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Atanu Dey-Vinod Khosla Marshall Plan

Posted on Sunday, Jan 28th 2007

By Atanu Dey, Guest Author

India’s economic growth depends critically on the development of its
700-million strong rural population living in 600,000 villages. The
challenge is to manage their transition from a village-centric
agricultural-based economy to a city-centric non-agricultural economy

Economic growth is both a cause and consequence of urbanization.
Cities are engines of economic growth because they give rise to
economies of scale, scope, and aggregation. The aggregation of supply
and demand for economic goods and services (and thus for
infrastructure) which accounts for cities. Availability of low cost
infrastructure in turn makes the availability of a wide range of
services possible in cities as opposed to very small villages.

People need access to a range of services which allow them to engage
in economically productive activities. These services include, at a
minimum, market access, educational, health, financial, entertainment,
transportation, and communications—these enhance life and livelihood.
Affordable infrastructure makes service provision commercially viable.
However, infrastructure investment is ‘lumpy’ – the average cost of
provision of infrastructure is inversely related to the scale of the

Resource limitations preclude the provision of infrastructure at every
village. Moreover, instead of 600,000 small villages, the future
population distribution has to be in a much smaller number of much
larger habitations – if the majority of the labor has to be engaged in
non-agricultural activities. The basic geographical structure of
population distribution will eventually undergo a change because
people migrate out of villages into cities.

RISC (Rural Infrastructure and Services Commons) is an economic
model which can catalyze rural economic
development by providing rural populations a comprehensive set of
relevant services. It works within the constraints of limited
resources by focusing attention to and concentrating investments at
specific locations to obtain economies of scale, scope, and

A RISC provides a reliable, standardized, competitively-priced
infrastructure platform consisting of power, broadband
telecommunications, and the physical plant (building, water,
air-conditioning, sanitation, security). This is achieved by the
coordinated and cooperative investment of firms that specialize in the
component activities.

The user services such as market making, financial intermediation,
education, health, social services, governmental services,
entertainment, logistics, etc, make use of the infrastructure
services. Market forces determine the set of services offered at any
location. The availability of the infrastructure reduces the cost of
the services and therefore the prices that the users face.

The total rural population of India can be covered by about 6,000
RISCs each servicing the needs of approximately 100,000 people. By
providing a full complement of services, RISC creates a ‘micro-city’
which seeds the formation of a city by drawing to it the population
from the surrounding areas. RISC focuses on the development of the
rural population, and not on the development of villages which are
destined to be extinct anyway.

[The RISC concept paper was jointly written by Vinod Khosla and Atanu
Dey. It is available at]

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Sramana Mitra on Strategy » Blog Archive » Atanu Dey-Vinod Khosla Marshall Plan - Addendum Saturday, March 3, 2007 at 7:53 AM PT

Wow! Its great to come up with revolutionary ideas and to dream big. But where is the dose of reality? What are each of these 6000 SLUMS going to do? Why not instead propose a model for industrial centers in rural areas (much like the MIDC’s in Maharashtra) and let people go where they will. One may draw a parallel to the Button/Zipper cities in China but to think that there 6000 SLUMS are going to offer world class IT services is .. the nightmare ending to the dream. Visit rural India and get some perspective.

KS Tuesday, March 4, 2008 at 9:22 AM PT

I have visited rural India. And I have visited many small towns in India. There is nothing rocket-science like in a lot of the data entry / BPO / KPO work that these people cannot do, if trained properly, and within the processes that the ITES companies are perfecting over time.

SLUM? Is Jamshedpur a slum? Jamshedpur is a classis example of a town that developed around and based upon one entrepreneur’s dream.

Sramana Mitra Tuesday, March 4, 2008 at 10:53 AM PT

Personally I do not believe the line “The challenge is to manage their transition from a village-centric agricultural-based economy to a city-centric non-agricultural economy urgently”

The rural-urban classification is a post industrialist gift. Cities as center, focal point of collection of resource, humans, control sucks life out of villages. I do not say let villages remain the way they are – poor, unhealthy and jobless. I say dream of creating cities all over is an unsustainable progress.

Has any one studied about villages / towns in first world or second world countries?

This concept of micro city seems interesting but we should have newer ways of doing agriculture

quark Tuesday, March 4, 2008 at 9:36 PM PT


I was not refering to 1 instance but to 6000! Yes, in select cases this model works and I pointed out the MIDC model myself. Can you create 10 Jamshedpurs’s – likely. But can you create 600 (10% of the number mentioned)? You know my answer. This is a case of a great idea, overextended, and by virtue of extension likely to not be successfully implemented in the few instances where it can be successful?

