India is on the path of digitalization that is different from China and US

Ira Singh
Khabar Khabaron Ki,15 Mar’24

New Delhi. In the realm of digitalization, India is carving out its distinct path. One that diverges from the trajectories of tech giants like China and the United States. As the world moves swiftly towards an AI-driven future, India stands at a pivotal juncture where it must harness the power of artificial intelligence (AI) to propel itself onto the global stage.

While India may have made a mark in the software services exports, it has lagged a bit in terms of the adoption of artificial intelligence (AI), Soumitra Dutta, Dean of Oxford University Dutta quoted as saying, a professor of Indian origin, says India has to now focus on building a world-class AI infrastructure if it wants to leverage the real potential of AI and automation.

Unlike China’s top-down approach marked by state-led initiatives and the United States’ dominance through private sector innovation, India’s digital journey is characterized by its diverse ecosystem of tech startups, burgeoning entrepreneurial spirit, and government initiatives that foster innovation and inclusivity.

However, amidst this digital evolution is a crucial realization dawning upon policymakers, industry leaders, and technologists alike – the imperative of nurturing a world-class AI infrastructure in the country. With AI poised to revolutionize industries ranging from healthcare and agriculture to finance and manufacturing, the stakes are high for India to position itself as a frontrunner in this race for technological supremacy.

Moreover, a concerted effort towards AI infrastructure development holds the promise of addressing pressing socio-economic challenges plaguing the nation. From healthcare delivery and education accessibility to agricultural productivity and urban planning, AI-powered solutions can catalyze inclusive development and bridge the digital divide.

Where does the world especially the developing economies stand on AI adoption, according to experts

Experts weigh in on the current state of AI adoption worldwide, shedding light on the progress made by developing economies and the challenges they face in harnessing the full potential of AI.

Global Landscape:
Developed nations such as the United States, China, and several European countries have been leading in AI adoption, leveraging advanced technologies and robust infrastructure to drive innovation and economic growth. These nations boast thriving AI ecosystems characterized by substantial investments in research and development, a skilled workforce, and supportive regulatory frameworks.

Developing Economies’ Progress:
While developing economies have historically lagged behind their developed counterparts in AI adoption, recent years have witnessed significant strides in this domain. Countries across Asia, Africa, and Latin America are recognising the transformative potential of AI and investing initiatives to foster AI-driven innovation and development.

India, for instance, has emerged as a key player in the global AI landscape, leveraging its vast pool of technical talent and burgeoning startup ecosystem to drive AI adoption across sectors such as healthcare, agriculture, and finance.

Similarly, nations like Brazil, Nigeria, and Vietnam are making concerted efforts to embrace AI technologies to address pressing socio-economic challenges and drive inclusive growth.

Where does the world stand on AI adoption, especially the developing economies?

In the fast-paced world of artificial intelligence (AI), the global landscape is witnessing a profound transformation, with countries across the spectrum racing to adopt AI technologies and integrate them into various sectors of their economies. While developed nations have been at the forefront of AI innovation and deployment, the journey for developing economies presents a unique set of opportunities and challenges.

Global AI Adoption Trends:
Developed nations, including the United States, China, and several European countries, have spearheaded AI adoption, leveraging advanced technologies, robust infrastructure, and significant investments to drive innovation and economic growth. These nations have established thriving AI ecosystems characterised by cutting-edge research, a skilled workforce, and supportive regulatory frameworks.

The Rise of Developing Economies:
In recent years, developing economies have been increasingly recognizing the transformative potential of AI and are actively working to integrate these technologies into their socio-economic fabric. Nations across Asia, Africa, and Latin America are embracing AI to address pressing challenges and drive inclusive growth.

Countries like India, Brazil, Nigeria, and Vietnam are investing in initiatives to foster AI-driven innovation across sectors such as healthcare, agriculture, finance, and education. These nations are leveraging their demographic dividends, burgeoning startup ecosystems, and government support to propel AI adoption and development.

Challenges Facing Developing Economies:
Despite the progress made, the developing economies encounter significant hurdles in their AI adoption journey. Challenges include limited access to technology and infrastructure, inadequate funding for research and development, and a shortage of skilled professionals proficient in AI and related fields.

