The 2018 Budget announcement saw the Narendra Modi government maintain its bullish stance on technology. Though most of these measures are steps in the right direction, the government must back them up with robust policy reforms and institutional dynamism to reap maximal digital dividends.

Access To Digitalization

he finance minister announced the introduction of five lakh broadband Wi-Fi hotspots, presumably as part of phase II of the Bharatnet initiative. Bharatnet started as the National Optic Fiber Network (NOFN) launched in 2011 by the UPA-II government to scale broadband penetration. In 2015, the NDA government examined the NOFN with a view to overhaul it and rechristened it ‘Bharatnet’.

Bharatnet sought to solve some of the implementation issues with NOFN by diversifying source connectivity infrastructure and enlisting the assistance of states and public sector undertakings (PSUs). The project, however, continued to be mired in controversy as it failed to meet several deadlines and targets. Reports indicated that only 30 percent of gram panchayats and the cabling were ready by November 2017. This meant that the government still had to complete 70 percent of the work if it was to meet its renewed deadline of March 2019.

It is important to note that Bharatnet is a middle-mile connectivity scheme which envisions the last mile connectivity to be fulfilled by the combined efforts of the public and private sector. While the introduction of five lakh Wi-Fi hotspots should go a long way in boosting last mile connectivity, there is no guarantee of qualitative service, as the experience with Wi-Fi initiatives like the Government of Maharashtra’s AapleSarkar Wi-Fi Hotspot scheme has shown.

The government could consider utilizing existing infrastructure like cable TV connections to deliver high-speed last mile connectivity. Cable TV enjoys 40 percent household penetration in India. The existence of this preliminary infrastructure makes cable TV a viable avenue for speedy and cost-effective last mile connectivity.

The provision of internet services through cable TV has failed to take flight so far primarily because of the regulatory uncertainty surrounding the monetary recoupment process. However, research indicates that private sector interest in the undertaking can be encouraged through fiscal interventions such as tax credits and discounted loans.

National Artificial Intelligence (AI) Program

This is a laudable initiative as competency in AI will be a key determinant of economic and geopolitical clout in the near future. Two key issues must be addressed, however, if this program is to be a success. The first is data collection. Large repositories of data are sine qua non for developing proficient AI systems. Unfortunately, India is a data poor country – we generate a lot of data but retain hardly any of it. Data localization has been posited as a solution to this conundrum. However, the cons of such a strategy far outweigh any potential benefits.

A study by the European Centre for International Political Economy reveals that a nationwide data localization stipulations would deal a sizeable blow to India’s GDP and decrease investment by at least 1.4 percent. Rather than localization, government and industry should come together to create frameworks to facilitate secure data sharing between entities holding data and organizations looking to use data to develop AI systems.

The second issue that must be addressed is the human capital deficit in research and development in India. While the Budget seeks to tackle this issue by allocating funds for a scholarship program for BTech students to pursue PhDs, capital must be infused into the institutions themselves if there is to be a qualitative improvement in tertiary education. The government and institutions can also look at brokering arrangements with leading science and technology PhD program abroad to facilitate greater cross-border permeation of knowledge and research. Finally, the government must find ways to root out the bureaucracy plaguing most research institutions in the country and ensure that administrative appointments are based on merit rather than politics.

The Budget also includes an increase in customs duty on mobile phones as well as certain allied components. This is in consonance with the Ministry of Electronics and Information Technology’s phased manufacturing program (PMP) – an initiative launched to promote mobile phone manufacturing in India. It is, however, important to note that most cellphone production in India happens by way of assembly rather than manufacturing. Thus, although the hike is a creditworthy move, ambiguities surround whether it will prompt a shift from assembly to manufacturing as important components such as printed circuit boards have been excluded from the higher duty rate.

The government must be extolled for its far-sighted budgetary interventions in the technological sector. Hopefully, it will take strides over the next few months to pass the auxiliary reforms necessary to actualize its renewed vision for a truly digital India. – The Wire