Tuesday, August 30, 2005
Online Extra: Jobs That Could Swim Offshore
| Online Extra: Jobs That Could Swim Offshore |
| Nurses and barbers don't need to fear for their livlihoods, say two researchers. Most everyone else, don't be so confident |
Economists J. Bradford Jensen and Lori Kletzer have come up with an inventive way of figuring out whose jobs are vulnerable and whose aren't.
BUNCH FACTOR. The two hold positions at the Institute for International Economics, a Washington, D.C., think tank, and Kletzer is also on the faculty of the University of California at Santa Cruz. Their paper, "Tradable Services: Understanding the Scope and Impact of Services Offshoring" is available on the Web.
Jensen and Kletzer came up with a simple test: If a worker has to be located close to the customer, then the job can't be sent offshore. If the worker can be located far from the customer, the job might qualify for offshoring. After all, they reason, if you can serve a customer in Alabama from New York, you can probably serve her almost as easily from Shanghai or Mumbai.
Next, they assume that customers for most kinds of businesses are spread uniformly across the U.S. If the people serving them are spaced just as thinly and evenly (as, say, barbers and mechanics are), then the work likely requires geographic proximity to the customer. But employees of other businesses are highly bunched -- auto workers in Detroit, stock traders in New York City, moviemakers in Los Angeles. Those people clearly can get their jobs done from afar.
Jensen and Kletzer classify every worker two ways: by occupation and by industry. For example, an in-house counsel for GM (GM) would fall into the "lawyer" and "auto industry" categories. Want to determine your job and industry's vulnerability? The following table demonstrates how Jensen and Kletzer categorize the U.S. workforce.
| Nontradable occupations | Tradable occupations | |
|---|---|---|
| Nontradable industries | 50.03% | 10.79% |
| Tradable industries | 21.64% | 17.54% |
Here's what Jensen told BusinessWeek Economics Editor Peter Coy in an interview about his work with Kletzer:
Q: What gave you the idea of looking for geographic clusters of workers?
A: We used this geographical approach, because doing research on this is hampered by the lack of good detailed data from government sources on what is actually being traded.
Q: Where did you tend to find lots of clusters -- indicating that the jobs are potentially offshorable?
A: In professional and business services, 70% of employment is in the tradable range. It's very concentrated. The most concentrated are software publishing, sound recordings, motion pictures, securities, commodities, funds, and trusts. Most of retail is not traded. Health and education are almost all nontraded.
Q: Everybody knew that factory workers were vulnerable to offshoring, but people might be surprised by your numbers on service businesses.
A: I've heard other economists assert that we don't have to worry about services, because they're mostly nontradable. In fact, many service jobs are tradable. About 14% of the civilian labor force is employed in tradable professional services. That's bigger than the 12% that's in tradable manufacturing jobs.
Q: Does this mean that, just because employment in certain occupations and industries is clustered, that it's likely to go offshore?
A: Not necessarily. [Jensen says Silicon Valley, Wall Street, and Hollywood have built up powerful local networks that would be hard for foreign competition to dislodge.] That said, if you're in an industry that was previously sheltered, and if it's not particularly well aligned with U.S. comparative advantage, bad things can happen.
Crouching Tigers, Hidden Dragons
Plenty of forces can still throw the Chinese and Indian economies far off course. The economic fundamentals of both nations, with their enormous populations of young workers and consumers, point to strong growth for decades under almost every forecast. But it is instructive to remember that financial crashes, coups, political strife, and plain bad management have derailed many other miracle economies from Southeast Asia to Latin America. And the same huge populations that can translate into economic power for China and India also could prove to be a double-edged sword if social, political, and environmental challenges are not deftly managed. Indeed, growth doesn't have to slow all that much to pose serious social problems. Both China and India need annual growth of at least 8% just to provide jobs for the tens of millions joining the workforce each year. Fear of worker unrest is a big reason Beijing has kept stoking its boom with massive lending and growth in the money supply, despite economists' warnings that it is setting the stage for a nasty bust. If India grows only 6.5% a year, which seems a respectable rate, its jobless rate would still jump, resulting in another 70 million unemployed by 2012, forecasts India's Planning Commission.
Slower growth also could keep China and India from fulfilling the widespread predictions that they will become superpowers. For example, in forecasting that India will rank just behind the U.S. as the world's No. 3 economy by mid-century, with a gross domestic product of $30 trillion, Goldman, Sachs & Co. (GS ) assumes 8.5% average annual growth. But what if India grows at less than 6%, its average for the past 20 years? By 2050, it would have only a $7.3 trillion economy -- smaller than Taiwan's even then and just 2.6% of global GDP, notes Stephen Howes, the World Bank's former chief India economist. Worse, India's masses would remain extremely poor. "If you don't grow fast enough, will you have social forces that bring everything to a stalemate?" asks Infosys Technologies Ltd. (INFY ) CEO Nandan M. Nilekani. "That's the worry."
