Nandan Nilekani: This is the year of network power

Dec 31 2013, 00:12 IST
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Going digital also plays very well into the mobility of Indians (Reuters) Going digital also plays very well into the mobility of Indians (Reuters)
SummaryOver 1.8 cr people in 184 districts have been given Rs 2,000 cr of LPG subsidies since June

Indias bad macros are well known, but what makes me bullish is all the stuff thats happening under the hood, the creation of networks and platforms which are critical if we want to fix Indias problems fix the high-frequency, low-value transactions that affect millions, and youve fixed India.

Networks and platforms neednt necessarily be an IT thing, they could be rural roads India has built 3.5 lakh km of rural roads in the last decade that help people move to other areas to get jobs, to sell their goods and services. The fact that we have 600 million people with mobile phones helps people to sell their wares.

An ICRIER study found that states with a 10% higher mobile phone penetration had, on average, a 1.2% higher GDP growth; another found every 10% hike in internet and broadband penetration raised GDP by 1.08%.

Take Aadhaar, another great example of networks and platforms. We gave out the first Aadhaar on September 29, 2010, we had 21 crore enrolments in November 2012 and we have 51 crore today we will be at 60 crore by June. LPG was the proof of concept. Over 1.8 crore people in 184 districts have been given Rs 2,000 crore of LPG subsidies since June thats 16 crore annual transactions that can be done since nine cylinders are to be subsidised, and weve just covered 10-15% of LPG users. This is the tipping point, and we havent touched other transactions yet.

Look at the spinoffs. Once you extend this to all LPG, you can get a Shell or an RIL back into LPG distribution. Do this for diesel and kerosene and, suddenly, while people continue to get subsidised, the entire market is freed up and you have private sector players making investments in the production and distribution networks that the PSUs alone cannot possibly handle.

You dont notice these changes every day, but suddenly they become so big, the network impact becomes large. A mobile internet user base of 30-40 million a year is one thing, but when you reach 140-200 million users as we have now, the impact is very different. Thats when the laws of increasing return kick in the more people with cell phones, the cheaper it becomes to contact someone; the more Aadhaar numbers you have, the easier it becomes to transfer money using Aadhaar numbers.

Going digital also

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