government, and it enhances efficiency in terms of improved level of services, accountability, willingness to pay and overall development of jurisdictions (Bahl 1999;Musgrave 1983). There is now an increasing realisation in several countries that have gone for decentralisation that it needs to be reinforced by fiscal decentralisation (Bird 1994). Further, one common feature of urban local finance across the developing countries is inadequate own sources of revenue. The devolved sources of revenue do not match with wide range of functions required to be performed by them. This has led to increasing dependence of ULGs on higher levels of government (central government in a unitary system and provincial or state governments in federal countries). Bahl and Linn found that in the cities studied by them, the median share of local revenues in financing local expenditures was as low as 30 percent in the Caribbean countries (Bahl and Linn 1992). This, including shared taxes, was around 63 percent in the transitional countries (Bird and Wallich 1993). This is an anathema and needs to be addressed by devolution of tax instruments, which have a direct nexus with the urban economies. One of the contradictions characterising urban local finance in less developed countries is that even though urban economies keep on growing, the city governments are becoming impoverished. Taxes to be devolved to the ULGs therefore have to be related to the economic base of cities and towns. Buoyancy of local tax instruments depends on their nexus with city economies. Reasons for the Fiscal Gap Reasons of the fiscal gap are attributed to a host of indigenous and exogenous factors. Vertical imbalance, fiscal dependency, borrowing constraints and inefficiency in municipal management are affecting the functioning of urban local bodies. Whereas the municipal governments. Do not have adequate autonomy to fix the rates and base of fiscal instruments available with them; they also do not have adequate institutional capacity to raise resources within the given framework. At the same time many areas of revenue generation such as land and town planning etc are still not assigned to municipal governments at various states. Secondly, municipal bodies do not receive suitable amount of fiscal transfers from higher levels of governments. Who have better resources and relatively low level of expenditure? These two factors lead to a regular addition to the strategic fiscal gap. Vertical Imbalance Urban local bodies in India are yet to find suitable place on the public finance map of the country, which is needed to facilitate inclusive economic growth and equitable development. The size of the municipal fiscal sector in India 171 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure is very small compared to that in many developed and developing countries and in relation to the public services that the urban local bodies are mandated to deliver There is mismatch between functions and finances of ULBs, which primarily explains the vertical imbalance. Out of 18 functions to be performed by the municipal bodies in India less than half have a corresponding financing source. The 12th Schedule in the Constitution 74th Amendment Act also envisages that functions like 'safeguarding the interests of weaker sections of society, including the handicapped and the mentally retarded', 'slum improvement and up gradation' and 'urban poverty alleviation' belong to the legitimate functional domain of urban local bodies. However, there are no commensurate resources with these institutions to discharge these functions. Urban local finance register a marginal presence in the overall public finance in India and is declining due to relatively low growth and at times decrease in its size in real terms. The total municipal revenue in India accounts for about 0.75 per cent of the country's GDP as against a figure of 4.5 per cent for Poland, 5 per cent for Brazil and 6 per cent for South Africa. In terms of both revenue and expenditure the urban local bodies account for little above 2 per cent of the combined revenue and expenditure of Central Government, State Governments and ULBs. (O P Mathur) This is in contrast to the situation obtaining in advanced countries, where local bodies normally account for 20-35 per cent of the total government expenditure and the principle of 'subsidiary' is regarded as a cornerstone of fiscal federalism. Recent data on municipal finances reveal that the total revenue of ULBs is growing at a lower rate compared to the growth of combined Central and State Government revenues. (RBI 2007) Therefore, national and state economies are capable of sparing additional funds for municipal infrastructure provided suitable mechanism is devised. Horizontal Imbalance Horizontal Imbalance is reflected in the municipal inability to tap local economy to raise requisite funds. There are direct benefits to local economy as a result of municipal infrastructure which are not adequately charged through suitable instruments. Secondly, Municipal infrastructure also has a value added role. Land value gains are also not adequately used to fund municipal