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Rural E-govcrnant'e M edel 39

Rural E-governance M odel and lts Im pact onD ecision-M aking Process in A griculture:

A Study of ITC'S E-choupalDr. Satyabhusan DashlH lm anshu M israz

ntroduction''I'1'C is engaged in imjaarHng arevolutitm ary dim ension to its rural

partnership by leveraging informationtechnology to elevate the lndian farmerto a new order of em powerm ent. ITC'Se- c ho up al ini t ia tiv e i s a p owerf uli1l u s tra ti on o f the poten tial o finformation technology to transform

rural economics, notwithstanding thstructure of size of land holdings iIndia.''

Excerpls from speech of lTC ChafrmllShri KC. Dvveshwar IFC Jyfuulfl genermefrfftzg ilt:lf.l6.

72% of Indian population residein 6.4 Iakh villages and it constituteabout 60% of the work force. lndia

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40

5000. M ajority of rural po pulace isengaged in agriculture. ln developedand developing countries agriculture isperformed under different environmentand posses dif f erent characteristicsIeading to different resu lts as well.Although India has a distinction ofhaving largest arable land in the w orld,yet the average size of an lndian farmis 1.5 hectares while that in U .S.A. is500 hectares. Sim ilarly w hile 50% offarm produce is processed in U.S.A.less than 1 % is processed in India anda p p r ox im a te ly 25 % o f f ru i ts a n dvegetables in India rot ia farms (worth2500 Cr rupees). Certain other factorswhlch further aggravate the situationresults f rom oor i n frastructure interm s of power' road connectivity,telecom , declining health stattts poorcondltion of women and citildren andmuscle power of a few affluent

Startirlg w'il'h jast 8 choupals in Junta2000, this m odel has become ruralIndia's largest internet based initiativeand as on M ay 2007 e-choupal servicesreach m ore than 4 m illion farm ers inabout 40,000 villages through m ore than6500 chou pals in Uttar Pradesh,Mad dzy'a Pradesh Rajasthan,M aharastra, Kaznataka A nd IA raPradesh and Kerala, ITC'S objectiveover the next decade is to create a lowcost I'F based interactive transaction andfulfilm ent channel to cover 1,00,000villages representing 1/6th of India'svi1 Iag'es rcachirlg ottt tc mjllions offarmers. lTC is extending its busiriessm odel to ottter Indian states incltzd ingW e s t B en ga l H ima n ch a l Pra deshPunjab and Haryana. Considering thephenomenal rise of ITC'S business anf.liong term collaborative partnershiprelatignship w'ith the farmecs in ru ra1

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ea through its much talked e-choupalodel there is m om entous need to findhe impact of I'1-C'S E-choupal initlativen empowcring Indian farm ers Therimary objective of this study is tompirically validate Che impact of'ITC'S-chou pa l initiatlve on im provingarm er's decision m aking process ingriculture practicesm p act A ss e ss m e n t of e- chou a Iodel over farm ers: G eneration ofypothesesITC'S e-choupal m odel is based en

he philosophy of co-creation of value.-clo u pal physically consists of am puter w ith an internet connection.armers selected from within the villagemmunity are trained and designateds ''Sanchalaks'' w ho m anage thesen Lernet Kiosks The com puter isnstalled at sanchalak's residence.etween sanclzalak and ITC there is oneore intermediary called as Sanyojakho looks after 40-50 such choupals.anchalaks help the farm ers to accessifferent agricultural specific websiiesat ITC has created in relevant localnguages. Farmers can also learn theest farm ing practices the prevailingrices, risk m ana gem ent, w eatherorecast etc, The e-chou pal providesariolzs tangible and intangible benefitshe farmers Under tangible benefitse farm er with the help of sanchalak

I'l'C in t'UI'n earns revenue by sellingse vera 1 diversif ie d pr o d u c ts andservices through its e-choupal andChoupal sagar. Starting w ith selling oagricultural inputs only, e-choupal isnow becoming cost-eff ectivedistribution channel of diff erenestablisbed com panies. ITC is tying upwi th B PCL - (Bh a rat laetroleu mCorporation Limited) to sell cooking gasand establisbed com panies to selseveral FMCG and financial services(including insurance a nd bankingservices, etc). lTC has Iaunched severaF M CG brands s uch as , i knomangaldeep, Vaxlit etc During theyear 2004, 1TC launched Choupal sagarin Sehorez Madhya Pradesh which haseverything from soapsy detergents andto oth pas tes to TV , D V D p l ayerstractors, etc. The m all is spread over

4com petition. These centres also act asprocurement centres and Sanchalakpuzchases their agricultural produce amarket price elimina tirtg not only theneed of travelling to distant M andi bualso the interference of' intermediariesthus reducing the cost involved inselling proccss. The intangible benefitsres ult f rom getting inf orm ationregarding weather advance farmingtechniques and other inputs to boosproductivity. To facilitate the flow osuch informationz lTC I'tas tied up withvarious agricultural universities

