Mobility Talk with CEO of NITI Aayog, Mr Amitabh Kant

NDTV Smart Cities & Environment degradation

Should WhatsApp be held accountable for lynchings?

PUBLISHED IN THE HINDU ON JULY 20, 2018

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(The Original Article)

We have come to witness the destructive power of social media, amplified by the advent of ubiquitous smartphones, unleashing havoc on innocent people. As the cases of lynching by mobs spread through the country, fueled by malicious videos on popular mobile messaging platforms that feed off on sheer ignorance of the masses, the obvious question that comes up is who is responsible for this?

The easiest mob mentality again is to find the most obvious entity in this value chain of
malicious videos being spread, and the lynch that entity. In this case, it being the mobile
messaging platform. Clearly, there is no doubt that the mobile messaging platforms are in a powerful position to make significant interventions to prevent such mob frenzies that are arising out of what the platform is facilitating to propagate to the masses. In fact, as good corporate citizens, it is the duty of the messaging platforms to step in and do their best to prevent such mob frenzies arising out of content being forwarded through such platforms, that is leading to gruesome lynching. However, the messaging platforms are only one actor in the value chain of malafide content being spread.

The value chain of malafide content being spread includes people who are creating such
content (and are clearly investing significant time and perhaps money), the mobile messaging platforms, the people who are forwarding such content, the people who are organizing the mobs and the enforcement authorities who are responsible for maintaining law and order.

Let us look at the first step in this value chain of spread of malafide content, which is the
content creator. This is not the first time that mob frenzy has been triggered in India through mobile messaging platform. The first such prominent case was the one that led to mass exodus of North-eastern origin folks from Bengaluru in the August of 2012. Much of the content that led to the exodus, was found to be of origin from a neighbouring country. Pretty much the same place of origin as one of the key videos on child kidnapping that has been circulating that led to many of the recent lynchings. Why did we have such a “Social Media attack” on Bengaluru and continue to have such “Social warfare” being carried out sporadically on India? Who would invest time and money to coordinate such an “attack”. Imagine the scenario where such Social Warfare is unleashed on our military itself. If an adversary is quickly learning how to spread Social Warfare from a city to the entire country, as the case is now, it is only a matter of time that the adversary’s next attack would be on institutions that would have far greater
destructive impact on the country. Is that too far-fetched? Has there been a precedence? Of
course there has been several such precedence in India itself, going back all the way to 1857, when rumours were spread that the cartridges being provided to Indian soldiers by the British is laced with cow and pig tallow. That sparked off the sepoy mutiny. The same can now be done far more efficiently using the digital instant messaging platform. So would it help if we onlyforce a single mobile messaging platform to take steps to stop the spread of malicious videos?

Yes it may help for now, but the forces that seem to be getting better at Social Warfare will use an alternate platform just as they started with MMS for the Bengaluru mass exodus and moved to mobile messaging.

We must also keep in mind that India is the only place in the world where mobile messaging has led to such widespread mass exodus and lynchings. Why hasn’t the same happened in other countries where revolutions have been triggered but not mob lynchings and mass exodus? Clearly, one of the reasons being that such behavior is being engineered by powers with vested interests that are detrimental for India. And clearly, the mobile phone game “Bluewhale” has demonstrated the ability for absolute mind control from remote locations, driving people towards destructive actions. But there is also the fact that we have a highly uneducated, under- exposed, gullible set of citizens with existing deep fissures and mistrusts. And this also includes those who are apparently highly educated and are doctors, lawyers, engineers and other professionals, but they fail to understand the power of technology where truth and untruth are hard to distinguish. This is a potent mix for targeted misinformation campaigns.

It is necessary for the government to urgently update the education curriculum to make citizens aware of not only such Social Warfare but also of other dangers such as phising, cyberbullying, cyber-blackmail etc. This is long overdue and previous attempts to create such curriculums through NCERT has not seen the light of the day.

Similar training is required for the enforcement authorities who also need to develop standard operating protocols to tackle such situations. Such a step needs to be reinforced by appropriate regulatory changes that makes it mandatory for entities in the value chain of information dissemination to share appropriate alerts with the law enforcement authorities, in a prescribed real-time electronic format. In the absence of such a regulation, information intermediaries can neither be triggered to act, nor be held illegal for any acts of omission on their part.

