Editorial: Cash in on data flows

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Updated: Feb 29, 2016 8:29 AM

India must push high-speed broadband connectivity

Net neutrality, net neutrality india, Net neutrality debate, net neutrality us, Digital India, digital india programme, digital india initiative, NewCo, ott services, ott telecom, ott players in India, smart citiesDigital Globalization: The new era of global flows.

As the world gets further connected, cross-border flows of data are surging while global goods trade and financial flows have flattened since the 2008 recession, according to a McKinsey Global Institute (MGI) study, Digital Globalization: The new era of global flows. Flows of goods, FDI and data have increased current global GDP by roughly 10%—$7.8 trillion in 2014 alone—compared to what would have happened without any flows. Data flows account for $2.8 trillion of this effect, exerting a larger impact on growth than traditional goods flows. The report states that global goods trade may continue to decline relative to world GDP over the coming decade. However, during 2005-14, cross-border bandwidth has grown 45 times, to 211.3 tbps, and is projected to grow another nine times over the next five years. The MGI Connectedness Index has ranked nations based on goods, services, finance, people and data. Singapore tops the list followed by the Netherlands and the United States. While China is ranked seventh, Japan (24), India (30) and Brazil (44) are ranked way behind.

Despite the thriving business process off-shoring sector, India comes in at rank 70 for data flows, down from 64 in the previous edition of the index, indicating that other countries have increased data flows faster than India. The country is ranked behind Malaysia (43), UAE (46) and Saudi Arabia (53). In services India ranks 10, followed by goods (24), finance (35) and people (58). The report points out that if India had accelerated its participation in all types of global flows to match the top-quartile countries over the past 10 years, its GDP would have been $1.2 trillion higher (58% larger) by 2014. The same applies to Brazil which could have added $1.4 trillion to its GDP by 2014. The rise in cross-border data is due to a variety of reasons. This includes the 914 million people who have at least one international connection on social media, the 361 million cross-border e-commerce shoppers, the 244 million people living outside their home country and the 5 million students studying abroad globally. As competition intensifies, the emerging market giants are going global. MGI estimates by 2025, companies with headquarters in emerging countries will account for 45% of the global Fortune 500, up from 26% now. With the NDA government pushing ahead with Digital India, the time is just right for India to punch above its weight in cross-border data flows. But for that to happen, the country will need high-speed broadband connectivity, which still remains a work in progress.

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