Set priorities to prepare for the global economy that’s emerging

It is absolute necessity for India’s new government to adopt a visionary approach to navigate and leverage the dual technological transformations—energy transition and digital transformation—currently reshaping the global economy.

Understanding the Technological Transformations:

• Energy Transition: The fossil-fuel-based industrial economy is giving way to renewable energy sources like solar power, wind power, and green hydrogen. This transition is being fast-tracked by massive private investment and plummeting costs of renewable energy capacity and products.
• Digital Transformation: The advent of artificial intelligence (AI) and Generative AI (GenAI) is changing the way we live and work. These technologies are replicating and massively multiplying the mental capacity of human beings, leading to a revolution in various fields.
• Global Competition: There is intense global competition, especially between the US and China, in leading these transformations. National governments are playing a key role in supporting and subsidizing private companies in this race.

Implications of the Technological Transformations:

• Impact on Global Economy: These simultaneous transformations are expected to usher in a massive investment boom and decades of high growth, changing the world in which we live.
• Existential Threats and Opportunities: While some experts fear that AI poses an existential threat to humankind, others argue that AI can be deployed to immensely enhance human knowledge and creativity across many fields.
• India’s Position: In India, the AI experience has been quite positive so far, with 92% of knowledge workers using AI. However, much of this has to do with the application of AI and GenAI algorithms, rather than creating them.

Strategic Implications for India:

• Leveraging Technological Transformations: The new government must prioritize leveraging both energy and digital transformations to propel India towards becoming the third largest economy by the end of the decade and achieving developed nation status by mid-century.
• Government Support and Policy Framework: Effective policies and substantial government support are crucial for fostering innovation, attracting investments, and ensuring sustainable economic growth amidst these technological disruptions.
• Global Economic Positioning: Preparing for and integrating into the emerging global economy requires strategic planning, investment in infrastructure, and nurturing of a skilled workforce capable of driving and sustaining technological advancements.

UPSC Mains Questions:

Q. Discuss the implications of the energy transition and digital transformation for India’s economy. How can India leverage these transformations to become the third largest economy by the end of this decade?