9978 - Digital India Still Elusive, World Bank Report Shows - Business World

Digital India Still Elusive, World Bank Report Shows

It is an amazing transformation that today 40 percent of the world's population is connected by the internet. While these achievements are to be celebrated, this is also occasion to be mindful that we do not create a new underclass. With nearly 20 percent of the world's population unable to read and write, the spread of digital technologies alone is unlikely to spell the end of the global knowledge divide - Kaushik Basu, World Bank Chief Economist

The Government of India's flagship scheme Digital India received some sobering news from the World Banks recently released World Development report 2016, titled 'Digital Dividends'. The report finds globally that although digital technology is widespread its aggregate impact has fallen short and the benefits are unevenly distributed.

The report stresses that along with measuring connectivity countries must focus on digital dividends (the broader developmental benefits like employment and a better livelihood for the majority of the population) and the analog complements to digital investments; strengthening regulations that ensure competition among businesses, adapting workers' skills to the demands of the new economy, and ensuring that institutions are accountable.

The main issue right now seems to be that an overwhelming majority has no internet access. India specific data reveals that while almost 80 percent of the population owns a mobile phone almost 1 billion people in the country, or 83 percent of the population, does not have access to the internet. The report also highlights the potential of digital technologies to enhance growth, jobs and better access to public services. Digital access facilitates biometric registration, authentication, and payments in India's National Rural Employment Guarantee Scheme (NREGA), the world's largest workfare program. The benefits in respect of NREGA have been proven with reduction in time for paying beneficiaries going down by 29 percent and leakages by 35 percent.

According to the report, India is currently the largest exporter of ICT services and skilled manpower in the developing world. The Business Process Outsourcing (BPO) industry today employs more than 3.1 million workers, 30 percent of them are women. However, the country's early successes in becoming a global powerhouse for information services have slowed down especially when contrasted with China's achievements.

India had more than 200 million internet users, compared to 665 million in China. Fewer than two out of every five Indian businesses had an online presence compared to almost two-thirds of firms in China. Total spectrum allocated to mobile communications in India is 288 MHz as opposed to 630 MHz in China. The cost of residential broadband service in India is 6-10 times more expensive than in China.

The one area where India surpasses China is in the adoption of digital technology by government through the digital ID program Aadhaar. The Indian government has announced a slew of initiatives in addition to Digital India such as Make in India; Start-up India; and innovative applications of Aadhaar such as JAM (Jan-Dhan Yojana-Aadhaar-Mobile trinity) and Digital Lockers that seek to harness the capabilities of digital technology.

The World Development Report 2016: Digital Dividends is available at http://www.worldbank.org/wdr2016

9346 - India’s digital transformation - The Hindu

February 12, 2016

India’s digital transformation

• KAUSHIK BASU

Reuters

“India has not yet taken full advantage of the digital revolution.” Picture shows a rickshaw puller in Kolkata.

computing and information technology

telecommunication service

The country can only derive the digital dividend of faster growth, more jobs and better services by expanding affordable Internet access to all/

There is little doubt that China has stolen a march on India when it comes to leveraging the Internet. Of the top 20 Internet companies in the world, 13 are American, five are Chinese, with one each for Japan and the United Kingdom. Alibaba, China’s largest e-commerce company, has a market capitalisation that is 25 times higher than that of Flipkart, the largest e-commerce company in India.

Why did India, which has had the remarkable achievement of being the largest exporter of information technology services and skilled manpower among developing countries, fall behind China in digitally transforming its economy? Is it now making a comeback? The World Bank’s recently released World Development Report (WDR) ‘Digital Dividends’ provides some answers.

The WDR finds that digital technologies have spread rapidly throughout much of the world, but their digital dividends — the broader development benefits from using these technologies — have lagged behind. In many instances digital technologies have boosted growth, expanded opportunities, and improved service delivery. Yet their aggregate impact has fallen short and is unevenly distributed.

The report argues that for digital technologies to confer their full benefit on society, it is vital to close the digital divide, especially in Internet access. But greater digital adoption will not be enough. To get the most out of the digital revolution, countries also need to work on its “analogue complements” — by strengthening regulations that ensure competition among businesses, by adapting workers’ skills to the demands of the new economy, and by ensuring that government institutions and others are accountable.

Measuring the performance of India and China with the WDR metrics of connectivity and complements shows why India has not yet taken full advantage of the digital revolution.

The contrast with China

At the end of 2014, India had 227 million Internet users, compared to 665 million in China. Fewer than two out of every five Indian businesses had an online presence compared to almost two-thirds of firms in China.

