Imagine an India, where a villager directly tweets”Applied for visa but official asking for bribe.” to Ministry of External Affairs, or “No power supply in the village during the last 24 hours, please send officials for inspection.” to Ministry of Power, or “Unemployed despite high qualification” to Ministry of Labour & Employment and gets a prompt reply along with immediate actions.
Imagine an India, where a father from the remotest villages of the country, that had no reliable network connectivity few years back, sends e-mail to his daughter studying in California stating that he has paid her college fees through digital wallet.
Imagine an India, where high level of surveillance and quicker judiciary processes have resulted in declining crime rates, online post-office/pension remittances have reduced hassles of countless physical visit, important official documents are processed online, students across India have access to e-books and e-courses, biometric scan provides complete individual details and doctors provide remedies to patients through e-healthcare solutions.
This is the power of digitisation that India aspires for. To graduate from a developing to a developed nation. To bridge the gap between Bharat and India by providing necessary support in rural areas and give rise to a new rural urban. To empower the common citizens with increased awareness.
The Indian economy, with a GDP growth of 7.6% in 2015-16 is the world’s fastest growing major economy. Over the past two years the macro-economic factors like inflation, fiscal deficit, interest rates and current account deficit have shown significant improvements. In terms of global competitiveness and ease of doing business the country’s ranking have improved by 16 and four places respectively.In wake of such positivity leading agencies like IMF, World Bank and Asian Development bank are bullish on the economic growth of the country forecasting it to be the fastest growing major economies over next few years.
Inspite of such an exciting future, the major hindrance to the growth of the Indian economy remains the fact that it lags way behind in terms of infrastructure development and implementation of information technology.The country still banks on yesterday’s technology to solve tomorrow’s problems, support its massive population of over 1.33 billion and scale of operations leading to various bottlenecks. This is severely impacting the country’s competitiveness owing to delays in approvals from government agencies, payments and subsidies transfer, document verification, and setting-up new business. Despite having a wide pool of entrepreneurs, new start-ups and business opportunities are lost due to various red tape issues.
However, over the next few years, the scenario is expected to improve as the country embarks on an ambitious journey of ‘Digital India’ under the charismatic leadership of Mr. Narendra Modi at an estimated investment of Rs. 1,130 billion. The initiative shall focus on robust implementation of Information Technology across the length and breadth of the country with the objective of raising productivity, enhancing efficiency across all major sectors of economy, facilitating government’s engagement with public, offering wider access to internet, improving banking infrastructure, enhancing mobile connectivity, creating provisions for e-services on demand, and ensuring availability of key digital resources to all citizens.
One key aspect of digitisation shall be its ability to empower the common citizens with better knowledge, and awareness resulting in rising aspiration levels. Social rights (homeless shelters, food, employment, good and affordable healthcare,and comfortable commuting) and expeditious public services that are prevalent in developed nations shall soon become a norm in India.Common men, who until now had no medium to stand-up against corruption or dream of better lifestyle shall have the authority to question the government and ask for their rights.The major initiatives under the ‘Digital India’ programme launched by the Government of India include:
- Domestic electronics manufacturing:Target net zero imports by 2020 through engaging in indigenous manufacture of smart energy meters, set-top boxes, smart cards, VSATs, mobiles, micro ATMs, and consumer and medical electronics.
- Broadband highways:Creating a nation-wide broadband connectivity by March, 2017 at an investment of Rs. 476.9 billion.
- Mobile connectivity: Enhancing network penetration and covering gaps in mobile connectivity at an investment of Rs. 160 billion.
- Public access to internet: Invest Rs. 47.5 billion to provide internet services across 2.5 lakh villages and 1.5 lakh post offices by March, 2017.
- e-Governance: Exploit the power of IT for business process re-engineering to improve processes, delivery of services and enable faster data examination by simplifying forms, integrating services and platforms (i.e., Aadhar and payment gateway), online availability of school certificates and Voter IDs, and automation of government workflow and public grievance redressal processes.
- eKranti: Deliver services electronically across multiple areas like healthcare and medicine supply, education and online courses, financial inclusions, agriculture, cyber security and justice to public.
- Global information: Effective utilisation of internet, social media and online messaging to provide important information and documents online.
- Job creation: Provide IT training at a cost of Rs. 2 billion to over 10 million people for jobs in IT sector, providing assistance for setting-up businesses for new IT services and having BPOs in each Northeastern state.
