Author: B2B

Recognizing that e-Governance is playing an increasingly important role in modern governance, various agencies of the Government and civil society organizations have taken a large number of initiatives across the country.

Key models implemented in the country 

• Customs and Excise (Government of India)

1. 1. 98% of export and 90-95% of import documentation computerized.
   2. Electronic filing through ICEGATE.
   3. Service Tax returns electronically processed

• Indian Railways (Government of India)

1. 1. Anywhere to Anywhere reservation from Anywhere.
   2. Electronic Booking of tickets.
   3. Online Information of Railway reservation on Internet.

• Postal Department (Government of India)

1. 1. Direct e-credit of Monthly Income Scheme returns into the investors accounts
   2. Dematerialization of Savings Certificate (NSC) and Vikas Patras (KVP), offering full portability

• Passport / Visa (Government of India)

1. 1. 100% passport information computerized.
   2. All 33 Regional Passport Offices covered.
   3. Machine readable passports available.

• AP Online (State Government of Andhra Pradesh)

An Integrated Citizen Services Portal providing citizen centric services such as: Birth/Death Certificates, Property Registration, Driver’s License, Govt. Applications & Forms, Payment of taxes / utility bills etc.

• Bhoomi – Automation of Land Records (State Government of Karnataka)

Bhoomi (meaning land) is the project of on-line delivery and management of land records. It provides computerized Record of Rights Tenancy & Crops (RTC) – needed by farmer to obtain bank loans, settle land disputes etc. It has also ensured increased transparency and reliability, significant reduction in corruption, exploitation and oppression of farmers. This project has benefited more than 20 million rural land records covering 6.7 million farmers.

• CARD – Registration Project (State Government of Andhra Pradesh)

Computer Aided Administration of Registration Department (CARD) impacting more than 10 million citizens. The system ensures transparency in valuation of property and efficient document management system. The estimated saving of 70 million man-hours of citizen time valued at US$ 35 mil (investment in CARD – US$ 6million). Similar initiatives in other states like SARITA (State Government of Maharashtra), STAR (State Government of Tamil Nadu), etc. have further built upon this initiative.

• Gyandoot: Intranet in Tribal District of Dhar (State Government of Madhya Pradesh)

This project offers e-governance services including online registration of applications, rural e-mail facility, village auction site etc. It also provides services such as Information on Mandi (farm products market) rates, On-line public grievance redressal, caste & income certificates and Rural Market (Gaon ka Bazaar).

• LOKMITRA (State Government of Himachal Pradesh)

Offers e-governance services:

1. Online registration of applications,
2. Rural e-mail facility, village auction site etc.
3. Information on Mandi (farm products market) rates
4. On-line public grievance redressal
5. Sending and receiving information regarding land records, income certificates, caste certificates and other official documents.
6. Market rates of vegetables, fruits and other items

• e-Mitra – Integrated Citizen Services Center/ e-Kiosks (State Government of Rajasthan)

1. Implemented using a PPP (Public Private Partnership) model
2. Private partner paid by the government department / agency
3. G2C services like:
4. Payment of electricity, water, telephone bills
5. Payment of taxes
6. Ticket Reservations
7. Filing of Passport applications
8. Registration of birth/death
9. Payment by cash/cheque/ credit card

The above-mentioned models of e-Governance are only illustrative. 

Many of the State Governments have successfully implemented several such initiatives. This has positively impacted the quality of life of citizens.

Hence e-Governance affords an excellent opportunity for India to radically improve the quality of governance and thereby:

1. Allow for two-way communication between government and citizens not only for service delivery but also to receive opinions of citizens on policies and government performance
2. Provide greater access to excluded groups, who have few opportunities to interact with government and benefit from its services and schemes
3. Include all sections of the society in the mainstream of development
4. Enabling rural and traditionally marginalized segments of the population to gain fast and convenient access to services in their own neighbourhoods.

There are many challenges in implementing E-governance model in India as well as at global scale.

The actual challenge is how to develop and withstand successful e-governance projects and deliver state of the art e-services to inhabitants.

Unfortunately, it is not as easy to develop e-governance website in service delivery mechanism. Efficacious e-governance initiatives can never be taken in hurriedness. With reference to India, e-Governance should enable seamless access to information and seamless flow of information across the state and central government.

With reference to India, e-Governance should enable seamless access to information and seamless flow of information across the state and central government.

Security drawbacks

There are several security drawbacks of an E-Governance mechanism.

1. Spoofing: In this practice, the attacker attempts to gain the access of the E-Governance system by using fallacious identity either by stealth or by using false IP address. Once the access is gained, the assailant abuses the E-Governance system by elevation of the privileges.
2. Tampering of E-Governance system: As soon as the system is compromised and privileges are raised, the classified information of the E-Governance mechanism becomes very much susceptible to illegal adjustments.
3. Repudiation: Even the attacker can mount refutation attack during the E-Governance transaction, which is the ability of the user to reject its performed transaction.
4. Disclosure of E-Governance Information: In case of the compromised E-Governance system, the undesirable information disclosure can take place very easily.
5. Denial of Service: In this technique, attacker can perform Denial of Service (DoS) attack by flooding the E-Governance server with request to consume all of its resources so as to crash down the mechanism.
6. Elevation of privilege: Once an E-Governance system is compromised; the attacker pretending to be a low profile user attempts to escalate to the high profiles so as to access its privileges to initiate further damage to the system.
7. Cyber Crimes: Advancement of science and technology increase the rate of the cybercrime. It is a threat to the transactions accomplished between the Government and its Citizenry within the E-Governance methodology.

Other challenges

• Funding

Funding is the foremost issue in e-Governance initiatives. The projects that are part of the e-governance initiatives need to be funded either through the Government sector or through the private sector.

For the private sector to step into the funding activity their commercial interests needs to be ensured. The projects can be built either on BOO (Built Own Operate) or BOOT (Built Own Operate Transfer) basis.

