At a packed stadium in Delhi last July, Prime Minister Narendra Modi, with characteristic zeal, outlined his vision for a Digital India, where all important government services will be available on mobile phones. “I dream of a Digital India where high-speed digital highways unite the nation; 1.2 billion connected Indians drive innovation; technology ensures the citizen-government interface is incorruptible,” said the Prime Minister, flanked by some of the stalwarts of Indian industry and his senior cabinet ministers.
He evoked the image of a child, once fascinated with a pen, or a pair of glasses in an adult’s pocket, now captivated by a mobile phone. It is an analogy that resonates with older generations and millennials alike. Since the late ’80s, we have rushed from pen and paper, Xerox, via text-prompt computers, crash-prone editions of Windows, dial-up connections, and floppy disks, to rapid broadband, cloud storage, open-source software, and smartphones. Viral videos, selfies, and social media (which Modi exploited to win a landslide victory in May 2014), among other things, have enriched our digital odyssey. “Google today has made teachers less awe-inspiring and grandparents more idle. Twitter has turned everyone into a reporter. The traffic lights that need to work the best are on Cisco routers,” Modi told Silicon Valley’s top executives in a speech at San Jose, California last November.
We are in the throes of a technological e-volution and the government simply must jump on board. But it begs the question: Is Modi’s rhetoric merely political braggadocio or can he deliver on his digital promises? First, let’s look at the cost. The Modi administration estimates its digital drive will cost Rs 1.13 lakh crore (roughly $17 billion), about as much as the government has set aside to expand and modernise the railways in the current fiscal year. This seems conservative, given that Modi hasn’t provided a timeline for many of the programmes. In 2016 alone, technology researcher Gartner expects the government to spend $7 billion (Rs 47,142 crore) on technology products and services. Efforts to expand broadband connectivity and provide more mobile services will drive much of this expenditure, Gartner said in a report in June.
To put it in context, Reliance Jio, billionaire Mukesh Ambani’s pet telecom venture, has shelled out more than Rs 1.5 lakh crore on setting up a pan-India fourth-generation (4G) mobile network, but the project has still missed deadline after deadline since it acquired spectrum six years ago. Last November, Bharti Airtel unveiled Project Leap, a Rs 60,000 crore blueprint for upgrading networks in the next three years. Suddenly, universal connectivity at a fraction of what private companies are already spending begins to look implausible. How much will it actually cost to provide Internet access to every Indian? “Trying to estimate the cost of such a massive project is like standing at the foot of Mount Everest and attempting to calculate how tall it is,” says Akhilesh Tuteja, partner and head of technology, KPMG India. So how will the government afford it (after all, the country’s yawning fiscal deficit has long pressured budget plans)?
Will the public need to pay another tax to fund Digital India à la Swachh Bharat Abhiyan, Modi’s mission to clean the country’s streets and infrastructure? So far there are no plans for a Digital India tax. Here’s why: Private players will largely power India’s digital juggernaut and that’s the reason Modi has gone to great lengths to rally their support. The onus is on the Reliances, Airtels, Googles, Intels, and IBMs of the world, rather than on the government, says Tuteja. They are already spending as much as Rs 4.5 lakh crore on the initiative, more than four times what the government has budgeted. More on this later.
No matter the cost, there is little doubt digitalisation is crucial for transparency, better governance and sharper conversation between a state and its people. In India, where the politics of suspicion endures, it is viewed as an attempt to stamp out dishonesty and reduce red tape. To this end, Modi has charted out a three-pronged strategy: Build digital infrastructure such as fibre-optic cables and towers, deliver government services online, and improve digital literacy. But things rarely go as designed.
If Modi wants to be the face of a truly digital India, he must improve the country’s dire position on rankings of Internet connectivity. The World Economic Forum places India at No. 91 in readiness to transform into a digitalised economy and society. The country fares even worse in Internet speed, bringing up the rear of the list at 114 with an average speed of 2.8 Megabits per second (Mbps), compared to 26.7 Mbps in Korea. Only 35% of Indians (462 million people) were to have Internet access by June 2016, as per industry body IAMAI’s projections last year. There is also a huge gender divide—17% of women use the Internet in India, compared with 27% of men. The rural-urban gap is just as vast—only 87 million in rural India are estimated to have access to mobile Internet, compared with 219 million in urban centres, according to IAMAI. This social inequality and lack of education are major impediments to the country’s technological progress. To bridge the digital divide, Modi will need to concentrate on literacy, as well as tackle sticky gender and social inequities. And that’s just part of the problem.
