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AI Infrastructure Development Vision and Anticipations for the Upcoming 2024-25 Budget

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By Debashish Banerjee (Partner) and Priyam Banerjee (Partner), Deloitte India

In today’s world, it is hard to ignore AI in almost any area an average person would deal with. In India, the Government of India (GoI) has been a fast mover in pushing for development of AI talent, research and infrastructure. The FY 2023-24 budget highlighted ‘Making AI in India’ and ‘Making AI work for India’. Initiatives like the national AI portal INDIAai, Bhashini and YuvAI just reinforce the push. In addition, positions like the chair for GPAI for 2023 recognizes India’s global AI leadership capabilities. With recent successes of Chandrayaan-3, which uses AI significantly and Aditya L1, sky is clearly not the limit for India’s AI ambitions and leaves a lot to be desired from the Union Budget 2024-25.

The role of the government in promoting AI infrastructure and skill development

The Union Finance Minister, Nirmala Sitharaman, in her 2023 budget speech had stressed building AI locally and recommended setting up AI CoEs in top educational institutions. To that end, GoI invited proposals in November 2023, for setting these up with a significant outlay of Rs. 990 crore for 5 years, from FY 2023-24 to 2027-28. These CoEs will form crucial partnerships with industry and academia to conduct interdisciplinary research, developing cutting edge and scalable solutions especially in the areas of healthcare, agriculture, education, and smart and sustainable infrastructure. The government has also prepared a National DeepTech Start-up Policy (NDTSP) to stimulate innovation, spur economic growth and promote societal growth through the effective utilization of deep-tech research driven innovations.

The Indian government’s ambitious project to set up AIRAWAT (AI Research, Analytics, and knowledge Assimilation) – a cloud platform for advancing AI capabilities is a great example of developing infrastructure for next generation technologies. Similarly, multiple state government schemes (notably in Tamil Nadu, Telangana, and Karnataka) have been launched to grow and develop skills, propel India Inc and investments in this area, and regulate and govern the use of AI.

The impact of strong AI infrastructure in positioning India as a global leader in AI, fostering innovation, and attracting international investments

The AI industry is estimated to grow year-over-year at a CAGR of 30%. India Inc. has adopted AI in various segments. India might be behind a couple of global matured markets, but far ahead amongst developing economies. The application of AI brings in 3–10X improvement in business processes2. Hence, if used effectively, the technology will have a significant contribution to India’s ambitious goals of reaching US$ 5 trillion economy.

The Digital Personal Data Protection (DPDP) Act stresses the meaningful use of personal data with Government in the loop. Initiatives like National Data & Analytics Portal (NDAP) and Open Government Data (OGD) Platform, if used effectively via public-private partnership (PPP), can help build sovereign AI and attract private investment in areas of healthcare, agriculture, government services delivery in local languages, etc. to maximize economic development. The partnership between Reliance Jio and NVIDIA to build India’s sovereign Large Language Models (LLMs) is a great step forward to providing every citizen transparent access to resources.

Role of Budget 2024-25 to enhance AI ecosystem

Although steps like NDTSP and DPDP are great beginnings to generate enthusiasm of India Inc. and public in AI, opportunities are galore to improve citizen services like using AI to reduce legal case backlogs at courts, tax compliance, disease risk prediction from citizen lifestyle data, fraud detection in government schemes, using large language models (LLMs) for services and education delivery, etc.

The union budget has a huge opportunity to address these by devising ways to implement PPP models with value-based impact. There is also an opportunity to focus on centralized data repositories like NDAP, OGD, etc. for the country, especially in improving completeness, building trust and improving data access with the right set of controls. Lastly, with any improvement comes risks. Recent episodes of deepfake videos compromising private social data increases the expectations of stricter regulations and addressing ethical concerns. Establishing a governance mechanism is crucial to ensure trustworthy AI, covering everything from data sourcing and storage to the application of AI methods.

Anticipated Key Announcements from the upcoming Budget 2024

With AI becoming mainstream across the world, it is key that the Government devises plans and budget outlay to develop crucial AI infrastructure and skill development. A few crucial focus areas maybe:

• Data ecosystems: To realize India’s sovereign AI dream, easy access to complete data is critical. For example, Electronic Health Records () data for healthcare is not free flowing across medical institutions. Can the Government encourage adoption of ABHA (Ayushman Bharat Health Account) for easy yet responsible access to EHR for targeted healthcare services delivery?

• Regulations: 2023 saw US releasing executive orders on AI as well as different regulations in EU and China. In India, the DPDP is a great beginning, but the industry needs a deeper dive to ascertain how each industry is using personal data and keeping a balance between fostering innovation and regulating data use. We have seen many good and unethical/fake/wrong uses of AI. India must introduce penalties for unethical use, helping it shape up its image as a global AI hub. India’s diversity, cultural identity, and values should be considered while drafting policies on AI.

• Skill Development: Design a central committee of AI/ML experts in India whose role will be on standardizing the curriculum for masses and suggesting/investing on new unexplored technologies. Collaborate with leading academic and industry players to develop and globalize solutions, starting locally in India and using Indian IP.

• Incentivizing research and adoption of responsible AI: While schemes like NDTSP are good starts, there needs to be clearer intellectual property rights design to incentivize more individuals to take up solution development for real problems that plague India and adoption is pushed at more granular levels.

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