Policy Update
Lakshita Singh
Context
The International Monetary Fund recently developed the AI Preparedness Index to evaluate the level of AI readiness in various organizations. This index assesses AI preparedness in 174 countries by examining factors like digital infrastructure, human capital and labor market policies, innovation and economic integration, as well as regulation and ethics.
The index has categorized countries into 3 levels which are:
- Advanced economy
- Emerging market economy
- Low income economies
On June 25, 2024, the International Monetary Fund (IMF) launched an Artificial Intelligence Preparedness Index (AIPI) Dashboard on their website, which tracks AI readiness across 174 economies globally. According to the Index, India ranks 72nd with a rating of 0.49, while Bangladesh is at 113th with a rating of 0.38, Sri Lanka is 92nd with 0.43, and China is 31st with 0.63. Singapore (0.80), Denmark (0.78), and the United States (0.77) are among the highest-rated advanced economies.
What is Artificial Intelligence?
AI refers to the ability of machines to perform cognitive tasks like thinking, perceiving, learning, problem solving and decision-making. It can work and think like a human brain. It is a form of Machine Learning in which with the help of data the AI is enabled to imitate humans.With incredible advances made in data collection, processing and computation power, intelligent systems can now be deployed to take over a variety of tasks, enable connectivity and enhance productivity. As AI’s capabilities have dramatically expanded, so have it working in a number of different fields.
Significance
In Today’s world, countries are striving for economic excellence all around the globe. Due to present geo-political scenarios and thriving modernisation, it is important for countries to adopt newer technologies and digitise their economy for better efficiency and economic security.
In this digital era, it is the need for countries to adopt new generation and state-of-the-art technologies for their growth and development. AI is no such exception, it cannot be ignored. It is improving day by day, enhancing and making its place in the society. Integrating economies better with AI would enhance production and boost the economy, if we look from the perspective of the economy. There are many fields in which AI can be leveraged to make work faster and more accurate and boost competency and completeness, be it in security, defence, maritime, economic activities, space and science.
However, AI can be proved to be a powerful tool but if not regulated it can harm people in many ways possibly by creating deep fakes and errors resulting in threat to national integrity. Hence, it is necessary for a country to formulate enough rules and policies and create suitable digital infrastructure for the same. So, to better equip with the knowledge of how much a country is prepared and what all necessary steps it should take, this index is a very good source to know about the same.
The AI Preparedness Index is a valuable resource for policymakers, researchers, and the public, helping them to better assess AI readiness, identify gaps, and design policies to ensure that the benefits of AI are accessible to all. AI can enhance worker skills, boost productivity, and expand opportunities. For instance, in advanced economies, around 30 percent of jobs could benefit from AI integration. Younger, more skilled workers may find it easier to leverage these opportunities, while older workers might struggle to adapt. Workers who can effectively use AI may experience pay increases and greater productivity, whereas those who cannot might fall behind.
To protect against potential risks and abuses and to build trust in AI, countries should collaborate globally to strengthen regulations. For emerging markets and developing economies, the policy priority should be to establish a solid foundation by investing in digital infrastructure and providing digital training for workers.
According to Geovanni Milena, an economist at the IMF, “Artificial Intelligence can increase productivity, boost economic growth, and lift incomes. However, it could also wipe out millions of jobs and widen inequality. It could endanger 33 percent of jobs in advanced economies, 24 percent in emerging economies, and 18 percent in low-income countries. But, on the brighter side, it also brings enormous potential to enhance the productivity of existing jobs for which AI can be a complementary tool and to create new jobs and even new industries.”
Most developing and low-income countries, such as India, have smaller shares of high-skilled jobs compared to advanced economies, meaning they may be less affected by AI-induced job displacement. However, these countries often lack the necessary infrastructure and skilled workforce to fully benefit from AI, potentially exacerbating economic inequality.
