Union Budget 2019: Tech Startups Look For Action On Digital India Front With New Budget

While The New York Times termed PM Narendra Modi’s ‘Digital India’ as a ‘Big Brother’ tool to influence voters, accusing the centre of introducing China-style internet censorship, Piyush Goyal, the interim finance minister in early 2019, during his maiden interim Union Budget 2019 speech termed ‘Digital India’ a ‘revolutionary’ programme.

“Monthly consumption of mobile data increased by over 50 times in the last five years. The cost of data and voice calls in India is now possibly the lowest in the world,” Goyal had said.

Arguably, India’s startups have immensely benefitted from Digital India and are expecting the government to open doors for more digital partnerships with startups. For instance, Rajan Navani, vice chairman & MD of JetSynthesys who is also the current chairman of Confederation of Indian Industry’s (CII) National Council on Future Businesses, Artificial Intelligence and India@75 told Inc42, “The increasing adoption of new and emerging technologies like AI are further driving business growth. With growing entrepreneurial aspirations in India, initiatives like Startup India and Digital India are creating an enabling ecosystem to support startups, incubators, accelerators and co-working spaces.”

According to Himanshu Pujara, regional managing director, Asia Pacific, Euronet Services India, measures are being taken to make cash and digital payments more accessible to the common man, and the government has demonstrated its willingness to work towards a more financially inclusive and empowered India. For the past few years, the Ministry of Finance and the RBI have been creating an enabling environment for the payments sector.

We are optimistic that this Union Budget 2019, the government will provide tax relaxations for fintech companies and payments players which will lead us to increase penetration and provide better customer service through constant innovation. – Himanshu Pujara

Digital India Movement Gets Impetus

While many new national leaders take their own time to plan and launch new policies after coming into power, in the case of Narendra Modi, many of the startup-centric plans seemed to be ready by the time he became the Prime Minister. Digital India, Startup India and Clean India are just a few of the policies announced shortly after Modi took office for the first time in 2014. While the efficacy of these policies is debatable, they did succeed in not only raising awareness about the subject matter, but also brought in a lot of government investment in this area.

While under Jan Dhan Yojana, 34 Cr bank accounts were opened, Aadhaar provided digital identity to 122.9 Cr citizens of India, helping save thousands of crores through direct benefit transfer (DBT). Lastly, more than 307 government services have been available on Umang egovernance platform for all citizens. These were some of the cornerstones of the Digital India movement.

Approved by the Cabinet on August 20, 2014, the Digital India programme was intended to be implemented in phases till 2018 and aimed to provide the thrust to the nine pillars of growth areas, namely

1.     Broadband Highways
2.     Universal Access to Mobile Connectivity
3.     Public Internet Access
4.     Egovernance
5.     Electronic Delivery of Services or e-Kranti
6.     Information for All
7.     Electronics Manufacturing
8.     IT for Jobs
9.     Early Harvest Programmes

As the government has made credible progress in the areas of egovernance, e-Kranti, public internet access programme, universal access to mobile connectivity, some of the other plans such optical fibre connectivity for all villages is still far from reality. Earlier, the government had announced that as part of Digital India programme a network of Common Service Centres (CSCs), which act as access points for delivery of various electronic services to villages in India, have been expanded to 2.5 Lakh gram panchayats.

In 2018, the CSC model adoption of six villages in the country in the pilot phase was further expanded to 700 villages. Named as DigiGaon or Digital Village, this was conceptualised as a connected village where citizens can avail various egovernance services from the central government, state governments and private players in rural and remote villages in the country. Digital villages have also been equipped with solar lighting facility in their community center, LED assembly unit, sanitary napkin unit (with active participation on Asha and Anganwadi workers) and Wi-Fi Choupal or the rural public Wi-Fi programme and its applications.

On February 1, 2019, the then interim finance minister Goyal had announced plans to create 1 Lakh digital villages over the next five years. “The Common Service Centres are expanding their services and also creating digital infrastructure in the villages, including connectivity, to convert the villages into Digital Villages. More than 3 Lakh Common Service Centres (CSCs) employing about 12 Lakh people, are digitally delivering several services to the citizens.” Goyal said.

Key To Digital India Infrastructure: AI, Big Data, IoT

Big companies such as Google, BSNL, BBNL, Reliance and many others have actively participated in Digital India campaign. Startups want a similar opportunity for themselves as well.

Kumar Srinivasan, CEO of MatchMove, believes that the startup participation should be equally encouraged by the government. “The areas of interest for me are mobile connectivity and early harvest programs.”

I am expecting that the upcoming budget will open more doors for digital India and most importantly will help ease things for digital payments, IOT, AI, and overall help focus on GDP growth. – Kumar Srinivasan

Hiren Shah, Founder and Chairman, Vertoz said that one of the important aspects of the Vision 2030 declared this year was the emphasis laid on Digital India. He called digital villages an important step to achieve deeper internet penetration in the country.  “In addition to the effective adoption of digital technologies like AI and Big Data across sectors, India has the potential to drive 275 Mn people towards internet usage while creating new ways for brands to target customers. We hope that Modi 2.0 government will come up with newer policies to encourage Digital India and smart cities.”

With the current discourse revolving around data security and data localisation, especially with the Personal Data Protection Bill 2018 now in the spotlight, India will need to create better digital infrastructure for the storage of data. Shah added that the upcoming budget needs to emphasise on the importance of better digital infrastructure along with a focus on AI and Big Data.

Prashan Agarwal, CEO, Gaana too said that Digital India is a move in the right direction that will further bolster the music streaming economy by enhancing accessibility to tier II and tier III markets. With a greater emphasis on Artificial Intelligence (AI) and lower data costs in the interim union budget 2019, this step in the right direction will nudge home-grown brands to launch disruptive products & services.

