Enabling a Paradigm Shift in Social Protection through BECKN

Delivery of social protection measures is a big challenge to any government; especially in a developing country.  Social protection program has three key components.

The first component is how we can uniquely identify the beneficiary and enrol them into the program. Digital Id revolutionised this part. The pandemic demonstrated that the countries which have established a foundation of digital id can manage the outreach much better than a country that is lacking in this area. Countries which have gone one step forward and have established a somewhat comprehensive registry of uniquely identified deserving beneficiaries did even better.

The second component is the payment system. Building on the foundation of Digital ID, in India we have introduced Unified Payment Interface (UPI) which is a completely open and interoperable protocol that has transformed the payment system.  As of now, UPI handles more than 1.25 billion transactions per month which is more than four times the volume of transactions handled by the Credit / Debit card network every month. We are now in the process of building a next layer on top of it to provide a digital voucher using completely open protocol. This could be a straightforward money voucher, or it could be a voucher that is meant for a specific product if the government wants to ensure that the benefits are provided in kind with respect to certain goods and services.

The third element is the market including the supply chain, and it is still a challenge. That is why the governments are forced to run the whole physical operation of procurement, supply chain management and retail shops. Often very very inefficiently.

BECKN foundation established by Nanden Nilekani has come out with a brilliant solution to this problem. It has published and open protocol specification which can completely revolutionize the marketplace.

What is the challenge it is attempting to solve?  Digital marketplace is a big boon; but the market is still heavily siloed.  It is increasingly becoming walled gardens of few players. Take for example retail. There are  a few large aggregators like amazon/ big basket/ Alibaba They are doing a great job; but, they are walled gardens. Same is the case with delivery or mobility or health service. It is a pain for the consumer who must look at multiple apps to make an ideal choice. This limits the choice and makes markets inefficient.

The service providers are also constrained. Unless you are a part of the aggregator platform you are at a big disadvantage in terms of discoverability.

BECKN protocol addresses this issue for both the service provider and the consumer. It is a paradigm shift; we are making internet, small business friendly and not small business internet friendly.

A simple adapter to the payment system or inventory management system based on BECKN protocol can provide any service provider equal access to the market whether he is big or small. Any frontend app which is comfortable to the consumer; could help him or her to access all the options seamlessly if it has a BECKN based connector to the network. It may be WhatsApp may be telegraph may be Google map or a special app provided by the government.

These mean simplification of service delivery [e.g. one stop payment, personalized workflows combining multiple services, granular view of events as and when they occur], freedom of choice for consumers, stitching of suppliers to fulfil a comprehensive service, much better (network driven) view of consumer demand and ability of suppliers to fulfil that demand

Such a marketplace has also the potential for bringing dramatic innovations in terms of option to the beneficiary. Once such an Open Benefit Delivery Network is in place, governments can focus on scheme design and enrolling the beneficiaries and reaching him the subsidy / financial assistance . Then leave the markets to make the best offer.

The beauty of this solution is that we are not talking about huge investment in a new platform or software solution. The service providers at a very low cost can be enabled to plug into the market. We are democratising the market just like HTTP democratised the internet. This is not a wishful thinking. We are helping the first solution built around BECKN to go live in India next month and few more are on the way.

It is time to give this a serious try and be an innovator to solve fundamental problems so that we can manage emergencies like the pandemic much better.

“He who is best prepared can best serve his moment of inspiration and desperation.” ― Samuel Taylor Coleridge

If wishes were horses…

I recently read an interesting observation about growth prospects for India. During the first millennium AD, and even before, India was an evolved society. It had world class educational institutions (Nalanda, Taxila etc) which attracted students and scholars from around the world; it had world renowned commercial centers which had trade relationships with many continents, and it demonstrated leadership in area of philosophy, mathematics, literature and astronomy. It was the era of knowledge and reasoning.

The second millennium was the era of engineering and industrial revolution which practically bypassed India. The colonial suppression would have definitely contributed to this. But, as per the above article it was also a manifestation of how Indian brain is wired, which makes it more comfortable with knowledge and logic than technology and applied science.

The third millennium again is that of knowledge and learning, which are comfort areas for the Indian brain. In fact the planning commission in early 2000 had set up a task force under the chairmanship of Dy Chairman of Planning Commission to evolve strategies for becoming a knowledge superpower.

I don’t know how correct is this analysis with respect to the competitive edge of Indian society in this knowledge economy. But there can be no argument about the fact the key drivers for today’s growths are information and collaboration. The most important infrastructural requirements for these key drivers are connectivity to link people and capability to use the modern tools that facilitate information flow and collaboration.

