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Andhra Pradesh Priorities Digitisation - Digital Empowerment Foundation
1. Digitization
Ritu Srivastava and Eshita Mukherjee
Digital Empowerment Foundation
Andhra Pradesh, Priorities Conference, Vijayawada, 18-20 June, 2018
2. Digitization
• ICT is a cross sectional subject and aims to bring efficiency, accessibility,
transparency through connectivity to all the social and economic issues
that were and will be discussed today.
• It is also practical and is economically one of the most cost effective
medium to reach a large population like that of Andhra
• Andhra has adopted this route for framing government action crystal clear.
It’s not just the adoption of digital programs, but educating people about
the technology.
• Example: Meeseva : An initiative for the delivery of all government services
to citizens through digital PKI integrated architecture and multiple service
delivery points by fusing in the various pre-existing state initiatives with the
Mission-mode and people first app.
3. • Effective broadband infrastructure enables citizens to participate in
the governance system by improving access to information. Thus, In-
order to reap the optimal benefit of these services at state level, the
central government initiated the National Optic Fiber Network in
Andhra Pradesh 2011 with an aim to connect 12918 Gram
Panchayats in AP
• And in 2009 began the Aadhaar scheme to remove duplicity and
corruption in the existing system through ICT intervention
5. Large sum of money spent on social welfare schemes through a range of subsidies
and targeted poverty reduction programs. However, most of the programs have come
under the scanner for various implementation and service delivery issues.
• Paper analyses how the use of ICT-based biometric technology
(Aadhaar) can prove beneficial to:
•Reduce corruption
•Increase income
•Increase efficiency
•Reduce transaction time
• It examines the major costs and benefits of linking the last group of
unconnected MGNREGA workers to the Aadhaar scheme.
6. Current Scenario in AP as of March 2018
99
18
82
1 19
-
20
40
60
80
100
120
Percentage of
active workers
in AP
MGNREGA
with Aadhaar
Percentage
ofactive
workers in AP
without DBT
Percentage of
active workers
in AP with DBT
Percentage of
active workers
in AP to be
provided
aadhaar
numbers
Percentage of
active workers
in AP to be
provided
Aadhaar DBT
Current Scenario in percentage
Current baseline Scenario
7. Linking the last section of the unconnected MGNREGA
population in AP to Aadhaar through positive reinforcement
• It estimates the incremental costs and benefits of linking
unconnected workers to the system.
• In this case, the primary benefit will be in reduced leakages
caused by the incidences of ghost beneficiaries and deception
• A potential cost-neutral option in this regard would be
expeditious clearance of previous month’s MGNREGA wage
arrears for those who get a new Aadhaar card linked to their bank
account.
8. Linking the last section of the unconnected MGNREGA population in
Andhra Pradesh to Aadhaar through positive reinforcement
Costs involved
a) Cost of enrolling new MGNREGA workers to Aadhaar,
b) Cost of seeding: linking new and old Aadhaar number to MGNREGA
c) Reoccurring cost of Devices
d) Privacy ( not included)
Benefits incurred
a) leakages due to duplicity in the system
b) leakages due to deception (Khera 2016,2017)
c) Inculcation of the habit of saving amongst workers (Not included)
d) The Aadhaar scheme can help improve access to other benefits (Not included)
9. Costs
• Cost of enrolling 19% of total active MNREGS workers to Aadhaar and DBT after
intervention: The cost per person for this is estimated at Rs. 328, including
personal costs towards time and travel. The total cost of this component is Rs. 3.7
crore.
• Cost of seeding: linking new and old Aadhaar number to DBT : The cost per
person for this is Rs. 163. With 15 lakh workers requiring linkage to DBT, the cost
of this component is estimated at Rs. 24.6 crore.
• Recurring cost of devices and its maintenance and connectivity have been
calculated on a yearly basis at Rs. 2 crore in the first year, projected downwards
for likely counterfactual growth in Aadhaar enrolments.
• The total cost of the intervention is Rs. 49 crore over a period of 15 years at a 5
percent discount rate.
10. Benefits
• Gains yielded from reduction in two types of leakages have been
estimated
a) leakages due to duplicity in the system
b) leakages due to deception
• Total wage expenditure is the sum of the actual expenditure and
payment due on unskilled wages at Rs. 3,646 crore.
• The percentage of leakages as per Economic Survey 2016-17 is
20 percent
• Expected reduction in leakages due to Aadhaar enabled DBT
(reduction in duplication and deceit) is 41 percent (Murlidharan,
Neihaus et al, 2016) of 20 percent.
