The annual meeting of the World Economic Forum at Davos is behind us. I have been going to Davos for nearly 17 years. Davos has changed in multiple ways, seeking to re-position and remain relevant. Its themes have become more complex and participants multiplied manifold. All this, in some ways, has robbed Davos of its endearing charm of remaining cohesive and compact. However, Davos is about networking, renewing contacts and making new friends. New friends incubate new ideas that often result in collaborative ventures. Someone described this year’s Davos as being confused and eclectic. It was no doubt, heterogeneous in multiple ways, breaking away from stereotyped classifications. Some developed countries were doing well while others were struggling. Growth in the United States is less robust than earlier projected and some view the Fed action in raising interest rates as pre-mature. Many jocularly referred to Janet Yellen as being the Central Banker of emerging markets! This is the measure of global inter-dependence, where interest rate behaviour in the US has global implications. Europe, having survived the Greek crisis, remains fragile. Administrative boundaries are severely stressed when nations, propelled by a deteriorating security environment, seek to relocate. The heterogeneity was equally true of emerging markets. Some were doing significantly better than others. Many view BRICS as irrelevant, with India bucking the trend. The speed of the Chinese meltdown and the anxiety about its soft landing compound global uncertainties. Latin America remains a mixed basket. Commodity-dependent emerging markets have been severely challenged by continued soft commodity prices. Overall, the Davos mood was sombre. India was suddenly in a sweet spot, given favourable external circumstances and a more purposeful political leadership.
The overall Davos theme was ‘Mastering of the Fourth Industrial Revolution’. The global economy is now perceived to have entered the age of ‘cyber-physical systems’. Not that the benefits of the first three revolutions have fully benefited the world. With almost 1.3 billion people still lacking access to electricity, the second industrial revolution has yet to be fully experienced by 17% of the world. The third industrial revolution was also incomplete, with roughly four billion people lacking internet access.
Industrial revolutions have come a long way. From the first industrial revolution (when muscle was sought to be replaced by machine) to the second industrial revolution (which revolved around division of labour, electricity and mass production) and the third industrial revolution (characterised by developments of digital systems, automated production and communication technology). The young Canadian prime minister, Justin Trudeau, remarked at Davos, “We don’t want technology simply because it’s dazzling. We want it, create it and support it because it improves people’s lives.” There is no doubt that there will be gainers and victims of the fourth industrial revolution. The speed with which societies embrace new innovations will determine the ability to gain from dramatic changes that the new Internet Age seeks to usher in.
Harnessing the benefits of the fourth industrial revolution is also contingent on managing multiple global risks outlined in the WEF Global Risks Report 2016. These include large-scale involuntary migration, mitigation and adaptation to climate change, geo-political uncertainties and inability to create new gainful employment. According to an Oxford University study (2013) titled ‘The Future of Employment’, disruptive technological innovations, like robotics and artificial intelligence, could leave up to 35% of workers in the UK and 47% of workers in the US at risk of being displaced by technology over the next 20 years.
The message for India from Davos was one of applause and expectations. The year 2008 was a similar inflexion point for the Indian economy. We had then missed the opportunity. This was the second opportunity and the configurations, both external and internal, are distinctly more propitious. The prime minister has achieved the extraordinary feat of not only putting India on the global radar but persuading the rest of the world that we represent the biggest untapped opportunity.
Can we embrace the fourth industrial revolution, quickly transiting the earlier stages?
India remains a land of contradictions. It has a large number of people living in poverty, malnutrition and hunger and without access to electricity, safe drinking water and sanitation. On the other hand, the number of mobile phone subscribers is close to a billion. The number of internet users, in spite of significant growth, is at best 400 million. Out of the 250,000 panchayats, less than 20,000 have reliable broadband connectivity. Curiously, resources garnered from the Universal Service Obligation Fund remain grossly underutilised. The path forward may require more than a combination of incremental actions. The financial system is broken and positive ongoing initiatives may need legislative support. Competitive federalism also needs incentives for faster replication to enable states to leapfrog. Judicial reforms and faster disputes resolution remain a continuing worry. Senseless obstructionism in Parliament goes beyond the game of numbers. They dent the credibility of our parliamentary democracy as a vehicle of inclusive but rapid change. The theme of this year’s Davos conference was about the fusion of technologies that blur lines between the physical, digital and biological spheres. The fourth industrial revolution is in a nascent stage. Its pace of change is rapid and disruptive to business and society. The time to leapfrog is now.
NK Singh is a member of the BJP and a former Rajya Sabha MP
The views expressed are personal