Common Services Centres (CSCs), the gateway for rural India to access every sort of service ? from banking, mobile connections & recharge, Internet use, e-learning and government services ? is sputtering to a halt as companies are closing down a large number of them for being unviable.
This is happening when the department of information technology in the central government has just got the mandate to enhance the CSC network to 2.5 lakh from the original 1,00,000. President Pratibha Patil, in her speech to the joint session of Parliament this month, said the centres will be transformed into Bharat Nirman Kendras.
Only three small states?Haryana, Jharkhand and Sikkim?have managed to achieve a 100% rollout of CSCs. Private players like Reliance Communications have shut their centres in many states while 3i Infotech has been pulled up for sub-par rollout of the centres in different states, including Gujarat and Maharashtra.
Though the original target for setting up all CSCs was March 2008, just 40% have come up so far. ?The complete roll-out of CSCs is now expected by mid-2010. It will take another three years to take the number up to 2.5 lakh,? Shankar Aggarwal, joint secretary of the department, told FE.
?In West Bengal, Reliance Communications has shut down some of the CSCs it was allocated.? Its bank guarantee has been revoked, said an official. An e-mail sent to Reliance Communications from FE remained unanswered. The company was allocated over 1,800 CSCs in West Bengal. It is also allegedly facing a penalty in Maharashtra for not meeting its roll-out target.
3i Infotech, which was allocated 12,500 CSCs, is also under the scanner. ?Though the company has not closed any CSC, it has failed to roll out the centres on time and is also not able to manage the centres,? the official said. 3i Infotech?s executive director & president (South Asia), Anirudh Prabhakaran, however, said the firm has 6,000 operational CSCs and the rest will come up by December 2009.
Explaining the reasons for companies pulling out, an analyst who has worked with the project said, ?The project has met with partial success as there are not enough government services available. Though the project was bid out through viability gap funding, the private sector didn?t understand the costs and issues involved fully and might have bid too aggressively.?
Private players were hoping to lure CSC users to a host of private services they could provide on the same platform?like banking, e-learning, Internet surfing and telecom. But there are only a few government services that are on offer. Even staples like land record or driver?s licences are not digitised across the states.
Even in states like Jharkhand, where a 100% roll-out has been achieved, infrastructure hiccups like connectivity and power threaten their sustainability. An official of an infrastructure company closely linked with the project said the ministry of telecom & IT is doing a review at the ground level. ?The picture is quite varied. While some CSCs are doing well, others have a question mark on their viability. The ministry is considering alternatives.? The revenue model for the CSCs envisages that only a third of their revenue will come from government services. Accordingly, the ministry had agreed to provide a viability gap funding of around Rs 3,300 per CSC for four years to the private party, assuming that each centre would generate Rs 10,000 per month. But companies like 3i Infotech and Reliance Communications were too optimistic about the level of expected revenue and, in fact, put in bids for negative VGF?meaning they were ready to pay the government for being allowed to set up these centres.
?The government consumer services would not be digitised in a day and will take some years to go fully online. That is why the subsidy was provided. But companies that failed to create a model based on that assumption are bound to suffer,? says Vikas Aggarwal, director, government sourcing, KPMG.