Thursday, June 16, 2022

Drivers of Customer Service in ONDC


In the prevailing model of eCommerce, the same entity provides end-to-end solution as a market place which manages both customer experience and seller interface.  Such an end-to-end solution offer significant influence and control to the platform providers compared to the end points like the seller / buyer. This enables the platform providers to give priority to customer demands which is their natural strategic choice to build and retain an exclusive customer base as their lever for market control. With this prioritisation logic, they may follow a no-questions asked return and refund policy. Sometimes they take this to the logical extreme even if the return request is not on account of the fault of the seller which is possible with the control of the funds and contractual hold they have on their on the sellers which the economists explain as ‘near monopsony’ power of these platforms.  Any loss on account of this is usually borne by the seller. Such selective service also enable significantly big margin for the platforms.

In the end, if there is any dispute with the seller, the existing legal framework forms the basis for the dispute resolution between the buyer and merchant as the merchant is the seller on record and not the platform providing the market place.

ONDC Network

In case of ONDC, with unbundling of the building blocks of the transaction (like seller interface, buyer service, logistics etc) there is possibility for different models to evolve which will suit different segments of buyers and sellers.

A.     Different Business Models with divergent service level offers


1.      Some Buyer application would like to offer a select service and may offer no-question asked return / refund with then insisting on payment to be routed through them so that the full payment to seller is made only after the necessary lock-in period for customer return.

In this case, the search request and order placement will include these conditions and only offers meeting these conditions will be accepted by the Buyer App and shared with the customer which means the seller has the option to respond to such conditions without being dictated by the intermediary.

2.      In some cases the Seller App  (may be a discount store) may offer products with a no or limited return  which will be part of if its offer when it returns response to a search by a buyer app and only customers accepting these conditions explicitly will be serviced .

The important point to note is that the ONDC network offers opportunity for sellers offering different price/ service combination and buyers with different price/service preference to come together and transact in a transparent fashion thus creating a healthy and diverse market place which is what we are familiar in any physical market.

B.      ONDC checks and balances encouraging and incentivising fair and responsible business practices

As in the case of the prevailing eCommerce market place, the legal framework still remains the same and there is no different legal framework for ONDC. However, as a community manager ONDC will develop an enhanced set of checks and balances to offer better experience both to the buyer and seller thus reducing the need of legal recourse.

1.      ONDC will onboard buyer and seller apps only after establishing their identity

2.      ONDC has stringent polices on expected behaviour of each NP.

3.      Most of these policies are programmatically enforced

4.      All NPs are onboarded only after their apps / software is tested for their compliance to ONDC protocol

5.      All NPs sign an agreement confirming their commitment to the policies

6.      All seller market places are expected to undertake due diligence on the sellers onboarded by them and expected to watch for their responsible behaviour

7.      ONDC will compute and publish network level reputation and credibility score of platforms and sellers which will act as a strong check on them.

8.      ONDC will monitor and publish record of grievance redressal and dispute resolution performance of each app and seller

9.      ONDC is establishing a framework and platform for Online Dispute Resolution (ODR) following the guidance issued by NITI Ayog for exception handling.,

10.  ONDC will suspend/ expel from the network entities with continuous aberrant behaviour

11.  The onboarded platforms are required to undertake periodic system and process audits with respect to compliance with network policies and share reports with ONDC

12.  ONDC may undertake periodic mystery shopping exercise to monitor performance of participants and share feedback with the entities


C.      Inherent nature of ONDC network encouraging healthy and fair market practices.


1.      ONDC network being unbundled, very often the Buyer app will only have buyer as clients and Seller app will have only sellers as clients (in some cases same entity may have both apps)

2.       With no platform able to have captive buyers and sellers and the buyers and sellers being available as a cohesive pool in the network discoverable and accessible to all buyers and sellers, there will be many buyer and seller apps giving multiple options to the consumers limiting the possibility of the platforms for user-unfriendly measures.

3.      The Buyer app will be forced to have loyalty to the buyers and would have to take extra effort in terms of functionalities and services to retail loyalty and continued support from the buyers. Their services thus will include active follow-up with sellers for grievance redressal and escalating aberrant behaviour by the sellers if any

4.      Seller Apps on the other hand with no captive buyers but with a responsibility to ensure good customer service to attract the buyers, will have to put in checks and balances to ensure that their sellers treat the end customers in a fair and transparent fashion failing which their network wide reputation will suffer and may be rejected by buyers

5.      With multiple platforms offering competing services, there will be possibility for continuous social audits on the practices by the platforms and ONDC will enable publishing of such social audits. This becomes all the more relevant with multiple buyer and seller apps in the market giving strong competition

6.      Even cases where the platforms are providing both buyer and seller apps, each side will attempt to focus on their consumer (buyer for buyer app and seller for seller app) as their own platform offer of sellers for buyers and buyers for sellers will only be a small part of the total available options in the network.

All the above point out to the possibility for a total transformation of the way markets operate impacting big and small players. This transformation will not happen overnight, but over a period of three to five years. The entities readying themselves for this new reality will  reap the benefit and the others will pay the price.

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things.” Niccolo Machiavell

Friday, July 3, 2020

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

Saturday, April 11, 2020

COVID-19 and Foundations of Social Security Delivery


The COVID-19 has turned out to be a pandemic in a very short time causing significant disruption of normal life and economic activities around the world. This has led to increased stress to financially marginalised and has also pushed many who are not otherwise included in the financially challenged segment down the precipice at least in the short term. Therefore, financial assistance by the government to a larger cross section of society has become a necessity.