Also the Government interest of Value Addition in services also needs to be taken care of while transferring the services to private sector. Advertising, sharing of Government information etc could be a few revenue generators for the Government.

• Management of Change

The delivery of Government services through the electronic media including EDI, Internet and other IT based technologies would necessitate procedural and legal changes in the decision and delivery making processes.

It demands fundamental changes in Government decision management. The employees need to be delegated more authority. De- layering of the decision-making levels leads to re-engineering and appropriate sizing of the decision-making machinery.

These changes need not only be accepted by the Government and citizens but also be accepted by various interests groups like Employees unions. Under such circumstances bringing in a change will involve changing the mindsets of the people, and a complete Reengineering process needs to be carried out for the same.

This will involve training of the personnel at all levels, more so, at the lower rung of Government management organizations. There will also be a loss of vested interests and power amongst the legislature and the executive, which may lead, to resistance to change.

• Privacy

The privacy of the citizen also needs to be ensured while addressing the issues. Whenever a citizen gets into any transaction with a Government agency, he shells out lot of personal information, which can be misused by the private sector. Thus, the citizen should be ensured that the information flow would pass through reliable channels and seamless network.

• Authentication

Secured ways of transactions for the Government services are another issue of concern. The identity of citizens requesting services needs to be verified before they access or use the services .

Here digital signature will play an important role in delivery of such services. But the infrastructure needed to support them is very expensive and requires constant maintenance. Hence a pertinent need still survives, compelling the authorities to ensure the authenticity in their transactions thereby gaining absolute trust and confidence of the citizen.

• Interoperability

A major design issue for integrated service delivery sites is, how to capture data in a Web-based form and transfer it to an agency’s systems for processing and sharing that information in a common format. Infact the interoperation of various state Governments, the various ministries within a state Government is a critical issue. Further how the various islands of automation will be brought together and built into one is another key issue of e-Governance.

• Delivery of services

The ability of citizens to access these services is another major issue. Since the penetration of PCs and Internet is very low in the country, some framework needs to be worked out for delivery of the e-Services that would be accessible to the poorest of the poor.

What will be the Government’s network to deliver those services? Could we have something like a single stop shop of the Government? A proposed mechanism is delivery of the same through the Government Post Offices, for they already have the brick and mortar support and the most extensive network in the nation.

• Standardization

Defining the standards for the various Government services is another issue that needs to be addressed. The standards need to be worked out not only for the technologies involved but also for issues like naming of websites to creating E-Mail addresses.

• Technology Issues

A number of organizations, both in the Centre and the States, have taken commendable initiatives to develop hardware and software platforms to address the challenges offered by e-Governance. At the central level in particular, the C-DAC, CMC and a number of others are noteworthy.

The e-Governance initiative would have to address these Technology Issues/Objectives by identifying the appropriate hardware platforms and software application packages for cost-effective delivery of public services.

This knowledge repository should be widely available through appropriate Demo- Mechanisms. Offering a basket of these models to the State departments, both in the Center and the State, could be suitably customized as per location and work specific requirements.

• Use of local language

The access of information must be permitted in the language most comfortable to the public user, generally the local language. There already exist technologies such as GIST and language software by which transliteration from English into other languages can be made.

Requirements for implementing successful e-governance across the nation are

1. e-Governance framework across the nation with enough bandwidth to service a population of one billion.
2. Connectivity framework for making the services to reach rural areas of the country or development of alternative means of services such as e-governance kiosks in regional languages.
3. National Citizen Database which is the primary unit of data for all governance vertical and horizontal applications across the state and central governments.
4. E-governance and interoperability standards for the exchange of secure information with non-repudiation, across the state and central government departments seamlessly.
5. A secure delivery framework by means of virtual private network connecting across the state and central government departments.
6. Datacenters in centre and states to handle the departmental workflow automation, collaboration, interaction, exchange of information with authentication.

E-Governance is the use of information and communication technologies to support good governance.

It has the following main applications:

Government To Citizen (G2C)

G2C will aim at connecting citizens to government by talking to citizens and supporting accountability, by listening to citizens and supporting democracy, and by improving public services. It will involve better services to the citizens through single point delivery mechanism and will involve areas like:

• E-Citizen

Under e-citizen integrated service centers are created. The purpose of these centers is to provide various customer services. It offers services like issue of Certificates, Ration Cards, Passports, Payment of Bills and taxes etc. These centers will become one-stop Government Shops for delivery of all services.

• E-Transport

The transport aspects that can be easily e-governed include: Registration of motor vehicles, Issue of driving licenses, Issue of plying permissions (Permits), Tax and fee collection through Cash and Bank Challans and Control of Pollution.

• E-Medicine

It involves linking of various hospitals in different parts of the country, thus providing better medical services to the citizen.

• E-Education

E-Education constitutes various initiatives of educating the citizen and the Government with the various Information Technologies.

• E-Registration

E-Governing the registration and transfer of the properties and stamp duty to be paid thereon brings substantial reduction of paper work and reduces the duplicating of entries. Further the transparency in work increases and the overall time of process registration reduces.

Essentials for achievement:

1. Information for All: Keeping the citizen informed, providing him with details of Government activities. The citizen will act as a watchdog to the Government if the information is available to him. Certain interest groups like the journalists, the opposition will always keep an eye on the expenditure of the Government, status of which will be available online. The same will bring accountability amongst Civil Servants. The rationale is to increase the pressure on staff to perform well and to improve public understanding of the government.
2. Citizen Feedback: Citizen Feedback is a must for improving the Government Services. Unless the Government listens to its citizens, it will not be able to find out what he wants. Thus it is an effort to make the public sector decision responsive to citizens’ view or needs.
3. Improving services: World’s best companies have done it, Indian companies have copied them, Governments abroad have followed the suit, why can’t the Indian Government. The aim should be improving the services delivered to citizens on dimensions such as speed, quality, reliability, convenience and cost. Information Technology will have a big role to play in the same; the services can be delivered from 24-hour one-stop Government shops.

