Author: Explains

Fourth Industrial Revolution: What it Means, Why it’s being Discussed 

CONTEXT

• CEOs, political leaders, social entrepreneurs, technologists and other global leaders are all at Davos to further the World Economic Forum’s mission of improving the state of the world.
• But, the big buzz at the World Economic Forum (WEF) in Davos this year is about the ‘Fourth Industrial Revolution’.

What is the Fourth Industrial Revolution?

• As described by the founder and executive chairman of WEF, Klaus Schwab, “the fourth industrial revolution is a technological revolution that will fundamentally alter the way we live, work and relate to one another”.
• The fourth industrial revolution is the current and developing environment in which disruptive technologies and trends such as the Internet of Things (IoT), robotics, virtual reality (VR) and artificial intelligence (AI) are changing the way we live and work.

Background:

1^st industrial revolution: The first Industrial Revolution began in Britain in the last quarter of the 18th century with the mechanisation of the textile industry, harnessing of steam power, and birth of the modern factory.

2^nd industrial revolution: The Second Industrial Revolution, from the last third of the nineteenth century to the outbreak of World War I, was powered by developments in electricity, transportation, chemicals, steel, and mass production and consumption. Industrialization spread even further – to Japan after the Meiji Restoration and deep into Russia, which was booming at the outset of World War I. During this era, factories could produce countless numbers of identical products quickly and cheaply.

3^rd industrial revolution: The third industrial revolution, beginning c. 1970, was digital — and applied electronics and information technology to processes of production. Mass customisation and additive manufacturing — the so-called ‘3D printing’ — are its key concepts, and its applications, yet to be imagined fully, are quite mind-boggling.

How different will be the 4^th industrial revolution?

There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact.

• The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace.
• Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.
• The 4^th revolution will be characterized by the advent of cyber-physical systems which, while being reliant on the technologies and infrastructure of the third industrial revolution, represent entirely new ways in which technology becomes embedded within societies and even our human bodies. Examples include genome editing, new forms of machine intelligence, and breakthrough approaches to governance that rely on cryptographic methods such as blockchain.
• Hence, it can be said that the 4^th industrial revolution is conceptualised as an upgrade on the third revolution and is marked by a fusion of technologies straddling the physical, digital and biological worlds.

How does mankind benefit from this?

Like the revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world.

• By gaining access to the digital world, consumers will be benefited in several ways. With the advent of new technology, we get to use more and more efficient products.
• In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity.
• Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.

Challenges posed by this revolution

Economists have pointed out that the 4^th revolution could yield greater inequality, particularly in its potential to disrupt labour markets.

• As automation substitutes for labour across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labour.
• With this revolution, it is also possible that in the future, talent, more than capital, will represent the critical factor of production. This will give rise to a job market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments, which in turn will lead to an increase in social tensions.
• In addition to being a key economic concern, inequality represents the greatest societal concern associated with the Fourth Industrial Revolution.
• The largest beneficiaries of innovation tend to be the providers of intellectual and physical capital—the innovators, shareholders, and investors—which explains the rising gap in wealth between those dependent on capital versus labour.

What will be the impact on the government?

As the physical, digital, and biological worlds continue to converge, new technologies and platforms will increasingly enable citizens to engage with governments, voice their opinions, coordinate their efforts, and even circumvent the supervision of public authorities.

• Simultaneously, governments will gain new technological powers to increase their control over populations, based on pervasive surveillance systems and the ability to control digital infrastructure.
• On the whole, however, governments will increasingly face pressure to change their current approach to public engagement and policymaking, as their central role of conducting policy diminishes owing to new sources of competition and the redistribution and decentralization of power that new technologies make possible.
• Ultimately, the ability of government systems and public authorities to adapt will determine their survival. If they prove capable of embracing a world of disruptive change, subjecting their structures to the levels of transparency and efficiency that will enable them to maintain their competitive edge, they will endure. If they cannot evolve, they will face increasing trouble.

Impacts on national and international security

The Fourth Industrial Revolution will also profoundly impact the nature of national and international security, affecting both the probability and the nature of the conflict.

