1. An app for economic growth! Apps boost GDP, but restrictions on Ola, Uber will choke growth

An app for economic growth! Apps boost GDP, but restrictions on Ola, Uber will choke growth

Nor is it just private sector that is changing the face of the economy through greater information availability and disintermediation. From the communication-entertainment tool that the mobile phone was, it has become a tool of governance and empowerment.

Updated: July 15, 2017 6:10 AM
Icrier-BIF report, WhatsApp, DigiLocker, NPCI, Amazon, UrbanClap, MSME, GDP Proliferation of apps boosts GDP but restrictions
like on Ola/Uber will choke off the growth

Even those unaware of the exact magnitude of the impact of the app economy will tell you it is significant—an Icrier-BIF report estimates a 10% increase in mobile internet traffic leads to a 1.3% increase in GDP and that the app economy could add $537 billion to GDP by 2020; that’s a 5-fold jump from today. If a Practo, going by the study, has over 200,000 doctors registered on it already, this can only be because it is adding to their clientele. Ditto for an UrbanClap which, according to Icrier-BIF, has 65,000 professionals listed on it and 1.5 million people have used its services—in the case of the 800 beauticians on the app, the study talks of their incomes rising 2-4 fold since they get to keep more of their earnings now as compared to when they worked in beauty salons. An Amazon, though this is not featured in the study, has over 200,000 manufacturers registered on it, the majority of which will be MSMEs—since being on Amazon opens up the possibility of a pan-Indian market, the impact on sales and jobs creation will be immense; the fact that there are apps that allow such MSMEs to get bank loans through ‘flow-based’ lending models only makes the impact that much more.

Nor is it just private sector that is changing the face of the economy through greater information availability and disintermediation. From the communication-entertainment tool that the mobile phone was, it has become a tool of governance and empowerment. The DigiLocker, for instance, promises you digitally signed government certificates in your locker; UPI allows digital payments at a fraction of the costs of traditional credit/debit cards and esignatures have grown rapidly; many government departments have apps to register and track complaints.

While many apps are useful because they help cut through government bureaucracy and clutter (DigiLocker) and others because they get you visibility (UrbanClap), the app economy can just as easily stagnate if policy interventions aren’t fast enough or are in the wrong direction. Interoperability of mobile wallets, for instance, requires government intervention. And, in the case of apps like Ola and Uber, the next wave of productivity will be unleashed by allowing ride sharing and even non-licensed people to, whenever they like, simply joining the taxi-force by logging on to the app—but if the government is to outlaw this, as some did when motorcycle taxis were sought to be introduced, this will choke off the app economy.

Similarly, the bulk of apps, including those for e-tail are in English, so part of the government’s effort has to be focused on how to expand this to regional languages—NPCI’s work on payments, for instance, has been a force-multiplier and has brought down costs dramatically. Similarly, the increased cyber vulnerability means the government has to beef up anti-hacking efforts dramatically—if the app economy is seen as something that can compromise user data, especially financial data, it will die a quick death. Though the issue of whether apps like WhatsApp had to be licensed or pay telcos seems to have died a natural death, if the telecom industry continues to be in the financial state it is in today, it is difficult to see how the app economy can thrive.

  1. J
    Jayesh
    Jul 15, 2017 at 10:59 am
    App is necessary tool to empower individual entrepreneurs. It gives takes care of critical features of their business e.g. scheduling, billing, collection, feedback etc. These are essential for an entrepreneur on real time basis since they are critical for survival and profitability and being organized. I think India will become an app economy which will create millions of entrepreneurs.
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