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Digital India progress report: Taking stock of India’s digital initiatives

From smart cities and Aadhaar to startup India and digital payments – we take a look at how the various Digital India initiatives have fared so far, and what lies in the future

In a country like India, where the problems hinge more on mindset and less on policy, digitisation has unanimously been dubbed as a very ambitious task. For years, India has had a familiar set of problems – poverty, illiteracy, sanitation, joblessness, etc.

Digitisation demands a basic level of digital literacy from people who might not even know how to read a word in their native language, even though almost all of them have cell phones in even the most remote areas.

The latest India Exclusion Report 2016 (IER), suggests that despite the government’s thrust towards digital in the country, it isn’t producing the results we’d hoped for, mainly because of connectivity and infrastructure issues.

To list out the major highlights put forth by scholars and policy analysts in the IER report, it would suggest that the digital pathway of the country is faced with several roadblocks.

While the initiatives taken under the digital India initiative are laudable, bridging the digital divide is of vital importance, experts believe.

“One must keep in mind that roughly only a third of the country has access to the internet. Given the size of India’s population, the infrastructure needed for digitisation of the country is woefully inadequate,” says Shalini Narayan, Communications Advisor, Society for Promotion of Youth and Masses, a national organisation working towards community mobilisation, healthcare and socio-economic development.

Digital India

The IER 2016 suggests that the goals set during the launch of the Digital India initiative in July 2015, are nowhere close to be achieved. The plan to build the National Optic Fibre Network (NOFN) to provide broadband connectivity to 2,50,000 Gram Panchayats in three phases seems to have lost track now.

About 37 per cent of the network has been laid so far, and of the Gram Panchayats connected to NOFN, only 13 per cent have internet access. The report further adds that the government seems to have no clear direction to go with the NOFN and a continual tweaking of the deadline, is adding to the problem. Recently, the Union IT minister Ravi Shankar Prasad said that the entire target of connecting Gram Panchayats will be completed by mid-2018. If so, it would be a very successful project, given that even developed countries like Australia have struggled to build a fibre-optic backbone for the country in twice that time!

Indias digital landscape
The digital shift is inevitable

According to estimates, the cost of internet is a bit too expensive for at least 1.063 billion people in a population of 1.3 billion. Remember, we have over 25 per cent of rural India, and about 13 per cent of urban India living below the poverty line.

The digital locker facility, which lets people store their documents in the cloud, is a good concept and an efficient system, but is susceptible to cyber threats. Currently, loss due to documented cyberattacks stand over ₹25,000 crores in India.

The Union IT Minister has also added that the country’s digital economy is set to grow from $400 billion to $1 trillion in a mere five to seven years. It’s a grandiose target, and we will have to wait and watch, but we all know that our IT infrastructure needs to improve drastically to achieve it.

Aadhar

As of June 2017, over 1.1 billion people have a number attached to their identity. Aadhar, the Hindi word meaning “foundation” is going on to become the basis of every aspect of our lives, but is also one of the most contested of government policies, especially because it seemingly infringes on an individuals’ privacy. While the idea of Aadhar to establish accountability, exclude middlemen and curb corruption may seem perfectly justified, it cannot work without a secure cyberspace. Just recently a security lapse in about 210 state and government websites meant that the Aadhar details of beneficiaries registered with them was accessible publicly. While the government claimed that there was no leak from The Unique Identification Authority of India (UIDAI), such breaches shake the common man’s trust in Aadhar.

Many argue that Aadhar should be made mandatory, and eventually become the only identity proof of an individual in India, whilst others have gone to court, and the Supreme Court is currently considering whether the right to privacy is fundamental or not.

“The availability of large datasets of Aadhaar numbers along with bank account numbers and phone numbers on the Internet increases the risk of financial fraud,” a report by Centre for Internet and Society said.

The Supreme Court, in March this year had ruled that Aadhar cannot be made compulsory for welfare schemes like Mahatma Gandhi National Rural Employment Guarantee Scheme and Employees Pension Scheme.

“I feel concerns regarding privacy surrounding Aadhar are quite valid. Though data security for Aadhar has not been breached so far, it is a very real issue of concern as not only can data be misused by those seeking to monetise personal information about Aadhar users, but there is even the threat of identity theft,” says Narayan, who has done extensive research on digital initiatives of the government.

Despite the apparent doom and gloom being portrayed, a digital identity for citizens is a must as the world itself moves almost entirely digital over the next few decades, and it’s no mean feat for a country like India to be leading the world in this effort.

Smart cities

Launched in June 2015, the Smart Cities Mission looked to transform the country, especially rural areas, with a major thrust to technology and cloud services. The project entails not only economic development in the country but also enough job opportunities in the manufacturing and service sectors. The plan to build 100 new smart cities by 2022, entails schemes which will focus on slum rehabilitation, and improving urban services like water supply, waste management, urban mobility, among others. This especially gains importance when you consider that 70 per cent of India’s population is expected to live in cities by 2030.

Indias digital landscape
Redeveloping rural sector through technology

“There is no ‘one shoe fits all’ kind of a solution. Smart is not only better technology as perceived today. To be truly successful, smart cities must be design driven through active community participation that takes into consideration cultural diversity as well,” Nidhi Gupta, Project Manager at Environmental Design Solutions Global told India Infoline.

