Modi@4: Why IAS Officers Governing Digital India Is a Bad Idea

Video Editor: Mohd Ibrahim

After four years of Modi rule, India’s digital economy is disheartened. Two of my recent articles/videos went viral and touched a raw nerve with readers and policy-makers. In the first one, I coined a catchy acronym – DACOIT, ie Digital America/China Colonising and Obliterating Indian Tech – in the hard-hitting style patented by Modi.

A few weeks later, when Walmart acquired Flipkart, it vindicated my DACOIT-y assertion. I then published a second piece/video.

Here is what a highly acclaimed first-gen founder of a digital start-up (not Flipkart) told me on WhatsApp:

“Loved the DACOIT-y article and video. Have been saying similar stuff but this government is not a good listener. It’s really tough. Irony is that they keep saying they want a Google and an Alibaba to come out of India!!! I’ve said this to the face of everyone including the PM (politely) but they don’t get it because the obsession is FDI in the short term.”

For obvious reasons, I shall not disclose the identity of this bright young man! And here is my WhatsApp exchange with a digitally savvy IAS officer, recorded at about 7 am one fine morning:

IAS Officer: Read your very nice piece. Agree with large parts of it. Not all. No party can alienate the traders with 12 million establishments. Thus it will also be salami tactics, slow poison. Not a direct confrontation. BTW this PMO has been seized of the issues you mentioned and has been working on it. Albeit slowly. You should see positive changes soon.

Me: The policy-makers should stop micro managing, trying to control winners and losers. Their job should be to ensure fair competition, not become the arbiters of who can do what under which rules! But unlike you, other IAS officers are deeply suspicious of freedoms. And politicians couldn’t care less. That’s the core problem.

IAS Officer: I agree with you. Problem is in many cases, not all, they are unable to ensure fair competition either!

Me: Then leave it to the brutality of markets. Far better than creating rent seekers.

IAS Officer: Give me 3 months ….

Unfortunately, Prime Minister Modi is again making the fatal error that has dogged four years of his reign. He is trusting the Indian Administrative Service (IAS) to deliver a modern, market-friendly policy architecture.

Before the formidable IAS lobby swats me down, let me say that “I am an IAS kid”. My father belonged to the 1957 Batch (Rajasthan Cadre). Now IAS officers are easily the brightest, most intelligent talent that this country has to offer.

But their cradle-to-grave security ring-fences them from volatile success and failure. Their monetary rewards are completely unhinged from merit or achievement. Whether you are a fast-tracker or a laggard, you move in the same slow lane. This stalemate nurtures a deep suspicion about free markets.

Hence the urge to micro-manage and “create provisos”:

Mr Statistically-Suspicious IAS Officer will stipulate “that no single shareholder shall invest more than 10% in the equity capital”.

Mr Structurally-Suspicious IAS Officer will say since these large corporations can create layers of ownership behind a corporate veil, we should add “directly or indirectly” in the definition of a “single shareholder”.

Mr Small-Fetish IAS Officer will say since start-up founders become dollar billionaires after their exit, we should add a “second proviso” that these benefits will be available “only to the first venture of a first-gen entrepreneur”. But sir, how do you figure that out?

And here’s Mr Final-Nail-in-the-Coffin IAS Officer: Sir, we must distinguish between start-ups which add to the tech/innovation ecosphere, as opposed to somebody setting up a “pakoda” (fried potatoes) shop. So sir, these concessions should be made available only to those start-ups which are duly certified by the Inter-Ministerial Board set up under DIPP to identify an “innovative business operation”.

There you go again! Even before it’s born, this policy has been made un-implementable.