To achieve the high growth predictions, China and India will have to overcome formidable challenges. Some of the biggest:
ENVIRONMENT
Both countries have paid a steep ecological price for rapid industrial and population growth, with millions of deaths attributed to air and water pollution each year. Air quality in big cities like New Delhi, Chongqing, and Bombay is among the world's worst. And forests are vanishing at alarming rates.
Enforcement of environmental laws in both nations is poor. Many power plants and factories depend on coal and don't invest in clean technologies. China is one of the world's most wasteful users of oil. If it does not act quickly, the long-term costs of health problems linked to the environment and the required cleanup will skyrocket. A growing scarcity of water in both nations could slow industry within two decades.
POLITICAL BACKLASH
China's Communist Party harshly represses dissent. But virtually each week brings new reports of big protests in cities and villages over corruption, pollution, or worker abuse. They underscore China's lack of democratic institutions and the widening gap between rich and poor. Serious challenges to Communist rule can still erupt, especially if the economy stalls. Judging from history, the process could be tumultuous.
India has a democracy, but it also has extremely unbalanced growth and rampant corruption. The surprise electoral defeat of the ruling Bharatiya Janata Party by a more populist coalition led by Sonia Gandhi's Congress Party in 2004 served as a warning of mass discontent. The new government also is reform-minded, but the pace of economic liberalization has slowed. Further electoral setbacks for reformers are possible if the poor don't see the benefits of growth. Tensions between Hindus and Muslims have eased after bloody riots in 2003 and 2004. But communal violence remains a threat.
FINANCIAL CRISIS
Debt and currency crises have derailed many high-flying emerging markets. India needed an International Monetary Fund bailout in 1991. China withstood the 1997 Asian financial crisis mainly because they lack convertible currencies. Also, Beijing controls the banks. Bailouts and the banks' near-monopoly over China's vast domestic savings have kept them solvent despite mountains of bad loans to state firms.
In 2006, however, Beijing will start letting foreign banks compete for deposits and domestic loans. That could put more financial pressure on state banks. China also is starting to loosen its currency controls a bit. China has plenty of foreign reserves now. But if Beijing can't whip its banks into shape, there's a danger that financial market liberalization will go wrong, leading to a crash. India's financial system is in stronger shape, but its public finances remain a mess, with budget deficits at the federal and state level reaching 10% of GDP.
HEALTH
Perhaps China's biggest worry over the long term is inadequate medical care for its rapidly aging population. In 20 years, China will have an estimated 300 million people age 60 or older. Yet only one in six Chinese workers now has a pension plan, and just 5% have guaranteed medical benefits. What's more, many retirees will not be able to rely on children for support. Beijing promises to build a broader safety net, but adequate health care and pensions could consume a huge portion of GDP and deplete China's economic strength in the future.
Both nations also could face full-blown crises with AIDS, tuberculosis, avian flu, and other infectious diseases, and their health systems have been slow to mobilize. At least 5 million Indian adults are infected with HIV, one of the world's highest rates outside sub-Saharan Africa. India's National Intelligence Council predicts the number could pass 20 million in 2010. The U.N. estimates the number of Chinese with HIV could hit 10 million in five years. Some 200,000 Chinese also die annually of TB. And a serious flu epidemic could kill millions. "Many investors don't appreciate the economic damage a serious outbreak would cause in our crowded cities," says Subroto Bagchi, chief operating officer of Bangalore info-tech services firm MindTree Consulting Ltd.
WAR
India and neighboring Pakistan have fought three times since their independence in 1947 -- and have had many border skirmishes over Kashmir. Now, both nations possess nuclear weapons, so a war could be catastrophic. New Delhi and Islamabad have recently eased tensions and begun peace talks. But the rise to power of a radical Islamic regime in Pakistan, or election of a stridently Hindu nationalist government in India, could easily reignite tensions. China's biggest flash point remains Taiwan. Beijing has cooled its fiery rhetoric lately, but still vows to invade should the island declare independence. Any war in the Taiwan Strait would likely involve the U.S. and possibly Japan -- China's two biggest trade partners -- and paralyze shipping in and out of China's southern ports. It also would likely result in long-term Sino-U.S. tensions that would spill into trade.
It's too much to expect for any developing nation to avoid military, financial, environmental, and health crises for decades. But the test for a great power is how well it manages a great crisis.
By Pete Engardio
Chindia Challenge
A New World Economy
It may not top the must-see list of many tourists. But to appreciate Shanghai's ambitious view of its future, there is no better place than the Urban Planning Exhibition Hall, a glass-and-metal structure across from People's Square. The highlight is a scale model bigger than a basketball court of the entire metropolis -- every skyscraper, house, lane, factory, dock, and patch of green space -- in the year 2020.
