Will Aadhaar be the Same with PC as FM?

Well, if media reports have to be believed, P Chidambaram, the Union home minister is all set to return as the finance minister. It does not sound too surprising, considering PC has been one of the best finance ministers that India has had in the recent past. What is more, his track record in the home ministry has been anything but spectacular.  Not only has he failed to achieve much, his tenure has seen continuous friction of his ministry with the states.  In short, his transfer from the finance ministry to home ministry has neither been good for the economy of the country nor for its politics. So his return should be good news for most.

Except those strongly backing UID/Aadhaar.

His dislike of the project—or rather the way it is being rolled out—is well-known. Not only has he disagreed with UIDAI’s way of collecting data, he has written to the prime minister multiple times complaining about it. It is in his insistence that the cabinet discussed in January the possible security loopholes in the way UID was collecting data and decided that while  NPR and UIDAI would use the biometric data collected by each other, in case of discrepancies between UIDAI and NPR data, NPR would prevail.

Again, as recently as last month, he had written to the PM that UIDAI was not cooperating with Registrar General of India (RGI), which was working on the NPR. This is what Mint had reported, quoting from the letter.

“The decision of the cabinet is crystal clear and I am unable to comprehend the reluctance of UIDAI to allow the NPR camps and to accept the NPR data. I had taken these issues with Nandan Nilekani, chairman, UIDAI, dated 14.05.12. The home secretary (R.K. Singh) has also discussed the issue at length with the UIDAI director general and mission director. However, despite our best efforts, issues remain unresolved,” he said.

It is difficult to believe that once he takes charge of finance ministry, his opinion about the Aadhar project would change drastically.

The question is: will it impact the effectiveness of UIDAI?

While it is true that UIDAI is part of the Planning Commission, the reason it became the government’s flagship program so soon is because of strong support from the former finance minister Pranab Mukherjee. Not only did Mukherjee generously provided for the funding of the project in three of his budgets, he made it the basis (aadhaar) of most of the government programs. There were nine reference to Aadhaar in Mukherjee’s budget speech this year. Whether it is for subsidy being credited directly to beneficiary’s bank account, creating a more efficient public distribution regime by creating a PDS network, or for disbursement of government payouts—such as MG-NREGA payments, pensions and scholarships—the finance minister seemed confident that Aadhaar could be leveraged as a platform to deliver. National Payment Corporation of India (NPCI) even created the Aadhaar Payment Bridge Systems.

In short, while the UIDAI chairman Nandan Nilkeani created a new generation platform in form of Aadhaar, it is Mukherjee who was instrumental in making it the flagship platform of all developmental activities in India. So much was Mukherjee’s liking for Nilekani that he made him head some half a dozen task forces, groups, and committees entrusting him with most changes. I wrote about it in a post in this blog earlier called The Importance of Being Shri Nandan Nilekani. Mukherjee had even gone to the extent of openly backing Nilekani on PDS reforms when the food ministry was ignoring the recommendations of a committee headed by him.

From there, it would be quite a change for Aadhaar/Nilekani if Mukherjee is succeeded by someone who very recently complained so strongly about the project to the prime minister, taking the name of its chairman.

Things would probably have been a little different had the UIDAI been a independent statutory body. A proposal to make it one was rejected by a Parliamentary Standing Committee headed by Yashwant Sinha a few months back. Interestingly, in its report, the Committee had extensively quoted news reports about the home ministry’s objection to/criticism of Aadhaar to justify its decision.

Both Chidambaram and Nilekani have proven track records. The country will benefit if they work in tandem. Another conflict in the government is the last thing that we want in the time of this apparent policy paralysis. Not only will it make another fresh and fairly successful experimentation in the government go astray, any drastic change in the path will make very wrong signals to international community. After 2G decision and GAAR, the last thing the country would like to see is going back on UID plans.

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RBI Slashes Debit Card MDR

In a circular issued by RBI on 28 June 2012,  the central bank directed the commercial banks to cap the debit card merchant discount rates (MDR) at 0.75% for all transactions upto Rs 2000 and at 1% for all transactions above Rs 2000.  On 28th May 2012 — that is exactly one month before this directive came — in a post titled Containing Black Money: Promoting Debit Card Usage Holds the Key, in this blog, I had argued that increased usage of debit card could go a long way in reducing the black economy.

This is what I wrote

RBI can well go proactive on promoting use of debit cards, as they provide a risk free way for banks to increase electronic payment. Just asking banks to promote/build awareness on debit cards can go a long way in growing the use of debit cards. Removing artificial blocks like high transaction fees can further accelerate the trend.

RBI noted in its circular that debit card is a secured product with the card usage being linked to the availability of funds in the accounts of the customers whereas credit cards are a part of the unsecured credit product portfolio of the issuers and there was no rationale for having similar MDR for both.

“Given this scenario, it is necessary to encourage the use of debit cards, especially at smaller merchants/service providers and location by way of lower MDR. This move would encourage all categories and types of merchants to deploy the card acceptance infrastructure and also facilitate acceptance of small value transactions. Further, in the case of the acquiring banks, a certain element of guarantee on the Return on Investment (ROI) is required for deepening the card acceptance infrastructure. A lower MDR with the expected increase in transaction volume on account of network effects would result in a reasonable ROI for acquiring banks,” said the circular.

Could not agree more!

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National Citizen Database/Unique ID: Is Chidambaram Speaking the BJP Language?

It is ironic. The Bharatiya Janata Party (BJP) may be baying for his blood after Madras High Court rejected Union Home Minister P Chidambaram’s Plea in his Lok Sabha election case, but the minister is actually fighting a bitter battle within his own government to implement a plan that was, by all means, envisioned by the BJP.

