A decade ago, on January 26, 1999, the scientist Dr Sugata Mitra watched as his team cut out a hole in the wall of the Delhi
NIIT campus in the Kalkaji area. On the other side of it was a slum, a closely packed, messy confusion of small concrete and brick homes.
The slum’s neighbours had regarded it as such an eyesore that the government had been busy building a five-foot-high fence to cordon it off. But Dr Mitra saw the slum—whose clusters carried hopeful names like ‘Nehru’ and ‘Navjeevan’ (new life)—and spotted an opportunity. Through the hole they had carved out, his team provided access to a computer for the slum’s kids, who quickly figured out how to use it. And soon enough, Dr Mitra found that children using these computers were demanding ‘a faster processor and more RAM’  and teaching themselves English.
Experiments like the one initiated by Dr Mitra, whose project the government has since taken up as part of its literacy efforts, are shaping a face for information technology in India that is very different from anything anyone expected when IT first made inroads here.
When IT first made a serious debut into Indian economic policy—with its coming-out party in 1984—it might as well have been the most unpopular kid in class, greeted with brickbats and managing to survive only thanks to its passionate champions in the Rajiv Gandhi government. Rajiv had great faith in the possibilities of these technologies, and as prime minister, had announced the New Computer Policy just 20 days after he took office. But, if anything, electronification started off disappointing the expectations of both its critics and its admirers. Some of the early initiatives were enormous successes—the telecom policy introduced by Sam Pitroda had an immediate impact, as public telephone booths mushroomed across the country, making phones truly accessible for the first time in India’s cities and towns. The electronification of banking processes across India’s public banks made the jobs of those at the front-office, the tellers and clerks, far easier. And the computer policy put wind in the sails of small IT companies, including Infosys, which were targeting the international software market. Indian IT companies such as ours—despite early clients who seemed interested but anxious about our ability to deliver—took off.
But other efforts fared badly; Rajiv had emphasised, for instance, that IT was key to tackling India’s challenges from poverty to education, but computers supplied to schools with no electricity were little more than curios, and most departments in Delhi strongly resisted the IT initiatives the new government introduced. Overall, the technology remained on a slow simmer. Its effect on the lives of ordinary Indians was mostly indirect—some industries such as banking and telecommunications were adopting these tools in a big way, but few Indians had come in touch with such technology themselves.
But sometimes, change can sneak up on you, completely underestimated in the impact it will have. Around the 2000s, the impact of electronification in India began to change. It started to rapidly evolve from a top-down system driven by government policy and industry into a force surging up from the grassroots. Indian entrepreneurs big and small were at this point focusing on the possibilities of building a unique business approach—based on the idea that you could vastly expand the pool of Indian consumers if you were willing to focus on extremely low-cost products. When IT met this strategy, its presence exploded. Even as Hindustan Unilever Limited (HUL), P&G, Nirma and Cadbury began selling everything from shampoos to soap, detergent and chocolate in tiny, ‘single serve’ packets costing a rupee or less, banking firms such as ICICI began to offer ‘micro’ loans and hospitals such as Aravind Eye offered targeted, low-cost health services, technology entrepreneurs began offering low-cost Internet and computer usage to villagers across rural India.
As the possibilities in such low-cost technology began to explode, firms across retail, banking and communications found that IT could well be their missing link in connecting with people who were often illiterate and located in distant villages, dirt-road miles away from the nearest market. And reform-minded bureaucrats found that such technology, untouched as it was by the legacies of the sarkar raj, could be a powerful leverage for better public services. IT could play a bigger and more powerful role in the economy than anyone had guessed or attempted before.
Beneath the surface
But I think that electronification is still incredibly underestimated in India in the changes it can bring. Our changing attitude towards technology, from being regarded as an alien and forbidding thing to something that has a huge impact on our daily lives, has been one of the ideas that helped reshape the Indian economy. But we have yet to scratch the surface of the possibilities that electronification offers us, partly because we have looked to the West for guidance in using such technology.
The evolution of IT worldwide has given us a whiff of its potential. Since the invention of the transistor, technology has evolved to astonish even its most optimistic champions. Computers and other forms of digital technology are becoming more powerful, smaller and cheaper every year—and more ubiquitous. We are now seeing the rise of immense computing power, almost unlimited storage capacity and numerous small yet powerful devices that can tap into this. This has enabled a high-speed ‘digitisation’ of all kinds of content, where voice, books, music and video can be transmuted into ones and zeros and carried on the network. At the same time, networks transmitting this information have become intricately intertwined and ubiquitous, especially with the rise of fibre optic and broadband technology. Communication is becoming wireless, lighter than air, with cellular telephony and an alphabet soup of technologies such as Wi-Fi and WiMax. But while these electronification trends triggered dramatic change in the United States and Europe—and no book has described these shifts better than Thomas Friedman’s The World Is Flat—we have seen them evolve in these countries mainly as another layer over traditional models, complementing fixed-line telephones, dead-tree content and established ways of doing business.
