What could the Omar Abdullah government have done for the digital sector of J&K?

Tourism is our pride sector and there should be no confusion about it.  But this is the time to look for diversity in the economic mix of Jammu & Kashmir, especially by focusing on the aspirational sectors where digital will stand at the top.

It’s been over a year for the Omar Abdullah government. I cannot be an assessor of the overall performance of the government as that is a topic for the administration and public governance experts to evaluate. However, as an ordinary citizen, I do feel a lot could have been achieved during this period, even within the present structure where this government might not be as resourceful as the state governments of J&K used to be in previous tenures.  

As a technology evangelist, I do have some views on the focus on the digital sector and what could have been attempted so far to bring J&K onto the digital landscape as a strong prospect across India.

Over the past few years, there has been a new perspective of looking at the various economic sectors that form the growth potential of any economy. There are legacy sectors and then there are sunrise sectors. In J&K, we haven’t yet done this exercise meticulously of identifying the sunrise sectors, while it’s not hard to guess our legacy sectors.

There is no denying of the importance and criticality of tourism as a sector and a force behind the socio-economic prosperity of J&K.  While the sector directly might be contributing a small number to the GSDP of J&K, the indirect and multiplier effect is manifold.  It is indeed our pride sector!  At the same time, there is a need to diversify the basket.

Ever since the elected government assumed office, I personally had a lot of expectations that this government would take some extraordinary measures to develop and promote the digital sector of J&K.  Among many reasons to believe so was that the Chief Minister himself is a young politician and belongs to the late Gen-X cohort, and this generation has been responsible for the digital revolution across economies. His understanding of the importance and potential of the digital sector, not only as a vertical but as a horizontal transforming every sector of J&K, be it on the social front like public health and education or the economic side impacting agriculture, horticulture, tourism, industry, trade, etc., is expected to be many levels higher than the Chief Ministers of J&K have had so far.  Even in his previous tenure as the CM, where he was a lot more resourceful, we did not unfortunately see much progress on the digital front. Though one could argue that at the country level itself, we weren’t that digital back then.

In this tenure, when India’s digital prowess is known and established, it was expected that the Chief Minister would lay strong emphasis on the development of a sustainable and strong digital ecosystem in J&K.  The digital sector will be designated as a priority sunrise sector for the UT, and while other pride sectors like tourism and agriculture will continue to get the prominence they deserve, this sector will also be prioritised to align with the aspirations of the people who see this as a promising sector for economic pursuits like jobs and entrepreneurship.  Unfortunately, nothing substantial has been promoted so far.  There is no strong policy-driven intervention that would designate the digital sector as a priority sunrise sector for J&K.

There are many reasons why J&K is one of the most fertile regions for developing a thriving digital sector. 