A large section of media has reported that the home minister has complained to thePrime Minister about the Unique Identification Authority of India (UIDAI) (part of Planning Commission) not cooperating with the Registrar General of India (RGI) (under Home Ministry) in a letter. Both are collecting biometrics based data of people–UIDAI for issuing Aadhar numbers and RGI for its National Population Register (NPR)

In a report today, this is what Mint said

In his letter to Prime Minister Manmohan Singh last week, Chidambaram accused the Nandan Nilekani-led UIDAI of not following the 27 January cabinet decision where it was agreed that the purposes of UIDAI and the home ministry-led National Population Register (NPR) project were different. Under this truce, both projects were to continue simultaneously and each would use the biometric data collected by the other. Also, in case of discrepancies between UIDAI and NPR data, NPR would prevail.

“Despite these directions from the government of India, UIDAI is objecting to the conduct of the NPR camps in certain states and is also refusing to accept the biometric data of NPR for de-duplication and generation of (the) Aadhaar numbers,” he said in the letter, which was reviewed by Mint.

“The decision of the cabinet is crystal clear and I am unable to comprehend the reluctance of UIDAI to allow the NPR camps and to accept the NPR data. I had taken these issues with Nandan Nilekani, chairman, UIDAI, dated 14.05.12. The home secretary (R.K. Singh) has also discussed the issue at length with the UIDAI director general and mission director. However, despite our best efforts, issues remain unresolved,” he said.

On the face of it, the fight seems to be about the data collection. But there is a bigger issue. And no, it is not about ego clash between Chidambaram and Montek Singh Ahluwalia. Or if it is, we do not know that. The big issue is that while both UIDAI/Aadhar and NPR are collecting data for creating citizen databases, their objectives are entirely different. And hence the details vary. While it certainly is a laudable idea that there should be no duplication of efforts and national resources for doing similar kind of work, it requires more than a cabinet meeting to pan out how that could be done. Else, the cabinet decision is like a patchwork; pushing the dirt under the carpet.

Without getting into too much details, there are certain important differences that must be pointed out.

One, the sacrosanct thing in the Aadhar number  is the number. There is a card but that is like a PAN card. The card is just a piece of plastic. It is the number that matters. On the other hand, the citizen card would be like a passport (or so it is believed). It is not just the number but the physical document that is important.

Two, the Aadhar number is not mandatory; the citizen card would be mandatory. That is a major difference.

Three, the Aadhar number—since its main aim is to facilitate the smooth access to services like banking—could be issued to anyone residing in India, even a foreigner. The citizen card of NPR is a proof of citizenship.

The above two characteristics of UID together ensure that the Aadhar number is neither a necessary nor a sufficient condition to citizenship of India. That is the whole purpose of the resident identity card of NPR.

These differences are fundamental. The Aadhaar project was launched by UPA to ensure financial inclusion, which was a big requirement for achieving social inclusion, UPA’s top election promise. The way in which NPR is being projected suggests that central to it is security. “The resident identity card programme was launched in India’s nine coastal states after the 2008 Mumbai terrorist attacks. The home ministry is seeking to extend the scheme to the rest of the country and has sought Rs. 6,700 crore to fund the program,” reported Mint.

Interestingly, this is what was originally BJP’s idea. In a story that I did in Dataquest, way back in January 2010, I had pointed this out. Calling it “Inclusion Vs Security”, I argued that while the central idea behind BJP’s national citizen database was security, it was inclusion that drove UPA’s agenda when it created UIDAI.   “While it is true that it was the NDA government that had taken the first step on creating a national identity system, its objective was entirely different,” I wrote. I cited an August 2003 press release issued by PIB on this.

“Illegal migration has assumed serious proportions. There should be compulsory registration of citizens and non-citizens living in India. This will facilitate preparation of a national register of citizens. All citizens should be given a Multi-purpose National Identity Card (MNIC) and non-citizens should be issued identity cards of a different color and design. This should be introduced initially in the border districts or may be in a 20 Kms border belt and extended to the hinterland progressively. The Central Government should meet the full cost of the identity card scheme”.

This is exactly what Chidambaram’s home ministry is now talking about. In fact, even in 2009, BJP’s Elections Manifesto had an IT vision in which a lot of emphasis was laid on this (MNIC).  It claimed that the centrepiece of the implementation of the BJP’s IT Vision is the Multipurpose National Identity Card (MNIC). This is what the vision document said.

We would amend the Citizenship Act, 1955, to combine the offices of the Registrar General of the Census of India and that of the UIAI to set up a Citizenship Regulatory Authority of India (CRAI). The CRAI would be responsible for maintaining a National Register of Citizenship (NRC), and keeping it current up to the minute.

This is what the BJP IT vision said further.

The amended Citizenship Act would make it mandatory under law for all citizens to acquire an MNIC, and parents of newly born infants would have to apply for one for their child, immediately after the baby’s birth.

So, whether it is the “mandatory” requirement, NPR (BJP’s NRC) or starting with coastal areas (BJP’s border belt), the home ministry idea is an exact reflection of what BJP wanted. In fact, these differences were also the basis of the Parliamentary Standing Committee on Finance headed by BJP MP and ex FM Yershwant Sinha for sending back the National Identification Authority of India Bill, 2010. “The Committee have received a number of suggestions for restricting the scope of the UID scheme only to the citizens and for considering better options available with the Government by issuing Multi-Purpose National Identity Cards (MNICs) as a more acceptable alternative,” it noted. MNIC was BJP’s phrase.

What Chidambaram’s home ministry is doing is to reintroduce BJP’s plan under a different name. Not surprising considering Chidambaram has been a hardliner when it comes to security.

So, which one is a better objective? There is no straight answer to that question. But as I had pointed out in another story, The Politics of Identity, in Dataquest after the Sinha-headed committee sent back the bill, “the primary objectives of the two projects, though their means are the same, are completely different. To measure one with the yardstick of the other, is not just unfair but would never yield any result.”

Even if one can debate this versus that, it is too late to do that as the government has decided to go for both. The good idea is that someone is thinking about minimizing on the national resources. But that is easier said than done.

While I did point out the fundamental differences between the two projects above, there are some more differences that have come the way that the two are being implemented. And while they are less sacrosanct to be changed, they need to be examined before one tries to work out a synergy.

