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How India’s ongoing digital transformation will drive the rise of its economy

Published Sep 3, 2019, 5:32 pm IST
Updated Sep 3, 2019, 5:32 pm IST
To reach the milestone of USD 5 trillion by 2025, it will need to grow at a nominal CAGR of 12 per cent over the next five years.
As Digital India gets more data rich it will boost productivity, particularly in innovative areas such as AI, robotics, big data and IoT.
 As Digital India gets more data rich it will boost productivity, particularly in innovative areas such as AI, robotics, big data and IoT.

While presenting the Union Budget in the Parliament, the Finance Minister Nirmala Sitharaman laid out an ambitious project: turning India into a USD 5 trillion economy by 2025. The announcement has sparked discussions about the plan’s feasibility and the various conditions that the country would have to meet to achieve this target.

This brings us to a commonly asked question: is it even possible? Conservative projections say that it isn’t.The Indian economy is currently worth USD 2.8 trillion. To reach the milestone of USD 5 trillion by 2025, it will need to grow at a nominal CAGR of 12 per cent over the next five years. With government data putting the actual growth over the last quarter at lower than 6 per cent, the gap between the current market situation and the required growth rate seems too wide to bridge on the surface.


For this to turn to reality, improvements in productivity leading with the agricultural space is crucial. Public spending is being primed in this regard through irrigation projects, rural roads and piped drinking water contributing to ease of living. This has to be accompanied by private investment leading to recapitalization of banks and capital for NBFCs along with changes in investment policies.

A digital backbone primed by the India stack is crucial to enable this productivity whether it is through reaching the right beneficiaries, optimized paperless processes through faceless interactions, payments etc. As Digital India gets more data rich it will boost productivity, particularly in innovative areas such as AI, robotics, big data and IoT.


The ‘AI’ in India: Recent industry developments and government initiatives in the field

The government has been underlining its commitment to promoting digital technology as an enabler and facilitator for large-scale transformations. Initiatives such as Digital India and Jan Dhan-Aadhaar-Mobile (JAM) have accelerated digital adoption across the country. Technological deployments, such as the launch of India Stack and the Smart Cities Mission, are creating a robust infrastructure that can facilitate seamless interactions between data, consumers, services and service providers.


This push towards digital enablement has been amplified by various other government-led technology projects. The NITI Aayog, for instance, is exploring the feasibility of a nationwide R&D program for the development of indigenous AI applications. The Department of Telecom (DoT) is collaborating with IIT Madras to create a native 5G testbed. Other AI-led deployments are being explored across a diverse range of sectors such as national defense, agriculture and urban mobility etc.

Future-spotting: The long-term impact of AI and allied technologies in government functions


But can AI and allied technologies help India achieve its Vision 2025? The upcoming developments seem to indicate that they can.

Take, for instance, the planned deployment of AI within the MCA21 Mission Mode Project, the e-governance initiative which has facilitated easier access to services from the Ministry of Corporate Affairs (MCA) for Indian businesses. The integration of AI into the MCA portal will enable the government to identify, analyze and flag any discrepancies in corporate balance sheets.

This will help in cutting down on corporate malpractices, such as tax evasion and financial misdemeanours, to introduce greater transparency in the business ecosystem. With malpractices minimized, India Inc’s actual contribution to the national GDP is expected to increase substantially.


More importantly recently the Prime Minister stated “We see Right to Personal Data in the machine intelligence age in a manner akin to Right to Private Property at the dawn of industrial era, as not merely a mechanism to protect but also as an enabler to spur commerce in ways we haven’t fully foreseen.” This sets the right policy foundation element for an information consent framework which is the foundation of AI.

How AI and allied technologies can unleash transformations across industries

One of the key levers to productivity is the agriculture sector which forms 42.7 per cent of India’s workforce is in agriculture which is symptomatic of low-yield, resource-intensive industry. Optimizing this will greater GDP. The use of AI, IoT and machine learning in farming practices are expected to add USD 9 billion to the annual incomes of more than 70 million farmers across the country.


More importantly, they can optimize the utilization of critical, limited resources – such as agricultural land and water – to drive better output. Pilot AI deployments in agriculture have already generated impressive results in in the US. AI-backed soil health monitoring reduced the use of chemical fertilizers by almost 40 per cent in Raleigh, North Carolina, while the use of GIS technologies in irrigation led to a 20 per cent decrease in water usage. In the latter case, the per acre crop output also increased by up to 37.5 per cent. Given the impressive results of agriculture-based pilot applications across the country, the Indian agriculture sector can expect similar results from AI deployments.


The road ahead: Driving India into the future?

According to a 2018 report by McKinsey Global Institute, AI alone has the potential to add USD 13 trillion to the global economic output in the next ten years. As one of the fastest-growing large economies, India has the capability, resources and intention to capitalize on this shift to drive incremental, exponential growth. If it can optimally capitalize on the opportunities that its digital transformation represents, it is not unlikely that the nation can achieve – and exceed – the targets set by Vision 2025.


- Manoj Karanth, Vice President, Digital, Mindtree

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