Among the initiatives launched with much fanfare by the government is the one titled “Digital India”, which is slated to use high speed internet as a core utility and provide citizens entitlements, documents and a host of services on the cloud. While digital literacy is crucial for the success of such an initiative, a more fundamental requirement is access to and use of the Internet. How far does the government have to go to ensure access and use to be successful with this digital mission?
According to recently released survey results from India’s official National Sample Survey (NSS) Organisation (71st Round with reference period January to June 2014), the proportion of Indian households in which at least one member had access to the Internet was 16.1 per cent in rural areas, 48.7 per cent in urban areas and 26.7 per cent in rural and urban areas combined. Needless to say, this is far short of the near universal connectivity envisaged by the Digital India mission.
If yet there is a unstated belief in certain circles that the foundations for a Digital India already exist, it is partly attributable to India’s success as an Information Technology (IT) and IT-enabled services provider to the rest of the world.
It is also partly due to the kind of number observers look at. In absolute numbers India’s internet usage is impressive. According to a recently released Boston Consulting Group report, at 190 million, India had the third largest population of internet users in the world in 2014, coming in after China (620 million) and the US (275 million).
Besides that absolute number, the pace of expansion of the Internet user population is what is striking.
A more optimistic set of estimates from the Internet and Mobile Association of India (and IMRB International) places the Internet user base at 300 million at the end of 2014.
According to that set of estimates, a decade after the introduction of the internet the user base was estimated at 10 million. That figure rose to 100 million a decade later. A further 100 million were added to the base in three years (2010 to 2013) and a year later the number of Internet users is estimated to have crossed 300 million in December 2014.
While the reliability of such estimates is uncertain, and there can be differences in the numbers from different sources, the broad magnitudes are close. Thus, the oft-quoted website (www.internetworldstats.com) reports that the number of Internet users in India rose from around 5 million in 2000 to 243 million in June 2014, which makes the 300 million December 2014 figure quite plausible.
However, before launching celebrations based on these absolute figures, a degree of caution is called for.
These high and rising absolute figures conceal the fact that in relation to India’s population Internet penetration is still low. If we go by figures from Internet World Stats, Internet penetration within the population in India amounted to 19.7 per cent at the end of June 2014, as compared with 86.9 per cent in the U. S., 86.2 per cent in Japan, and 47.4 per cent in China.
The International Telecommunications Union (ITU) also estimates that around 18 per cent of individuals in India were using the Internet in 2014, as compared with 49.3 per cent in China, 90 per cent in Japan and 87.4 per cent in the US.
But, as noted earlier, the NSS figures suggest that the proportion of households with Internet access is much higher than the “non-official” numbers on the proportion of individuals who are Internet users. Since services provided by the government are likely to be accessed by households, this improves the initial condition from which the government is working. But still, a quarter of households is a long way from the near universal access to cloud-based services that the government is hoping to ensure.
One problem is, of course, that of providing access to the hardware through which individuals get access to the Internet. Options here have increased hugely in recent years. But few seem to be willing to pay for access.
Thus, the ITU estimates that only 3.1 per cent of Indian households had access to the Internet at home in 2011, whereas that figure for China in 2012 was 23.7 per cent. Thus, Indian internet users would have to rely on connections of friends and acquaintances, or at the work place or in cyber cafes to access the internet.
Even here the government has made an effort. Almost a decade back it announced a policy initiative to bridge India’s widening digital divide by increasing physical access to computers connected to the Internet.
As part of that initiative it had promised to put in place in rural India a hundred thousand Common Service Centres (CSCs) – broadband-enabled computer kiosks that will offer a range of government-to-citizen and business-to-customer services, besides providing sheer access to the Internet. The CSCs were expected to begin servicing all of India’s 600, 000 villages by mid-2008. However successful the government has been, it does not seem to have helped universalise access.
The challenge here seems enormous.
The NSS survey quoted earlier suggests that there is an unusual relationship between internet access, computer access and literacy.
As is to be expected the extent of literacy across the states of India is higher than the extent of access to the Internet through at least a single member of the household. That suggests there is still some slack in terms of getting literate people to take to the Internet.
However, there is a strong association between household access to computers (or proportion of households with access) and household access to the Internet. While one survey may be inadequate to arrival at any causal suggestions let alone conclusions, if this relationship proves robust it could imply that increasing internet access is predicated on increasing hardware access to a far greater degree than the CSC programme envisaged. That makes the Digital India challenge not just more difficult, but more expensive.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.