The cost of a 1 Mbit/s residential broadband service in India is 6-10 times higher than in China. And by most accounts, the digital divide across age, gender, geography and income within India is significantly higher than in China. Thanks to its successful digital ID programme, Aadhaar, India scores higher than China in digital adoption by governments, but the need now is to use the platform that Aadhaar provides more widely and effectively.

Amartya Sen has written extensively on the idea of human ‘capability’. This concept has large applications in the digital world. Unfortunately, not only does India have a higher digital access gap, it also has a bigger digital capability gap. The capability gap, according to the WDR, arises from two main sources: the overall business climate and the quality of human capital.

Despite some commendable improvements in cutting bureaucratic costs faced by small and medium enterprises, India scores considerably below China in doing business indicators. It is important for India to create space for creativity and enterprise and to promote competition.

The slow pace of improvement of the quality of basic infrastructure — expressways, logistics, storage, postal delivery system and reliable supply of electricity — have also hampered the growth of e-commerce in India. And the excessively cautious approach of Indian regulators towards disruptive technological innovations such as mobile money or ride-sharing services has made it difficult for digital start-ups to enter new markets and achieve scale.

While Indian technology workers and entrepreneurs excel in Silicon Valley in the United States, the skills level of the average Indian worker remains significantly behind his or her Chinese counterpart. India has made considerable strides in improving its human capital, but a vast majority of its population still lacks the skills to meaningfully participate in the digital economy.

Around 25 per cent of India’s adult population cannot read and write compared to fewer than 5 per cent in China.

There is also major difference in quality of education: The latest Annual Status of Education Report (ASER) test scores in rural India show that 10 per cent of children aged 16 and below cannot identify single-digit numbers consistently. Fewer than one in five can do a subtraction, performing considerably below their grade level.

Clearly, India’s challenge to becoming a digital economy remains formidable. The government has announced a slew of new initiatives: Digital India; Make in India; Start-up India; and innovative applications of Aadhaar such as JAM (Jan-Dhan Yojana-Aadhaar-Mobile trinity) and Digital Lockers. Successful and accelerated implementation of these programmes can make up for some of the lost time. But India also needs to do more by strengthening the basic foundations of its digital economy.

Making the Internet accessible, open and safe for all Indians is an urgent priority. The cost of mobile phone access is already low by international standards. And with a supportive policy environment involving smart spectrum management, public-private partnerships, and intelligent regulations of Internet markets, the same can be achieved for Internet access. Zero-rated services for mobile data access have become 

controversial, though they could be an intermediate step to fully open and affordable Internet access for the poorest, provided that the choice of selecting services is transparent and inclusive.

Back to basics

Access, however, is only one part of the agenda. An important lesson from the WDR is that even the most sophisticated technologies are no substitute for tackling long-standing shortcomings in other areas — most importantly basic health, education and a regulatory ethos that encourages competition and enterprise.

When the World Bank adopted in 2013 “shared prosperity” as one of its mission goals, it was the first time that combating inequality was being set up as a target. There was a lot of initial opposition because while the battling of poverty seems like a fairly impersonal goal, the goal of “sharing” makes many uncomfortable.

Fortunately, the way the shared prosperity goal is formalised has deep conceptual roots. One of the best accounts is to be found in S. Subramanian’s ‘“Inclusive Development” and the Quintile Income Statistic’, in Economic and Political Weekly and this goal is now increasingly being recognised as vital for a better world. The aim of ending the digital divide discussed in our most recent WDR stems from this same basic idea and is an urgent need of our times.

India wrote one of the early success stories of the digital revolution when it became a global powerhouse for software development and information services. Its Aadhaar digital ID system has become a model for many other countries, helping governments to become more efficient and more inclusive in expanding services to those who had been left behind.

Whether the new initiatives will generate even greater and more widely shared digital dividends — faster growth, more jobs, and better services — depends not only on expanding affordable access to all, but also on making long overdue progress on the analogue complements of digital investments.

(Kaushik Basu is Chief Economist of the World Bank, and is a former Chief Economic Adviser to the Government of India.)

2887 - Kaushik Basu warns inflation shadow on direct cash transfer

Kaushik Basu warns inflation shadow on direct cash transfer

DCT is the Centre's plan of disbursing subsidies directly to the poor through cash transfer into their account

Shine Jacob / Kolkata Dec 19, 2012, 16:24 IST

With the United Progressive Alliance (UPA) government gearing up to implement the direct cash transfer (DCT) scheme, World Bank senior vice president and chief economist, Kaushik Basu, today cautioned that it might create a risk of inflationary pressure on the economy. he also indicated that the DCT should be indexed, in order to adjust with the inflation.

