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Artificial intelligence (AI), machine learning (ML), blockchain technology, and Internet of Things (IoT) - jargons that have hardly found mention in previous Budgets, managed to make their way into Finance Minister Arun Jaitley’s Budget speech this year, reinforcing the government’s resolution to push everything digital.
“Global economy is transforming into a digital economy, thanks to the development of cutting-edge technologies in digital space - ML, AI, IoT, 3D printing, and the like. Initiatives such as Digital India, Startup India, and Make in India would help India establish itself as a knowledge and digital society. The NITI Aayog will initiate a national programme to direct our efforts in the area of AI, including research and development of its applications,” Jaitley said.
The government, the FM said, would use blockchain - a technology used to trace back transactions - in governance and digital payments. Karnataka has already begun a pilot to use the tech in governance.
Continuing with the push to digitising payments, the FM said e-tolling on highways would be given utmost importance. “The system of toll payments by cash is being fast replaced with FASTags and other electronic payment systems. The number of FASTags has gone up from about 60,000 in December 2016 to over a million now. From December 2017, all class ‘M’ and ‘N’ vehicles (basically, passenger and commercial vehicles) are being sold with FASTags. The government will come out with a policy to introduce toll system on ‘pay as you use’ basis,” Jaitley said.
The government also plans to have more than 500,000 Wi-Fi hotspots that would provide broadband access to 50 million rural citizens. It allocated over Rs 100 billion for creating and upgrading telecom infrastructure for FY19. Jaitley also doubled allocation for Digital India scheme to Rs 30.73 billion.
The Department of Science and Technology will launch a mission in cyber physical systems to support establishment of Centres of Excellence. According to the FM, combining cyber and physical systems will not only transform the innovation ecosystem but the economy, too.
The Indian Institute of Technology, Madras, will have a centre as a test bed to build home-grown technologies in 5G telecom networks. "The government has an aspiration (even though 5G is 2-3 years away) that when 5G happens, it actually disrupts the industry. There’s a real opportunity for India to leapfrog and not only become a user of 5G technology but also a creator of 5G products," said Sanjay Nayak, CEO and MD of Tejas Networks.
And, the government plans to digitise education, too. “Technology will be the biggest driver in improving the quality of education. We propose to increase the digital intensity in education and gradually move from ‘blackboard’ to ‘digital board’. Technology will also be used to upgrade skill of teachers through the recently launched digital portal DIKSHA,” Jaitley said.
Jaitley also said there was a need to provide an Aadhaar-like unique identity to enterprises to aid the government in cracking down on shell companies.
Industry experts, however, said a lot would depend on the participation of the private sector. “It is encouraging to note the focus on new generation technologies. As far as skill-building initiatives go, it remains to be seen how partners from the private sector ecosystem, with the knowledge and expertise in these areas, get involved in these initiatives,” said Arindam Guha, partner, Deloitte India.
With delays in disbursing funds from the Rs 100-billion start-up fund continuing, the Budget focused on highlighting the need for building a regulatory and taxation regime for venture capital (VC) firms and angel investors. “We have taken a number of policy decisions, including launching of the Startup India programme, building a robust alternative investment regime in the country and rolling out a taxation regime designed for the special nature of VC funds and angel investors,” Jaitley said.
He was, however, silent on the so-called angel tax, which counts angel funds received by start-ups at a valuation higher than its fair market value as income. The Income-Tax department has sent several notices to start-ups asking them to pay 30 per cent tax on such fundings, forcing angel investment in new firms to drop to a record low. Investors were anticipating clarity in this Budget, so that start-ups could focus on building their business rather than getting worked up with tax notices.
While the investor community would have to wait for more clarity, Jaitley has identified the role of fintech firms helping small and medium businesses with loans in the aftermath of demonetisation. “The government will set up a group in the ministry to help devise institutional development measures to help fintech companies to grow,” said Jaitley.