requirements. Empirical evidences suggest that Economic Rate of Return on Urban Infrastructure is fairly high in a range of 28-30. Similarly Value Added Role of Urban Infrastructure is also leading to high amount of Land Value Gains. Thirdly infrastructure enables cities to have economies of scale. These three factors confirm that city economy benefit to a great deal of additions as a result of municipal/ urban infrastructure. However, returns from the city economy are substantially lower than the potential. The share of municipal own sources in the total municipal revenue is recorded in a range of 20-50 percent only. This confirms magnitude of horizontal fiscal imbalance Urbanization-Implications for Urban Infrastructure India is undergoing a transition from rural to semi-urban society. Around 30-35% of population is now living in urban areas. It is clearly evident from urbanization pattern that high the rate of development, higher is the rate of urbanization. States with higher gross domestic product have higher levels of population living in urban areas. Gujarat, Maharashtra, Tamilnadu, Karnataka etc. have a significantly high level of urbanization than Utter Pradesh, Bihar and Orissa. It is estimated that during the next 16 years - by the year 2025 - well over 40% population will be living in the urban areas. The magnitude of urban divide, as among other developing countries, in India also is fairly wide. India has 286 million people living in over 5000 cities and towns out of which 61.7 million or nearly 22 percent urban population is living in slums and squatter settlements. Incidence of poverty and slums are closely linked with each other and nearly 26 percent of urban population is estimated to be living below poverty line. The incidence of poverty is associated with inadequate access to shelter, sanitation, employment opportunities and income generation. Key concerns include: The rapid pace of urbanization associated with faster rate of growth of slums, concentration of migration among million plus cities, disparities in the income and access to services, large size of informal sector, backlog in shelter and infrastructure in the urban areas pose a challenge to meet the requirements of inclusive growth. Access to water and sanitation is also fairly inadequate with a particular reference to low income and poor segments in terms of availability of in-house connections, connectivity to sewer/underground drainage, availability of toilets within the house and adequacy of community toilets. Garbage collection is another area of equal concern wherein almost 1/4th to ½ garbage remains on the road; disposal is largely in the form of open dumping, causing a range of environmental concerns. Maintenance and upkeep of roads is also lacking in terms of road widening, flyovers, under-bridges, over-bridges, regular maintenance, etc., leading to noise pollution, air pollution and congestion, affecting the economic activities, health status and intra-city movement. Community and social service, public convenience, market place, shopping centres, etc. are also either not available or lacking various services and amenities . Roadmap For Municipal Fiscal Reforms It should be obvious form the above discussion that fiscal decentralization has to be at the top of the agenda for municipal fiscal reforms. Other equally important aspect of the strategy and the issues involved relate to the very revenue sources of the urban local self-government. These are (i) tax sources; (ii) non-tax sources; (iii) fiscal transfers; and (iv) borrowings. Whereas fiscal transfer depends on discretion of the higher levels of governments, other element in the revenue structure are within the competence of the ULBs who can use them effectively for generation of financial resources. Other residual spheres of intervention for enhancing revenue are municipal asset management, accounting and budgeting and political risk management. In sum reform should be taken up under (i) Intergovernmental Action plan and (ii) Municipal Action plan. 172 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure Intergovernmental Action plan It should be explicitly recognized and noted that urbanization and economic development are closely interlinked and cities contribute far more to the nation's economic growth than their share in total population. They contribute significantly to the country's national income and exchequer. Urban policy, therefore, needs to enable cities to contribute to national development through the effective provision of infrastructure and services. This, however, cannot be viewed in isolation from broader economic and social policies. These policies lead to unintended spatial consequences, which may sometimes be far more profound than those intended or envisaged originally. Thus fiscal transfers and assignment of fiscal powers to city governments need to be done very carefully. India being a three-tier federal system, inter-governmental fiscal transfers is bound to remain an integral mechanism for solving the problems of vertical imbalance in the assignment of responsibilities and fiscal powers between the Centre, State and local