Quark brings up an excellent point. If you eat roti you may have noticed that India has banned wheat exports this year since they risk compromising local demand. Who does the farming when everyone lives in a city? Can the farmer benefit more from punching numbers into a database or from advanced farming technology?

KS Friday, March 7, 2008 at 3:29 PM PT

What are you talking about? India has a Billion+ population. We’re just talking about increasing the It workers from 4M to 30M.

How does that impact agriculture?

And why can’t you create 6000 Jamshedpurs? How did NIIT create its franchises? You take a successful model and replicate. Starbucks.

Sorry, i don’t share your points of view of this.

Sramana Mitra Friday, March 7, 2008 at 4:09 PM PT

Will the people living in those 600,000 villages really want their villages to change as you have envisioned? If some bright, resourceful people do get together and bring about this change, would they have not changed the lives of such large number of people irreversibly?

The problem with taking one successful idea replicating it all over is that many places start looking like the same.

When I was in Canada/US for a while, I used to be surprised by the fact that no matter how many hours I drive and reach a different place, I never felt like I actually went to a different place. I used to find the same Mc Donalds, Starbucks and other chains.

That may be good for people who are comfortable with a set of conveniences in life and would want that those to be found everywhere.

Whenever I am in India and travelling, I am amazed at the how different the places become within a matter of travelling for a few hours. You cannot be sure what sort of tea you would get in a stall you will find, but most of the time you are pleasantly surprised by the difference in taste. Just one example of the many things that you will find different.

This may sound like I am against technological progress. I am definitely not. Create new things and let people decide whether they want them. Don’t force things on them, when you can’t be sure what the effects of your change will be.

Vikram Pawar Saturday, March 8, 2008 at 12:29 PM PT

Hi Vikram,

Yes, these are thoughtful concerns.

However, which is more important? To ensure that the people in these villages have a source of income, or that the villages are preserved exactly as they are today for the traveling pleasure of the affluent class like you and me?

By the way, you may want to read my essay, As India Builds, if these kinds of issues interest you.


Sramana Mitra Saturday, March 8, 2008 at 4:17 PM PT

Increasing IT strength from 4 to 30 M was not covered in the article! Developing 6000 RISC’s was.

City NOT EQUAL TO Coffee Shop or Educational Institute. Different objective & different dynamics.

I appreciate your optimism on the subject, all I would like to stress is there doesnt seem much realism involved.

KS Sunday, March 9, 2008 at 8:37 AM PT

Yes it was:

Also, if you told anyone 10-15 years back that India would be flushed with venture capital by 2008, people would have questioned your “realism”.

And I am sure many people questioned Narayan Murthy’s “realism” at one point.

Sramana Mitra Sunday, March 9, 2008 at 11:24 AM PT

According to Dr. Atanu Dey
“RISC focuses on the development of the
rural population, and not on the development of villages which are destined to be extinct anyway.”

Extinction of village is unnecessary and unwanted. History of development does not show of any trend of extinction of rural life or for that matter. Every citymen wants a “villa” or a “farm house”. Just like a sustainable ecosystem, diversity and democracy needs to be respected and desired for alongside the economic development. Some of the economic development can probably be done without the provision of big infrastructure as proposed in PURA or RISC model. Besides ICT enabled services high value low volume products (specialty chemicals, handicrafts, literary and art objects), agro or eco-tourism all these have great potentials to generate revenues and hence economic development.

Sanjay Pal Saturday, August 29, 2009 at 3:00 PM PT


A dated thread/discussion, but if these matters still interest you, I wonder if you’ve looked at the spatial planning and development as in the Netherlands/Scandinavia in the context of development in India — please see:
6 Thinking Big: Scale, Ownership & Results
We’d do well to borrow from the Dutch model of public-private partnership
BS October 6, 2005

17 Integrated Area Planning (Spatial Planning)
[Infrastructure: Rural & Urban]
Let’s begin with Integrated Area Planning – Spatial Planning.

Stop to think of what is really essential: enabling people to live well, be active and productive, by providing the necessary services and facilities… What assumes importance, after goal setting and prioritisation, is pragmatic planning and execution…
BS October 5, 2006

28 India & The Netherlands (Dutch Systems – 1)
Applying concepts from the Netherlands in India
BS Supplement, November 2007

29 Planning for Markets: Keukenhof (Dutch Systems – 2)
[Tulips & Bulbs from Keukenhof]
Planning for markets & development: The Dutch Experience
BS Supplement, November 2007


Shyam Ponappa

Shyam Ponappa Wednesday, April 14, 2010 at 12:23 AM PT