There are white plastic showpiece towers designed by architects such as I.M. Pei and Sir Norman Foster. There are immense new industrial parks for autos and petrochemicals, along with new subway lines, airport runways, ribbons of expressway, and an elaborate riverfront development, site of the 2010 World Expo. Nine futuristic planned communities for 800,000 residents each, with generous parks, retail districts, man-made lakes, and nearby college campuses, rise in the suburbs. The message is clear. Shanghai already is looking well past its industrial age to its expected emergence as a global mecca of knowledge workers. "In an information economy, it is very important to have urban space with a better natural and social environment," explains Architectural Society of Shanghai President Zheng Shiling, a key city adviser.
It is easy to dismiss such dreams as bubble-economy hubris -- until you take into account the audacious goals Shanghai already has achieved. Since 1990, when the city still seemed caught in a socialist time warp, Shanghai has erected enough high-rises to fill Manhattan. The once-rundown Pudong district boasts a space-age skyline, some of the world's biggest industrial zones, dozens of research centers, and a bullet train. This is the story of China, where an extraordinary ability to mobilize workers and capital has tripled per capita income in a generation, and has eased 300 million out of poverty. Leaders now are frenetically laying the groundwork for decades of new growth.
INVALUABLE ROLE
Now hop a plane to India. It is hard to tell this is the world's other emerging superpower. Jolting sights of extreme poverty abound even in the business capitals. A lack of subways and a dearth of expressways result in nightmarish traffic.
But visit the office towers and research and development centers sprouting everywhere, and you see the miracle. Here, Indians are playing invaluable roles in the global innovation chain. Motorola, (MOT ) Hewlett-Packard (HPQ ), Cisco Systems (CSCO ), and other tech giants now rely on their Indian teams to devise software platforms and dazzling multimedia features for next-generation devices. Google (GOOG ) principal scientist Krishna Bharat is setting up a Bangalore lab complete with colorful furniture, exercise balls, and a Yamaha organ -- like Google's Mountain View (Calif.) headquarters -- to work on core search-engine technology. Indian engineering houses use 3-D computer simulations to tweak designs of everything from car engines and forklifts to aircraft wings for such clients as General Motors Corp. (GM ) and Boeing Co (BA ). Financial and market-research experts at outfits like B2K, OfficeTiger, and Iris crunch the latest disclosures of blue-chip companies for Wall Street. By 2010 such outsourcing work is expected to quadruple, to $56 billion a year.
Even more exhilarating is the pace of innovation, as tech hubs like Bangalore spawn companies producing their own chip designs, software, and pharmaceuticals. "I find Bangalore to be one of the most exciting places in the world," says Dan Scheinman, Cisco Systems Inc.'s senior vice-president for corporate development. "It is Silicon Valley in 1999." Beyond Bangalore, Indian companies are showing a flair for producing high-quality goods and services at ridiculously low prices, from $50 air flights and crystal-clear 2 cents-a-minute cell-phone service to $2,200 cars and cardiac operations by top surgeons at a fraction of U.S. costs. Some analysts see the beginnings of hypercompetitive multinationals. "Once they learn to sell at Indian prices with world quality, they can compete anywhere," predicts University of Michigan management guru C.K. Prahalad. Adds A. T. Kearney high-tech consultant John Ciacchella: "I don't think U.S. companies realize India is building next-generation service companies."
SIMULTANEOUS TAKEOFFS
China and India. Rarely has the economic ascent of two still relatively poor nations been watched with such a mixture of awe, opportunism, and trepidation. The postwar era witnessed economic miracles in Japan and South Korea. But neither was populous enough to power worldwide growth or change the game in a complete spectrum of industries. China and India, by contrast, possess the weight and dynamism to transform the 21st-century global economy. The closest parallel to their emergence is the saga of 19th-century America, a huge continental economy with a young, driven workforce that grabbed the lead in agriculture, apparel, and the high technologies of the era, such as steam engines, the telegraph, and electric lights.
But in a way, even America's rise falls short in comparison to what's happening now. Never has the world seen the simultaneous, sustained takeoffs of two nations that together account for one-third of the planet's population. For the past two decades, China has been growing at an astounding 9.5% a year, and India by 6%. Given their young populations, high savings, and the sheer amount of catching up they still have to do, most economists figure China and India possess the fundamentals to keep growing in the 7%-to-8% range for decades.
Barring cataclysm, within three decades India should have vaulted over Germany as the world's third-biggest economy. By mid-century, China should have overtaken the U.S. as No. 1. By then, China and India could account for half of global output. Indeed, the troika of China, India, and the U.S. -- the only industrialized nation with significant population growth -- by most projections will dwarf every other economy.
