Trivandrum Management Association
28-Feb-2020

Valedictory Session

I am delighted to be here with you, in Trivandrum. I spent some of the best of my growing-up years in this city, at the University College. I was lucky to have inspiring mentors and teachers in those years, and wonderful classmates, among whom are some of my closest friends.

I grew up here at the advent of the seventies when there were the beginnings of a recognition that there would be an information revolution that would be just as important as the industrial revolution. There was perhaps just one computer in the state, and that was a Russian-made Minsk device at the Space Research Centre. Today, each of us carries in our pockets at least one computer, a mobile phone, that has computing capacity that is over a hundred thousand times that of that lone Minsk computer.

Indeed, the fourth industrial revolution is well upon us. Industry 4.0 is a trifecta of global technological forces that are transforming our world and how people transact with each other, in ways that we are only now beginning to comprehend.

Three trends are impacting nearly every aspect of our lives.

One, nearly 70% of the world’s population now possesses unprecedented personal processing power, storage capacity, and instantaneous access to knowledge and networks in the form of the mobile phone.

Two, along with ubiquitous connectivity, we are amid the big-data revolution: the ability that we now possess to collect, curate, and utilise what has been called a ‘tsunami of data’.

And a third major trend has been the recent technological breakthroughs in realms like AI, robotics, IoT, quantum computing, and machine learning.

There is another cultural and behavioural paradigm-shift that is taking place in parallel with these transformative technologies, especially among the younger cohort of the population, the millennials. The ability to convene consumers, assets, and data together, via the Internet and the mobile phone, has created the sharing, or ‘on-demand’ economy, in realms ranging from transportation to habitation. We see examples in the recent popularity of Uber and Airbnb, or food-delivery apps.

These disruptions are creating new opportunities and powerful tools to handle complex challenges in nearly every arena of human endeavour.

The use of big data culled from implanted IoT devices can facilitate cost-effective innovation in the use of natural resources like water for irrigation, or energy for pumping water. AI has the potential to radically transform areas such as healthcare using techniques like non-linear analysis, probabilistic interpretation, and dynamic reasoning. Predictive analytics can improve safety thresholds in public infrastructure, while enabling economies of use. Facial recognition technologies can simplify process-barriers for travellers, enhance security levels in financial interchanges, and ease government-to-citizen transactions.

On the supply side as well, Industry 4.0 is transforming the ways in which production or value-creation is organised. Products and services can now be tailor-made to serve the needs of individual customers, while preserving the upsides of mass production at scale. For instance, garment manufacturers can produce bespoke clothes for every single buyer, using data and machine learning.

The ability to spot and to be ahead of trends, along with agility and responsiveness, is becoming a critical determinant of success in the modern marketplace. Hierarchical organisational structures and the production-line approach of the past are being replaced by flat teams that can quickly mutate in tune with rapidly evolving requirements. Organisations are becoming thinner in terms of their own staffing, relying on a web of suppliers of services. A recent study has revealed that in the United States, around 90% of net new jobs in the past five years were created by gig workers – independent contractors and on-call workers who not on the rolls of the company.

Talent is becoming increasingly consequential, in proportion to capital, as a factor of production. And robotics and AI are displacing human endeavour and repetitive skills across sectors. Studies conducted by the World Economic Forum have predicted that up to 50% of current tasks and skills will be replaced by AI, and that nearly two-thirds of children who start school now will go on to jobs that don’t exist yet.

While the jury is still out on the types of skills and the proportion of the existing workforce that will be displaced by AI, it’s clear that while certain capabilities will be well-rewarded, many of the existing skills could be replaced by machines.

One of the policy remedies to handle this great skills transition has been the suggestion to introduce Universal Basic Income for all, which would be unrelated to anyone’s situation or entitlements. This suggestion has recently been widely debated in India as well, and this is something that Kerala, with its strong tradition of social security, could contemplate for managing disruptions caused by the new wave of technologies.

The fourth industrial revolution is, hence, replete with opportunities that we are only beginning to comprehend.

What are the implications for a state like Kerala?

A new moment for Kerala is potentially here, as its knowledge economy can take advantage of the fourth industrial revolution that is unfolding.

Kerala today has the ingredients and a tremendous opportunity to build on its favourable socio-economic base to become the next economic powerhouse of India. As is well known, Kerala’s welfare-oriented development model has resulted in high literacy and quality of life indicators comparable to developed countries.

But alongside, and this is not often highlighted as much as it should be, Kerala has made progress on economic growth and financial indicators. According to the Kerala Economic Review 2019, the State registered 7.5 per cent growth, higher than the country’s growth rate.

The Economic Review also noted the growing share of manufacturing to the State’s GDP at 13.2%, an uptick of 35% since 2013-14. Kerala’s share of manufacturing in India grew from 1.2% in 2014 to 1.6% in 2018-19; this was during a period when the share of manufacturing in the National GDP continued to decline.

Furthermore, the state’s per capita income is 60% above the national average today, a strong base to build on.

But while Kerala has sustained decent levels of growth, is it enough?

Many states are outperforming Kerala on the growth front.

A major drawback of economic growth in Kerala today is that it is not generating adequate jobs to meet the expectations of educated Keralites entering the labour markets.

Alongside employment generation, how can Kerala make the best use of the fourth industrial revolution to further improve the quality of lives, and equip its young demographic to take the best advantage of such a rapidly evolving environment?