Moreover, concerns regarding data privacy, ethical AI deployment, and regulatory frameworks pose additional challenges for developing economies seeking to leverage AI technologies effectively.

Opportunities and Potential:
Despite these challenges, experts highlight the opportunities AI presents for developing economies. are immense. AI technologies have the potential to drive productivity gains, enhance service delivery, and unlock new sources of innovation and growth.

By harnessing AI effectively, developing economies can leapfrog traditional development pathways and accelerate progress towards achieving their socio-economic objectives. Moreover, AI can play a pivotal addressing pressing challenges such as healthcare accessibility, agricultural productivity, and infrastructure development.

The Way Forward:
To capitalize on the potential of AI, developing economies must prioritize strategic investments in AI infrastructure, talent development, and supportive policies. Collaboration between governments, industry stakeholders, academia, and international organizations is essential to drive AI adoption and ensure its benefits are realized equitably.

How can we be so certain that AI won’t create bigger economic gaps between the developed and developing world?

As artificial intelligence (AI) continues to reshape economies and industries worldwide, concerns have emerged regarding its potential impact on widening economic disparities between developed and developing nations. While AI presents opportunities for innovation and growth, there are valid concerns about its implications for employment, skills development, and access to technology, which could exacerbate existing inequalities.

The Promise and Peril of AI:

AI technologies hold immense promises for enhancing productivity, optimizing processes, and driving innovation across sectors. Developed nations, with their advanced technological infrastructure and skilled workforce, are well-positioned to capitalize on these advancements, potentially widening the economic gap with developing nations.

Employment Displacement and Skills Gap:

One of the primary concerns is the displacement of jobs due to automation by AI. While AI may create new job opportunities, there is a risk that developing economies, with their reliance on labour-intensive industries, may struggle to adapt to this technological shift. This could lead to job losses and exacerbate unemployment rates, particularly among low-skilled workers.

Access to Technology and Resources:

Another factor contributing to potential economic disparities is unequal access to AI technology and resources. Developed nations have greater financial resources and technological infrastructure to invest in AI research, development, and deployment. In contrast, developing nations may face barriers such as limited access to high-speed internet, insufficient funding for AI initiatives, and a shortage of skilled professionals.

AI’s Potential to Widen Economic Disparities:

Despite its promises of efficiency and productivity, AI has the potential to exacerbate existing economic disparities. Developed nations, with their advanced technological infrastructure and skilled workforce, may reap the lion’s share of AI’s benefits, leaving developing countries at a disadvantage. Job displacement due to automation, unequal access to technology and resources, and skills gaps could further widen the economic chasm between nations.

Like, for the last 20 years and what we have seen from the data is that the digital divide actually has increased … let us take the mobile phone as a good example. Today, everyone has a mobile phone. But the people who have more education, more money, and better network are able to make more money and more value out of the mobile phone than someone who is less educated, has less money and has got a smaller set of networks.

Considering this, isn’t India, a developing economy, in a peculiar situation because it is adopting technology fast and its economy is also doing well?
India is on a third path of digitalisation. It is not the Chinese path, not the American path; it is its own path, which is very interesting,say experts. And the question now is that it has to integrate AI into the third path. Because right now, the third path does not really have AI integrated into it. Traditionally, it is for identity verification, it is for some kind of financial transaction that is now getting tested for some other domains like commerce and all that, but not yet fully. So, I think what India has to do is leverage this third path and build out the AI infrastructure in the country because India cannot rely on these Western multinationals to build out the AI infrastructure.

That has to come from the India Stack architecture because the reality is India does not have any AI company

India’s Accelerated Adoption of Technology:
India stands out as a developing economy that has embraced technology at a rapid pace, leveraging it to drive economic growth and development. With initiatives such as Digital India and Make in India, the country has made significant strides in digitization, e-governance, and technology-driven innovation. The proliferation of smartphones, increasing internet penetration, and a burgeoning startup ecosystem are testament to India’s commitment to technological advancement.

India’s Peculiar Situation:

India’s rapid adoption of technology coupled with robust economic performance, places it in a peculiar situation within the global AI landscape. While the country stands to benefit from AI’s transformative potential, there are concerns about its impact on various socio-economic factors, including employment, inequality, and access to opportunities. India’s large population, diverse workforce, and complex socio-economic dynamics add further complexity to the equation.

