Connecting the digital dots in India's Union Budget
A digital reading of India's Union Budget reveals key insights into the future pace of digital acceleration that will impact every business.
- Article |
- 22 February, 2022
Digital has become the biggest force driving business growth, improving customer experience, and creating process efficiencies. While its importance was well established even before the pandemic, the last two years have accelerated the digitalisation trend, condensing many years of development into a few months.
As companies embrace digital in their strategy, keeping track of the continuous shifts happening in the landscape becomes critical to tap new opportunities and defend their business from emerging threats.
A case in point is the recent Union Budget for 2022-23. While the annual budget is always eagerly anticipated for its announcements on tax and spending policies, Kanvic's analysis shows a clear shift over last few years away from tax related proposals and toward a focus on digital technologies to drive India's economic growth.
Consequently, business leaders need to read India's budget not only from a tax and spending standpoint but also from a digital perspective to help them direct digital transformation.
Digital accelerators and barriers
Digital accelerators and barriers assess the trends that affect the development of the digital landscape. This dimension looks at government policies and regulations, as well as emerging social and technological trends.
Digital market landscape
The digital market landscape examines the competitors in the technological space. This area evaluates key players in the industry, including start-ups leveraging digital technology and large digital native firms, as well as suppliers of new digital solutions.
The technology frontiers look at the specific technologies that are emerging and making a business impact.
The Union budget 2022-23 lays outs several important policy measures to
- facilitate digital acceleration
- shift the digital market landscape
- advance technology frontiers
The new budget will facilitate digital acceleration
The Indian Budget presents four key policies that will accelerate the digitalisation of the economy: i) spectrum auctions for5G mobile services, ii) the introduction of Central Bank Digital Currency (CBDC), iii) the extension of broadband and mobile services to rural areas, and iv) the designation of infrastructure status to data centres.
First, India will soon have access to 5G services, as the government plans to conduct an auction for 5G spectrum to telecom providers in 2022. The 5G network will enable licensees to provide cutting-edge communication services to the public, with the aim of boosting internet access in rural areas. Not only can businesses look forward to the 5G's powerful speed, but can benefit from extensive network coverage, lower costs, and greater flexibility.
Second, the Reserve Bank of India plans to introduce a Central Bank Digital Currency in the form of the Digital Rupee, using the means of blockchain and other financial technologies. The electronic tender will provide a large boost to the economy by making digital currencies more available for users.
Third, five percent of annual collections under the Universal Service Obligation Fund will be allocated to enable affordable broadband and mobile service growth in rural and remote areas. The funds will be allocated to R&D efforts that will help local businesses improve mobile infrastructure in rural localities through improved internet speeds, broadband proliferation, and cost reduction.
Finally, data centres will now be included in the government's "Infrastructure Status". This will give the sector easier access to credit facilities at competitive rates and accelerate the broader push towards data localisation.
With a vision of what these initiatives can achieve, leaders can develop a digital transformation roadmap that progressivelyincorporates these new developments to further accelerate their businesses. Adapting to these new changes will enable them to gain a clear and definitive lead over competitors who are still tied to the traditional ways of working.
The proposed budget initiatives will shift the digital market landscape
The pandemic has shed light on the need for a stronger and more resilient infrastructure. Accordingly, the government plans to support the start-up, education, and healthcare sectors to boost accelerated digital services in both urban and rural areas.
The government plans to support the start-up ecosystem by providing the resources to stimulate growth. The budget will continue to provide tax incentives to eligible start-ups, and has extended the eligibility to companies incorporated before 31st March 2023. Furthermore, the government will promote start-ups to facilitate 'Drone Shakti' through Drone-as-a-service (DrAAS), as well as various other applications.
With the additional support to the start-up ecosystem, we expect to see an explosion of talent, technology, and investment. Leaders should keep an eye out for investment in start-ups. They should also closely monitor the evolving startup ecosystem to look for opportunities for innovation, strategic partnerships, and acquisition.
In the area of edtech, the national budget includes four initiatives to help provide students with high-quality universal education. First, the Digital Ecosystem for Skilling and Livelihood – the DESH-Stack e-portal – will be launched, where citizens can access online training content to improve their skills.
Second, a Digital University will be created to provide a personalised world-class quality universal education, where students across the country can access learning at home. Third, the government plans to create high-quality e-content in all spoken languages that will be developed for distribution via theinternet, mobile phones, TV, and radio through Digital Teachers. Fourth, the ‘one class-one TV channel’ programme of PM eVIDYA will be expanded from 12 to 200 TV channels to help build a resilient education system across all regions, especially those in rural areas whose education was interrupted by the pandemic.
As a result of these initiatives, leaders can look forward to the new sources of digital talent especially in tier-3 and tier-4 towns to stay ahead of the curve.
In light of the pandemic, the government has taken big steps to put health at the forefront of its digital initiatives. The announcement of the 'National Tele Mental Health Programme" will enable people of all ages to better access mental health services. The initiative will help in the push towards breaking the silence about mental health issues.
Furthermore, an open platform for the National Digital Health Ecosystem will be rolled out, consisting of digital registries of health providers and health facilities, unique health identity, consent framework, and universal access to health facilities.
The spotlight on mental health will nudge large corporations to spend more time and efforts on mental health initiatives in the workforce in the coming months. Leaders should prioritise incorporating mental wellness services into their core offering to align with long-term shifts in well-being.
The budget will move technology frontiers to the spotlight
The national budget's big push towards a "Digital India" means that new technologies will drive the success of the digital economy. The Government will heavily rely on revolutionary technologies, such as blockchain, 5G, and drone-as-a-service, to attain their vision.
First, blockchain will become an essential driver towards achieving a 'cashless' ecosystem. As a core component of a digital currency, blockchain will provide greater transparency, improved security, enhanced traceability, and easier transactions.
Second, the rollout of 5G will provide companies with the capabilities to implement a wide variety of use cases in their digital transformation roadmap.
Third, the advancement of drone-as-a-service will provide more efficient services for agriculture, as well as promote the advancement of skills in terms of research and development and employment opportunities.
Establishing these technologies within the Indian economy presents the opportunity for businesses to adapt their traditional strategies. By encompassing three dimensions of Kanvic's DOTS framework, leaders can prioritise digital opportunities whilst appropriately taking direct measures to counteract threats.
As a first step, leaders need to conduct a systematic scan of thedigital opportunities and threats that these emerging technologies present for their business. They can then identify and prioritise key areas of focus to build their digital transformation roadmap. Finally, they can embed the capability to continually scan and monitor their business environment to gain the most from new developments.