• The history of warfare and international security is the history of technological innovation, and today is no exception.
• Modern conflicts involving states are increasingly hybrid in nature, combining traditional battlefield techniques with elements previously associated with nonstate actors.
• As new technologies such as autonomous or biological weapons become easier to use, individuals and small groups will increasingly join states in being capable of causing mass harm.
• This new vulnerability will lead to new fears. But at the same time, advances in technology will create the potential to reduce the scale or impact of violence, through the development of new modes of protection or greater precision in targeting.

The impact on people

The Fourth Industrial Revolution will change not only what we do but also who we are. It will affect our identity and all the issues associated with it: our sense of privacy, our notions of ownership, our consumption patterns, the time we devote to work and leisure, and how we develop our careers, cultivate our skills, meet people, and nurture relationships.

• Also, the revolutions occurring in biotechnology, which are redefining what it means to be human by pushing back the current thresholds of lifespan, health, cognition, and capabilities, will compel us to redefine our moral and ethical boundaries too.

How can we be prepared for the Fourth Industrial Revolution?

• By providing universal access to affordable education and job training.
• By continuing to ensure basic protection for workers as the changes take place. Governments have, along with the private sector, an obligation to strengthen these core protections.
• By modernizing infrastructure. Governments have fundamental responsibilities to build roads, bridges, railways, ports, broadband. And all of this can have a profound impact on economic growth, generating well-paying jobs and bringing opportunity to areas where it does not exist.
• By having a more progressive tax code.
• By expanding access to capital. Existing capital and the tools that support entrepreneurship should be made widely available to people who haven’t had access to it before.

What the Fourth Industrial Revolution means for India

• For India, the Fourth Industrial Revolution brings tremendous opportunities to leapfrog many stages of development, hastening its journey towards becoming a developed economy. In many ways, the Fourth Industrial Revolution is a leveller.
• The technologies being used in India will be the same as those in use in the developed world. Robots, AI, IoT are all technologies transforming the industry in the West and are ready to do the same in India.
• Companies are adopting different elements of the revolution in diverse ways, some gingerly, some in a sure-footed manner. Many have launched pilot projects, while many others have totally migrated some of their business functions to AI-led processes.
• There is much that India has to be worried about too. An overreliance on automation will shrink job creation. Automation and robotics in industrial manufacturing suits countries with low productive populations. But it does not suit countries like India, where 12–13 million people enter the job market every year.
• There is a natural fear of job loss resulting from automation and robotics in India. Repetitive processes are being increasingly automated. Banks in India are already using chatbots and even humanoid robots. HDFC Bank has the Ira robot, which helps customers choose the right service and financial products.
• There are several projections for job losses owing to factors such as automation and consolidation in the market. A report by PeopleStrong says, one in four job losses in India will happen on account of automation.
• The use of data analytics is opening up efficiencies in sectors like agriculture that did not exist earlier. Cargill India, for instance, is allowing thousands of traders to be part of the system by using mobile-based pricing data.
• A report by mobile analytics firm App Annie says India is already the fourth largest app economy. Tim Cook, the CEO of Apple, said more than 750,000 jobs here can be attributed to apps on the Apple IoS platform. Indian developers have created 100,000 apps; registering a growth of 57% over 2016.
• New industry sectors are being created. These have the potential to create work for millions. There is already an industry association for producing and promoting the use of drones in India.

The Way Ahead for India:

• India needs a collaborative effort. It will have to create a long-term ecosystem that trains and educates professionals. India could collaborate with the US, Germany, and the EU. The central government can consider a joint platform between ministries, state governments and industry bodies to create a mission for making the most of the Fourth Industrial Revolution technologies.

Suggestions by Niti Aayog CEO Amitabh Kant

1. There is an urgent need for more industry-academia collaboration and to develop requisite skills in technology.
2.  Introduction of a compulsory apprenticeship programme to encourage hands-on experience on technology as early as higher secondary level.
3. He also suggested fortifying quality, prioritizing investments in innovation and R&D and invest in life-long learning for employees. He urged industry to think big and think global.
4. To effectively embrace digitalisation, the industry has to foster competitive advantage across their value chains, focus on productivity and fill productivity gaps to compete globally.

