Although it is difficult to formulate a clear definition of the term, due to its entangled nature containing elements of the traditional economy as well, it can be simply understood as a ‘new economy’ based on the spread of information and communication technologies in the business sphere.
Along with enhancing productivity, it has completely transformed how businesses are structured in the modern world.
India has seen a great surge of internet users in the past two decades and our digital infrastructure is developing at a rapid speed. The rise of the digital economy of India is a result of this constant development in the field of digital infrastructure and awareness.
Boom in the Pandemic
The digitisation of the economy that happened in the COVID-era is not just a temporary phase, it is a long-term transition for the better.
Due to the massive contribution of the digital economy of India, about 20%, in its $5 trillion economy vision, the government needs to acknowledge the need to spend more on the development of digital infrastructure and related services for the public.
Digital transactions are common even in remote areas and small towns, which was hard to imagine even a decade ago.
Benefits of Digitisation:
One must understand how this digitisation in the economy not just widens the tax net and reduces the citizens’ tax burden, but also makes it easier to track money transactions for the government and get accurate numbers of how much money is flowing through the economy.
This eliminates the downsides of informal transactions in businesses and other corrupt practices. Recent times have taught us the importance of contactless payments and the government has played a big role in pushing that forward.
After the introduction of Universal Payments Interface (UPI) by the Reserve Bank of India in 2016, the digital economy of India has been revolutionized and it has become one of the most prominent banking methods.
Currently, about $200 billion are being generated from the digital economy in India. The consulting firm RedSeer has predicted the digital economy of India to reach up to $800 billion by 2030.
As a consumer, the digitisation of the economy benefits us in multiple ways, including faster payments/transactions, increased choice of goods and services and lower cost of products available in the market.
Future of India in Digital Economy
We need to understand that the digital economy of India is not separate from the traditional economic activities.
It impacts most industries and businesses and covers a whole range of sectors such as buying and selling, banking services, the education industry as well as access to entertainment facilities. It has introduced many new opportunities in the market that have led to exponential growth.
India is on its way to a digital transformation and this can be an attractive option for potential start-ups, businesses and companies to invest in upcoming technologies to keep up with the demands of the future.
Having the second largest digital consumer base in the world, we are on our way to provide digital services and infrastructure to inaccessible areas of the country as well.
Diverse sectors such as agriculture, e-governance, healthcare, financial services, etc. contribute to the digital economy of India. The government of India has introduced its flagship programme, Digital India, intending to transform India into an empowered society and knowledge economy.
Government initiatives like this have led to widespread technology adoption in the economy.
With this changing nature of the economy, the demand for IT-related services also increases and more people trained in this field would be employed. From digital coders to delivery personnel delivering daily use items at your house, everyone would require retraining to be better equipped with the technological updates.
Businesses, Government and individual consumers still have a long way to go in terms of adapting to the digitisation of the economy. Many opportunities need to be tapped effectively with proper analysis to reap the maximum benefits of this new mode of functioning.
This growth needs to be regulated vigilantly by individuals as well and they need to keep an eye out for their private data and security.
Written By - Himanshi Nebhnani
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