Monday, June 22, 2015

Release of information in machine-readable format

Most businesses like airlines, hotels and restaurants benefit from
making this information available as electronic feed. For some of the
functionalities to come together, one needs data from government
sources. For instance, the ubiquitous global positioning system (gps)
data that so many applications use is a government resource available
for free in an electronic format which computers can crunch.

Decades ago, the U.S. Government set the boat sailing on this
phenomenon when it first made both weather data and the gps freely
available. Since that time, entrepreneurs and innovators have utilised
these resources to create navigation systems, weather newscasts and
warning systems, location-based applications, precision farming tools,
and much more.  One area which has not benefited adequately from this
data revolution is financial services.

I have a blogpost (reproduced below) which talks about recent global
government led push towards open and machine readable data and how the
financial industry in India could benefit from release of information
in machine-readable format.

All data starts out in computers. All data is analysed using
computers. However, all too often, materials are produced and placed
on websites which are not readable by computers. This dramatically
drives up the cost of using the data. There is much to gain from an
insistence that the materials which appear on websites -- of financial
firms and of regulators -- are machine readable.

One example of a success story is mutual funds who provide data like
NAV (Net Asset Value) of their schemes as an electronic feed. Third
party websites are able to use this to provide annualised return on
portfolios, or analysis and comparison of historical data. None of
this would have been possible if mutual funds had a chaos of diverse
presentation with different fund houses giving out data in different

The above-mentioned electronic feed is an example of machine-readable
data. "A computer file" does not constitute machine readable
data. Machine readability is obtained where the data can be read and
processed by a computer for further analysis and interpretation. Comma
Separated Values (CSV) is one example of a machine-readable data
format. Other examples include XML files.

The gains from machine readable data
The value of even minimal information, when made accessible in machine
readable form, is remarkable. As an example, suppose a government
releases adequate information for all consumer courts to be placed on
google maps. Once this is done, consumers can start rating the
courts. This can support policy analysis and improvement of the courts
which are laggards. As more information is released, more
sophisticated applications become possible. If case load data about
consumer courts is made available, third parties could build software
and systems through which one could get a fairly accurate estimate of
the queue and expected hearing slot if a complaint were to be filed on
any given day. If data on financial firms against whom complaints are
filed is also loaded, one would know which firms are generating more

Consider a household survey run by a regulator. The regulator can
release a PDF file with a report which analyses the survey
evidence. This is useful and interesting. A big jump is obtained when
the regulator releases the record level data. This would make possible
novel analysis by third parties, of kinds that may have never been
envisaged by the regulator.

A revolution is shaking the world of finance globally, the financial
technology revolution. This is critically about opening up data access
to new kinds of firms, while access is controlled by consumers. This
is about shifting ownership of data from financial firms or
governments to consumers, and giving consumers access to sophisticated
analytical services which add value.

Developments internationally
These ideas are not unique to India; they are changing the way
governments and regulations work worldwide. The U.S. Government’s Open
Government Directive of 2009 is one early example of a government that
created such an obligation. It said that to the extent practicable and
subject to valid restrictions, agencies should publish information
online in an open format that can be retrieved, downloaded, indexed,
and searched by commonly used web search applications. An open format
was defined as one that is platform independent, machine readable, and
made available to the public without restrictions that would impede
the re-use of that information.

Initially this led to resistance, inconsistent formats etc and
required government to create capacity to make it happen. After that,
the US government has set up, home to its open data
initiative with tools, and resources to conduct research, develop web
and mobile applications and design data visualisations. It followed
this up in 2013 by making open and machine-readable the new default
for government information.

Many countries have embarked on similar initiatives. As an example,
see a paper tabled in 2012 in the UK Parliament about unleashing the
potential of open data. In 2011, the Open Government Platform (OGP)was
launched as an international platform for domestic reformers committed
to making their governments more open, accountable, and responsive to
citizens. Since then, OGP has grown from 8 countries to the 65
participating countries. India is not yet on that list.