The current mob lynching triggered by mobile messaging is a wake-up call for India. We have earlier seen direct cyber-attacks that brought down ATM’s elsewhere and brought down a part of India’s electricity grid, that were recognized as test attacks. The mob lynching need to be viewed in the same lens and larger steps need to be taken to protect the nation and its people.

Jaijit Bhattacharya is president, Centre for Digital Economy Policy Research

Budget Analysis 2018-19

Published in http://www.mydigitalfc.com/plan-and-policy/logistics-remains-critical-focus-area

The Union Budget 2018-19, comes at a time when the Twin Balance Sheet issues continues, wherein, both the banks and the corporates have stretched balance sheets, which prevent the corporates from borrowing any further for investments, while it also prevents the banks from lending any further. In such a scenario, as expected, investments and growth has stayed challenged, even though we see early signs of an upturn in growth.

 Therefore, the only entity that can borrow significantly and can spend in order to spur growth, is the government. Hence it is not surprising that the government decided to breach the fiscal deficit target of 3.3% by 20 basis points in the Union Budget that was presented on February 01.

The Union Budget therefore envisages a total spend of INR 24.42 trillion, and increase of INR 5.4 trillion (roughly 28% increase) from the previous budget’s budgeted estimate.

	2016-17	2017-18 BE
Gross Tax Revenues (Cr.)	17,03,243	19,11,579
Direct Tax (Cr.)	8,47,097	9,80,000
Indirect Tax (Cr.)	8,51,869	9,26,900
Non Tax Revenues (Cr.)	3,34,770	2,88,757
Fiscal Deficit ( % of GDP)	3.5	3.2
Revenue Deficit (% of GDP)	2.1	1.9
Primary Deficit (% of GDP)	0.3	0.1
Net Debt Receipts (Cr.)	5,34,274	5,46,532
Total expenditure ( Cr.)	20,14,407	21,46,735
Revenue expenditure (% of total expenditure)	86.11	85.57
Capital expenditure (% of total expenditure)	13.89	14.43

This obviously raises concerns of (a) abandonment of the glide path to fiscal prudence, (b) stoking inflation and (c) sending wrong signals to investors, thus impacting their sentiments. However, given the situation of the economy, breaching the fiscal deficit appears to be a necessary evil, and it is unavoidable that the associated public spend would lead to inflation, which would happen in any growing economy. This was indeed a tightrope walk call for the budget.

But the more interesting part is how the budget proposes to make the public spending. It continued its signaling of focus on infrastructure development with over INR 50 trillion being committed to for infrastructure spend, which is not entirely through budgetary provisions, but through off-balance sheet mechanisms. The economic impact of such infrastructure spends comes in with significant lag that the economy can ill-afford at this stage. Hence, it appears that by trying to put in more money in the hands of MSME’s through reducing the corporate tax to 25%, and by putting more money in the hands of farmers by providing a minimum support price that is 150% of the costs of farming, there is an attempt to resolve the issue of distress in rural areas and with MSME’s, while also injecting more disposable income which is expected to increase consumer demand, thus kick-starting a virtuous cycle of more investments and more jobs.

The only challenge in the above story appears to be the fact that the 150% of cost support is only for the kharif season, whose crops would hit the market only by around November, thus postponing the expected relief. There are also concerns that the budgetary provisions for such a procurement is not evident.

However, as per the expectation set in the 2017-18 budget to reduce corporate tax from 30% to 25% over a period of time, atleast the same has been done for MSME’s with turnover of less than Rs 250 crores, and hence it signals the government’s intent to make India a lower tax country for corporates. But a re-introduction of Long Term Capital Gains Tax (LTCG) of 10%, while not removing the Securities Transaction Tax (STT – which was introduced in lieu of LTCG being abolished earlier), turned out to be a dampener for the storyline of being a lower tax regime destination for investments.

The theme of the Union Budget was clearly a focus on rural, women, underprivileged and the marginalized as substantial announcements were made for rural industries including fisheries and animal husbandry and for SC/ST’s. The most spectacular part of the budget is the strong intent to strengthen the social safety net by providing a whopping Rs 5 lacs per household health insurance for 100 m households (which translates to covering 500 m households). This is indeed the mother of all healthcare programs, if successfully implemented. Alongwith it, the announcement of 1 medical college in every three districts, setting up of high quality Eklavya schools and providing all-weather motorable roads to every habitat, underlines the shift towards not just providing benefits, but providing high quality benefits. Even if the above is not achieved in the short-run, it sets the agenda for all future governments to strive and deliver on these audacious targets.