India is different. For all the benefits India has seen from expected trends in mobile phones, electronic voting and modern stock exchanges, there is a lot more that is likely to unfold around our technology revolution in the next decade. As virgin territory, India could be a testing ground for something far more radical. India is not yet a ‘settled in’ economy—our supply chains and infrastructure are not nineteenth- or twentieth-century structures and systems, and our market systems are little more than a quarter century old.
Combine the still untapped potential of technology with India’s possibilities, and I see a path to a very different kind of country a few decades from now. Even if I were to extrapolate only from what is happening in the present, we can expect a transformation. We can, first of all, reasonably assume that within a few years we should be able to have ubiquitous connectivity to cover every Indian home, hamlet and town. The trends towards this are already obvious: mobile phones are set to pass the 50 per cent penetration mark and many mobile operators hope to cover 95 per cent of the population in a few years. Falling prices for handsets has helped make them popular, as the price has come down from around Rs 15,000 for the cheapest handset in the early 1990s to less than Rs 700 today. And even as mobile telephony gets more sophisticated and networks move from 2G to 3G, high-bandwidth and wireless connectivity will allow us to transmit both voice and data with ease.
The second implication of the rise of increasingly low-cost technology is that it will be possible to put an electronic device into the hands of every citizen and in every village. It could be a low-cost computer, a smartphone, a smart card or a PDA, and it will be both practical and cheap enough for the person to buy or the state to provide.
The third implication is that we will have the computing power and storage capacity to store an unprecedented amount of information that could be universally accessible. While this may conjure up the picture of an Orwellian Big Brother for some, in truth the power from ict and access to information flows both ways, as many governments have found out to their disadvantage. For instance, news on unpopular policies and state scandals spreads much faster, and so does dissent. The combination of ubiquitous communication, cheap devices and unlimited computing and storage means that everyone will have a way of communicating with each other, and of storing vast amounts of such information, accessing knowledge and entertainment and being connected to a ‘national grid’.
So powerful are these tools becoming that I believe India’s revolution, when we see it, will be not be like the one carried out in Europe, with peasant revolutionaries storming the castle gates with farmhand tools, but through low-cost technology models that put the power of digital information and networks in the hands of everyone.
But so far what I have described will happen one way or the other. This part of the revolution is already inevitable, thanks to falling costs of technology, global competition and the emphasis Indian governments have placed on making these tools accessible. But there is a lot more we must get done in terms of our underlying structures in order to have a truly effective, wired nation in place.
To have any kind of national-level, working approach to technology, we must start with the government. But when it comes to computerisation within the state, we cannot build new systems over a creaky base—we have to first reinvent our state processes to increase our efficiencies rather than merely computerising what exists. We also need to ensure that people can actually access these systems effectively; else IT-enabled governance will be little more than a showcase project. And we have to take a long, strategic look at the information infrastructure we need and all the possible services we can deliver across this structure.
Getting rid of our phantoms: Single citizen ID
A big source of heartburn for those running banks, managing elections and regulating the stock market in India is that the country is filled with people who are virtually invisible. "The one thing that gives me sleepless nights," ICICI’s Madhabi Buch tells me, "is the inability of us Indian bankers to put a name to a transaction."
Today Indians can have a multitude of numbers with which to identify ourselves, depending on when and where we interact with the state. When we get a passport we get a passport ID, a ration card gets us another number, when we pay taxes we need a permanent account number (PAN), when we register our vote we get a voter ID card, and on to barcode infinitum. "Our databases are in these disconnected silos," the chief election commissioner N. Gopalaswami says. This makes zeroing in on a definite identity for each citizen particularly difficult, since each government department works a different turf and with different groups of people. The lack of a unique number has given space to plenty of phantoms—in voter lists and in below poverty line (BPL) schemes and holding bank accounts with multiple pans. One academic tells me, "The number of BPL ration cards circulating in Karnataka is more than the state’s entire population, let alone the number of BPL families."
India’s ministries and departments are also quite isolated, with separate fund flows and intricate, over-hyphenated authority levels. As a result these systems require paperwork-choked processes each time citizens approach the state. A common technology and process platform for government schemes and departments—especially now that they have such large budgets—would be a huge improvement in coordinating information between departments, and getting rid of redundancy and triplicate forms. Identity systems linked up with an IT-enabled process that interlinks our various departments would, besides making citizen information and identity more verifiable, make the relationship between the state and the citizen infinitely less traumatising in both time and energy wasted.