bodies. These transfers could be an effective tool to correct such vertical imbalance, reduce the inequalities amongst ULBs due to a variety of factors including fiscal power, cost disabilities, revenue effort, etc. and promote public spending in desired sectors like water supply, education, health etc. In addition to the factors of vertical balance, equalization principle and externalities, administrative justification in terms of economies of scale in tax collection at the Central or State level also make a case for inter-governmental transfers to local bodies. CFC and SFC Devolution It is in this context that article 280 (c) has been added to streamline a dedicated flow of central funds for urban infrastructure. Similarly State funds are now transferred on some scientific bases. However, quantum of funds under two types of devolution is far below the potential that already exists at higher levels of governments in India. Norms for sub-national expenditures may be evolved and depending on the normative estimates of expenditures to be incurred by State Governments and local bodies, a share in the central divisible pool of resources may be considered for the local bodies in lieu of ad hoc grants. As urban poverty issues are going to assume critical proportions, the CFC (Central Finance Commission) may consider revenue assignment for 'redistributive' functions such as urban poverty alleviation and slum development and linking such functions to a share in 'redistributive' taxes like personal income tax, corporation tax and service tax. The patterns of urban public finance in India are based on the model of Anglo-Saxon countries like United Kingdom and Australia, which have an elaborate system of intergovernmental transfers. In addition to 'own' and 'shared' revenues, grants-in-aid received from the concerned State Governments constitute a major resource of ULBs. However, the fiscal position of the States themselves has been weak with high level of deficits and outstanding liabilities. Hence, the State Governments have not been in a position to provide sufficient funds to their ULBs as per the recommendations of the SFCs (State Finance Commissions). The SFCs may follow the suggestions made by the Twelfth Central Finance Commission regarding approach to be adopted to study the finances of local bodies, identifying problems and making recommendations. The SFCs, which need to have eminent experts with knowledge of local public finance or local administration as members, may make specific recommendations that are implementable. Definite time-frames for implementing the SFC recommendations by State Governments may also be fixed statutorily. SFCs may accord priority to 'measures' for improving municipal finances and financial management to address the fundamental factors leading to vertical imbalance rather than adopting a gapfilling approach. Further, most of the ULBs are committed to reducing fiscal deficit, as per their newly enacted Fiscal Responsibility and Budget Management Acts. While there is a need for empowering ULBs with 'own' taxes and non-taxes, the intergovernmental transfer system, especially transfers from States to ULBs, need restructuring. The present system in States is ad hoc, with very little incentive to ULBs to prompt efforts for bridging the fiscal gap and rendering performance. The design of inter-governmental transfers from State Governments must be based on the principles of objectivity, transparency and predictability which may include : (a) the transfers must imply a hard budget constraint for the municipalities and there should be no soft options at the margin; (b) the quantum and frequency of transfers must be predictable; (c) they must be transparent through explicit and identifiable entries in government budgets; (d) they must be pre-determined rather than open-ended and (e) they must have in-built incentives for promoting local resource mobilization and effective public service delivery. A simple distributive formula that gives due weights to needs, rights to minimum basic services, incentives to performance and inter-jurisdictional equity may be designed Therefore a devolution index needs to be devised to streamline devolution in terms of equalization and promotion of distributional and jurisdictional equity. XIIIth Central Finance omission therefore tries to promote a devolution index along with bottom up assessment of gap so that State Finance Commissions and CFC can take appropriate actions to minimize vertical gap. Decentralize Fiscal Control Fiscal control in terms of devolution of fiscal powers to levy taxes and fee/charges etc. and borrowing powers along with rationalization of expenditure assignment should be liberalized to enable municipalities to become centre for self governance. Most of these actions are due on part of state governments. The Constitution (74th Amendment) Act 1992 identifies 18 functions in the 12th Schedule as belonging to the legitimate domain of urban local bodies. A study of amendments to municipal acts by the State Governments following the 74th Amendment reveals that there is inadequate clarity regarding the assignment of functions to