In the US, you can get a credit card approved, a home or auto-loan approved, a utility account initiated/ terminated, auto-insurance initiated/ transferred/ terminated — all at the click of a mouse, usually in no more than a few minutes. In the remotest event that this is not possible, you can do so by calling a number clearly published on a website or a directory. In India, if you are an existing post-paid mobile subscriber with EDGE based data-plans, to upgrade to 3G-based data-service-plan, you need a visit to their retail outlets, with people of all requests standing in line.

This post is not about “US is sexy, India is not”, not superficially anyways. This blog, I hope, has a better reputation than that. This post is about inquiring why it is the way it is.

Business practices are based on regulations and regulations are created by policy-makers for a reason. Ten years ago, it was possible to buy a pre-paid mobile connection in India on an in-and-out basis — TRAI came up with requirements to establish identity to prevent abuse of this provision — this effort can only be lauded. But filling a paper form to upgrade from EDGE to 3G? It is a result of decades of bureaucratic thinking and implementing controls in the wrong places.

Root cause

The root-cause of many of these issues, in my view, is two factors. Businesses need a way of establishing the consumer’s identity, and they need a way of establishing her credit-worthiness. With an absence of a mechanism to do one or both, there is a tendency to delay the process of providing access to a service or a product. This has serious ramifications — it slows down transactions on a micro-level and it stagnates economy on a macro-level. If people had an instant or near-instant method of getting common public services, it enables them to do what they do and on some level, it will speed-up the process of trade.


UID is a noble initiative, but 2–3 decades too late. India is right now in the middle of some of the greatest revolutions, alongside developed countries — such as consumerism, mobile etc…An initiative like Aadhaar had to have been completed by now and people should have an effortless way of proving their identity, without burying themselves in paperwork. Unfortunately, Aadhaar just started and much less likely to finish in the foreseeable future.

Credit ratings

Unfortunately, credit card and other consumer-level credit devices represent only a minute section of the massive Indian population. Methods of establishing credit-worthiness are very old (paychecks, proof of property etc…). Even bank accounts and ATMs are heavily skewed towards urban population, leaving a vast majority behind and disconnected from the recent developments. RBI is doing its part in getting more participation from the rural side, but the pace and efficacy of progress leaves much to be desired. Rating systems for individuals exist but systemic adoption is way too low.

The unintended consequence

If the need for identity and credit-worthiness of individuals are systemically addressed, it will have unintended positive consequences. It will significantly challenge shadow economy, reduce cash-based transactions and boost the GDP of the country. It will also increase organized sales and result in higher revenues for the exchequer, measured by tax revenues, through better coverage of sales. Today, a very small % of wage-earning Indians pay taxes thanks to shadow economy and another consequence could be that the government revenues through various taxes will improve.

Nothing’s free

Systemically addressing issues such as identity, credit-worthiness, shadow economy, revenue leakage will not only take time, but also involves cost to achieve. In the immediate term, this will hurt us heavily, but 2 or 3 decades down the line, the ongoing costs of operating such massive systems will become the cost of doing business and people will start accepting it. After all, we are an economy of 1.2 billion people and any system developed to address this population will have a much higher return on investment and yield/ citizen than less populous countries in the West.


TRAI — Telecommunication Regulatory Authority of India is the body that governs the communication industry, similar to FCC in US RBI — India’s “Bank of Banks” — similar to the Fed Reserve, also responsible for monetary policies and controls; though there are more differences than similarities GDP — Gross Domestic Product, the chief method of measuring the output of the country, a concept central to economics