Demonetisation: Misalignment of note sizes part of a bigger problem

India’s long-suffering cash-strapped aam aadmi will have to wait two more weeks, according to Finance Minister Arun Jaitley, to gain easier access to the new Rs 2,000 and Rs 500 notes that symbolise the government’s campaign against black money. Apart from evidence of poor planning, this disconnect between policy intent and implementation efficiency highlights a chronic problem with which almost every Indian citizen will identify: The lack of standards in the manufacture of products of everyday use. In this instance, it is the fact that the new notes that are to replace the old are significantly smaller and, therefore, do not fit into the dispensing trays of ATM machines. This misalignment of currency note sizes, apart from the shortage of new notes, has been a significant contributor to the queues snaking out of banks and ATM kiosks and the visible public unrest that prompted ultra-emotional speeches from Prime Minister Narendra Modi. If adequate attention had been paid to this small but vital detail, Mr Modi may have spared the public considerable angst and possibly robbed his opponents of an issue to disrupt Parliament with. Instead, nearly 200,000 ATM now have to be reconfigured at express speed to deal with a backlog that is approaching crisis proportions.

The chance of a flawless changeover is an open question, given the speed that is required from suppliers of the new machines. This inattention to standards is not confined to currency notes and their suitability for ATM machines; it is symptomatic of a whole range of materials and components, including currency notes that have always been in different sizes, unlike the uniform dollar note of all denominations. Standard specifications for building components encourage pre-construction of different elements like doors and windows, which can then be bought ready-made. This reduces on-site construction time and encourages do-it-yourself. Today marble slabs come in all sizes, so do wooden planks, and a whole range of engineering items of common use -- like scissors and knives. Standardisation facilitates volume manufacture, which cuts costs and also encourages quality benchmarks to be set.  On a broader scale, this lack of uniformity – an issue that goes well beyond certification standards mandated by the Bureau of Indian Standards – conflates with larger industry problems. One, for instance, is India’s continuing adherence to different gauges in the railways, the country’s largest transport network. India currently has four different gauges, none of which conforms to the international norm of standard gauge. This makes it difficult to add much-needed rolling stock outside of whatever is domestically manufactured. Admittedly, this is an inherited problem and a full-scale network conversion would be prohibitively expensive.

It is worth noting, in fact, that urban transit systems like the Delhi Metro, however, did adopt standard gauge, but not without some initial opposition within the political establishment some years ago. Issues such as these go to the heart of the prime minister’s Make in India programme as well. The ambit of this programme, which is closely related to the prime minister’s job creation agenda, should cover not just large-scale manufacturing but also small and medium industry. The automobile industry has been a major beneficiary of aligning component manufacture. Perhaps the lesson from this is to mandate the Institution of Engineers to follow the model of German engineering best practices and focus on creating uniform specifications for a range of small and medium products that raise the standard of Made in India to something approaching global standards.