What makes the two giants especially powerful is that they complement each other's strengths. An accelerating trend is that technical and managerial skills in both China and India are becoming more important than cheap assembly labor. China will stay dominant in mass manufacturing, and is one of the few nations building multibillion-dollar electronics and heavy industrial plants. India is a rising power in software, design, services, and precision industry. This raises a provocative question: What if the two nations merge into one giant "Chindia?" Rival political and economic ambitions make that unlikely. But if their industries truly collaborate, "they would take over the world tech industry," predicts Forrester Research Inc (FORR ). analyst Navi Radjou.
In a practical sense, the yin and yang of these immense workforces already are converging. True, annual trade between the two economies is just $14 billion. But thanks to the Internet and plunging telecom costs, multinationals are having their goods built in China with software and circuitry designed in India. As interactive design technology makes it easier to perfect virtual 3-D prototypes of everything from telecom routers to turbine generators on PCs, the distance between India's low-cost laboratories and China's low-cost factories shrinks by the month. Managers in the vanguard of globalization's new wave say the impact will be nothing less than explosive. "In a few years you'll see most companies unleashing this massive productivity surge," predicts Infosys Technologies (INFY ) CEO Nandan M. Nilekani.
To globalization's skeptics, however, what's good for Corporate America translates into layoffs and lower pay for workers. Little wonder the West is suffering from future shock. Each new Chinese corporate takeover bid or revelation of a major Indian outsourcing deal elicits howls of protest by U.S. politicians. Washington think tanks are publishing thick white papers charting China's rapid progress in microelectronics, nanotech, and aerospace -- and painting dark scenarios about what it means for America's global leadership.
Such alarmism is understandable. But the U.S. and other established powers will have to learn to make room for China and India. For in almost every dimension -- as consumer markets, investors, producers, and users of energy and commodities -- they will be 21st-century heavyweights. The growing economic might will carry into geopolitics as well. China and India are more assertively pressing their interests in the Middle East and Africa, and China's military will likely challenge U.S. dominance in the Pacific.
One implication is that the balance of power in many technologies will likely move from West to East. An obvious reason is that China and India graduate a combined half a million engineers and scientists a year, vs. 60,000 in the U.S. In life sciences, projects the McKinsey Global Institute, the total number of young researchers in both nations will rise by 35%, to 1.6 million by 2008. The U.S. supply will drop by 11%, to 760,000. As most Western scientists will tell you, China and India already are making important contributions in medicine and materials that will help everyone. Because these nations can throw more brains at technical problems at a fraction of the cost, their contributions to innovation will grow.
CONSUMERS RISING
American business isn't just shifting research work because Indian and Chinese brains are young, cheap, and plentiful. In many cases, these engineers combine skills -- mastery of the latest software tools, a knack for complex mathematical algorithms, and fluency in new multimedia technologies -- that often surpass those of their American counterparts. As Cisco's Scheinman puts it: "We came to India for the costs, we stayed for the quality, and we're now investing for the innovation."
A rising consumer class also will drive innovation. This year, China's passenger car market is expected to reach 3 million, No. 3 in the world. China already has the world's biggest base of cell-phone subscribers -- 350 million -- and that is expected to near 600 million by 2009. In two years, China should overtake the U.S. in homes connected to broadband. Less noticed is that India's consumer market is on the same explosive trajectory as China five years ago. Since 2000, the number of cellular subscribers has rocketed from 5.6 million to 55 million.
What's more, Chinese and Indian consumers and companies now demand the latest technologies and features. Studies show the attitudes and aspirations of today's young Chinese and Indians resemble those of Americans a few decades ago. Surveys of thousands of young adults in both nations by marketing firm Grey Global Group found they are overwhelmingly optimistic about the future, believe success is in their hands, and view products as status symbols. In China, it's fashionable for the upwardly mobile to switch high-end cell phones every three months, says Josh Li, managing director of Grey's Beijing office, because an old model suggests "you are not getting ahead and updated." That means these nations will be huge proving grounds for next-generation multimedia gizmos, networking equipment, and wireless Web services, and will play a greater role in setting global standards. In consumer electronics, "we will see China in a few years going from being a follower to a leader in defining consumer-electronics trends," predicts Philips Semiconductors (PHG ) Executive Vice-President Leon Husson.
For all the huge advantages they now enjoy, India and China cannot assume their role as new superpowers is assured. Today, China and India account for a mere 6% of global gross domestic product -- half that of Japan. They must keep growing rapidly just to provide jobs for tens of millions entering the workforce annually, and to keep many millions more from crashing back into poverty. Both nations must confront ecological degradation that's as obvious as the smog shrouding Shanghai and Bombay, and face real risks of social strife, war, and financial crisis.