One of the foundational elements to target benefits to deserving citizens is the ability to uniquely identify every person. Many developing countries don’t even have reliable functional IDs that generally cover the majority of population. Hence, the relevance of national ID becomes even more important. In this world with increasing mobile penetration if this ID database also includes a mobile number and/ or email ID seeded the whole targeting process can become more efficient. ‘Aadhaar’, in a country as large as India, has demonstrated the benefit of having a platform that issues a unique ID to every resident and enables easy authentication. Many experts have observed significant variations in targeting benefits between countries that have well-established infrastructure, institutions & processes to uniquely identify/ authenticate its residents and countries that don’t have such facilities.

The other two important foundational elements for targeted delivery are digital social registries and digital financial inclusion.

A well-established social registry consolidates the list of residents along with their key attributes essential for determining the nature and extent of assistance needed. This registry could be built by linking multiple databases against unique ID of the resident subject to good practice personal data sharing rules. Such a registry maintained digitally and updated dynamically will go a long way in correctly identifying and targeting the deserving persons and avoid leakage through fraud, double-dipping or because of any processing error. A social registry built on a unique national ID is more efficient and less error prone.

An efficient and low-cost payment system that is inter-operable among all segments of institutions that hold a customer account storing value is another critical element that encourages and enables financial inclusion. The digitalisation of holding and transaction is key to reducing the cost of account maintenance and transaction. The success of Unified Payment Interface (UPI) that has been introduced in India enabling interoperability across all banking transaction networks at practically nil cost has revolutionised the payment ecosystem. The high volume, low value transactions which were hitherto not encouraged in the conventional card driven ecosystem have found exponential growth in this regime. In January 2020, the UPI transactions crossed 1.3 billion, amounting to close 30 Billion USD, which is about 3.5 times the number of transactions in the VISA/ MASTER network. In addition to the interoperability offered by UPI, it removes the need for plastic cards and relatively expensive to maintain POS network, with conventional smartphones for both the account holder and merchant. It also enables feature phones based USSD transactions that widen the serviceable segment of the population thus giving boost to financial inclusion. This has been endorsed both by large multinational private sector players like Google and by the banker to the Central Banks, BIS. The National Payment Corporation of India (NPCI) established by the Reserve Bank of India, which introduced UPI is expected to establish and promote an entity to introduce UPI to countries around the world to help them launch this in their countries.

The COVID-19 pandemic now brings to the forefront the importance of mature systems for ‘national ID’, ‘social registry’ and ‘interoperable payment systems’ as discussed above. As a response to the immediate need, many countries are quickly establishing beneficiary registries. Considering the urgency of the short term need, this is being built with lesser safeguards against ghosts, double dipping and such possible avenues for leakage. In the short term, this may be acceptable. However, instead of seeing this as a one-time exercise, it is advisable to consider this as a big step towards building a comprehensive social registry and establish mechanisms to refine this in the next few months so that this becomes the foundation for all social service delivery programs in the future. For example, Philippines is in the process of undertaking a door-to-door enumeration of 18 million households (out of 21 million total households) to create a list of beneficiaries. There could be concerns as to whether this is the best possible means to build the registry in this period. However, if this plan is already rolled out, the way forward could be as follows. Philippines is also expected to roll out their national ID project by the end of this year. It may be a good idea to use the digitised database built on the current enumeration as a starting point for enrolment for national ID by providing it as a pre-populated form that could be refined during enrolment. Thus, soon Philippines will have a biometric national ID seeded social registry. In this fashion, every country needs to evolve appropriate strategies to enrol deserving residents in the short term using the existing infrastructure and use this, in medium to long term to build a robust social registry.

Large number of residents are being provided cash transfer to tide over the crisis. While each country would rollout this cash distribution using the existing infrastructure this is the opportune time to encourage, enable and nudge the unbanked in this group to open at least a limited purpose account operated online with capping on the amount held in the account. This can be allowed with limited KYC processes. Eventually, the customers can opt to upgrade to a regular account after necessary due diligence. In this process, it is important to ensure that infrastructure and policies are in place at the earliest to enable seamless transactions across accounts at a cost that make sense for the small value transactions of customers and merchants, irrespective of which entity holds the account for storing value. Governments may have to consider regulatory nudge for interoperability and to contain the cost for low value transactions. Also, it is essential that all the entities holding account (including mobile wallets) are also regulated uniformly with respect to the safety and security of these accounts. Mobile platforms can also speed up the proliferation of low-cost micro ATM making cash in cash out (CICO) centres widely available using the mobile industry distributor network.

While each government will have their own approaches on the most pressing and emergent issues of today, a robust national ID integrated with a social registry and combined with digital financial inclusion are the building blocks that will enable governments to deliver benefits in good times as well as crises.

It is hoped that the governments and developmental agencies take these lessons in their design of policy interventions in the social sector.

“Those who cannot remember the past are condemned to repeat it”, George Santayana.

