The trouble with being first
India has homework to do to be ready to lead a data revolution
“India #1 in the world” — from space exploration to COVID-19 cases, digital payments to population size — whatever it may be, we Indians see headlines like these all the time. But unlike topping the middle school maths test, leading the way in cutting-edge areas comes with consequences.
Just like the Green Revolution of the 1960s multiplied agricultural productivity to the nation’s immense benefit, it also had the unseen, unintended consequence of making farmers more reliant on chemical fertilisers and pesticides. This doesn’t mean we shouldn’t make such leaps of progress. However, it does emphasise the importance of protecting against ‘known unknowns’, and rapidly responding to ‘unknown unknowns’ as they arise.
This is no different for India’s great leap forward on data. India has built world-beating public digital infrastructure like UPI, and is pushing some boundaries on regulations. For instance, with directions from India’s central bank in 2016, the financial services sector has been building a new category of companies called “account aggregators” that will help you move your banking data from one bank to another. But why stop at banking? India’s recent digital heath blueprint and its telecom regulator foresee similar entities in their sectors. All these steps would build pipes that connect all your scattered data across your bank, telco, hospital etc., and empower you to choose how it should be used.
When implemented, this will be transformational for the Next Half Billion (NHB). Imagine if an under-banked farmer uses his mobile billing data to prove his creditworthiness to a formal loan provider, rather than a loan shark. Or if a start-up uses your health data to help you manage your lifestyle better. The possibilities are as vast as our imagination, and India is dreaming big.
But it’s worth considering what could lie ahead. If these new data pipes are completely open, they could be leaky, and put people at serious risk. For example, if health data accidentally gets into the wrong hands, someone could blackmail you about revealing your medical history. Or uses your banking data to pretend to be a representative of your bank, and then siphon your funds away. As more and more pipes emerge, the risks increase — more pipes that could leak, or with more data in one place, more that can be siphoned away with one illegal connection.
To prevent such situations, designers of these systems have stringent security and privacy requirements for service-providers wanting to connect to peoples’ pipes. Only a few service-providers make the grade, and they remain highly regulated. Just like the few park entrances you’ll see open at Cubbon Park on a Sunday stroll — police can be deployed at just those few instead of them all to make it easier to monitor. But what would happen if the park was allowed to grow to a thriving rainforest? Would we able to protect it then? Similarly, are system designers in the world of data, sufficiently increasing our ability to protect individuals and provide recourse from harms?
Our twentieth-century institutions will find it hard to — the NHB find it hard to seek recourse against errors made in 1:1 government service-delivery. Take payments, for example. India has scaled up the infrastructure dramatically, and transaction failures have risen concurrently. Many in the NHB don’t receive their money, but see it deducted from their accounts. Whose door do they knock on then? A complex data piping architecture managed by government would be much harder to get right than 1:1 service-delivery.
And do citizens, including the NHB, have sufficient voice in how India’s data future is being designed? To ensure a well-functioning data marketplace, account aggregators came together in an industry body to set standards and recommend those to government regulators. But who might hold such an unelected industry body to account? And how risky might this prove given regulators’ track record of seeking public comments — the central bank, for example, opened only 2% of its orders for feedback. The securities regulator did so for 10%.
Developed countries have seen sustained economic growth partly because they built resilient, democratic institutions, that set the ‘rules of the game’ — rules that balance innovation and safeguards. There’s no substitute for them. As India takes the lead in building glitzy new tech systems for citizens, it will benefit from bringing similar energy to building the institutions that fuel the dream machine and keep the nightmares at bay. We will reap what we sow.
