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Home >Opinion >Views >Uncaging the Indian tiger from attestations and thumb prints

On 2 August, e-Rupi, a voucher-based, pre-paid, contactless, cashless digital payments solution was launched by Prime Minister Narendra Modi. This pre-paid voucher is provided directly to beneficiaries via a QR code or SMS and doesn’t require an internet connection, a smartphone, or an app, and, most importantly, is person and purpose dependent. The service provider gets paid in a timely manner, as there is no intermediary, but only after providing the service—medical care, medicines, nutritional support, books, subsidies, etc—by redeeming the e-voucher that’s been paid for by the sponsor, such as the government, a philanthropic foundation, or a private- sector Corporate Social Responsibility initiative. This transparent and ‘leak-proof’ e-voucher promises to extend the possibilities of direct benefit transfer (DBT) programmes quite dramatically.

Over the past decade or so, India has embraced digital technology to effect a societal transformation through the timely, low-cost, transparent and efficient delivery of services to hundreds of millions of needy beneficiaries. The private sector too has been co-opted as a partner for payments. Examples abound from DBTs and bill payments to vehicle registrations, passports, rail bookings, vaccinations, pensions, e-tolls, taxes, ration-card portability and verified document storage, The impact on the ‘ease of living’ in India has been nothing short of revolutionary. In almost all these cases, it has been the Union government alone that has been the driving force behind digital enablement.

However, the same cannot be said on the ‘ease of doing business’ front. Our businesses collectively deal with 1,536 Acts, 69,233 compliances and 6,618 filings. Given our federal polity, while the Centre may propose any model law or procedure, it is left to the states to dispose of them as they see fit. PSARA is a case in point. India’s private security services industry is governed by the Private Security Agencies Regulation Act (PSARA), 2005, a model Central Act that lays down rules for the private security services industry in India. This is an industry that employs about 9 million people, the second most after agriculture, with a compound annual growth rate of 20% in the past decade, as noted by a Federation of Indian Chambers of Commerce and Industry report.

However, an applicant—say, a company—needs to apply for a licence from each state in order to operate there. And what might such a licence application typically entail? Two copies of a form to be filled and signed in five places by each company director, along with a photograph, an affidavit with two signatures, two thumb impressions, self-attested copies of the company director’s PAN and Aadhaar cards, and passport copies (for address and ID proof), a letter to the police station, and letters from two fellow citizens in testimony to the director’s good conduct. Some states may require the director to physically present oneself in front of the local magistrate or perhaps have a Gazetted Officer sign the forms. Online applications are allowed in a few states but are complicated to use. An online national portal for filing PSARA applications has been operational since 2019. A licence application for operating in a state is scrutinized by the concerned home department and then a request for police verification is made to the state of the concerned director’s domicile. This request goes to a police station in the appropriate jurisdiction that performs a Know-Your-Customer (KYC) check. The information then presumably flows back to the licence-issuing state. This entire process is inefficient, time-consuming, wasteful and inexplicable, when all the required information already exists in digital form in different data repositories for Aadhaar, PAN, passport details, IT returns, etc. Police databases can confirm any criminal antecedents of directors. Integrating e-signatures is also possible. All it takes is for the central online portal to provide secure access to states and for the states to use digital means to complete their verification of a PSARA application.

Clearly, the digital capacity of states in terms of their awareness and readiness to deploy solutions needs to be significantly enhanced for the benefits of digitization to flow to businesses.

We picked this example for illustration because one of us had to go through this process recently. The same can be said of many requirements that banks still have, even though they have KYC data on customers. Despite having an existing relationship, to open a new account or arrangement, they want all that information, self-attested or notarized, all over again. They even want a ‘cancelled cheque’, although many of us have switched to making payments through electronic means. So, such an untrusting and document-obsessed mindset is not the unique prerogative or fetish of governments.

We hypothesize that our underlying malady is that the formal sector in India operates with a low trust quotient. The behaviour of a few subjects the many to the tyranny of compliance and control. We need to use technology smartly to break out of this mindset—in and outside governments—for India to become a productive, non-inflationary and prosperous country.

V. Anantha Nageswaran & Sanjay Anandaram are, respectively, a member of the Economic Advisory Council to the Prime Minister and a volunteer, iSpirt Foundation. These are the authors’ personal views.

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