Before we go any further, let’s rewind the clock to understand where we stand. India’s tryst with digitalisation dates back to the ’70s when Indira Gandhi’s government set up the National Informatics Centre (NIC), which has played a pivotal role in steering e-governance. Gandhi’s son, Rajiv, a pilot who became Prime Minister after her assassination in 1984, was also a technophile, introducing Commodore computers in government offices.
By the mid ’90s, e-governance initiatives had taken a broader view, involving citizen-centric services. In 2006, the Congress administration, which dominated Indian politics after Independence, introduced the National e-Governance Plan (NeGP), with the aim of making all government services accessible to the entire population.
Manmohan Singh’s government rolled out a string of projects to improve connectivity and bring more people into the digital fold. In 2009, it launched the National Knowledge Network (NKN) to provide a high-speed, multi-gigabit network backbone for educational institutions. The Rs 48,000 crore National Optical Fibre Network (NOFN), started in 2011, aims to provide broadband to the country’s 2.5 lakh unconnected villages.
Soon after sweeping the elections, Modi turned his attention to India’s digital legacy. He pledged to personally shoulder the responsibility of digitalisation, with the kind of self-confidence that has seen him amass more power in his own hands than any other Prime Minister since Indira Gandhi. Within three months, he launched MyGov.in, where citizens can offer their suggestions to improve governance. MyGov, which has 3.5 million registered users, aims to foster participatory governance via crowdsourcing. It was widely viewed as a swipe at the Congress, which had relied on panels and academics to shape policy. He also united the hodgepodge of acronymed Congress schemes under a single catchy banner: Digital India.
Under the previous Congress-led regime, every ministry and state largely handled its own digital affairs. This created considerable disparity in levels of progress in different regions and government departments, critics say. Modi claims centralisation will streamline and transform the digital landscape. But aside from being an umbrella programme that clubs together several earlier initiatives, what is Digital India’s raison d’être?
For a better grip on the government’s plans, we visit Electronics Niketan, the building that houses the Department of Electronics and Information Technology (reverently shortened to DeitY) in central Delhi. (In Modi’s most recent cabinet reshuffle, telecom and IT minister Ravi Shankar Prasad was shifted to the law ministry, but remained the head of DeitY after Modi removed it from the remit of the Ministry of Communications and Information Technology, and made it a new ministry.)
We are here to meet Aruna Sharma, the bureaucrat who spearheads Digital India, but she isn’t in office yet. A flat-screen HD television, with dubious picture quality, extols the achievements of the campaign. We are finally led to Sharma’s basketball court-sized office that offers her name and title—Secretary, Electronics & IT—on its door. Sharma, a 1982 batch IAS officer from the Madhya Pradesh cadre, doesn’t come across as the stereotypical safari suit-clad bureaucrat who exploits loopholes in the system to accumulate personal wealth. For starters, her sartorial taste leans towards saris. Furthermore, she seems a straight shooter, although her admiration for Modi shines through. Sharma was appointed this February to oversee Digital India after she launched a similar programme in Madhya Pradesh called Samagra, which brought all public records onto a single database. “The Prime Minister’s message is crystal clear: Transform India into a digitally empowered society,” she says.
Proselytisation aside, how will Modi do this? The NIC, she explains, is working on a master database called Servam, a bilingual play on words, which is derived from ‘server’ and means ‘everything’ in Sanskrit. Everything from education certificates and health records, to scholarships and land documents, will eventually be included on Servam, using the latest technology, she says.
At the heart of the mission is Modi’s push for the Direct Benefits Transfer (DBT) programme, introduced in 2013 by the previous government. The scheme transfers subsidies directly to people’s bank accounts to reduce leakages and delays. On Servam, data from the National Population Register (NPR)—which contains information on a person’s name, father’s name, occupation, marital status—will initially be combined with the Socio Economic and Caste Census (SECC) list that provides information on households such as income levels and total land holdings. The database will use Aadhaar numbers to identify individuals. (The Aadhaar, introduced by the previous government, is a 12-digit identification number for every individual.)