Friday, June 8, 2018

To be or not to be Part 9- Aadhaar: Proving my Identity

Our everyday life is full of interaction with other people or organisations. Depending on the nature of these interactions there could be exchange of credentials. If I walk into a shop to buy a burger, normally the shop keeper does not care who I am. He only needs the price to be paid with acceptable instruments. He may ask for my phone number or address with an intention to be in touch with me with his offers. But I have the choice to give this or not. (Unless of course he is a monopoly supplier at that point of time and I need the service desperately) But if I am trying to access a service or a product which is meant to be provided only to specifically identified persons, the service provider will require evidence to prove my identity.
Based on the criticality of service, the extent of credentials and  / or endorsements that the service provider will ask will be different for different transactions. For example, the passport authority has extensive procedure to establish my identity; often they ask for multiple documents to establish my credentials before they issue a passport. The bankers may have a different way of establishing my identity; especially to meet the compliance requirement relating to KYC. The service providers with whom I have recurrent interactions may often provide me a special token to prove my identity during future interactions with them, thus avoiding extensive identity verification every time I have an interaction with them. These documents/ tokens are generally referred to as functional id. Some service providers may save on the effort required for establishing the id by making use of a functional ID issued by another entity (often government) as an evidence to establish my identity/ credibility.  For example tax id or driving license is often accepted as a proof of identity by many service providers. For evidence purpose and for future investigation they may retain copy of the credentials provided to them.

There are some practical problems associated with the above. (i) As most of the identity creds used are issued by service providers for their clients many people; especially from poor of marginalised segment of the society may not have any such credentials with them as they may not be availing any services in their name from these service providers (ii) most of the entities who provide such documents/ tokens do not publish the process they use to issue the cred making it difficult for the users to judge how good the cred issued by them is (iii) none of the entities that issue the cred (which are often meant to be only for their clients) does provide a mechanism to third parties to verify the authenticity the id token provided; resulting in use of fake id documents by some.(iv) Most of the entities who are issuing the functional ids have effective tools to avoid duplicate id generation. This makes it possible for one person to manage to have multiple identities  (iv) many functional ids are not accepted as proof of identity by all service providers (v)when the service provided is very sensitive or very valuable, the service provider will ask for multiple proofs (sometimes including biometrics) as they are limited faith in many of the functional ids.

UIDAI was established to address these concerns. (i) It is an entity established with a single focus; to issue and authenticate id for all residents of the country, unlike most of the other ids which are issued to limited set of individuals who are often beneficiaries of the service provider (ii) It has established checks and balances of the highest quality to ensure security and privacy of data and has institutional mechanisms in place to keep it updated (iii)it has a very standard and published means of establishing the identity of the person who is being enrolled. These are quite simple and straightforward with clearly defined exception handling mechanism so that practically nobody will be denied an opportunity to enrol (ii) it gives a quick, easy and straight forward means to authenticate the id by third parties and that too only with the consent of the id holder(iii) the biometric characteristics collected makes it almost impossible for a person to obtain multiple ids (iv) it is recognised as a proof of id by almost all service providers (v) it collects bare minimum attributes of a person compared to all other accepted functional ids. UID does not collect or store any attributes other than name, dob, address , sex, father’s name and biometrics in their database.(vi) UIDA does not share the biometrics collected with any other entities which is guaranteed by an act of parliament. Further it does not also collect or save the purpose for which the id was authenticated (vii) it gives an facility for the holders to be enquire online which entities have authenticated their id. This is also enshrined in Aadhaar Act

In this context, many service providers insisting that their clients should provide their Aadhaar as proof of identity is not in anyways overreaching their right and need to establish the identity of their clients. Rather, this is only making their process stronger and makes their services accessible to a larger cross section of the society who otherwise would have been denied of the service. The latter is a major boon for a large cross section of the society who thanks to Aadhaar are able to access a wide verity of services. In a similar fashion the requirement of authentication of id behind each tax id also is helping the Income Tax Department to weed out many instances of multiple tax ids by same person to avoid tax.
The database of Aadhaar has quite limited data relating to a person. Aadhaar based authentication is allowed only through registered entities through registered devices. As a part of authentication they do not store the purpose for which the authentication was undertaken by service providers. In this way, UIDAI does not and is not able to profile any of the UID holders or track their activities.  Compared to this all entities who collect information about their clients to issue functional ids and provide services hold significantly more information about their clients. Most of them in electronic form which are often connected to internet without strong security measures in place. Many of them even sell this data to third parties to other agencies. The number of un-solicited mails and sms we get is a proof of this.
The big difference in case of Aadhaar is that it provides a means to authenticate the Aadhaar even without sharing the data relating to aadhaar. (UIDAI only provides a yes/ no response to an authentication request. Only in limited and specified cases it also allows certain specified entities to collect the demographic information available with them against consent by the user). Thus the worry that UID database is a violation of privacy is unfounded. Further, compared to most other databases which compile and maintain their client information the security processes are much stronger.  Therefore, in cases where ID is required to be established for service delivery, it is safer for both service provider and recipient to use Aadhaar as proof of id; especially considering the wide coverage of Aadhaar and easy and fast enrolment possible. The service providers may also introduce exception handling mechanism to handle rare cases of not being able to have an Aadhaar or being authenticated with Aadhaar.

Another concern is that if the Aadhaar number of a person is used as proof of id by various service providers, it will give the government a mechanism to track a person extensively. This again is a myth. All services provided will take some kind of functional id as a proof of id. Most beneficiary databases have been converted or in the process of being converted to electronic form. With the modern computing and analytics tools, if the government decides to profile any person they will be able to do so by linking these multiple databases even without Aadhaar being linked.

To protect privacy what we need is a clear legal framework on who can collect what data, what is the disclosure they have to provide to their clients and what should be the data retention and data sharing policy with respect to all entities who collect third party data. Going after Aadhaar is nothing but a folly or just plain ignorance of the landscape of id establishment today.