Such a ‘national grid’ would require, as a first and critical step, a unique and universal ID for each citizen. Creating a national register of citizens, assigning them a unique ID and linking them across a set of national databases, like the pan and passport, can have far-reaching effects in delivering public services better and targeting services more accurately. Unique identification for each citizen also ensures a basic right—the right to ‘an acknowledged existence’  in the country, without which much of a nation’s poor can be nameless and ignored, and governments can draw a veil over large-scale poverty and destitution.
The use of IT and the rise of such unique number systems are closely correlated. In the United States, for instance, the Social Security Administration (SSA) was the first federal bureaucracy to require the use of computers, because of the overwhelming complexity of processing the social security numbers and data of its 200 million plus citizens. The bureaucracy was a massive complex of wall-to-wall file cabinets managed by hundreds of clerks. It was the early ibm 705 computer that helped transform and streamline it. This mainframe approach quickly spread to European bureaucracies in the 1960s and 1970s. The transparency and flexibility of such computerisation also enabled other reforms—such as laws that introduced individual citizen accounts for benefits and welfare payouts, a step which both opposition parties and citizens in Europe and the US would have been deeply suspicious of under the earlier, less transparent and bureaucracy-run system. In China as well, IT has helped the government transform its social security systems from a local network to a national, increasingly interlinked process.
In India the government has made some attempts towards such a single citizen ID number. This had a lot of traction in the previous NDA government as well, albeit for reasons that were less financial—they saw it as a way of identifying illegal aliens and refugees. UPA’s finance minister, P. Chidambaram, has on the other hand seen it as a way to address the identification challenges of Indian banks and the financial sector. A stop-gap arrangement that the government has put in place requires the pan as ‘the sole identification number’ during bank transactions. But of course, with just 60 million people with a pan, this does not come close to a broad-based citizen ID, and Dr Arvind Virmani, former principal adviser at the Planning Commission in New Delhi, tells me that the government has been working on a ‘smart integrated ID card’ that would serve as a unique ID. As things stand, a regulatory authority along the lines of the SSA in the United States, Chidambaram says, is likely to be approved.
Too often though, we see issuing smart cards as the main challenge of implementing such a system. But building these intelligent little stripes is the easy part. It is in making the back-end infrastructure secure and scalable, providing a single record keeper for the whole country and integrating the agents who issue these numbers that it gets tough.
To do this, we need a sustained and multi-pronged effort that cuts across governments as well as companies. For example, issuing this number to each citizen, say, during a census would be extremely onerous, as it is a painful task prone to errors as census officials spend long days walking through neighbourhoods and knocking on doors. It would be a lot more effective to issue these numbers when citizens come to the government.
This would mean issuing citizen IDs when individuals come to a public office for an identification document—a passport, birth certificate, caste certificate, driver’s licence—when they come to collect a benefit such as a BPL card or when they have to make a financial transaction, such as pay taxes, open a bank account or buy into a mutual fund. The government can also easily recruit private companies such as telecommunication and financial services firms to become intermediary issuers to their large numbers of customers.
Each of these paths to identifying the citizen and bringing him into the database would cover different pools of people. The pan covers all tax payers, voter IDs all registered citizens over 18, birth certificates all newborns and BPL cards the poor. Using the databases to issue IDs to different groups of people means that the initiative would ramp up to near-universal, accurate levels very quickly. And if necessary, such efforts can be complemented with a census.
A national smart ID done at this level could, I think, be transformational. Acknowledging the existence of every single citizen, for instance, automatically compels the state to improve the quality of services, and immediately gives the citizen better access. No one else can then claim a benefit that is rightfully yours, and no one can deny their economic status, whether abjectly poor or extremely wealthy. More than anything else, this recognition creates among all parties concerned a deeper awareness of their rights, entitlements and duties. It becomes far more difficult for both the citizen and the government to dodge any of these.
A key piece of infrastructure that must sit on top of an interconnected grid is the electronic flow of funds. This will require that each uniquely identified citizen or organisation has a financial account into which money can be transferred from the state. This could be an account in a bank, a post office or with a self-help group. And within this system, the ID smart card can function as a mobile, non-transferable electronic passbook.
My guess is that the impact on inclusive growth and India’s savings rate from implementing this would be massive, considering that an estimated 80 per cent of Indians today do not have a bank account, and therefore lie outside any sort of banking system besides perhaps the one represented by the exploitative moneylender and his steel box of cash. "The weakest aspect of India’s economic reach is in financial access," Dr C.