Servam will make it easier to transfer money directly into a beneficiary’s bank account for DBT, and help prevent corruption and duplication in payments, Sharma says. Linking Aadhaar to DBT is already saving crores of rupees. The government distributed Rs 61,000 crore among its 30 crore beneficiaries in FY16, but it also detected 1.6 crore bogus ration cards. These were deleted, saving nearly Rs 10,000 crore, she says. DeitY minister Prasad recently gave a much larger projection: Over the last two years both state and central funds have saved Rs 36,500 crore with the help of Aadhaar.
“The real challenge for successive governments so far has been their inability to get a clear fix on the number of individuals or households availing benefits,’’ says Rama Nagpal, deputy director general of Servam. Different ministries and departments used separate databases and software that aren’t tallied against each other, allowing for substantial leakages. No one was really sure how much money was actually paid out, and used by the beneficiaries. The databases of Aadhaar, NPR, and SECC, will help governments and agencies catch the offenders, says Nagpal. But it won’t be a witch-hunt. “If there is a mismatch in the data, we will not stop their entitlements but have a verification done,” he says.
Deity’s software uses an open-source code, whereby information from various ministries can be directly incorporated into Servam. This will keep the databases updated. “So, if a death is entered into the Servam database, it automatically gets reflected in the others like NREGA [National Rural Employment Guarantee Scheme] and pensions. There will be no need to deposit the certificate in different departments,’’ explains Sharma. Essentially, government programmes will now be able to talk to each other.
Also crucial for fulfilling the promise of Digital India is the cloud computing initiative Meghraj. “The advantage is that you go live at very short notice. Not only can you scale up but applications become really agile too,” says Neeta Verma, director general, NIC. The national cloud, launched a few weeks before Digital India, will ensure rapid delivery of all sorts of applications and help improve them. It will set the country up for the next wave of technology that is on the way—cognitive computing, she says.
There are already some success stories. The NREGA, launched by the Congress government in 2005, is one such example. The scheme, which guarantees 100 days of work a year to every person and 150 days to those in drought-affected areas, has drawn criticism in the past for widespread corruption, but the Internet is changing that perception. “If earlier only 15 paise from a rupee reached the beneficiaries, today nearly 95% of the amount reaches them because the money is directly credited to their bank accounts or in nearby post offices, if banking services are not available,’’ says Sharma.
The portal, launched by NIC in 2005–06, has nearly 18 terabytes of data on job seekers, grievances, and payments, among other details. It has 44 servers, cloud infrastructure, and a disaster recovery system at Pune, says D.C. Mishra, deputy director general and head of NREGA at the NIC. It has made the system more transparent since everyone can track the flow of money, checking corruption, he says.
Pragati, the government’s video conferencing platform, is revolutionising government meetings, says Verma. The government has 400 video conferencing studios and conducts 28,000 video conferencing calls every month. “When the Prime Minister wanted to launch a stadium in Sri Lanka, he did not go there but did it over videoconferencing,” she says. Furthermore, DeitY is introducing digital lockers for citizens on the national cloud. These are personal online vaults, where citizens can store private documents in the public cloud. KPMG’s Tuteja praises the programme, but points out that the vault will require adequate protection. Radha Chauhan, CEO, National e-Governance Division, plays down security concerns. “The moment someone registers and is given 2 GB in the cloud, whatever is stored is safe, secure, and only shareable with the user’s consent,” she explains.
Notwithstanding Chauhan’s conviction, there are genuine concerns about the government’s ability to protect a citizen’s privacy. Government websites remain soft targets for hackers. (Over 700 government websites hosted under ‘gov.in’ and ‘nic.in’ domains have been compromised since 2012, according to media reports.) Sahir Hidayatullah, chief executive of cybersecurity firm Smokescreen Technologies, paints an alarming picture. “We are talking about bringing the demographic information of 1.2 billion people online. Very few here are tech-savvy and this actually has hackers the world over licking their lips. You are looking at an extremely vulnerable population that isn’t aware of the most basic security precautions,” says Hidayatullah.
