Friday, March 14, 2008

Informal versus formal

A few weeks back, I was to receive my passport. The postman landed at my place and seeing that I was not at home, my mom was, he left a note asking me to come to the post office. I reached there, told them that I was indeed I and he took me at face value and handed over my passport. Ideally, he should have validated my ID.

This is India - the land where "trust"/"mutual agreement" means a lot. Often to a lot of peoples chagrin, some of these mutual agreement or word of mouth deals go sour. Family, friends, partners, the whole hog. Partners, families promise something and since there is no real, legal, enforceable agreement, find that they are cheated out of it too.

Take the demant account for instance. One of the persons I worked with many years ago had multiple demat accounts "operated" by his family members - including his driver and grandmother - all of which he obviously, operated himself. (This was prior to the time internet trading caught on, but even here you can be pretty sure there are many who trade in others names.) So, if you see a statistic that many grandmothers are into trading, there is a good probability that someone else is merrily trading in their name.

This is nothing new. Heard of benami transactions? Well, a lot of land that "on paper" belongs to a lot of people, in reality belong to "others" - read bigwigs - who do so, so that there are no tax hassles. Which is why far off relatives of "important" people are as important as the people themselves.

The foreign car import scandal was one such scheme. Someone would import the car posing as a tour operator or a person who is transferring residence and an agent would simply sell off the cars to "those who wanted it." Hawala money? Nearly the same story. An informal but highly organized network of people channels money right under the noses of official systems. Black money, lets not even talk about it.

Stock market? Same story. For every analyst, there are probably tons of tipsters out there. Many of them do not even use the tip themselves, they just pass it on, as a social service and some of them act on the information and some of them do not. Some of them in turn (like the weather report joke) find their way back as a "research" item. Insider information? Thats a laugh if you ask me.

When you rent a house using a lease agreement, quite a few landlords try to cheat you off the deposit - and this despite it being a gentlemans agreement.

So, what is the connection with this blog? The things that you think enforcing a process will solve, often does not resolve it in India. People just find ways and means to get around processes using an arrangement like the one above. And when in doubt, go for the written agreement.


Raj said...

The passport incident was not so much a matter of trust as non-conformance to prescribed procedure. Even when the postman hands over to the right person at home, he is expected to open the cover, match the photo on the passport with the individual. No separate id evidence is required, when the passport itself acts as one.

neti said...


it just goes to prove that if there is a law or process, someone or the other will find a way to circumvent it or break it. it's true the world over

gregory said...

ha, did you read the article from the journalist in north india who got his entire id thing via lanjam, bakhsheesh.... pan card, passport, driver's license, birth certificate... everything, all fake

got to love india