One, UIDAI, in its wisdom, has decided that it would respect citizen’s privacy, something that is traditionally not a big issue in India but increasingly, citizens are getting more concerned about their privacy. UIDAI has taken a proactive stance on that. So, it is looking at collecting only the essential information for identifying and no more. NPR wants to have all the information and still operates with philosophy that government has all the rights  over citizen. While that is essential for somebody trying to ensure security, it should happen only when the government ensures that there is no information leakage.

Two, UIDAI has taken a mission/marketing approach rather than a typical government mandated top-down approach. It has marketed the program, got buy-ins from partners and has shown the benefits accrued to each stakeholder such as banks, telcos and state governments because of Aadhaar. By doing so, not only has it created a feeling of ownership, it has managed to share the cost of collection of data. NPR wants to do a massive centralized exercise.

While it is true that both are trying to collect similar data and hence should cooperate with each other to avoid wasting of national resources, it cannot just be wishful thinking. It has to be planned out properly. One thing about Aadhaar project is that, all its small flaws notwithstanding, it is fairly thought through program. It is halfway. The Finance Minister Pranab Mukherjee has emphasized its significance many times. Most of the development programs of the government now use Aadhaar as a platform. In fact, this year’s Budget speech had as many as nine reference to Aadhaar. So, you cannot do something that creates problems for UID project. That will affect all these development programs.

But NPR, even though it is an original BJP idea, is an important requirement too for security. And the fact that the government has decided to pursue it with all seriousness means going back in not an option. Certainly, duplication of efforts is certainly not a great idea.

The two projects have no option but to find synergies. But it cannot just be wishful thinking. It has to be thought through further. It requires more than a cabinet meeting or a letter by the Prime Minister for that.

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Containing Black Money: Promoting Debit Card Usage Holds the Key

Recently, RBI released its annual data on electronic payment transactions in India. The retail electronic payment systems data showed that the downward trend that credit card numbers had started showing from 2008-09 onwards has continued through 2011-12. Total number of outstanding credit cards dropped to 17.65 million by the end of March 2012 from 18.04 million a year ago. This was a 36% drop from the peak of March 08 when credit card numbers rose to 27.55 million. This was a conscious exercise on part of banks to minimize NPA. Most of the banks drastically cut issuing credit cards to those without good credit history. As a result, defaults went down drastically.

“In the last one year, the percentage of cardholders who have not met their payment obligations for more than 90 days has dropped from 2.82% in the fourth quarter of 2010 to 1.62% in Q4 2011,” says this recent report by Moneycontrol. By and large, analysts have interpreted it as a positive trend. As credit cards were denied to those with bad/suspect credit history, the limited number of cards remained with affluent people and professionals. That naturally took up the average spend on the cards. While the overall aggregate spend on credit cards jumped from Rs 57985 crore in March 2008 to Rs 96613 crore (that is a 68% jump), doing a little arithmetic on RBI data shows that during the same time, the average monthly spend increased more than two and half times—from Rs 1754 to Rs 4562.

There are, of course, reasons to cheer up the trends. But here is the stark reality. The total number of credit cards are just 17.65 million in a country of more than one billion people. Accounting for multiple card ownership by individuals—most of the people that I know have at least two active credit cards; I have three—the penetration of credit cards hovers around just a little above 1% of the population.

On the other hand, look at the rise of debit cards. In the same period—March 08 to March 12—when number of credit cards fell by 36%, debit cards grew 172%. At the end of March 2012, there were 278 million debit cards. Not surprising considering most banks today give ATM cards to their account holders which double up as debit cards. But look at the spend data. The 278 million cards accounted for a mere Rs 53423 crores. Simple calculations show that the average monthly spend on them is a mere Rs 136—that is 3% of the average monthly spend on credit cards.

That is not an encouraging figure. Especially when the finance ministry acknowledges that the card payments should be incentivized to arrest black money growth. The white paper on black money tabled in the Parliament by the finance minister Mr Pranab Mukherji was quite unequivocal about that. “Use of banking channels and credit/debit cards should be encouraged, while trade practices such as cheque discounting should be discouraged,” notes the paper. “Payments by debit/credit cards through e-service intermediaries will simplify and encourage payments in these modes and reduce the cash economy,” it further says. Reducing the cash economy is vital for arresting black money.

But so far, banks have not cared to do much for promotion of usage of debit cards. Most users do not even know that they can directly make payments through debit cards. They still rush to the ATM to withdraw cash to pay in a shop. In small towns, many shopkeepers actually encourage that even though they are aware about debit card payment. That is because they save on paying the transaction fees. Yes, banks still charge similar kind of transaction fees that they charge on credit cards.

Of late, RBI has voiced its concern about that. G Padmanabhan, Executive Director, RBI, in charge of payment and settlement systems recently called the practice illogical. “We are saying that the debit card interchange fee should be lower because credit cards get paid after sometime, whereas in debit cards, there is an instantaneous debit into my account. Hence, logically debit cards charges should be lower,” Business Standard reported him as saying, at the launch of RuPay debit cards, promoted by National Payments Corporation of India (NPCI).

There is no participation fee in RuPay for banks and there is aggressive plans by NPCI to take up its market share. If successful, it may actually cut down the transaction cost drastically—something similar to what the National Financial Switch (NFS) has done for ATM transactions. NFS, started by Institute for Development and Research in Banking Technology (IDRBT) is now managed by NPCI.

But that is some time away. Till such time, RBI can well go proactive on promoting use of debit cards, as they provide a risk free way for banks to increase electronic payment. Just asking banks to promote/build awareness on debit cards can go a long way in growing the use of debit cards. Removing artificial blocks like high transaction fees can further accelerate the trend. Any other incentive can only help.

We may well see some concrete action on this front this year, if the government is really serious about minimizing the hold of black money on our economy.

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Of Numbers, Business Journalism and the Emerging World of Data Journalism

Yesterday was my last day at CyberMedia India Ltd—an organization where I served in various capacities for the last 18 years. This also happened to be—going by my current plans for the future—my last day as a journalist; business journalist, as I never forget to emphasize.

