Making shoes for the cobbler's son

The Finance Minister (FM) presented the Budget for 2012-2013 in the shadows of shrill criticism against governance failure, corruption and waste of tax-payers money. The vast amounts of money that the central government spends each year does not trickle down fully. It trickles out through leakages. And sometimes, defying the laws of physics, it trickles up and even trickles back. One of the five objectives that the FM has set himself this year is to “improve delivery systems, governance and transparency ; and address the problem of black money and corruption in public life.” And he wants a system that does not leak.

Although we have emerged as a powerhouse of information technology, India has remained the proverbial cobbler’s son who goes barefoot. Our IT engineers and software factories build and implement systems around the world to improve transparency, governance, efficiency and speed of delivery .But our own systems particularly in the government and in rural parts of our country are poor. Our digital divide is wide. Clearly, if we use a fraction of our talent reservoir to innovate frugally, leverage technology and improve our systems to improve transparency, reduce waste, combat corruption and empower the poor we could change the game-forever.

In his budget speech the FM has promised to do just that. In his own words he wants to “improve the qualityof public spending”. We intends to leverage technology and our skills in designing and implementing IT platforms and systems and I have picked 10 areas from his speech:

1. He has promised to introduce a mobile telephony based Fertilizer Management System (mFMS). This system will provide end-to-end visibility of movement of fertilizers and subsidies initially from the manufacturer through the supply chain to the retailer and finally to the kisan. The first phase of “ manufacturer to retailer” will be rolled out in 2012 benefiting 120 million farmers (i.e. .improving services) and reducing subsidies by curtailing misuse of fertilizers.

2. All three PSU Oil Marketing companies have launched LPG transparency portals to improve customer services and reduce leakages. A pilot project is underway and it will be rolled out nationwide. LPG will be sold to customers at market price and subsidy will be transferred directly into the beneficiary’s bank account.

3. A similar pilot project for kerosene is being implemented using the Aadhaar platform to validate PDS ration cards and transfer subsidy directly to the beneficiary’s bank account.

4. The FM has indicated significant investments in networking infrastructure without which the GST legislation will be stymied. In a rare cooperation between the central and state governments the GST Network called GSTN is being set up and the deadline for implementing GSTN is August 2012. Once completed, this will enable common PAN-based registration, electronic filing of returns and payments processing for all states on a shared platform. In other words we are creating not only a network but also a shared service facility that will make GST administration cheaper, faster, better, more transparent and leak-proof.

5. In order to simplify the process and improve penetration, the FM is making it mandatory for all companies issuing IPOs of Rs 10 crore and above in electronic format through nationwide network of stock exchanges.

6. Although somewhat odd in a budget speech, the FM has announced important decisions of companies must be more participative and he is making electronic voting facilities mandatory for top listed companies. presumably.

7. Those who have accounts in multiple banks know what a pain it is to update Know Your Customer (KYC). You must have wondered why no one devised a simpler procedure. The FM has leveraged technology to make the lives of banks and customers easier. A central Know Your Customer (KYC) depository will be developed to avoid multiplicity of registration and data updating. Of course, there will be issues of privacy and security. But this is an inherent component of the global banking system –so the good news is that the wheel exists and does not have to be re-invented.

8. The FM is also embedding intelligence into devices and systems. He wants the Kisan Credit Card (KCC) to become a smart card and double up as an ATM.

9. Those who have listened to Nandan Nilekani in the early days would remember that he always said that Aadhaar was a platform not a card. He repeated that Aadhaar will produce a unique identification number and a platform that can verify the identity of an individual and Aadhaar project itself will not issue any cards.

But clearly other operators can use the unique number for identification for different applications. Enrolments in Aadhaar system has crossed 200 million people and the FM has, in this budget, allocated adequate funds for an additional 400 million in the current. Already the payments under MG-NREGA, widow and disability pensions and scholarships are being paid into beneficiary’s bank accounts directly in selected areas.

10. The FM has mooted a proposal to issue Resident Identity Cards bearing Aadhaar numbers to all residents above the age of 18 to help in e-governance initiatives.

Therefore, one should applaud the FM and the government’s resolve to use the skills and brain-power available in India and to leverage modern information and networking technology. The FM wants to do so to improve services, enhance governance, stop leakages and provide subsidies and entitlements directly to the beneficiary. This move shines brightly through the labyrinthine tax proposals including his effort to cast the service tax net wider and with a sharper sting.