Date: 24/12/2022

Relevance: GS-3: Indian Economy, mobilization of resources, growth, development and employment.

Key Phrases: Emerging Technologies, Revolutionary Changes, Reduction In Job Opportunities Due To Innovative Technologies, Artificial Intelligence Quantum Computing, Digital Mechanisms.

Why in News?

• India is on the verge of implementing in a big way emerging technologies such as 5G, artificial intelligence, autonomous systems, blockchain, cloud and quantum computing, digital mechanisms, to improve the living conditions of its people, to the next level.

Impact of the Emerging Technologies on India's Growth:

• Almost all the sectors of the Indian economy may witness revolutionary changes (in financial services, transport, information technology, manufacturing, and educational sectors), the externalities of which may have a huge positive impact on the economy’s growth.
• However, international agencies highlight a reduction in job opportunities due to innovative technologies.

How emerging technologies can lead to the creation of employment opportunities?

1. A substantive shift from wage employment to self-employment through a Robust Startup ecosystem:
   • The most promising development in India is that of the Indian start-ups ecosystem which is the third largest globally with more than 60,000 start-ups across 642 districts and also 65 unicorns across various industries [CB Insights Global Unicorn List, 2022].
   • This means that there is huge scope for entrepreneurial ventures; essentially, self-employment will indirectly provide employment opportunities too.
   • These start-ups are specialised in fintech, e-commerce, supply chain logistics, internet and software services and ed-tech, which are indeed emerging technology applications.
   • Thus, if entrepreneurial skills are imparted to the disruptive skilled population, India may witness a substantive shift from wage employment to self-employment adding to the formal sector.
2. Formalisation of the economy and financing of the unorganised sector:
   • Application of emerging technologies may result in the formalisation of the economy since AI, blockchain, and Big Data can help the Government track the chain of economic activities to the last mile.
   • This record of economic activities could help the financial platforms to finance existing unorganised manufacturing or traditional sector at a nominal rate, which indeed helps them reduce their cost of production and deliver their products at a competitive rate.
   • This may, in turn, enhance their income, the multiplier effect of which will lead to more employment opportunities.
3. Employment opportunities in the telecom sector:
   • The telecom sector, banking on new opportunities of 5G, may provide a wide range of employment opportunities as per the projections of the Telecom Sector Skill Council.
   • On the other hand, the unorganized allied sectors, due to formalisation, may witness more employment opportunities.

Scenario Analysis Of Major Sectors Of The Economy:

• Agriculture: In the case of agriculture, AI and IoT may help farmers improve yield and reduce information asymmetries, resulting in an increase in their income.
• Travel and tourism industry: The application of ‘blockchain’ in the travel and tourism industry, coupled with innovative digital strategies and apps, may disrupt the tourism sector, with positive externalities for allied sectors such as medical and virgin tourist destinations.
• ICT Sector: Cloud computing in ICT offers flexibility for greater collaboration with work teams, better control of documents, work from anywhere environment leading to an increase in productivity, and innovation offering positive externalities and employment across the sector.
• Legal Sector: The legal sector is also witnessing the application of disruptive technologies which indeed ensure more employment opportunities for ICT and data analytics professionals, and this is one sector which may not witness loss of employment.
• Banking Sector: Micro-technologies, especially in digital banking, connectivity and transport services may improve labour productivity.

Impact on Agriculture, Construction And Unorganised Allied Sectors:

• Currently, as per available data sources, a major chunk of the labour force is concentrated in agriculture, construction and unorganised allied sectors and the construction sector may not witness the adoption of advanced technologies as it may not be able to compete with the cheap labour available.
• Although advanced robotics may find application in auto manufacturing, auto component manufacturing still requires professional, skilled and semi-skilled labour in India.

Way Forward:

• Various research studies reveal that educated unemployment in India is mainly due to factors which include, among other things, information asymmetries, lack of guidance for suitable jobs, etc., which indeed may get resolved through online tools and platforms as also flexible working environment.
• India has comprehensively reviewed its regulatory, policy, and legal framework, enabling it to be one of the best ‘ease of doing business’ destinations.
• This, along with its cheap and educated manpower, may be favourable for building micro supply chains within India paving the way for the country to become a global manufacturing hub.

Conclusion:

• If Rostow’s five stages of growth are considered, India is presently placed in the ‘take-off’ stage where investment leads to increased income, savings and further investment.
• The next stage is ‘drive to economic maturity’, characterized by tech innovation leading to a diverse range of investment opportunities and relying on fewer imports, wherein technology is used widely.
• A promising development is that of the Indian start-ups ecosystem, which is the third largest globally implying a huge scope for entrepreneurial ventures.

Source: Hindu BL

Mains Question:

Q. Almost all the sectors of the Indian economy may witness revolutionary changes with the adoption of emerging technologies by India, the externalities of which may have a huge positive impact on the economy’s growth. Critically Examine. (250 words).