Automation Important For India's Big Leap Forward But Ruthless AutomationNeeds To Be Avoided Given The Indian Context

June 1, 2017 | Kiran Nanda (Economist)


Recent digital drives, especially carried out during the demonetization period, point out that India carries the potential to be the leader in the 4th industrial revolution, which is powered by billions of smartphones having unprecedented processing power, storage capacity and immediate access to knowledge thanks to automation. India has taken a big leap forward from a predominantly cash economy to a digitally enabled optimal cash economy. In the process, it has brought unproductive money into productive use. This process has to be aggressively carried further to bring about a paradigm shift for India’s big leap forward. In this journey automation will have a significant role.

 

Emerging technologies -mobile internet, cloud computing, artificial intelligence, robotics, nano-technology, genomics, Internet of Things, 3D printing and quantum computing -form the foundational technology for building the fourth Industrial revolution. Automation and Digital India can be a stepping stone for tapping these transformational technologies. India is a very young nation with 63% of its population under 35 years which can adapt to technology faster.The automation economics need to be researched afresh as traditional economics’ principles may not be all that sufficient as business cycles are getting shorter and luxury of instant information is increasingly available on tap. Strides in automation are enabling people to work much faster than before. It is a well- established fact that digitization will give birth to huge entrepreneurial opportunities for establishing disruptive models in existing industries. The end result will be more cost effective and productive business models.

 

It is interesting to note here the contrast depicted betweenthe US President Donald Trump’s new US work visa regulations that made even the best of Indian tech stocks tumbleand the Executive Chairman of Mahindra Group Anand Mahindra reactingto thisby saying ”theseon the contrarypresented a big cost cutting opportunity to India.… We are talking about IT now becoming on the cloud, being an app, then why on earth is it that we should worry so much about onshore presence.”Automation has no boundary. This in a way indicates that a process of revisiting business models in India has made a beginning.

 

Digital India has been one of the key themes of the Narendra Modi government, eloquently summed up by FM’s budget speech – “Promotion of a digital economy is an integral part of Government's strategy to clean the system and weed out corruption and black money. It has a transformative impact in terms of greater formalisation of the economy and mainstreaming of financial savings into the banking system. This, in turn, is expected to energise private investment in the country through lower cost of credit. India is now on the cusp of a massive digital revolution”.

 

The electorate has become more aware, empowered by a new-found digital literacy and information. Indian stakeholders are fast riding the wave of automation, with value added products getting churned out at a geometric pace. Numerous far reaching developments have happened in the field of automation. There is a possibility of a MegaTech developing by 2050, wherein scientists, industry leaders, academics and sci-fi writers are joining journalists from ‘The Economist’weekly to explore how technology will affect the way we live and how far we are willing to go. Amazon has becometoday the top recruiter at IIM-A. IMF Managing Director has welcomed the establishment of High Level Advisory Group on FinTech, composed of highly-experienced and respected leaders in the field of finance and technology from industry pioneers, regulators, lawyers and academics. The Group will work closely with the IMF's Inter-departmental Working Group on ‘Finance &Technology’ to study the economic and regulatory implications of developments in the area of finance and technology.

 

What is more automation has opened host of new horizons like in the field of Aviation, Health Hygiene and e-portals that regulate sale of medicines thereby putting in place a track-and-trace mechanism for drugs sold throughout the country etc. World’s largest ‘Artificial Sun’ is being created in West Germany. Amazon, Big Basket, Grofersare seeking to invest $695 m in food e-tailing. Online E- Commerce giants have started opening retail offline Brick/Mortar stores to establish seamless integration of retail business. Recently, the Supreme Court has decided to go almost paperless in six to seven months.

 

According to Yahoo Inc., India’s app usage grew by 43% in 2016 with categories such as music, media and entertainment clocking the fastest growth. Business, Utilities and Productivity apps came next. Shopping apps continue to gain popularity, increasing by 12% in India. Automationhas permeated in every walk of life- design making, healthcare, all Industries’-automobiles, textiles, fashion industry, real estate etc. and entire gamut of services.There has emerged possibility of Nano eye implantation to restore vision of masses. Wireline solutions are helping businesses breaking new ground and building up scale with wide range of enterprise solutions.Success of the entire GST regime would rest on an efficientworking of its IT network.AI can now predict an athlete’s every move, forecasting of key economic variables and what not.

 

Technology has become part of our day to day life and includes smartphones, smart watches, smart cities based on newer upgraded intelligent technology, digi-drivers, Artificial Intelligence applications etc. Besides individuals and corporates, governments are now providing various services with introduction of automation & smart technology. Smart buildings and infrastructure form more than 30% of the smart city market. Major segments like transport, traffic management, energy management, water management, waste management, proper healthcare amongst many others bear out that the possibilities are infinite.