Has Digital India Improved Ease Of Doing Business?

Digital infrastructure brings transparency as well as efficiency into all government systems. In the World Bank’s Ease of Doing Business Ranking of 190 countries, India, currently at 77, has improved its rank by 53 positions in the last two years and 65 positions in last four years. Much of this is thanks to Digital India initiatives.

According to Rituparna Chakraborty, cofounder & Executive VP of TeamLease, introducing a Universal Enterprise Number (UEN) and replacing the 25+ ID numbers is critical to improving the ease of doing business. The budget should also look at allocating funds and setting up a council similar to the GST Council.

The GST Council should look into rationalising, simplifying and digitising the current 60K compliance rules, 3,800 filings and 600 changes that businesses are mandated to do. Additionally, the thrust on Digital India should continue as it has the potential to create a forward-looking regulatory sandbox or innovation test labs to promote EODB. – Rituparna Chakraborty

Seconding this, Navani said that alterations or changes in regulations such as faster payment processing and relaxation in certain goods and services tax (GST) norms will help build a conducive environment for early-stage ventures. “Overall, the startup industry is looking at improvement in ease of doing business with a digital-first approach to enable them to scale up,” he added.

E-Governance, Easy Access To Funding And More 

The Modi government has already been on a mission to digitise all aspects of governance. It’s also an essential pillar of the Digital India programme. As part of the programme, the government has already implemented direct benefit transfers, government emarketplace (GeM) and many other initiatives.

MatchMove’s Srinivasan said that while the nine pillars of Digital India themselves are broad areas which require capital, human workforce, technological advancements, and infrastructure. “My preferred three areas are egovernance, jobs, and connectivity. Technology has shrunk our world and brought us all together. Expanding on technology and connectivity for e-governance is a great initiative as it can bring ease-of-use, growth, and prosperity to all citizens of India. Jobs are key to the growth of the nation. The government must handpick the right leaders with the long-term vision with the capability to execute for these important areas.”

Rachitta Juneja, the CMO of IoT startup Letstrack, which has worked with government bodies said, “Considering the current scenario we expect that there should be a fast implementation of the procedures to ease startup funding. We also expect a strategic plan to promote AI in various sectors, as this would need close coordination of different ministries with Information Technology ministry and tech startups.”

She added that the Modi government in Budget 2019 should focus more on smart cities and Digital India initiative in order to shape IT infrastructure and increase adoption of technology in rural areas and Tier 3 markets.

We hope that the government pulls the GST tax rates. We need policies to be implemented for increased use of technology to make systems efficient and more transparent. – Rachitta Juneja, Letstrack.

Pinning Hopes On Digital Villages

The digital villages announcement from earlier this year was welcomed by all, especially tech startups, who have been looking to access the rural market with government support. It took cues from another ambitious project of the government —100 smart cities by 2022 —  which was launched in 2015, The Smart Cities Mission is supposed to transform 100 cities into “smart cities” by 2022 in terms of ICT, supply chain infrastructure, housing, waste, wastewater management, and mobility infrastructure.

The centre has approved a fund of INR 98K Cr ($14 Bn) and aims to attract INR 8.58 Lakh Cr ($120 Bn) from private players for Digital Villages. While dozens of tech startups have been working on the project, if it is executed properly, it was to open up loads of opportunities for IoT, cybersecurity, robotics, WTE, ICT, AI, ML, real estate, and other tech startups.

However, it’s been four years since the announcement, and not a single city has been announced as a smart city. Highlighting this gap, Sameer Nayar, founder & CEO of BuildSupply said, “The Union Budget 2019 also needs to give a nudge to the ambitious ‘Smart Cities Programme.’ The lack of planning in terms of providing the infrastructure that meets the growing needs of Indian cities is a roadblock that requires immediate attention.”

Time To Consolidate Digital India Plans

About the Digital Village programme, Nayar said that the Union Budget 2019 should expand the scope to improve and upgrade rural CSCs, schools and healthcare and irrigation infrastructure to provide an impetus to the real estate and construction industry. “This can be implemented in a phased manner across these 1 lakh villages. With the right balance of physical and digital infrastructure, this would help transform the quality of life of local inhabitants and enable these villages to emerge as model villages and form the blueprint for the subsequent upgradation of other villages,” he said while adding that local construction and infrastructure development will also boost local employment.

On a similar line, Anand Kumar Bajaj, founder of PayNearby, said that a more inclusive policy-making process is key. He said it is important for the government to work with all the stakeholders towards the creation of a regulatory, social, commercial and infrastructure frameworks. He also stressed on the need for a digital literacy infrastructure and policies to help assisted distribution of digital services to all segments of customers.

There’s no doubt that Digital India and Make in India have given a big impetus to many startup sectors. But Upasana Taku, cofounder, Mobikwik said the Union Budget 2019 should give a further thrust to the digitalisation of services, especially in terms of investment in infrastructure, availability of capital, incentivising digital payments.

“The benefits of the digital services value chain must percolate to the under-banked population, offering them affordable and accessible financial services like loans and investment products. Indians want to save, transact, make and receive payments, access credit, and ensure against vulnerabilities but the lack of affordable financial services often sets them on a road to failure and keeps them in a vicious cycle of dependency,” Taku added.

While many of the key announcements in relation to the Digital India programme and its many initiatives came at the interim Union Budget 2019, the full budget session which begins this week on July 5 will create a roadmap for the future of the Digital India programme. India’s new finance minister Nirmala Sitharaman will face the challenge of ensuring right budget allocations for the smooth implementation of the various policies that have already been floated by the government — instead of announcing new developments — as this is the time to consolidate Digital India work for a deeper impact.

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