Consumer To Government (C2G)

C2G mainly constitutes the areas where the citizen interacts with the Government. It includes areas like election when citizens vote for the Government; Census where he provides information about himself to the Government; taxation where he is paying taxes to the Government.

• E-Democracy

The e-democracy is an effort to change the role of citizen from passive information giving to active citizen involvement. In an e-democracy the Government informs the citizen, represents the citizen, encourages the citizen to vote, consults the citizen and engages the citizen in the Governance.

Taking the citizens input about the various government policies by organizing an e-debate will further strengthen the e-democracy. The concept of e-debate is similar to chat over the Internet, wherein not only the citizens but also the political leaders contesting the elections participate.

The citizens give their feedback about the various policies of the parties and particularly the manifesto of the party. The initiative will further strengthen the process by enhancing the representative role, improving accessibility of citizens to their elected members and developing the capacity of elected representatives to engage in e-government.

Elected members will also be provided with access to the local authority’s Intranet and e-mail systems so that they become available online for decision making and people can easily access them.

Essentials for achievement:

• Citizen Participation: For achievement of the above initiative the citizen has to participate in the Government Business and therefore spreading awareness becomes the responsibility of the State.

The elections should not be fought on the principle of what one party or other has to offer. But they should be fought on the principle of what the citizens require.

Market research programs should be carried out using the Information Systems to determine the needs of the citizens. GIS could be used as a tool to find out potential gaps in the services offered.

Government To Government (G2G)

This can also be referred as e-Administration. It involves improving government processes by cutting costs, managing performance, making strategic connections within government, and creating empowerment. It involves networking all Government offices so as to produce synergy among them. The major areas are:

• E-Secretariat

Secretariat which is the seat of power has a lot of valuable information regarding the functioning of the State. The cross-linking of various departments and exchange of information amongst various components simplifies the process of Governance.

• E-Police

E-Police will help to build citizen confidence.

There will be two databases: one, of police personnel and the other of criminals.

The database of personnel will have the records of their current and previous postings. This will help to track policemen specialized in certain geographical regions and skills. For example, we want to look for a forensic expert. The database within seconds gives the list of all forensic experts. The same database will keep a track of their details like service record, family background etc which will also be helpful in intelligent posting and promotion of personnel.

The second database will be of criminals. This database has to be upgraded to national database for its total utility. By just typing the name of a criminal a police officer will be able to know the details of his past activities, including his modus operandi and the area of operation. Further, a database like this will help tap the criminals easily as all the police stations will have simultaneous access to their record.

The module also includes G2C activities like online filing of FIR’s, finding the case status of an FIR etc. Creating a database of Lost and Found can assist further lost and found of valuables and individuals.

• E-Court

The pending court cases in India have brought the legal system to a halt. Not only are the consumers asking for changes in the administration, but also the system will collapse if it continues in this manner.

Information Technology can transform the system and bring in the court cases to a level of zero dependency. Creating a database of cases can do the same.

In fact such a system will help to avoid all the appeals to High Courts and Supreme Court, for the Judges can consider the appeals from an intranet wherein the case remains in the same district court but the Higher Court gives their decision online based on the recorded facts of the case.

Such a step will not only help the citizens but will also reduce the backlog of cases. Further the use of IT in the areas like recording of court proceedings, high resolution remote video to identify fraudulent documents, live fingerprints scanning and verification, remote probation monitoring, electronic entry of reports and paper work will further speed up the court proceedings.

• State Wide Networks

This involves linking all the departments of the Government with various district headquarters and the state capital, facilitating the flow of information between the various state departments and its constituents. Here various blocks are linked to district Headquarters, district headquarters to State Headquarters and State Headquarters to the National Capital.

Essentials for achievement:

1. Cutting Expenditure: With proper process control the input output ratio can be improved. The same can be achieved by cutting financial time costs. Cutting Government expenditure will lead to saving and accountability.
2. Organize around outcomes, not tasks: This principle suggests that a single person should perform all the steps in a process and that the person’s job be designed around the outcome or objective rather than a single task. Say, for example, a citizen applies for a permit – it becomes the duty of the receiving authority that the citizen gets the same, rather than moving around to get it done.
3. Managing process performance: planning, monitoring and controlling the performance of process resources (human, financial and other). Informatisation supports this by providing information about process performance and performance standards. The rationale is to make more efficient or effective use of process resources.
4. Establish a network: Treat geographically dispersed resources as though they were centralized. Government can use databases, telecommunications networks, and standardized processing systems to get the benefits of scale and coordination, while maintaining the benefits of flexibility and service. Strategic connections in Government should be established like central-to-local, ministry-to-ministry, executive-to-legislature, and decision maker-to-data store.
5. Delegate and Empower: Put the decision point where the work is performed, and build control into the process.

Thus, for overall Government Process Reengineering (GPR) to succeed the decision making should pass on to the people who do the actual work, from the people who are just monitoring it. People engaged in actual activities should be empowered to make decisions at the required focal point and hence to delegate such activities on their own so that the process itself can have built in controls. This will not only speed up the process but will cut cost as well.

Government To Business (G2B)

• E-Taxation

This constitutes the various services that a business house needs to get from the Government, which includes getting licenses etc. In a similar scenario, it can also flow from a business house to the Government as in the case of procurements, from such business houses by the Government. This will become a B2G service.

Essentials for achievement:

1. Standards: Standards for Electronic Transactions or E-Commerce needs to be built. The standards will also include standards on content etc.
2. Payment Mechanism: A secure payment mechanism needs to be built to enable payments over the electronic medium.
3. PKI: PKI or Public key Infrastructure is required for secure and authentic transactions.

Government To NGO (G2N)

• E-Society

Building interactions beyond the government boundaries by developing communities, building government partnerships and civil society.

