The Next Frontiers for India’s Next Half Billion

The Next Frontiers for India’s Next Half Billion

By Roopa Kudva.

India’s Next Half Billion (NHB) is represented by people like factory workers, security guards, domestic help, and gig economy workers. These Indians either have or will come online for the first time via their mobile phones between 2017 and 2022. They represent the lower 60 percent of India’s income distribution and have traditionally been underserved, excluded and disempowered. Not surprisingly, their experience of using and engaging with technology is fundamentally different to that of most readers of this piece.

The NHB is critical to India’s growth story. Helping them flourish requires taking a holistic view of what constitutes a “meaningful life” for them. There are four elements to this:

1) access to aspirational products and services;

2) opportunities for employment and productivity;

3) protection of individual agency; and

4) strong and responsive institutions.

In order to help create a meaningful life for the NHB, we must think both differently and comprehensively.

At our organisation, putting the NHB at the centre of our work has helped us remain clear about our purpose and led us to support many bold entrepreneurs across for-profits, non-profits and government. We are fortunate to have flexible funding that allows us to adopt a dual chequebook approach—we make both equity investments in early-stage enterprises and provide grants to non-profits, with a focus on tech-led solutions. Earlier this year, we articulated both our investment and grantmaking theses.

Bringing equity and grants together to help create a meaningful life

The internet and mobile phone have the power to unlock greater incomes, choices and opportunities for the NHB, similar to what India’s economic liberalisation did for the urban middle-class. Tech-led business models can provide the NHB access to a range of affordable services and products that can improve their lives.

The digital journey of the NHB progresses through various stages, from basic use cases of the internet (e.g. personal communication), and gradually towards conducting online transactions regularly to access various services. However, there are several barriers along this digital journey. These include lack of local language content, low internet access among women, low confidence in online payments and lack of customised products. The good news is that significant progress has been made in overcoming the barriers to the NHB’s digital journey in recent years.

Affordable mobile data and smartphones, public digital infrastructure and entrepreneurial innovations have increased the quantum and range of uses of the internet. COVID-19 has, of course, been a gamechanger in accelerating digital adoption.

Over the last decade, many bold and innovative entrepreneurs have proved that it is possible to build successful tech-led businesses focused on the NHB. Design features such as a “mobile-first” approach, use of vernacular languages and relatable UI/UX have contributed in no small measure to increasing the NHB’s comfort with accessing various services online and thus speeding up their digital journey. And the emergence of a thriving early-stage equity investment ecosystem in India has given wings to these bold entrepreneurs.

On the other hand, not all problems can be solved by businesses alone. The challenges faced by the NHB are deep-rooted, pervasive and interconnected. Driving social impact at scale requires building a supportive ecosystem across all the four elements of a meaningful life. This is where grant capital can be uniquely catalytic. Grants can be useful not just in supporting grassroots efforts in communities and government programme implementation, but going beyond these to support a range of efforts—a better understanding of issues (e.g. through data and research), developing sector-level institutions and infrastructure, informing policy reform and laying the ground for potential market-based solutions.

At our organisation, this understanding of the combined power and relative advantages of equity and grants has helped our investees and grantees touch millions of lives from the NHB. We have learned many lessons along the way but recognise that there is still much more to be done.

The next frontiers

The NHB has come a long way in the last decade and today stands at another inflexion point. The pandemic has sparked off fundamental transformations in our economy and society. On the positive side, digital adoption has increased. However, the pandemic has triggered many challenges—economic shocks and decline in incomes for many, increasing inequalities, and several social and environmental crises. Over the next few years, the lives of the NHB will play out in the context of these shifts. This will create new opportunities for entrepreneurs, organisations and investors, who must anticipate the “next frontiers” in serving the NHB.

From the perspective of equity investments, the accelerating digital journey of the NHB in the aftermath of COVID-19 will create opportunities in many existing and emerging areas. Entrepreneurs will have to continue pushing the bar on addressing barriers in the NHB’s digital journey, such as addressing language barriers, contextualising models for them and increasing women’s participation. “Utilitarian” segments like ed-tech, agri-tech and health-tech will likely see a further deepening. We have also started seeing many new solutions focused on empowering Small & Medium Enterprises (SMEs) by giving them the tools to compete in the digital economy. Several other areas like mobility (e.g. intra-city solutions and electric vehicles), civic-tech, property tech and legal tech are also promising.

At the same time, various ecosystem-building efforts will be critical, creating opportunities for non-profit entrepreneurs supported by grant capital. These include initiatives that seek to provide greater agency to the NHB, build strong and responsive institutions to support them, and enable them to better interact with our contemporary economy. For example, there is much work to be done in the area of “Responsible Tech” (i.e. responsible data privacy, data sharing and security practices) in the form of generating evidence, sparking conversations, building collaborations, influencing policy and institutionalising sector-level best practices.

Going forward, we expect to see grant capital play a greater role in increasing government capacity to deliver services (e.g. municipal services), enforce rights (e.g. property rights) and dispense justice more efficiently. Another high-impact area where non-profits can play a role is in supporting Open Digital Ecosystems (ODEs) i.e. shared, open-source, interoperable tech infrastructure that can be leveraged by governments and private entities to unlock a range of innovative services. ODEs can unlock more than $700 billion (or over Rs. 50 lakh crore) for India across sectors like agriculture, urban governance and education, to name just a few. Finally, initiatives focused on developing the capacity of the non-profit sector will also be important.

An inclusive growth agenda for India

India’s well-being is inextricably linked with that of the NHB. Social change is a long and complex process; success is hard to predict and measure. Building a supportive ecosystem for the NHB, which provides them agency, safeguards them from harm, and fosters strong and responsive institutions to further their interests, is essential to a holistic approach in helping them flourish. At the same time, tech-led innovations can provide them a range of essential and aspirational services. While such innovations might initially serve customers higher up in the income pyramid, over time, they find acceptance amongst the NHB.

Addressing the next frontiers for the NHB will require many bold and mission-driven entrepreneurs to rise to the challenge. India’s entrepreneurs are increasingly coming from its smaller towns and cities; they are drawing from their own lived experiences to solve problems they themselves have faced. In the coming years, we hope to see many more of them, especially from among the NHB themselves, emerge and find the support they need to thrive. Their efforts can go a long way in helping create a meaningful life for every Indian.

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