ULBs. Some municipal Acts mention functions 'as may be assigned from time to time' by the concerned State Governments. In the absence of activity mapping and clarity regarding the levels at which component of functions such as policy-making, planning, formulation of programmes and projects, implementation, monitoring, quality assurance, assessment and evaluation are to be performed in 173 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure connection with the delivery of particular public services, overlap between the functional domains of ULBs, State and Central Governments will continue. Functions of various tiers of government need to be clear and without any ambiguity. Assignment of fiscal powers Inadequate assignment of tax and non-tax resources including inter-governmental transfers, incomplete delegation of revenue-raising powers, inappropriate user charges, inefficiency in tax administration and under-exploitation of assigned revenues are some major factors that have contributed to the resource crunch of ULBs. The ULBs must be made an integral part of revenue mobilization in as much as they share responsibilities. Studies recommend a combination of benefit taxes, user fees, development charges and borrowings for long gestation capital works as appropriate for meeting civic expenditures. User charges should be based on the marginal cost of additional units of services from the infrastructure and development charges on the marginal cost of extending infrastructure to new developments, levied on a development-by-development basis. Borrowing Powers Adequate fiscal powers should be allocated/devolved to ULBs. In the Changing framework of reforms under JNNURM ( Jawaharlal Nehru National Urban Renewal Mission) covering accounting and budgeting reforms , creditworthiness is gradually emerging .It is suggested that borrowing restrictions on ULBs may be relaxed and guided by pre-specified principles and not by case to case examination at the State level A critical issue to be addressed in the context of debt-financing as a key instrument of municipal finance is that practically all Municipal Acts in the country impose restrictions on the power of Municipalities to borrow funds. Examples are: Section 86 of Karnataka Municipalities Act, 1964 as amended by Act No. 24 of 1995; Section 154 of Karnataka Municipal Corporation Act, 1976 as amended by Act No. 25 of 1995; Section 154 of the Uttar Pradesh Municipal Corporations Act 1959 as amended by U.P. Act No.12 of 1994; Section 185 of Delhi Municipal Corporation Act 1957; Section 149 of Hyderabad Municipal Corporation Act 1955 and Section 142 of Madras City Municipal Corporation Act 1919. All these laws make the previous sanction of the State Government (Central Government in the case of Delhi) mandatory before any borrowing is resorted to by an ULB. While stipulating that such borrowings would be on the basis of security of all or any of the taxes, duties, fees and dues authorized under municipal and other laws, the State Governments prescribe conditions regarding security, rate of interest, repayment of principal and interest, date of floatation and time schedule for loan repayment. They also specify the purposes for which borrowing can be resorted to. These generally include: (a) construction of permanent works, (b) acquisition of lands and buildings, (c) paying off any debt due to government and (d) repaying loan previously rose under municipal and other laws. Thus, vertical imbalance is constitutionally in-built and correction to the same needs to be achieved through reforms in the structure of fiscal federalism, including revenue assignment and inter-governmental transfers through the Central and State Finance Commissions. There is a need for function-finance mapping to ensure that each function to be performed by the ULBs is backed by a corresponding financing source. The revenue instruments assigned to a tier of government should match, as far as possible, the expenditure requirements to induce fiscal responsibility. Owing to the fact that ULBs, which have better delegation of revenue powers and less dependency on upper tiers of Government, perform well in terms of provision of core services or lower under spending. Thus, the restructuring of revenue powers to ULBs needs to be given top priority by State Governments, if urban services are to be improved. Simultaneously, the quality of expenditure by ULBs needs to be enhanced with a rationalization of the work force and reduction in spending on establishment and administration. There is considerable scope for the ULBs to recourse to borrowed funds for improving civic infrastructure as their current level of indebtedness is perceived to be low. Thus, several ULBs would be in a position to access the capital market if borrowing constraints are eased and tax-free bonds are facilitated. However, strong revenue reforms, covering both general revenues and user charge revenues, are a pre-condition for accessing market funds. There is a significant scope to raise the user charges which are abysmally low across the States. Expenditure Assignment The Constitution (74th Amendment) Act 1992 identifies 