Increasingly, such problems will be the world's problems. Also, with wages rising fast, especially in many skilled areas, the cheap labor edge won't last forever. Both nations will go through many boom and harrowing bust cycles. And neither country is yet producing companies like Samsung, Nokia (NOK ), or Toyota (TM ) that put it all together, developing, making, and marketing world-beating products.
Both countries, however, have survived earlier crises and possess immense untapped potential. In China, serious development only now is reaching the 800 million people in rural areas, where per capita annual income is just $354. In areas outside major cities, wages are as little as 45 cents an hour. "This is why China can have another 20 years of high-speed growth," contends Beijing University economist Hai Wen.
Very impressive. But India's long-term potential may be even higher. Due to its one-child policy, China's working-age population will peak at 1 billion in 2015 and then shrink steadily. China then will have to provide for a graying population that has limited retirement benefits. India has nearly 500 million people under age 19 and higher fertility rates. By mid-century, India is expected to have 1.6 billion people -- and 220 million more workers than China. That could be a source for instability, but a great advantage for growth if the government can provide education and opportunity for India's masses. New Delhi just now is pushing to open its power, telecom, commercial real estate and retail sectors to foreigners. These industries could lure big capital inflows. "The pace of institutional changes and industries being liberalized is phenomenal," says Chief Economist William T. Wilson of consultancy Keystone Business Intelligence India. "I believe India has a better model than China, and over time will surpass it in growth."
For its part, China has yet to prove it can go beyond forced-march industrialization. China directs massive investment into public works and factories, a wildly successful formula for rapid growth and job creation. But considering its massive manufacturing output, China is surprisingly weak in innovation. A full 57% of exports are from foreign-invested factories, and China underachieves in software, even with 35 software colleges and plans to graduate 200,000 software engineers a year. It's not for lack of genius. Microsoft Corp.'s (MSFT ) 180-engineer R&D lab in Beijing, for example, is one of the world's most productive sources of innovation in computer graphics and language simulation.
While China's big state-run R&D institutes are close to the cutting edge at the theoretical level, they have yet to yield many commercial breakthroughs. "China has a lot of capability," says Microsoft Chief Technology Officer Craig Mundie. "But when you look under the covers, there is not a lot of collaboration with industry." The lack of intellectual property protection, and Beijing's heavy role in building up its own tech companies, make many other multinationals leery of doing serious R&D in China.
China also is hugely wasteful. Its 9.5% growth rate in 2004 is less impressive when you consider that $850 billion -- half of GDP -- was plowed into already-glutted sectors like crude steel, vehicles, and office buildings. Its factories burn fuel five times less efficiently than in the West, and more than 20% of bank loans are bad. Two-thirds of China's 1,300 listed companies don't earn back their true cost of capital, estimates Beijing National Accounting Institute President Chen Xiaoyue. "We build the roads and industrial parks, but we sacrifice a lot," Chen says.
India, by contrast, has had to develop with scarcity. It gets scant foreign investment, and has no room to waste fuel and materials like China. India also has Western legal institutions, a modern stock market, and private banks and corporations. As a result, it is far more capital-efficient. A BusinessWeek analysis of Standard & Poor's (MHP ) Compustat data on 346 top listed companies in both nations shows Indian corporations have achieved higher returns on equity and invested capital in the past five years in industries from autos to food products. The average Indian company posted a 16.7% return on capital in 2004, vs. 12.8% in China.
SMALL-BATCH EXPERTISE
The burning question is whether India can replicate China's mass manufacturing achievement. India's info-tech services industry, successful as it is, employs fewer than 1 million people. But 200 million Indians subsist on $1 a day or less. Export manufacturing is one of India's best hopes of generating millions of new jobs.
India has sophisticated manufacturing knowhow. Tata Steel is among the world's most-efficient producers. The country boasts several top precision auto parts companies, such as Bharat Forge Ltd. The world's biggest supplier of chassis parts to major auto makers, it employs 1,200 engineers at its heavily automated Pune plant. India's forte is small-batch production of high-value goods requiring lots of engineering, such as power generators for Cummins Inc. (CMI ) and core components for General Electric Co. (GE ) CAT scanners.
What holds India back are bureaucratic red tape, rigid labor laws, and its inability to build infrastructure fast enough. There are hopeful signs. Nokia Corp. is building a major campus to make cell phones in Madras, and South Korea's Pohang Iron & Steel Co. plans a $12 billion complex by 2016 in Orissa state. But it will take India many years to build the highways, power plants, and airports needed to rival China in mass manufacturing. With Beijing now pushing software and pledging intellectual property rights protection, some Indians fret design work will shift to China to be closer to factories. "The question is whether China can move from manufacturing to services faster than we can solve our infrastructure bottlenecks," says President Aravind Melligeri of Bangalore-based QuEST, whose 700 engineers design gas turbines, aircraft engines, and medical gear for GE and other clients.
