Closing the digital divide – The Financial Express

By Ejaz Ghani & Saurabh Mishra

Related posts

EXCLUSIVE – Crypto giant Binance controlled ‘independent’ US affiliate’s bank accounts

June 5, 2023

Why investing just to save tax may be bad for you

June 5, 2023

The importance of digital revolution in economic growth, job creation and human development has grown exponentially. While the Industrial Revolution was a marathon run, the digital revolution is turning out to be a sprint. India has already made the big leap in digital revolution, as the aggregate number of internet users in India exceeds the aggregate number of internet users in some developed economies. It has produced the CEO of Google and sent millions to the Silicon Valley. India shows up on top of artificial intelligence (AI) skill penetration across many sectors in online job platforms.

However, despite this progress, India’s digital divide has remained deep and persistent. It is multidimensional, and growing across states, within states and across gender groups. This digital divide is expected to worsen in the future with the onset of the new digital revolution, which is in AI, and which will unleash a bigger wave of digital change. Unfortunately, most developing countries, including India, lack the investments to benefit from the new digital revolution.

India’s digital divide remains huge as more than 400 million people still have no access to the internet. Spatial divide is also huge, with the internet density in rural areas, where more than 60% of the people live, is still low at 25% compared to the internet density in urban areas (90%). The digital divide is also big across the leading and lagging regions, with states like Bihar and Uttar Pradesh with very low internet use density. Gender digital divide is also huge within India, with far fewer women with access to mobile phones and internet services. India’s digital sectors still account for less than 10% of GDP, which is low compared to other emerging economies. While e-commerce revenue has grown exponentially globally, it remains at less than 5% of trade in India, and more than 80% of all retail transactions are still made in cash.

India stands to gains a lot from the digital revolution, if it can invest more and develop the digital ecosystems in sectors such as agriculture, education, energy, healthcare and logistics. Digital technologies can also create significant value in areas such as government services—subsidy transfers and procurement—and can improve labour markets, and reduce fragmented job market in the informal sector that employs a majority of the labour force. A key challenge is how to scale up digital investments.

First, policymakers will need to increase investments to scale up access to reliable and less erratic electricity supply, which is the key to a digital foundation. Second, a lot more needs to be done to improve the digital data and ecosystems—the ease with which people can connect, collaborate, transact and share information. Improvements in digital ecosystems can improve productivity of farmers, who lack data on soil, weather, storage, logistics and digital land records that enable them to borrow loans and access crop insurance. Improved digital ecosystems can help with the expansion of telemedicine that can reduce the shortage of medical professionals in rural areas and smaller towns.

Digital technology can play a key role in improving access to the education system, and create affordable and effective education and training programmes at a larger scale. Online learning has skyrocketed globally during the Covid-19 pandemic, but most of the digitally connected children live outside India. There are creative solutions to help bridge network connectivity gaps, and address high data costs by offering non-streaming option for school education content, and promoting on-demand learning platform for creative and digital professionals. Closing the digital educational gap also requires reskilling teachers, and investing more in teamwork and communication. Local content applications will need to be developed in local languages, so that they can be understood by local people.

The economic and social impact of the digital revolution will depend on scaling up digital investment from billions to trillions to expand digital reach, digital depth and digital value. The current global glut in saving, and expected high returns to investments due to India’s young population, demographic dividend and a rising middle class, provides an unprecedented opportunity to attract private investments. Digital dividend and demographic dividend go together, hand in hand.

Public and private partnership in digital technology infrastructure—data storage, data centres and content hosting infrastructure—will need to be scaled up to connect people and cities. Large-scale and cost-effective digital solutions, such as broadband technologies, already exist that are appropriate for rural areas. Compute capabilities are driving progress in AI. For example, the time to train object detection task like ImageNet to over 90% accuracy has reduced from more than 10 hours to a few seconds, and the cost declined from over $2,000 to less than $10 within the span of the last three years. In order to enable inclusive AI-based growth, public policy should aim to provide broad-based access to compute capabilities (GPUs and TPUs) for skilled aspiring scientists across universities across the nation.

Concerns of ‘digital colonialism’ have been raised that a few large corporations are beginning to dominate the digital field. In the past, a free market approach was seen as the solution, but the market-based approach has now started to shift towards to a more regulated approach. This transition towards a more regulated approach—how data can be collected, stored and processed—at national and global levels is still at an early stage and raises many societal and ethical questions. Drawing the line between self-certification and regulation remains a key challenge, as private enterprises explore internal ethics boards and external audits, and governance frameworks. Global regulatory frameworks on cybersecurity, AI, digital trade and more are still evolving. There is no one-size-fits-all solution, as there are different options for operationalising and implementing digital regulations at national and global levels. The key is that regulations do not impede the nature and pace of innovation.

India will benefit from establishing a national digital institution to promote investments in digital infrastructure and build strategic partnerships with the private sector, especially the Silicon Valley and European centres of excellence. The existing global multilateral institutions—the OECD, the World Bank, the IMF and the WTO—will also need to expand their resources devoted to digital development, as this will help achieve Sustainable Development Goals at a faster pace. There is a role for partnerships between Indian and foreign researchers to design AI systems for the Indian context to reduce the digital divide.

A global digital revolution will benefit when all countries collaborate, and not look inwards, or distance themselves from each other. Increased global digital cooperation is very important and far greater than global cooperation in goods trade, given the intangible nature of digital assets. The importance of global digital collaboration has become greater following Covid-19, which has shown how interconnected we have become as a global society.

Ghani is former lead economist at the World Bank, and lecturer in Economics at the Oxford University. Mishra is CEO of TaiyōAI, researcher at Stanford University, and former economist at the World Bank and the IMF. Views are personal