Budget 2024: India's digital public infra now a new 'factor of production'

The budget announcements also provide ample scope for the use of artificial intelligence (AI) tools and advanced data analytics as the government plans to expand and strengthen the country's electric vehicle ecosystem, agriculture, and healthcare sectors.

To begin with, while land, labour, capital and entrepreneurship are well-known factors of production—and considered to be the building blocks of an economy since they comprise the inputs used to produce a good or service which, in turn, produce income—Nirmala Sitharaman on Thursday described the country's DPI as a new ‘factor of production’ in the 21st century, adding it was "instrumental in formalization of the economy".

In India, DPI refers to platforms such as digital identification, payment infrastructure and data exchange solutions including Aadhar, the Unified Payment Interface (UPI) and the Account Aggregator built on the Data Empowerment Protection Architecture (DEPA).

The continued emphasis on building the country's DPI will provide a boost to fintech and healthcare startups, especially, along with the thousands of AI startups that are building tools over DPI.

Second, terming this period a "golden era" for "our tech-savvy youth", the finance minister announced a 50-year interest-free loan for such youth from an outlay of ₹1 trillion for the same. 

She emphasized that the corpus will provide long-term financing or refinancing with long tenors and low or nil interest rates, and hoped that this initiative would encourage the private sector to scale up research and innovation "significantly in sunrise domains".

Further, acknowledging the role of "new-age technologies and data" in changing the lives of people and businesses, while enabling new economic opportunities and facilitating provision of high-quality services at affordable prices for all, including those at the ‘bottom of the pyramid’, the finance minister underscored the need for programmes that "combine the powers of our youth and technology".

Third, Sitharaman also announced a new scheme to strengthen deep-tech technologies for defence purposes and expediting ‘atmanirbharta’ (self-reliance), but did not provide any details of the scheme. 

India already has many deeptech drone, robotics, and semiconductor design startups that make, among other things, unmanned aerial vehicles (UAVs) to carry various payloads to meet security, surveillance, geographical information system (GIS) mapping, inspection, traffic and crowd management requirements of the government, defence and homeland security agencies.

According to Mayuresh Raut, co-founder and managing Partner at Seafund, this scheme will not only help the government start addressing the 'Make in Bharat' initiative through indigenous technologies in defence but also unlock these technologies to other civilian uses. "Deeptech-focused funds like ours will definitely benefit from enabling initiatives like this," he added.

Kalyan Sivaraman, founder of 5C Network—a Tata 1MG-backed digital diagnostics startup, lauded the budget for recognizing the "crucial role of technology and youthful ambition" in shaping India's future. 

He believes that by combining these forces, "we can revolutionize healthcare delivery, making it more accessible, efficient, and personalized", adding that the creation of a dedicated fund for technology-driven startups with long-term, low-interest financing is a "bold move that will unlock immense potential".

Sivaraman added, though, that while extending tax benefits and exemptions for startups until March 2025 is a "welcome move... the devil lies in the details. We look forward to understanding the specific eligibility criteria and streamlining the application process to ensure ease of access for genuine startups".

He also urged the government to "prioritize digital healthcare infrastructure" as well. "Initiatives like telemedicine and remote diagnostics can significantly expand reach and affordability, especially in underserved areas," he said.

Meanwhile, Sitharaman also pointed out that the country's Electronic National Agriculture Market has integrated 1,361 mandis, and is providing services to 1.8 crore farmers with a trading volume of ₹3 trillion. 

She insisted that the sector is poised for inclusive, balanced, higher growth and productivity on the back of farmer-centric policies, income support, coverage of risks through price and insurance support, and promotion of technologies and innovations through startups. 

According to the National Academy for Agricultural Sciences, there were 7,241 agri startups as of July 2022. The number would have only increased since then, spelling good news for this sector.

Last but not the least, the finance minister spoke about expanding and strengthening the electric vehicle ecosystem, promoting "green growth" with a new scheme of bio-manufacturing and bio-foundries, and developing more "iconic tourist centres, branding and marketing them at global scale". 

All these initiatives are being made "smarter" with the help of technology, especially AI tools and advanced data analytics.

As an example, there are moves to develop Uttar Pradesh and Delhi as AI cities (not just 'smart' cities). For instance, when Ayodhya was gearing up for the Pran Pratishtha ceremony at the Ram temple on 22 January, the UP government pumped in crores on AI surveillance systems to identify suspicious activities and track down miscreants in the city.

Likewise, Delhi plans to develop a single window facility for micro, small and medium enterprises (MSMEs), thus, helping boost the fortunes of many deeptech startups that provide AI tools.