I thought this is an apt time to share what I believe are the most essential requirments for a business journalist. It would not be new to people who have worked closely with me—my juniors for sure, but many of my peers and seniors too. I have often preached two simple mantras to freshers. Many may and do disagree with me on this—and that is fine with me—but I dare anyone to point out even one instance when I have been unfaithful to these mantras!

Those mantras would sound astoundingly simple to you. In fact, I believe they really are. And here they go…

  1. Never underestimate the value of numbers
  2. Never overestimate the value of numbers

That is common sense, na?

Yes, it is.

But unfortunately, I have encountered so many youngsters who believe they can “stay away” from numbers and still be succesful business journalists. They believe I am some sort of a fundamentalist to insist on something so mundane. I take the criticism with alll humility but would still stand by my assertion. And the fact that I chose to highlight this as the most important requirement as I say good bye to the field just shows how much importance I attach to these two mantras.

But before that, I must make a clarification. These are not sufficient conditions for becoming good business journalists. A person who is on top of numbers but is not good at finding stories is good to be a statistician, not a business journalist. A business journalist should be a journalist first. And a good business journalist should be a good journalist first. A good journalist, I am repeating for the sake of completeness, should have an eye for a story. A good business journalist, often, may find a story in a set of numbers itself, though that is just one aspect of it.

So, what do I mean? When I say never underestimate the value of numbers, it simply means you must be comfortable to deal with numbers if you want to be a business journalist. You do not need to be an economics or engineering or mathematics graduate, but you must not fear numbers. You need to learn how to read them and they must not repel you. I think there is no other way. In many ways, Mantra 1 is a necessary condition to be a business journalist. It is the beginning of the journey.

Mantra 2, on the other hand, is what would help you transform yourself to a good business journalist from an average one. At first, it sounds contradicting the first mantra, but in essence, it is not. The first mantra just emphasizes the importance of being comfortable with numbers. The second suggests you should not get obsessed by numbers. Practically, it could mean one of the two things: one, tell yourself that numbers could often give you a good story, or an idea to pursue, but there are other important sources too. Two—and this is more important—just because you have discovered something by doing some number crunching does not mean the reader is interested in all those numbers. The fact is that most readers do not like a copy that is full of numbers; it must tell a story. But very often, you have got to the story by doing some heavy number crunching in the background. Resist from throwing all those numbers in the story. Tell the reader the story, may be suported by a couple of big numbers. But don’t subject him to all that you have worked out. That is what I mean when I say never overestimate the value of numbers.

If mantra 1 is about starting the journey, mantra 2 is about reaching virtuosity; knowing when to exercise restraint. Sometimes, numbers are just for the input; not for the output.

The reason I chose this topic for highlighting is not just my love for numbers. It is about the increasing relevance of this skill on part of a journalist (and not just business journalists) in a world that is going through a data revoloution, driven primarily by a movement towards transparency. Releasing of data by governments, such as the US government’s data.gov and similar initiatives the world over, is becoming mainstream. Apart from governments, international organizations and business organizations too are releasing huge raw datasets to the public domain. These datasets are invaluable sources of treasure as far as spotting trends is comcerned. And that is what good journalists have done traditionally—to be out with a trend. These datasets provide a great opportunity to analyze and come out with interesting stories by the journalists. So much so that, a new term, data journalism, is now becoming vogue.

Wikipedia calls it data driven journalism and defines it thus

Data-driven journalism is a journalistic process based on analyzing and filtering large data sets for the purpose of creating a new story. Data-driven journalism deals with open data that is freely available online and analyzed with open source tools. Data-driven journalism strives to reach new levels of service for the public, helping consumers, managers, politicians to understand patterns and make decisions based on the findings. As such, data driven journalism might help to put journalists into a role relevant for society in a new way.

I, however, find the explanation of Guardian to be far more relevant and simple.

My major disagreement with the Wikipedia definition is this: while I do believe that open data will revoloutionize the way data journalism is handled, I will not like to include it in the definition of data journalism. Journalism should not concern itself with the nature of the source of that data. Even if it is not open data, it should still be called data journalism. Having said that, open data, because of its sheer volume and openness—the fact that is available to all—will make a huge impact on how data journalism evolves.

I will also recommend this piece  by Guardian, that is an extract from its Data Journalism handbook. While you go through that yourself, I will like to reproduce extracts from its first tip and last tip.

The best tip for handling data is to enjoy yourself. Data can appear forbidding. But allow it to intimidate you and you’ll get nowhere. Treat it as something to play with and explore and it will often yield secrets and stories with surprising ease. So handle it simply as you’d handle other evidence, without fear or favour.

…….

…….

The best questions are the old ones: is that really a big number? Where did it come from? Are you sure it counts what you think it counts? These are generally just prompts to think around the data, the stuff at the edges that got squeezed by looking at a single number, the real-life complications, the wide range of other potential comparisons over time, group or geography; in short, context.

As it is, data journalism is not a new concept. All business journalists (and other journalists) would have done it in some way or other—in the earning season, for example.

As far as I am concerned, I have done many big stories, purely basing them on analysis of data. That is why some of the international multilateral organizations as well as bodies like RBI are my regular stops. They often release data that reveal exciting stories if you look for them. In fact, I have even managed to earn a name for such stories from many who term them, armchair stories. Honestly, I did not know the term data journalism while doing those.

For those who call them armchair stories, I have just one more piece of news. I have gone a step ahead. In recent days, I have focused on what one could well term lazy man’s data journalism. Many of my tweets are actually based on those “hunted” data from various sources (minister’s answer to a question in parliament, RBI Governor’s speech or GITR report by WEF) often without any analysis on my part. But what makes me select a few from so much that is around is that I know what is a little surprising, counter intuitive, or plain interesting. That does not come from my comfort with numbers. That comes from my familiarity with the area of ICT/public services. I cannot do the same in say, biotechnology.

I have found those tweets to be the most retweeted. So, there must be something interesting in them.

