Digital Economy Deserves More

Going by the chapter on data in the Economic Survey released on July 4, it seemed that the government’s new Budget would carry new thinking on the digital economy. If data of, for, and by, the people was going to be an important digital mantra, then the Budget had to build on this. However, the BJP government’s digital imaginary, read in the text and subtext of the Budget presented by the Finance Minister, does not really unpack the lofty idea of data as a public good, “in the spirit of the Constitution of India”. Instead, ideas of digital society and economy, despite all the right rhetoric on AI and the rest, end up as fragmented and minimalist, harking back to the unsubstantiated urgency for making digital payments commonplace and conveying the unstated assumption that the private sector will drive the country to the dream of Digital India.

If the Economic Survey made its ambition to open up all data for all sectors in all departments to the private sector in what clearly is a misnomer for what a public good is supposed to do, the Budget simply sidestepped the idea of digital and data infrastructure. The government’s framework for the digital economy seems to peddle a worryingly flimsy vision about Digital India, with no substantial reference in the Budget to public investments in digital and data infrastructure. An efficient agricultural or health care system that works for the majority — the mazbooth desh and mazbooth nagrik the Finance Minister referred to — is highly unlikely to come only from private sector innovations subsidised by public data sets. A policy vision that is backed by an appropriate Budgetary architecture is crucial for how Digital India in the AI age will be operationalised. The silence on this count in the Budget therefore comes as a disappointment.

The digital game plan for the economy and its 3 trillion dollar mark for the upcoming year seems to be a sloppy attempt; a lopsided balance between perfunctory good words about MSMEs and startups and strident hard talk underscoring an expanded role for privatisation and foreign investment.

Lacking focus

There seems to be a visionary myopia in conceiving of the Budget as a crucial instrument for Digital India in a world that is rapidly modernising through datafication, automation, cloud infrastructure, IoT networks and more. In talking about connectivity as the life blood of the country, the Finance Minister invoked many schemes — Pradhan Mantri Gram Sadak Yojana, Bharatmala Pariyojana, SagarMala Project etc. — with no mention about internet infrastructure. Whether for digital transactions, online education, rural health facilities, or agriculture information services, even with the 5G revolution, reliable broadband continues to be important.

Nearly 50 per cent of rural India still does not have access to the Internet. Also, the digital component of different infrastructure plans, like the SagarMala project for port-led development, assumes new significance today. Investment related modalities for digitisation in strategic sectors like ports or in smart cities projects must be cognisant of key concerns such as data sovereignty, citizen oversight, corporate accountability, and national security, in addition to domestic capital accumulation. Private investment in digital modernisation must not undermine economic and social goals.

The online portal for MSME credit is of course a welcome step, but it needs to be recalled that earlier this year the RBI cautioned that having generated ₹11,000 crore NPAs, the scheme could upset the credit market severely. Studies reveal that several borrowers or enterprises under the MUDRA loan scheme are not traceable and that the share of manufacturing is a small fraction. Make in India can succeed for digital startups only when a strong vendor base is set up in the MSME space.

The Finance Minister’s assurance to startups that complaints and concerns on the angel tax will be resolved does suggest a desire within the government to promote domestic innovation, certainly good news for digital startups in India.

It is however not completely clear if digital innovation has received the boost it needs. Cutting edge innovation in areas such as AI tends to be capital intensive, requiring high-tech hardware devices that need to be imported. The high import duty on IoT devices has been a problem for AI startups in sectors such as agri-tech, pushing up product costs and disincentivising uptake by farmers. Industries manufacturing drones have had to rely on costly imports of essential components. The Budget speech did refer to exemptions on customs duties for manufacture of electronic goods, but more information on the fine print is necessary to confirm any optimistic outlook.

Labour pangs

Despite the heavy duty desk thumping that the proposed labour codes received during the Budget speech, the reforms do not portend well for worker rights. The labour codes do recognise the changing nature of employment in the digital economy and the emerging context of increasing precarity. They make minimum wage a requirement for organised as well as unorganised workers. But they are far from creating a uniform minimum wage, and they do not guarantee specific rights, such as consumption or productivity-based criteria for setting the minimum wage, instead choosing skill-based criteria. In the context of deskilling in the digital economy, this is particularly worrisome.

Revitalising agriculture, including through e-NAM, was mentioned by the Finance Minister. Even without information about the exact outlays, it may be pointed out that from basic problems such as lack of Internet connectivity, to lack of investment in digital automation for assaying and quality control, there are critical digital infrastructural gaps that render e-NAM an uneasy solution at best. Inter-state commodity trading is not easy in India and a ‘one country, one market’ idea seems more a pipe dream.

To gain traction, public investments that integrate other solutions – warehousing, logistics and credit — with the portal, are indeed vital, and seem to be nowhere in the government’s stated priorities. The omission of agriculture research outlays in frontier areas such as AI and in the requisite training and skilling to produce a new generation of agro-extension workers also reflects a blindspot. Privatised agriculture driven by new age logistics, handled today by the likes of Amazon, will be a lost opportunity in building domestic digital infrastructure and a strong agriculture sector.

The self-praise about two crore rural Indians trained to be digitally literate and the announcement of plans to train 10 million youth for meeting the complex challenges of the twenty-first century need to be put in perspective. India has 600 million young people. The demands of the future require a new type of commitment to digital literacy — an approach that focuses on strengthening public education so that children and young people emerge as competent and critical users and creators of technology. The under investment in primary and secondary public education and undue focus on a handful of higher educational institutions so as to draw foreign students may prove to be a costly approach, fiscal decisions with negative consequences in the long term.
PPP and other issues

Public-private partnership arrangements were mentioned quite a few times in the Minister’s speech, including in relation to Bharat-Net and internet connectivity for local bodies in every Panchayat in the country. The proposed approach may not be the best fit for rural e-governance. Many studies have already shown that the private entrepreneurship model in the Common Services Scheme has failed.

The enormous benefits to women, and SC and ST populations under ‘Stand Up India’ was elucidated by the minister through the example of loans availed for purchase of scavenging machines and robots. The government’s commitment to continue the scheme notwithstanding, neither Kayaka (the removal of all economic, social and religious inequalities) nor Dasoha (equal opportunity for all), teachings of Basaveshwara that the Finance Minister cited, are likely to obtain if ideas of automation to address drudgery become individualised and entrepreneurialised. Access to dignity cannot be marketised and must be provided as a right – so that robots can replace human beings in all situations of dehumanising work.

The electronic fundraising platform for the social sector devised as a “social stock exchange” in the name of inclusive growth, requires wider deliberation. It is unclear why the social sector needs a financialised, stock exchange model. How this will pan out and who this will benefit remains a matter of concern. The Finance Minister should open the issue up for the “common man’s” views, as she did for crowd-sourced suggestions on the Budget itself.

This article was first published in Business Line.


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