So far, 90 cities have been listed out for redevelopment, with a budget of ₹1,900 billion for the mission and it continues to grow. The project is attracting investments from both private and public sectors, including investors from abroad. But some of the basic features of smart cities including proper sanitation, standard housing, green cover, IT connectivity, solid waste management, etc., are only few parameters that must be met to call a city ‘smart’. While the dream of achieving these technologically-advanced living blocks may seem a little distant, experts believe that cities must be made liveable first, which would mean citizens are empowered to spearhead the changes in urban planning.

Digital Payments

In a world where digital is the general trend of living, digitisation as a route to development doesn’t seem too implausible. But in India, where the general attitude is to hoard cash or gold at home, digital payments and digital cash seem a tough act to master. In fact, demonetisation, one of the biggest financial exercises undertaken in the history of our country (or the world?), managed to change people’s attitudes about cash, at least for a while.

Indias digital landscape
Digital Transactions changing the monetary landscape

While digital transactions grew by about 55 per cent in 2016-17, the share of digital payments fell by about 3 percent in June as compared to the previous month.

“The slight fall should be a momentary blip as the leading drivers of digital payments are bound to go up through initiatives like automated toll collection, digital transit payments and new convenient modes of payments for service,” Vivek Belgavi, fintech leader at consulting firm PwC told ET.

However, with the current pace of remonetisation, financial transactions may go back to the pre-demonetisation levels. Government data suggests that the present currency in circulation is 85 per cent of that before November 8, when high-value currency notes of ₹500 and ₹1,000 were discontinued in a bid to curb the rampant corruption in the country.

“The notes in circulation as on June 23, 2017 stood at ₹15,074.43 billion as against ₹17,540.22 billion as on October 28, 2016,” Minister of State for Finance Arjun Ram Meghwal recently said in a written reply to the Lok Sabha.

Demonetisation, as per an SBI report, helped India take a three-year leap forward in projected digital payment growth.

“If demonetisation had not happened, it would have taken 3-years more for credit and debit card transactions on PoS terminals to reach the current level of ₹700 billion (assuming a yearly growth rate of 25 per cent),” Soumya Kanti Ghosh, analyst of SBI, had stated in a report.

With global giants such as Google, Facebook and WhatsApp looking to come on board the UPI segment, it will give a major boost to digital payments, given their user-base in the country.

Startup India

Launched in 2016, the start-up India initiative was meant to boost the entrepreneurial zest brimming in the country as the government allotted a fund worth ₹10,000 crores to be used through 2025.

The Union Budget of 2017, saw no major sops for start-ups, leaving entrepreneurs disappointed. Reportedly, there have been ample snags on the governance end, which is keeping the local start-up environment in a rut.

Processes involving income-tax exemption, registration of innovation are overly long and complicated, deterring people to take part in them. In fact, even banks do not loan out capital to start-ups without collaterals. This creates an impact on their working capital, given a majority of start-ups do not earn profits before the first five years of operation.
Now, the government has broadened the definition of start-ups to include companies set up seven years ago instead of five years that was mandated earlier. Eventually, a gathering pace in implementation of provisions under the initiative will help boost the start-up environment in the country, experts believe.

Indias digital landscape
A truly interconnected future awaits?

Round up

While the various digital initiatives spread to different wings of the government, and with the expectation that digital payments or documentation might be made compulsory in some cases, there is need to change perceptions about digital money, or perhaps, the concept of digitisation as a whole.

There is a gender divide which is very much pronounced even when it comes to digitisation in the country. Reports suggest that a mere 29 per cent of the country’s internet users are women. Only 28 per cent of women own cell phones, as against 43 per cent of men. Now, this might be looked at as a simple lack of resources for women, but it has also a lot to do with the common activities they are associated with in the society.

There are women-centric initiatives to make them technologically advanced, but it’s a tough ask to change several millennia of perception. We can only truly succeed in digitisation when we foster equality of ownership of resources between men and women.

Digital currencies need to be trusted for them to succeed. Education, especially in rural areas is the next step. Since there’s no point in knowing how to make digital payments when you don’t have internet access, infrastructure is the biggest hurdle we face for digitisation.

The government’s smart city initiative will be a big enabler in building trust and exposing more people to digitisation, but it’s going to take quite a while before that becomes reality.

The biggest threat to all of the government’s initiatives, by far, is a lapse in cybersecurity. Whilst we Digit readers will be totally at ease with digital payments, and know all the ins and outs of cyber-security, a rural dweller need only lose a fraction of his hard earned money to fraud to forever lose faith in a digital system. Thus, government agencies and associated support functions need to take cyber-security way more seriously.

Moreover, regulations to protect sensitive personal information must be made stricter under the IT Act to save users from misuse of their personal data. A Data Protection Code, as adopted by the UK and European Union, for instance, will strengthen users’ trust in the digital environment of the country, which is still at a sensitive juncture.

The bottom line, however, is that this isn’t optional. Digital is the future, and we will all need to be dragged into it (kicking and screaming if need be), for the good of the country, and our own lifestyles.

This article was first published in the August 2017 issue of Digit magazine. To read Digit’s articles first, subscribe here or download the Digit app for Android and iOS. You could also buy Digit’s previous issues here.

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Kanishk Karan