Friday, October 1, 1999
It’s time to take a leap. A lot of India's antiquated and stumbling systems are standing in the way of progress. And as the rest of the world keeps becoming faster, smaller, and clearer, India must get over its obsession with paper. Instead of clinging to these old ways, we should examine what the Internet, with its speed, convenience, and transparency can do to reform these inefficient processes.
Sure, the Internet has been introduced in India. But the true power of the Internet doesn't lie in accessing a few remote databases or placing a couple of classified ads. The true power of the Internet lies in its ability to eliminate old and problematic ways of doing things and replace them with modern, fast-paced solutions. In order for India to capitalize on this opportunity, we must re-examine each sector of Indian life in light of the IT revolution.
Push Buttons, Not Paper!
Let's begin with the financial sector, a huge part of Indian day-to-day activity. The financial sectors can be divided into two basic parts: the whole banking process, on one side, and the money/currency aspects on the other. The banking process includes everything from how your money is deposited, funds are transferred, bills are paid, accounts are tracked, as well as the paperwork that is involved in these activities. All of these aspects must be reexamined in light of the Internet, which is capable of reforming the entire banking process.
We can begin banking reforms by creating laws that allow for digital signatures, electronic banking, wire transfers and other modern methods. All of these areas will create currency on the Internet; before long we will see less and less paper. With the introduction of electronic banking, the current Indian financial arena -- from bookkeeping to check writing -- will become obsolete overnight. We have to convert India's antiquated banks into high-tech, electronic Internet banks. This will make transactions much more rapid and accessible. Users will be able to check their accounts and transfer money through their mobile phones. All of this is technologically feasible, we just need to create laws that will allow us to implement the changes.
Along with convenience and speed, one of the best things about IT is that it creates an open and transparent system. This cuts down corruption because it exposes dubious and dodgy ways of doing things. Creating transparent systems is a social transformation that I believe will be of great value not just to India, but to all developing nations. Developing countries have created a climate in which a select few have access to privileged knowledge. We need to replace this with an open system geared toward performance and productivity. IT, with its dissipation and decentralization of knowledge, forces this sort of change.
Furthermore, in order to take advantage of these features, the average user would not need to have a computer at home. In the last ten years, we have put in place a system of 650,000 PCOs. These can be converted into Internet kiosks and moved into local areas. By creating these public Internet terminals, we can make banking cheaper, faster and more convenient. These changes may take up to three to five years to implement, though they really shouldn't take more than two.
What’s Money, Really?
The second piece, which is more challenging, is the concept of money. What is a rupee? What does it stand for, and what does it mean? Before independence, we had close to three hundred different currencies. Each state had its own money. I've seen coins from the state of Kuch, from Baroda, and other regions. Despite there being lots of different types of money in India, trade among states was vibrant. In fact, the idea of standardization of currency is actually quite new in India, dating back only some 60 to 70 years. This is because money is essentially a token of trust; money was invented because citizens needed trust in order to exchange goods and services.
It is very difficult to find coins and small notes in India -- finding change required for 900 million people is no small matter. I am told India flies in thousands of tons of coins and currencies every year. We do not have the capability to print all of our currency. Due to the rigors of the Indian environment, the life cycle of the currency is notably short. Currency is damaged easily, and needs to be burned and replaced after a while. Printing or importing currency, distributing it, and, after a while, taking it out and burning it is a costly, inconvenient and unnecessary process. Electronic systems can reduce India's currency problem by converting many of our tokens of trust from paper and metal into silicon.
Steel to Silicon
We could help to remedy the currency problem with the introduction of devices such as smart cards and digital wallets. If the 50 to 100 million people in India who conduct the vast majority of transactions were provided these devices, we could eliminate a significant amount of the problems of carrying cash and making change.
Even if we were to charge consumers an initial sum of a few thousand rupees, these devices would justify their cost through the benefits they offer. We would be providing consumers with a lifetime device that allows them to download cash, pay phone bills, buy train tickets and perform a variety of other functions. Indians need to carefully consider the larger, long-term aspects of these solutions. By switching to a more digital system, we could significantly reduce the amount of money we need to print every year.
Money on the Move
Compare the larger benefits of moving money at electronic speeds with how it is currently moved. If money was circulating instead of sitting in the bank for two weeks at a time, it would generate more money, which would dramatically accelerate the economy. We are talking about billions of dollars moving fast. The Internet can create a tremendous amount of wealth through the restructuring of financial systems into electronics media. Along with wealth, this restructuring would also create a large number of high-tech job opportunities. Obsolete professions such as bookkeeping would be upgraded to more modern and productive occupations.
The Internet can do a lot to help India's ailing and inefficient financial sector. By converting our antiquated banks into electronic Internet banks, we would make the entire banking process
more open, efficient and inexpensive.
By using products such as digital wallets and smart cards, we can cut down on the inefficient process of creating currency only to destroy it later. The Internet creates a transparent system, so corruption and crime in these sectors would be easier to expose. The speed at which money moves via electronic channels would itself create a significant amount of wealth. By revamping our obsolete, static systems, we would also create lots of high-tech job opportunities for Indians.
In order to fully harness the power of the Internet, we must analyze what it can do for each sector of India's day-to-day affairs. The sectors of education, finance, transport, and health care, to name a few, can be vastly improved and transformed by the use of these methods. We must recognize the Internet for what it is - not just another piece of technology, but a unique historical opportunity to transform old, inefficient procedures into simple, user friendly, convenient, and accessible solutions.