18 functions in the 12th Schedule as belonging to the legitimate domain of urban local bodies. A study of amendments to municipal acts by the State Governments following the 74th Amendment reveals that there is inadequate clarity regarding the assignment of functions to ULBs. Some municipal acts mention of functions 'as may be assigned from time to time' by the concerned State Governments. In the absence of activity mapping and clarity regarding the levels at which component of functions such as policy-making, planning, formulation of programmes and projects, implementation, monitoring, quality assurance, assessment and evaluation are to be performed in connection with the delivery of particular public services, overlap between the functional domains of ULBs, State and Central Governments will continue. Functions of various tiers of government need to be clear and without any ambiguity. Municipal Action Plan One common feature of urban local finance across the developing countries is inadequate own sources of revenue. India too is no exception. The devolved sources of revenue do not match with wide range of functions required to be performed by them. This has led to increasing dependence of ULBs on higher levels of government (central government in a unitary system and provincial or state governments in federal countries). Bahl and Linn found that in the cities studied by them, the median share of local revenues in financing local expenditures was as low as 30 percent in the Caribbean countries (Bahl and Linn 1992). This, including 174 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure shared taxes, was around 63 percent in the transitional countries (Bird and Wallich 1993). While the huge resource gaps of the ULBs require major structural reforms that take time, there are no two opinions that ULBs should exploit the revenue sources already assigned to them more effectively. There is a particular need for focusing on maximization of revenues from property taxes, user charges and the use of urban land as a resource. 'Users pay', 'beneficiaries pay' and 'polluters pay' are the cornerstones of local public finance as suggested by theory as well as practice. They must be fully made use of through scientific ways of identifying tax base and revenue potential at local level. Own sources from city economy, value added role of services and sale of assets and services Therefore, Municipal Action plan is needed to minimize horizontal imbalance to bring resources from city economy, value added role of municipal infrastructure and sale of municipal assets and services. The international experience shows that the range of resources available to urban local bodies in federal countries such as United States, Canada, Brazil, China, etc., is very broad compared to that in India. 'Own' taxes and user charges of ULBs in India is grossly inadequate to meet the expenditure needs of ULBs. Abolition of Octroi has seriously affected municipal fiscal autonomy. Besides, elaborate State Government controls on the municipal authority to levy taxes and user charges, set rates, grant exemptions, etc. and on the design, quantum and timing of inter-governmental transfers are constraining ability of the ULBs in mobilizing resources. The issues of lack of clarity, consistency and predictability in expenditure assignment and revenue assignment should be addressed. In particular, the system of taxes, user charges, inter-governmental transfers and borrowings in respect of ULBs need to be reviewed for their adequacy and suitability to match the expenditure needs. Resources are required to be aligned with expenditures so that the delivery of services most required by citizens can take place effectively. Reforms need to focus on the basic issues of fiscal federalism, namely, revenue assignment must be clear and revenue assignment must correspond to expenditure assignment. There is also a need to address the issues of service delivery management as in the ultimate analysis outlays will have to translate into outcomes valued by the public. Tapping Local Economy Potential Local economy potential can be tapped by Direct Taxes/ levies or using municipal money as seed capital to motivate city community to come forward to join municipal efforts. Octroi used to be mot elastic and liquid municipal source. However due to pressure for transport efficiency and business efficiency of octroi has taken place across the country (except for Mumbai). Assigning an alternative in the place of Octroi to ULBs is a critical reform, which is pending since long. The Twelfth Finance Commission has recommended that a tax, preferably linked to the consumption characteristic of good and hence also buoyant, would be a suitable alternative to Octroi. The search for a substitute for Octroi may perhaps end with a reasonable formulae-based share for the ULBs in the Value Added Tax in the state of Madhya Pradesh, which has been thinking. Also a Niryat Kar (Tax on Export from local area) is imposed to generate additional revenue. Lately to bring back Octroi, few municipal governments levy a Paryavaran Kar (Tax on Environment) on the lorries, which unload