Conclusion

• In its most pessimistic, dehumanized form, the Fourth Industrial Revolution may indeed have the potential to “robotize” humanity and thus to deprive us of our heart and soul.
• But as a complement to the best parts of human nature—creativity, empathy, stewardship—it can also lift humanity into a new collective and moral consciousness based on a shared sense of destiny.
• It is incumbent on us all to make sure the latter prevails. We should thus grasp the opportunity and power we have to shape the Fourth Industrial Revolution and direct it toward a future that reflects our common objectives and values.

Why in news?

• CMIE and labour Bureau data indicates that India continues to face the jobless growth problem

Jobs scenario in India

• Multiple data sources clearly show that job opportunities in India are, at present, limited, with the average annual addition to regular jobs during 2012-16 falling to 1.5 million from 2.5 million in 2004-12.
• Besides, job creation in India’s organized manufacturing sector experienced a sharp fall in 2012, later recovering only to a level considerably below any prior year during 2006-12.
• Furthermore, the share of regular workers with any form of social security has declined from 45% in 2011-12 to 38% in 2016.

Reasons for Jobless Growth in India

1. India’s focus on higher education:

• Indian Government since the second five-year plan focussed more on higher education rather than basic education (Unlike Southeast Asia). In order to create mass scale manufacturing jobs, the workforce should have some basic skills however in India because the focus was on higher education, we failed to create enough basic skilled workforce required for labour-intensive manufacturing.
• When India adopted economic reforms in 1991, We had a pool of highly educated workforce but we had a shortage of labour force with basic skills,
• This meant that India’s growth story of the last 2 decades was led by Few sectors in Service sector like IT, Banking, telecommunication etc because these sectors required highly educated workers which we had plenty.
• However, these sectors are not labour intensive.  While the share of Service sector increased significantly in India’s GDP, however the share of services in the employment structure remained more or less stagnant.

2. Import-oriented economy

• India did not move from the import-substituting phases of its economic development to an export-oriented development strategy and hence failed to witness a strong growth in the labour-intensive segment of the manufacturing sector.
• If India would have followed Labour intensive goods export-led model like Southeast Asian countries, it would have created many jobs in the MSME sector. Opening up of the economy lead to the availability of cheap capital goods from abroad.

3.Stagnation in manufacturing output and employment and contraction of the labour-intensive segment of the formal manufacturing sector: (Due to)

• Excess rigidity in the formal manufacturing labour market and rigid labour regulations has created disincentives for employers to create jobs
• Industrial Disputes Act has lowered employment in organized manufacturing by about 25% (World Bank Study)
• Stringent employment protection legislation has pushed employers towards more capital-intensive modes of production than warranted by existing costs of labour relative to capital
• Therefore, the nature of the trade regime in India is still biased towards capital-intensive manufacturing.

4. Slow Infrastructure Development

• Infrastructural bottlenecks (especially in access to electricity)
• Lack of backward and forward linkages between agriculture, industry and service sector has failed to create jobs.

5. Other impediments

• Impediments to entrepreneurial growth in small firms (such as high costs of formalisation) along with a long history of small-scale reservation policy which has prohibited the entry of large-scale units in labour-intensive industries.
• The tax incentives, subsidies, depreciation allowance all are solely linked to the amount invested and not to the number of jobs created.
• Sluggish process in education and skill levels of workers.
• Governance failure – no targeted interventions designed specifically for specific sectors and less focus on MSME.

