Digital India Initiatives

[op-ed snap] Jobs growth: Digitally-enabled mass services to be game changer

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Mains Paper 3: Science & Technology | Awareness in the fields of IT, Space, Computers, robotics, nano-technology, bio-technology and issues relating to intellectual property rights.

From UPSC perspective, the following things are important:

Prelims level:Internet of things, blockchain tech, big data, etc.

Mains level: Importance of digital technology in creating growth and jobs.


NEWS

CONTEXT

Digital technologies have the same potential to transform the paradigm of economic growth and jobs through mass services, and India is well positioned to lead this paradigm shift as England, the US and China had done earlier.

Nature of revolutions in past and present

  • In the last 150 years, the world has seen three industrial revolutions starting with the steam engine in the 19th century, mass manufacturing in the mid-20th one and the internet in late 20th century.
  • Now we are embarking on the fourth industrial revolution led by digital technologies which will once again reshape the paradigm for economic growth and job.

What is the mass production?

  • Mass production refers to the production of a large number of similar products efficiently and typically is characterized by some type of mechanization to achieve high volume, detailed organization of materials flow, careful control of quality standards and division of labor.

Potential of digital technologies as mass production

  • Digital technologies have the same potential to transform the paradigm of economic growth and jobs through mass services, and India is well positioned to lead this paradigm shift as England, the US and China had done earlier.
  • Like mass manufacturing technologies, digital technologies dramatically alter the cost-price equation of services which can lead to the creation of a virtuous cycle of growth, competition, investments and new jobs.

Ways to create growth

  • Digital technology does this in four different ways. First, it drives productivity. For example, large asset managers, by leveraging the digital technology stack, have reduced customer acquisition and operations costs by 10-100 times.
  • Secondly, it has the unique characteristic of allowing ‘fractionalisation’ or in consumer vocabulary, ‘sachetisation’, i.e, breaking down the service into small consumption offers.
  • The third is its unique characteristic to allow integration of physical and digital assets and processes to drive down price, induce consumption and grow the market, e.g, taxi aggregators or e-commerce.
  • Finally, the digital and digitally-enabled businesses also spur innovation by entrepreneurs to find new value creation opportunities through the exploitation of the power of data and analytics across the value chains.

Factors contributing to India being a leader in digital services growth

  • The first is the huge unmet demand for services and a decent starting position in service sectors.
  • India has both, with services being the largest part of its economy, unlike other developing countries, but still with huge unmet demand existing across sectors, especially health, education, financial services, logistics and transportation, government and municipal services, tourism, and agricultural services.
  • A world-class public digital infrastructure as the backbone of mass service sectors, as high quality public physical infrastructure like roads, ports, and airports was the backbone of the mass manufacturing industry.
  • India has a world-leading starting position on this front with its digital stack consisting of Jan Dhan (banking for all), Aadhaar (digital identifier for all), and mobile connectivity, and public applications like e-KYC (for e-authentication), digi-locker (for digital storage), e-signature (digital signature recognition), BHIM (a national payments gateway).
  • Together, they constitute a comprehensive digital architecture which offers open APIs as public infrastructure which private and public enterprises can integrate into their digital platforms to transform the cost-price equations of a wide range of services.

Interventions that are needed to be  taken

  • The first is setting standards for data flows which are the backbone of any service offering—in terms of both interoperability and privacy.
  • Secondly, a regulator is required which has the technical skills and understanding to develop and regulate the revenue sharing arrangements between partners in the digital ecosystem to create an efficient market.
  • Finally, a public policy case can be made for creating societal digital platforms for all public goods like education and health and which are offered for free for the development of business solutions by entrepreneurs.
  • GSTN can be one such powerful public digital platform which, of course with necessary privacy protections in place, can help entrepreneurs develop truly innovative financial products which can, for example, solve the huge challenge of funding faced by small enterprises.

 

Examples of mass service Success

  • We have experienced it in India to drive growth and create new jobs in the telecom sector after it was liberalised in the mid-1990s. At that time, the price of a phone call was over Rs 16 per minute and the total subscriber base was just above 1 million. As the cost per minute fell below Rs 1 (currently it is Rs 0.19), the number of subscribers expanded exponentially (today we have over 1.13 billion today) showing the scale of unmet need in the market.

Conclusion

The twenty-first century will see the emergence of mass services as the driver of economic and jobs growth, much as mass manufacturing did in the twentieth. India has a great starting point to be an early leader in this fourth industrial era. Whether we grasp this opportunity or lose the plot, as we did with the third industrial transformation (internet-driven low-cost manufacturing), only time will tell.

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