Overall, the budget appears to have covered most of the bases, leaving out the taxpaying salaried middle-class, who appear to have a higher tax burden through increased cess and indirect taxes. The only concern would be the developments in other parts of the world, such as the change in US tax rates and possible hardening of US fed rates, which could suddenly put brakes on the FDI, FPI and remittances inflows. Then again, a healthy forex reserves of over USD 400 billion would help buffer Indian against any such sudden brakes on fund flows.

Policies for Innovation Economy

·        California, with a population that is 1/33th of the population of India, has an economy of size that is comparable to that of India. As of FY16, the GDP of India is ~USD 2.26 trillion, while the GDP of the state of California is ~ USD 2.6 trillion. California is at the forefront of innovation and technology, providing a favorable ecosystem to promote innovation, with numerous technology companies, including Facebook, Google and Apple Inc., headquartered in California.

·        California is considered to be the home of American innovation, providing constant inspiration, a culture of innovation, and a healthy competitive energy. California has a large number of good-paying, tech-sector jobs.

o   California leads among states of the US in number of industries in which it has a higher proportion of employment than the US national average. A research study shows that California exceeds the U.S. average in 17 out of a possible 19 high-tech industries.

o   The state boasts nearly 1.2 million tech-sector employees, a robust 7.2% of the workforce, making it number one among states of the US in number of employees and fourth largest as a percentage of the workforce

o   On average, the wage in California is nearly two and half times more than the US national average wage

o   According to a report by WalletHub in 2017, California was ranked 4^th among states of the US in 18 “key indicators of innovation-friendliness”. It was ranked behind the District of Columbia, Maryland and Massachusetts.

o   California ranked No. 1 among states of the US in venture-capital spending per capita

o   California ranked No. 4 among states of the US in research-and-development spending per capita, behind District of Columbia, Massachusetts and Maryland

o   California is ranked 1^st among states of the US for number of patents issued per capita, almost 3 times the national average of USA

·        The role of governments is critical in the promotion of innovation. Government policies play a critical role in the determination of where R&D investments will be made, and consequently   where successful innovations occur and spur economic growth. Interventions promoting innovation in California include – creation of the Innovation and Entrepreneurship Unit under the Governor’s Office of Business and Economic Development, banning of non-compete agreements and hence promoting entrepreneurial growth, and recently announced proposed regulations for testing autonomous cars on public roads.

Indian Context

·        "Jugaad", the poster boy of Indian innovation, is also a poster boy of what is wrong in the Indian innovation ecosystem and policy. Jugaad is a means of transportation in north India, powered by diesel/kerosene engines originally intended to power agricultural irrigation pumps. It has numerous benefits – helps in irrigation, in transportation of farm produce and in transportation of people. It is therefore a perfect example of innovation that leads to enormous asset optimization as the same asset is used for multiple purposes and does not lie idle. However, as per Government of India's Central Motor Vehicle's Act , Jugaad is an illegal vehicle. In spite of the product providing asset optimization, limited efforts were made by the Government of India to strengthen it and popularize it in the rest of the country and therefore its usage stays limited to north India and is subject to the vagaries of the whims and fancies of the local police in allowing it to operate on the roads.

On the other hand, Uber, which faced similar regulatory challenges globally and in India, was able to tweak the regulatory bottlenecks to enable it to survive and prosper. Uber could do that as their home government supported them from a regulatory perspective and allowed Uber to prosper. 

·        Innovations in science and technology are integral to the long-term growth and dynamism of any nation. According to the Global Innovation Index (GII) 2017, announced by the World Intellectual Property Organisation, India is ranked 60 out of 130 nations, up from Rank 66 in 2016.

·        While Indian historic contribution to scientific knowledge has been significant, currently India under-spends on R&D, even relative to its level of development.

·        According to the 2016 Global R&D Funding Forecast, global R&D spending was estimated to grow by ~3.5% in 2016. On the other hand, according to the Economic Survey 2017 – 2018, R&D spending in India has doubled in the last 10 years, growing at a CAGR of ~8% over this period. However, India’s R&D spending as a % of GDP has remained stagnant at 0.6% – 0.7% over this period.

·        According to the Economic Survey 2017 – 2018, India’s spending on R&D is ~0.6% of GDP and is well below that in major nations:

o   USA: 2.8% of GDP,

o   China: 2.1% of GDP, and

o   Israel: 4.3% of GDP

·        The Economic Survey 2017 – 2018 observes that in India, unlike other nations, the central government is not just the primary source of R&D funding, but also the primary user of these funds. It is critical that state governments step up and increase spending on R&D, to target problems specific to their population and economies.