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Crackdown on Illegal Music Sites: The Solution is Not So Simple

In a well-coordinated move, the Indian Music Industry (IMI), a consortium of more than 100 music companies, recently managed to get an order from Calcutta High court directing ISPs in India to block 104 music sites on charges of piracy. Some of these sites such as songs.pk, musicindiaonline.com, dishant.com, and smashits.com are extremely popular destinations for music lovers. Medianama.com, one of the top websites focusing on business related to digital media and entertainment, said that the IMI had made a case against each website, quoting Apurv Nagpal, CEO of Saregama, one of India’s largest and oldest music company. Medianama further said that the court orders were obtained on different dates and the first order was against songs.pk.

The order against songs.pk was widely reported in media and we had even discussed it in our editorial meeting in Dataquest. But I came to know about the blocking of the other sites when, while searching for the lyricist of a 60s Hindi film song, in the third week of March, I clicked on a Google link and found the message that the site has been blocked because of orders from DoT. It is only when I did a couple of more queries that I saw a few write-ups (none in the traditional media) about the sites being blocked because of the orders from Calcutta High Court. Medianama even gave a list of all the sites. I found that many of the sites that I often visited to find/confirm info about songs (esp the year of a film/lyricist etc) are in the list. Most of them are music streaming sites.

According to IMI, these are illegal sites while there are a few sites such as raaga.com, gaana.com, in.com, and dhingana.com that have legally obtained licence to stream music. The average user of the sites, however, have no way of knowing which one is legal and which one is not. Most of the people I know who use these sites are heavy purchasers of legal music. When I asked a few of them, most of them said they choose these sites because of ease of navigation/look and feel. I agree with that but have one more parameter: accuracy of information about songs. This, because, there is little to choose when it comes to the quality of sound or speed between one site and another. The Saregama site scores heavily on the accuracy-of-information front while it is poor when it comes to presentation and does not work quite often. Flipkart’s Flyte—though much better in terms of presentation and navigation—has quite a few mistakes when it comes to information on songs—one common and frequent error being combining films of the same name (one released in 40s and another in 90s, for example) to a single album.

So, while feeling good about the success of the anti-piracy moves, I was a little sad that these sites—to which I often trurned for a quick check-up of info—would not be accessible any more. But as feared by many analysts and legal experts, they resurfaced under different names. Songs.pk became songspk.pk; musicindiaonline.com became musicindiaonline.co; and dishant.com became dishant.co and so on. So, while the music industry may have won a battle—that too partially, what with all the resurfacing of some of the sites—the war is still far from being over.

But what is this war all about? On the face of it, it is piracy and loss of revenue to the music industry. From a moral and legal point of view, the IMI action looks plausible. But when you look at it practically, it is bound to fail because of two reasons. One, well discussed by many bloggers, is technical: it is virtually impossible to completely ban sites. In any case, restricting through ISPs would work only in India.

But the other reason—and I think it is far more important—is that the music industry is not yet prepared to embrace the change that would actually give them back the power. We have come to a situation like this because the music industry has been lax in moving with the times. People’s unwillingness to pay is only part of the reason for piracy. An equally strong reason is access to music. In my school/college days, for example, there was virtually no way to “get a song” without “recording it (read piracy)” till Gulshan Kumar exploited a loophole in the law to re-record many of the yesteryear’s hits in newer singers’ voice and offer an alternative. And even though these songs stood nowhere in comparison to the original, people lapped them up because they were affordable and more importantly, they were widely available. In fact, many people in my generation might have first listened to a song in Babla Mehta’s voice before listening to the the Mukesh original! Kumar created a few star singers such as Kumar Sanu and Sonu Nigam in the process! And brought about the first big change in the industry.

While Kumar’s method and today’s illegal websites’ methods vary in terms of their legal status, their basic raison d’ etre is the same. T Series under Gulshan Kumar and many sites of today were created to make music reach people in a music-hungry nation in an easier, friendlier and cheaper manner.

Today, the users of those sites, if asked to pay some money, could actually end up paying, provided pricing is right and paying is trouble-free. After all, they have been paying for things like caller tunes amounts which are often 20-30% of their montly spend on mobile!

My argument is not meant to justify illegal streaming, but to point out that the music industry is as much responsible for the problem as anyone else. And it cannot fight the disease by trying to cure the symptom.

A look at the table here would tell the story. The data is from Google AdPlanner and may not be 100% accurate. But even if you take 30% error margin, you get to see the point. Why should an obscure name like song.pk would get millions of pageviews while India’s best known music brand—which also has a vast collection available in its site for downlaod—can muster only a few thousands? Yes, the fact that they are free could be a big reason; but you will be fooling yourself to argue that it is the only reason.

And yes, these traffic figures are for Marh 2012, which for the blocked sites, are a mere fraction of what they used to get before the ban. As one can see, the loss of these sites has translated to gain for some legal streaming sites and not for Saregama.com.

Traffic: Music Sites in India

SITE TYPE UV (India) PV (India) COMMENT
Songs.pk Illegal/blocked 5.6M 23M Dropped by almost 2/3rd between Jan-Mar
Smashits.com Illegal/blocked 830K 8.3M Dropped significantly between Jan-Mar
Dishant.com Illegal/blocked 570K 2.2M Dropped significantly between Jan-Mar
Musicindiaonline.com Illegal/blocked 320K 3.8M Dropped by almost 3/4th between Jan-Mar
Hummaa.com Legal 680K 2.6M No major gain between Jan-Mar
Gaana.com Legal 2.9M 16M Significantly moved up between Jan-Mar
Raaga.com Legal 2.2M 9.8M No major gain between Jan-Mar
Saavn.com Legal 1.1M 70M Significantly moved up between Jan-Mar
Dhingana.com Legal 1.6M 7.5M Actually dropped between Jan-Mar
Saregama.com Music Label 130K 230K No major gain between Jan-Mar

Source: DoubleClick AdPlanner by Google. All figures for March 2012 and for India traffic. K stands for thousands and M for millions. UV: Unique visitors. PV: pageviews

Most music companies believe that they can continue to do what they have been doing so far—recording the music, owning the copyright, and revenue should come to them automatically, even from newer channels. Legally, it is a valid stance. Practically, it is not.