How can we reverse the Jobless growth Phenomenon in India

1. Implement Niti Ayog action agenda

• The Action Agenda has provided several good ideas for job creation, including labour law reforms at the state level, recognizing the difficult national political landscape as well as the wide cross-state variation in the nature of political constraints.
• The AA has also identified labour-intensive sectors, such as apparel, electronics, food processing, gems and jewellery, financial services, and tourism, where employment needs to be encouraged.
• Furthermore, the report emphasizes the role of exports in job creation and recommends establishing coastal employment zones (CEZs), similar to China’s special economic zones (SEZs)

2. An industrial and trade policy is needed.

• The Department of Industrial Policy and Promotion (DIPP) is preparing an industrial policy. National Manufacturing Policy came in 2011, was not implemented fully.
• While the DIPP is preparing the industrial policy document, it is essential that trade policy is consistent with such an industrial policy. Otherwise, the two may work at cross purposes and undermine each other’s objectives.
• Excessive imports have been decimating Indian manufacturing.
• An inverted duty structure has the following features: higher duty on intermediate goods compared to final finished goods, with the latter often enjoying concessional customs duty.
• As a result, domestic manufacturers face high tariffs leading to higher raw material cost at home, emanating from the unfavourable inverted duty structure.
• This has prevented many manufacturing sectors from growing since economic reforms began. This must be corrected.
• The automobiles sector in India faced no inverted duty structure, and has thrived. India has become in the last decade one of the largest producers of vehicles of several kinds in the world now. Electronics faced an inverted duty structure, but due to changes made, electronics manufacturing has shown slow growth.

3. Special packages are needed for labour-intensive industries to create jobs

• There are a number of labour-intensive manufacturing sectors in India such as food processing, leather and footwear, wood manufacturers and furniture, textiles and apparel and garments.
• The apparel and garments sector received a package from the Government of India roughly a year back. The other labour intensive sectors have been ignored.
• The nature of the package will need to be individually designed for each sector defined as quickly as possible.

4. Cluster development

• There should be cluster development to support job creation in micro, small and medium enterprises (MSMEs).
• Most of the unorganised sector employment is in MSMEs, which tend to be concentrated in specific geographic locations.
• There are 1,350 modern industry clusters in India and an additional 4,000 traditional product manufacturing clusters, like handloom, handicraft and other traditional single product group clusters.
• There is a cluster development programme of the Ministry of MSMEs, which need to be funded adequately and better designed to create more opportunities.

5. Align urban development with manufacturing clusters to create jobs.

• The Ministry of Urban Development has a programme called AMRUT (Atal Mission for Rejuvenation and Urban Transformation) aimed at improving infrastructure for small towns. Infrastructure investment by the government creates many jobs.
• The same intervention should be made in towns which have clusters of unorganised sector economic activities.
• Hence an engagement between the Urban Development and MSME Ministries is necessary to attract more investment to industrial clusters and increase non-agricultural jobs.

6. More focus on women participation

• Girls are losing out in jobs, or those with increasing education can’t find them, despite having gotten higher levels of education.
• Secondary enrolment in the country rose from 58% to 85% in a matter of five years (2010-2015), with gender parity.
• Skilling close to clusters is likely to create more number of jobs.
• The problem with skilling programmes has been low placement after skilling is complete.
• The availability of jobs close to where the skilling is conducted will also enhance the demand for skilling.

7. Public investments in health, education, police and judiciary

• This can create many government jobs.
• Public investment in the health sector has remained even in the last three years at 1.15% of GDP, despite the creation of the national health policy at the beginning of 2017.
• The policy indicates that expenditure on health will rise to 2.5% of GDP by 2025.
• Given the state of health and nutrition of the population, it is critical that public expenditure on health is increased immediately.
• In the absence of greater public expenditure, the private sector in health keeps expanding, which raises the household costs on health without necessarily improving health outcomes, because the private sector does not spend on preventive and public health measures.
• Preventive and public health have been in all countries the responsibility of government. More government expenditure in health means more jobs in government hospitals and better health outcomes.
• Next important area should be Revitalising schools. Government schools should maintain education quality on par with private schools. Many new government jobs can be provided if more young people could be trained specially to become teachers for science and mathematics at the secondary and higher secondary levels in government schools.
• The same applies to the police and the judiciary. All the vacancies in Police and judiciary should be filled immediately. More police and a larger judiciary can both reduce crime as well as speed up the process of justice for the ordinary citizen

Conclusion

India needs a new strategy to counter the phenomena of jobless growth. This requires manufacturing sector to play a dominant role. “MAKE IN INDIA” initiative a great step forward which will boost the manufacturing. Complementary schemes like Skill India, Startup India etc can enhance the skillsets and employment generation

The focus of economic policy must be the creation of jobs and creating an enabling policy for youth to take up entrepreneurship and create more jobs in the market. India does not need five companies worth 5000 crores turnover but needs 5000 companies of 5 crore turnover.