Implications for the draft Indian Financial Code

The Indian Financial Code (IFC) has drafted strong reporting
mechanisms so as to achieve accountability of financial sector
regulatory institutions. This needs to be pushed further into the
direction of the release of machine readable data. Good reporting can
be used more effectively, if the data tables and charts can be read
and analysed with minimum frictions through computer programs.  In
Chapter 16, `Functioning of the financial agency', the first section
`Minimum standard for publication of information' (S.74(2)) says:

All information published on the website or other repository of the
Financial Agency must be in an easily accessible and text-searchable

The phrase `machine readable format' needs to be defined and used in
the law. This would encourage innovative financial sector firms and
third parties to provide analysis to consumers using tools like mobile
based apps, thus helping consumers make better choices in a timely

Sunday, March 01, 2015

Union Budget 2015: A conservative plan

Union Budget 2015: A conservative plan
Ashish Aggarwal

Finance Minister Arun Jaitley’s budget is unlike last year’s plan where the revenue and expense estimates were both a bit iffy.
The fears on last years plans have now been confirmed, revealing a torment, which is avoidable even in a household budget! For example, last year’s budget aimed for a 20% hike in tax revenue but managed only 10%.
This year's plan seems to be relatively sober and attempts to get the basics rights. Mr. Jaitley has attempted to be prudent on expenses without skimping on the much-needed capital expenditure.
The budget seems to have no obvious science fiction on revenues estimates and the tax department conceivably has achievable targets. This is important and it sets an honest tone for actions ahead, over his remaining four years in office.
This year the FM is still targeting a 16% rise in tax revenues against a 10% increase achieved in previous year. This would require many things to come together. Importantly, the targets for various individual taxes largely appear to be credible. Service tax, customs and corporate taxes are all a case of point.
Some might argue that the FM is not being conservative at least on his revenue estimates. While the target for 2015-16 on excise and service tax collection could be realistic given the growth expectations and increase in taxes, at 24%, these might very well prove to be stiff considering the reality of 2014-15, where the revised estimates reveal that the collections grew by just about 9%.
The table below shows the targeted increase in tax revenues in 2015-16 along with the increase targeted in the previous year as against the actual increase.

2015-16 Target Increase (%) 
2014-15 Targeted
Increase (%)
Actual Increase (%)
Gross Tax Revenue
Corporation Tax
Taxes on Income
Union Excise Duties
Service Tax
Taxes on Union Territories

There is some slack in the case of non-tax revenue, where the FM has targeted just a 2% upward nudge. Less expectations on dividends from public sector? For 2014-15, a 9.5% increase was achieved against a target of 7%.
The disinvestment target of Rs 69,500 crore for 2015-16 is near to the one set in previous year even though only 50% of the 2014-15 target was achieved. The FM, now second year in office, needs to deliver on this count. In-fact, one would hope that this target is well exceeded.
The story on the expense side seems to be one of pragmatism and hope with an ambitious plan to increase capital expenditure by 16.3% on non-plan side and 33.9% on the plan side. This would help economic growth. Last year, though there was a plan to increase capital expense by about 20% on both plan and non-plan side, the same was not achieved. A result perhaps of poor budgeting and execution.
The table below show how the FM plans to increase expenditure and how this compares with the plan and actual of the last year.
2015-16 Target Increase (%) 
2014-15 Targeted Increase (%)
2014-15 Actual Increase (%)
Total Revenue Non-Plan Expenditure
Defence Services
Grants to State and U.T. Governments
Capital Non Plan Expenditure
Defence Services
Other Non-Plan Capital Outlay
Total Revenue Plan Expenditure
Total Capital Plan Expenditure
Total Expenditure
With plausible revenue targets and prudent expenditure plan, there is an elevated probability that the plan would hold up. This should give some confidence to every one. Next February could then provide greater leeway to initiate measures to spur demand.
This write-up is not about what the FM did not do and that could really be a long list! It must however be said that for the average tax payer, this budget offers no meaningful tax relief, not even to keep up with inflation. In-fact, there is an unwelcome hike in service tax.
Yes, there is some well intended push towards encouraging spending on pension and insurance but no unconditional relief on taxes.
Perhaps, the FM could have at-least hiked the basic tax exemption limit by 10% i.e. Rs 25,000. Assuming 40 million taxpayers this would have meant forgoing a tax of Rs 2500 per tax payer or about Rs 10,000 crore in aggregate which is 0.6% of total budget expenditure.
Clearly, the wait for Acche Din continues. And there is hope that the road taken leads there.