Fourth Industrial Revolution: How should India React?

Hello guys!

I wrote a draft policy discussion paper on the impact of forthcoming technologies like robotics and artificial intelligence on the economy. Please read it at your leisure. Any critical comments are more than welcome so that I can make incorporate them and make it better.

The questions addressed are: will the upcoming industrial revolution (robotics, AI) be good for mankind like the previous ones or will it take away all our jobs? Will it create a winner take all economy and increase inequality? Or will, like the previous ones, economy will adjust itself and create better lives for all? Will history be repeated or will it be different this time?

What does basic economic logic say about the impact of these technologies? Will the unemployment so caused only be temporary? If so under what conditions can it become sticky? Can India really avoid Fourth Revolution by banning the new technologies? If so what will be the consequences? What should it do to better prepare itself for the coming Revolution.…/D…/SSRN_ID3084256_code2854981.pdf…

#AI, #Robotics, #Unemployment, #ClassicalEconomics


2 Replies to “Fourth Industrial Revolution: How should India React?”

  1. Hon’ble Sir
    I fully subscribe to your view that India can’t escape from it in a globalised world. But I have many worries:
    Recent news said that now Google is creating such intelligent machines that they will be able to write new codes for generating new machines which are further more intelligent. At present these are created by extremely high qualified professionals which are just 1000s in number.
    Even IIT guys will find it tough to get jobs at any stage of work process. We have capable machines now that can create further machines and whole chain is automated.

    2. Even per capita GDP may have gone up but quality of life of majority is not rising. Gini coefficients itself has huge limitations. (while both Bangladesh (per capita income of $1,693) and the Netherlands (per capita income of $42,183) had an income Gini coefficient of 0.31 in 2010, the quality of life, economic opportunity and absolute income in these countries are very different, i.e. countries may have identical Gini coefficients, but differ greatly in wealth. Basic necessities may be available to all in a developed economy, while in an undeveloped economy with the same Gini coefficient, basic necessities may be unavailable to most or unequally available, due to lower absolute wealth.)
    3. Even at present when we have not embraced IoT, AI etc in full measure, we are not able to create GOOD QUALITY FORMAL JOBS and as Labour bureau puts that 8 Labour intensive sectors just created 1.35 lakh jobs when we need 1.2 crore jobs every year.
    4. In AGRICULTURE on which more than half India is dependent, NSSO puts that on an average a household earns about 1600 per month and even in recent pre budget talks, farmers are demanding some sort of income security.
    5. Even in near future for India’s growth, we are heavily dependent on firms like Google, IBM and other Japanese firms as for smart cities etc we have lack of cutting edge technology.
    6. I also make the case of easing Labour laws as it is imperative but it is equally true that it is not going to improve quality of life of labour simply because since this technology revolution, bargaining power of labour unions is extremely less in front of machines.
    7. All sectors are losing including
    Professions like CA, CFA, MBBS as now machines are able to do surgery, file tax returns or do tax planning and do complex financial analysis. WEF days that productivity will be highest only when men and machines work in collaboration and so it is not man VS machines rather man with machine. Even though in short run it seems to be working but in long run it is taking entire knowledge work. Till now machines used to take our physical labour work but now they are taking mental capabilities and are much more intelligent then humans. Worse, they have the capability to learn much faster and apply logic and they are simply no longer a programmes machines.
    Many experts said earlier that skills like COMMUNICATION AND EMPATHY can’t be emulated by robots but that is defied with HUMANOBOTS like SOPHIA. They have emotions, learn like humans and can create their own world in near future.

    Several reports shows that nearly 70% of jobs have potential to be automated and as population is rising, I am quite sure that in no way we can create that much of jobs.
    This reminds me of Dr Raghuram Rajan saying that then would we levy 90 percent income tax simply to create purchasing power as 4.0 will bring abundance?
    Though many countries including India is doing it in many ways but suppose if we start giving UBI to all citizens simply because there are no jobs and what would be meaning of life then?
    Retail, defence, manufacturing, AGRICULTURE, logistics, entertainment etc all sectors from low to high skilled are coming in realm of 4.0.

    You said that technology will reduce cost but cost of other factors may increase:
    Civil unrest and so populist policies may create social and political instability
    Inputs like water, quality air etc will become costlier.

    Worst, Indian youth like us are not prepared well by our education institutions despite being from top institutions in the country. Less than 10% people are graduate and you see many have fake degrees, many have only corrospondence course and regulars have low employability. I sincerely request you to work to improve education system in India otherwise future problems will be very tough to handle.
    Please correct me if my views are wrong as I also aspire to be in realm of policy making in near future.
    Warm Thanks
    Tarun Goyal

    Liked by 2 people

  2. I think the author has presented a very comprehensive study on the subject. In a crust, even if machines replace humans at jobs, as long as they do not act as consumers, economic equilibrium will make sure that humans will survive (perhaps even thrive). Hence, the question is not whether we should or should not embrace 4 IR but how to do it. In this case, as the proverbial truth goes – “We are condemned to make a choice”

    Ideally we should make sure that –

    1. India does not become a market for foreign products of 4th IR but a manufacturer and export hub. Can 4th IR technologies be nationalised or they should remain open source? There is an underlying caveat in this that it would work smoothly in a free-market based economy. But, if present US-China trade war is to go by then one has to take into consideration what if in future protectionism become more prominent? What if the theory of self-sustenance of nations, which now resides either in dustbin or North Korea is revived because of increased automation. Surely technologically advanced, with low population countries like US can experiment with it.

    If this be the case, I am afraid India might have to follow the path of colonisation herself (in a more peaceful manner) either in Africa (which is very unlikely) or some new planet (I believe it to be more likely).

    2. Rather than focusing on UBI, why not ensure Universal Access to Fundamental Needs – Food, Health, Education, Transportation and Clean environment. I say this because the truth is that Indian despite of modern education and literacy are psychologically driven by their identities. Most Indians define themselves not by their hobbies but by their jobs/how much they earn. There is a good reason to believe that some people might feel left out of this endeavour even when they are actually not. Self-victimisation is the favorite pastime for most Indians else we would not have so many protest for reservations.

    3. Prioritising social and environmental infrastructures rather than growth when it comes to using these technologies. Earlier revolutions have exclusively been driven on economic growth and productivity at the cost of these fundamental needs. We should learn from our mistakes. Days of just counting progress via economic jargons are gone. People now measure prosperity by fundamental need and this feeling is only likely to become more strong. For eg: What if Machines themselves do not consume food but consume something which depend on land. Then there is bound to be competition. As more machines will be used, we do not have enough reserves of either – lithium, boron or even fossil fuel. It might be that there might be competition between human food and Solar energy from solar parks which require land.

    All this is not say that we can ignore 4th IR else we will ourself become colonised again in a different manner. The form of colonisation might change but its effect will be same or even worse. As I said, “We are condemned to make a choice” here.


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