What is Island Development Agency (IDA)?

1. The 1382 offshore-identified islands of India hold immense unexploited potential for fostering growth and achieving cohesive socio-economic development of the region in particular and also, the nation as a whole.
2. They can significantly contribute to the GDP by leveraging the gains from promoting infrastructure and tourism on a large scale.
3. Considering this IDA was set up in June 2017 following Prime Minister’s review meeting for the holistic development of islands.
4. The meetings of the agency are chaired by the Union Home Minister. Members of IDA include cabinet secretary, the home secretary, secretary (environment, forests and climate change), secretary (tourism) and secretary (tribal welfare).
5. NITI Aayog has highlighted the elements of holistic development, including key infrastructure projects, digital connectivity, green energy, desalination plants, waste management, promotion of fisheries, and tourism-based projects.
6. With better communication services, Information Technology based and other Micro, Small and Medium Enterprises (MSME) would be promoted in the Islands.

What does it include?

Key Infrastructure projects such as:

• creation of jetties/berthing facilities,
• Roll-on/Roll-off ships;
• Bridges on Andaman Trunk Road;
• Upgradation of Diglipur Airport;
• Construction of Minicoy Airport;
• Modernization of existing Jetty at Kavaratti;
• Augmentation of Satellite Bandwidth from 1.118 Gbps to 2.118 Gbps in Andaman & Nicobar;
• augmentation of helicopter services for Islanders and tourists etc.

Development of IDA

First Meeting

• In the first meeting, directions were given to identify and execute infrastructure and connectivity projects together with provisioning of water and electricity.
• 10 islands namely Smith, Ross, Aves, Long and Little Andaman in Andaman & Nicobar and Minicoy, Bangaram, Suheli, Cherium and Tinnakara in Lakshadweep have been identified for holistic development in the first phase.

Second Meeting

• It reviewed concept development plans and detailed master plans for holistic development of 9 islands.
• These 9 islands include four in Andaman & Nicobar Islands (Smith, Ross, Long, Avis) and five in Lakshadweep (Minicoy, Bangaram, Thinnakara, Cheriyam, Suheli).

Third Meeting

• It reviewed the progress made towards the preparation of Development Plans for identified Islands (four in A&N Islands i.e. Smith, Ross, Long, Avis and five in Lakshadweep i.e. Minicoy, Bangaram, Thinnakara, Cheriyam, Suheli).
• For these Islands, Final Site Suitability Reports have been prepared, Carrying Capacity determined and Environmental zoning carried out to ensure sustainable development.

What makes IDA important?

Maritime Strategic Importance

1. Given the strategic location of Andaman & Nicobar (A&N Islands) and the Lakshadweep Islands and China’s assertive expansionist policy in the Indian Ocean Region (IOR) there is a need to develop critical infrastructure and upgrade the military base in these regions.
2. India’s only tri-service command is established at the A&N Islands at the entrance of the Malacca Strait, the 2.8 km long -world’s most congested choke point, and the primary route for Chinese oil supply.
3. Illicit activities such as Pirates and territorial violations can be curbed if the Islands such as Lakshadweep are strategically developed.
4. Andaman & Nicobar Islands is centre-point for the development of Quad Group’s maritime agenda in the Indo-Pacific Region.

Energy Potential

1. The Islands host an unexplored Exclusive Economic Zone (EEZ) with clearly demarcated boundaries that can be capitalized on in numerous ways.
2. The varied ecosystem can be exploited for its medicinal plants and exotic plant species, sustainable agriculture and horticulture practices conducive to the agro-climatic conditions of the regions can be propagated.
3. The IOR is home to large-scale hydrocarbon which can be explored. Recently India’s exclusive rights to explore polymetallic nodules from seabed in Central Indian Ocean Basin (CIOB) have been extended by five years.
4. This can boost India’s hunt for alternate renewable energy resources so as to meet the energy needs of the nation.