So, what is the solution? It surely is not rocket science. Most of them know the answer; it lies in mainstreaming these sites and not excluding them. Medianama has carried an interview with Saregama CEO, who admitted as much.

We don’t want these sites to be shut down, we want them to pay a license fee and flourish as a business. There are legitimate businesses in operation too. The scope is there, and we want these sites to be legal.

But they must act. It should be right approach; right and transparent pricing. In another story, Medianama said that IMI was unwilling to share pricing. While sharing any exact pricing may be tough, it should reach out with a rough idea, because many of these sites are run by young kids in their 20s. They will not come running to get into sophisticated discussions.

It is not really lack of intention that is the problem with the industry. It is the discomfort with the disruptive changes. Take Saregama for example. It takes one step at a time. As a buyer of legal music all through, I have tried everything and can say with some authority how it has evolved. First came hamaracd but not with mp3. So, you could get around 10-12 tracks for Rs 300 or so. It won’t work half the time. Then came their current website with provision to download mp3s for a price. Then came a set of MP3 CDs—really beautiful compilations of old Indian light music—film, bhajans, ghazals—priced for Rs 75 for 40 songs. Almost all of them are gems. But try to look for them in any big store—Landmark, MusicWorld, Planet M—you will never find too many of those titles. The company site is silent about this series. Then came Flipkart’s Flyte, which made the downloads far easier and friendlier. Yet, unlike books, music is a mass market product and e-commerce with credit card/online banking is still pretty unreachable for many. Not surprisingly, cash on delivery has been the preferred mode for most e-commerce buyers in India. That is not an option in downloads.

With always connected devices, the future is clearly streaming. My own experience says that 80% of the music that I buy, I do not listen for more than 2-3 times. So, I will not mind if I can pay a very small price per listening a song. That requires a completely different kind of pricing. So, any song that costs Rs 6 at Flipkart Flyte should probably cost no more than 30 paise for listening once. This is not a suggestion by me based on any calculations, but just an illustration. The actual calculations may show even more dramatic pricing. What I want to point out is that it requires disruptive thinking.

But I must reiterate the point I made earlier. The bigger issue is ease of paying and not pricing. Even if it is 30 paise, a user with no credit card or online banking can do precious little. If, on the othe hand, the payment is through, say, a mobile, it is absolutely possible to target a much biggger base of users. It can be really simple. An SMS goes out with a code. Once the user enters the code, he can stream/download the music and it gets debited from his mobile balance. Yes, it requires talking to a couple of players—an operator/an independent payment gateway etc—but it is not impossible. And I am not stupid enough to believe that these ideas are my original and have not occurred to the bright guys who run the music business. Or for that matter, this is the only way it can be done!

The problem is not lack of ideas; it is not even lack of intention. It is just lack of strong will to disrupt a model that has been in place for so long. If the music industry does not do it, someone else will do it. Apple has already done it to a great extent, creating value for itself but making the music companies a little richer, which they seem . But as Apple without Jobs is beginning to face the possibility of an anti-trust trial in case of e-books, the closed model is being threatened.

As of now, the illegal web sites may be getting a few ads, which makes them sustain the business. But if they have to be in this business, they will have to charge the consumers or get targeted ads. These sites have to be convinced that they have to walk half way. The music industry must walk the other half. But as big boys, the onus is on the music industry to drive the change. Else, change will just happen—to them.

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Sorry Amazon, You Are Not Welcome

Today, the government notified what it calls the circular 1 of 2012, its fifth six-monthly update on Consolidated FDI Policy, since it began doing so in March 2010.

In one of the major clarifications that will impact e-commerce in India, the policy has clarified that “existing restrictions on FDI in domestic trading would be applicable to e-commerce as well.” Which means a foreign company cannot take either the automatic or government route to invest directly in a retail e-commerce venture in India. However, like in offline retail, it allows FDI B2B e-commerce. In short, all the rules of FDI that apply to offline retail would apply to e-commerce as well.

This is the first time that the government has clarified its stance on e-commerce. Earlier this year, in a column that I wrote in Dataquest, titled, Stoped FDI in Retail? Here Comes E-commerce, I wrote about this anomaly. “Online retail is not defined as retail by today’s government definition,” I pointed out that time.

Most of the e-commerce ventures, though, will not be affected, as few, if at anyone at all, has FDI investment. In fact, Amazon, which has been eyeing Indian market for a long time was not taking the big step anticipating this policy stance. So, it entered with junglee.com, a sort of marketplace, in the likes of eBay but targets different kind of sellers, mostly the e-commerce service providers. This India-specific services serves as an aggregator platform.

However, the market was rife with speculation that Amazon wanted to buy out Flipkart. It was even speculated that the two parties were in negotiation but there was valuation mismatch.

With this clarification, though, for the time being, any plan of Amazon to enter Indian market directly selling to consumers, has to be shelved.

 

 

 

 

 

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The Not-so-new Arguments of Protectionists

Politicians everywhere are the same. Many a times they are really ignorant. And many times, they just act ignorant. Then, there are the classic fundamentalists in a debate, who are dogmatic, and no logic would convince them. The most dangerous, however, are those who take help of logic and selective facts to argue their point. In reality, they are as dogmatic, but they use logic to project themselves as liberal rationalists because few know the facts and sources that they quote. They often shift the debate to a completely different point in which they may be on stronger wickets but that is of little relevance to the original debate. Apart from some politicians, many in this category happen to be from my profession: media.

I came across this post in ComputerWorld Blog, called Clueless in White House. The whole piece, taken on its face value, argues that the US Vice president Joe Biden “doesn’t know a thing about H1-B visa” and the president Barack Obama was evasive about a question related to US job loss and probably he is also ignorant. So what? Didn’t Michael Moore write about this long back? But that is not the point. What is it that the author is actually hinting at?

You get the answer to that when you read this other piece of his, Indian IT firms heading for a fall. It starts with the sentence, “Indian IT firms understand software but not America.”

And you know what to expect.