INDIA’S POSITION WITH AI
According to a report from NITI Aayog, India, as the fastest-growing economy with the largest population in the world, has a significant stake in the AI revolution. Recognizing AI’s potential to transform economies and the need for India to strategize its approach, the Hon’ble Finance Minister, in his budget speech for 2018–2019, mandated NITI Aayog to establish the National Program on AI to guide the research and development of new and emerging technologies.
In pursuit of this mandate, NITI Aayog has adopted a three-pronged approach:
- Undertaking exploratory proof-of-concept AI projects in various areas.
- Crafting a national strategy for building a vibrant AI ecosystem in India.
- Collaborating with various experts and stakeholders.
India has partnered with several leading AI technology players to implement AI projects in specific areas such as education and health. Learnings from these projects, which are at various stages of implementation, as well as engagements with leading institutions and experts, have provided valuable insights for crafting the national AI strategy.
India, with its unique strengths and characteristics, has the potential to position itself as a global leader in AI through its approach of #AIforAll. This strategy emphasizes leveraging generative AI technologies to ensure social and inclusive growth in alignment with the Government of India’s development goals. In recent years, both public and private sectors in India have developed AI-powered tools that enhance the delivery of health and security services, positively impacting millions of lives. Some notable examples include:
- MyGov Corona Helpdesk: Launched by the Ministry of Electronics and Information Technology (MeitY), the Ministry of Health, and the AI startup Haptik, this chatbot was designed to combat misinformation and raise awareness about COVID-19 during the pandemic.
- E-Paarvai: An AI-powered mobile application by the Tamil Nadu State Government that detects cataracts, improving eye health care.
- Uzhavan: Another initiative by the Tamil Nadu State Government, this app helps farmers diagnose pest infections in their crops and provides remedial measures using AI in their local language, Tamil.
These initiatives demonstrate India’s capability to develop and implement AI solutions that address local challenges and promote inclusive growth. By continuing to invest in AI research and development, and fostering collaboration between public and private sectors, India can strengthen its position on the global AI stage.
India’s Steps in the Global AI race
Today, India’s government is focusing on leveraging digital technologies to drive inclusive development through widespread internet access and robust digital infrastructure, such as UPI transactions. This effort has resulted in innovative solutions addressing India’s traditional challenges:
- Unified Payments Interface (UPI): UPI is a mobile-based instant payment system developed by the Indian government to facilitate inter-bank peer-to-peer (P2P) and person-to-merchant (P2M) transactions. It has revolutionized the payment landscape in India by making transactions seamless and efficient.
- Aadhar System: Aadhar is the world’s largest biometric ID system. It provides a 12-digit unique identity number to India’s citizens and resident foreign nationals based on their biometric and demographic data. Aadhar is crucial in streamlining the direct benefit transfer scheme, ensuring that subsidies and benefits reach the intended recipients.
- DigiLocker: This is an online digitization service provided by the Ministry of Electronics and Information Technology (MeitY) under the Digital India initiative. DigiLocker offers every Aadhaar holder a cloud-based account to access authentic digital documents from the original issuers, enhancing the efficiency and security of document management.
- PAi by NPCI: PAi is an AI-powered chatbot developed by the National Payments Corporation of India (NPCI) to raise awareness about digital payment platforms like UPI. It educates users about the benefits and functionalities of these platforms, promoting the adoption of digital payments.
Numerous forecasts suggest that AI will contribute USD 967 billion to India’s economy by 2035. India benefits from a substantial demographic dividend, and major multinational corporations and entrepreneurs leverage AI technology in their startups and core services to enhance production quality and competitiveness. Globally, India leads in skill penetration and has an AI-ready market valued at $6.4 billion. In 2020, Indian companies ranked second in AI adoption in the Asia Pacific region.
India has also established itself as a hub for AI research and innovation. Since 2010, India has been the 4th largest producer of scholarly works related to AI and ranked 8th in the world for AI patents filed in 2020. India’s AI strategy aims to develop tools for both national and global use, particularly focusing on the global south. Here are a few Indian startups that are creating AI tools and products to tackle socio-economic challenges both nationally and globally:
Niramai: This AI startup offers affordable and fast breast cancer screening services at clinics in rural India, addressing the significant shortage of radiologists and labs.
