Mobinomics

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A lot has been written by experts on many forms of economics. From Reaganomics which stood for American President Ronald Reagan’s form of pro-capitalistic brand of economics. To the latest best seller called Freakanomics that captures the peculiar aspects of studying economics.

I won’t be too surprised if someone soon writes a book called Mobinomics; or the many different aspects of the growth in mobile penetration, on the economic growth, social interaction, language habits etc. Economist, in its article a few months ago, did mention that experts opine that a 10% increase in mobile penetration results in a 0.7% increase in the GDP of the country. This number has been gathering legitimacy but one wonders whether this has been proven with hard data.

Shashi Tharoor in his book, The Elephant, The Tiger and The Cellphone, speaks of the transformational effect of the cellphone in India, giving stories from many parts of the country, including one from his home town where he found a toddy tapper cum tender coconut vendor answering his call from atop a coconut tree (I wonder what is the accident rate of coconut vendors falling off coconut trees answering mobiles?).

The mobile penetration in the country has climbed up from less than 10% to over 35% in the last three years, so it would be right to imagine that this growth in penetration has resulted in a GDP growth effect of about 2% or so. The latest reports say that every month we are adding almost 8 million subscribers, an awesome number of 100 million a year. And if penetration continues to climb at the rate of 7% a year it would add about 0.5% to the GDP going forward.

This seems a little too simplistic. While mobile operators report large numbers, at times numbers hide more than what they reveal. A large part of the reported ‘total subscriber’ figures are inactive numbers; and if the subscriber has paid the Rs 200 towards lifetime incoming, then the operator has to retain the number and will continue to count the subscriber as an active one. Some report put the inactive subscribers at a staggering 30%.

The other issue is one of multiple mobile ownership, by even taxi drivers. As a tourist taxi driver in Hyderabad explained to me “One number is reserved for home calls and the other for regular customers”. So what is the real penetration of mobile phones in the country?