 

However the most damaging impact of rising automation and resultantheightened competition in the field has been inadequatecreation of new employment opportunities. As digitization of process and content accelerates, intelligent automation would significantly reduce the labour component, perhaps making it redundant in many cases. A research report says that four out of ten jobs will be lost globally due to automation by 2021. Of these one in every four will be from India. This implies 23% of job losses in India. IT industry that was offering new employment opportunities last many years has suddenly slowed hiring due to competitive pressures being faced both from abroad and domestic economy. In developed countries increasing examples of auto factories and railway stations un-manned by any person are on the rise. Issue arises whether such a model of economic functioning can prove to be good for a country like India which has huge surplus labour. Jobs have to be created for the roughly 12 mn Indians who enter the workforce every year. India seems to be sitting on a time bomb of anger and frustration.

 

All assets associated with the infrastructure keep on degrading with increase in population, migration, exponential growth of urbanization etc. which need regular up-gradation through latest technology. The market for global intelligent building automation technologies is likely to boomwith better tools & technologies getting launched and rising awareness levels.

 

Some Prominent Trends

  • Telecom Industry has entered a consolidation phase. Numerous developments includeGoogle and Reliance Jio developing affordable 4G smartphone and Google branding to help boost Reliance Jio’s plans to sell cheaper 4G handsets thereby reaching a larger market.

  • Three partnerships have been entered by Netflix with Airtel, Videocon and Vodafone.

  • Even farmers have made a beginning to pay via e-cash. Aadhaarhas been made a must for a slew of farm schemes. But Aadhaar linking to everything can pose serious national security challenges.

  • IIFL-backed 5paisa.com aiming to add 50,000 customers next fiscal,has nearly 7,500 retail customers as on date and evolved into low-cost financial services provider with added business segments of mutual funds and insurance distribution.Plans are also afoot to get into low-cost broking for commoditieslike metals and bullion.

  • Cutting edge technology is being applied to hair, skin and slimming treatments ie to cosmetology in India. With services ranging from natural hair improvement and scar treatments to body contouring and slimming, there are one –stop clinics providing solutions for an image makeover and boosting self-confidence of individuals.

  • NASA is sending Atomic Clock to space to safely navigate future human exploration of solar system. NASA is set to send its atomic clock to space in late 2017.

  • Some innovators are staying away from the rat race for valuation and prefer creating value instead—Directi website; CODECHEF a programming platform; RADIX; RINGO; SKENZO; media.net; Flock; Zeta amongst many others. Creating value in turn will create valuation.

  • Smartphone- powered device detects Zika, dengue in 30 minutes. Tests require a smartphone and instruments that are roughly the size of a microwave oven. The App uses the phone’s camera to detect diseases with greater accuracy than a lab technician’s naked eye.

  • Indian-origin doctor has reconstructed jaw using '3D printer in UK.

  • India needs to focus on new avenues for services job creation where it has strength in numbers as well strength in potential like engineering services and analytics.

 

Areas of Key Concerns/Challenges

 

  • Automation is being misused like wiretapping of phones, hacking of e-mails, unlawful activities misusing automation methods etc. According to Google, hacked websites are on the rise. Number of websites hacked rose 32% last year last year, with little relief in sight.

  • A major adverse impact has been on the job displacement frontdue to technological change. Way back in 1930, famous economist J M Keynes coined the term “Technological unemployment”. Since the process of computer programmes replacing manual work has started, in recent period technological unemployment has gathered stream. Technology has threatened the old order like the decimation of the music industry, the death of the cable subscription, the near annihilation of newspapers etc. Jobs are harder to come by on account of general slowdown and automation. Opportunities for job seekers are expected to be less bright in the next few months than they were a year ago as Indian companies grapple with increasing technology, global business uncertainties and scarcity of talent for niche skills.According to a World Bank research, Automation is threatening around 69% of the jobs in India, while 77% in China.  Technology could fundamentally disrupt the pattern of traditional economic path in developing countries. 

  • High Cost of New Technology is a big dampener.

  • Inadequate Cyber Security in place.

  • Smartphones and TV watching can put kids at diabetes risk.Almost every child of this generation is guilty for spending too much time in front of screens such as TV, mobiles, tablets, etc.

 

Concluding Remarks

 

Things are certainly turning around for the economy. In the future, present period may be remembered as a time not of death but of rejuvenation and rebirth. Connectivity between online and off-line businesses is increasingly getting established. Digital/Automation economics is fast getting evolved.It is stated that India is most well placed to take advantage of the convergence of physical, digital and biological sciences that will facilitate to reimagine, reinvent and re-engineer all aspects of life and living. But jobs creation aspect has to be specifically focused upon. The low-skilled Indian services workforces will be most impacted.Nation will certainly need high skilled jobs like someone to build and monitor the robots. Nature of job creation will become altogether different. Comingabout five years periodmay be the painful ones for India as we go through this transition from people to technology-plus-people services, but after that it could well be a completely different story.

 

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