DCT is the Centre's plan of disbursing subsidies directly to the poor through cash transfer into their account, which to start with, will be implemented in 51 districts in 18 states across the country from January 1, 2013.

“Once DCT is implemented, there is a risk of higher inflation as more money is pumped into the system. However, we have enough tools to counter it,” said Kaushik Basu, who happens to be the former chief economic adviser to the Government of India.

As per the plan, government benefits like liquefied petroleum gas (LPG), kerosene subsidies, scholarships and pension payments will be given through the DCT scheme. However, Basu added that this needs to be indexed, so that the poor people are not affected by inflation.

“When you switch over to DCT, you index it. You have to index it, so that it does not erode with inflation. So that the people continue to have the same buying power,” he said, while speaking on the sidelines of the Indian Finance Conference organised by IIM Calcutta campus. Basu later clarified that the net impact of DCT on inflation might be negligible, as it is replacing subsidy.

Through the project, the government aims to disburse subsidies worth Rs 300,000 crore to the targeted beneficiaries. About 29 welfare schemes under various ministries will be transferred through Aadhaar-enabled bank accounts, targetting more than one million households in the country.

Reforms to bring back growth to 9-per cent mark

Backing the Centre's steps like foreign direct investment in retail, DCT, land acquisition bill and banking reforms, the former chief economic advisor said, “These reforms will bring back the growth to 9% mark again in the next three years. However, the next two years will be difficult for us due to the recessionary trends and major economic crisis in Europe.”

Meanwhile, Basu said along with the growth, if inflation can be kept at 5-6%, that will be comfortable for the country. “When you are growing rapidly, we have to live with some inflation. Real growth means you are getting more food more cloth everything which is a cushion against inflation. If we can keep at 5-6%, it will be worth it,” he added.

As per the government data released last week, the wholesale price index (WPI), the main inflation gauge in India, was down to a 10-month low of 7.24%

1357 - NAC members protest against plan panel's move for new poverty line - Source- Times of India

Nitin Sethi, May 24, 2011, 04.12am IST
 

NEW DELHI: A spoon, 25 grams of dal, half a slice of bread, some washing powder and a torn piece of kurta, in total worth Rs 20. That is what three key National Advisory Council members -- Jean Dreze, Aruna Roy and Harsh Mander -- brought for the deputy chairman of Planning Commission Montek Singh Ahluwalia on Monday protesting against the Rs 20 per day person expenditure poverty line it has decided upon as a cut off.

The three NAC members led a group of about 60-70 noisy protestors carrying dozens of packets – all worth Rs 20 – and asked the Planning Commission members to survive a day in Delhi on the contents and shouted slogans waving placards mocking the poverty line

The presence of the trio, who have been locked in an argument against the 'fiscal prudence wallahs' in the government while pushing for an expansive food security bill, marked a scaling up of the battle between the two sides.

They were leading the Right To Food campaigners protesting against how the Planning Commission defines poverty in the country.

The storm had been brewing since the Planning Commission impleaded itself in the case in the Supreme Court and claimed that an expenditure of Rs 20 per day on essentials for those living in urban areas and Rs 15 for those living in rural India was enough to keep them out of poverty and, therefore, out of government's social safety net.

The poverty line of Rs 20 works out from the Rs 578 per month per capita expenditure Planning Commission considers ample for a city dweller to survive on. This, as per their report, includes Rs 31 a month on rent and conveyance, Rs 18 a month on education, Rs 25 a month on medicines and Rs 36.5 a month on vegetables. Anyone spending a paisa more than this is officially not poor.

The three would have been well aware that their presence at the protest would mark a public declaration that they were not backing off from the confrontation with the Prime Minister's Office and the Plan panel, the latter being as determined that food subsidies have to be kept low despite the food security bill.

Earlier the apex court too had suggested to the government to relook at whether spending Rs 20 kept people well fed and above the poverty line.

When the protestors gathered at Yojna Bhawan they were whisked away by the police and later released. The Plan panel members refused to meet them but later in the evening the deputy chairman met 15 of them which included Jean Dreze.

Montek got his packet of goodies. The gathering handed over the Rs 20 packets -- including combs, a little dal, some rice grains, a band aid, and other essentials -- for his colleagues as well. But he stuck to his position, said one of the protestors who got to meet Singh. He instead suggested they meet Kaushik Basu, the chief economic advisor to the finance ministry. Basu has made a strong pitch for dismantling the grain distribution system and shift to cash transfers.

The meeting only produced one result – both sides came out sure that the other is not going to budge from its position anytime soon.