[OLPC India] India Digest, Vol 23, Issue 11

[K. K. Subramaniam]

> What is wrong with using a $188 computer as collateral for the loan to
> buy it?
The asset depreciates 60% every year. So a long term loan from banks on 
commercial terms is ruled out.

> What about the economic opportunities that it opens up for 
> families, even before their children go through school? I want
> computers for preschoolers, to be paid back out of the economic growth
> of the entire community.
Yes, that is possible but a lot more infrastructure (particularly in micro 
power generation and communication) needs to get into place before computers 
can become economically viable. The communication infrastructure will be in 
place in the next few years. There are people working on the micro power 
generation problem (see www.selco-india.com) but we still don't have our arms 
around the problem.

> > 2. INR 15,000 is a huge amount for most people. Capital is expensive in
> > India and educational loans would cost upwards of 11%. Over a decade the
> > loan amount would triple. An XO would depreciate long before a decade.
>
> You are assuming that computers for schoolchildren have no economic
> value.
Incorrect. My statement was that children will not be able to generate enough 
money to compensate for interest cost and deprecation in the asset value. The 
situation gets better for the 14+ age group but that is not where the  bulk 
of the problem lies.

> This turns out not to be the case. Elementary school children 
> have been found to be doing agricultural research for their families
> on the Internet.
Children in the 14+ age group also earn money doing chores around the village, 
but what about younger children? Basic education for young children should 
not be tied to their ability to earn money.

> Anybody who makes anything that can be sold outside 
> the community, such as art, music, clothing, crafts, and much more,
> can get into e-commerce on sites such as Overstock.com, Shopping.com,
> eBay.com, and others. People in microfinance programs connected with
> e-commerce have been known to go from an income of $1/day to $6/hour.
Yes. but power and communication infrastructure is not yet in place to enable 
this to happen. It will take a few more years. Again this model will work for 
older children but not for younger children. There is a law against employing 
young children in commerce.

Subbu