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India: The Impact of Mobile Phones

India: The Impact of Mobile Phones

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Published by ICTdocs
Vodafone: India: The Impact of Mobile Phones
Vodafone: India: The Impact of Mobile Phones

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Published by: ICTdocs on May 22, 2011
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Moving the debate forwardThe Policy Paper Series
• Number 9 • January 2009
India:The Impactof MobilePhones
India: The Impact of Mobile Phones
Moving the debate forward •
The Policy Paper Series
• Number 9 • January 2009
This study on India is part of the Vodafone Public Policy series launched in 2004.Our aim is to provide a platform for leading experts to write on issues that are importantto us at Vodafone and which may help policy makers as they strive to provide a regulatoryenvironment which stimulates growth and economic development.
We hope you nd this report informative.
Vittorio Colao
, Chief Executive, Vodafone Group 
In this report, we have returned to the important subject of the economic impact of telecommunications on emerging markets by undertaking research looking in detail atIndia. As in the other reports in the Vodafone Public Policy Series, we have asked leadingresearchers to conduct the analysis. We are delighted that a team led by Dr. Rajat Kathuriaof the Indian Council for Research on International Economic Relations (ICRIER), one of India’s foremost independent research institutes, was able to direct and conduct this work.The opinions expressed in this document are not ours but those of independent expertswhose views we respect even if we do not always agree with them. We believe that theyhave important things to say that should be of interest to anyone concerned with goodpublic policy, and the policies towards economic and social development of India andother emerging markets.
Neil Gough
, Director, Public Policy-Emerging Markets, Vodafone Group
Diane Coyle, OBE
, Enlightenment Economics and chair of Vodafone SIM Panel
This paper can be seen online at www.vodafone.com/publicpolicyseries
Published by Vodafone Group PlcCopyright © 2009 Vodafone Group PlcISBN 978-0-9552578-5-8
Welcome 00
– Vittorio Colao, Chief Executive, Vodafone Group
Foreword 00
– Neil Gough and Diane Coyle
A policy overview 01
– Dr. Rajiv Kumar
An econometric analysis of the impact of mobile 05
– Professor Rajat Kathuria, Dr. Mahesh Uppal and Mamta
The impact of mobiles on agricultural productivity 21
– Sanjay Gandhi, Dr. Surabhi Mittal and Gaurav Tripathi
A survey of usage of mobile in poor urban areas 34
– Professor Ankur Sarin and Professor Rekha Jain
The impact of mobiles in the SME sector 51
– Dr. Mahesh Uppal and Professor Rajat Kathuria
India: The Impact of Mobile Phones
Moving the debate forward •
The Policy Paper Series
• Number 9 • January 2009
A policy overview
Amidst the spreading gloom of the economic downturn
following the global nancial meltdown, the Indian telecom
sector provides the proverbial silver lining. The growth inmobile connections has continued at around 10 milliona month and investment prospects remain bullish. It is
important at this stage to ensure that investor condence is
maintained by further improving the regulatory environmentand ensuring that the policy regime promotes growth. In thiscontext, I am delighted that a team of eminent researchers ledby Professor Rajat Kathuria of ICRIER undertook to examine thesocial and economic impacts of mobile telephony in India, witha view to improving the knowledge content for policy-makingin this important sector. The project team has analysed whatwe consider to be an extremely important and relevant topictoday. This project is a good example of ICRIER’s strategy of carrying out research which generates analytical and empiricalresults relevant for generating analytical and empirical inputspushing forward the reform agenda and for contributing topolicy formulation in the country.We believe the analysis and results reported here to be veryimportant for the Indian economy. There is a growing bodyof careful empirical economic research which providesa compelling picture of the positive impact of mobiletelecommunications on economic growth in developingeconomies. During the past few years this researchhas built a detailed understanding of the importanceof telecommunications infrastructure to economicdevelopment. The unique contribution of this report, whichmakes it of special interest to policy makers, is that it looks atimpacts
a single country, potentially delivering muchmore robust conclusions.India has more diversity within its borders than any othercountry – it comprises 1.1 billion people, living and workingin very different circumstances and geographies. Yet it hasa national government and policy environment that setscritical economic policies (including telecommunications)across the whole country. We have taken advantage of thatdiversity and the availability of state level data to investigateeconomic impacts within India across states, economicsectors and population segments. Furthermore, because evenstate level data can mask great differences, we have looked at
specic economic sectors (agriculture and small and medium
enterprises) and segments of the population (urban slumdwellers) to extend our understanding.Encouragingly, the econometric analysis reported hereextends the conclusion that there is a
relationshipwithin the same country between higher mobile penetration(mobile subscriptions/population) in a region and highereconomic growth.
Indian states with high mobile penetration can be expected to grow aster than those states with lower mobile penetration rates 
, by 1.2% points a year more onaverage for every 10% increase in the penetration rate.This is an important result. The paper in this report byKathuria and Uppal suggests, furthermore, that there areimportant network effects which magnify the economicimpact of mobiles on development when the level of mobilepenetration exceeds a critical mass of around 25%. This
nding underlines the
urgency o increasing teledensity 
across allstates and especially in those numerous areas of India that are yet to reach this threshold level.The extraordinary recent macro-economic performance of the Indian economy has also raised the question of how the
benets of the 8–10% annual GDP growth rate can ‘trickle
down’ to poorer socio-economic groups in the country. In thatcontext, the ICRIER researchers have also looked at threesegments of the population – the agriculture sector, theSmall and Medium Enterprise (SME) sector and urban slumdwellers. In each case, the research demonstrates that accessto telecommunications is an important catalyst to realizing
productivity and efciency improvements and therebymaking it possible for the benets of economic growth to
be shared. Mobiles currently provide more than 300 million
Rajiv Kumar is the Director and Chief Executive of the Indian Council for Research on InternationalEconomic Relations (ICRIER), and a member of the Telecom Regulatory Authority of India since January 2007.
Director and Chief ExecutiveICRIER
Dr. Rajiv Kumar

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