Turbocharging India’s Digital Economy
New digital ecosystems are springing up across India’s economy, transforming business models and delivering huge productivity, efficiency, and growth benefits. And sectors that have not traditionally had technology at their core – such as agriculture, banking, health care, and logistics – are among those with the most potential.
MUMBAI – India is taking a great digital leap. Having reaped substantial rewards from building up its core digital sectors, such as information technology and business process management, the country is now seizing new digital opportunities in many more sectors, such as agriculture, education, energy, financial services, health care, and logistics. These opportunities could deliver up to $500 billion of economic value by 2025.
India’s digitization process has been the second-fastest among the 17 mature and emerging economies we studied. Admittedly, it started from a low base, but in the last five years alone, the number of Internet subscribers has almost doubled, reaching 560 million.
Last year, Indians downloaded 12.3 billion apps, second only to the Chinese, and they spent an average 17 hours per week on social media, more than Americans. As a result, Indians used more than 54 times as much data, on average, in 2018 than in mid-2016.
Both the public and private sectors have played an important role in driving digitization. Many public services are now accessible only when linked to the government’s Aadhaarbiometric digital-identification program, in which over 1.2 billion people are now enrolled. Aadhaar has thus helped to propel the development of many other digital services. About 80% of Indians now have digital bank accounts, with the vast majority of government benefits paid directly into Aadhaar-linked accounts. The Goods and Services Tax Network – a government platform for taxing wholesale and retail sales – has likewise created a powerful incentive for businesses to digitize their operations.
The private sector has facilitated this process, as competition has helped to reduce data costs by 95% from 2013 to 2017 and to make smartphones affordable. Falling costs have fueled rising data use: last year, Indian data subscribers used 8.3 GB of data per month, on average, compared to 5.5 GB used by Chinese subscribers. Together with rapid growth in telecom infrastructure, lower costs have also helped to reduce the digital divide: in the last four and a half years, India’s middle- and low-income states have accounted for 45% of the 293 million new Internet subscribers.
Digital business leaders are now spearheading even more innovative ways to reach and serve customers. New digital ecosystems are springing up across the economy, transforming business models and delivering huge productivity, efficiency, and growth benefits.