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7 Aug 2023

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India Faces Difficult, Complex Environmental and Development Challenges

After more than two decades of developing its business process outsourcing (BPO) and software industries, the nation of India faces an ironic issue: “a serious data problem,” according to a recent Bloomberg report.

The report found a glaring example of this problem with the government's consumer price index (CPI), which is said to be outdated by at least a decade and “grossly inadequate...for understanding and managing our economic reality,” according to economic advisors to Prime Minister Narendra Modi. A former head of the nation's statistics ministry decries an “absence of real and credible data” throughout the government's data reporting, resulting in what he calls a credibility crisis.

IDCA Research Confirms Challenges
India, despite what may seem like miraculous progress this century to establish a $3 trillion economy that now ranks 5th in the world (trailing on the US, China, Japan, and Germany), shows overall weakness in the IDCA Research Digital Readiness of Nations Index as well. The country ranks 89th among 147 nations, brought down primarily by its daunting CO2-abatement challenge. India is the world's 3rd largest producer of greenhouse gases (GHGs), behind China and the US, with an efficiency in producing them relative to its economy that's lower than China's, only 27% of the USA's, and only 39% of Brazil's.

India's overall Digital Readiness score stands at 40 on a 100-point scale (around the world average), the same as China's overall score, and compared to world leader Norway's 84 and the USA's 51. India's Environmental score of 10 compares to a world average of 21, with China scoring 15 and the USA 21.

There is optimism, though, with India's Economy score of 77, which is well above the world average of 67, well ahead of China's 61, and even ahead of the USA's 73. India continues to have a vibrant economy as measured by several third-party organizations (including the UN, World Bank, IMF, and US CIA), despite its reported crisis with internal reporting.

The economic score, as with all scoring in the IDCA Index, is relative, showing per-person data and comparing it to what would be expected by the nation's overall income levels. In this respect, India gets significant “bang for its buck” in establishing Internet access, speed, and mobility to its people.

Yet its data center industry remains well below the world median, and is only 50% as dense as that of China. It trails most of the developed world by a couple of magnitudes and more.

The other two categories in the IDCA Index are Social and Governance, reflecting factors such as income disparity, physical infrastructure development, education, corruption, and overall stability. In these categories India scores 43 and 30, respectively, compared to world averages of 48 and 44. China comes in at 45 and 34 in these categories, and the USA scores 57 and 72.

The data in these latter two categories shows that India still has a long way to go in developing its infrastructure and social safety nets, and faces ongoing concern over the direction of Modi's leadership and the future of India's political culture.

Massive Resources, Complex Challenges
India's population of more than 1.4 million people officially overtook China earlier this year, establishing India as the world's most populous country. So its challenges must always be considered in terms of their absolute scale, in addition to the relative challenges identified by the IDCA Index. Its massive population can be felt in many statistical views of the nation: for example, despite decades of aggressive development, India's BPO and software industries still constitute less than 4% of its economy.

These industries have created $60 billion in revenue among the top tier of development companies alone, along with about 1.5 million relatively well-paying jobs. Yet those jobs encompass only about 0.1% of the total population. India is too large, too diverse, and too complex to be amenable to any single program to further its digital infrastructure and develop its Digital Economy.

Getting a firm grasp on CO2 abatement seems to be the highest priority, at least to an outside observer. Its overall economic vibrancy offers hope, and should continue to in the face of its serious challenges.

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