Budget 2018 and the Opportunity for the Technology Industry
Finance Minister says disruptive technologies will help India establish itself as a knowledge society and digital economy
Tech buzzwords like artificial intelligence, machine learning, 5G, IoT, 3D printing, Fintech, and blockchain found a place in the Union Budget 2018 address. However, Bitcoin and crypto-currencies got the thumbs down, in the Budget speech, with the government refusing to accept it as a formal mode of payment. The education industry is also going to leverage edutech to reskill teachers and to improve the quality of education. The Budget also acknowledges digital technology bringing benefits to the poor.
The Finance Minister said, “Global economy is transforming into a digital economy thanks to the development of cutting-edge technologies in digital space – machine learning, artificial intelligence, internet of things, 3D printing and the like. Initiatives such as Digital India, StartUp India, Make in India would help India establish itself as a knowledge and digital society. NITI Aayog will initiate a national program to direct our efforts in the area of artificial intelligence, including research and development of its applications.”
The National Institution for Transforming India (NITI Aayog) is the government’s think-tank and the institution that advises the government on strategy in the economic policy-making process using a bottom-up approach.
Regarding crypto-currencies, the Finance Minister said, “The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.” However, he did acknowledge Blockchain technology, which was invented for the distribution of Bitcoin. “The Government will explore use of blockchain technology proactively for ushering in digital economy,” said Jaitley.
Some in the industry feel the move denouncing cryptocurrencies is harsh and the government could have taken a different stance.
“The move to make cryptocurrencies illegal is a major announcement; it is likely to create a negative impact on the price of these currencies, especially Bitcoin,” said KK Mookhey, CEO & Founder of Network Intelligence. “A better idea may have been to come out with some sort of a regulatory framework around cryptocurrencies. On the other hand, the point raised by the Finance Minister about exploring the usage of blockchain technology for payments is a very good initiative. It will support homegrown technologies who have already invested in the technology and will attract new investments in this technology. It is a positive sign to see that 5 lakh wifi-hotspots will be set up covering 5 crore rural citizens. This falls in place with the country’s Digital vision. We would have liked to see more substantial movement on setting up the CERT-Fin for the financial sector.”
Read our interview with KK Mookhey here.
D.D. Mishra, Research Director at Gartner had a similar opinion. “Rather than restricting cryptocurrencies, they can be regulated to prevent any adverse impact and risks while exploring blockchain side by side and leverage opportunities which are available with new concepts and technologies that they bring to the table,” he said.
Blockchain technology has already been implemented in the Banking industry but it also has potential use in other sectors like Government. An IBM study suggests that Blockchain can help governments build trust, by increasing transparency and collaboration.
Blockchain can be used for securing property records, educational records, employee records, healthcare records, high-value transaction records and utility records. The government of Andhra Pradesh, for instance, is using Zebi chain (a version of blockchain) to provide immutable security to land records of Capital Region Development Authority (APCRDA). Read more about it here.
Pushan Mahapatra, MD & CEO, SBI General Insurance said, “While virtual currencies like Bitcoin remain illegal for all purposes in India, the Government’s declaration that it will explore the potential use of blockchain technology is a very good news for the Insurance industry. We have seen very limited application of Blockchain technology in insurance mostly limited to Travel Insurance. Blockchain operates like a distributed ledger used on mutual trust and breaks the centralized processing into independent distributed nodes carrying their own copy of a common verifiable ledger. Its waiting to disrupt the insurance industry globally by giving it a more distributed mode of operations which eliminated the need of intermediaries and manual processes and ultimately leads to higher efficiency, lower cost of operations and better quality of service.”
While we are still coming to terms with poor 4G connectivity, we hope to have a much better experience with 5G. The Budget speech mentioned that the Department of Telecom would support the establishment of an indigenous 5G Test Bed at IIT, Chennai.
Startups, particularly those providing cutting-edge technology to banks and financial institutions, have been on the rise in India. The Budget reveals that Ministry of Finance is exploring how Fintech could help MSMEs (micro, small & medium enterprises) grow their businesses in India.
