Saturday, July 07, 2007

Paperwork and Loss of Productivity

There is paperwork in all economies, and more so in some than in the others. The research issue I raise here is to what extent a nation’s GDP is reduced by avoidable paperwork.

What is avoidable paper work? In using this phrase I have in mind to the cost of time and resources involved in doing what could be done in nore efficient ways, usually by re-engineering the process or by inducting relevant technology.

The loss in productivity arises in three ways:

a) People spend time in preparing applications/documents, traveling to some office, and then in getting the paperwork done there;
b) Economic activity can get delayed by avoidable paper work, for instance the construction of commercial property gets delayed by months in getting all the paper work done; import and export of goods are slowed down by avoidable paper work.
c) Some people in some countries pay “speed money” to get things done. This often creates a motivation for staff involved to slow down the process or complicate matters for those who don’t pay speed money. This compounds the loss that occurs anyway because of unnecessarily complicated processes and by the absence of relevant technology. Of course, this is only one form of corruption related to paperwork.

I will give a couple of examples from my own experience in India.

1. It was in 1999, in Chennai, when my father passed away. I traveled from Mumbai to Chennai and spent three or four days there after the cremation, trying to get done things like arranging for access to my father’s bank account for my mother. I had to make a visit to a govt office in Mylapore, Chennai to apply for a death certificate in this connection. I stood in line for about 90 minutes, and when I got to the counter they asked me for the form issued by the hospital where my father had died recording his death. I had applied for this certificate at the hospital earlier that day and they had told me to come the following day to collect it. All I wanted at the govt. office was to get a blank form to fill in to request a death certificate. I was planning to fill it up and leave it at home for someone to submit it when the hospital form arrived. I had to leave that evening to Mumbai. The clerk at the counter told me that they don’t issue application forms until the hospital certificate is shown to them. I returned home in disgust. Later, a friend told me that the clerk would have been expecting a hundred-rupee note. Hundred rupee notes are good substitutes for documents not readily available :=)
2. This year, 2007, I bought my used company car from my company. They gave me forms signed to show that they had sold the car to me. I was supposed to get the car registered in my name. This involved a trip to an office 20 KM away where the car had been originally registered, to get a “clearance certificate”; such certificates are sometimes called no-objection certificates. Nothing moves without several no-objection certificates! Now I have submitted my application for car registration to another office near where I currently live. I have been asked to wait for a week or ten days for the paper work to be done. This has involved so far one trip to the office to get the forms and to find out what supporting documents need to be submitted, and another trip to present the application. I do not know how many more trips I will need to make to get the process completed in this IT Capital of India, Bangalore!

Let us now come to my research proposal. Such research could be carried out by a graduate student in management, by a researcher in the area of productivity, or by some one concerned with administrative reform. The proposal is that economically significant causes for the loss of productivity should be examined: time lost by citizens and by staff doing avoidable or slow work, and loss created by delaying the use of scarce resources. I suspect that in India, the loss will be somewhere in the range of 1 to 5% of the GDP. That is a loss of roughly 8 to 40 Billion dollars per year. Another way to look at this issue is to note that the GDP can be increased by 1 to 5% by taking the necessary steps to correct the problem.

I have not discussed here the question of economic losses incurred by avoidable delays in legal procedures. Undoubtedly, they are also worth studying, and quantitatively estimated to the extent possible.

My wise wife read a draft of this posting and asked me a question: are you merely suggesting more paperwork, possibly resulting in a conference paper?

No, I explained, we hope that the proposed research would lead to action!

She then gave me her no-objection certificate, enabling me to post this.

Srinivasan Ramani


Ankit Dangi said...

Observations to note for sure, but then could the same apply to the Software Industry as well?

A considerable amount of time is being spent on designs rather than direct on-the-field work.

Agile development isn't (most of the) organization's choice?

Apologies, if I've gone off the track.

Srinivasan Ramani said...


You are right. Inefficiencies are not unique to any particular segment of economic activity! The division of effort between field work and design/development varies from company to company. However, I do find practically all software companies put a lot of emphasis on business development, keeping contact with hundreds of potential customers and understanding their problems. If the exploration leads to an order, they spend a fair amount of effort maintaing contact with the customer, reporting, and getting early feedback. To that extent the software industry does do direct on-the-field work.