"In the social jungle human existence there is no feeling of being alive without a sense of identity."

Erik Erikson

Wednesday, April 19, 2017

Guarding Democracy

It is widely accepted that in most cases monopolies are not very good for the economy and society. It is inefficient and lead to increase in price paid by the consumer. In olden days many industrialists used muscle power and/ or political patronage to muster monopoly power. Over the years the policy frameworks have evolved and matured, reducing opportunity for monopoly leading to a more competitive industry structure that encourages innovation and foster efficiency. Disruptive technologies also played a role in unseating established monopolies.

But we are now seeing a new trend in market monopolies. Technology innovations with the support of money power fuelled by PE funds are manipulating the market to build and enable monopolies. For some time it will appear that the consumer is benefitting. But once these new breed service providers decimate their competition and establish difficult to break monopoly on top of the network effect might give no option to the consumer from their monopoly pricing or lack-lustre service. Dr Ajay Shah has published a blog on this topic building on a paper published by him along with  Smriti Parsheera, Avirup Bose  This paper discusses some of the regulatory innovations that is required to address this concern.

This is not just a matter of concern with respect to industry. It is also a matter of concern in politics and in governance. The strength of democracy is that the common man through the majority vote can make a selection of who should govern his country. Though individually nobody would be knowledgeable on all matters, the “wisdom of the crowd” enables collective decisions that is more right in most of the times than even the expert opinion. But democracy may not be very efficient always. Fragmentation of political parties and / or absence of decisive leadership may lead to periods of wild uncertainties. Different countries in the world have experienced this in different periods of time. When a country pass through such uncertainty for a long time hampering growth a large cross section of the society would yearn for a benevolent dictator (a monopoly). In short term this appears like a panacea. . At this point of time if a leader rises and come up with an appealing theme, he will be able to win the heart of the majority.

If he is good leader he be able to make a big difference and could stimulate economic growth and wider acceptance. But if such super-popularity built on emotional themes it could also eventually slip to autocracy. Especially if his team has a large contingent who have no vision or capability they, instead of providing a balanced support structure to the leader, will focus on deification of the leader. Then like the PE funds finance monopolies, a powerful few start selling specious dreams and unfounded fears towards meeting their hidden agendas. When they manage to buy or suppress media the story is complete.. Then the “wisdom of the crowd” becomes mob frenzy which fails to see reason and start dancing to the catchy slogans and clever public relations campaign almost like sheep.

This is what happened in Germany after the First World War. The degeneration of German economy made worse by Versailles’ Treaty made Hitler and his Nazi Party the hope of the German Society. In the first few years of his rule the German Economy turned around and helped recover the “lost Honour” from with the reparations forced by the allied forces. He and his cronies were able to build on this and eventually he became a cult figure. When people lifted their phone instead of a “Hello”, “Hail Hitler became the norm. Those who did not qualify as per the ‘majority norm’ were marginalised and eventually eliminated.

One of the key elements of success of any democracy is how we prevent degeneration to autocracy. India managed when Indira Gandhi through her emergency rule attempted this. Only with the sacrifices of many thinking members of the society we were able to manage to curtail her. That is why we need to nurture a strong opposition who has the capability and popularity to provide strong check and balance and avoid media surrendering it independence. We should not just get carried away by the “Uber Pricing” fuelled by PE funding and should we willing and confident to raise questions where it us warranted if our democracy is to sustain.
It would be folly to argue that the people cannot make political mistakes. They can and do make grave mistakes. They know it, they pay the penalty, but compared with the mistakes which have been made by every kind of autocracy they are unimportant. Calvin Coolidge

Sunday, June 14, 2015

A Requiem for Mother

It was around 1 o' clock in the afternoon on Sunday 31st May 2015. Mom was lying on her bed. My sister Mary, niece Reni, Ambily and I were sitting around. Mom’s eyes were closed and her breathing was strained. Although we had seen similar condition few months ago when she was in the hospital, it still did not feel right and a cloud of foreboding enveloped me.  I wanted her to open her eyes, look at me and smile. I called out “Mother” (in the recent past I had started calling her mother and she used to laugh at this) hoping she would respond as she always did. I did not know what to do. I felt helpless in not knowing how I could help my mom. The only thing I could do was to pray.

I took the hymn book.  The song that came to my mind was “Nearer my God to Thee.” I had my hand on her shoulders gently caressing as I started to sing. I finished the first stanza and was at the refrain “Nearer my God to thee, Nearer to Thee”. Suddenly mom opened her eyes wide and took a deep breath. And that was her last breath.

The song stopped in my throat. Ambily and Reni gave out a gasp. The only thing to be done now was to close those eyelids and kiss her still warm body that would fast turn cold.

As Mary, Reni and Ambily were cleaning the lifeless body and clearing it of all the tubes and wires that were supporting her life, I sat stupefied on the chair.  I couldn’t help thinking about that iron lady who though short in stature, stood tall in her spirits, conviction and confidence.

She was born in 1917, two years short of a century ago. In a time when girls were not allowed to step out of the house, she was lucky to have had a father who sent her to a reputed residential school in Kerala called “Nicholson”. After her higher secondary she went for further studies to a far way land (in those days) Madras at Women’s Christian College (WCC).

After completing her studies she joined the Indian Postal Department as a Post Mistress and later she left this position to take up teaching. A few years later she resigned her job to give more attention to her children although the family income was meagre with the focus her husband had on spreading the word of God.

