Clos­ing In­dia’s tech­nol­ogy gap

Financial Mirror (Cyprus) - - FRONT PAGE -

It is a no­table irony that In­dia, which pro­duces so­lu­tions to many of the knot­ti­est in­for­ma­tion-tech­nol­ogy prob­lems faced by the world’s largest com­pa­nies, has ben­e­fited lit­tle from tech­no­log­i­cal progress. For­tu­nately for In­dia’s cit­i­zens, Prime Min­is­ter Naren­dra Modi in­tends to change that.

The gap be­tween In­dia and its emerg­ing Asian coun­ter­part China is sig­nif­i­cant. Whereas China has cre­ated the world’s largest on­line bazaar and be­come a global leader in re­new­able en­ergy, In­dia has just be­gun to ex­plore the po­ten­tial of ecom­merce; IT re­mains beyond the scope of mil­lions of small and medium-size en­ter­prises; and most cit­i­zens re­main cut off from the dig­i­tal econ­omy.

To bring In­dia up to speed, Modi’s gov­ern­ment an­nounced in Au­gust a na­tional dig­i­tal ini­tia­tive: 1.13 trln ru­pees ($19 bln) in in­vest­ment to bring broad­band com­mu­ni­ca­tions to 250,000 vil­lages, pro­vide univer­sal mo­bile ac­cess, ex­pand on­line gov­ern­ment ser­vices, and en­able on­line de­liv­ery of all sorts of ba­sic ser­vices. Need­less to say, this will do much to ad­vance In­dia’s e-gov­ern­ment am­bi­tions.

Tech­nol­ogy trends are help­ing Modi’s cause. The rapid de­cline in costs and in­crease in per­for­mance ca­pa­bil­i­ties of a range of dig­i­tal tech­nolo­gies – in­clud­ing mo­bile In­ter­net, cloud com­put­ing, and ex­pert sys­tems – make large-scale adop­tion a dis­tinct pos­si­bil­ity in the com­ing decade, even in rel­a­tively poor In­dia.

Th­ese dig­i­tal tech­nolo­gies – to­gether with ad­vances in ge­nomics (sup­port­ing agri­cul­tural and med­i­cal in­no­va­tion) and un­con­ven­tional en­ergy (wind, so­lar, and shale oil and gas) – will en­able fi­nan­cial in­clu­sion for hun­dreds of mil­lions of In­di­ans and po­ten­tially re­de­fine how ser­vices like ed­u­ca­tion, food al­lo­ca­tion, and health care are de­liv­ered. Re­search by the McKin­sey Global In­sti­tute in­di­cates that, by 2025, th­ese fac­tors are likely to con­trib­ute at least $550 bln – and as much as $1 trln – to In­dia’s an­nual in­come.

The gains would be dis­trib­uted among a va­ri­ety of sec­tors, even some that cur­rently have low lev­els of tech­nol­ogy adop­tion. Ex­ist­ing ap­pli­ca­tions in agri­cul­ture, health care, ed­u­ca­tion, and in­fra­struc­ture can col­lec­tively con­trib­ute $160280 bln to an­nual GDP – and, more im­por­tant, em­power or­di­nary In­di­ans.

In­deed, ed­u­ca­tional in­no­va­tions – such as adap­tive learn­ing and re­mote teach­ing – could en­able some 24 mln work­ers to re­ceive more years of ed­u­ca­tion and find higher-pay­ing em­ploy­ment. Mo­bile fi­nan­cial ser­vices will give 300 mln In­di­ans ac­cess to the fi­nan­cial sys­tem, al­low­ing them to build credit. And pre­ci­sion agri­cul­ture – us­ing ge­o­graphic in­for­ma­tion sys­tems and data to guide plant­ing, wa­ter­ing, and other ac­tiv­i­ties – can help 90 mln farm­ers in­crease their out­put and re­duce post-har­vest losses, with ac­cess to timely mar­ket data bol­ster­ing their in­comes.