consignments in the city (Raipur) at Chhattisgarh. (Box !) Innovative local revenue instruments Several new instruments have emerged to raise funds from local economy. These include alternate instruments which have higher compliance. Capital value taxation is recognized as a desirable way to enhance the yield from property taxes. However, the process to move to such a system is bound to be slow given the view that tax-payers in cities in India are 'property-rich', but 'cash-poor'. Moreover, most ULBs do not have a cadre of trained assessors to evaluate property values and update them regularly. Experiences of cities like Hyderabad and Bangalore suggest that area-based property tax systems, linked to self-assessment schemes, have considerable scope for enhancing property tax revenue. The Pune Municipal Corporation in Maharashtra levies a Street Tax at the rate of 5 per cent of ARV as a piggybacking on Property Tax for part financing an elaborate scheme of improving traffic and transportation (Jha 1998). In the state of Haryana in India, the state government has introduced an elaborate scheme of taxation to moblise revenue for ULGs after the abolition of Octroi (boxes-l and ll). Navi Mumbai Municipal Corporation has given a lead in this regards. It is using CESS on goods coming to city for consumption, production and sale and getting highest amount of own sources from this instrument .Encouraged by this innovation Government. of Maharashtra has introduced Local Body Tax to be levied by all the municipal governments in the state. This has potential to emerge as alternative to Octroi. Tapping Local Elasticity There are several innovations among different states to motivate local community to provide resources for provision of urban infrastructure. Janambhumi, (Andhra) amaknamme Thettam (Tamil Nadu), Community support for social forestry, road construction, public conveniences, footpath etc at Indore and other towns of Madhya Pradesh are examples of local elasticity coming for municipal resources. There are several other examples of local elasticity which need to be followed by ULBs. Suitable mechanism to document, award, adapt and replicate these innovations is needed at local levels. Linking Services with User Charges Property tax is collected under various Municipal Acts with components such as water tax, drainage tax, lighting tax, conservancy tax and general tax. It is desirable that services like water supply, which can be measured and for which beneficiaries can be identified without incurring a huge cost, are financed through user charges. This however requires pricing and costing for the supply of water. After a reform process presently undergoing under JNNURM, it should be possible for several such cities to have scientific costing and pricing. It will also require complete metering and continuity in supply of water. ULBs in India need to be enabled to levy user charges for 175 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure BOX-l: New fiscal Tools Innovated by Cities PUNE: RAIPUR: Box-ll: New Fiscal Tools Innovated in Haryana Street Tax @5 per cent of ARV Use of Land as resource Transfer of Development rights Marketing of FSI Local Area development Tax @ 4 per cent of the value of goods moving from one area to another within the state Niryat Kar (Export Tax) Paryavaran Kar (Environment Tax) Rs. 100 tax on Driving License Tax on Profession, Trade and Callings Fire Tax @ one per cent of ARV Five paise per unit on power consumption Municipal Corporation of Delhi Toll Tax on Commercial Vehicles, Including government Vehicles (a) Tempos and Taxies: Rs. 25 per entrymonthly coupon, Rs. 500) Rs 2,500 per year on hotels, restaurants, banquet halls, petrol pumps, nursing homes, gas agencies, private schools and colleges, furniture show rooms, milk dairies, industrial units. (b) Buses and mini trucks: Rs 50 per entry (monthly coupon, Rs. 1000) Rs. 1,500 per year on private laboratories, commercial colleges, computer centres and show rooms of big companies. (c) Six wheeler trucks: Rs. 50 per entry(monthly coupon Rs. 1500) (d) Ten wheeler trucks and trawlers: Rs. 200 per entry (Monthly coupon Rs. 3000) (e) Sixteen wheeler trawlers: Rs. 500 per entry (Monthly coupon Rs. 5,000 individual services with the goal of full cost recovery. Benefit taxes should be levied when the levy of user charges is not possible. Strengthening the creditworthiness of ULBs requires that they be given autonomous authority to set realistic taxrates and user-charges for the basic services provided by them and also for pursuing right-sizing of staff. Services provided by a public organisation are grouped as (i) public-goods and (ii) merit goods or non-public goods. The latter is fit for application of principle of exclusion. Consumers are identifiable and quantum of services consumed is possible to be measured. In case the consumers do not pay for the services consumed, the service can be disconnected. Water supply, sewerage, urban transport, solid waste collection and parks qualify for imposition of user charges. The economic rationale of cost recovery entails that the user charges have to be based on the unit cost of