Relevance: GS-2: Government Policies and Interventions for Development in various sectors and issues arising out of their Design and Implementation; E-governance- applications, models.

Key Phrases: Collaborative model of governance; double-edged sword; contact-sensitive sectors; PFMS; a catalyst for a future of abundance.

Context

• Covid-19 along with its multiple waves has raised ‘persistent uncertainty’ and ‘agnostic anxiety’.
• This has also made us rethink our priorities.
  • A 137% increase in healthcare expenditure was announced in Budget 2021.
• This crisis saw unique models of collaboration between the government and private sector.
• In post COVID economy, a similar collaborative model of governance will be required to solve the problems faced by society.

Key Highlights

Challenges and Opportunities during Covid times

• The pandemic has been a double-edged sword for India.
  • Some sectors profited heavily due to their adaptability and due to less requirement for physical contact in those sectors.These include businesses operating in the horizontal B2B SaaS space (Business to Business), Web3, HR Tech, biotech, and niche sectors of ed-tech.
  • Whereas, contact-sensitive sectors have suffered like hospitality, offline schools, tourism, etc.
• An uneven recovery and rising inflation are fuelled by rising raw material costs, thereby impacting corporate margins.
  • The middle class is being forced into making choices that curtail consumption.
  • This further causes recessionary pressures to persist, resulting in a vicious cycle of low growth.
• Internet poverty has worsened existing social divides.
  • This has worsened the problem of learning loss.
• The pandemic gave entrepreneurs a chance to build brands that could capture unexplored spaces
  • This in turn fed a startup boom, particularly in emerging sectors like Web3 and crypto.
  • The number of unicorns has increased during this period. Recently, neobank Open became the 100th unicorn.
• Nature was briefly relieved of human pollution and GHG emissions.
  • This was due to less traffic on the road, a reduction in electricity generation, and reduced production in industries.

What is Gov-Tech Model?

• It is a mutually beneficial collaboration between Tech start-ups and institutional capital (investors) on one hand and the government on the other.
• For instance - Fund of Funds of SIDBI
  • Which requires a partnership between government and VC funds.
  • It provides indirect funding to emerging Startups through the provision of funds to Venture Capital (VC) Funds present in the Indian Start-up Ecosystem.

What are the benefits of this model?

• Effective resource mobilisation
  • Technology can help the government to plan holistically and effectively.
    • Eg. the Public Financial Management System (PFMS) of the Department of Expenditure helps in better allocation of budgetary resources.
• The technical expertise of the private sector can be leveraged.
  • This includes prudent economic decisions and better prioritizing of the targets to be achieved.
  • With the aid of the expertise of the private sector, the government is capable of achieving moonshots in the domains of healthcare, sanitation, education, cleantech, and biotech.
• Deployment of new technologies to keep the governance up to date.
  • The private tech sector is better aware of the recent technology and its application. This can be used to improve public service delivery.
  • Citizens would benefit as this Gov-Tech partnership scales up and reduces the prices of many services.
• The private sector can crowd-in capital to augment government capabilities for carrying out developmental activities.
  • This ‘gov-tech alliance’ can help move away from the shackles of scarcity and act as a catalyst for a future of abundance.
  • Eg. In UDAN Scheme, the private sector is the primary spender whereas government provides supporting functions.
    • This results in new air routes becoming viable in the long run while streamlining government subsidies.

This will help in resolving various pending issues which are stuck due to

• a lack of technical capabilities.
• a paucity of infrastructure support.
• a dearth of funds as capital is required to implement the projects in a timely manner.

Way Forward

• The country’s surging startup ecosystem will need to work in sync with the government.
• The government will have to be amenable to integrating new technologies into traditional frameworks of governance and public policy.
  • This will deliver widespread economic benefits.
• Policy issues must be resolved and ease of doing business must be promoted
  • Frequent flare-ups of communal tension must be checked.
  • Poor civic infrastructure must be addressed.
  • There is a need to actively protect the cultural fabric of India, and preserve the social capital that Indians inherited from their forefathers.
• The government must learn from the positive-sum game that the venture capital (VC) industry espouses.
  • Venture Capital industry mentors the startups to grow monetarily, technically, and organically.
  • In return, Venture capitalists derive large returns on the capital invested.

Conclusion

• By adopting a Gov-Tech model of development, India will be well poised to become a global economic powerhouse over the next 3-5 years. The broad idea must be to immerse India in a technology-enabled growth journey. This strategy will help India prosper sustainably and efficiently.

Source: Live-Mint

Mains Question:

Q What is the Gov-Tech model of development? What are its benefits and how will it help in addressing the challenges of governance?