 I am Balasubramanian from the Commonwealth of Lalit. This presentation is an introduction to the module of mobiles for learning, financial inclusion and development. The objective of this presentation is to familiarize you with the role of mobile phones in rural development, particularly in the context of financial inclusion. We will discuss the concept of development, the role of technology, particularly mobile phones in the development process, the need for financial inclusion to promote development, the challenges in the financial inclusion and the role of mobile phones in strengthening the financial inclusion. This general introduction will be further elaborated by various experts when you take the elective courses for mobiles for learning and financial inclusion. Let us see the following scenario, sometime back I did not have a mobile phone, later I brought this mobile phone, a simple mobile phone costing 25 to 30 dollars and after some time I moved to the smartphone, something like this. The transition from no phone to a simple phone to a smartphone, can you call that as development? It is true that from no phone to smartphone would require additional income which would enable me to buy the handset and support the services, while at a first glance it looks like a development, we should be careful before coming to the conclusion. I would have stopped my daughter from going to school, save the school fee and would have brought the phone, I may not allow my wife to use the phone, I would have reduced the expenses on milk for children and would have brought the phone, now tell me, will this constitute development? The concept of development is bit more complicated and definitions differ according to different schools of thought. The classical economics focus more on production and growth and looked into the issues of demand, supply, market, prices etc. Developers such as gross domestic product GDP were generally perceived as indicators of development. The Marxist school of thought laid emphasis on the transition from the capitalist mode of production to collective mode of production, stressing the distributive aspects and the role of labour masses in managing the economy. The development economic approaches of scholars like Michael Todaro, Amartya Sen saw development as a not mere economic phenomenon but a multi-dimensional socio-economic dynamic process. In addition to income, consumption, food, concepts such as self-esteem, dignity were included as indicators for development. Amartya Sen's influential contributions focused on freedom, entitlement and capability as the important dimensions of development process. He pointed out that, I quote, the process of economic development has to be concerned with what people can or cannot do, that is whether they can live long, escape avoidable morbidity, be well-nourished, be able to read and write and communicate, take part in literary and scientific pursuits. It has to do, in Marx's word, with replacing the domination of circumstances and chances over individuals by domination of individuals over chances and circumstances." Gender and women's studies stressed the role of empowerment, particularly among women in the development process. Such discourses influenced the international agencies such as the United Nations and its bodies. The Human Development Index, developed by Mahbub Huck for United Nations Development Program, UNDP, emphasized on shifting the focus of development economics from national income accounting to people-centered policies. The Human Development Index and the Human Development Reports of the UNDP assess development in terms of indicators such as life expectancy, education and income. This led to the evolution of millennium development goals, which are the eight internationally agreed goals. They are eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality and empowering women, reducing child mortality rates, improving maternal health, addressing HIV-E8s, malaria and other diseases, ensuring environmental sustainability and developing a global partnership for development. While the objectives of the millennium development goals, MDG, is to achieve these goals by 2015, many countries still lag behind in achieving these goals. According to World Bank, about 2.5 billion adults lack access to formal financial services, limiting their ability to benefit from economic opportunities, improve their health and education and raise their income levels. Financial literacy is another crucial factor in financial inclusion. A report of the World Bank points out that in one of the major developing countries, 60% of the adults do not understand the term interest. The private and the public capital formation in agriculture in many developing countries have been declining. Such a trend has resulted in poorer investment patterns in rural areas leading to unemployment, lower income and poverty. Non-institutional credit was the major source of capital and in many cases it also became unviable economic tool resulting in the vicious cycle of exploitation and poverty. The transaction for agriculture credit in rural India, the transaction cost ranges from 11.5% to 16.5%. Similarly, in terms of non-performing asset rate, that is the default rate, are the non-repayment of the principal and the capital and the interest. In the priority sector, which includes agriculture, ranges around 45%. The major reasons for such high non-performing asset rates are improper support system, lack of insurance, imperfect market, problems in the value chain, high opportunity costs for farmers in obtaining credit, financial illiteracy, etc. The emergence of microfinance, community banks and self-help groups have added a new dimension to the rural finance. Many countries have started adopting proactive approach towards financial inclusion. During 2011, more than 80 countries came together in Mexico and signed a declaration called Maya Declaration whereby they have agreed to create an enabling environment to harness new technology that increases access to and lowers the cost of financial services. Implement a proportional framework that advances synergies in financial inclusion, integrity and stability. Integrate consumer protection and empowerment as a key pillar of financial inclusion. Organize data for informed policymaking and tracking results. Such a process of financial inclusion is expected to enhance the entrepreneurial qualities of the rural poor and help them to achieve a better quality of life. Now comes the mobile phone. The role of mobile phones have to be looked from this perspective. The following questions need to be asked. Can mobile phone help to reduce the transaction cost of credit? Can it play a role in improving the credit management? Can it reduce the opportunity cost of the rural poor in obtaining credit and lead to better investment strategies in agriculture? Can it increase the financial literacy and enable the farming community and the marginalized sections such as women to make informed choices? If you can get yes as an answer, then mobile phone will have constructive role in adding value to the development process. I met this lady in Bukoba, Tanzania who is managing a savings and credit cooperatives for women, SACOs. She and the members of SACO had to travel a long distance from their villages to come to the town for depositing their savings in the SACO. This involved substantial travel cost and other opportunity costs. Then the SACO introduced the MPSA system and now the women are able to transfer the money sitting in the village to the SACO without traveling to the town. This has improved the saving and has reduced the transportation cost as well as the drudgery for the women. Look at this lady, Mrs. Perie Jackamal from the Thaini district in India. She had never been to school. She borrowed money under a program called Lifelong Learning for Farmers. She borrowed a loan along with 5,000 other women from a bank and started developing a goat-rearing enterprise. She agreed to learn using mobile phones with audio-based learning materials in her language on various aspects of goat-rearing as well as on financial literacy. These show that such learning has helped her to earn better income and become empowered. Banks point out that the credit repayment rate is very high among such women and such learners. Mobile phones by itself cannot be a silver bullet for development. Innovation is more about harnessing such technologies in an appropriate socioeconomic and political context for reaching various development goals. There are various innovative models such as MPAESA, mobiles for microfinances, etc., which have shown that mobile phones can be effectively utilized if they are positioned according to the needs of the primary stakeholders such as the rural community as well as the secondary stakeholders such as the financial institutions. Thank you.