Budget 2023-24: Decoding The Government’s Artificial Intelligence Pitch

In 2018, government think-tank NITI Aayog released the National Strategy on Artificial Intelligence (AI). At that time, AI was a popular word in the coder parlance but was largely missing from ground zero. Back then, NITI Aayog then sought creation of Centres of Excellence (CoEs) to strengthen AI development and spur application-based research.

After five years, AI found mention in the most important financial document of the country, the Union Budget, for the second year running.

Presenting the Union Budget 2023-24, Finance Minister Nirmala Sitharaman called for realising the vision of ‘Make AI in India and Make AI work for India’. She made the following AI-related announcements in her speech:

• Three CoEs for AI to be set up in top educational institutions
• Industry partnerships for R&D of scalable solutions in agriculture, health, and sustainable cities
• National Data Governance Policy to be set up to enable access to anonymised data

The announcement of the National Data Governance Policy is also expected to address one of the major hiccups for adoption of AI in the country – the lack of datasets, as the policy would enable widespread access to anonymised data. 

Further, in another boost to the Centre’s bid to create a skilled AI talent pool, the minister said that the fourth edition of the Pradhan Mantri Kaushal Vikas Yojana will provide on-job training and courses in emerging technologies such as AI.

Professor Srivardhini K Jha, the chairperson at IIM-Bengaluru’s startup incubator NSRCEL, welcomed the move to set up the CoEs.

“The industry-academia research linkage is tenuous in India, and strong incentives need to be in place for both academia and large industry players for the initiative to bear fruit,” added Jha.

Increasing AI Usage 

Moving from a popular word in the tech domain, AI has been lapped up by the central government in the past few years. 

As the industry grew, the government was also quick to jump onto the bandwagon. Post 2019, it went full throttle on AI and deployed the technology for novel products such as Covid virtual assistants, monitoring drinking water supply and for recording the attendance of the field staff of the National Highways Authority of India (NHAI).

States such as Telangana, Uttar Pradesh, Tamil Nadu and Punjab have also deployed AI systems from surveillance to verifying pension beneficiaries and from screening cataract to forecasting energy needs.

After the Budget 2022-23 pitch, the Centre went on a blitzkrieg and launched multiple new initiatives. Among them was the AI-led Digital India BHASHINI project to mine open data to build the next-generation of government websites and citizen-centric services.

Besides, the government is also working on evolving the popular IndiaStack to embed an AI layer to scale its offerings and robustness. However, the most prominent deployment came in the form of the rollout of Digi Yatra, a biometric-based digital processing of flyers, at multiple airports. At the heart of it, the system deploys AI classification models to decipher one passenger from another.

Obstacles On The Road 

The AI-related announcements in Budget 2023-24 have been widely welcomed by the industry, calling them a much needed impetus to the burgeoning ecosystem. 

Speaking to Inc42, Sandeep Dutta, AI-based analytics startup Fractal Analytics’ chief practice office for the Asia Pacific region, said that India has the potential to become the AI powerhouse of the world and that the CoEs would enable new talent to contribute to the industry.

However, he also added that while more granular data was available in the western hemisphere, lack of data sets was a problem in India. He expressed confidence that the National Data Governance Policy would spur the creation of better quality datasets, which would incentivise development of AI-specific products for India. 

While AI has wide applicability across domains, the government has largely limited its focus on key areas like agriculture, healthcare and sustainable cities. Many industry players have called for ramping up deployment of AI systems even in niche areas such as defence and infra mapping. 

Defence surveillance startup Optimized Electrotech’s MD and cofounder Sandeep Shah told Inc42 that the perception of the emerging technology has evolved from being just an experiment to something that works in India. 

He also called for ministry-specific budgetary allocations to quickly shore up adoption of such systems across sectors. 

However, the biggest issue before the ecosystem appears to be the opaque regulatory mechanisms. While there is no consolidated regulatory framework to govern the space currently, the rollout of Digi Yatra saw the Ministry of Civil Aviation impose several norms on airports and related agencies regarding the collection, storage, and deployment of biometric data.

Public policy firm The Quantum Hub’s founding member Rohit Kumar said that it is imperative for the government to not just focus on technological development but also the regulation aspect. 

“The scope of research at CoEs should go beyond developing AI solutions to understanding how AI should be regulated. While AI promises to revolutionise how we use tech for development, it also has the potential to disrupt, and therefore legislation needs to stay ahead of the tech, to ensure that the solutions we build are ethical and the least disruptive,” said Kumar. 

In the past, the government has also tried to push for reforms and legislation to govern the space. Last year, the revised draft National Data Governance Framework Policy was unveiled by the government which proposed a sea of changes, including the establishment of an India Data Management Office (IDMO) to formulate standards and guidelines on all aspects of data storage and data anonymisation.

However, the draft Bill received criticism from policy experts and is currently under consideration of the MeitY.

The Ecosystem Shapes Up

The government’s push has helped scale the AI ecosystem and spawned a number of new players in the domain on the back of a large talent pool. As per a report, India accounts for the biggest chunk of AI talent in the globe. 

As per Inc42 data, India is currently home to more than 200 venture capital-funded startups working in the domain of AI. 

The domain is populated by a slew of startups such as Cropin, REZO.ai, Rephrase.ai, among others. Besides, a host of big conglomerates, including Reliance Industries and the Tata Group, have also acquired or deployed these AI startups to streamline operations and efficiency. 

India has also been working with countries such as Germany in the domain of AI, specifically to advance AI-based startups and research. Besides, India has also been leveraging its G20 presidency and chairmanship of the Global Partnership on Artificial Intelligence (GPAI) to bat for innovation in AI and to devise a common framework to govern the emerging tech. 

The growing requirement of SaaS products and services with an in-built AI layer has also pushed the space. Besides, AI has also seen usage in newer domains such as digitising documents, automating heavy machinery, and building tailored learning experiences for users.

However, despite the growing push from the government, certain nuances are yet to be ironed out. Be it large scale deployment or instituting a common framework to govern the space, India still has a long path ahead of itself. While the Budget announcements are certainly a big push, it remains to be seen if the AI ecosystem can finally lift off and make a splash like the IT industry did decades ago.