·        According to Forbes 2017, there are 26 Indian companies in the list of the top 2,500 global R&D spenders compared to 301 Chinese companies. Further, 19 (of these 26) firms are in just three sectors: pharmaceuticals, automobiles and software. There is a need for greater private sector investments in R&D.

·        The Economic Survey 2017 – 2018 advises doubling of R&D spending is necessary, with a much larger role by the private sector and universities. This also involves a more conducive regulatory environment.

·        Number of publications:

o   Between 2009-2014, annual publication growth in India was almost 14%. This increased India’s share in global publications from 3.1% in 2009 to 4.4% in 2014 as per the Scopus Database.

o   The Nature Index publishes tables based on counts of high-quality research outputs in the previous calendar year covering the natural sciences. This Index ranked India at 13 in 2017.

·        Patents:

o   While, India is the 7th largest Patent Filing Office in the World (according to the World Intellectual Property Organisation), the number of patents filed in India is just ~7% of the number of patents filed in USA and ~4% of the number of patents filed in China.

o   Also, India has a poor patents per capita

o   There is a severe backlog and high rate of pendency for domestic patent applications. Given the rapid rate of technological obsolescence, the inordinate delays in processing patents penalizes innovation and innovators within the country.

·        

The Government of India has adopted numerous initiatives to promote innovation and entrepreneurship, including Start Up India, Make in India, Atal Innovation Mission (AIM), Support to Training and Employment Programme for Women, Jan Dhan – Aadhaar – Mobile (JAM) Trinity, Digital India, Stand Up India, among several other initiatives.

There are broadly 2 types of innovation models, depending on the main driver of innovation – the bottom-up approach and the top down approach.

Bottom-up approach to innovation:

·        The bottom-up approach to innovation is demand-based and driven by affected communities, with effective incentivization for all stakeholders.

·        In the bottom-up approach, the role of the government is to provide a conducive environment for research and for adoption of innovations.

·        A stable, innovation-friendly regulatory framework is critical to encourage and promote innovation. Moreover, along with simplification of the regulatory framework, it is important to spread awareness on the related regulations; this ensures a level-playing field.

·        An example of short-term innovation developed using the bottom-up approach is the Jugaad vehicle in India. An economy that achieves long-term innovations using the bottom-up approach is an innovating economy, and this is the ideal state for an economy to be in.

Top-down approach to innovation:

·        The top-down approach to innovation is driven by companies or nations. Examples of short-term innovations using this approach can include electric vehicles, while long-term innovations may include Artificial Intelligence.

·        China has adopted the top-down approach to great success. The central and provincial governments have funded numerous projects throughout the country that aim to produce advanced technology, cultivate high-level talent and nurture an entrepreneurial environment.

·        Big data has become crucial to building China’s IT industry and China’s economic growth. According to the China Academy of Information and Communication Technology, investments promoting big data storage and use in 2015 were estimated at USD 1.89 billion. It is estimated that China's data volume will expand at an annual rate of over 50% and account for 21% of worldwide data by 2020.

·        China aims to be the global leader in artificial intelligence (AI) by 2030.

o   With more than 700 million internet users, China has an abundance of data to train AI-learning algorithms

o   The existing mobile internet ecosystem provides the opportunities for AI researchers to collect and analyze big data related to demographics and behavior, and to conduct large-scale experiments

o   The Chinese government has adopted favorable policies to inspire innovations, with several internet giants and rising start-ups adopting AI technology in their operations or investing in it.

o   Local governments in China are offering incentives to encourage AI-related innovations.

§  Guizhou, earlier one of the poorest provinces in the country, has become known as China’s ‘big data hub’, with major internet companies setting up big data centers in the province.

§  Chongqing became one of the 1^st municipalities of China to establish a bureau to support local AI development

§  Xiong’an New Area and Guangdong-Hong Kong-Macau Greater Bay Area have incorporated AI in their development plans

Global Context:

·        Innovation requires continuous investment. Before the 2009 crisis, global research and development (R&D) expenditure grew at an annual pace of approximately 7%. GII 2016 data indicate that global R&D grew by only 4% in 2014, as a result of slower growth in emerging economies and tighter R&D budgets in high-income economies.

·        The growth in global R&D investments is being driven by spending in Asian countries, in particular, China, Japan, and South Korea, which now account for more than 40% of all global investments.