His firm identifies groups or hackers that can compromise data. Financially motivated cybercriminals, typically from Eastern Europe, who have excellent technical education in former Soviet states but are unemployed, are one such threat. “These guys are going to come for the money, for the identity theft, to set up bank accounts and move money, launder money and things like that,” he warns.
Then there are hackers from China who could be interested in India’s long-term economic objectives and strategic vision. They would want to know what is happening in the markets and the government, he says. The last category, Hidayatullah explains, is the fraudster, who unlike the techie cybercriminal is probably a local, exploiting a loophole in a system or bribing officials to provide data to sell.
There have already been several security breaches. For instance, last year, a leading private bank was scammed by a nexus of people somewhere in rural India, who figured out that if they transfer money from their mobile wallets to another person and immediately switch off their phones, the money not only stays in their wallet but also reflects in their collaborator’s account. After doing this from various devices for some days, they were able to make more than Rs 10 crore by year-end.
Now take this scenario and multiply it by a billion. The fallout would be catastrophic if the master database were hacked. A scene from Yes Minister, the classic British political satire, highlights the inscrutability of public records gathering dust in a government office. Bernard, the private secretary to minister Hacker, asks his minister whether he should file a petition from the archives against surveillance, containing 24 million signatures. Hacker is appalled at the suggestion and orders him to shred the incriminating document. “No one must ever be able to find it again!” Bernard replies: “In that case, Minister, I think it’s best I file it.”
Once digitalised, however, government records are data goldmines for hackers. “We have not completely cracked the mechanism [for security],” Sharma concedes. “We are still working on it; on how we categorise it. We are constantly monitoring threats, and improving with the help of a special cybersecurity team.” To beef up its security, India wants its government servers located in the country, she says. If someone breaks the country’s information technology law (for instance, sending offensive e-mails on Gmail), only looking at the time a suspect logged into the server can prove the crime. Otherwise, in order to get that data, Indian officials would have to rely on the cooperation of the authorities where the data centre is located. “Internationally, we have to do a lot of arm-twisting to get a local root server. But servers will soon be based out of India,” she adds.
That said, security measures still aren’t foolproof in developed countries either. In 2015, for example, U.S. government databases with personnel records and security-clearance files for about 22.1 million people were breached.
Security systems also need to be upgraded regularly as technology changes. Tuteja fears that if the government is unable to upgrade in time, the existing technology will become vulnerable to hackers. Another cause for consternation is outsourcing of bigger IT projects to third-party private companies, who may gain access to the master key of the cloud. “What is the protection that you have if a private company holds the master key? I would also be worried about that part of the security,’’ says Tuteja. What happens if somebody hacks into the Aadhaar database? “There is absolutely no solution because you can’t change an individual’s biometrics.”
Here, too, Modi has urged the world’s top tech players to throw their intellectual might behind finding solutions to the “bloodless war” waged online. In Silicon Valley, he wooed the Indian diaspora to join his cause. “As our economy and our lives get more wired, we are also giving the highest importance to data privacy and security, intellectual property rights and cybersecurity,” he told them. “I know to achieve the vision of Digital India, the government must also start thinking a bit like you.”
Private players will be the real torchbearers of Digital India. It was the agenda of Modi’s weekend tour of Silicon Valley, where he met the leaders of America’s largest and most storied technology companies, including Google’s chief executive Sundar Pichai, Apple head Tim Cook and Microsoft’s Satya Nadella, among others. Modi, who has more followers on Twitter than any other head of state apart from President Barack Obama, had fittingly announced his visit, the first by an Indian Prime Minister in more than three decades to the West Coast, via a tweet. In China, he consorted with industry leaders including e-commerce giant Alibaba’s Jack Ma, Xiaomi’s Lin Bin, and Huawei’s Sun Yafang.
He has also called on domestic industry captains to push on with digitalisation. Ambani is finally set to launch Reliance Jio’s 4G network, hailed as a potential game changer in India’s telecom sector. With Project Leap, Airtel, India’s top telecom player, will also take on broadband proliferation. The Digital India mission will only touch the lives of Indians by 2018, once private players start leveraging broadband infrastructure to expand products and services, tech research firm Forrester said in a February report.
