Getting India digitally ready: COVID-19 pandemic highlights urgent need to build digital cocoons for the whole population

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Published: May 15, 2020 3:25 AM

The Covid-19 pandemic highlights the importance of, and urgent need to build digital cocoons for the whole population.

Those who have been able to weave a ‘digital cocoon’ have done comparatively better than the real-world migrants.

The series of lockdowns implemented to counter Covid-19 has brought very different experiences for varied segments of society—the contrast can’t be starker than the social media posts of fancy meals at home compared to the long walks back to hometowns. What explains the difference? Those who have been able to weave a ‘digital cocoon’ have done comparatively better than the real-world migrants.

A migrant moves location for economic activity—whether a job, business, or studies. In case of a real-world migrant, her presence at the site of the economic activity is sine qua non—there is simply no way that the activity can be performed without the person being there. In the case of a ‘digital migrant’, however, a virtual presence suffices. Juxtapose the move of migrant labourers to their hometowns with the initiatives that many companies are now running to empower their employees to work from home (WFH)—or indeed, work from anywhere (WFA)—and the contrast is explained clearly.

The forces acting on the movement of people are divergent: In one case, migrants will have to come back to cities for work, while in the other, they can head back to smaller cities and towns to log in from anywhere. Depending on how many citizens are able to build their digital cocoons, and how quickly, it will have massive impact on urbanisation, real estate, transportation needs, and working contracts, among many other effects.

Building a ‘digital cocoon’
Five elements are required to build a sturdy digital cocoon: the ability to (1) get on a network, (2) communicate and connect, (3) add value, (4) make and receive payments, and (5) access assets and liabilities.

Identity and access: With UID in place, India has been able to address the challenge of identity to a large extent. However, in spite of some of the lowest prices in the world, a recent Internet and Mobile Association of India report notes that access to internet in India is still limited to only around 40% of the population. This digital divide automatically precludes a majority of the population from building its digital cocoon. Similar to the bijli-sadak-paani narrative of infrastructure development in the last quarter century, the next leg of public infrastructure investment will include access to the digital world—both in getting the relevant devices, and the ability to connect.

Communication and connection: For those on digital platforms, communication and connection are solved for by a wide number of applications, from social media platforms to gig-economy apps. Communication is cheap and easy, with the profusion of audio and video calls, and the ability to host and broadcast large events on stable platforms—in many cases, these come free of cost, so access is not a challenge. Over time, communication and gig-economy apps will start to become public utilities. For example, cities could start building ride-sharing apps for their citizens by linking various modes of public transport on a city app.

Add value: The primary and secondary sectors of economy (agriculture, manufacturing, construction) have a large physical component in their value-addition. These sectors (cars, clothes, medicines, chemicals, etc) work on real things requiring physical activity—these sectors will see more mechanisation and farming away of work to fancier technologies like robots or drones. The services sector, on the other hand, has been able to move its processes and outputs into the virtual world, and hence, is able to weather the Covid-19 storm somewhat better. Personal services like salons and spas will need to adapt to the changed world, just as services like auditing and consulting have. Mechanisation and digitisation of processes, coupled with the Internet of Things, will be an inevitable outcome of this pandemic. This change will upend many current processes, and will call for significant policy dexterity.

Make and receive payments: India is a leader in the digital ecosystem for payments. UPI, and the various consumer-facing apps built on top of it, have made accessing payments easier. Note, however, that this still remains constrained by the access to internet and reasonably-smart devices. Similar to identity, access to bank accounts has been largely addressed in India. The increase in currency in circulation post demonetisation, and the lines to withdraw monies from bank accounts during the lockdown indicate that there is still a significant section of the society that needs physical cash for its needs. The goal of building a less-cash society will need to be relentlessly pursued.

Access assets and liabilities: Payments, or medium of exchange, is one aspect of the use of currency; the other is its use as a store of value. For those with financial assets that they could access at a click, the impact of the lockdown was not as severe, even if the value erosion due to mark-to-market was. Those who have largely physical assets may not notice the mark-to-market gains or losses on their holdings, but have seen issues of liquidity. Physical assets have traditionally been used to create lines of credit—however, the paperwork in such cases requires significant physical activity. Digitising asset records and making them available as security will help create a more seamless flow of liquidity.

A national priority
At each step of building the digital cocoon, a significant number of citizens currently drop off. A specific agenda to pull as many of our fellow-citizens into this digital cocoon—and keeping them there—has to become a national priority. Building a digital cocoon does not mean detaching from the physical world. For many things, from consuming food to accessing healthcare, the physical world will still be around. However, the ability to get into a digital cocoon can offer protection to individuals and society in times of sudden crises.

 

The author is Head, Strategy and New Initiatives, Axis Bank. Views are personal

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