• Moderate Capital Investments:  The digital sector does not require a huge investment purse unless someone is trying to do something in deep tech.  In most of the digital products and services, the capital investment is moderate, which suits the socio-economic profile of J&K and also goes well with the risk-taking appetite of investors when considering J&K as an investment destination.  We have to admit that there is an additional risk profiling done by investors when thinking of J&K. An 8-10 Crore rupees capital investment can be adequate to set up a 100-person IT setup in the UT, considering land, etc., is provisioned as per the industrial concession rates offered.
• Micro Energy Needs: Again, relative to what a medium-scale industrial setup would require only to meet its energy (power) needs, the digital businesses can do even within a fraction of it. For comparison to understand better, a cement plant requires 100-120 kWh of electricity to produce 1 ton of cement. Compared to this, a 100-member IT firm would consume anywhere between 10,000-20,000 kWh of power in a month. This also factors in any data centre, air-conditioning, etc., that the firm might be powering.  At the same time, a standard cement factory producing 1 million tons of cement a year typically employs 150-200 people. Since we don’t have many industries established in J&K, we don’t have legacy systems. Whatever factories we will establish will be as per modern technology, which does not require many people to run operations. So, many other setups than IT will require more energy (power) and employ fewer people, which does not precisely fit into the present needs of J&K.  The automation trends will further reduce employment generation in such setups.
• Human Capital Availability:  While AI is a reality and is fast eating up many job roles in the IT and allied sectors too, there is still scope for many job roles to exist.  The reason being that many of the AI tools haven’t scored perfection that any organisation can rely on them entirely.  AI tools are assisting and still need a human QC before putting any of its output to use. Be it in the field of content, coding, analytics, etc., there is still immense potential to absorb a skilled workforce.  Fortunately, in J&K we have thousands earning diplomas, graduations, and post-graduations every year.  All of them cannot be directly employed. But with a 15-day to 2-month internship, they can be ready to serve.  With multi-lingual proficiency, the human resource from J&K can serve many global markets, including that of the Middle East, through digitally enabled products and services.
• Favourable Cost Structures:  Be it the infrastructure cost or the manpower cost, Jammu & Kashmir still offers far more affordability due to oversupply of both, ideal for the digital sector. Post-pandemic of COVID-19, as a reference, one can get a co-working station in the peripheries of Delhi-NCR for not less than Rs 7,000 excluding taxes, which was negotiated even at Rs 4,000 prior to COVID. In J&K, a well-furnished co-working starts at Rs 3,500.  There are similar benchmarks for human capital as well.  In the digital sector, after AI adoption, there has been a ‘polarisation’ of skill set requirement. There is a need for extremely skilled and talented manpower who can drive product development, innovation, and monetisation in this extremely hyper-competitive space. For these, organisations will prefer to employ such talent from major locations. The reason is not only that these will be coming from top-tier T or B schools. The reasons also include them having a wider exposure and experience that adds to their intellect.  On the other side, organisations need a workforce to execute at right price points. The price points include the total cost of employment including overheads. This is where J&K is extremely favourable.
• Manufacturing & Services Equilibrium:  The digital sector needs to progress on both – manufacturing and services. J&K through its geographic diversity offers a playground for both. The Jammu region, which is well connected with the plains, can be explored further, establishing manufacturing clusters around digital products and goods, while Kashmir, where manufacturing has many hurdles, can focus on the services, including IT-enabled products. This can make J&K uniquely an integrated digital sector destination, which is feasible as well as sustainable. 
• Meeting GenZ Aspirations:  GenZ has joined workplaces. This is the first generation that has grown up in the digital era and naturally aspires to be a part of it. They want to work in digital or digitally led organisations and sectors. Worldwide, for GenZ and beyond, it has been established through various studies that digital enablement is one of the factors driving their motivation at work. If we are not able to provide them with a digitally equipped workplace, they will still feel something is missing even if other perks, etc., are industry best.  Eventually, this will result in them looking for better pastures.  While today, we might be facing unemployment, tomorrow we might not have people available to work.

There could be many more reasons which could be enumerated to strengthen the argument about designating the digital sector as a sunrise sector in J&K.  For instance, keeping with the trend of India increasingly becoming a preferred GCC or Global Capability Centre for many multinational corporations.  J&K too must have a piece out of this exponentially growing opportunity and for that we need to prepare ourselves. 

The government led by Mr Omar Abdullah hasn’t taken any significant steps so far which could make us, the stakeholders, feel that there is a focus on this priority. Even from working on a roadmap and defining the path.  The other innovative things that this government could have taken include forging collaborations with the digital diaspora of other states and UTs, especially states like Karnataka where they have their coalition partners in power. Karnataka is one of the strong digital powerhouses of India and leveraging its very great relations with the party in power there, they could have explored inviting and laying a red carpet for seeking collaboration between the existing digital ecosystem in J&K and that of Karnataka. There could have been several areas where the established and big names in the digital sector headquartered in Karnataka, Tamil Nadu, etc., could collaborate in specific areas with the small IT/ITeS firms operating out of J&K to identify preferred outsourcing partners, giving them a stable business funnel.  This could have been a win-win situation where small IT/ITeS establishments in J&K would have got predictable business and the large enterprises in Karnataka would save on operational costs, especially those which have become non-strategic areas for them over a period as they grew in stature over the past years.

This write-up is not a criticism note, but a critical evaluation of the performance in the digital sector of Mr Abdullah’s government which has been in office for over a year. There are several hopes pinned on this government and developing a thriving and sustainable digital sector is undoubtedly one of them which needs to be prioritised at the earliest. We have lost one year which means a lot for the digital sector, not just because it’s extremely dynamic, but in a year, one can also achieve a lot relatively to other sectors where many times this much gets consumed in only preparing DPRs.

What has happened has happened! Time cannot be retrieved. We are late but we haven’t missed the opportunity. It is hoped that as the government prepares for its 2^nd budget and starts prioritising for the socio-economic good of J&K, the digital sector gets its due.