The Politics Of Smart-up India

PR Ramesh is Managing Editor of Open
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A recent conference at The Ashok in the Capital on an ambitious energy efficient irrigation scheme mooted by the Government saw a motley crew of participants and potential consumers. Many of them were different from the usual corporate honchos one sees at such gatherings. They were farmers who had come from various parts of the country to listen to Power Minister Piyush Goyal, who promised that the Government would invest some Rs 75,000 crore over the next five years to procure and distribute 30 million sophisticated pumpsets. As officials of Energy Efficiency Services Ltd (EESL, a JV of NTPC Ltd, Power Finance Corp Ltd, Rural Electrification Corp Ltd and Power Grid Corp of India Ltd) proceeded to explain that the cost of the pumps would be recovered by the end of the scheme period through power savings of around 37 per cent annually, food and agri producers queried, contested, argued, explained, computed and nodded. Many of those at the conference were ‘smart’ farmers, growing what would once have been considered too risky—from ice lettuce and mushrooms to orchids and lilies. Bearing not the remotest resemblance to the impoverished, burdened, helpless farmer of the celluloid epic, Mother India, they were at ease with high-tech phones, quick number crunching and spot decision taking.

‘No century in recorded history has experienced so many social transformations and such radical ones as the 20th century. They may turn out to be the most significant events of this century and its lasting legacy...but it is the social transformations that have had the lasting, indeed, permanent effect. They, rather than all the violence of the political surface, have transformed society but also our economy, the community, the polity we live in. The age of social transformation will not come to an end with the year 2000, it will not even have peaked by then,’ Peter F Drucker wrote of America in his essay The Age of Social Transformation, which surveyed an epoch where knowledge rather than labour or material would define inequality and radical transformations.

Referring to the far smaller and slower social changes in earlier periods that triggered rebellions, riots, upheavals, intellectual and spiritual crises, Drucker could well be talking of India, with its long history, multiple identities, ground struggles and its steady-if-slow march of social progress. Towards the end of the 20th century and well into the 21st, the Republic’s society, economy, commerce, public services and polity have all been transformed significantly— both qualitatively and quantitatively—not only in comparison with the earlier half of the 20th century, but also from what existed in any other phase in history. There have been sweeping changes in their configurations, processes, problems and in their structures.

India has trekked a long way from the Republic it became on 26 January 1950. According to Sumantra Bose, author of Transforming India: Challenges to the World’s Largest Democracy, “The regionalisation of the nation’s political landscape has decentralised power, given communities a distinct voice and deepened India’s democracy although the era has also brought fresh dilemmas.” Bose observes that the dynamism of India’s democracy derives from the active participation of its people, ‘the demos’, as it dramatically emerges into the 21st century on the global stage in all its complexities and distinctiveness. And the empowerment of technology is now a key catalyst for change in every key sphere. The 21st century Indian Republic marks the process of breaking free of the ‘Mai Baap Sarkaar’ mindset that reigned between 1950 and 1991 when governments in power took all major economic and political decisions and citizens remained mired in freebies doled out by decision makers. This was the era of ‘benevolent’ rulers, with the citizenry pressured into being mute beneficiaries. Most Indians just followed what was told to them by the Government, little or no questions asked.

It was after the economic liberalisation process was initiated in the early 90s that the second phase began, significantly redefining the role of the citizen in the social, economic, political and other sectors. In 1991, with the opening up of the Indian economy, smart processes— granting Indians access to alternative products and service delivery options—made headway, but only gradually. Actual transformational change had to wait until the 21st century when internet penetration allowed a variety of processes to be established that ended the prevailing long, complex and inefficient chain of service delivery.

Service delivery to ordinary citizens has assumed centre stage in the electoral process only in the 21st century, including the Right to Information that was aimed at encouraging transparency in decision making, programme implementation and public expenditure right down to the village level. Some political parties, such as the Akali Dal, consulted and engaged public intellectuals and experts to spell out promises of basic service delivery to voters in their election charter, including those that touched the citizen personally. Time frames were spelt out within which complaints at police stations had to be registered, FIR copies issued, health services provided in Primary Health Centres and government hospitals, and essential needs met, such as getting passports and driver’s licences, electricity connections and water supply. This was how voters were now wooed, with assurances of stern action and complaint redressal should the rules be violated.

The increasing use of information technology in different sectors afforded easier access, speed and transparency vis-à-vis services and products for citizens. Many of these revolutionary changes came about due to the initiative of individual companies, banks and so on to reach consumers directly. Online, the 21st century consumer has become the key driver of the design and development of products for the retail sector, for example. Mahatma Gandhi’s view that the consumer is ‘the most important person on the premises’, once put up prominently in public sector banks, took on entirely new dimensions. Besides design and development of both material and service products in different sectors, competitive pricing also put the consumer at the centre of marketing efforts and strategies. In the financial sector, for example, the rise of payment banks such as PayTM have disrupted the existing framework and ushered in competition among existing banks, giving a big push to the idea of a cashless economy.

A key problem for Indian banks has been that the number of customers to be serviced is huge. After a point, the expansion of the branch network not only becomes uneconomical and inefficient, it is also subject to other constraints, such as of manpower. Key customers in remote areas remain physically distant from bank branches. With the increase in payment banks, bank correspondents and cashless banking, these problems are expected to be sharply minimised by a click on a handheld device such as a cellphone.