The piece cites a few lawsuits that have been filed against Infosys, TCS and L&T Infotech to argue that these lawsuits are the results of the Indian companies’  lack of understanding of America, American spirit and so on, with a conclusion that they are heading for a fall, which comes right on the headline.

It goes on…

The lawsuits are a problem for each of the companies. But taken together, the cases are a major threat to the Indian IT industry in America.

India’s IT firms are dependent on American businesses for about half of their revenue. They can’t operate in this country without work visas, such as H-1B and L-1 visas.

Indian IT firms are dependent on American business. That is a fact. But it is time to put the other side of the story as well: The American businesses are equally dependent on Indian IT workers.  

Anyone who follows the outsourcing trends knows that the share of US revenue as a percentage of overall revenue is falling for most Indian IT companies. The share of offshoring to India as a percentage of total outsourcing contracts in the US is on the rise year after year. Ten years back, Indian companies would not have survived without American business. Ten years hence, American business would not survive without Indian workers.

As Tom Friedman put it so well in his 2005 book, The World is Flat: America must choose the future and not the past.

But let us even forget all that for a moment. Let us go back to the original debate. What is it about? Is it about H1-B visas and L-1 visas? Well, that may the most immediate issue, but the actual debate is whether you need people from outside America to do some of the IT work more efficiently or not?

And let us, for sake of argument, assume that the US government decides it does not need foreign workers. In that case, it must say so rather than creating hurdles in the visa process.

And who is saying that? It is not just Infosys, TCS and L&T Infotech but Accenture, eBay, Microsoft, and GE as well. The letter that the industry sent to the president on this issue is signed by more American companies than Indian companies.

Protectionism is not about politics. It is about fear. America is still the most open society, the most innovative among large nations, and of course, still the biggest economic and military power globally. It may get concerned about employment levels but there is no reason to panic.

 

 

 

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Infosys: Its Real Contribution

Recently, Fortune magazine listed Infosys founder N R Narayana Murthy among the The 12 Greatest Entrepreneurs of Our Times. The list, dominated by Americans, has only two people outside the US. Interestingly, both of them happen to be from the subcontinent, Muhammed Yunus of Grameen Bank, Bangladesh being the other.

The piece on Narayana Murthy—like most of the other profiles—does not substantiate  too well why he is in the list. This is what the magazine says

He proved that India could compete with the world by taking on the software development work that had long been the province of the West. As one of six co-founders of Infosys and the CEO for 21 years, Murthy helped spark the outsourcing revolution that has brought billions of dollars in wealth into the Indian economy and transformed his country into the world’s back office.

Well, with all respect to Fortune and Murthy, I do not think this can actually be the reason bestowing the honor  on him. For Murthy was neither a pioneer nor an innovator as far as offshoring per se goes. Nor is Infosys, the company he co-founded, the largest among the lot. So, while he/Infosys could still be acknowledged  as one of the major forces that shaped this phenomenon, it is unfair on others to single him out for this.

The West, though, has always seen Infosys as the most important symbol of offshoring phenomenon. In his 2005 book, The World is Flat, Thomas Friedman wrote that the two biggest challenges to America were Infosys, which was “taking away” the American jobs and Al Qaeda, which wanted to destroy America. He portrayed Infosys as the symbol of the pro-globalization forces.

In fact, if anything, that is a lasting contribution of Infosys to Corporate India. It taught Indians how to market globally. Just when the world was waking up to the “The Rise of  PR” wave, Infosys taught the world in general and B2B companies in India in particular how to use PR effectively.

But again, the idea of the piece is not to suggest that it is PR that has made it what it is. For that matter, that is not the greatest contribution of Infosys to India, Indian business and the society in general, which is what I want to discuss here.

But before that, I would like to bust some of the myths that exist about Infosys.  I would like to reiterate that

  • Infosys is not the pioneer in offshoring per se
  • Infosys has not even pioneered any particular trend within offshoring industry (such as moving up the value chain by doing different things, globalizing delivery, movement to smaller locations, targeting newer markets, service lines etc)
  • Infosys is not particularly more innovative or disruptive than its peers
  • Infosys is driven by a good set of values but it is not among India’s top few companies when it comes to social responsibility
  • Infosys is no more one of the preferred employers among IT employees, as many best employer surveys show
  • Infosys, as the company is not hesitant to admit, is not particularly risk taking
On the other hand, Infosys’ contribution to Indian IT, Indian business, Indian economy, and Indian collective psyche are much more than these business parameters. Here is what I feel Infosys brought to us/changed in us.
  • The belief that middle class Indian values can be successful business mantras globally.  I think this is the single biggest contribution of Infosys and Murthy. In my college days (88-92), we had one of our batchmates who came from a business family. He always silenced us by saying that you cannot succeed in business by following the so-called ethics. Though he did grudgingly admit that Tatas and a few others are exceptions, he always pointed out that the formative years of all those companies were much older. In independent India, it was not possible. Most of us fumed but had no answer for him. Infosys single-handedly changed that perception. By doing so, it gave hope to millions of middle class youth that you could still stick to a set of values and be successful in business. What is more, you do not need to come from a “business background”.
  •  Transparency in business. Ethics and transparency are related but they are not the same. Transparency requires a proactive approach of sharing information with stakeholders, be in clients, investors, employees or partners. One of the classic statements of Murthy is, “When in doubt, declare.” That has been the guiding principles of its investor strategy. And many newer second generation companies have tried to follow that approach.
  • Setting new benchmarks in employee care.  As is rightly believed, Infosys created new standards with its approach to employee care. Its employee care strategy looked beyond the traditional HR parameters of pay, job satisfaction, growth etc to actually proactively make  the lives of its employees smoother so that their minds are not pre-occupied with too many issues. What Infosys did became the standards for the entire IT industry. Be it IBM or Acccenture or Indian companies, whoever wanted to be a player in the Indian offshore industry, had to play by the HR rules created by Infosys. Though it has been criticized—I myself have done that—for not changing with the time when the IT labor market became more like any other labor market anywhere else, with employees turning to more professional parameters than feel-good parameters, it had already raised the bar for ever. The feel-good HR may not be a differentiator for anyone anymore, but it is a filter, a bare minimum that you cannot ignore.
  • Sharing of wealth with employees. While Dhirubhai is credited with popularizing the stock market phenomenon in India, it is Infosys which can be credited for pioneering the concept of sharing wealth with a large set of employees through its ESOP. Though this is not really a pure innovation—it is the norm in many places—in India, Infosys can surely take the credit for this practice.
  • Making traditional Indian parents proud about their chilldren’s work and organization. One of the things that Infosys understood that parents and elders in India are actively involved in decisions about their children’s job choices. And it knew that the “secure” government job and a few in the private sector such as “Tatas” are always the first choice, it actively wooed the parents with proactively communicating what it stood for. Its great concern for employees, its sprawling campus (to which many parents come to see as if it is a pilgrimage spot), active communication of values that it stands for (which would appeal to any traditional parent in India) were all targeted at the parents. It did it for itself but that became a benchmark for most of the new companies that entered IT business.
  • Beating Americans at their own game. When Friedman wrote Infosys stands for the pro-globalization forces, he meant Infosys as a symbol of the offshoring wave. But Infosys is much more than that. While Tatas and Wipro are often hyphenated with Infosys, none of them comes anywhere close to Infosys when it comes to marketing and PR. HCL too is seen as too aggressive and sales-driven. While Wipro and TCS traditionally would not mind their sales people doing cold calling, Infosys ensures that the name itself does the trick in most cases. Whether it is Friedman or Fortune, the first name that they turn to is Infosys/Murthy. That is not a mean achievement for a company with headquarters in India, that too South India, where talking about oneself positively is often frowned upon. Unless of course, you know how to do it without sounding arrogant or verbose. Infosys has mastered that art. That too is a lesson for corporate India.

