Content

1. Inter-State rivalry that is fuelling India’s growth
2. Fine-tune the AI labelling regulations framework

Inter-State rivalry that is fuelling India’s growth

 Why in News ?

• Google announced its largest AI data centre outside California in Andhra Pradesh (Visakhapatnam).
• Triggered political reactions in Tamil Nadu and Karnataka, showcasing intense inter-State competition for global tech investment.
• Marks a shift from Centre-driven patronage to State-led economic federalism.

Relevance

GS 2 – Governance, Federalism

• Centre–State relations, cooperative and competitive federalism, devolution of powers.

GS 3 – Economy

• Investment climate, infrastructure growth, FDI policy, industrial reforms.

Practice Question

• Discuss how competitive federalism has transformed India’s investment landscape in the post-liberalisation era. Illustrate with recent examples.(250 Words)

Historical Context: Centralised Control (Pre-1991)

• Planned Economy & License Raj: Industrial decisions—what, how much, and where to produce—were made in New Delhi.
• States vied for favour, not for investors; bureaucrats, not markets, allocated capital.
• Political patronage > Economic efficiency, creating distorted industrial geography.

Liberalisation (1991) and the Shift in Power

• Economic Reforms (1991): Abolished licensing, opened trade & FDI, decentralised economic authority.
• Power shift from Centre → States, enabling them to design investor-friendly policies.
• Initially slow: State bureaucracies retained a “control mindset”.

Rise of Competitive Federalism (Post-2014)

• Definition: Healthy inter-State rivalry to attract investment, jobs, and innovation through governance, not lobbying.
• Key Enablers:
  • Ease of Doing Business rankings (DPIIT).
  • Start-up, Export Readiness, Logistics Index assessments by Centre.
  • Digitalisation and fiscal autonomy post-GST.

Case Studies: State-Level Investment Competition

• Andhra Pradesh: Secured Google AI Data Centre; high EoDB ranking, port infrastructure.
• Gujarat: Won Foxconn–Vedanta semiconductor project through policy clarity.
• Tamil Nadu vs Telangana: Competing EV manufacturing hubs.
• Uttar Pradesh: Emerging electronics hub in Noida under UP Electronics Policy.

Global Comparisons

• United States: 200+ cities competed for Amazon HQ2; improved governance and urban planning.
• Germany (Bavaria): Innovation-led growth via proactive State policy.
• Australia & Canada: Subnational competition in clean energy, education, and technology sectors.
• Lesson: Decentralised competition spurs efficiency and innovation.

Benefits of Competitive Federalism

• Economic Efficiency: States innovate to reduce red tape and boost infrastructure.
• Governance Reforms: Best practices diffuse quickly—single-window clearances, EV policies, digital facilitation.
• Skill & Employment: Industrial rivalry drives local job creation and skill development.
• Regional Balance: Reduces over-dependence on a few industrial States.
• National Advantage: Each State’s success strengthens India’s collective competitiveness (“India competes globally through its States”).

Risks & Challenges

• Subsidy Race: Fiscal strain from excessive incentives or land giveaways.
• Environmental Oversights: Race for industrialisation may neglect sustainability.
• Uneven Capacity: Not all States possess equal institutional readiness or governance capacity.

The New Federal Compact

• From Patronage to Persuasion: States pitch directly to global investors, not to Delhi.
• Mindset Change: Growth through data, governance, and credibility, not concessions.
• Outcome: Emergence of a “federation of opportunity” — multiple growth poles (Andhra–Tamil Nadu–Gujarat–UP).

Way Forward

• Compete through Competence, not Concessions.
• Build human capital, legal predictability, and logistics networks.
• Strengthen Centre’s role as facilitator (incentive-linked rankings, fiscal incentives).
• Encourage regional partnerships (e.g., southern tech corridor).

Conclusion

India’s evolving competitive federalism marks a paradigm shift—from Delhi’s patronage to State-led persuasion, where economic performance, policy credibility, and institutional innovation decide the winners. Each State that attracts global investment doesn’t just grow individually—it strengthens India’s global economic standing.

Fine-tune the AI labelling regulations framework

 Why in News?