It involves building various associations or interest groups that will ensure the betterment of the society. Such initiatives deal particularly with the relationship between government and citizens: either as voters/stakeholders from whom the public sector derives its legitimacy, or as customers who consume public services.

Essentials for Achievement:

1. Publishing: Delivering data to citizens. This involves open access to Government Information. The citizen has a right over Government information and its activities.
2. Interaction: Delivering data to citizens and receiving data from citizens. This involves taking feedback from the citizens and interacting with the interest groups.

E-Governance implemented by the government of India allows for government transparency.

Government transparency is significant because it allows the public to be informed about what the government is working on as well as the policies they are trying to implement. It encourages accountability in all government dealings, in recent times many Indian states have come up with various e-Governance patterns to expedite smooth functioning in their daily administrative activities.

Though extreme efforts have been made to develop infrastructure and internal information handling by government officials as well as public services, the diffusion of technologies in moving towards e-governance have been slow.

There are some reasons for sluggishness

1. Lack of IT Literacy and awareness regarding benefits of e-governance: There is lack of awareness regarding benefits of e-governance projects. The administrative structure is not geared for maintaining, storing and retrieving the governance information electronically. The general tendency is to obtain the data from the files as and when required instead of using Document Management and workflow technologies.
2. Underutilization of existing ICT infrastructure: Second reason is that the computers in the department are used for word processing only, resulting in the underutilization of the computers in terms of their use in data mining for supporting management decisions. The time gap between the procurement of the hardware and development of the custom applications is so large that by the time application is ready for use, the hardware becomes out-dated.
3. Attitude of Government Departments: Government officials have different attitude as compared to private sectors. Conventionally the government executives have derived their sustenance from the fact that they are important repositories of government data. Thus any effort to implement DMS and workflow technologies or bringing out the change in the system is met with resistance from the government servants.
4. Lack of coordination between Government Department and Solution developers: Designing of any application requires a very close interaction between the government department and the agency developing the solutions. Currently, the users in govt. departments do not make efforts to design the solution architecture. Subsequently, the solution developed and implemented does not address the requirements of an e-governance project and hence does not get implemented.
5. Resistance to re-engineering of departmental processes: Many experts have stated that in order to implement e-governance projects successfully, executives must make efforts in restructuring in administrative processes, redefining of administrative procedures and formats which finds the resistance in almost all the departments at all the levels. Moreover, there is lack of expertise of departmental MIS executives in exploiting data mining techniques, updating and collection of real time content onto website. Therefore the content as is collected or maintained by various e-governance portals is unreliable or full of gaps. In such a situation, it is difficult for any e-governance solution to accomplish its anticipated results.
6. Lack of Infrastructure for sustaining e-governance projects on national level: In Indian scenario, Infrastructure to support e-governance initiatives does not exist within government departments. The frustrating fact is that the government departments are not prepared to be in a position to project the clear requirements nor are there any guidelines for involving private sector.

The infrastructure creation is not guided by a constant national policy, but is dependent on the needs of individual officers championing a few projects. Therefore, the required networking and communication equipment is either non-existent in government departments, or if it exists at all, it does not serve any concrete purpose as far as the requirement of e-governance project is concerned. The use of connectivity options provided by govt. agencies are used in a very limited manner for data transmission purpose between various locations.

Most state governments have established the IT task force and have their IT policies in place. Although policies may have supercilious goals, much seems to have happened only in automation and computerization. The disadvantage is that these IT policy documents are not made based upon the requirements and intrinsic capabilities of the state but are based on the surveys and strategies used by other nations or other states.

Interaction between various stakeholders

E-Governance enables interaction between different stakeholders in governance.

1. G2G (Government to Government): In this interaction, Information and Communications Technology is used to reorganize the governmental processes involved in the functioning of government entities as well as to increase the flow of information and services within and between different entities.

Gregory (2007) indicated that G2G is the online communications between government organizations, departments and agencies based on a super-government database.

This kind of interaction happen horizontally such as between different government agencies as well as between different functional areas within an organisation, or vertical such as between national, provincial and local government agencies as well as between different levels within an organisation. Main intent of this interaction is to increase efficiency, performance, and output.

2. G2C (Government to Citizens): G2C maintains the relationship between government and citizens. It allows citizens to access government information and services promptly, conveniently, from everywhere, by use of multiple channels. Government-to-Citizens (G2C) model have been designed to facilitate citizen interaction with the government. In this situation, an interface is generated between the government and peoples that enables the citizens to benefit from efficient delivery of array of public services.

This expands the availability and accessibility of public services on the one hand and improves the quality of services on the other. In G2C model, clienteles have instant and convenient access to government information and services from everywhere anytime, via the use of multiple channels.

Additionally, to make certain transactions, such as certifications, paying governmental fees, and applying for benefits, the ability of G2C initiatives to overcome possible time and geographic obstacles may connect citizens who may not otherwise come into contact with one another and may in turn facilitate and increase citizen participation in government (Seifert, 2003).

3. G2B (Government to Business): In this type of interaction, e-Governance tools are used to help the business organizations that provide goods and services to seamlessly interact with the government. G2B can bring significant efficiencies to both governments and businesses. G2B include various services exchanged between government and the business sectors that include distribution of policies, memos, rules and regulations.

Business services offered include obtaining current business information, new regulations, downloading application forms, lodging taxes , renewing licenses, registering businesses, obtaining permits, and many others (Pascual, 2003). The major aim of this interaction is to cut red tape, save time, reduce operational costs and to create a more transparent business environment when dealing with the government.

4. G2E (Government to Employees): G2E denotes to the relationship between government and its employees only. The aim of this relationship is to serve employees and offer some online services such as applying online for an annual leave, checking the balance of leave, and reviewing salary payment records, among other things (Seifert, 2003).