However the race plays out, Corporate America has little choice but to be engaged -- heavily. Motorola illustrates the value of leveraging both nations to lower costs and speed up development. Most of its hardware is assembled and partly designed in China. Its R&D center in Bangalore devises about 40% of the software in its new phones. The Bangalore team developed the multimedia software and user interfaces in the hot Razr cell phone. Now, they are working on phones that display and send live video, stream movies from the Web, or route incoming calls to voicemail when you are shifting gears in a car. "This is a very, very critical, state-of-the-art resource for Motorola," says Motorola South Asia President Amit Sharma.
Companies like Motorola realize they must succeed in China and India at many levels simultaneously to stay competitive. That requires strategies for winning consumers, recruiting and managing R&D and professional talent, and skillfully sourcing from factories. "Over the next few years, you will see a dramatic gap opening between companies," predicts Jim Hemerling, who runs Boston Consulting Group's Shanghai practice. "It will be between those who get it and are fully mobilized in China and India, and those that are still pondering."
In the coming decades, China and India will disrupt workforces, industries, companies, and markets in ways that we can barely begin to imagine. The upheaval will test America's commitment to the global trade system, and shake its confidence. In the 19th century, Europe went through a similar trauma when it realized a new giant -- the U.S. -- had arrived. "It is up to America to manage its own expectation of China and India as either a threat or opportunity," says corporate strategist Kenichi Ohmae. "America should be as open-minded as Europe was 100 years ago." How these Asian giants integrate with the rest of the world will largely shape the 21st-century global economy.
Thursday, August 18, 2005
In rural Gujarat, why they say cheese
Sunday, August 14, 2005
India empowered means knowledge in village
'India empowered means knowledge in village'
Posted online: Sunday, August 14, 2005 at 0437 hours IST
Updated: Sunday, August 14, 2005 at 1331 hours IST
A new situation is emerging in India. Very rarely in history have we come across such a constellation: an ascending economic trajectory, rising foreign exchange reserves, reducing inflation rates, global recognition of technological competence, energy of 540 million youth, umbilical connectivities of 20 million people of Indian origin abroad, and the interest shown by developed countries to invest in our engineers and scientists, including in new R&D centres.
THIS discussion will be in five parts. The first part cites experiences with knowledge centres working in the country. The second part presents a case for Village Knowledge Centres in relation to the integrated development of rural areas through PURA.
The third part deals with examples of PURA in action. The fourth part presents the working domain services for effective knowledge acquisition to the PURA complexes. The final part consolidates the flow chart of data needed for farmers, fishermen and the entire rural population in an integrated way for sustainable development.
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IN June 2005, when I visited Nagapattinam, I saw the Village Resource Centre established by the Tata Tsunami Relief Committee in association with the M.S. Swaminathan Research Foundation at Akkaraipettai.
Speaking to the young members operating the system, I found they were helping locals by imparting education through computers, helping the Self Help Group Members to maintain their accounts, providing weather and sea state forecast data.
While it was very good, the important issue of providing a live database on various services to fishermen and farmers needs to be upgraded. This has to be a coordinated effort.
Recently, I inaugurated six Village Resource Centres in Ettimadi, Coimbatore district, Tamil Nadu, established by Amrita Vishwa Vidyapeetam in partnership with ISRO. They provide tele-education and tele-medicine to six villages in Tamil nadu and Kerala through video conferencing.
I also understand the RASI Scheme of Tamil Nadu, implemented at Mellur taluk in Madurai district, is providing knowledge connectivity to villages. This enables local unemployed youth to set up village kiosks to provide computer literacy, Internet access through CorDECT Wireless system with a limited bandwidth and allows small value-added services through computers, with digital photographs as well as e-mail access.
This also helps villagers get birth certificates from local government authorities and healthcare advice from the Madurai Arvind Eye Hospital through e-mail.
I appreciate the efforts by these organisations for knowledge enabling the villagers at the Village Knowledge Centres (VKC). These VKCs will act as a knowledge-delivery tool. How to equip the VKCs with knowledge and purpose in an integrated way, within a sustainable developmental framework, is the challenge.
Pure is as PURA does
NEARLY 700 million Indians live in 600,000 villages across rural India. Connectivity of village complexes providing economic opportunities to all segments of people is an urgent need. We need to innovate to increase connectivities to the villages, making clusters out of them even while retaining their individuality.
The integrated method that will bring prosperity to rural India is called PURA or Providing Urban Amenities to Rural Areas. This envisages four connectivities: physical connectivity through quality roads and transport; electronic connectivity through telecom with high bandwidth fibre optic cables; knowledge connectivity through education, skill training for farmers, artisans and craftsmen and entrepreneurship programmes.