·        The top innovating nations are all high-income economies, with high GDP per capita, and these economies show mature innovation systems with robust institutions and high levels of market and business sophistication, allowing investment in human capital and infrastructure to translate into quality innovation outputs. The steps taken by some of these top innovating regions are:

o   United Kingdom: the framework under the Department for Innovation, Universities & Skills (DIUS) has been performing well, especially on the lifelong learning and early-stage venture capital front. The Innovation Nation White Paper outlines the future of innovation in the country, providing intellectual leadership by suggesting new policies based on new imperatives. Highlights include provisioning for ‘hidden’ innovation and demand-driven ideas and fostering collaboration between public, private and non-governmental organizations (NGOs) to transform public services.

o   United States: The US recognizes a vision and strong culture of innovation, and more importantly, successful commercialization of innovation in the country. The National Innovation Initiative (NII) outlines the next phase in this journey, focusing strongly on the three pillars - talent, investment and infrastructure.

o   European Union: The European Union (EU) stresses on innovation at both the Union level as well as the regional level. For Europe 2020, the three priorities identified include smart growth, sustainable growth and inclusive growth. The EU’s Innovation Policy places strong emphasis on social innovation, recognizing it as “an important new field which should be nurtured”.

o   China: China has shown tremendous rise over the past decade, and is currently ranked 22 in the Global Innovation Index 2017. This high ranking was on the back of strong performance in business sophistication and knowledge and technology outputs, presence of global R&D companies, research talent in business enterprise and patent applications.

Recommendations to promote innovation in India:

·        The innovation strategy for India needs to have four very clear objectives:

o   enable innovation at the bottom of the pyramid (for and by the next billion)

o   create an innovation ecosystem

o   focus on local capabilities for both near- and long-term benefits, and

o   harvest existing innovations so that the benefits reach a larger potential user base.

This quadri-focal strategy is outlined in the figure below:

·        To build the environment for innovation, the strategy needs to address the following factors:

o   Ensure research converts to innovation

o   Create a strong legal structure

o   Enable business partnerships and incubation

o   Encourage community participation

o   Develop policies to incentivize innovation

·        The legal and regulatory framework in India for promotion of innovation may be further strengthened to address the existing weaknesses. There are three requirements on the policy front for innovation:

o   formulation of appropriate  strategies for promoting technological development,

o   identification of trade and fiscal measures to encourage technology development, and

o   developing of a framework for standardization, certification and accreditation

·        According to the Global Innovation Index 2017 Report, the weaknesses in regulatory ecosystem in India include ease of starting of business, ease of resolving insolvency, ease of paying taxes and environmental performance. India is expected to show improvement in these parameters, with the Government’s steps to address these issues, including adoption of the Insolvency and Bankruptcy Code (IBC) Code.

·        The intellectual property regime in India is weak, and there is scope for strengthening. Innovators do not generally seek protection for their intellectual property unless forced to. For most entrepreneurs, patents and other forms of protection take too long and cost too much. Patent literacy is low and there is a lack of expert help in this field.

·        Incentives in the form of capital investment, finance and favorable taxation are critical. Also, current procurement policies disincentivize innovation, there is a need for government policies to enable procurement of innovation. Technology and IPR framework, availability of a talent pool and better access to market are all necessary to foster innovation as well.

·        Innovation is critical to the creation of high-quality, high-wage, sustainable jobs and economic growth. It is important to create an ecosystem to recognize a vision and strong culture of innovation, and also promote successful commercialization of innovation.

·        As India emerges as one of the world’s largest economies, it needs to gradually move from being a net consumer of knowledge to becoming a net producer.

·        India lacks structures and mechanisms to identify areas of innovation for a top-down innovation approach. This needs to be defined and created.

·        Also, India needs to create institutional mechanisms to identify and promote innovations happening at the grassroots.

·        As highlighted by the Economic Survey 2017 – 2018, the Government of India is the main source and user of R&D funding. It is critical that state governments, private sector and universities step up and play a greater role in investments in R&D.

·        While research is integral to innovation, it is also important to convert research into meaningful innovation. This calls for a three-way understanding and collaboration between the public sector, the private sector and the academia. Collaboration between industry and labs, creating a framework for jointly-funded research, creating a functioning lab-less research capability that leverages the existing facilities in the private sector, universities and the government itself, and ensuring feedback for research are the other important factors.

My Views on Budget 2018