School drop-outs rate is very high in Rural India. Why?

School-drop out is a serious problem in Rural India (even in urban areas but just the magnitude). If we try to analyze why is this so, the first reason appears to be the supply issue. Government controls education sector in such a manner that the schools operating margins hit badly. Apart from the license/quota issue there seems to be 3 major issues:

1. Teaching styles
2. English
3. Mathematics

1. Teaching styles: Most of the teachers (and coupled by the parents in home) impose learning processes on child. The teachers/parents themselves are badly taught and so they viciously follow the cycle.

Learning is a joy. The children should feel that it is like a roller-caster ride. To get to that level, children should be taught how to learn. For example, they should be told as many as stories. Exercise to the kids on this would be to tell many more stories to other children. Children must be formed into a group of 5-10 and then teacher must guide each group. This is basically a process of peer review. They can source the new stories from parents, neighborhood, friends, relatives etc. And in fact, children are natural at creating their own stories. Songs and dance are very natural to them and TV, mobiles, competitions, etc can help in this regard.

2. English: Children are exceptionally talented to learn multiple languages at their very early ages. Most children in rural India struggle with the grammar rules and in turn they start to hate the language itself. The trick is to make them learn spoken language first and then to turn to Grammar but not the other way around.

3. Mathematics: Maths is a very critical subject and children are very natural at it. However the astounding ability to learn the subject by the children is eclipsed by the incompetency of the teachers in turn to result that Maths is regarded as the most hated subject by a minimum of 1/3 of the all children. I think children should learn it through games. Classes 1-6 should only consist of a variety of games. All exercises should be again to play at home with other kids at neighborhood areas.

Why sachets are popular in Rural India?

Rural people consume most products such as shampoo, biscuits, tooth powder, etc in micro units. This is majorly linked to the fact that they earn in daily or weekly wages. The following discussion is to reason out why do they prefer daily/weekly wages in turn to explain the popularity of shampoo sachets (and not a shampoo bottle).

If you visit any rural household or a surrounding retail stores please observe what kind of things they have. Tooth powder in sachet, Coconut oil in sachet, Fail & Lovely in sachet, only one soap bar (though they might be using multiple soaps in a month), small biscuit packet (Do you know the very popular Britannia Tiger?? it just contains 3 pieces instead of regular 10 pieces), the telephone usage with a 1 Re coin box, mobile phone usage in small top-ups (10/- or so), chota pepsi, etc. Basically consumption world is a miniature here.

Basic reason for this micro-units of consumption is to use them for a day or for at most a week. Their consumption budget is just about a week or less. That is because their earnings fall under in similar periods. Typically in rural locations, the work contract period is about a week or less. In fact, it is day-contracts which rules here.

Before proceeding further discussion on these consumption patterns, let me talk about an interesting topic and it is about you (Yes, I am talking about you, the reader). Assume, after a shopping exercise, you came out of a shop to return your home. As you are with some luggage, you wanted to return home with a auto-rickshaw. You found 3 autos standing on the road and you know it takes about 45/- to reach your home. When you asked each auto driver, you were told 3 prices, first guy – 100/-, second guy – 50/- third guy – 10/-. Then which one will you take to reach home? and why? Think for a while before reading further.

Coming back to our original discussion, rural people plan weekly budgets unlike the Indian government which does 5-year budgets. As we have seen before that is because rural people earn in similar periods. And surprisingly, it is their choice to earn in daily but not monthly. Yes, you read it right, it is their preference. Why is that so? It is because, their logical capability to think is very limited. Just like birds, they can do additions up to 10, beyond which it is difficult for them to count. To understand things for a year period, you need to foresee a lot of things, and plan accordingly. This requires arithmetic skill-set. So it is skill-set deficiency that makes an issue with them. Again, what exactly is the issue??

By the way, did you find out which auto you would prefer? I am damn sure that it is not the one which charges 100/-. Moreover, it is not the auto that charges 10/- either. Second guy who charges 50/-, which is a little more than the usual charge of 45/-, is the one you prefer. Why is that so? Why do you wish to pay higher, when there is a guy who would take you as cheap as 10/- (and in fact, you are willing to pay more than the usual charge)? The reason is simple. You know that it is not economically feasible for him to run at 10/-. Because you know if the usual charge is 45/-, then any auto must be making 10-15/- (or 25%-40% margin). This means actual cost is about 30/-. Then you would start doubting the guy who just charges 10/- instead of some price more than the actual cost of transportation, that is 30/-. You would believe that he would make money in another fashion perhaps by robbing you or so and not by direct charge. That’s what is known as fear of uncertainty. No one likes to take unknown risk.

Rural Indians can’t take decisions beyond a week or more is due to their incapability of logical thinking or arithmetic calculations. Beyond anyone’s capability falls under uncertainty. Rural people don’t wish take those unknown risks. This is the reason for their earnings in short periods, and so, they spend on micro-units of consumable goods.

As you see, arithmetic or logical skill-sets are so much important in life.

Accountability to the world at large!

I consume more resources (both intellectual resources-ideas, knowledge, etc and physical resources-land,water,air,etc) than an average person in this world. As I use these worldly resources, I got to be accountable as well. And moreover, our life is nothing but the choices we make. So, now the question is that are those choices that we opt for are taken with considerable thought process?? And moreover, who audits them for improvements?

In this regard, I decided to note down all actions that I do every day (hour by hour basis). This is an attempt to make the world (at large) to conduct an audit on my every action to improve my way of doing things.

