One of our great obsessions is how business-friendly India is. We are constantly quoting statistics on how we are improving in this, while watching Bangladesh, once synonymous with poverty, outstrip us in GDP per capita, while lagging behind us by a 100 places in business-friendliness. So either business-friendliness doesn't help in GDP growth, or there is something wrong with the parameters we are using.
The fundamental problem is enormous trust deficit - between institutions and people. Ask yourself how many times are you asked for that wonderful Indian acronym, KYC, Know Your Customer. Every time I hear that word or get a message on it I begin to shudder. God, here we go again, go to a website, load your Aadhaar card, your PAN card and photograph and any other silly demand, and some of them are quite crazy.
LIC for instance, not only wanted these cards but then said they wanted my bank statement and income tax return. Why? Isn't that private information? What would LIC do with it anyway? If they worried about where the money came from, ask that question in the form and let the Income Tax department, whose job it is, to check.
The digital signature for directors in companies goes with another looney demand; they want you, after you have given all the forms and cards, to record a selfie video saying "I am so and so, and I have applied for a digital signature, and my PAN number is xxxxx and here are my PAN and Aadhaar cards!" And you then show the cards! This process is to be repeated every two years, just to ensure that in the intervening period you haven't changed your face, or your cards. Of course, your CA who handles all this rubbish will send you a small bill for it.
Even applying for GST, which presumably the government wants people to do, is a tiresome process. All partners, directors or whatever have to send photos, ID cards and then receive a bombardment of OTPs to confirm everything. (OTP is another great national treasure for which someone must have got a worldwide trademark, and if they haven't they should.) It's at least three different OTPs per person. So while the CA loads all this information you sit around chewing your nails waiting for the OTPs to arrive. Another small bill from the CA follows. No wonder small businesses would rather pay off the inspectors than go through this hassle.
It's not just the public sector that is subjecting you to all this; even private banks now have the KYC, OTP and myriad forms for anything you want. They have an excuse, which is, this is mandated by the RBI. Try finding the RBI notice on this and you age before you can, because the RBI issues notices, orders, guidelines and action points like it prints notes (currently we have in excess of Rs 26 lakh crore worth of currency floating around but that's another story).
Once upon a time (or "OUT" - I can also make acronyms), if you wanted to open an account you went to the bank with a friend or relative and filled a cyclostyled form and index card, placed your photograph and signed a couple of times and bingo! Now you get anything upto eight pages to fill, along with reams of disclaimers that only a Supreme Court lawyer could understand, along with your ID cards etc. Then you will have to wait for OTPs etc.
Similarly, OUT if you wanted an overdraft against a fixed deposit, all you did was to take your paper fixed deposit receipt (nicely printed thing it was) to the bank, sign at the back of it and hand it over along with some form, and after a couple of internal bank signatures, your overdraft was through. Now you will fill an eight plus-page form, with the usual long list of photos, cards, board resolutions or partnership deeds, undertakings, etc. etc. all of which have to be stamped on every page with a rubber stamp and then signed by everyone.
And yes, that little Rs 150 rubber stamp carries almost as much legal authority as your fingerprint and is a must for any legal transaction.
Why, you may ask, in this digital age does the bank need all this, since you gave all this when you opened the bank account and every two years when the bank demanded, under RBI guidelines, to update the KYCs. The truth is, that these forms you fill disappear into some electronic hole which even your bank manager cannot access. To get it, I am informed he has to fill numerous documents and get various permissions, so he avoids that. Simply, Make the Customer Do It (MCDI - there, another one).
MCDI is true of the banks, Mutual Funds and Depositories (under SEBI guidelines) and all government departments, including municipal corporations, electricity suppliers.
What fuels this deep trust of citizens by institutions? Are we such a base lot people that no one can trust us; the British certainly thought so when they said the word of Englishman is worth that of a thousand Natives, and proceeded to exonerate General Dyer of the Jallianwala Bagh massacre. Do we lie so much and fiddle our documents all the time that we need to be whipped into doing KYCs every two years?
It is these little daily things that make doing business hard, not the big ones. Until someone gets all these players to improve the small stuff, we are going to carry on being an economy where most people don't report what they are doing for the fear of being harassed by KYCs and OTPs.
Obviously, the burden of history has made institutions most distrustful of the people they have to deal with, but perhaps a part of the problem comes from our ponderous, overburdened and overrun legal system which takes a lifetime to convict anyone of fraud, if and when the state catches them. Most big-time players manage to sneak away to foreign lands.
Unless we fix the small stuff, we will never get the big stuff done.
(Ishwari Bajpai is Senior Advisor at NDTV.)
Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.