Fortunately for Indian citizens, the Prime Minister Narendra Modi intends to change that.
The gap between India and its emerging Asian counterpart, China, is significant. While China has created the world’s largest online bazaar and become a global leader in renewable energy, India has only just begun to explore the potential of e-commerce; IT remains out of reach for millions of small and medium-sized businesses; and most citizens remain cut off from the digital economy.
To bring India up to speed, Modi’s government announced a nationwide digital initiative in August: ₹ $1.13 trillion ($19 billion) investment to bring broadband communications to 250,000 villages, provide universal mobile access, expand government services online and enable online delivery of all kinds of services basic.
Needless to say, this will go a long way in advancing India’s e-governance ambitions.
Tech trends are helping Modi’s cause. Rapidly falling costs and increasing performance capabilities of a range of digital technologies, including mobile internet, cloud computing and expert systems, make large-scale adoption a distinct possibility over the course of the next decade, even in relatively poor India.
These digital technologies, along with advances in genomics (supporting agricultural and medical innovation) and unconventional energy (wind, solar, and shale oil and gas), will enable the financial inclusion of hundreds of millions of ‘Indians and will potentially redefine the way services such as education, food allocation and health care are delivered.
McKinsey Global Institute research indicates that by 2025, these factors are likely to contribute at least $550 billion – and up to $1 trillion – to India’s annual income.
Gains would be spread across a variety of industries, even some that currently have low levels of technology adoption.
Existing applications in agriculture, health, education and infrastructure can collectively contribute $160-280 billion to the annual Gross Domestic Product (GDP) and more importantly empower ordinary Indians. Indeed, pedagogical innovations, such as adaptive learning and distance education, could allow some 24 million workers to benefit from more years of education and find a better paid job.
Mobile financial services will enable 300 million Indians to access the financial system, allowing them to build credit.
And precision farming – using geographic information systems and data to guide planting, watering and other activities – can help nearly 90 million farmers increase production and reduce post-harvest losses. harvest, with access to timely market data to bolster their income.
Additionally, some 400 million Indians in poor rural areas can access better health care at outreach clinics, where health workers can diagnose and treat certain diseases using low-cost diagnostic tools. , expert software and online links to doctors.
Finally, by digitizing government services, such as food distribution programs for the poor, India could eliminate the leaks that divert, by our estimates, half of food from intended recipients.
For India to fully exploit the potential of these technologies, it will need to dismantle barriers to adoption.
McKinsey’s Internet Barriers Index for 25 countries places India as part of a group (along with Egypt, Indonesia, Thailand and the Philippines) characterized by medium to high barriers in four key areas: infrastructure, accessibility, incentives and capacity.
Even with low prices for devices and data plans compared to the rest of the world, internet access in India remains out of reach for almost a billion people.
In addition, network coverage and adjacent infrastructure remain insufficient, especially in rural areas. And, although 48% of urban Indians are computer literate, only 14% of rural Indians are able to use a computer effectively.
Indian policymakers should work with the country’s tech industry and other private sector players to implement measures that would enable technology adoption. These include ensuring continued investment in broadband backbone networks, establishing standards for interoperability, and creating an enabling environment for low-cost devices.
In order to spur the growth of online service provision, authorities also need to address broader entrepreneurship challenges, such as the cumbersome procedures for setting up new businesses in India.
Moreover, as the experience of the mobile phone industry in India clearly shows, scaling up for massive impact requires more than start-up innovation; it also requires a regulatory environment characterized by a liberal approach to pricing, manufacturing and distribution.
Sustaining the benefits of technology adoption and innovation will require ongoing investment and adjustment to offset its disruptive effects. For example, the automation of knowledge work – software and systems that are increasingly capable of performing human tasks that require judgment – could affect 19 to 29 million jobs by 2025. Technology can help create new, possibly better jobs to replace lost ones, but only if India’s education and training systems prepare workers adequately.
With thoughtful planning, productive collaboration between public and private institutions, and competent execution, the Indian government can pave the way for technological advancement. The social and economic benefits of a successful strategy cannot be overstated.
© 2014/Syndicate Project
Raghunath A. Mashelkar is Chairman of the Global Research Alliance and Chairman of the National Innovation Foundation of India. Anu Madgavkar is a Senior Fellow at the McKinsey Global Institute.
