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India is on a path of digitalisation that is different from China and US: Soumitra Dutta, Dean of Said Business School

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While India may have made a mark in the software services exports, it has lagged a bit in terms of adoption of artificial intelligence (AI), says Soumitra Dutta, Dean of Oxford University’s Said Business School. Dutta, a professor of Indian origin, says India has to now focus on building a world-class AI infrastructure if it actually wants to leverage the real potential of AI and automation. Dutta also says there is an urgent need for India to increase its spend on R&D and other academic research. India should get its companies collaborating more with the academic institutions to generate the ecosystem for AI. Edited excerpts of an interaction with ET Digital:

Economic Times (ET): Where does the world stand on AI adoption, especially the developing economies?

Soumitra Dutta (SD): I think all economies now in the world are realising that they have to adopt AI. First of all, AI is not a separate thing from technology. What is happening is, general digital technology is evolving into AI. So, for me, the distinction between digital and AI is getting blurred more and more. All economies are realising they have to actually adopt technology. The challenge, of course, is that they do not always have the skills.

Skills are the most important thing; and second, the resources. The adoption of AI technologies in emerging economies is going slower than expected and that is a problem because AI technology is moving exponentially fast right now. So the ability of emerging economies to keep up is getting challenged. That is the problem.
ET: What would be the impact of AI on jobs?SD: It’s a very important question. What is for sure is that some jobs are going to be automated by AI, some jobs are going to be enhanced by AI, and some jobs will be created by AI. What no one knows is the proportion of all.ET: How can we be so certain that AI wouldn’t create bigger economic gaps between the developed and developing world?SD: See, if you look at technology, it has actually increased global inequality. That is the reality, unfortunately. I have done research in the Network Readiness Index for the last 20 years and what we have seen from the data is that the digital divide actually has increased … let us take the mobile phone as a good example. Today, everyone has a mobile phone. But the people who have more education, more money, and better network are able to make more money and more value out of the mobile phone than someone who is less educated, has less money and has got a smaller set of networks.

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Soumitra Dutta, Dean of Oxford University’s Said Business School

So, some people are making much more value and some people are making smaller value with the same technology. That is the key difference why the divide is growing and that is one reason why you see that the countries that do better are the ones that use technology better. The people who will do better are the ones who will be able to use technology better. So technology is not the great equaliser. It creates more inequality. Now, obviously, what happens is it creates challenges for society and governments to reduce that because you have to reduce that gap. The gap is increasing.

ET: Considering this, isn’t India, a developing economy, in a peculiar situation because it is adopting technology fast and its economy is also doing well?

SD: Yes. So, India is on a third path of digitalisation. It is not the Chinese path, not the American path; it is its own path, which is very interesting. And the question now is that it has to integrate AI into the third path. Because right now, the third path does not really have AI integrated into it. Traditionally, it is for identity verification, it is for some kind of financial transaction that is now getting tested for some other domains like commerce and all that, but not yet fully. So, I think what India has to do is leverage on this third path and really build out the AI infrastructure in the country because India cannot rely on these western multinationals to build out the AI infrastructure.

That has to come from the India Stack architecture, because the reality is India does not have any AI company.

ET: What kind of skill sets are now required with respect to a developing country like India?

SD: One is the invention of AI, you create the technology. Second is adoption of technology, and third is regulation. India is weak in invention. So what it needs to do is invest more in R&D because India does not do much R&D; invest in academic research. It needs to get these Indian companies collaborating more with the academic institutions, with IITs.

ET: In developing nations such as India, a large chunk of jobs are generated by the agriculture sector and the MSMEs. Do you fear AI taking up many jobs in these sectors and creating some kind of imbalance for the economy?

SD: AI is already creating a huge imbalance in society. The agricultural sector has already got mechanised a lot.

ET: In the western world?

SD: Yes, in the western world. India has not got mechanised because the land size is small. It is not amenable to large-scale farming. Mechanisation is a reason why employment in developed economies has dropped in agriculture. Because you have automated everything with machines. That has happened in manufacturing right now.

If you look at the western world, agriculture is automated, manufacturing is automated and service is not, that is the reason why 80% of employment is in services. That is the threat. Why people are scared of AI is because they say that 80% of my population is in services and if that gets automated, like what has happened in agriculture and in manufacturing, that is a real problem for the society. For India, agriculture mechanisation will probably never be that high.

ET: How does AI impact a country’s GDP?

SD: You look at Germany’s GDP, it is driven by the middle and small companies. The one reason why Germany’s middle-sized companies are doing very good is because they invest heavily in technology automation. I think in general what you see is the more automation you have, the more value you create.

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