Today India is acknowledged as a powerhouse in the area of Information Technology. We are the back end development center for the whole world. Graduates in every field of science, whether it is engineering, physics, chemistry and mathematics appear to be drifting to computer programming and many more into IT Enabled Services.

Therefore, it appears that we have the aptitude, the infrastructure and the human resources necessary in this most important field and we are well poised to build on this. But when we go a little deeper, we see some underlying weaknesses.

A global ICT index called “Connectivity Score Card” based on a Study created by Professor Leonard Waverman, London Business School, and economic consulting firm LECG, commissioned by Nokia Siemens Networks has been tracking the level of sophistication of ICT infrastructure across the world for last few years. It is a broad based matrix taking into account availability of infrastructure and usage & skills in the area of ICT among consumer, business and government sectors. This study has ranked countries which are segregated into two groups called innovation driven and resources driven as per the categorization of world economic forum. The former contains mostly developed economies and latter more of developing economies. India forms a part of the resource driven countries and with a score of 1,82 out of 10 it ranks 21 among 25. The only four countries which have ranks lower than India are Kenya, Nigeria, Bangladesh and Pakistan. Malaysia with a score of 7.14 has the top place among the resources driven economies.

What do we learn from this contradiction? We have outstanding strengths in the field of ICT which is one of the key requirements for a knowledge economy. But, this skills and strengths are concentrated in few Islands of excellence. Therefore, we need to have a focused strategy and attention (a little more than that gets wasted in telecom scams) for wider availability of ICT infrastructure for us to exploit this opportunity. Somebody once asked Dr R A Mashelkar what would be his ultimate wish for India. He had no difficulty in responding quickly. “High quality connectivity to every citizen at affordable cost and skill to use it effortlessly and meaningfully.” Then, as Mat Ridley would say, ideas will have more sex and multiply.

The number one benefit of information technology is that it empowers people to do what they want to do. It lets people be creative. It lets people be productive. It lets people learn things they didn't think they could learn before, and so in a sense it is all about potential. Steve Ballmer


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“Vanity my favourite sin”

Nuremberg trials are a series of military tribunals held by the allied forces who won the Second World War. These trials were held to prosecute members of political and military leadership of the Nazi Germany for their crime against humanity. In most of these cases, they were being prosecuted for what they did, for their obedience to their superior’s commands as expected from a disciplined officer of any organisation, more so of the armed forces. Therefore, a certain set of principals had been evolved to determine what constitutes war crime. These principals called the ‘Nuremberg Principles’ had been created by the International Law Commission of the United Nations.

It is now accepted at a philosophical level, that when we act as per the directions of the superiors, we also have the moral responsibility to assess the fairness of the actions and express our dissent when those actions are against the larger interest of the society.

The issues associated with ‘blind following of the order from the superior officer’ are not just a concern in military actions. We face it in our day-to-day life as an officer of the government or even of commercial entities. It is practically difficult for many of us to act on a moral choice to “blow the whistle” as the potential retribution of such action could have an adverse impact in our personal life.

In many cases, the individuals who have questioned the actions of their superiors have been harassed and had to suffer significant damage to their life and career. This include dismissal from job, coming in the way of he getting alternate employment, tarnishing his image so on and so forth.

Society has been trying to evolve legal structures to protect and encourage citizens to ‘blow the whistle’ when they come across un-ethical or fraudulent actions and to give them the right to demand information that could elicit truth.

The listing agreement between the stock exchanges and the companies has a provision (though still non -mandatory) that all listed companies should have a published ‘whistle blower policy’ for employees to report instances of unethical behaviour, actual or suspected fraud or violation of the Company’s code of conduct or ethics policy.

The “Right to Information Act” tries to provide a strong tool in the hands of the citizen to demand access to information regarding the actions of the government.

This legal enablement has helped to bring about more transparency in administration and corporate governance. One of the main criticisms against these provisions is that many a time these are misused to further private agenda, inter-personal conflicts or even to clog the pipes of the administrative machinery.

In spite of all these, India is still rated high on corruption both in private and government sector. The tag line of an article written by Mohan Murti (former Europe Director, CII, and lives in Cologne, Germany) in Business Line titled “Is the nation in a coma?” reads “Europeans believe that Indian leaders are too blinded by new wealth and deceit to comprehend that the day will come when the have-nots will hit the streets”

Corruption is not just with respect to monetary returns for favours dispensed or deviation from law; it is also applicable to the actions of commission and omission by the so called clean and honest people, that pander to their needs of ego satisfaction, self glorification and just plain megalomania. As John Milton played by Al Pacino in the award winning movie quips “Vanity definitely my favourite Sin”. And un-ethical actions that satisfy this vanity is equally despicable as the actions that layers the pocket.