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Open Government Platform: Beginning of A Great Journey

In the next few hours, the Union Minister for Communications & IT, Kapil Sibal, is expected to announce the launch of open government platform, in the presence of some representatives from the US government. This will be the first major announcement after the cabinet approved the National Data Sharing and Accessibility Policy (NDSAP) 2012 last month.

The idea of open governance, spearheaded by the US, under then then Federal CIO Vivek Kundra, has been gaining popularity the world over. The Open Government Partnership  is a multilateral initiative that aims to “secure concrete commitments from governments to promote transparency, empower citizens, fight corruption, and harness new technologies to strengthen governance.”

The Open Government Partnership as a global partnership is not too old and started just about six months back. Formally launched on 20 September 2011, with an initial declarationby eight countries—Brazil, Indonesia, Mexico, Norway, Philippines, South Africa, United Kingdom, United States—the partnership now has 53 member countries, including the original eight.

With its time-honored policy of under-commitment, India is yet to formally join the partnership but is working with the US government to work on open access to data.  To become a member of OGP, participating countries must embrace a high-level Open Government Declaration; deliver a country action plan “developed with public consultation”; and commit to independent reporting on their progress going forward.

It may be noted here that publishing data collected by government is just one—though, at present, arguably the most important—aspect of the move towards this openness.

The Platform

While the actual beginning of the move towards open government began with President Obama signing the Memorandum of Transparency and Open Government on Day One of assuming office, it was with the appointment of Vivek Kundra as the Federal CIO that the real momentum started. Barely two months after his appointment in March 2009, Kundra launched Data.g0v platform (in May), for providing public access to raw datasets generated by the Executive Branch of the Federal Government in order to enable public participation and private sector innovation. It drew from the DC Data Catalog launched by Kundra when he was CTO of Washington, D.C., where he published vast amounts of datasets for public use.

Though open government is a broader objective and is not just about releasing raw government data, this was nevertheless considered a major step, as the public availability of these datasets would not only help in transparency and openness, it also would allow anyone who wishes to do so—companies, individuals, NGOs—to create innovative applications using these data. And it actually did.

But when Kundra announced his resignation in June last year, there was a lot of apprehension whether the open government movement will lose its momentum. Many believed Kundra’s resignation was because of a drastic cut in funding for the e-government initiatives that he had undertaken. In a column titled, The Death of Open Government,  in Washington Post, renowned technologist, academician and commentator was drastic in his observation.

But, with Kundra gone, I am not optimistic about the program. Whenever a program loses its key evangelist, it normally dies. The Open Government Initiative is likely to suffer a slow, inevitable death.

But nevertheless the progress continued.

And when there is something around IT, can India be kept out of it? When the US government started to look at open sourcing the data.gov platform, India—the land of techies—was of course, the first stop. And this began around August, even before the Open Government Partnership was announced. India was not to be a member of that; it still isn’t.  But when it comes to tech work, the world’s most business savvy nation, surely knew where to turn to.

In December, it was publicly announced that India and US were working together to create a platform, called data.gov- in-a-box, an open source platform that would help governments globally to produce their own version of data.gov. This is what the data.gov site said at that time.

Among the actions in the U.S. National Action Plan announced by President Obama is an effort under the U.S.-India Strategic Dialogue to produce “Data.gov-in-a-Box,” an open source version of the United States’ Data.gov data portal and India’s India.gov.in document portal. The U.S. and India are working together to produce an open source version available for implementation by countries globally, encouraging governments around the world to stand up open data sites that promote transparency, improve citizen engagement, and engage application developers in continuously improving these efforts. Technical teams from the governments of the U.S. and India have been working together since August of this year, with a planned launch of a complete open source product (which is now called the Open Government Platform (OGPL) to reflect its broad scope) in early 2012.

Today is that day, when that formal announcement about that platform is likely to happen by the Indian IT minister.

All the best for the journey together of two great nations, which are not just the most influential democracies in the world but are also the most competent when it comes to IT. And nothing marries democracy and technology like this initiative does. It takes the tool to be transparent on a platter to the governments around the world.

Additional Note: This should also convince critics of outsourcing to India (many within the Obama administration itself) that companies that seek Indian help in IT  do not do that just because it is low cost.

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