Public-private partnerships (PPPs) will be key. “PPPs have the opportunity to forge blueprints, policies, and practices that help create a digital India,” Dinesh Malkani, president Cisco India/SAARC, wrote in an article published in Businessworld Online. “Governments alone do not have all the resources to provide the required infrastructure and facilities to their citizens. Private participation brings efficiency along with funding.”
Cisco is investing over $100 million to support Digital India and is working with local governments to launch incubation centres for entrepreneurs and training students.
That the private players bring in capabilities that government does not have is evident. But what’s in it to attract these players? For one, access to remote areas. The government has begun to lay out a fibre-optic network to connect 2.5 lakh gram panchayats. A company such as Airtel, then, need not invest in a nationwide network. It can ride on the government’s network to provide last-mile connectivity. Then, of course, there are the huge orders for computers and peripherals that will go to the likes of IBM and HCL. There will also be a huge demand for maintenance contracts, software, communications equipment, and the like. In a recent report, technology research firm Forrester stated that India’s tech purchases in 2017 will be worth Rs 2.6 lakh crore; a third of this is estimated to go towards hardware.
The enormous headroom for growth in broadband and mobile Internet has sparked huge interest. India, whose economy is outpacing every other major global economy amid weak global crude oil prices, has already overtaken the U.S. as the No. 2 nation behind China by number of Internet users. Mary Meeker, a partner at venture fund Kleiner Perkins Caufield & Byers, pegged India’s mobile Internet user growth at 40%, as the country is set to become the world’s second largest smartphone market by next year.
Modi’s ambitions extend beyond the Internet and IT. He plans to localise electronics manufacturing, with a target of zero imports by 2020, in line with his other pet project: Make In India. He has introduced higher duties on electronic items such as mobile handsets to curb imports. To support innovation and R&D in technology, the government also launched the Electronics Development Fund (EDF) earlier this year in collaboration with Canbank Venture Capital Fund. With an initial corpus of Rs 2,200 crore, the EDF aims to create a “fund of funds” that will work with venture capitalists to create “daughter funds”, which in turn will provide risk capital to companies for tech development. The government is also setting up electronics manufacturing clusters in seven states.
These measures have whet investor appetite. Terry Gou, Foxconn’s billionaire chairman, has pledged to open as many as 12 factories and create one million jobs in India by 2020. The who’s who of world tech—LG, Samsung, Xiaomi, Cisco, Google, Facebook, IBM, GE, and Intel, you name it—are sizing up India’s booming electronics and smartphone market.
Total investments surged from 25 proposals worth Rs 11,198 crore in May 2014 to Rs 1,21,502 crore from 181 proposals by May 2016. Some experts are encouraged by the stream of investments. A Deloitte report reckons that Digital India has the potential to add $1 trillion to the country’s gross domestic product (GDP) by 2025. Pointing to a World Bank report that says even a 10% increase in mobility and broadband can add up to 2% to the GDP, Hemant Joshi, partner at Deloitte Haskins & Sells, says, “This will result in a paradigm shift, which will create a huge explosion of opportunity.”
But it’s not all sunshine. The mission is mired in complexities that will not just call for an infusion of funds, but also close collaboration between the government and the private sector.
There lies the rub. Setting up infrastructure is simple enough if you have the capital, but ensuring everything works and making it affordable is another matter.
Renowned development economist Jean Drèze expresses concern about private-led digitalisation. “The real test of these initiatives is whether they serve the public interest or private profit. Conflicts between the two abound, and commercial interests often prevail,” he tells us via e-mail.
While there is no doubt there are many examples of intelligent and constructive use of digital technologies for the benefit of ordinary citizens, the government needs to be alert to “the danger of counter-productive technocracy”, he warns.
Sharma says affordability will be high on the government’s agenda. Telecom regulator TRAI has said Wi-Fi hotspots would not only slash Internet rates by 90% but also offer much faster connectivity. “We realise that broadband will provide ultimate connectivity. But until we have such bandwidth, we’re working on Wi-Fi hotspots, TV whitespace, VSAT, and other solutions,” she says.
Sharma says the government is rapidly expanding broadband network. On paper, it looks impressive. But Osama Manzar, founder director of the Digital Empowerment Foundation and member, advisory board at Alliance for Affordable Internet, tells us a contrasting story.