While continuous evolvement of the legal framework can help the cleansing process, each us has a responsibility; the responsibility to act ethically and to question ethical violations (especially the ones which are technically and may be even legally correct) that hinders the path to building a cleaner society that respects decency and fair play more than the smell of greenbacks and self edification.

“Nearly all men can stand adversity, but if you want to test a man's character, give him power”. Abraham Lincoln

Call of Duty

Meera Sanyal, the country head of ABN Amro has announced that she is going to stand for the coming election. I don’t know if she will win or what she will do if she wins. But I salute this initiative and I believe more of us should follow.

When we were under the colonial rule a large number of brilliant, highly educated people joined politics and played very active roles. May be what prompted them was the yearning to see our country independent. Once we got our independence, many of us decided that we have done our duty and now we are left to reap the fruits of our labor.

We realized that there are many opportunities for the educated people in our country without the travails of a political career. The civil service gave power and status. IITs degrees gave us the visas to the land of opportunity and IIMs opened doors to lucrative careers in industry. No need to cover street by street kissing little babies and asking how the family is doing. No uncertainty of elections.

When we abdicated our social responsibility there were many who were too happy jump to the fray. Because it gave them power and it gave them opportunity to enrich themselves. We have a saying in our tongue which translates as “if you don’t sit where you are supposed to sit the dog will come and sit there”. This is what happened to Indian politics the dogs took over the vacuum that was left.

We have no right to complain; because we allowed many goons to sit there. Now that they have taken over, naturally they try to protect their turf. That gave us more excuses to run for cover and curse politics. I don’t mean to say that all our politicians are goons. But many are. There are many who are gems and give their best for the country and that is why we are not a banana republic.

In the recent past we see more educated people willing to join politics. But they were mostly the ones with political lineage. It is at least a new trend.

I agree the degrees don’t ensure maturity or make good and honest leaders. If it was so, the bureaucracy should have been outstanding examples of social responsibility.

I hope more people with capability and principles will be willing to join the fray. With an intention to make a difference and not to make a killing. If this trickle turns to a tide, we will definitely be able to repeat the history of ousting the evil with no bloodshed.

Keep praying and keep hoping.

Devastation of world financial markets - A case of Policy Reversals in India?

The economies around the world in the last few months are trying to adjust to the neutron bomb like devastation that downed many titans of the financial market and decimated large part of the forces, both officers and the foot soldiers, all around the world. We in India have also been caught the wake of this destruction and has been exposed to a fair share of misery ourselves. This experience has since raised questions from many as to whether this is a signal that the market economy too is a failure; like the failures of communism and planned economies in the last couple of decades. For a country like ours that is struggling out of the paralyzing hold of the planned economy, the lower impact this meltdown had on our economy naturally triggered these doubts. Fanning these worries are many who enjoyed the protective cocoons, of licenses and controls we had for practically each and every economic activity ranging from manufacturing to imports and exports, which ensured profit for few at the cost of many.

I am not an expert to assess the reasons and impact of the quake that shocked the financial world. But I couldn’t help pen few thoughts that come to my mind on the issues that are being discussed among my crowd of friends.

It is in the nature of market to see cycles of growth and creative destruction. During the cycles of growth we will see extensive rallies of innovations. Many of these innovations are meant to die. Like experimental mutations of evolutionary process. The environment around test these mutations and the ones that can survive these tests precede forward in the path of evolution. As Garry Hammel has explained in ‘Future of Management’, this is one lesson we need to learn from the evolutionary process if we want to build sustaining institutions.

Some time these innovations build a momentum that takes it to ridiculous heights. If we recall, similar enthusiasm and short term orientation resulted in blowup of about 65 billion dollars in the dotcom revolution. Internet then was a new idea opening up opportunities that were not dreamed. The matrices to measure the performance were just evolving. In the meantime there was much causality. Did the internet industry die? No. The right kind of models survived. In past most of these such bubbles were localized to industry and market. Whenever new technology or new product ideas have been identified, we have seen an immediate profusion of organizations that spring up to exploit this. Most of them die and few survive to become successful players in the market. Men with showels who ventured to prospect diamonds when new continents were discovered to the number companies which were set up to manufacture electrical machinery to computers are cases in point. How many have survived till today? Very Few.