11. Baseline costs and benefits
• Both costs and benefits are assessed against the
predicted increase in Aadhaar enrolments in the
absence of the intervention.
• There are two countervailing adjustments made to
the total benefit of 57 Crore over the timeline of
the analysis. First, real growth of MGNREGA wages
is accounted for and assessed at 3.5 percent per
annum. Second, the analysis has also adjusted
benefits downwards to reflect likely counterfactual
growth in Aadhaar and DBT enrolments.
• The total benefit over fifteen years amounting to
Rs. 504 crore at a 5 percent discount rate
y = 0.256ln(x) + 50.904
R² = 0.9075
50.4
50.6
50.8
51
51.2
51.4
51.6
51.8
1 2 3 4 5 6 7 8 9 10 11 12
Series1
Log. (Series1)
13. Conclusion
• The proposed intervention is seen as measure to make optimal use of
public money already invested in the Aadhaar framework.
• Although the derived BCR ratio of 6 is a positive indication towards
adoption of Aadhaar, there is still a need to do a cross-sectional
analysis of the Aadhaar framework to understand its complexities.
• Improve the monitoring and implementation system as Aadhaar as a
number will not be able to solve most of the existing issues in the
system.
• Several other unaccounted costs and benefits : Privacy and the
general-equilibrium effects of the intervention (Muralidharan,
Neihaus and Sukhtankar (2018))
15. Importance of the intervention
• Mobile broadband penetration is 16.8 percent. However, the fixed broadband penetration
at households in India is 1.4 percent (ITU 2017)
• The World Bank estimates that 10 percent increase in broadband penetration will lead to
1.38 percent increase in GDP growth on average for low/middle income countries, which is
higher than the impact of mobile penetration on GDP growth (KPMG & CII, 2013)
• Existing rural population in Andhra Pradesh have fixed broadband connection is 1.40%
• Potential of broadband is to enable key services like e-governance, education, telehealth,
banking and other information services in rural regions which are unconnected.
• This intervention analyses the cost and benefits of connecting the remaining GPs through
NOFN, and the households that take up connections thereafter. This intervention
calculates the major cost and benefits of connecting rural households to NOFN.
16. Current status of NOFN in Andra Pradesh
• No of GPs in Andhra Pradesh: 12918
• No of GPs connected by Optical Fiber Cable= 601
• No of Occupied Rural Households in Andhra Pradesh = 8390820
• No of GPs yet to be connected = 12317
• Optical Fiber Cable Laid in KMs = 1544
• Optical Fiber Cable required to cover all villages other than GPs (in
KMs) = 11419
17. Description of the solution
• National Optical Fibre Network (NOFN) an ambitious initiative to trigger broadband revolution in
rural India, is creating a robust middle network infrastructure layer to connect gram panchayats of
the country through broadband connectivity.
• Since its roll-out, many telecom analysts and social scientists have criticized NOFN as an initiative.
Issues like extending the launch of NOFN project from 2012 to 2014; inability to lay the optic fibre
within timeline by service providers, non-availability of G2C services and sustainable framework
are some issues that have been continuously raised.
• In 2015, NOFN was renamed as BharatNet aiming to connect all gram panchayats and villages and
the existing institutions (like government offices, public health centres, schools, banks, etc)
through broadband
• This intervention calculates the costs and benefits of connecting the unconnected GPs connecting
rural households to broadband using the NOFN Infrastructure
• We find that though there is a considerable cost of connecting the remaining gram panchayats
and households, the benefits are much higher.
• We find a positive benefit cost ratio of 1 at the 5% level using wired infrastructure to connect
households for the next 10 years
18. Costs
There are four categories of cost associated with this intervention 1) cost of connecting the
remaining GPs and ongoing maintenance; 2) cost to connect remaining households and
ongoing maintenance; 3) upgrading the data centre cost to connect institutions (such as
public health centre (PHC), schools, government agencies, etc) and 4) costs of accessing
broadband services.
1) Cost of Connecting the remaining GPs
• No of GPs to be connected: 12317
• Assuming that the remaining GPs will be connected over 3 years.
• The average cost of connecting a GP to the NOFN nationwide is 0.3 crore. Applying this cost
figure to the remaining GPs, delivers a cost of 1195 crore per year, for 2018, 2019 and 2020.
• This cost mostly covers the laying of fiber optic cable from the network to the GP.
19. Costs
2) Cost to connect remaining households and ongoing maintenance;
• Average kms to reach one village is 2.93 km; thus, the optical fibre cable (OFC) required to cover the
remaining villages is 11419 km.