• The government proposed draft amendments to the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 to mandate labelling of AI-generated or synthetic media.
• Triggered by AI deepfake misuse, such as a fake video of FM Nirmala Sitharaman endorsing a fraudulent investment scheme that caused a ₹66 lakh loss to a citizen.

Relevance

GS 3 – Internal Security, Cybersecurity, Technology & Governance

• Tackling misinformation and fraud via deepfakes.
• Balancing innovation with ethical AI governance.
• Role of IT Act and intermediary liability in regulating digital platforms.
• Cyber ethics, privacy, and responsible AI use in India.

Practice Question

• Critically examine the challenges in regulating AI-generated synthetic media in India. How do the proposed IT Rules 2021 amendments address these issues?(250 Words)

Background and Context

• AI Deepfakes Surge: Rapid proliferation of near-real synthetic videos, audios, and images due to generative AI tools.
• Public Harm: Used for misinformation, fraud, and reputation damage — eroding trust in digital content.
• Government Response: Earlier believed existing IT Rules were sufficient; now introducing explicit labelling mandates for synthetic media.
• Stakeholders: Ministry of Electronics & IT, major SSMIs (Meta, YouTube, X), and civil society groups.

Key Provisions of Draft Rules

• Mandatory Labelling: Platforms must clearly mark synthetic/AI-generated media.
  • Label to cover ≥10% of visual area in videos.
  • Label to appear for ≥10% of duration in audios.
• Responsibility: Applies to Significant Social Media Intermediaries (SSMIs) – Facebook, YouTube, Instagram, X, etc.
• User Disclosure: Users creating AI-generated content must declare it while uploading.
• Verification: Platforms to deploy AI tools to verify user declarations.

Core Issues & Ambiguities

• Broad Definition Problem: “Synthetic media” covers both harmless and harmful content — needs clarity.
• Mixed Media Confusion: Difficulty in labelling hybrid content (real visuals + cloned audio).
• Ineffective Labels: 3-second or small-font disclaimers may fail to alert users.
• Non-future-proof Rules: Fixed “10% rule” may not adapt to evolving AI tech.
• Unreliable Watermarks: Easily removable; not a foolproof authenticity marker.

Proposed Improvements

• Tiered Labelling System:
  • Fully AI-generated (entirely synthetic)
  • AI-assisted (minor AI edits or enhancements)
  • AI-altered (real base with AI modification)
• Graded Compliance:
  • Larger creators (above follower threshold) = mandatory disclosure.
  • Smaller creators = voluntary self-labelling.
• Independent Verification:
  • Inclusion of third-party auditors or fact-checking bodies.
  • Cross-platform collaboration using C2PA (Content Provenance & Authenticity) standards.

Implementation Challenges

• Technology Gap: Detection tools are less advanced than AI-generation tools.
• Platform Failure: Audit by Indicator (2024) showed only 30% of AI posts were labelled; Google and Meta failed to tag their own AI outputs.
• Training & Accuracy: Current AI detection models lack diverse datasets and regional adaptability (e.g., Indian languages, faces).
• Creator Resistance: Many fear overregulation or loss of creative flexibility.

Global Parallels

• EU AI Act: Mandates transparency and risk classification for generative AI outputs.
• U.S. Initiatives: Voluntary watermarking frameworks led by companies like OpenAI and Adobe.
• China: Requires prior government approval and source disclosure for AI-generated content.

Way Forward

• Principle-based, Tech-neutral Regulation: Avoid fixed numeric prescriptions.
• AI-labelling Standards: Unified global metadata and watermarking protocols.
• Cross-Stakeholder Collaboration: Platforms + government + auditors + researchers.
• Public Literacy: Campaigns on AI misinformation and media discernment.
• Accountability Mechanisms: Penalties for fraudulent use of synthetic media.

Significance

• Protects Information Integrity: Ensures citizens can trust digital media.
• Balances Innovation and Regulation: Maintains creative freedom while curbing misuse.
• Strengthens Cyber Governance: Aligns with Digital India & Safe Internet missions.
• Enhances India’s Global Credibility: Positions India as a responsible AI regulator.