In this case, Government is major employer and it has to interact with its employees on a regular basis. This interaction is a two-way process between the organisation and the employee. Use of ICT tools helps in making these interactions fast and efficient on the one hand and increase satisfaction levels of employees on the other.

Action Plan

A tentative action plan is presented to help implement the e-governance initiatives as under:

E-Governance Action Plan in India: Government officials in India have realized that e-governance is vital technology for economic progress of country in highly competitive environment. It requires an increased participation from citizens. Providing services online is no longer going to remain optional for local and central government as demand for providing services @ internet speed has been coming from the citizens. 

In this period of accountability and performance measurement, government will face huge pressure to make the services more accessible to their inhabitants. The pressure comes directly from the new legislatures and govt. policies to implement high-end technologies in governing the nations; but also indirectly and perhaps more intensely from citizens.

E-governance is about more than streamlining processes and improving services. It plays major role in transforming Governments and renovating the way citizens participate in democracy.

For governments, the more overt inspiration to shift from manual processes to IT-enabled processes to increase efficiency in administration and service delivery, the will be visible to all. This change can be conceived as a valuable investment with huge returns. Some of the recent e-governance projects are implemented by various state governments.

In the arena of advanced technology, e-government has distinct place and it facilitates to huge number of customers to perform their task speedily. As the Internet supported digital communities grow, they present the national governments with numerous challenges and opportunities.

e-Governance which also known as electronic governance is basically the application of Information and Communications Technology to the processes of Government functioning in order to bring about ‘Simple, Moral, Accountable, Responsive and Transparent’ governance (Governance for The Tenth Five Year Plan (2002-2007), Planning Commission, November, 2001 ).

E-governance involve the use of ICTs by government organisations for exchange of information with citizens, businesses or other government departments, faster and more efficient delivery of public services, improving internal efficiency, reducing costs / increasing revenue, re-structuring of administrative processes and improving quality of services.

Concept of e-Governance

E governance has gained more popularity in convoluted business world. Many management scholars have described the concept of e governance which is emerging as an important activity in the business field.

It is established that E-governance is the application of information and communication technologies to transform the efficiency, effectiveness, transparency and accountability of informational and transactional exchanges with in government, between government & govt. agencies of National, State, Municipal and Local levels, citizen & businesses, and to empower citizens through access & use of information (Mahapatra, 2006).

Use by government agencies of information technologies (such as Wide Area Networks, the Internet, and mobile computing) that have the ability to transform relations with citizens, businesses, and other arms of government.

These technologies can serve a variety of different ends: better delivery of government services to citizens, improved interactions with business and industry, citizen empowerment through access to information, or more efficient government management. The resulting benefits can be less corruption, increased transparency, greater convenience, revenue growth, and or cost reductions.

-World Bank, on E-governance

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A transparent smart e-Governance with seamless access, secure and authentic flow of information crossing the interdepartmental barrier and providing a fair and unbiased service to the citizen.

– Dr. APJ Abdul Kalam

Historical review and current position of e-governance

It has been documented that in the decade of nineties, there was major Global shifts towards increased deployment of IT by governments due to emergence of the World Wide Web. The technology as well as e-governance enterprises have come a long way since then. With the upsurge in Internet and mobile connections, people are learning to utilize their new mode of access in various ways. They have started expecting more and more information and services online from governments and corporate organizations to advance their public, professional and personal lives.

Objectives of E-governance

The tactical objective of e-governance is to support and streamline governance for all parties such as government, citizens and businesses through effective use of ICTs.

E-governance evolution in India

The notion of e-governance evolved in India during the seventies with a focus on development of in house government applications in the areas of defence, economic monitoring, planning and the deployment of information technology to manage data intensive functions related to elections, census, and tax administration.

In Indian scenario, there were great efforts of the National Informatics Center (NIC) to join all the district headquarters during the eighties. In the beginning of nineties, IT technologies were improved by ICT technologies to extend its use for broader sectorial applications with policy emphasis on reaching out to rural areas and taking in greater inputs from NGOs and private sector as well.

There has been an increasing involvement of international donor agencies under the framework of e-governance for development to catalyse the expansion of e-governance laws and technologies in developing nations.

Stages of e-Governance

It is apparent in various research studies that e-Governance is fundamentally linked with the development of computer technology, networking of computers and communication systems. In developing nations such technologies and systems became available with observable time lag as compared to developed nations.

When appraising the e-governance model in India, it is established that with the liberalization of the economy from the early 1990s onwards, there has been a convergence in the availability of progressive technologies and opportunities in this field.

The inception of e-Governance proceeded through four stages in India

1. Computerisation: In the first stage, with the availability of personal computers, majority of Government offices are well equipped with computers. The use of computers began with word processing, quickly followed by data processing.
2. Networking: In this stage, some units of a few government organizations are connected through a hub leading to sharing of information and flow of data between different government entities.
3. On-line presence: In the third stage, with increasing internet connectivity, a need was felt for maintaining a presence on the web. This resulted in maintenance of websites by government departments and other entities. Generally, these web-pages/ web-sites contained information about the organizational structure, contact details, reports and publications, objectives and vision statements of the respective government entities.
4. Online interactivity: A natural significance of on-line presence was opening up of communication channels between government entities and the citizens, civil society organizations etc. The main objective of this stage was to lessen the scope of personal interface with government entities by providing downloadable Forms, Instructions, Acts, Rules.

It has been observed that there was more emphasis on automation and computerization, state governments have also endeavored to use ICT tools into connectivity, networking, setting up systems for processing information and delivering services.

At a micro level, this has ranged from IT automation in individual departments, electronic file handling and workflow systems, access to entitlements, public grievance systems, service delivery for high volume routine transactions such as payment of bills, tax dues to meeting poverty alleviation goals through the promotion of entrepreneurial models and provision of market information.