More­over, some 400 mln In­di­ans in poor ru­ral ar­eas can gain ac­cess to bet­ter health care in field clin­ics, where health work­ers can di­ag­nose and treat some ail­ments us­ing low-cost di­ag­nos­tic tools, ex­pert soft­ware, and on­line links to physi­cians. Fi­nally, by digi­tis­ing gov­ern­ment ser­vices, such as food­dis­tri­bu­tion pro­grammes for the poor, In­dia could elim­i­nate the leak­age that di­verts, ac­cord­ing to our es­ti­mates, half of the food from in­tended re­cip­i­ents.

For In­dia to de­rive the full po­ten­tial of th­ese tech­nolo­gies, it will need to dis­man­tle bar­ri­ers to adop­tion. McKin­sey’s In­ter­net Bar­ri­ers In­dex for 25 coun­tries clas­si­fies In­dia as part of a clus­ter (along with Egypt, In­done­sia, Thai­land, and the Philip­pines) char­ac­terised by medium-to-high bar­ri­ers in four key ar­eas: in­fra­struc­ture, af­ford­abil­ity, in­cen­tives, and ca­pa­bil­ity.

Even with low prices for de­vices and data plans rel­a­tive to the rest of the world, In­ter­net ac­cess in In­dia re­mains beyond the grasp of close to a bil­lion peo­ple. Fur­ther­more, net­work cov­er­age and the ad­ja­cent in­fra­struc­ture re­main in­ad­e­quate, par­tic­u­larly in ru­ral ar­eas. And, though 48% of ur­ban In­di­ans are com­puter lit­er­ate, only 14% of ru­ral In­di­ans are able to use a com­puter ef­fi­ciently.

In­dian pol­i­cy­mak­ers should be work­ing with the coun­try’s tech in­dus­try and other pri­vate-sec­tor ac­tors to im­ple­ment mea­sures that would en­able tech­nol­ogy adop­tion. Th­ese in­clude en­sur­ing on­go­ing in­vest­ment in broad­band back­bone net­works, es­tab­lish­ing in­ter-op­er­abil­ity stan­dards, and cre­at­ing a sup­port­ive en­vi­ron­ment for low-cost de­vices.

In or­der to spur growth in on­line-ser­vices de­liv­ery, the au­thor­i­ties must also ad­dress broader chal­lenges to en­trepreneur­ship, such as In­dia’s cum­ber­some pro­ce­dures for start­ing new busi­nesses. More­over, as the ex­pe­ri­ence of In­dia’s mo­bile tele­phony sec­tor clearly demon­strates, scal­ing up for mas­sive im­pact re­quires more than start-up in­no­va­tion; it also de­mands a reg­u­la­tory en­vi­ron­ment char­ac­terised by a lib­eral ap­proach to pric­ing, man­u­fac­tur­ing, and dis­tri­bu­tion.

Sus­tain­ing the ben­e­fits of tech­no­log­i­cal adop­tion and in­no­va­tion will re­quire con­tin­ued in­vest­ment and adjustment to com­pen­sate for its dis­rup­tive ef­fects. For ex­am­ple, the au­to­ma­tion of knowl­edge work – the soft­ware and sys­tems that are in­creas­ingly ca­pa­ble of per­form­ing hu­man tasks that re­quire judg­ment – could af­fect 19-29 mln jobs by 2025. Tech­nol­ogy can help cre­ate new – per­haps bet­ter – jobs to re­place those that are lost, but only if In­dia’s ed­u­ca­tion and train­ing sys­tems pre­pare work­ers ad­e­quately.

With thought­ful plan­ning, pro­duc­tive col­lab­o­ra­tion be­tween pub­lic and pri­vate in­sti­tu­tions, and ca­pa­ble ex­e­cu­tion, In­dia’s gov­ern­ment can clear the way for tech­no­log­i­cal progress. The so­cial and eco­nomic ben­e­fits of a suc­cess­ful strat­egy can­not be over­stated.

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