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Digitising The State

Digitising the State


In his 2015 visit to Silicon Valley, Prime Narendra Modi suggested that “digital platforms were advancing citizen empowerment and democracy that once drew their strength from constitutions”.

Presently, in India, there is a huge gap between digitization in the private and government sectors.

The COVID-19 crisis has demonstrated that Aadhaar enabled Direct Benefit Transfer which is one of the elements of Digital India that has facilitated quick and targeted action.

At the same time, the COVID-19 crisis has also demonstrated that large parts of the Indian state continue to resist, underinvest in, and delay digitization.

This editorial analyses problem with government accounting and suggests ways to tackle this problem in line with CAG (Comptroller and Auditor General) proposal of a new project and law called DATA (Digital Accountability and Transparency Act).


2.1 Problem with the Government’s current account Keeping

  • The Union budget has grown from a mere Rs 197 crore in 1947 to Rs 30 lakh crore last year.
  • For the previous fiscal year, the total government expenditure stood at more than Rs 70 lakh crore.
  • Despite that humongous change in total government budget the form and manner of account keeping have largely remained unchanged since 1947.
  • Manual transactions and manual payments often lead to manually entered data at different stages in different databases on different systems.
  • Manual account keeping makes that data unreliable and violates the principle of “single source of truth”.
  • Manual data-keeping also sabotages transparency and is against the spirit of good governance.

2.2 Problems with government computerization

  • Government computerization has often mechanized manual processes rather than “re-engineered processes”.
  • This had led to the creation of siloed IT systems with disparate databases.
  • Due to separate databases established in silos, these IT systems lack modern data sharing protocols for organic linking like APIs (Application Programming Interfaces).
  • Lack of data sharing leads to the following:
    • It makes fiscal data like salary expenditure across states incomparable
    • creates the problem of obscurity as large expenditures are booked under omnibus head called other
    • it makes data non-traceable as actual expenditure against temporary advances drawn or funds drawn on  contingent bills
    • it creates the problem of misclassification of data as grants in aid is classified as capital expenditure and bookings under suspense heads


3.1 About DATA

  • The CAG (Comptroller and Auditor General has proposed a three-phase transition to mandatory digital payments, accounting, and transactions for the government.
  • This has been done under a new project and law called DATA (Digital Accountability and Transparency Act)
  • It uses the COVID policy window for an empowering, elegant, and overdue reform with delightful consequences.
  • DATA recognizes that digitally empowered citizens require digital public utilities that not only provide e-services but make all government revenue and expenditure data electronic, machine-readable, granular, comprehensive, purpose linked, non-repudiable, reliable, accessible and searchable.

3.2 Starting and End Points of DATA

  • A starting point for DATA is that all entities receiving government funds in all forms of funding should have a common data standard
  • The endpoint of DATA is a single searchable website that ascertains total government funding by element and entity.


Connecting the start and the endpoints of DATA requires three elements:

4.1 A 100% end-to-end electronic data capture

  • This is a fairly simple element.
  • It requires that all receipts and expenditure transactions including demands, assessment, and invoices should  be received, processed, and paid electronically

4.2 Data governance for standards across all government entities

  • This is a complex element.
  • Data standards are rules for describing and recording data elements with precise meanings and semantics that enable integration, sharing, and interoperability.
  • Advantages of prescribing data elements for all transactions
    • It will ensure standardization
    • It will clarify ambiguity
    • It will minimize redundant data
  • A defined data standard will also create protocols for integration across
    • different databases
    • entities receiving government funds,
    • entities collecting revenues on behalf of the government
    • entities discharging core functions on behalf of the government
  • The proposed standardization of government-wide data coupled with real-time data captured end-to-end will enable the following
    • use of cognitive intelligence tools like analytics, artificial intelligence, machine learning,
    • it will also support the establishment of budget baselines, detecting anomalies, data-driven project/activity costing, performance comparisons across departments and agencies, and benchmarking

4.3 Technology architecture.

  • The third element of technology architecture.
  • It ensures that all IT government systems should conform to a prescribed open architecture framework (for instance, IndEA) while ensuring robust security and maintaining privacy.


  • It can help to recognize off-budget transactions (the last Union budget took steps towards this fiscal transparency and consolidation)
  • It will also lead to business continuity as electronic records cannot be lost or misplaced like files or paper records
  • It will lead to an incontrovertible audit trail.
  • DATA will also ensure that all government dues are duly collected and every single rupee is spent for the purpose it was allocated.


6.1 Data Governance Authority

  • A Data Governance Authority would be required for Recurring operations.
  • The proposed three-year timeline is ample.
    • one year for standard-setting by the data governance authority
    • two years to ministries/departments of the Government of India and states
    • three years to all other recipients of government money such as local and autonomous bodies
  • The 12-month mandatory deadline for all government payments to go digital will be of great assistance to this project.
  • Presently, the bad behavior costs the RBI Rs 4,000 crore in bank agency commissions, as many parts of the government do not use the RBI’s free e-kuber system.


From the point of view of a citizen, a single source of truth that accounts for every single rupee of the public money would make the framers of the Indian Constitution proud of this 21st-century citizen empowerment innovation. Digitization of the Indian state proposed by the government and CAG imagines a giant leap in empowering our citizens.

Source: Indian Express