Economic Importance

1. Fisheries, the main occupation of the larger population of these regions, can be given a thrust so as to develop modernized and sustainable inland fisheries and aquaculture ecosystem integrated with the ‘Blue Economy’ vision. Ex. Fishing of Lakshadweep Tuna.
2. Most importantly, the Islands can be developed as prime Tourist Hotspots for not just the country, but also internationally.
3. The pristine beaches, coupled with rich tropical vegetation, can be turned into a more economical and attractive alternative to conventional destinations such as Bali and Maldives.
4. This help in creating many forward and backward linkages and boost the economy of the regions to a large extent.

Trade and Regional Connectivity

1. Indian Ocean Region handles most of the sea trade in the world.
2. The shallow coastline of mainland India has severe impact on trade capacity.
3. Deep water ports can be developed on these Islands thereby paving way for creation of additional service and refuelling stations.
4. Greater connectivity of these islands with South East Asia can be harnessed for India’s Act East Policy.

International Cooperation

1. The 2016 Indo-Japan Joint Statement on Bilateral Cooperation envisioned to develop “Smart Islands” on the line of the ‘Smart Cities’ project.
2. Japanese capital and expertise can be both pioneering as well as beneficial to this endeavor.
3. The development of the Reunion Islands by France can be a guiding example and also opens up the opportunity for prospective collaboration with Paris in implementation of such projects.
4. The positive response by OECD countries in taking on ‘Smart Cities’ projects further demands similar international cooperation.

What hinders the development of Island?

Climate Change

1. Parali Island of the Lakshadweep got completely submerged due to rising sea levels,
2. The vulnerabilities of these Island groups to Tsunamis is a grave matter of concern.
3. Rise in sea temperature and oceanic acidification further intensify coral bleaching.

Restricted Area Permit

1. Recently govt has decided stop the requirement of Restricted Area Permit for foreigners visiting the Andaman and Nicobar Islands to boost tourism.
2. This can pose a threat to the PVTGs such as Jarawas, Ongis and Sentinelese.

Chinese Assertiveness

1. China’s bid of encircling India in the Indian ocean region by various initiatives are greatest threat to India.
2. Chinese development such as Naval base in Djibouti and Hambantota, Sri Lanka pose a greater threat.

Other issues

1. These include delay in the project implementation due to lack of funds.
2. Infrastructural development in on the islands are restricted due to logistical limitations such as lack of developed ports, airports etc. Seamless supply of electricity and potable water is still not achieved in these region.
3. The remoteness of these hinterland currently fails to attract private players due to such problems.

Indian initiatives so far

1. Ship Building and Ship Repairing have been the high priority areas for infrastructure initiatives in the islands.
2. The government has announced laying of Rs, 1,102 Crore worth of submarine optical fiber cable between Chennai and A&N Islands so as to increase telephone and internet connectivity in the region by December 2018.
3. Tri-services military command has also been established in the Eastern Naval Commands at A&N islands . This will help curbing piracy, smuggling and terror activity.
4. Various exercises such as CORPAT, SIMBEX are held to bolster maritime security.

Way Forward: Private Sector Participation

1. The road to development sails through the islands.
2. The high financial costs in such investments create a need for private sector involvement, where their operational and managerial expertise is required to optimally deliver on these projects.
3. Similarly, International best practices can be modified suitably and replicated so as to maximize returns further.
4. Although, the need for civil infrastructure development in Island regions is unquestionable, in the wake of existing geo-strategic position, upgradation of defense facilities is equally important.
5. This will constructively channelize the positive externalities of such assets to enhance the living conditions of entire populace.
6. Due attention needs to be paid so as to not disturb the ecological balance, disrupt local livelihood-activities, and engage all stakeholders in the decision making process while ensuring that sufficient institutions and mechanisms exist for grievance redressal, compensation and rehabilitation.