CropIn: An intuitive, intelligent, self-evolving system that provides future-ready farming solutions across the agricultural sector. CropIn offers live reporting, analysis, interpretation, and insights across geographies, digitizing farms and managing data for the entire ecosystem.
Razorpay: A major payment gateway platform, Razorpay facilitates online payments with various methods and offers excellent checkout experiences for businesses.
To address linguistic diversity, India has launched various e-courses in different regional languages and introduced the National Language Translation Mission, further supporting inclusive growth and development.
CHALLENGES of AI and AI PREPAREDNESS INDEX
Measuring preparedness is challenging, partly because the institutional requirements for economic-wide integration of AI are still uncertain. Different countries are at different stages of readiness in leveraging the potential benefits of AI and managing the risks. As far as AI is concerned, INDIA is at a very novice stage as a result there are many challenges that India faces, the main issues are:
Data Privacy: AI systems rely heavily on large volumes of data to operate effectively. However, there is a significant risk of breaching data privacy when AI-powered tools extract sensitive information from databases, social media accounts, or online platforms without proper consent. This violation undermines individuals’ privacy rights and can result in both financial and personal harm. Ensuring data privacy and complying with data protection laws, such as the proposed Personal Data Protection Bill, is a pressing concern in India.
Employment Concerns: In India, employment has been a major concern, and the automation of tasks through AI could potentially reduce job opportunities across various sectors. As AI becomes more prevalent, there is a growing apprehension about its impact on employment and the need for reskilling and upskilling the workforce to adapt to changing job requirements.
Transparency and Ethical AI: It is crucial to develop and deploy AI systems that uphold ethical principles and human values. This involves ensuring fairness, accountability, transparency, and preventing biases in AI decision-making processes. Upholding these ethical standards is essential to build trust among users and stakeholders and to mitigate potential societal risks associated with AI technologies.
Way forward
Nonetheless, the AI PREPAREDNESS INDEX is an important step for people in business and various stakeholders to make the right and more informed decision in the field of AI which will make the incorporation of AI more smoothly and efficiently. AI shall be more leveraged in the growing economies but with proper regulation so that it doesn’t become a liability. More variety of data assimilation while training the AI models is one step ensuring more reliability, monitoring systems to be employed at various stages and legal policies should be made too.
References
- Fiscal policy can help broaden the gains of AI to humanity. (2024, June 17). IMF. https://www.imf.org/en/Blogs/Articles/2024/06/17/fiscal-policy-can-help-broaden-the-gains-of-ai-to-humanity.
- Mapping the worlds readiness for artificial intelligence shows prospects diverge. (2024, June 25). IMF. https://www.imf.org/en/Blogs/Articles/2024/06/25/mapping-the-worlds-readiness-for-artificial-intelligence-shows-prospects-diverge#:~:text=AI%20Preparedness%20Index,-Index&text=Measuring%20preparedness%20is%20challenging%2C%20partly,AI%20and%20managing%20the%20risks.
- Kumar, A., Shukla, P., Sharan, A., Mahindru, T., NITI Aayog, Sarkar, A., Nayan, A., Asthana, K., Wadhwani Institute for AI, Gupta, M., Raskar, R., nVIDIA, Intel, IBM, NASSCOM, McKinsey, Accenture, Roy, A., & Kant, A. (n.d.). National Strategy for Artificial Intelligence. In National Strategy for Artificial Intelligence [Report]. https://www.niti.gov.in/sites/default/files/2023-03/National-Strategy-for-Artificial-Intelligence.pdf.
- OECD AI Policy Observatory Portal. (n.d.). https://oecd.ai/en/wonk/india
About the Contributor: Lakshita Singh is a research intern at IMPRI, and currently pursuing BA history hons at Delhi University.
Acknowledgement: I would like to thank Ms Aasthaba Jadeja and Dr Arjun Kumar for helping me throughout, also my fellow interns Mr Shivansh and Ms Naushaba for helping me get it reviewed.
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