She took the complete load of running the household allowing her children to focus on their studies. Those were the days when there was no cooking gas, no refrigerator, no washing machine or no mixers. This meant that food had to be freshly cooked, loads of clothes hand washed, all the grinding needed for cooking to be on the grinding stones every day; not to forget the cows in the stable and the hens who also needed attention. It is this sacrifice that has helped all of us children to where we are.

She was a strong personality with exceptional administrative skills. She was a support and guide not just for her children but to many in the local community and church in which she was very active till very late into her life.

She enjoyed a healthy repartee laced with humour, especially those rhymed, with no malice intended. She could beat any smart alecs in a verbal rally with her quick-wittedness. Once one of her students in the Sunday School she taught wanted to prove his smartness.

“Teacher, whom did Cain marry?”

As most of you would know Cain  was the son of Adam as per the Bible and there is no reference about any woman in the story of Adam and Eve other than Eve.

Pat came the reply

“Son don’t worry about somebody else’s wife. Read the scripture and learn about life”

Even in her fading years when her memory started to fail her logical mind was still intact.  Once when somebody came to visit her she could not recollect who it was. When he kept on asking her whether she knew who he was he replied with a smile

“If you don’t know who you are, high time you consult a doctor”

In the last few months she was getting to be younger in her mind. She wanted to dress up and even have some make-up. As the days went by she was turning to  be a little baby who wanted to be hugged and even preferred to be allowed sit on lap. She was so lucky to have Ambily looking after her 24 X 7. For my mother, she was a great companion, a well-qualified nurse, a daughter, a mother and a sister all rolled into one. The luckiest thing that happened for mom in the last one year was having Ambily around.

She was also lucky that all her five children who are scattered around the world could spent time with her in the last one year with the eldest and the youngest spending lots of time. This is the only thing that any parent would want and any child could give in the twilight years. Unfortunately this unfettered togetherness is turning to be a luxury in the new world of abundance.

In the last one year when she was failing in her health I was lucky that my work brought me to Delhi, where she stayed with my sister, every week. Every day when I left for office I would go to look her up and to give her a kiss. I learned to cherish the moment; but there was a nagging thought deep in my heart, “how long”. 

Now the death has come and taken her away. What is left; some memories. As the days go by we try to internalise this vacuum, this feeling of emptiness, ruminating on the old and not so old memories; sometimes happy about those wonderful moments and sometimes with regret about those wasted moments and stupid fights.

We need to look ahead. There are many more loved ones still here with us. Make our time relevant to them, to us and the society around us.  As Oliver Wendell Holmes said “Death tugs at my ear and says “Live, I am coming”” 

No man is an Iland, intire of it selfe; every man is a peece of the Continent, a part of the maine; if a Clod bee washed away by the Sea, Europe is the lesse, as well as if a Promontorie were, as well as if a Mannor of thy friends or of thine owne were; any mans death diminishes me, because I am involved in Mankinde; And therefore never send to know for whom the bell tolls; It tolls for thee: John Donne. (this was the original spelling he used in 1624)