• Per HH cost using thick line of 1 km additional cable from GP to village using underground or over
electricity lines = Rs. 1508
• Per HH cost of thin OFC required to connect HH to the thick OFC line (assuming that 15 meters will be
required to connect each HH from thick OFC line running through the street/electricity pole or the existing
telecom tower = 1750
• The above calculations imply the cost of connecting one household using wired infrastructure is Rs.3258.
• The operational cost for the last mile connectivity per household is assumed to be 5% of this cost, at INR
163.
3) Upgrading the data centre cost to connect institutions (such as public health centre (PHC), schools,
government agencies, etc)
• Assuming that 8% of the total cost of data centre is required to upgrade the data centre every year to
provide the connectivity at HH level.
• The cost of upgrading and maintaining the data cente will be INR 0.27 crore per year.
20. Costs
• At a 5% discount rate the costs are Rs.10179 crore over 50 years
Cost Component Rs. crores
Cost of connecting remaining GPs 3,586
Cost of connecting HHs 896
Operations cost for NOFN including data center
upgrades 21,042
Operations cost for HH connections 1,298
Costs of accessing broadband 2,391
Total (undiscounted) for 50 years 29,212
21. Benefits
• Benefits for this intervention are measured in two forms
•Increase in rural broadband penetration leading to statewide broadband penetration
•Estimation of the annual boosts to GSDP arising from the pathway of fixed broadband
growth across the entire state attributable to the NOFN
1. Increase in rural broadband penetration
• In Andhra Pradesh, it will increase to 14 per 100 rural households by 2028. Due to the falling
share of rural population in the state, this will contribute to a statewide increase in
penetration of 9 per 100 households. Similarly, there will be broadband penetration in rural
Andhra Pradesh will increase to 38 per 100 rural households by 2067, which will contribute to
a statewide increase in penetration of 23 per 100 households.
2. Growth in GSDP
• The incremental boost to GSDP is Rs. 112 crore by 2020, Rs. 590 crore by 2025, Rs. 2708 crore
by 2035 and Rs. 23925crore by 2067.
22. Benefits
y = 12.8ln(x) - 104.69
R² = 0.7493
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
0 20,000 40,000 60,000 80,000 100,000 120,000
Broadbandpenetration(%)
Income per capita, 2015 Int $
Relationship between income and fixed
broadband penetration
Total benefits until 2067 equal 69,707 a 5% discount rate
The benefit-cost ratio (BCR) of the intervention is 7
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
2018
2020
2022
2024
2026
2028
2030
2032
2034
2036
2038
2040
2042
2044
2046
2048
2050
2052
2054
2056
2058
2060
2062
2064
2066
Penetration
Fixed Braodband Penetration over time
Boost in statewide broadband penetration attributable to NOFN (as % of all HH)
Broadband penetration in rural areas (as % of Rural HH)
23. Total benefits and cost-benefit ratio
Interventions Discount
Rate
Benefit
(INR in
crore)
Cost
(INR in
crore)
BCR Quality of
Evidence
Providing the NOFN
connectivity from gram
panchayat (GP) to
household (HH) level
using wired
infrastructure
3% 133,861 14,352 9 Medium
5% 69,707 10,179 7 Medium
8% 29,277 7,072 4 Medium
24. Conclusion
• Calculations considered the cost of ‘Right of Way (RoW)’ and other costs such as
cost of coordination of multiple service providers across various segments after
GP level and the cost of Point of Interconnects (PoIs) at the block level to deliver
services in rural areas. There are significant risks in implementation of this
intervention.
• Moreover, other kind of challenges that exist are complex regulatory mechanism,
structural challenges in BBNL, functionality of service providers, low bandwidth
for the last mile connectivity, lack of affordable devices and content available in
rural regions.
• But if NOFN is implemented on an efficient basis and it is full operational, then it
has the potential of bringing significant changes in lives of rural citizens
Hinweis der Redaktion
The current analysis has been carried out on the basis that the Aadhaar scheme has been implemented at an expense of Rs. 8,800 crore and is currently in use. This paper is an attempt to understand if investing a little more in the existing system can help improve benefits accrued in the long term.
It is to be noted that these costs are assumed to have been incurred within the existing biometric direct payments system, already established for MGNREGA. Hence, much of the capital costs have already been incurred, and only a representative proportion of ongoing costs have been attributed to this intervention.
Leakages caused by extortion by middlemen or collusions between workers and middlemen have not been included, as they remain unaffected by the Aadhaar system
In BharatNet, to connect the institutions at district, block and gram panchayat, data centres were established at the district level. These data centres offer variety of services like application hosting, server hosting and managed services in a secure environment for processing, storage and backup, networking, management and distribution of data (BBNL, 2015).