Job growth in India has been driven by advances in telecommunications, information technology and health care. But a recent pronouncement by transport minister Nitin Gadkari suggests not to expect much future growth in IT. That is because Mr Gadkari recently announced in opposing the introduction of driverless vehicles in India he would "not allow any technology that takes away jobs."
This kind of rhetoric may make for good politics, but it's terrible economics and awful for the future of Indian workers who need the country to continually modernize. Mr Gadkari essentially is saying, "We're done modernizing."
But if Mr Gadkari really wants to preserve jobs, then why not ban self-service elevators, automatic cash machines at banks and automatic telephone switches too? That would create lots of jobs for elevator operators, bank tellers and telephone operators. The trouble is, it also would consign the economy to low-wage, menial tasks, instead of a better future with higher productivity, better jobs and a better quality of life for Indian citizens.
The greatest economic challenge India faces is not only job growth, but also income growth. Per capita income in India is $1,900 per year, just 15 per cent of the world average. There is a simple reason for this: India's labour productivity-economic output per hour of work-is just 12 per cent of US levels. Unless India can significantly boost its productivity, it will be incapable of ensuring a reasonable standard of living for all.
Technology is the key to raising productivity. Indeed, economic studies find that as much as 90 per cent of increases in per capita income come from technological innovation. So, unless India embraces technological innovation in all parts of its economy - including the transport sector - one thing Mr Gadkari can be certain of is that future generations in India will be consigned to low-wage jobs and lag behind the rest of the world's income levels.
To understand the potential for driverless vehicles to increase productivity in India, just picture the snarled traffic that now lurches haltingly and all too often, dangerously, along the streets and highways of most cities. This dysfunctional style of transportation represents wasted time, wasted lives and a missed opportunity to grow the economy.
Now imagine the same picture, but with autonomous vehicles that are equipped with sensors, algorithms, and information systems to communicate with each other, determine optimal speeds, use available road space as efficiently as possible and avoid collisions. In a study estimating the economic impact of autonomous vehicles in the United States, the Information Technology and Innovation Foundation found that shifting to autonomous vehicles would produce $1 trillion in savings per year, in large part by increasing throughput on roads for trucks, taxis and buses, and by reducing expenditures on health care because there would be vastly fewer accidents. These freed up resources could go to real needs in India.
This is the essence of increased productivity. Any economist will tell you it is the only way to increase economic growth, raise wages and improve people's living standards.
Yet there is great resistance in India - both to driverless vehicles and to technology-driven productivity growth more generally. As the CEO of one of the country's largest corporations told me, "India can't afford productivity growth; we need the jobs."
But this is a faulty view that is premised on what economists call the 'lump of labour fallacy', which holds that there is a limited amount of work to be performed and therefore any increase in productivity will mean fewer jobs.
The reality is that increases in productivity lead to higher wages and lower prices, which together spur additional spending on all sorts of things throughout the economy, which in turn creates jobs. Besides, if productivity really did destroy jobs, then the United States, which has one of the world's highest productivity levels, should be suffering from rampant unemployment, instead of its near record low of just 4.3 per cent. Moreover, if productivity really were a job killer then why is it that in the last 20 years, periods of high productivity in India have been associated with lower, not higher unemployment rates?
While technology-enabled productivity growth won't bring higher unemployment in India, it will reduce poverty. In a study of the Indian economy from 1983 to 2003, World Bank economist Ahmad Ahsan and colleagues found that "increases in long-term labour productivity are positively correlated with a decrease in poverty". As they write, "neither the employment intensity of growth nor the employment rate across (Indian) states is found to be significant in reducing poverty. Rather, it is the growth in labour productivity that has the largest impact." So, if Mr Gadkari really wants to help Indian workers, then he will support new technologies, including the introduction of driverless cars.
But there is another reason the minister should support this technology: it will save lives. Tragically, over 146,000 people were killed on Indian roads in 2015-including 46 children every day-and most of these deaths were caused by human error. Studies of autonomous vehicles in the United States suggest that widespread adoption would reduce traffic deaths by approximately 90 per cent. In India, this would mean saving over 130,000 lives per year.
So, for the sake of Indian living standards and public safety, India should embrace, not resist, new technologies including autonomous vehicles.(Robert D Atkinson is president of the Information Technology and Innovation Foundation, a leading science and tech policy think-tank)Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.
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