Sunday, December 28, 2014

Uber Case and Public Policy Thoughts

A few years ago public transport in Delhi (as in most parts of India) was pathetic. The public transport buses were unsafe; especially for a girl who can be reasonably sure of being groped (at the leastif she dares to get into a city transport bus; especially alone. You had to rely on the local taxi stands to hire a taxi and they may not have a taxi available when you want. When you hail a taxi the driver would ask you where you are going. If your destination did not suit him, he would refuse to take you. When a taxi driver deigned to take you, he would refuse paying by the meter and make quote you a fare which is often 1.5 to 2 times the actual fair. When he used the meter, it would be a doctored one or he would take the most circuitous route to your destination if you were not familiar with the city. When you went shopping or visiting a friend there was very high uncertainty about getting a safe transport back. The auto rickshaw drivers also behaved the same fashion (They do that even today) .
When you get a taxi you had no idea who the driver was or what his name was. Often he brought along “his friend” along with him. If you asked him who that person was or didn't want this 'friend' to be in the car for your journey, the driver would get upset and refuse to take you. As you were desperate and had no other option you put up with these dramas. There was no authority with whom you could give a complaint. (You won't even consider complaining to the police) There have been many instances of such drivers misbehaving with passengers; especially ladies. Many of the regular black and yellow taxis still continue with such behaviour. A Canadian friend who has been visiting India for about two months told me that whenever she was travelling without an Indian friend with her, the driver refused accepting fare as per the meter.
The Metro has made a big difference in Delhi. In most other cities the metros are non-existent or limited. Then the radio taxis happened. Situation started to improve. With more and more operators joining the fray there was more competition and each of them added more features and services. Call centre support for cab booking and customer support, mobile apps, GPS tracking, online receipt, online payment and so on. With the improved supply you could be sure of getting a cab when you want. The service levels have significantly improved, there is more reliability and the quality and comfort of the vehicles too have improved. Although per kilometer charge is higher for these radio taxis, the total bill ended up being lower as the meters are not doctored and the driver is not taking circuitous routes. Even today the pre-paid cool cab charges from airport to my home in Mumbai ends up being more than the radio taxi charges including their service charge of Rs 60. With registered drivers of radio taxis who are also given some training and monitored to some extent customers feel safer than before. There had been hardly any major complaints about the behaviour of these drivers. I am not saying that everything is perfect. There are still areas for improvement.
Then the disaster hit. One unscrupulous driver has molested an unfortunate lady. It is an absolutely dastardly act. No doubt that the driver has to be punished suitably. We also have to improve the systems and processes to prevent such occurrences. But the knee-jerk reactions of administrative decision makers once again demonstrates the pathetic state of decision making founded on emotions and populism. This is not the first instance of ridiculous action by regulators and law enforcement agencies.
The Police has acted fast and has apprehended the culprit quite fast. This is commendable. DCP south has been giving twitter update on the investigation which is appreciable.  But one of the first policy decisions on this taken by the administration is banning Uber and similar services. Some states have followed suit in extending this ban to their states. By doing that, we have created a shortage in the market and this has opened avenues for un-scrupulous behaviour by cabbies. I am a regular user of taxis and I experience it. Many of my friends also share the same feeling.
Are the operations of Uber and OLA so dangerous that we need to ban it immediately? Not at all.
Let us look at this a little deeper. Uber had a system of driver verification. They relied on a document that was submitted by the driver. It appears that the character certificate that he submitted was forged and not issued by the Additional DCP as claimed in the certificate. Uber should have had a process of undertaking much more serious background check of its drivers and verification of the veracity of the documents that it receives. These service providers could also have better tracking systems. It will be easier for law enforcers and regulators to demand and monitor such good practices on organised entities like the radio taxi operators than enforcing such good practices by each cabby. By outright ban of these entities we are not reducing the risk rather increasing it.
A case has also been charged against Uber for cheating as they failed to take necessary measures to live up to the promises they have made.
It has been also reported that the same driver used forged certificate to get a permit to drive his cab in the capital. Are we taking action against the department or the officer for dereliction of duty in issuing this permit without verifying the documents presented? With commercial taxi licenses, people like him manage based on such fake documents, (which is not verified at time of issue of taxi permit) if these drivers operate as an independent taxi operator and commit such crimes, tracking them would be even more difficult and this could turn out to be even more dangerous.
When we prescribe more documents and verification processes, we also have to establish convenient and speedy mechanisms to issue these verification for genuine applicants. The sad thing is that it is a herculean task to get any kind of clearance documents and validation of the clearances from government departments unless you have “connections” or willing to pay “speed money” directly or through touts. This makes the whole process a bottleneck and avenue for corruption and encourages bypassing of such verification. Therefore we also have to establish processes for speedy verification and validation processes. For example the Police can consider making online verification of certificates issued by it. Further, the Police also could make it possible to get verification done in an easy and fair manner. It could also have exception handling mechanism to take into account practical problems. For example I came to Delhi from Mumbai and took up a rented apartment and I wanted a police verification done on my Proof of Address. I was going from pillar to post and I had to take help of a senior bureaucrat who is a friend to help me. Imagine the plight of an ordinary person who comes to a metro in search of a job. May be wider acceptance of Aadhaar Card would address this issue to some degree.
We see such knee jerk behaviour very often. Let me quote some more examples. Remember the A 320 air crash in Bangalore soon after Indian Airlines bought these aircrafts? Our reaction has been to ground the whole fleet of 320 for a very long period resulting in severe loss to the airlines. We are the only country in the world which did that.
When there was complaint against the overcharging by some Micro Finance intermediaries the reaction has been to ban such companies instead of establishing good practices and enforcing the same. When we do this the only option left to the poor customers is to fall into the clutches of money lenders with usurious interest rates.
When there is complaint against ill treatment or malpractices by some NGO we have instances of the whole community of NGOs harassed and treated shabbily resulting in genuine players avoiding such initiatives.
The government instead of improving its services, taking ownership of its duties and being accountable for its mistake place the whole blame on the private service providers. Swaminathan Anklesiaria Aiyer's comment regarding the Coal Scam in TOI is quite relevant in this context.  “The Government was found guilty of wrongful coal allocations, but suffered no penalty. Instead mine operators not found guilty of anything had to pay huge fines to the guilty government. .. Investors are increasingly apprehensive that Indian Institutions no longer provide stable decisions or secure property rights”
The regulator and the law enforcer have to keep in mind that it has a balancing act to do. On one side it should establish good practices and enforce them. It should prevent monopoly behaviour, it should ensure good practices are followed for the safety, security and convenience of the user. On the other hand they have to keep in mind that regulations and regulating agencies also have a development role to play; helping and supporting service providers to establish good practices and to evolve and thrive rectifying their mistakes.
It should be practical in managing the evolution of the regulation and market practices. As Judge Learned Hand one of the very respected American judges observed “Justice is the tolerable accommodation of the conflicting interests of society, and I don't believe there is any royal road to attain such accommodation concretely.”
If we make rules that cannot be practically followed, then we will not have decent service providers but we will be at the mercy of shady operators who operates outside the law. When mistakes and failures do happen, the reaction should not swing to the extreme. If the error is technical in nature and does not reflect willful and repeated irresponsible behaviour that can potentially cause disaster to the community then the penalty should commensurate with the mistake and solutions should be implementable. We need to help these entities to improve and not kill them. What often happens is that the regulators go heavy on technical errors  making it difficult for many genuine service providers and leaving the ground open to the fringe players who act outside the regulated market or without any service standards at all. Very often these shady operators make these regulators to clear way for them consciously or unconsciously by eliminating decent operators. 
"We live in a stage of politics, where legislators seem to regard the passage of laws as much more important than the results of their enforcement." - William Howard Taft

Saturday, October 4, 2014

Reforms in Tax - A taxpayer’s wish list

[Excerpts of my speech at Conference on India 2.0 as a part of 37th SKOCH Summit at India Habitat Center, New Delhi September 2014] 

 “The only two things certain in life are taxes and death”. Why was taxes compared with morbidity and death and taxmen considered a villain? Because tax was considered legal extortion. The expected role of taxman was to make life difficult for those who don’t comply. The tax laws were complex and complicated that even genuine taxpayers ended up making mistakes. Instead of being an enabler catching these mistakes was the prime focus of the department. Complexity of the tax law was a aid in this enforcement by terror and a tool for the corrupt.

