India’s Union Budget 2020 provides strong initiatives for technology sector to remain on track for US$5 trillion economy by 2025, says GlobalData

India’s Union Budget 2020 provides strong initiatives for the technology sector to remain on track for US$5 trillion economies by 2025, says GlobalData

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India’s Union Budget 2020 provides strong initiatives for technology sector to remain on track for US$5 trillion economy by 2025, says GlobalData
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The Indian Union Budget 2020 presented by the country’s Finance Minister Nirmala Sitharaman delivers a host of initiatives to boost the growth of the technology sector, which is a key component of the Narendra Modi government’s target of turning India into a US$5 trillion economy by 2025, says GlobalData, a leading data, and analytics company.

One of the most significant announcements was the INR80bn outlay over the next five years for the National Mission of Quantum Technology and Application.

Nishant Singh, Head of Technology and Telecoms Data at GlobalData, says: “The announcement is significant as the scale of investments necessary to make headway in quantum computing is not possible without the support of the government or large corporations. The quantum computing race already has stiff competition, with companies like Amazon, Google and IBM in the fray; the Indian government’s move should boost the attempts of domestic technology providers, who have been keen to enter this field, but so far did not have the necessary scale or resources.

“From the government’s perspective, quantum computing and its related applications will have significant implications for India’s digital citizen initiatives in healthcare, smart cities, and research. For the wider technology sector within India, it would mean attaining indigenous capabilities in quantum technologies, which they can leverage commercially.”

The other significant announcement was the building of data center parks throughout the country with the support of the private sector. Building data center parks will be necessary to cope up with the volume of data that would be generated if the government is to continue its digital initiatives for its citizens. Significantly, this move will also pave the way for better privacy regulations within India, such as the European Union’s EU General Data Protection Regulation (GDPR).

Singh adds: “Datacenter parks within India coupled with better privacy regulation will ensure the privacy of the data of Indian citizens, and provide a legal framework for the protection of data by ensuring that the data stays within the boundaries of the Union of India. After all, as the Finance Minister said in her speech – Data is the new Oil.”

Another notable announcement was that all public institutions at the grassroots level of local self-governance system in India are to be provided with digital connectivity – BharatNet will link around 100,000 of Gram Panchayats over the next year. The government also intends to link PAN (a unique identifier for filing taxes) with Aadhaar (India’s biometric ID system) and increase the scale of Direct Benefit Transfers to citizens.

The government’s previous initiative on Smart Cities continued, with the Finance Minister proposing five new smart cities in collaboration with states via the public-private-partnership (PPP) model. A move to replace conventional meters with smart prepaid meters over the next three years was also announced. This move can prove immensely important in trimming power distribution losses, enabling real-time energy usage information and paving the way for a wider-footprint smart grid network across parts of India. The government will also be moving towards using artificial intelligence and machine learning in the healthcare sector.

Singh explains: “For this move to become a reality however, the government will have to move towards a standard electronic patient record (EPR) system across the healthcare. This is a long-term strategy, rather than something that will provide benefits in the short-term.”

IT investments in the education sector should also pick up in the forthcoming years with the Government announcing full-fledged online courses. As per GlobalData, ICT investments in the Indian education sector have so far been only a minuscule 1.5% of the overall ICT investments.

In the Union Budget, the Finance Minister announced a degree level full-fledged online education program by institutions ranked in the top 100 of the National Institutional Ranking Framework. This move should help provide wider access to higher studies for several Indians for whom the education costs prove to be a hindrance in their attempt to pursue higher education.

Sing continues: “The fact that these online programs will be from top institutions and will award degree-level certifications, could be a major impetus in creating a job-ready India, which as indicated by the Finance Minister will have the largest working-age population in the world by 2030. Initiatives such as these will also help improve the current levels of technology integration in the Indian education system.”

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The information technology sector undoubtedly has to play a major role if India is to achieve the target; its contribution which currently hovers at around 8% will have to rise to over 10% of the overall GDP. As per GlobalData’s estimates at the start of this year, the domestic enterprise ICT market in India was expected to grow at a compound growth rate of around 7% for the next five years.

Singh concludes: “The initiatives announced by the government should provide a considerable boost to the domestic ICT market, and we believe the growth can be higher – very close to the double-digit mark if such initiatives and incentives for the Technology sector continue in the subsequent union budgets as well.”

Notes to Editors

Comments provided by Nishant Singh, Head of Technology and Telecoms Data at GlobalData

Information based on GlobalData’s Market Forecasts.

This report was built using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis conducted by GlobalData’s team of industry experts

About GlobalData

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India’s Union Budget 2020 provides strong initiatives for the technology sector to remain on track for US$5 trillion economies by 2025, says GlobalData
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