But it was the decision of the Government to adopt e-governance and make online services as important as the brick-and-mortar interface that may have most effectively transformed the relationship between the citizen and the Government, a development that has got a fillip over the last two-three years. One key illustrative example is the use of the Aadhaar card based on unique ID numbers by the Government, signalling a transition to a rules-based regime. The use of Aadhaar linked to a bank account to enable direct transfers of LPG subsidies to eligible beneficiaries has vastly reduced leakages, ensuring that these giveaways are better targeted at the deserving. More recently, the Government weeded out those with annual incomes of over Rs 10 lakh from the LPG subsidy regime.

This is a process that has been long in the making. Conceived during the tenure of Manmohan Singh as Prime Minister, it has been accelerated by the Narendra Modi Government. This is not only about plugging leakages in subsides and directing them to those who deserve them. If the LPG subsidy transfer scheme works out, there is a good chance that over time a number of other subsidies— food and fertiliser among them—may be transferred to bank accounts directly. Once that happens, India may actually approximate the economic ideal of a lump sum transfer of money, something that can potentially end price distortions in many markets. But as of now, that goal remains the holy grail of Indian political economy. That the crucial initial steps towards that end have been taken is an achievement.

In a bid to further encourage the ongoing shift to a cashless economy, with a view to making economic activity more efficient and minimise corruption (thanks to the existence of an electronic trail), the Government is working on the creation of an enabling environment. For the first time in the financial history of India, electronic payments by the Government surpassed paper clearances in September 2015. Again, in November, a total of Rs 632,587 crore was transferred through electronic fund transfer mechanisms, compared to Rs 617,845 crore via paper clearances. Once proper electronic trails of money transfers are established, the ‘suitcase culture’ of earlier decades visible while government contracts were awarded, the unwholesome influence of black money on electoral processes, and a whole raft of other ailments promise to disappear from India’s political life. This process is already underway.

Over the last few years, there has been heightened awareness on the part of citizens of their rights and entitlements. They have been empowered as consumers as well. Accompanied by the rapidly growing use of electronic media, mobile phones and broadband internet, it adds up to a better quality of life for millions.

Says a Union minister, “Progress of a people’s quality of life is not just gauged by material well-being in the consumer economy. It has to be gauged primarily by the cutting of red tape and complexities that face the citizen in dealing with the Government in every sphere, whether business, education, agriculture, small trade, etcetera. Take the Prime Minister’s crop insurance scheme recently approved by the Cabinet. The revamped scheme covers all crops (kharif and rabi), has redefined the basic unit for assessing losses incurred by farmers, and taken a big step in de-risking agriculture by cutting through the red tape that a farmer faces. Start Up India, on the other hand, recognises that aspirations are common for all and has prominently included SCs, STs and women among potential entrepreneurs. For big businesses, the redefined ‘Ease of Doing Business’ rules cuts red tape and fosters an entrepreneurial environment. And the new Bankruptcy Code, pending in Parliament, aims at enabling failed companies to exit with ease, without choking the business economy and adding to pending litigation. Even a simple thing such as registering online for a passport has ensured that touts and intermediaries that clogged the system and complicated it have been completely erased.”


That women in the Republic have made noticeable gains on empowerment parameters is clear in the National Family Health Survey data released recently, which has shown that the fertility rate (or the average number of children each woman has) is dropping, but, just as importantly, there is a marked increase in women in the 15-49 age group who have savings accounts that they use themselves. Under the Jan Dhan Yojana, launched in 2014 to ensure that every household has access to a banking facility, an account needs to be opened in the name of a female member of the household. This gives women more control over household finances. The NFHS-4 has a new parameter—a count of women who own a house and/or land (alone or jointly with others). On this, Bihar, which otherwise ranks lowest on several indicators, tops the list with 58.8 per cent women owning some form of property. Tripura finishes second at 57.3 per cent, while West Bengal at 23.8 per cent has the least number of women owning property.

The full effects of these changes will be visible only years later. But the end result is already in view. Unless energy and commodity prices shoot skyward, these processes will ensure that India’s fiscal and current account deficits will come down dramatically. At the moment, no government—whether it be fiscally conservative or careless— can afford to reduce expenditure on welfare schemes and populist measures. India has a large number of people who are poor (and even destitute) and it is the Government’s responsibility to come to their aid. However, this tends to follow an uneven pattern. First governments spend as if there are no ill effects of spending unwisely. Next, when economic imbalances emerge, this kind of spending is the first to be stopped because it is the easiest to. The harmful impact on the poor— reduced access to medicines, essential services and food— is often ignored. Then, when the economy returns to health, the process begins all over again. Introducing smart systems will ensure the stable delivery of benefits to the needy. The aim should be to ensure a process-centric and accessible delivery system for the people of this Republic, rather than adopting measures that are person or political party centric, which end up as rickety systems prone to leakages and corruption.

This transition would be much easier achieved in a well wired country, and so electronic infrastructure is important to the effort. There are, however, perverse political incentives for not doing what is necessary. In the short- run, it may make sense for parties to splurge and distribute cash all around instead of instituting systems that will bring in efficiency. For example, given a choice between waiving outstanding loans to farmers and providing a viable and responsive crop insurance scheme, the political choice is obvious: waive the loan. But that does not help the farmer. All that will happen is that when the next crop fails, he will borrow more and hope for another loan waiver. In the meantime, banks must bear the burden of this populism. Fortunately, for farmers and banks, a better designed farm insurance scheme—one that covers all crops and also reduces the premium that farmers must pay, factors that kept the concept from taking off earlier— is expected to lower agricultural risks and thus help raise yields. The results would be clear in the future, but the signs so far are positive. It is with such small steps that a smarter, more efficient, Republic will be built.