The modern tax department is attempting a shift in its focus. The shift is towards being an enabler, making it easy and convenient for the genuine taxpayer to comply.

This is one of the tectonic shifts that are happening in the environment for the tax administration. There are more. The quantum leap in the volume of trade and commerce in the economy is resulting in exponential growth in taxpayers and taxable transactions. The globalisation leading increased international trade and e-commerce are adding to complexities to tax administration. In India the impending transition to a nationwide transition to Goods & Service Tax (GST) is another big shift expected in the near future. (Though this near future shift has been eluding us for years, we hope it will fructify this time)

In this increasing complexity and exploding volume the challenges are manifold for the tax administration especially with shift in their focus and the attendant reforms it is attempting.

Let us take a look at some of the expectations the taxpayer have with respect to these reforms.

Simple, Up-to-date, consistent information online

To begin with the taxpayer expects simplification of laws which are easy to understand and comply with limited exception and a nationwide standardisation. We also expect comprehensive information available online. Today many of the tax administrations in our country have web portals and have made extensive information available online. But they often come with a caveat along the following lines. “The department does not claim this to be up-to-date or comprehensive. The taxpayer is expected to keep himself abreast of all latest notifications and amendments and the department is not responsible for any fashion for any error and omission in the information available in this site”

We need to go forward in our information dissemination. We need you to guarantee that “what is not published on our portal does not exist” I am not suggesting a utopian model. Many regulators and law enforcement bodies in the world have already reached this level of sophistication.

Will it be possible to publish your interpretation of confusing provisions very clearly? In this manner it would also be consistent in its dealing with the taxpayers across the country.  It could help in reducing the rent seeking behaviour of many assessing officers who attempt to interpret for their convenience.

Don’t ask for same information again and again

Various tax departments in the country ask the taxpayers same financial information multiple times. Can you establish a mechanism to collect financial information from the taxpayers once and share the same among them as needed? Only in case in which it needs additional information for specific investigative purpose it should contact the taxpayer again to provide the same.

Can we think about standardisation of data format?

Different tax authorities today specify different data formats and technology specific forms to submit the data. Could you consider establishing a technology agnostic data format like XBRL for collection of data? This would also require a standard taxonomy being developed for all financial reporting for various tax departments if not for all other regulators who require the same financial information.

Avoid calling me in person and when you call please don’t make me wait

Can you consider establishing processes that could avoid physical visits for routine matters? Tax payers should be able to interact with the officers over phone or mail for routine matters. Even when they are required to visit for some clarification they should be given advance intimation of the documents and information they have to bring and should give them appointment to and adhere to the agreed time and avoid making them wait.  

Can I pay tax from my account in my bank?

In this day and age of electronic connectivity can you allow me to pay all my taxes from my account of choice instead of asking me to open accounts in different banks by different tax authorities

What I am hoping are not impossible to be met. But it needs a change in mind-set. We can hope that we will reach there one day

To make a crooked stick straight, we need to bend it the contrary way. - Michel Montaigne

Saturday, September 27, 2014

Digital India 2.0 Hoping for the best

[Excerpts of my speech at Conference on Digital India as a part of 37th SKOCH Summit at India Habitat Center, New Delhi September 2014]

If somebody asks me my opinion about the Indian Movie Industry my reply would be; “It is big and thriving, some of its productions are world class, exciting and memorable. But it has also created a lot of crap.”  My reply would be the same if anybody asks for my opinion on e-Governance in India.

Why do I say so? Let me give two metrics in support of my statement. Firstly as per DeiTY tracking system for electronic transactions we have had just about 2 billion electronic transactions in 2013 and in 2013 this number has already reached this number in the first 8 months. Impressing in a way. But for country with more than a billion population and internet penetration of 100 million (which itself is quite low and is an expression of poor internet infrastructure  and not enough relevant and convenient service offerings compared to 8000 million mobile phones) it is 20 an average of 20 transaction per month per person. When we consider that it covers both central and state services including online utility payments, it is not something to shout from the rooftops.

Secondly, let us take a look at the eGov Development Index (EGDI) of UN which it publishes every year. In the last few years India’s ranking has been hovering in the range of 110-120. In spite of India being a powerhouse in the world of Information Technology, we are so low in the world ranking of EGDI. We have even managed a drop in our ranking from 113 in 2008 to 118 in 2014. On the other hand South Korea holds top rank for past many years.

It is in this context that we should look at the Digital India 2.0 Program that has been announced recently. It has all the Right Intentions, Great Ideas and Enough Resource Allocation. But then, Is it much different from the NEGP of yesteryears?. If we look at NEGP, it also had right intentions, right ideas and enough resources when it was launched. But then why did it fail deliver what it should? The fundamental problem was in the “Implementation”.  Let us take a look at some key learning from our experience of yesteryears. The weakness was in the foundation itself of most of the projects; which includes stable citizen focus, leadership, procurement and contracting strategy, continuous improvements and business models. Let us go a little deeper.

