Management Perspectives

Across the globe, not also governments have recently increased their spending on artificial intelligence (AI). This is primarily to drive efficiency and replace humans with sophisticated machines for doing mundane and repetitive tasks. The move is welcomed by businesses and governments alike due to its cost advantages and promises of improved efficiency. The most recent example of the same is from the USA, where the newly elected government has created DOGE (Department of Government Efficiency) to cut down unnecessary government expenses and drive efficiency in government departments. And who better than Elon Musk—than the person who best understands technology and its application to derive growth and business—to lead such an initiative? If we look at some current statistics, according to a recent report by PricewaterhouseCoopers (PwC), AI could contribute USD 15.7 trillion to the global economy, which is more than the present combined output of India and China put together. The European Union has recently announced an AI Innovation Strategy that includes public as well as private AI investment to the tune of 4 billion Euros, emphasising the focus on generative AI. As per a report by Wired.com, the UAE has committed to spending a significant pie of USD 1.5 trillion sovereign wealth fund to transform Abu Dhabi into a leading AI hub in the Middle East. As far as India is concerned, in the Union Budget of 2025, India’s Finance Minister Nirmala Sitharaman announced a new Centre of Excellence (CoE) in AI being set up with a capital of R500 crore. This is in tune with the Government of India’s IndiaAI Mission to give a boost to the nation’s AI ecosystem which is seeing an investment of USD 1.25 billion to promote advanced computing infrastructure and also to finance startups in the AI space. And a similar trend is followed elsewhere around the globe including South Korea, Japan, China, and other countries.

Let us look at several advantages and benefits of digital governance that AI can augment:

1. Enhanced efficiency and transparency: Automation and digital-powered decision- making can streamline bureaucratic processes by significantly reducing delays and inefficiencies in process flow and government operations. On the other hand, digital systems can enable real-time monitoring and access to open government data, which has the potential to improve transparency in government functioning.

2. Improved public service delivery: E-governance platforms have the capability to improve public service delivery through automation and reduced need to visit government offices to avail various government schemes and services. We have seen some excellent examples in the Indian context, such as Passport Seva, DigiLocker, FASTag, DigiYatra, and many more. AI-powered chatbots are the recent additions in this context.

3. Interoperability, integration, and cost reduction: By its very nature, digital technologies enable interoperability among various systems and processes, if designed carefully. Data sharing and coordination among different government departments and agencies becomes easier with the adoption of technology in governance. This, in turn, improves the overall functioning of the government, making it cost-effective and efficient in its operations.

4. Citizen engagement and participation: Digital technologies and channels provide an alternate and easily accessible medium for citizens as well as governments to connect and communicate with each other. Now the popularity of elected representatives is also measured by looking at the follower counts on their social media platforms. Digital presence provides easy and direct access to connect and communicate that enables citizen engagement and participation in the process of governance.

5. Innovation and environmental benefits: Use of digital technologies by governments promotes innovation that also leads to unique and out-of-the-box solutions by startups and businesses. Such public-private partnerships promote cooperation and coordination among various stakeholders that drive the overall innovation ecosystem in any economy. AI-enabled automation and technological innovations lead to sustainable solutions development. The evolving AI landscape also poses various concerns and challenges for governments across the globe. This is primarily because technological advancements often outpace legislative policies and regulatory frameworks. This is also due to the lack of global consensus regarding different nations’ AI policies, which creates inconsistencies and adds to the complexity to digital global governance issues. There is also a need to balance the pace of innovation with the evolving regulatory environment. Over-regulation may choke AI progress (developments), while under- regulation may lead to unauthorised access or misuse of users’ data. Training AI models involves complex data sovereignty issues, such as data governance, regulations pertaining to cross- border data flow, conflicting global trade policies, to name a few. Biases and ethical concerns add to these growing challenges. Rapid AI advancements and their applications pose a challenge for industry standards and regulatory frameworks.

Following are some suggested strategies for effective digital governance in the AI age:

Public private partnership: Digital governance in AI age requires collaboration between governments, technology companies, academia and civil society. Such collaboration and partnerships are needed not only at national-level, but at a global scale, which will facilitate global knowledge exchange and transfer (and use) of best practices.

Developing global (and national-level) AI ethics and auditing mechanisms: Independent AI ethics bodies, having diverse representation from tech companies, governments, academia and civil society, to oversee development, deployment, and ensure compliance with local as well as global laws, regulations and standards. Such bodies can prepare auditing mechanisms to detect biases, security vulnerabilities, and unethical practices in AI development and implementation.

International cooperation and standardisation: Digital and AI governance in the current connected world is not limited to the geographical boundaries of nations. Given the global impact of AI capabilities, international cooperation is essential to build harmonised AI and digital governance frameworks that are acceptable to all.

Legislative and regulatory frameworks: Governments worldwide recognise the challenges posed by the AI capabilities if not used in a sensible manner. AI regulations and legislative policies are needed at the national level which will provide a fertile ground for AI development (and deployment) and also controls it against any unethical usage. The European Union’s AI Act published in the year 2024 is one such example for others to follow.

Digital literacy and citizen participation: Public involvement in digital governance is pivotal for its success. Digital literacy initiatives with AI capabilities, such as digital content in vernacular languages, real-time speech recognition and translation, automated chatbots in native languages are excellent examples that can bridge the digital literacy gap and enable enhanced citizen participation in governance.

From ChatGPT to DeepSeek, AI advancements and capabilities of large language models are revolutionising the applications and business use cases across industries. Most of us have experienced some common examples of automated chatbots, graphic media and content creation, messaging apps, etc., in this regard. Highlighting a recent example, Satya Nadela, the CEO of Microsoft, shared a story (on X) of a small-town sugarcane farmer from Baramati co-operative from Maharashtra (India) who could enhance crop yields, reduce chemical usage and optimise water consumption due to integration of AI technology in agriculture. To this, the tech billionaire, Elon Musk commented, “AI will improve everything.” As we see, AI applications in digital governance have a huge scope, and experts believe that this is just the beginning.