These three connectivities will lead to economic connectivity through starting of enterprises with the help of banks, micro-credit and marketing of products. We need to establish 7,000 PURA complexes in the country, encompassing 2.3 lakh village panchayats.
FOR providing knowledge connectivity to PURA complexes, VKCs will act as frontline delivery systems. The VKC should provide the essential data required for the targeted population such as farmers, fishermen, craftsmen, traders, businessmen, entrepreneurs, unemployed youth, and students. It has to be acquired by visiting the village, talking to the rural people, by understanding their requirement and core competence.
Providing meteorological data for both farmers and fishermen has to be area specific, covering say 20 or 30 villages in the vicinity of the sea coast or farming area. Local relevance of information offered is essential.
Users have simple needs of information but often it is tough for system integrators because of the need to update data. Trained manpower has to be deployed to generate information that can explain in simple terms the meteorological data, weather data, marketing data on fish, agricultural and other rural commodities.
This data has to come from various connected institutions that provide service to the people on a timely basis. But the transformation of data into user-friendly information is the real challenge.
The main focus of the VKC should be to empower youth to undertake development tasks of villages and establish rural enterprises that will provide largescale employment. So it is essential to skill enable and knowledge enable through academic institutions, industry, banking and marketing institutions. The VKC should act as a facilitator. Blended knowledge is better knowledge.
Nuts and bolts of connectivity
A low-cost multi-task handheld computer with GPS and wireless mobility should be developed and should reach fishermen and farmers. They should add value to this tool for their benefit to increase their earning capacity. Every VKC should have a computer terminal, wireless (Wi-Max) connection or fibre broadband or satellite connectivity to connect to the nodal centres for acquisition of knowledge and dissemination of updated real-time data.
Each PURA should have ‘‘Nodal PURA Knowledge Data Centres’’, which should be the hub for all activities. These Centres should be linked to the nominated domain service providing organisations in agriculture — including fisheries, cottage and small-scale industries and commerce, education and HRD, and healthcare. These domain institutions will have a mechanism to create continuously updated information systems needed to service the VKC.
PURA in action
I have visited many rural areas, and seen working systems of PURA such as the Gujarat-BAIF model and the Vallam Periyar PURA model near Thanjavur. I have also recently visited tsunami-affected villages of Nagapattinam and suggested the implementation of ‘‘coastal PURA’’ to the district administration.
The Bharatiya Agro-Industries Foundation (BAIF) is an integrated village cluster development programme in two village clusters, Chonda and Lachakadi, in south Gujarat. Every summer, tribal people used to migrate to nearby towns. The BAIF model was installed in these two villages with the cooperation of the people and the participation of state authorities. Water harvesting was undertaken.
Every home was provided with livestock and also a market for milk. Simultaneously, fruit orchards were established with various fruit crops such as cashew and mangoes, tolerant to drought.
Today, the tribal population is harvesting crops, packaging and carrying milk to different supply points. The project was implemented through self-help groups. The groups took the responsibility of helping weaker members, which boosted progress. The results were phenomenal.
LAST year I visited the Periyar Maniammai College of Technology for Women and inaugurated the Periyar PURA Complex. Over 65 villages near Vallam, Thanjavur, Tamil Nadu, have been transformed as a PURA cluster.
This PURA complex has all three connectivities — physical connectivity, with a circular road and interconnecting roads covering major villages, along with bus transport; electronic connectivity through Internet kiosks; knowledge connectivity through the academic bakcground of the promoting agency — leading to economic connectivity of 65 villages.
The centre of activity is the engineering college for women that provides the electronic and knowledge connectivity. Periyar PURA has healthcare centres, primary to post-graduate education and vocational training centres.
This has resulted in largescale employment generation and creation of entrepreneurs with the active support of 850 self-help groups. They have innovative water management schemes for irrigation and providing potable water for all village citizens.
ALL 65 Periyar PURA villages have only rain-fed irrigation. Two hundred acres of wasteland have been developed into cultivable land with innovative water management schemes, such as contour ponds and watersheds. Villagers are busy in either cultivation, planting Jatropha, herbal and medicinal plants, power generation using bio-mass, food processing and, above all, running marketing centres.
Due to shortage of rainfall in that locality, farmers were suffering water scarcity, for agriculture and for drinking. Periyar PURA developed six percolation ponds and five check dams to harness rainwater amounting to 2.73 lakh cubic metres per year.
This water is supporting the irrigation of 300 acres of land through recharging open wells and borewells. It also supplies drinking water to the people. More than 5,000 farmers are benefiting from this programme.
Recently Periyar PURA has introduced a number of employment-oriented schemes for tsunami-affected Nagapattinam villages and trained self-help groups in tile making, paper manufacturing, alternative building blocks manufacturing. This lone engineering college has empowered villagers through skill-oriented training, provision of finance and provision of market connectivity for their produce.