Most of the e-Gov initiatives are “transformational Projects” and not automation of the existing stable processes. Such transformational projects would require a re-look at the existing processes and undertake a re-engineering of the processes with a citizen focus and taking full advantage of what technology can offer. When I say citizen focus it means that the workflow and processes should attempt to make it easy and convenient for the citizen to access the services online. When he asks for a service from one government department he should not be asked to get a document/ certificate from another government department. The departmental systems should be able to talk to the other departmental systems electronically to source/ verify information available with the latter. This in addition to facility for online application could significantly reduce multiple interactions that the citizens have to make with the government departments and the related rent seeking and harassment.

One of the challenges in integrating the systems of different departmenst was the absence of a mechanism for uniquely identifying a person. Now that penetration of UID in India has reached significant levels, this problem has nearly been solved. Therefore, it is important for every departmental automation project to incorporate UID tracking of beneficiaries to the extent possible.

Any transformational project will succeed only if there is a stable and visionary leadership; especially during the conceptualisation and roll-out. Whenever government managed to place such people in the leadership roles the projects benefited. In many cases the selection and transfer policies of the government does not take this into account at all. This means poor choice of mission leaders and or key people frequently getting transferred; especially in critical stages of the project. Such changes not just affect the momentum of the project but are also counterproductive. One of the key reasons of  failure of many e-Gove projects is this.

Establishment of transformational project cannot be handled like an event management. It is an evolutionary process; a journey and not a destination.  But normally many government departments treat all projects alike an event management. There would be a study of the current processes, some kind of process re-engineering, development of specification for developing the software application , choosing of technology solution, getting the solution developed/ customised and rolling out the solution. During this process there we seed involvement of senior officers.

Once it is rolled out it is left to the operating staff to take care. But what is needed for success is continuous improvements. There should be continuous tracking and refinement of the processes, to strengthen validations, communication and clarification for the users on the basis of feedback from the field. This review and refinement should be led by the senior officers responsible for the mission. Only then would it reach adoption and acceptance of a broader cross section of clients. Often the feedback from the field is not given due importance. By the time the normal governmental process gets the approvals for these amendments it would be too late. So much negative image would have been created that adoption would have really suffered. Many users would have written this off. If we take the few projects that has demonstrated significant acceptance like Tax Information Network of CBDT, MCA 21 of Ministry of Company Affairs, Passport Seva Project of Ministry of External Affairs UIDAI etc were those which had taken this philosophy of continuous improvement seriously.

In addition to these efforts for continuous information there is also a need for education and handholding of the users so that they get used to the new system and make fewer mistakes. Even in this dimension many projects do badly.

The other major area of failure is in the procurement and contracting process of the government. Many departments select the lowest cost bidder referred to as L1. This often significantly affects the quality; especially in cases of services because it is difficult to quantify quality and monitor it. Some departments attempted Quality Cum Cost Based Selection (QCBS). But very often most of the bidders are given technical scores which are very close to each other. This is often because the evaluators would like to play safe. In this case, the bid again becomes L1.

In the selection process it is important to have experts in the field who compliment the departmental officials who may often do not have sufficient subject matter expertise. Many departments do adopt SME. But the SMEs are often selected often based on their willingness to give free/ low cost service and readiness to say yes and not on the basis of the quality of expertise. We can’t expect much value addition in such cases.

Then some departments started experimenting with outcome oriented contracts with service providers. It is a brilliant idea in theory. Even in this case most of the departments mess up. Let us see how. To make outcome oriented project a success, there are two critical pre-conditions. (i) There should be clear articulation and agreement on specific outcomes and milestones. (ii) Achievement of outcome requires that both the client and the service provider play their role on an agreed upon schedule.

But in case of most government projects both the above preconditions are not met. Firstly the outcomes are not clearly articulated. Often they are described very broadly which could be interpreted in different ways. Such vague definitions lead to so much scope creep that the service providers lose significantly. Secondly the departments fail so badly in meeting their part of the deal. Often there is significant delay / failure in giving timely approvals, giving input by users, providing feedback on proposed solutions, signing off on specifications and so on. This lead to significant delay, scope creep and increase in required effort. Taking both these together for most of the service providers government projects are loss leaders. Because of this, many good and reputed IT service providers are very cagey in bidding for government project and keep away from government projects in most cases.

It is evident that unless the Digital India 2.0 addresses these above implementation issues it will not be able to do any better. It can be seen from the above that n normal government processes are not capable of handling transformational projects. It has never been designed to support innovation or flexibility or agility that are essential ingredients for successful implementation of transformational projects.

One obvious solution such limitation is to carve these as independent projects and hand these over to a Special Purpose Vehicle (SPV) which has been suitably structured with sufficient flexibility to take nimble decisions and relevant mid-course corrections when needed. It is also important to have the right kind of leadership, team with relevant expertise and experience and also a supervisory body that recognizes the different approach needed for these SPVs to succeed. Especially the leadership vision and courage to take decisions will be very critical. We have seen examples of such successes. But unfortunately we see that even when SPVs are established the bureaucracy involved in the establishing these SPVs build-in structural limitations that will restrict/ prevent the nimbleness of the organisation and or install unimaginative bureaucrats to its leadership which completely vitiates the ability of these SPVS to make any significant difference.

I hope the focus of the new PMO has on implementation will galvanise the various departments towards better performance.

Related Reading

If wishes were horses

“Exogenous and blind interpretation of statutes, topped with hustled implementation of laws leads only to more turmoil and less productivity.”   Henrietta Newton Martin