The first Modi 2.0 budget has been called cautious, incremental and lacking a blueprint; Will India be able to implement the right programmes at the speed required to remain competitive?
Finance Minister Nirmala Sitharaman presented the Modi government’s budget for 2019/2020 to India’s parliament on Friday, in a statement full of vision for the future, drawing heavily on the themes from the national Economic Survey 2018–19 released last week. In a speech that aimed to garner popular appeal, Sitharaman prioritised infrastructure, digital economy and job creation. You can review the government’s online presentation here.
As expected, the new budget has received both praise and criticism, while inspiring some tough questions, depending on the economic and political leaning of the commentators. For the technology and outsourcing industries though, the messaging was very favourable, from skilling-up Indian talent on emerging technologies, to providing foreign technology firms tax incentives, setting up a commercial space agency to help drive a space industry and even a new ‘Startup India’ TV channel.
Critics accuse the budget being too vague and vision-focused, without any real blueprint for progress. India’s Prime Minister Narendra Modi had previously set a $5 trillion target for the economy by 2024/2025, which gives the country five years to grow from $2.7 trillion: a tall order in anyone’s book. Never at a loss for words, Indian National Congress MP Shashi Tharoor dismissed the 2019/2020 budget as ‘incrementalism’, with no road-map of how to grow a $5 trillion economy.
India’s IT and services economy has been a global success. However, in many respects India hasn’t re-positioned itself for Industry 4.0 and the technology sector acknowledges that it is no longer ahead of the curve. The IT and BPO/BPM sector — forecast to grow to $350 billion per annum by 2025 — has been outpaced by China in artificial intelligence and IoT and is being undercut by the Philippines on labour costs. Now, as big data drives exponential demand for analytics services, India can’t afford to slip behind in the AI race.
India appears behind the U.S., China, Japan, the United Kingdom, South Korea, Germany and Canada in the new Cambrian AI Index, which measures countries’ AI readiness, comparing strategies and development environments. India also follows China, the U.S., Germany, Japan, Canada and the United Kingdom in the McKinsey Global Institute’s AI Readiness Index.
Perhaps the most compelling message of the week was the government’s plans to update Skill India to develop more AI, machine learning, IoT and blockchain talent for the national and global economy. India’s national software association, Nasscom, has estimated that 40% of India’s total workforce will need to be reskilled over the next five years for the digital economy.
Skilling up India’s youth to equip them to take up high-paying jobs at home and abroad is a powerful message for any country, but in particular for one that has 660 million people under 25 years of age. However, the devil is in the detail and this naturally begs the obvious question: how will the new programmes be developed and rolled-out?
Meanwhile, in other news this week, Guangzhou city in China’s Guangdong province will begin offering AI courses in 100 primary and middle schools starting this September. According to the city’s bureau of education, all primary and middle schools have AI courses in their regular curriculum by 2022.
India will need to move quickly.