According to Microsoft-IDC Asia Pacific’s report ‘Unlocking the Economic Impact of Digital Transformation in Asia Pacific’, digital transformation is estimated to add $154 billion to India’s GDP by 2021.
:- By Dilip Modi
According to Microsoft-IDC Asia Pacific’s report ‘Unlocking the Economic Impact of Digital Transformation in Asia Pacific’, digital transformation is estimated to add $154 billion to India’s GDP by 2021. Within the next 4 years, digital technologies are also likely to contribute 50-60% of India’s GDP through direct or ancillary services, a substantial rise from the current 4%.
Public sector services, healthcare, education, logistics, retail, agriculture, the massive optimization ability of modern digital technologies can bring in layers of efficiency, cost-effectiveness and security to the entire economic system in India.
The advent of IT during mid-80s, BPO boom, SaaS movement etc. earned India the moniker of being an ‘IT enriched economy.’ In fact, it is the IT industry that made India’s liberalization process possible and fruitful. From an export of $100 million and around 5000 employees, the IT industry market size in India is expected to reach $250 billion by 2020. However, the industry was segmented into two avenues till now-software development and backend operations.
But new-age digital concepts such as Machine learning, Artificial Intelligence, Data Analytics, Automation, IoT etc. have made the domain an integral part of every sphere in the Indian economy. Its strongest impact, however has been felt in financial inclusivity, public service framework and entrepreneurship. Let us take a look at how cutting-edge digital solutions and start-ups have impacted these segments:
Facilitating Financial inclusivity–
India has emerged as a perfect case study for successful digital financial inclusion over the past half a decade. Over a billion mobiles, 400+ million broadband connections and 350 million new bank accounts, along with digital connections through initiatives such as Aadhaar and Pradhan Mantri Jan Dhan Yojana, digital inclusion has gained great grounds in India.
Rapid digitization has helped India deal with the age-old ‘inclusion crisis’, that of extending formal financial services to the large underserved and non-banked section of the population. Globally, digital financial inclusion has added 1.6 billion new individuals, created 95 million new jobs, reduced annual government leakage by $110 billion and is expected to add $3.7 trillion or 6% GDP to the world by 2025.
For emerging economies such as India today, every story begins with the phone. The digital products, facilitating everything from mobile recharges to foreign remittances, are being preferred as they offer true advantage in cost and utility.
As per a McKinsey report focused on Digital technologies for Emerging economies, 200 million MSMEs across emerging economies, i.e. half of all such businesses, lack access to a bank account and financial credit. The gap between credit required by MSMEs and what they can actually access is an estimated $2.2 trillion. In India, specifically, the schism stands at $140 billion for 23 million enterprises.
Fin-tech players have helped entrepreneurs get access to much needed financial assistance where conventional lending sources failed miserably. New age eligibility mechanisms, such as business potential evaluation, adopted by fin-tech start-ups help first-time entrepreneurs get financial assistance.
Moreover, digital payment systems help new entrepreneurs to improve tracking and analysis of cash flow, streamline supply and inventory management, monitor profitability, raising productivity and efficiency. Digital finance could unlock an additional $2.1 trillion of loans to individuals and SMEs and MSMEs, assisting productive but credit constrained business expand, diversify and innovate.
The third wave of transformation, driven by digital technologies has suddenly levelled the playing field for established players and emerging start-ups. The parameter is not huge market presence anymore, but utilizing new digital tools to give the best user experience. The future icons of the business world will be those who master the digital game today to easily reinvent products, operations and business models.
Strengthening public infrastructure
Recently, Telangana state government declared a dedicated SEZ for blockchain based project development. The Andhra Pradesh government expressed a desire to use the technology to transparently record municipal documents and deeds, while the state of Kerala has decided to use the technology for optimizing its agricultural distribution framework.
Globally, private enterprises as well as government bodies are increasingly turning the digital way. Digital payment platforms are rapidly integrating with government platforms to provide integrated government services. This reduces inefficiency due to bureaucratic interference and ensures greater accountability and governance. It also gives an additional layer of security via unique encryption.
Recently, Indian government extended online application service for important documents such as Voter cards, passport etc. The success of completely tech-driven, transparent and easily accessible public information systems, such as Estonia’s government-citizen engagement platform e-Estonia, gives further fillip to the usage of digital tools to provide public services.
Equal access to resources, information, opportunities and choices determine the health of a democratic nation. Unfortunately, India, even though it is the world’s largest, fares less on all these counts. 82% males and 92% females still earn less than INR 10,000/month, 1,50,000 people die every year due to medical negligence or lack of availability of medical care and more than 40% of our population still has zero or very little access to formal sources of funding.
Digital solutions can play a significant role in every domain, freeing the country from the burden of intermediaries to ensure that resources are provided to those with the most need. Riding on the common chariot of digital solutions, India is on the verge of a remarkable metamorphosis, one that blends service excellence, economic prosperity and the spirit of innovation together.
The author is Founder & Chairman of DigiSpice. The views expressed are author’s own.