The push has varied across initiatives, with focusing on facilitating the citizen-state interface for various government services, and others focusing on bettering livelihoods. Every state government has taken the initiative to form an IT task force to outline IT policy document for the state and the citizen charters have started appearing on government websites.

Advantages of e-governance

E-Governance is improvement in governance which is enabled by the resourceful use of Information and Communications Technology. 

E governance brings better access to information and excellence services for inhabitants. It also brings simplicity, efficiency and accountability in government.

Through the use of ICT to governance combined with comprehensive business process reengineering would lead to simplification of complicated processes, simplification in structures and changes in statutes and regulations.

E governance is advantageous to citizens and government as rapid growth of communications technology and its adoption in governance would support to bring government machinery to the doorsteps of the citizens.

Monetary Policy Agreement

What is Monetary Policy Agreement?

• In 2015 The Government of India and Reserve Bank of India signed a Monetary Policy Framework Agreement. The new monetary policy framework was formed following the recommendations of a committee headed by RBI Deputy Governor Urjit Patel.
• The objective of monetary policy framework is to primarily maintain price stability while keeping in mind the objective of growth.
• As per the agreement, RBI would set the policy interest rates and would aim to bring inflation below 6 per cent by January 2016 and within 4 per cent with a band of (+/-) 2 per cent for 2016-17 and all subsequent years.
• The central bank will be deemed to have missed its target if consumer inflation is at more than 6 percent or at less than 2 percent for three consecutive quarters starting in the 2015/16 fiscal year.
• If the central bank misses the inflation target, it will send a report to the government citing reasons and remedial actions.
• The central bank will also need to give an estimated time-period within which it expects to return to the target level.

Significance of Monetary Policy Agreement 

• While the agreement gives a free hand to the RBI Governor to decide on the monetary policy measures to achieve the inflation target, it also requires the RBI to give out to the Central Government a report in case the target is missed for a period of time. Thus, it is a fine balance between autonomy and accountability.
• The World over, the Central banks are moving towards an inflation targeting based criteria for managing monetary policy. The MPA is a step in that direction.
• The MPA will put India into the League of Nations that followed a rule based monetary policy mechanism.

Monetary policy committee

What is the MPC?

• The monetary policy committee framework will replace the current system where the RBI governor and his internal team have complete control over monetary policy decisions. While a technical advisory committee advises the RBI on monetary policy decisions, the central bank is under no obligation to accept its recommendations.
• The committee will have six members, with three appointed by the Reserve Bank of India (RBI) and the remaining nominated by an external selection committee. The RBI governor will have the casting vote in case of a tie.
• According to the Finance Bill, the committee will consist of the RBI governor, the deputy governor in charge of monetary policy and one official nominated by the central bank.
• The other three members will be appointed by the central government through a search committee.
• This search committee will comprise of the cabinet secretary, the secretary of the Department of Economic Affairs, the RBI governor and three experts in the field of economics or banking as nominated by the central government.
• The members of the MPC appointed by the search committee shall hold office for a period of four years and shall not be eligible for re-appointment.
• The idea to set up a monetary policy committee was mooted by a RBI-appointed committee led by deputy governor Urjit Patel in 2014.
• The current members of the MPC are:
  1. Governor: DR Urijit Patel
  2. DY Governor RBI: DR Viral Acharya
  3. Executive Director RBI: Michael Patra
  4. External Member: Prof. Pami Dua
  5. External Member: Prof. Chetan Ghate
  6. External Member: Prof Ravindra Dholakia

Analysis of the MPC

• There is very little to disagree about the desirability of transitioning from the current decision process to that of an MPC, imparting as it does a greater diversity of views, specialized experience and independence of opinion.
• With the introduction of the monetary policy committee, the RBI will follow a system similar to the one followed by most global central banks. The US Federal Reserve sets its benchmark rate—the Fed funds rate—through the Federal Open Market Committee (FOMC). The Bank of England’s monetary policy committee is made up of nine members.
• Setting up of MPC would make monetary policy making more democratic since currently, the RBI governor alone decides key interest rates. The committee will take a decision based on the majority vote. Each member will have one vote.
• The final composition of MPC announced by the government seems to tread the middle path as it tries to address concerns over excessive government influence over monetary policy in the country Which the draft MPC invoked since under it proposed to strip the Governor of veto vote on the monetary policy besides powers for the government to appoint four of the six members.. The government, however, has reserved the right to send its views to the monetary policy committee, if needed.
• Communicating the rationale of monetary policy actions is central to both the credibility of the central bank and to enable the incidence targets of the policy to adjust behavior appropriately.

By
Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

RBI Tools for Controlling Credit/Money Supply

Broadly speaking, there are two types of methods of controlling credit.

Bank Rate Policy

• Bank rate is the minimum rate at which the central bank of a country provides a loan to the commercial bank of the country.
• Bank rate is also called discount rate because the central bank provides finance to commercial banks by rediscounting bills.
• The RBI uses bank rate to control credit in the economy.
• For instance, in an inflationary scenario, the RBI increases the Bank Rate, which increases the cost of borrowing for commercial banks, this would discourage the commercial bank from borrowing from the RBI, hence lending in the economy will fall along with increase in lending rates by commercial bank, increase in lending rate will discourage investment and hence Aggregate Demand will fall. A fall in AD will reduce income and output in the economy. Thus, Inflation will Subside.

Open Market Operations

• OMO are another important instrument of credit control.
• OMO means the purchase and sale of securities by the RBI.
• For instance, in an inflationary scenario, the RBI will start selling government securities, the selling of securities will reduce money supply from the system (Since the buyer of the securities will pay for them in Rupee, hence currency from the system goes out), reduction in money supply will lead to reduction in funds with the commercial banks, which further reduce their lending capability. A fall in lending thus contracts credit in the economy.
• However, there are certain limitations that affect OMO viz; underdeveloped securities market, excess reserves with commercial banks, indebtedness of commercial banks, etc.

