AI has led to seminal transformations in major sectors of the economy, from healthcare to banking and finance. The ability of AI tools to analyse vast amounts of data and make decisions without human intervention has paved the way for amazing products and services, and a vastly improved customer experience.
The market size of AI is poised to grow at a CAGR of 29.1% to reach $9,631.4 million by 2032, as per the report by IMARC.
However, with benefits come ethical concerns and potential risks that need to be addressed transparently to ensure responsible and sustainable implementation of AI technology in society.
This is where, in an attempt to resolve the increasingly ethical aspects, the Indian government issued an advisory, ensuring compliance and transparency with the existing IT rules. The regulation specifically targets concerns around AI-generated misinformation, particularly deep fakes.
Government mandates for AI in India
On March 1, the Indian government issued an advisory guiding significant platforms to obtain permission from the Ministry of Electronics and Information Technology (MeitY). Before implementing any AI models, Large Language Models (LLM), generative AI, software, or algorithms for users accessing the Indian Internet, large platforms require explicit approval from MeitY.
Following public criticism, the Ministry came out with a revised advisory on March 15, focusing more on transparency and user awareness.
The new advisory says that AI models could be made available to Indian Internet service consumers, but only if their output is tagged with warnings that the AI may be unreliable or wrong. The guidelines also require AI developers to prioritise transparency and accountability in their products to protect customers from disinformation and harm.
Intermediaries are required to ensure that their systems do not facilitate bias, discrimination, or compromise the integrity of the electoral process. They are also advised to implement consent pop-ups to notify users about the reliability of AI-generated outputs, encouraging transparency and user empowerment. They must label all artificially generated media and text with unique identifiers or metadata to facilitate easy identification of deepfakes and misinformation.
Significance of the advisoryAccelerated AI development: Removal of strict regulatory processes promotes a more dynamic and innovative environment, accelerating AI deployment across sectors.
Enhanced trust: Transparency techniques increase user trust in AI-powered technologies, encourage responsible use, and mitigate potential risks.
Economic growth: Streamlined regulations attract investment and spur growth in India’s burgeoning AI ecosystem, driving economic prosperity and job creation.
Given the worldwide tendency to ensure the responsible development and deployment of AI, this action initiated by the government of India is a phenomenon that manifests that those who are in charge of AI systems must take careful consideration of their social as well as ethical implications.
Advisory impact: Prediction for the BFSI sector
For the time being, it seems that Indian startups can heave a sigh of relief. But what shape a future regulatory framework for AI will take is something only time will tell. However, if we talk about the impact, the mandate is expected to have a significant influence on the banking, financial services, and insurance (BFSI) sector. The BFSI sector in India has always been fundamental to economic development, serving as a key player in capital allocation, risk management, and the promotion of financial inclusivity.
In recent years, technological developments have resulted in significant improvements in the provision of financial services, particularly in the field of digital lending. Thus, with the growing advancement, the BFSI sector has become very active in AI technologies that are used to improve customer service, automate procedures, and make judgments.
By insisting on greater transparency and accountability in AI-based models, the government explains its intention to reduce the possibility of algorithmic bias. Along with this, they want to bring down discrimination, and other potential risks, with respect to the specific groups of users who predominantly suffer from computer program misuse in debt management, credit scoring, and risk assessment.
Boon or Bane: What you think
Though the advent of technology has many benefits, it also poses some risks. Therefore, the government has released an advisory about those hazards in an effort to mitigate them. Regarding AI in BFSI, the new regulations demand the delays brought about by AI systems and procedures be reported. Those systems and processes will have to be improved to meet the requirements.
The AI system can be made more credible and principled by employing procedures such as data collection, model training, and algorithmic auditing. This significantly enhances the fairness, accountability, and transparency of AI-driven decision-making. The government initiative aiming at this would not only be regarded as innovative but would also protect the interests of society and consumers as acceptance and dependability of AI solutions grow.
(The author is Co-Founder & CEO, Decimal Technologies; Views are personal)