providing a service. In actual practice, however, the municipal governments are not recovering even the maintenance cost. In India, the maintenance cost recovery through user charges is hardly one-third of the total operations and maintenance cost (NIUA 1993, TRF 1997). Many municipal bodies are, however, levying user charges in quite inefficient manner. Most of them adhere to piggybacking of user charges on PT which itself has depressed base and suffers from a number of infirmities. This makes the service delivery inefficient and inadequate. Efficiency requires to charge "wherever possible "(Bird 1994). Besides being an important tool of cost recovery, User Charges have commendable attributes. User charges enhance efficiency. Like price in a market economy, it provides a signal about the demand for the services to municipal bodies. It ensures economical use of the service by preventing misuse and abuse of the services provided. It disciplines both the users and the abusers and fits into the very economic rationale of local government to improve efficiency, "to ensure that local citizens get in local services what they want, and are willing to pay for" (Bird 1994). All the directly chargeable services have therefore to be charged on the basis of costs. In any scheme of user charge, the needs of lower income groups can be taken care of by working out an innovative cross-subsidy structure based on subsidy from one land use to another, from one income group to another and from one account to another. The Rs. 1,000 per year on workshops, service stations, ice factories, flour mills Mumbai Municipal Corporation's Bombay Electric Supply and Transport (BEST) which provides electricity and transport, electricity account gives subsidy to the transport account, which incurs deficit. Developing Public-Private Partnerships (P3) P-3 has come handy in recent years in the municipal sector due to its several spin-offs. It facilitates financing of urban services, augments the level of services, enhances efficiency of service delivery system, and brings in new technology. P-3 is pushed through either by way of privatisation or by contracting out of services to private operators and providers. Interesting forms of privatization have immerged like BOT, BOOT, BOO, BOLT and others. However, in order to enhance efficiency and effectiveness of the delivery system, municipal government and the urban infrastructure agencies are going for management contract. Privatisation has not yet materialised on a scale as required in less developed economies. There are only sporadic examples of privatisation. Water supply is privatised in Manila. Interestingly, two private providers were granted concession for eastern and western parts of the city to promote competition. After privatisation, the efficiency of the delivery system increased and the tariffs decreased (Dumol 2000). Other examples are Buenos Aires, and Macao. France has had a long history a privatisation of water supply, which is also being practiced in U.K. Indian cities have applied a large number of P3 cases in the area of water supply ( o&m at Navi Mumbai),Solid waste management ( Rajkot,Hyderabad ),Street Lighting ( Hubli Dharwad,Towns of TamilNadu),Parking and Public Conveniences ( New Delhi).These type of best practices need wider Replicability to improve efficiency, mobilise additional resources and promote healthy competition in the delivery of services. At the same time city governments should also perform the task of regulator for these P3 projects to ensure equity. Effective Tax Administration Maladies in tax administration relate to lack of proper assessment of demand, billing and collection. In the state of Gujarat in India, which is amongst some of the progressive states with respect of urban administration, average collection 176 THINKERS & WRITERS FORUM / Compendium of Papers 2009-10 URBAN DEVELOPMENT II Fiscal Decentralisation and Resource Mobilisation for Urban Infrastructure ratio was only about 40 per cent (NIUA 1993). A study for the Eleventh Central Finance Commission in India revealed that 47 per cent of the sample municipal bodies were collecting only up to 50 percent of PT demand. Statistics for other municipal bodies as well depict poor tax collection (Jha 1998). Non-realisation of potential of revenue from tax sources due to poor tax-administration is a major reason for low revenue mobilisation. To give only one example, the first State Finance Commission (SFC) in Rajasthan State in India believed that there was a potential for additional revenue generation of about Rs. 1544 million against the actual generation of Rs. 2129 billion (Rajasthan 1995). Tax collection and generation of additional revenue could be ensured through (i) a scheme of incentives and penalties for municipal staff and the taxpayers and (ii) by profitably adopting the ABC Analysis, which is usually applied in management of inventory in an organisation or a project. An innovative scheme of incentives and penalties tried in Delhi in the recent past led to three times increase in PT revenue in five years (Sharma 1991). Using Land as the Resource Land is emerging as a resource