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42p Aps, c feteria soil testing laboratoryand other agro inputs. 'l'his Choupalsagar is the logical culmination of E-Choupal scheme with the philosophyof empowering the poor and offeringdiversified products and services withlow cost. ITC plans to build such m allsirl each district lcgel very stxm. ITC alsoPurchase8 DAdxinau m ercenta 0 Of@;agriculturat produces from farmers dueto transparency in gefting selling pricethan local M andi.lf w e a naly se th is mod e l w i threference to support provided by I'I'Cthen at each and every stage' lTC triesto maxnise the value olztained by thefarmers. ln the input stage IR'C providestbem quality seed, ferti:izers andpesticides at a better price and muchmore conveniently as compared to theotlter players in the market. The valueof timely informatiou cannot be ignoredand by providing information relatedtty modern agricultu re techniq ues,weatber and providing solutions totheir specific queries (related fo plantdiseases, suitable crops for different soiland others) IR'C further enhances theirfortunes. In tbc. last stage the farmershave agricultural produce as output.Here again, by reducing the hasslesinvolved in selling the produce and bye li mina t i n g the u nnece s sa ryintermediaries and cost involved izl t14erocess, lTC helps these farmers in C)P

ASBM Journal of Management, 1(1), 2008ITC'S e-choupal business model isan ctxarnpfe w'here so much cttsttprzzkzed

o f fering i s given to the eonsum erswhich further reinforce trust and longterm ctyslaborative rclationship belweentbe farmers and I'rC. By shif ting to e-Cboupal farmers save 68 Oo of the costand the processing compauy about 36 %of the cost (Saran, 2004). Kumar andAli (2006) in their study on e-governance systems (E-choupal) anddecision m aking processesagriculture provided empirical evidencethat significantly better dedsion can befaken by uscr group of 1'rC's e-chtmpathan non users. As per Govindrajan(2006), the ITC'S e-choupal is a greae-com rnerce platf orm which wildisrupt the W al-lklarts of the world.

Following hypotheses are proposedon the basis of preliminazy qualita Livinterview and discussion w ith severagroups tyf farm ers who are associatevith 1TC and information from existinp u l i s e d l i t e r a t r t o e m i ' i a 1 lvalidate the im poct of ITC'S e-choupamotlel on im proveznent of decisiomaking proccss of farmers.Hypothesis: The farmers who have aa ssccia tjtAn vvith !l- (2 Ivi11:

Make more profitable czop choicePran rightly mu Itiple crop rotationwell in advance.Use good quality seeds, fertilize

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43kural E-governance M odelStore agric ultu ra I prod uces saf Iy.Can assess weather forecast timel sang je. p

) Can rightly adopt farming methods .rhe study population consists of thespecif c to t'ach crop and region. s e t o f a 11 f ar m ers wb o c o u ld getseek rttore tzxpert advice t')n soil invalvecl nrith JTC through purchaslngtesting. agricultural inputs/ selling harvest andassessing informaiion at ITC tschoupal.Use scienti f ic plant protecti on The sazrtplirtg frame consists of twentpmethods effectively. eight villages from the statc of MadhyaUse sc ientif ic plan t nutrition aradesh and Uttar 1 radesh.For gettingmetbtlds effectjvely. a diversified sarftple tht! lzstirlgs

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44ITC' s e-chou pal initiative has anyimpact on farmer's decision makingprocess related to imprtwed agriculturalpractices com parison has been m adebetween farmer's status before and afterassociation w ith ITC. Paired sam ple t-test is conducted in order to determineif significant difference exists betweenmean scores on status of agriculturalpractices before and after associatitmwi th 1TC . As evi d en ' f om pa i rc dsample t-test result illustrated in table-1, there is significant improvem ent ondecision m aking ability of farmers ona l 2 1 a s 1. e c f o f d e ci s i n - m a k f n grelated to farming after association withITC. Farmer's decision making ability'increased greatly by timely price relatedinformation yegarding market price ofrzroduce befortl spllingtmean score 1.8Vs. 4.17' p

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Rural E-go verna nce 51 o de1 4Table 1. M ean galues tyf abilit'y to take sevez'al benefitl received and

decisions related to agricultural praciices currently andbefore associaiion w ith ITC

Ylypotheses sieanProfitable crop choices 4 47**4.13

M ultiple crops 4.59*4.43

(c) Good quality seeds, fertilizers & pesticides 4 52**3.46(d) Modern Farm Implements 3.77*+2.65

Cred it facilities for purchasing Agri. Inputs 2.69*2.29

(f) Storing Agri. Produccs safely 4,13**3.31(g) Weather forecast 3.62**2.48

Farming methods specific to each crop & region 4.00+*2.60

(i) Expert advice ()n soil testing 2.42**1.40(j) Scientific plant protection methods 2 78**1.64

scientific plant nutrition m ethods 3 06**1.85

(l) Getbing Agri . Inputs conveniently 4.1 7**3.09(m) Prcdiction of risk on Agri. Practises well in advance 2.60**2.05

Exchange/ return of defective/adulterated Agri. lnputs 2.15**1.34

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The present ytudy has a lilnitationoos i.e. the sampling frame fixed andthe limited sam ple used for the study.1t limits the scope of generalization ofthe results of the study, thougb thereare several o her ITC ena bledgovernance systems wbich share thk!common objective of erhpoweringfarmrars to m ake right decision related

lo farming practices. The study wouhav'e prm ridt.l more meaningful insigif users of other ITC enabled syslemwere compared wifh users ()f I'l'C'S choupal,Ref erenccs

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