Towards federalization of digital governance

On September 26, the Tamil Nadu government approved an ordinance to prohibit online gaming in the state, which is yet to receive the Governor’s approval. This follows a spate of suicides linked to financial losses incurred by people playing online rummy. A previous attempt to prohibit all forms of online betting and wagering via an ordinance was struck down by the Madras High Court in August last year. The Court observed that the ban was excessive and disproportionate and it was beyond the jurisdiction of the State. Simultaneously, the Union Government is also working on a legal framework to regulate online gaming. These parallel developments are symptoms of a fragmented approach to digital governance and are best avoided with the help of our elegant constitutional scheme.

Though the Indian Constitution predates the internet, it separates the responsibilities of the Centre and states in a manner that still works for the internet. Consider the fact that telegraphs and telephones are governed by the Centre. This is because they require standardized infrastructure. Imagine if making phone calls was a different experience in each state! A similar logic applies to the modern-day internet. The Centre must regulate the online space, to avoid splintering the internet within India.

However, the Centre’s Information Technology (IT) Act, 2000, is outdated and is not sufficient to safeguard citizens online. A combination of artificial intelligence (AI) and decentralization of service provision will frustrate centralized enforcement. For example, when users engage in AI-generated gameplay, the enforcement of jurisdiction or attribution of liability becomes difficult. Similarly, the Centre cannot address behavioural harms from internet use across 28 states and 8 Union Territories.

Since relevant areas like law and order and health come under the state's purview, they must deal with related challenges in digital markets. There are at least three actions that states like Tamil Nadu can take, following this constitutional imperative.

First, states should ramp up the availability of specialized mental health services to address behavioural disorders that stem from the digital environment. Social media use can trigger psychological stress and comorbid psychiatric disorders like depression, according to scientific literature. But there are only a handful of hospitals and services that are equipped to deal with these new mental health paradigms. To its credit, Tamil Nadu has established an internet de-addiction at the Omandurar Government Medical College Hospital. After such infrastructure becomes omnipresent, states could mandate high-risk services, to identify and refer problem gamers to medical facilities.

Second, states must strengthen online consumer protection. They can do so by bolstering their consumer helplines, which are regional variants of the National Consumer Helpline (NCH). However, like the NCH, these helplines’ remit is limited to straightforward buyer-seller markets, not complex digital services like gaming. Consumer helplines must also provide basic legal aid in a fast-evolving digital environment. States need to ensure continuous helpline-operator training, to keep up.

Third, states must ramp up efforts to prevent cybercrimes and aid in cross-jurisdictional enforcement. According to the Tamil Nadu Police Policy Note, 2022-2023, cybercrimes witnessed an 18-fold rise in the state over the last decade, originating “mostly from

foreign countries”. However, states largely rely on the National Cybercrime Reporting Portal for recordkeeping on cybercrime, whereas its unfettered growth necessitates greater state involvement. Most cybercrime enforcement depends on a complaints-led process which states must facilitate via expert bodies.

In this context, states could collaborate with the private sector to increase digital market hygiene and supervision. The intellectual property (IP) crime units in Maharashtra and Telangana have already established a template for public-private partnerships, to reduce digital piracy. These specialized police units work closely with media businesses to mitigate IP crime.

The case of online gaming is a subset of a much larger digital governance challenge. Indian policymakers must commit to the division of responsibilities envisioned under the Constitution to ensure market and societal welfare. This necessitates a renewal of the promise of federalism, an ingredient most vital to navigate an uncertain technology-driven future. We must look back to our founding principles, to move forward.

Vivan Sharan

---

Vivan Sharan is Partner, Koan Advisory Group, a New Delhi-based public policy consulting firm.