for revenue enhancement. ULBs have started using it in innovative ways. Amongst several innovative use of land as a resource in India, two innovative practices deserve special mention. The City and Industrial Development Corporation (CIDCO) in Navi Mumbai has generated massive funds to finance development of New Mumbai by providing the entire needed urban infrastructure including its connectivity by rail and road over the creek with the island city of Mumbai. The funds generated by using land were used even for providing shelter for the economically weaker sections of the society. CIDCO did not have to spend huge funds for development of New Mumbai. The second example pertains to Delhi. The cost of acquisition and development of land is met from the funds thus generated and the entire sale proceeds of the developed land were credited to the fund. Other Land Based Tools In India, Chennai Municipal Corporation levies a Tax on Vacant Land (VLT) at the rate of Rs. 104 per ground (290 sq. ft.). The Municipal Corporations of Delhi, Kolkata and Mumbai as well levy this tax on the capital value (CV) of land. MCD levies it at the rate of 5 per cent of CV. Mumbai Municipal Corporation levies the same at the rate of 12 per cent of CV. More than generating the resources, VLT is used to regulate the use and development of vacant land, which will add to the housing stock. A number of countries in Latin America, Australia, Syria, Turkey and other Afro-Asian countries have taken recourse to VLT. Peru taxes vacant land on an increasing scale. The rate of tax is doubled every year till the vacant land is developed. In case one owns additional plot of land, it attracts additional tax burden (Smith 1979). In Ecuador, it is levied at the rate of 10 per cent. In Chile, it is levied at the rate of 3 percent, which graduates to 6 percent of land value over a period of three years, and frozen at this. In Buenos Aires (Argentina), Vacant Land Tax is levied at 5 to 10 percent. In Syria, it is levied at a graduated rate on the basis of land values. In Australia, a surcharge of up to 5 percent is levied on unimproved urban land. Vacant land is taxed in Taiwan, Turkey, Senegal, and Korea and even in Pakistan. Tax on Land Value Increment Land values appreciate largely due to improvements brought about by the city governments through city development initiatives. Land Value Increment Tax (LVIT) is used with the basic objective of mopping up some of the land value increment for the use and benefit of the community at large. There are two varieties of LVIT. It is imposed in some countries on the realized increased in land value. In others, it is levied on unrealized value increments. Israel and Malaysia impose this tax on the realized value. Italy, Taiwan levies it on unrealized value. In Sydney (Australia), land value increment is recovered partly through tax at the time of change in zoning from rural to urban at the rate of 30 percent. LVIT, however, is a tax imposed by the central governmental and is not very productive largely due to problems confronted in assessment of land value increments. There are ways, however, to get over the assessment problems and share the proceeds of this tax with the municipal authorities. A popular tax for sharing in the land value increment is Stamp Duty used extensively in India. Municipal Governments in UP and Haryana have access to this instrument; though imposed and administered by the state governments, the proceeds are shared with municipal bodies. As the land value increments are brought about by local development initiatives of municipal governments, there exists a rationale and justification for its devolving to ULGs. Betterment Levy Betterment levy is levied to recover increase in urban land values resulting from implementation of specific urban development project. The proceeds from this levy are used to meet capital cost of the project. It is levied on the project beneficiaries and continues till the full capital cost of the project is recovered. It has, however, been constrained by two problems. First is the element of arbitrariness in assessing the extent of land value increments in quantitative terms. The second is the physical distance of properties from the implemented project up to which the properties are supposed to have benefited. Additionally, how does one distinguish which part of the land value increment is due to natural increase (scarcity value) and which is due to the impact of the project in question? Valorization Charges Practiced in Columbia, it is similar to SAD. Valorisation charges have been used to finance street improvements, sewer extension and similar projects through a system of charging. The cost of public works is allocated to properties that benefit from projects directly. The cost is allocated in direct proportion to benefits conferred (Doebele, Grimes and Linn; Bird 1994) as a cost recovery mechanism; Valorisation Charges are allocated on the basis of assignment of prescribed benefits to properties in the demarcated series of equally wide parallel zones along the project. Adjustments are made to take account of variation in the lot size and frontage.