The Rise Of India Digital Economy || TINDIT INDIA

THE RISE OF INDIAN DIGITAL ECONOMY

Digital economy in simple everyday language can be referred to as the economy in which digital computing technologies are used for economic activities, these economic activities consist of a whole lot of activities ranging from online payments to online shopping. In this new economy, digital networking and communication infrastructure provides a global platform over which people and organisation interact, device strategies, communicate, collaborate and search for information. This economy has taken over the whole world and is considered as the future economy but still until a few years back countries as big as India relied on the traditional cash economies.

Though a big country like India which was considered as a technologically backward country in terms of its digital economy has stunned the world with its immense growth in this sector and is now setting up a benchmark in terms of its tremendous growth. So now a big question arises “What has led to the rise of Indian digital economy”? The answer to this question is not very simple and it surely takes you through a lot of twist and turns but at the end when things sort out a bit then it all start making sense.

Back in time when digital economy was considered just a catchphrase that foreign media used on a regular basis it was believed that India will remain untouched by its effect at least for the coming 8-10 years but slowly and steadily the Indian economy was picking up pace and so was the digital infrastructure of the country but these slow steps weren’t doing wonders for the digital economy. A quick switchover was needed for the Indian economy in order to match up with the pace of the entire world, then came in some of the very famous moves of the Indian government which faced a lot of backlash, hate and uncertainty but in the end these moves paved the way for the Indian digital economy which is now worth over a $200 billion. This huge leap started off with a very bold step which was “Demonetization”.

DIGITAL INDIA:

Digital India is a campaign launched by the government of India in 2015 to ensure that government services are made available to the citizens electronically by improved online infrastructure and by increasing internet connectivity or making the country digitally empowered in the field of technology. There were 3 main components of this campaign: the development of secure digital infrastructure, delivering government services digitally and universal digital literacy. The impact of this movement has been immense considering the fact that 99% Indians have enrolled in Aadhaar, a goal that not too long ago would have seemed impossible.

Combining digital identities with the paperless layer provided by the government enabled the opening of 350 million verified Jan Dhan accounts. These accounts helped the government in connecting millions of Indians to the formal economy and now more than 85% account holders use these accounts to access savings. The government previously had to navigate through a web of complex offline setup to effectively reach the beneficiaries of government benefits but now with the involvement of each and every Indian with the formal banking economy it has now become easy to distribute funds which means that every penny that leaves the government coffers now affectively reaches the intended beneficiary.

POSITIVE EFFECTS OF DIGITAL INDIA CAMPAIGN:

1. The digital India campaign helped in filling up various loop-holes of the system such as the     requirement of each person to submit unique ID to verify bank accounts, duplicity and anonymity in bank accounts has been alleviated.

2. India’s digitally enabled policy initiatives have significantly helped India in improving its “Ease of Doing Business” index. India make a huge leap in the ranking as it improved its rank from 142 to 77.

3. Another key transformation has been the increase in adoption of technology and increase in the number of digital payments.

4. India now has the second largest number of mobile phones and the average price of a smartphone has come down to $150 and so is the price of data which now cheaply available at a shocking price of 20 cents per gigabyte.

5. Until a few years back India only had 2 mobile manufacturers in the country but as the time progressed mobile companies realised the need of the growing market and as of 2020 India has a total of 127 mobile manufacturing units.

Though the digital infrastructure was rapidly increasing but the government was still looking for a reform that could solve the problem of unaccounted income and the mass adoption of these digital technologies along with various other systematic problems, then came in the bold step of demonetization that shook the entire nation to the roots.

THE BOMBSHELL:

More than 4 years have passed since the government of India took this bold step of implementing the demonetization policy which removed high denomination notes from the economy, this bold move was met with a mix of support, confusion, and criticism but these steps were necessary for the digital transformation of the Indian economy as it created an immediate need of online payments in the markets. Though this move faced a lot of criticism and hate but at the same time it transformed our economy which was much needed and was the need of the hour. Considering the huge size of the country it is a no brainier that a single move cannot completely transform the economy and make it cashless but various researches have shown that the Indian economy is operating at an estimated $33 billion less cash than it would have without demonetization.

Pic credit - The True Picture

The above graph gives a clear indication as to how the demonetization policy has influenced the mode of payments for a large population and these numbers clearly speak in favour of the move. After demonetization there were a lot of moves taken by the government in order to take this transformation a step forward and this next step was famously named as “Goods and services tax”.

GOODS AND SERVICES TAX (GST):

In 2017 the government of India removed 17 national and state taxes that had been impending trade and businesses in the country and replaced them with a single nationwide tax system. While the initial phase of this new system was a bit rough but later on the uptake of the new system was rapid and widespread and it can be proven easily by the number of businesses that enrolled themselves to GST. MSME have been the primary beneficiaries of this system through the benefits that they have acquired through the system by formalizing their businesses. This system helped in easing the complex network of taxes which was previously in place and it also helped in increasing the revenue generated by the government as more and more businesses came into the formal economic system.

Though the ride through the digital transformation of a nation of 1.3 billion people has been a bit shaky but slowly and steadily these reforms have started paying off and has helped in starting the new era of digital and self sufficient India. As of now the digital economy of India stands tall at $200 billion and keeping the current trends in mind it is estimated that by the end of 2025 the Indian digital economy will touch the mark of $1 Trillion. Though there is still a lot to be done but the efforts are bound to pay off as the foundation to this transformation has been laid very strong.

Written by  Shashwat Singh