Why Is ‘Startup India’ Not Focusing On Rural Innovation?

Posted on March 23, 2016 in Business and Economy, Society

By Yatti Soni:

A gardener plants seedlings at the entrance of Start-up Village in Kinfra High Tech Park in the southern Indian city of Kochi October 13, 2012. Three decades after Infosys, India's second-largest software service provider, was founded by middle-class engineers, the country has failed to create an enabling environment for first-generation entrepreneurs. Startup Village wants to break the logjam by helping engineers develop 1,000 Internet and mobile companies in the next 10 years. It provides its members with office space, guidance and a chance to hobnob with the stars of the tech industry. But critics say this may not even be the beginning of a game-changer unless India deals with a host of other impediments - from red tape to a lack of innovation and a dearth of investors - that are blocking entrepreneurship in Asia's third-largest economy. To match Feature INDIA-TECHVILLAGE/ Picture taken October 13, 2012. REUTERS/Sivaram V (INDIA - Tags: BUSINESS EMPLOYMENT SCIENCE TECHNOLOGY) - RTR3B6DT
Image credit: Reuters/Sivaram V.

Indian entrepreneurs are ferociously foraying into hyperlocal, e-commerce, SaaS – all that sounds trendy and more often than not, has a counterpart in Silicon Valley. But do we ever ask ourselves whether a new app on my INR 20k smartphone makes India developed or is it better transportation in rural areas that will bring about development.

According to Poverties.org, 50% of Indians don’t have proper shelter, 70% don’t have access to decent toilets, 35% of households don’t have a nearby water source, 85% of villages don’t have a secondary school and over 40% of the villages don’t have proper roads connecting them.

While E-commerce, Hyperlocal, Food-Tech, Health-tech, Logistics, Cab Hailing are all great technological interventions, none of them address the enormous opportunities in agriculture, health, education, water, sanitation or housing.

According to the estimates of Ashok Gulati, Infosys Chair Professor at ICRIER, 55-60% of India is farm-dependent and still the contribution of agriculture in the national GDP is mere 15-17%; that is nearly two-thirds of India subsisting on just one-seventh of the GDP.

This clearly brings out the poor redistribution of riches in our country. While India’s economy keeps on rocketing at the rate of 9% (approximately), poverty remains pervasive, especially in rural India which makes up for 70% of India’s population.

These figures call for an introspection of our tech-centred vision of growth. As we keep on advancing urban India while neglecting the rural, the already wide gap between rich and poor keeps on broadening and it is chilling to imagine a country which chooses to leave 70% of its countrymen behind.

Therefore, change is required in the way we think and study business, we need to integrate the idea of creating social value in business within the core curriculum of business schools and not seclude it from mainstream economic and business research.

The Fortune at the Bottom of The Pyramid‘ by C.K. Prahalad and Stuart L. Hart, identifies the widely shared assumptions that multi-national corporations have about Tier 4 (population with an annual income of less than $1,500) of the pyramid and also, stands true for many entrepreneurial minds:

• “Assumption 1 – The poor are not our target consumers because with our current cost structures, we cannot profitably compete for that market.
• Assumption 2 -The poor cannot afford and have no use for the products and services sold in urban markets.
• Assumption 3 – Only urban markets appreciate and will pay for new technology.
• Assumption 4 -The bottom of the pyramid is not important to the long-term viability of our business. We can leave Tier 4 to governments and nonprofits.
• Assumption 5 – Intellectual excitement is in urban markets. It is hard to find talent that want to work at the bottom of the pyramid.”

The paper reasons out these assumptions by comparing them to the story of a person who finds a $20 bill on the sidewalk and does not pick it up thinking that if the bill really existed, someone would already have picked it up!

These assumptions can also be refuted by considering the homegrown examples of rural innovation like the SELCO Foundation which facilitates solar lighting in rural areas. The company was essentially conceived in an effort to dispel the myths that poor people cannot afford and maintain sustainable technologies.

The company works on the wonderful model of user segments, each segment is specifically designed to match the customer’s need in terms of usage, as well as finance. “Remove the M from EMI and all of a sudden, even an expensive technology comes within the reach of the ‘poor’,” Harish Hande, co-founder of SELCO, explains in Rashmi Bansal’s I Have A Dream.

C.K. Prahalad and Stuart L. Hart further summarise the idea with, “Perception of market opportunity is a function of the way many managers are socialized to think and the analytical tools they use.”

Thus, the loophole is not our innovations but our idea of development. Most of us have grown to believe that urbanisation is development. This idea has undoubtedly made India the seventh largest economy with a GDP of $2.067 trillion. On the other hand, the same fastest growing economy scores 0.586 on the Human Development Index (HDI) and is being stated as a ‘medium developed’ country by United Nations Development Programme along with others such as Iraq, South Africa and the Philippines.

In order to bust this bipolar image, Indian entrepreneurs must devise technological innovations for the problems of rural India. This will create a link between modernised India and a stagnant rural ‘Bharat’ so that the tech-driven sector can act as an engine that pulls the rural economy along.