Addressing Economic Disparities:

To mitigate the risk of widening economic gaps India must adopt a multi-faceted approach that balances technological advancement with inclusive growth strategies. This includes:

Prioritizing Inclusive Development:

India should focus on inclusive development policies that ensure the benefits of technology reach all segments of society, particularly marginalized communities and rural populations.

Investing in Education and Skills Development: The government must prioritize investments in education and skills development to equip the workforce with the necessary skills to thrive in the digital economy. This includes promoting STEM education, vocational training programs, and lifelong learning initiatives.

Promoting Innovation and Entrepreneurship: India should foster a conducive environment for innovation and entrepreneurship, supporting startups and small businesses to leverage AI technologies for growth and competitiveness. This includes streamlining regulatory processes, providing access to funding, and fostering collaboration between industry, academia, and government

AI taking up many jobs and creating an imbalance

As artificial intelligence (AI) continues to advance, concerns are mounting about its potential to disrupt traditional employment sectors, particularly in developing nations like India, where a significant portion of jobs are generated by the agriculture sector and Micro, Small, and Medium Enterprises (MSMEs). The rapid adoption of AI technologies in these sectors raises questions about the potential imbalance it may create for the economy.

The Role of Agriculture and MSMEs in India’s Economy:
India’s agriculture sector remains a crucial pillar of the economy, employing millions of people and contributing significantly to GDP. Similarly, MSMEs play a vital role in job creation and economic growth, accounting for a significant portion of industrial output and employment.

AI’s Impact on Jobs:
The integration of AI technologies such as automation, robotics, and predictive analytics in agriculture and MSMEs has the potential to streamline operations, improve productivity, and reduce costs. While this can lead to increased efficiency and competitiveness, there are concerns about the displacement of jobs, particularly for low-skilled workers employed in these sectors.

Imbalance in the Economy:

The widespread adoption of AI in agriculture and MSMEs could potentially exacerbate existing imbalances in the economy. Job losses in these sectors could lead to increased unemployment and underemployment, particularly in rural areas where alternative employment opportunities may be limited. This could further widen the gap between urban and rural areas, exacerbating socio-economic disparities.

How does AI impact a country’s GDP?

Artificial intelligence (AI) has emerged as a transformative force reshaping economies and societies worldwide, with profound implications for a country’s Gross Domestic Product (GDP). As nations increasingly integrate AI technologies into their industries and governance, understanding the complex dynamics of AI’s impact on GDP becomes imperative.

Driving Economic Growth Through Innovation:
AI catalyzes innovation, driving productivity gains, efficiency improvements, and new business models across sectors. By automating repetitive tasks, optimizing processes, and unlocking insights from data, AI fosters a more dynamic and competitive economy, leading to higher productivity levels and ultimately contributing to GDP growth.

Enhancing Productivity and Efficiency:

AI technologies, such as machine learning, predictive analytics, and robotics, enable businesses to streamline operations, reduce costs, and enhance decision- making capabilities. This increased efficiency translates into higher output per worker and a more productive workforce, contributing positively to GDP growth.

Enabling New Industries and Markets:
AI fuels the emergence of new industries and markets, creating opportunities for economic diversification and expansion. From autonomous vehicles and precision agriculture to healthcare diagnostics and fintech, AI-driven innovations spawn new sectors that generate additional economic activity and contribute to GDP growth.

Addressing Societal Challenges:
AI has the potential to address pressing societal challenges, such as healthcare delivery, education accessibility, and environmental sustainability, thereby fostering inclusive growth and development. By optimizing resource allocation, improving service delivery, and enabling personalized interventions, AI-driven solutions contribute to overall well-being and human capital development, which in turn positively impact GDP.

Navigating Disruptions and Challenges:
Despite its transformative potential, AI adoption also presents challenges and disruptions that may impact GDP. Job displacement due to automation, skills mismatches, and unequal distribution of AI benefits can hinder inclusive growth and exacerbate socio-economic inequalities, potentially dampening GDP growth.

By embarking on this journey towards building a world-class AI infrastructure, India can not only enhance its global competitiveness but also chart a path towards inclusive growth, innovation, and prosperity for all its citizens. As the digital landscape continues to evolve, India has the opportunity to shape its destiny and emerge as a beacon of AI-driven progress in the 21st century.