Interim Budget and frontier technology: Sab ka Vikas, Sab ki Technology

Next budget should also consider talking about revamping infrastructure to adapt to AI

Dr Palakh Jain and Shreya Ganguly | February 14, 2024


#Technology   #Information Technology   #AI   #Economy   #Budget   #Interim Budget  
(Illustration: Ashish Asthana)
(Illustration: Ashish Asthana)

The world is at the cusp of a revolution based on Industry 4.0 and green technologies, including AI, big data, IoT, EVs, solar power, etc., which offer developing countries the opportunity to leapfrog into economic prosperity. However, India’s gross expenditure on R&D (GERD) still stands at a meagre 0.66% of GDP (Economic Survey 2022), with woefully low participation from the private sector. On the global level, the technological gap between developed and developing countries is widening, with the latter’s share of global exports falling from 48% to 33% over the past three years. The need of the hour is policy attention and investment targeted at building skills and capacities to capture value from frontier technology. To what extent did the Interim Budget 2024 rise to the occasion and adopt global best practices for technological readiness? This article explores the Budget’s successes and shortcomings in this regard.

The UNCTAD’s Technology and Innovation Report 2023 calls upon developing countries to invest in more complex and greener sectors, boost technical skills, scale up investments in ICT infrastructure, and address the digital divide. The UNCTAD assesses 166 countries’ preparedness for frontier technologies through a ranking based on five building blocks: ICT deployment, skills, R&D activity, industry activity, and access to finance. India is already a global overperformer at rank 46, which is 67 positions better than expected, given its per capita GDP. On the global stage, India performs particularly well in the R&D activity and industry activity blocks, thanks to its abundant supply of human resources at a comparatively low cost. The nation’sweaknesses lie in the blocks of skills, ICT deployment, and finance.

The Interim Budget takes promising strides to remedy these deficiencies.

(1) It offers financing in the form of a Rs one lakh crore corpus with 50-year interest free loans to encourage private sector innovation in sunrise domains and usher in a golden era for tech-savvy youth.

(2) Towards skill development, the finance minister cites the Skill India Mission’s success in training 1.4 crore youth, upskilling and reskilling, and establishing 3000 new ITIs (Industrial Training Institutes). The opening of new institutions of higher learning (7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS and 390 universities) represents a key step toward creating a skilled talent pool in the IT sector.

(3) In terms of ICT deployment, India has also developed its digital public infrastructure in record time, even acknowledging it as a new factor of production. The Interim Budget has harnessed the usefulness of technological infrastructure in numerous domains, from strengthening deep technology for defence, to fostering market integration on e-NAM.

(4) A slew of measures embrace the synergy of technology and sustainability. For example, the Budget unveils the launch of the Blue Economy 2.0, a new scheme for bio-manufacturing, and support for e-vehicle manufacturing and charging infrastructure.

(5) The Budget also proposes combined funding of over Rs 11,500 crore for Solar Power (Grid), the National Green Hydrogen Mission and Wind Power (Grid) projects in FY 2025, a significant rise from the previous year’s allocation.

However, notably absent was a discussion on revamping infrastructure to adapt to the advent of AI. The government must prioritise the allocation of ample budgetary resources to initiate, construct, and maintain the infrastructure necessary for AI development. Previously, the Budget 2023-24 had introduced the vision of ‘Make AI in India’ and ‘Make AI work for India’, through centres of excellence for AI in top educational institutes and research partnerships by top industry players. Many expected the finance minister to elaborate further on India’s AI strategy, discuss its regulatory framework, or allocate funds for AI-specific programmes. Stakeholders indicate the need for a dedicated AI budget, a specialised government agency for AI development, and stronger AI integration in the field of education, e.g., through revamped classrooms for AI-enhanced and AI-focused learning.

Moreover, towards making all states active participants in the digital economy, the state-level variation in technological readiness should be documented and addressed. As much as 90% of increases in per-capita income come from technological innovation, and its benefits should reach all states of India. The finance minister’s speech stated that technological changes must reach the bottom of the pyramid. However, while digital literacy has surpassed 70% in Goa and Kerala, rural digital literacy rates are less than 20% in regions like Uttar Pradesh, Madhya Pradesh, Chhattisgarh, and Bihar. To achieve Sabka Vikas, we need Sabki Technology.

While the Interim Budget takes bold steps and aligns itself well with the spirit of Jai Vigyan, Jai Anusandhan, the subsequent post-election Union Budget should take these additional steps to solidify India’s global leadership in frontier technological readiness.

Palakh Jain is Associate Professor at Bennett University and Senior Visiting Fellow at Pahle India Foundation.
Shreya Ganguly is Research Associate at Pahle India Foundation.

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