NEW DELHI: India excels in producing cutting-edge technologies like AI, but it lags in adopting fundamental infrastructure such as broadband and the internet, according to a report by the Indian Council for Research on International Economic Relations (ICRIER). The report, titled State of India’s Digital Economy (SIDE) 2024, also mentions that India is the third largest digitised economy globally, after the US and China.
The report employs a novel assessment framework called CHIPS, which stands for Connect, Harness, Innovate, Protect, and Sustain. This framework comprehensively evaluates the entire spectrum of digital transformation across various levels, including pillars, sub-pillars, and indicators. “While India ranks third in the innovate pillar, the frontier analysis shows that there is considerable scope to boost performance in other emerging technologies, particularly in terms of their commercialization,” said the report.
On India’s AI
According to the report, India is second on the AI sub-pillar. As the current Chair of the Global Partnership on Artificial Intelligence (GPAI), India is playing its part by supporting the development of several projects and use cases while emphasising the safe, secure, and trustworthy application of the technology.
“India’s biggest technology companies are yet to join the AI race in a big way. However, with India’s enormous engineering talent and policy push, its role in global AI development will only expand over time,” reads the report.
Scope to adopt emerging technology
The report noted that India ranks third in the innovate pillar, but the analysis shows that there is considerable scope to boost performance in other emerging technologies, particularly in terms of their commercialisation. The policy push behind technologies such as AR, VR, and IoT is much lower when compared to AI.
As Gartner’s Hype Cycle would suggest, many of these technologies are in the innovation trigger phase and are likely to be adopted only by innovators in the country. Scaling these technologies will be a function of their widely applicable use cases and their affordability. On preparedness, the country’s cybersecurity policy was last updated in 2013, much before the Digital India and AI strategies were announced. This is now overdue; a strategic focus on cybersecurity preparedness is important given the rising number of attacks in India.
According to cyber threat intelligence firm Cyble, India and the US are the most targeted countries globally. The report states that law enforcement agencies and banking, financial services, and insurance are the most targeted sectors in India.
India’s progress in digital payment
India has made remarkable progress on the use of digital payments, especially in the public sector. Data from the World Bank’s Findex Survey shows that digitally delivered government transfers or pensions increased to 10% of the population, amounting to about 100 million people in 2021. This accounts for almost 55% of government transfer or pension recipients.
The proportion of public sector wage recipients receiving payments directly into their accounts also increased from 63% in 2017 to 73% in 2021, the highest increase among G20 countries during this period, albeit for a relatively low base.
Level of digitisation
When compared by their aggregate level of digitalisation, i.e., by CHIPS (economy), India ranks as the third-largest digitalised country in the world, behind the US and China, and ahead of the UK, Germany, and Japan. While the US ranks first with a score of 65 and China a close second with 62, India is a distant third with a score of 39, followed by the UK (29), Germany (24), and South Korea (22). What is interesting is that three developing countries—China, India, and Indonesia—are ahead of Japan, France, and Canada—something not reflected in other global indices measuring digitalisation. India’s third rank is derived from outcomes in three of the five pillars.