PURA on the coast
WHEN I visited Nagapattinam, after reviewing the tsunami rehabilitation schemes, I proposed coastal PURAs, ideal for bringing sustainable prosperity to this region. The salient features of this PURA are the following:
• Physical connectivity: Construction of jetties and small and medium-sized boat-landing centres on the coast in the interval of 10 to 15 km. Each of these will have a good link road to the main coastal road. Establishment of community sheds for repair of nets, storing the nets and related equipment of the fishermen.
• Electronic connectivity: All the fishing villages in the coastal areas have to be linked with the district HQ through broadband fibre and wireless connectivities. Fishermen should be provided with broadcasting facilities through satellite radios and the HAMSAT network. Mobile phones with GPS facility may be provided for each boat for emergency communication.
This will also provide the local fishing population meteorological and sea state data through SMS from the VKCs.
• Knowledge connectivity: The government should facilitate the training of fishermen in cost-effective yet safe fishing techniques, application of technology for improving productivity, storage and preservation systems and marketing, banking and financing systems through the district HQ and connected VKCs. It must also provide adequate warning data for fishermen out at sea.
• Economic connectivity: These three connectivities will motivate and enable the local population to create cold storage infrastructure, fish processing and packaging and marketing for realising the value-added price.
This will also provide alternative employment-oriented schemes during non-fishing days, and for people who are involved in agriculture and other activities.
Here I would like to appreciate the work of the Alaimagal Self-Help Group, which in partnership with DRDA and NGOs has successfully got an export order of quality candles and other crafts products to the Netherlands. Such activities should be the objective of our rural development schemes.
So far, we have focused on ‘‘live’’ PURAs in action and on VKCs. How do we get the periodically updated and relevant information to the VKCs, so that the best knowledge base is available to farmers, fishermen and craftsmen?
Call centres for kisans
I have studied a system currently used by farmers and fishermen in different parts of the country. This is the Kisan Call Centre (KCC), established by the Ministry of Agriculture in partnership with Telecommunication Consultants India Ltd (TCIL), an enterprise under the inistry of Communication and IT.
The KCC offers three levels of interaction and support in agriculture, fisheries and animal husbandry domains, through national experts and corresponding directorates at the Central level.
In its one year of operation, the call centre has provided consultancy, information, assistance and guidance to over five lakh callers from eight states. Anywhere in India, people can call 1551 as a toll free number to access the service. The top users are Maharastra and Tamil Nadu, followed by Uttar Pradesh and Rajasthan.
I have studied some of the typical questions answered by the call centres:
• From Warangal: In cotton, what are the suitable varieties to be taken and when can we avail the varieties?
• From Anathapur: What is the seed treatment of groundnut, with dosage?
• From Cuddapah: What are the ways to get citrus fruits ripened quickly?
• From Indore: In which market will I get a good price for my cotton produce?
• From Jalandhar: What is the method of controlling yellowing in a paddy nursery?
These questions were answered by KCC agricultural and fisheries specialists. This is the working system for providing domain services in agriculture, fisheries and animal husbandry.
Typical knowledge requirements in agriculture extend to soil, seed, water management, post-harvest management, productivity increase, crop insurance, banking and financial systems, education, healthcare, and employment or entrepreneurial opportunities.
Flow chart for rural knowledge
AS we have seen in the KCC example, similar domain service provider call centres are required in commerce and industry, entrepreneurial skill development and employment generation, travel and tourism, banking and insurance, meteorological forecasting, disaster warning, education and HRD, and healthcare.
These call centres will act as service providers to the PURA Nodal Knowledge Data Centres located in the PURA complexes, which in turn will provide the area-specific and customised knowledge to the VKCs.
THERE have been many attempts across the country in taking information and communication technology (ICT) to rural areas. Each of the proponents of these efforts is passionately attached to the core idea and continues to pursue it even when it does not make economic sense or when it is proven not scalable or sustainable. Some of these efforts are successful only when centred on a creative leader.
What we need now is a serious and impartial review to decide on the best practices for nationwide deployment — a ‘‘best of breed’’ solution for sustainable PURA.
Technology is the instrument for providing non-linear growth to our economy. Hence PURA driven by technology for sustainable rural development will bridge the rural-urban divide. Access to technology is the means to generate employment potential for sustainable rural prosperity.
VILLAGE Knowledge Centres are the essential component for realising our goal of graduating to a knowledge society and India’s transformation to a developed country by 2020.
Higher the knowledge dissemination and its absorption by society, wider the perspectives of its citizens — leading to reduction in societal tensions and increasing cooperation and collaboration. Dimensions of political, societal and media thinking will also be wider and focused on relevant aspects of social and economic development.