If you did not understand the purpose of such a thing, please find the detailed post here.

I would write them from today onwards on my personal blog (http://malapati.blogspot.com/) and not on this blog.

Comments welcome!

How do I choose a party to vote for?

I know it is tough job to select a candidate among fools. But then, clever among the fools is what the selection criteria.

My first criteria:

Rural development is my passion. So why I have been working on this domain for the past 5-7 years directly (as an academic researcher, as a technologist, as a businessman and now as an investor) and indirectly more than a decade.

I have been trying to understand the root causes of these problems and few times, I have expressed my opinions on this blog. To my analysis, rural issues in India can be solved only if we create new cities of around 6000 just like Hyderabad, Pune, Bangalore, etc (the recently developed ones).

There is only one party, LokSatta, which is in this direction (in Andhra Pradesh, where I have my vote registered).

Second criteria:

And coming to MP elections, as you see every party is stupid. The fundamental problem for this studity across the parties is that Dynasty politics. So I believe, BJP should win this election in order to root out this plague that is sucking the wealth of India.

So here are my choices:

MP elections: BJP

State elections: LokSatta

Go ahead with your thoughts.

Broadband to takeoff, pre-paid models to be evolved

At the current growth rates, number of broadband customers will not cross 10 Million in the next 2 years where as we will cross 400 Million mobile customers by March/April 09. It appears that unless some game changing steps are taken, rural India would be completely disconnect for another 5-10 years. 

Recently BSNL, Tata Indicom, Reliance have started (hi-speed) broadband on move services. Download speeds are typically 500 Kbps  in practical scenarios (theoretically EV-DO, HSPA protocols provide much better speeds like 2 Mbps - 3 Mbps). 

This is really a welcome step considering that India is pathetic on wired infrastructure. To avail the service, users need to purchase a USB device (ZTE or Huawei) and pay monthly charges (ranging from Rs. 300 to Rs. 2000).

If you observe the voice calls business in India, it is above 90% prepaid market. Growth in new post-paid connections is almost stagnant. Today every telco talks only about their pre-paid consumers. However, I am not clear why telcos push post-paid model in the case of  data services?

Let me structure out a prepaid model for the datacards (USB devices):

Service plan: 100 MB - 5000 MB recharge (uniform validity: say, 6 Months)  top-ups should be available. Note that, by default, downlink speed is the maximum available on the network.

Connecting device: Recent eBay census report says that most sold items on its website in India are USB memory sticks. That shows the importance to such memory devices. So the EV-DO USB devices should contain memory in-built and should be sold separately in the market or perhaps rentable. Installation files should be available inside the stick itself and the installation process should be very much simpler. 

Interoperability: Device should be interoperable at least with respect to same technology vendors, such as EV-DO or HSPA. Now the user can purchase any service provider depending on SIM card in it, just like a mobile phone.

An example scenario: a student who don't own a computer but can purchase (or rent) a USB stick (say around 1000/- to 1500/-), service plan of 100 MB and connect to Internet at his college laboratory or at a friend's computer (stores his working files inside the device, just like a storage device)

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Another interesting development in the similar space: 3G would perhaps increase the adoption of broadband, because it has all the ingredients to take-off: the pre-paid model (basically, enables the micro-units of consumption), service involving SIM card, built-in memory functionality with every mobile phone. 

Rural Market focused fund: VentureEast Proactive fund

Update: VentureEast Proactive fund has several other focus areas. However, this blogpost only talks about the fund's interest on rural market opportunities which is the focus of this blog. More details about the fund can be had from its website.

Original Post:
After being on my own, I am now back to an employee position at a Venture Capital firm (VenturEast, Chennai). This company has a fund of 100 million dollars specifically focused on areas such as "Digital divide", "Bottom of Pyramid", etc. And the decision to join was a well-thought one. It's in order to get much exposed to different companies focused on rural markets in India and moreover to learn certain new skill-sets.

I have always supported rural market focused companies by providing strategic consulting services something that I would keep doing. Do write me your thoughts.

PS: Although my old mobile number is still alive, but you may like to call me on my Chennai number mentioned on the sidebar of my blog page.

First time Internet experience would be through TV in Rural India

Many venture capitalists believe that the first Computing/Internet experience for rural Indians  (or broadly, most Indians) would be through Mobile. However, as I see, this is only partially true. 

DTH players such as Airtel Digital TV, BIG TV,  DishTV, TataSky etc all are already in tie-ups with India's major Internet players such as Shaadi, MakemyTrip, Indiatimes Shopping, BookmyShow (for movie tickets), Edurite (online education), MapmyIndia, multiple gaming companies etc in order to bring Internet experience to larger audience. In fact, Airtel plans to activate its Airtel Live (mobile VAS) to its DigitalTV subscribers.

Particularly women, children will get the first hand experience of Internet through these TV services. This experience makes them familiar with Mobile Value Added Services and in turn to the grand daddy of all, Computer + Internet.

Although DTH is mostly urban phenomenon so far, but services like Railway ticketing, Matrimonials, Astrology, Education, Religious services, Games, Maps,  on-demand movies, etc would be attractive to rural users and in particular to children and house-hold women. In this regard, local language is the first requirement (currently it is all in English).

So this means, TV--> Mobile --> Computer is the Internet-learning-cycle. And so, many business opportunities (new mode of distribution) exist for all those Internet companies who tie-up with these Cable/DTH/IPTV service providers.