Cash Reserve Ratio

• Banks in India are required to keep certain proportions of their deposits in the form of cash with themselves as reserves.
• If the legal CRR is 10%, then the bank will have to keep Rs 100 as reserves against the deposit of Rs 1000.
• If at any time, the RBI decides to increase the CRR from 10 to 20%, then bank have to keep Rs 200 as reserves against the deposit of Rs 1000. This will reduce the credit in the economy as the banks now have less money to lend (800 in our example), less lending means less borrowing and investment and hence reduction in income and aggregate demand.
• Similarly, a reduction in CRR from 10 to 5%, will reduce the reserve requirement and hence increases the lending capacity of the banks. Increased lending will lead to increased investment, increase investment will increase AD and Income.

CRR Controversy

Context: Time and again many Bankers and economists have recommended scrapping of CRR. With Banks facing rising NPA in recent years, demand has again been raised my few experts to scrap CRR.

Why CRR should be abolished

• All banks put together maintained a cash balance of Rs3,14,900 crore with the RBI every day, and this keeps on growing with the growth in deposits of the banking industry. This huge amount does not earn any interest for the banks. If you calculate the interest on this amount at the average lending rate of banks, say at 10%, the total loss to the banking industry is in excess of Rs31,000 crore per year.
• According to many Bankers, CRR policy had denied the country growth, and its abolition would allow banks to lower the lending rate.
• Since the RBI did not pay any interest, the CRR acted like a tax on the banking system, placing the banks at a competitive disadvantage versus non-banking financial companies and mutual funds who do not require to pay CRR.
• According to experts, the loss to the banking sector due to CRR was Rs 21,000 crore.
•  If a bank falls short of its CRR requirements, the RBI collects interest on the shortfall from the bank at the bank rate as if the defaulting bank has borrowed that money from the central bank. While the RBI’s action is justified, as it is the only way the central bank can enforce discipline among the banks, this is a source of irritation to the Banks.
• Most of the central banks in developed countries have dispensed with the system of CRR and have been using the tool for open market operations to control inflation.

Why should it not be abolished?

• CRR system act as a hedging strategy for banks. CRR is important as it provides banks with the immediate liquidity of their own. Since bank operates on a minimum reserve system, any bad situation like bank run will push millions of depositors withdrawing their money at the same time. In such a situation if banks have its liquidity reserves it will stop the banking system from total collapse.
• Till the time the crisis day doesn’t come this is just blocked fund which is not put to full use, but when the crisis day comes CRR serves a useful purpose – surely banks and thereby customers have to bear the cost, but it comes at the price of increased safety.
• CRR and SLR are two Safety Valves built in the system by prudent bankers to protect banks from all types of adversities.
• If a bank falls short of its CRR requirements, the RBI collects interest on the shortfall from the bank at the bank rate as if the defaulting bank has borrowed that money from the central bank. While the RBI’s action is justified, as it is the only way the central bank can enforce discipline among the banks, this is a source of irritation to the SBI.
• A few years ago RBI had ceased to pay an interest rate on CRR, which affects the commercial banks. This is one of the main reasons why SBI chairman wanted CRR to be abolished.

Liquidity Adjustment Facility

• LAF is a monetary policy instrument which allows commercial bank and primary dealers to borrow money through repurchasing agreement or repos/reverse repos.
• LAF is used to aid banks in adjusting day to day fluctuations in liquidity.
• RBI extends LAF facility only to commercial banks (excluding RRBs) and Primary dealers.
• LAF allowed banks to park their excess money with the RBI in case of excess liquidity or to avail liquidity from the RBI at the time of deficit on an overnight basis against the collateral of government securities.
• The operations of LAF are conducted by way of repos and reverse repos.
• Repos or Repurchase Agreements is an instrument which allows banks to borrow money from the RBI to manage short term needs of liquidity against the selling of government securities with an agreement to repurchase the same government securities at a predetermined date and rate. The rate at which the RBI lends to the banks is called Repo Rate.
• Reverse Repo is an instrument which allows the RBI to borrow from the banks by lending government securities. The rate at which the Banks lends to the RBI is called Reverse Repo Rate.
• Repo injects money into the system whereas Reverse Repo takes money out of the system.
• The RBI increases the Repo Rate during the time of inflation and decreases the Repo Rate during the time of deflation and low growth.
• The important point to remember is that the window of LAF does not allow the banks to borrow the unlimited amount from the RBI. The Banks are permitted to borrow only a limited percentage of its Net Demand and Time Liabilities under LAF window.

Marginal Standing Facility

• MSF is a new scheme announced by the RBI in the year 2011-12.
• MSF is a penal rate at which banks can borrow money from the RBI over and above of what they can borrow from the RBI under the LAF window.
• MSF is a penal rate and is always fixed at a higher rate than the Repo rate.
• The MSF would be a penal rate for banks, and the banks can borrow funds by pledging government securities within the limits of the statutory liquidity ratio.
• The scheme has been introduced by RBI with the main aim of reducing volatility in the overnight lending rates in the inter-bank market and to enable smooth monetary transmission in the financial system.

Statutory Liquidity Ratio

• SLR is that percentage of the deposits which the banks have to hold with themselves in highly liquid government securities.
• SLR is one of the many arrows in the RBI’s monetary policy quiver. These are used, sometimes in isolation, sometimes in combination, to manage the money supply, interest rates and credit availability in the country.
• The SLR is an important tool of monetary policy, and its primary aim is to ensure that banks always have enough liquidity (cash and cash equivalent securities) to honour depositor’s demands and that they don’t lend away all their funds.
• The current rate of SLR is 20%. It simply means that the bank has to invest 20 Re out of every 100 Rupee deposited with him in government securities.
• The SLR is being used by the RBI to tighten or easing money supply in the economy. For instance, a 50 BPS reduction in SLR will leave more money with the banks to lend. More lending means more investment and hence more income and growth.
• Over the years, the use of CRR and SLR as instruments of monetary control has been reduced. From 37-38 percent in the early 1990s, the RBI has reduced the SLR to 20 percent now. But this is still significant to influence credit and rates.
• The RBI doesn’t always prefer bringing out the big guns in its monetary tools armament for fear of causing collateral damage — the risk of stoking inflation due to a repo rate cut.
• In such situations, SLR can be an effective pistol, so to speak. Reducing SLR can free up banks’ funds, which if deployed for lending can boost investment cycle. The RBI lowering SLR this time was broadly seen as an attempt to revive the slack credit demand in the economy.