What can control this runaway acceleration is healthy governance and stronger regulatory institutions to ensure that the innovations are good for the market as whole and not just for few people. Any game would need clear set of rules and an umpire who understands the game, its rules, its compulsions and who is fair. Else, greed or muscle power or fraud will rule the game.

In the last few years we saw out of balance developments in the market in comparison to the development in regulatory mechanisms. When complex financial engineering products were being structured and marketed the credit rating institutions who are supposed to signal the true risk associated with these products failed in their duty. The pull of the unhealthy incentive structure for these agencies (where their income was derived from companies whose products are being rated by these rating agencies) distanced them away from their fiduciary responsibility leading to ratings that failed to reflect the true risk which in turn lead to mis-allocation of funds.

When such ingenious financial engineering helped US sub-prime loans to reach un-sustainable levels the bubble broke. The mere scale and spread of infected assets across the market players suddenly came to light. That took away the trust that these institutions had among them; the trust that kept the money flow between these entities.

When the inter-institutional trust evaporated the absence of such well structured markets were exacerbated. This squeezed flow of money in the international money markets. The pumps that pressured the flow were no more primed sufficiently. It was this flow that provided the lubrication for the economy to work. And the sudden drying of the money market seized many of the moving parts of the real economy.

Financial markets can be compared to the circulatory system in a body (the other industry segments may be compared to different organs of the body). In an integrated world the infection in the circulatory system spread very fast and wide and it had its impact even in India although there has been no build up of toxic assets in India. The drying up of the western money markets added pressure on the international investors who had invested in India and the Indian corporate who had exposure to international money market which contributed to selling pressure in Indian stock market and a credit squeeze in Indian Money market.

Governments realized the magnitude of this disaster and the need for immediate action. They quarantined the infected, separated toxic assets and pumped in liquidity. Like the doctor taking series of actions to contain the infection and suggesting a life style of extreme moderation till recovery to normal health. It also suggested the need of disciplined life.

But this no way suggests the ossified existence of a vegetating economy with a permanent freeze on any innovation and experimentation. I don’t think the governments of US and Europe that came in with a bailout package, plan to permanently run these as nationalized institutions frozen permanently into a mummified existence. They wanted to contain the mess, doctor them to health and put them back to the competitive pressures of the evolution process. If we look a bit cynically, this is in a way similar to Buffet pumping funds to Goldman Sachs and buying controlling stake really cheap. I am sure both these parties are going to be better off from these transactions once the tide has turned and will not be saddled with unproductive and unresponsive companies to run. I am not suggesting that the intention of the interventions was profits; it was primarily stabilizing the rocking boat. But the process and the expected outcome is going to be similar.

The failure that we witnessed in the market and the governmental interventions even in the developed countries seem to spur pressure on the policy makers in our country to revert back to more government control of business. Let us for a second look back at what the prevailing situation was in our country before started our journey towards liberalized market economy.

The Indian manufacturing was protected from both internal and external competition. Import restrictions and high import tariffs protected them from external competition. The government licensing system, coupled with the MRTP removed any incentive for innovation or even providing quality product, customer service or improvement of product features. The history of our automotive industry is a classical case in point. India commenced production of motor cars in 1957 ; Toyota commenced production of cars in 1937 and Honda motor company of Japan commenced production of cars in 1963. For the next four decades we produced the same car, sold it at ridiculously high prices and the buyer had to wait for months after placing an order after paying an advance. In the meantime the Toyota and Honda established as world leaders in automotive industry. This is not something that was unique to automotive industry. Each and every Industry in our country from blades to cement to pharmaceuticals has the same story.

Banking and financial services industry was no better. Customers of the banks, instead of being serviced were made to feel like mendicants asking for alms. Stock market was a closed club of brokers with the interest of the investor always coming last.

What did it mean to Indian Economy? India was never regarded as place where anything was happening. The slow growth rate of around 3% was considered the characteristic Hindu rate of growth. The consumer had no options for any new products. The job opportunities were limited. Few connected industrialists made all the money by cornering licenses, sharing the booty with the political bosses who were also able to exploit this state of affairs by attracting the patronage of masses who were living in a world of shortages.

Since we gradually moved towards a liberalized economy we have now established ourselves as a place where things do happen. There is a feeling of widespread optimism that we are on a path of real development and not in a spiral of poverty.

Let the nostalgia or the convoluted interpretations of the happenings around blind us to the history. But let us use this as an opportunity to learn from these mistakes and strengthen our institutions so that the momentum we built is not extinguished.