In a 2015 visit to Silicon Valley — the first by an Indian Prime Minister to the US West Coast since the semiconductor revolution in the 1970s — PM Modi suggested that “digital platforms were advancing citizen empowerment and democracy that once drew their strength from constitutions”. COVID demonstrated how one element of Digital India — Aadhaar enabled Direct Benefit Transfer — facilitated quick and targeted action. But COVID also demonstrated how large parts of the Indian state continue to resist, underinvest in, and delay digitisation. We make the case that the three-phase transition to mandatory digital payments, accounting, and transactions for government proposed by the CAG (Comptroller and Auditor General) under a new project and law called DATA (Digital Accountability and Transparency Act) uses the COVID policy window for an empowering, elegant, and overdue reform with delightful consequences.
The Union budget grew from Rs 197 crore in 1947 to Rs 30 lakh crore last year and total government expenditure may be higher than Rs 70 lakh crore. But the form and manner of keeping accounts have more or less remained unchanged since Independence; manual transactions and manual payments often lead to manually entered data at different stages in different databases on different systems. This makes data unreliable, violates the principle of “single source of truth” and sabotages transparency and good governance. DATA recognises that digitally empowered citizens require digital public utilities that not only provide e-services but make all government revenue and expenditure data electronic, machine-readable, granular, comprehensive, purpose linked, non-repudiable, reliable, accessible and searchable.
A challenge for DATA is that government “computerisation” has often mechanised manual processes rather than “re-engineered processes”. This has created siloed IT systems with disparate databases that lack modern data sharing protocols for organic linking like APIs (Application Programming Interfaces) and breed valid concerns of fiscal data being incomparable (as basic as salary expenditure across states), obscure (large expenditures booked under omnibus head called other), non-traceable (actual expenditure against temporary advances drawn or funds drawn on contingent bills), and misclassification (grants in aid as capital expenditure and bookings under suspense heads). But data underlies all transactional, accounting, and payment information and a national framework and dictionary to consistently and accurately capture, record, report, publish and analyse data both vertically and horizontally across government is now possible. DATA has many other upsides; recognising off-budget transactions (the last Union budget took steps towards this fiscal transparency and consolidation), business continuity (electronic records cannot be lost or misplaced like files or paper records), and an incontrovertible audit trail. Most importantly, it will enable Parliament and legislatures to draw “assurance” that each rupee due to the government has been collected, and each rupee has been spent for the purpose it was allocated.
The start point for DATA is mandatory and common data standards for all entities receiving government funds in all forms of funding and the endpoint is a single searchable website to ascertain total government funding by element and entity. But covering the distance between these needs three elements: 100 per cent end-to-end electronic data capture, data governance for standards across all government entities, and technology architecture. The first is clear; all receipts and expenditure transactions including demands, assessment, and invoices should be received, processed, and paid electronically. The second is complex; data standards are rules for describing and recording data elements with precise meanings and semantics that enable integration, sharing, and interoperability. Prescribing data elements for all transactions will ensure standardisation, clarify ambiguity, minimise redundant data, and create protocols for integration across different databases across entities receiving government funds, collecting revenues on behalf of the government, and those discharging core functions on behalf of the government.
The proposed government-wide data standards coupled with real-time data captured end-to-end will enable the use of cognitive intelligence tools like analytics, artificial intelligence, machine learning, which in turn will support the establishment of budget baselines, detecting anomalies, data-driven project/activity costing, performance comparisons across departments and agencies, and benchmarking. The third element of technology architecture must ensure that all IT government systems should conform to a prescribed open architecture framework (for instance, IndEA) while ensuring robust security and maintaining privacy.
A citizen-centric view of a single source of truth encompassing every rupee of public money would make the 299 remarkable people who wrote India’s Constitution proud of this 21st-century citizen empowerment innovation. Recurring operations will require a Data Governance Authority and the proposed three-year timeline is doable; one year for standard-setting by the data governance authority, two years to ministries/departments of the Government of India and states, and three years to all other recipients of government money such as local and autonomous bodies. A big gift to this project could be a 12-month mandatory deadline for all government payments to go digital; bad behaviour currently costs the RBI Rs 4,000 crore in bank agency commissions because many parts of the government do not use the RBI’s free e-kuber system.
A wonderful new book Midnight’s Machines: A Political History of Technology in India by Arun Mohan Sukumar chronicles a lesser-known political project that began on August 15 1947; the Indian state’s undertaking to influence how citizens thought about technology and its place in society. He suggests that Madan Mohan Malviya’s 1916 dissent note as a member of the Indian Industrial Commission seeded the Indian state’s interest in technology and drew a blueprint for India’s modernisation. India’s current gap between the digitisation of the private sector and government often reflects the 1972 Dandekar Committee recommendation that no entity install a computer without first “justifying” its use to employees and their trade unions. This means our rights as consumers are higher than our rights as citizens. But 100 years after Pandit Malviya’s forceful note, the digitisation of the Indian state proposed by the government and CAG imagines a giant leap in empowering our citizens.
This article first appeared in the print edition on July 9 under the title “Digitising the state.” Sabharwal and Phatak are with TeamLease Services and IIT Bombay respectively