Bank Base Rate

• The Base Rate is the minimum interest rate of a bank below which it is not permissible to lend, except in some cases if allowed by the RBI.
• BR is the minimum interest rate that a bank must charge because below the base rate it is not viable for the bank to lend.
• The base rate, introduced with effect from 1st July 2011 by the Reserve Bank of India, is the new benchmark rate for lending operations of banks.
• Thus, all categories of domestic rupee loans should be priced only with reference to the Base Rate.
• The reason for introducing Base Rate was to bring out the transparency in bank lending rates as well as to improve monetary transmission mechanism.
• Base Rate has replaced the previous benchmark prime lending rate (BPLR) which bank charged to its most trustworthy customers.
• The committee constituted under the than DY Governor of the RBI Deepak Mohanty recommended the abolishment of the BPLR and establishment of more transparent Base Rate.

Qualitative Measure of the RBI

Fixing Margin Requirements

• The margin refers to the “proportion of the loan amount which is not financed by the bank”. Or in other words, it is that part of a loan which a borrower has to raise in order to get finance for his purpose.
• A change in a margin implies a change in the loan size. This method is used to encourage credit supply for the needy sector and discourage it for other non-necessary sectors. This can be done by increasing margin for the non-necessary sectors and by reducing it for other needy sectors.
• Example, If the RBI feels that more credit supply should be allocated to agriculture sector, then it will reduce the margin and even 85-90 percent loan can be given.

Consumer Credit Regulation

• Under this method, consumer credit supply is regulated through hire-purchase and instalment sale of consumer goods. Under this method, the down payment, instalment amount, loan duration, etc., is fixed in advance. This can help in checking the credit use and then inflation in a country.

Publicity

• This is yet another method of selective credit control. Through it, Central Bank (RBI) publishes various reports stating what is good and what is bad in the system. This published information can help commercial banks to direct credit supply in the desired sectors. Through its weekly and monthly bulletins, the information is made public, and banks can use it for attaining goals of monetary policy.

Credit Rationing

• Central Bank fixes credit amount to be granted. Credit is rationed by limiting the amount available for each commercial bank. This method controls even bill rediscounting. For certain purpose, the upper limit of credit can be fixed, and banks are told to stick to this limit. This can help in lowering banks credit exposure to unwanted sectors.

Moral Suasion

• It implies to pressure exerted by the RBI on the Indian banking system without any strict action for compliance with the rules. It is a suggestion to banks. It helps in restraining credit during inflationary periods. Commercial banks are informed about the expectations of the central bank through monetary policy. Under moral suasion, central banks can issue directives, guidelines and suggestions for commercial banks regarding reducing credit supply for speculative purposes.

Control Through Directives

• Under this method the central bank issue frequent directives to commercial banks. These directives guide commercial banks in framing their lending policy. Through a directive, the central bank can influence credit structures, the supply of credit to a certain limit for a specific purpose. The RBI issues directives to commercial banks for not lending loans to the speculative sector such as securities, etc. beyond a certain limit.

Direct Action

• Under this method, the RBI can impose an action against a bank. If certain banks are not adhering to the RBI’s directives, the RBI may refuse to rediscount their bills and securities. Secondly, RBI may refuse credit supply to those banks whose borrowings are in excess to their capital. The Central bank can penalize a bank by changing some rates. At last, it can even put a ban on a particular bank if it does not follow its directives and work against the objectives of the monetary policy.

Measure of Money Supply in India

By
Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

How Monetary Policy Works

The Inflation 

The Deflation

How RBI Controls Recession

The Recessionary Scenario

The Relationship between Interest Rate and Bond Prices.

The Bond Price and Interest Rate always have an inverse relationship with each other.

How RBI Controls Inflation

The Inflationary Scenario

By
Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University

The Barter System

Money as a medium of exchange was not used in the early history of mankind. Exchange of the goods was not very frequent as households were self-sufficient. Whatever exchange took place between the households was in the form of barter, that is, exchange of goods for other goods.

The barter system does not provide for the direct purchase of goods since there was no common unit of account and medium of exchange (Money).

Note for Students: Example, if a person grows only wheat and after his self-consumption, he wants to exchange it for apple. He can do so only if the other person having apples wants wheat. If that is not the case, no exchange will take place. This problem is called double coincidence of wants.

Moreover, if they both agree to trade an apple for wheat, then the next problem is how to determine how much apple is worth one kg of wheat and vice versa. Both the individuals will argue for more of another person commodity in return of his. Therefore, exchange of goods will be limited and most of the time will not take place at all.

Difficulties under Barter System of Trade

To overcome the problems of Barter trade, early humans started devising a system of payments and exchange that allows direct purchase of goods using any instrument that has following features:

• A unit of Account (it must be measured)
• High Liquidity
• It can be stored
• It must be wanted by everyone (It should have high demand)
• It can be exchanged easily (Medium of Exchange)

Evolution of Money

Money and its Functions

Definition of Money:

“Anything which is widely accepted in payment of goods or in the discharge of other kind of payment obligations”.

“Money can be defined as anything that is generally acceptable as a medium of exchange and at the same time act as a measure and a store of value”.

Economist has simply defined money as “Money is what Money does”. That is money is anything which performs the function of money.

Functions of Money:

The four main functions of money are;

Modern Monetary Systems

Importance and Significance of Money