Rajiv Kumar, Director and Chief Executive of the Indian Council for Research on International Economic Relations (ICRIER), prepared the report's overview explaining, "Indian states with high mobile penetration can be expected to grow faster than those states with lower mobile penetration rates, by 1.2% points a year more on average for every 10% increase in the penetration rate. This is an important result. The paper in this report by Kathuria and Uppal suggests, furthermore, that there are important network effects which magnify the economic impact of mobiles on development when the level of mobile penetration exceeds a critical mass of around 25%."
Mr. Kumar further elaborates, "The extraordinary recent macro-economic performance of the Indian economy has also raised the question of how the benefits of the 8–10% annual GDP growth rate can 'trickle down' to poorer socio-economic groups in the country. In that context, the ICRIER researchers have also looked at three segments of the population – the agriculture sector, the Small and Medium Enterprise (SME) sector and urban slum dwellers. In each case, the research demonstrates that access to telecommunications is an important catalyst to realizing productivity and efficiency improvements and thereby making it possible for the benefits of economic growth to be shared. Mobiles currently provide more than 300 million points of connectivity in India, through which information and opportunity flows. Citizens with access to telecommunications can tap into the benefits of broad economic and social growth much more easily than those who are unconnected."
There are a few additional findings worth mentioning:
- Teledensity in India lags well behind most other countries at similar stages of development (for example, China, Pakistan and Sri Lanka have achieved significantly superior
penetration rates of 77%, 60% and 61% respectively).
- There is enormous variation within India, and many of the less developed states have average penetration rates of well below 20%, including Bihar, UP, Orissa, Madhya Pradesh and Assam.
- The level of access to the internet remains persistently low across the whole country (at about 5%) and in less-developed states is virtually non-existent – only 0.1% in Bihar and 0.2% in Assam, for example.
It is Mr. Kumar's last point that outlines the problem. While it is important to increase mobile phone access, particularly in India's rural areas, it is equally important to capitalize on the technology's capabilities to stimulate economic development, which I will address in future postings. There are so many ways mobile phones can facilitate economic development in the agriculture sector, stimulate growth among small and medium-sized enterprises, and how mobile technology can have a significant impact on populations that possess a high illiteracy rate and often lack a formal education.
Aaron Rose is an advisor to talented entrepreneurs and co-founder of great companies. He also serves as the editor of Solutions for a Sustainable World.