“Use of Fintech in financing space will help growth of MSMEs. A group in the Ministry of Finance is examining the policy and institutional development measures needed for creating right environment for Fintech companies to grow in India,” said the Minister.
The Budget also looks at improving the quality of education and the quality of teachers in the country. He announced an integrated B.Ed. program for teachers and the amendment of the Right to Education Act, to enable more than 13 lakh untrained teachers to get trained.
“Technology will be the biggest driver in improving the quality of education. We propose to increase the digital intensity in education and move gradually from ‘black board’ to ‘digital board’. Technology will also be used to upgrade the skills of teachers through the recently launched digital portal DIKSHA, he said.
The IT and edutech industries will have a big role to play here, and there is ample opportunity for partnering with the government. Companies such as Intel, Microsoft and Cisco (among others) have already undertaken several initiatives to train teachers and professionals in India.
The Intel Teach Program is part of the company’s CSR activity, and it has been successfully implemented in Assam and other states. Over 13,000 teachers across 27 districts of Assam were trained under this program.
Microsoft too has been doing its bit to help the education sector through Project Shiksha and Project Saksham. It partnered with 12 state governments to build ICT skills in 8 lakh government school teachers under Project Shiksha. And Project Saksham is helping bridge the digital gap in higher education institutes, impacting 71 universities by integrating technology into the classroom to increase creativity, accelerate learning, and bolster collaboration.
Cisco wants to improve networking skills through its Networking Academy – a global initiative. It offers free online, self-paced courses on IoT, cybersecurity, Linux, and other IT skills. In India, there are over 165 Cisco Academies (across 26 states & union territories) with 8,550+ student currently enrolled in the program, and 5,150+ professionals have already graduated in CCNA. Today there are close to 70,000 Cisco Certified professionals in India. In addition to imparting IT knowledge and networking skills, NetAcad also aims to bridge the ‘digital divide’ as it takes technical education to rural India including technologically backward states like Kashmir, Orissa and Tripura.
Cisco India also inaugurated its Cyber Range Lab in Gurgaon, last year. The Lab aims to provide highly specialized technical training workshops to help security staff build the skills and experience necessary to combat new-age threats.
Apart from this, Cisco also launched other initiatives such as the Rajasthan Education Initiative that seeks to improve social and economic conditions by developing IT skills.
Railways have been the primary mode of transport for most Indians, whether it is a daily commute or travel to cities in search of jobs, or just for leisure. Trains and railway stations in India will now use more technology like cameras and Wi-fi connectivity. The Budget reveals that Indian railways will also spend on technology to improve rail safety.
“Redevelopment of 600 major railway stations is being taken up by Indian Railway Station Development Co. Ltd. All stations with more than 25000 footfalls will have escalators. All railway stations and trains will be progressively provided with wi-fi. CCTVs will be provided at all stations and on trains to enhance the security of passengers. Modern train-sets with state-of-the-art amenities and features are being designed at Integrated Coach Factory, Perambur. First such train-set will be commissioned during 2018-19,” said the Minister.
The statements regarding technology in the Budget 2018 are forward looking and do not specify any incentives for the technology industry. We do not see a direct link with investments and disruptive technologies.
Gartner’s D.D. Mishra concludes, “The budget does not generate excitement to the extent that was anticipated. Though the extension of rural WiFi hotspots along with investments in telecom can enable rural economy and drive much better financial inclusion and drive technology enabled growth for the subset of our rural population, we need a better connect between strategy and execution especially in terms of digital India so that we are able to fully leverage the enhanced allocation. Looking at the overall picture, I feel that the approach is more fragmented at the moment and outcome and objectives of digital India needs to be better connected with the investments which are being made.”
Technology plays a major role in the modernization of infrastructure and digitalisation of the nation. The Budget talks about investments directed at improving education, infrastructure modernisation (smart cities), boosting the MSME sector, making rail travel safer, and in bringing benefits to the poor. But we are unsure how exactly NITI Aayog and the government will make this happen. For the moment, the IT industry, with its expertise in disruptive technologies like machine learning, blockchain and AI, can continue to partner with government to enable a better India.
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