“Despite the tall claims made by DeitY minister Prasad that the government has laid several kilometres of optical fibre, the reality is quite different,” says Manzar. After almost four years, he says even the pilot locations don’t work. His foundation recently visited eight villages in Haryana’s Faridabad district and six in Uttar Pradesh’s Gautam Budh Nagar to investigate the government’s digital outreach. The team was shocked to find that even though fibre and routers had been installed in four villages, none was functional. If villages within 50 km of the National Capital Region don’t have proper infrastructure, imagine the situation in the rest of the country, he says.
Digitalisation and automation are seen as the holy grail, but Manzar says the government’s approach is slapdash. “There is a problem with the way we are carrying on our digital journey. For example, more than 50,000 villages have been provided computers and connectivity but the facilities are almost never used.”
Manzar says the situation has created a different kind of middleman, one that feeds off digital illiteracy. A third of the population is illiterate. Only 15 out of 100 households have access to the Internet, while broadband remains a privilege, with only 5.5 subscriptions for every 100 people, according to the World Economic Forum. As a result, many poor people take the help of middlemen to avail digital schemes. Nandan Nilekani, former chairman of UIDAI, calls this the “assisted service” model, and says that till such time digital literacy and smartphone use improves, this is the best way reach the unconnected (see page 78).
Manzar says promoting digital literacy itself is going to be a hurdle, as the digital literacy programme makes it mandatory to have an Aadhaar number. “If you don’t have one, you cannot become a training partner or a trainee. Besides an Aadhaar number, the mission requires investment in a biometric machine. The candidate has to take an online test, wherein a webcam, among other equipment, must identify the person; very often, the online system does not work properly,” he says.
Even in urban centres, server crashes, slow connections and poor payment-processing systems are standard. As citizens, the fallout is frustrating. A Fortune India journalist’s marriage registration in Delhi was delayed by two days when the server crashed at the district magistrate’s office. The Aadhaar programme has also turned out to be far more problematic than expected. In Rajasthan, several labourers were unable to record their fingerprints, as their hands had weathered years of manual work.
Then, there is obsolescence and congestion. As more people come online and use data, networks are getting clogged, says Gulzar Azad, head of Google India’s Access Programmes. “A lot of people are still using 2G in a world that is moving to 4G networks. Bringing people online is a beginning but it is not sufficient,” he says.
Technology moves fast. The government cannot allow its programmes amble on, critics say. India, which is traditionally one or two generations behind the developed world, must catch up. Sharma admits some hardware may become outdated, but defends the adaptability of government software. “The hardware is just a structure, but what makes it functional is the software. Now we have come to a stage of technology where the software can be upgraded from a remote site,” she says.
Digital and financial inclusion are the two biggest problems the country faces, she says. But she is confident that the government can steer India’s transformation, with parallel measures such as Jan Dhan Yojana, the mission to open bank accounts for those on the fringes of the financial system.
Sam Pitroda, an advisor to former Prime Minister Rajiv Gandhi who is often credited as the father of the telecom revolution, is unimpressed. Like any tech company, the government needs chief technology officers for all its departments, he says. “Our organisational architecture is from of the ’40s and ’50s,” he tells Fortune India in a telephonic interview from San Francisco. “As I have been saying for years, the best brains of the world are busy solving problems of the rich, who don’t have any. We really have to spend a huge amount of resources to use IT for food distribution and to manage our employment.”
At Electronics Niketan, Sharma is unruffled by the criticism. A tough taskmaster, she says performance is what matters. The pressure is ratcheting up. It is the biggest such experiment in the world. Klaus Schwab, World Economic Forum founder and executive chairman, recently said the global digital transformation, or the fourth industrial revolution, will be unlike anything experienced so far, in scale, scope, and complexity. “We do not yet know just how it will unfold, but one thing is clear: The response to it must be integrated and comprehensive, involving all stakeholders of the global polity, from the public and private sectors to academia and civil society.”
This uncertainty clouds India’s digital future. It is impossible to crystal gaze, but rapid progress is needed in education, technology, and reach. “To make the project a success, we have both a push from the government side and a pull factor from the citizens’ side,” says Sharma. There are a few encouraging signs. But the road ahead appears as potholed as the highways Modi has promised to repave.
(At the time of going to print, Aruna Sharma was secretary, electronics and IT, Government of India. She has since been transferred.)