- Early harvest program:Use IT platform for mass messaging from government, Aadhar enabled biometric attendance, e-books for schools and set-up national portal for lost and found children. Invest Rs. 7.9 billion to create Wi-Fi hotspots in major cities and tourist centers and Rs. 980 million to provide Wi-Fi in universities.
(Source: Speeding ahead on telecom and digital economy highway report by EY and FICCI)
Scale of digital revolution in India
India is expected to witness a digital revolution of a massive scale over the next decade leading to 2025 with a potential of generating millions of well-paying jobs and unleashing economic value to the tune of USD 550 billion-USD 1 trillion yearly by 2025.
The table below depicts the vast potential of digitalisation in India:
|Internet access and smart phones||~200 million
Smart phone users
Smart phone users with internet access
|Cloud computing users||~2 million||~20 million (including nearly 50% of small and medium enterprises)|
|Digital transactions||1 billion||12 billion|
|Percent of digital transactions linked to verifiable digital identity||~1%||~100%|
|Internet of things (devices connected)||< 1 million||3-10 billion|
(Source: McKinsey Global Institute analysis)
Impact of digitisation across various sectors
- Finance sector: Boost innovation in the financial services industry enabling players and start-ups to provide customers a gamut of seamless financial services and payment gatewaysfacilitating nearly 300 million citizens gain access to banking services and credit. This would result in transaction value from the Indian Fintech sector to grow at an estimated compounded rate of 22% from USD 33 billion in 2016 to USD 73 billion by 2020.(Source: FinTech in India report by KPMG and NASSCOM)
Digitisation shall also have the potential of unlocking the huge opportunity for digital payments in India where cash is the primary source of transaction accounting for nearly 78% of all payment transactions. Though in the past two years digital transactions have witnessed over 50% growth it is still at nascent stage accounting for only 13% of payment transactions. Post 2023, this perspective is estimated to reverse with non-cash transactions growing to 59% (37% digital payments) of overall payment transactions in 2025 with evolution to simpler technology (like contact less payments through near-field communication, internet of things, digital currency, voice based payments), over 10x growth in merchants acceptance network in next five years and introduction of modified unified payments interface facilitating interoperability between financial instruments using a mobile interface. The digital technology would revert the mechanism of consumption-driven payments to payments-driven consumption as the digitally captured customer payment history will allow marketers to tap new customers/resell to existing ones by offering freebies, discounts, loyalty points, and rewards based through use of data analytics.Driven by this, the total payments made by digital instruments is expected to grow from USD 40-50 billion currently to USD 500 billion by 2020.(Source: Digital Payments 2020 report by BCG and Google)
- Healthcare sector: Revolutionise the healthcare industry by facilitating remote monitoring and diagnostics to nearly 400 million citizens, reduce healthcare costs, encourage better education and health awareness, and enable healthcare record maintenance.
- Public services: Public services has been a major area of concern owing to its slow-pace and harassment for citizens. It is also an area having maximum corruption and least accountability. Digitisation promises to reduce human intervention with in turn would reduce errors and make administrative processes efficient and transparent. Public Distribution System that involves distribution of various government benefits citizens has various loopholes resulting in benefits not reaching end-users. Electronic mechanism and linking Aadhar card targets to reduce leakages and improve citizens’ life. In past services for passport, e-filling of taxes and e-voting have tremendously reduced corruption and enhanced efficiency. The government looks forward for various public-private partnership initiatives along with streamlining various operations, sharing e-documents through registered repositories, e-signing and KYC process using Aadhaar authentication to reduce lags.
- Education: Technology shall play a defining role in changing the education scenario in India from a knowledge transfer model to a collaborative, active, self-directed and engaging model. As India moves towards a massive urbanisation technology will aptly be able to handle the pressure on education system by enabling students to take online courses, providing e-books, online vocational training, skill enhancement training for teachers and promote self-learning solutions. During 2013-18, India’s e-learning sector is expected to grow at a CAGR of 17.4%.
- Agricultural sector: Equip farmers with real-time weather, price and best farming practices information at their finger tips. Thus, facilitating crop protection and providing them means to earn higher profits.The farmers would also receive latest news relating to subsidies, government schemes, financing options and irrigation facilitiesto enable them make necessary arrangements. Overall, digitisation has the potential to enhance per capita agricultural income by nearly 25%[viii] and improve farmers’ standard of living.
- Media and entertainment (M&E) industry: Digitisation has already taken M&E industry by storm through various social media sites and mobile applications that delivers contents to users anytime, anywhere and faster than any other media. People no longer wait for newspaper or television for news, information, videos, songs, moviesor advertisements as everything is available instantaneously on smartphones. Over the past few years marketers have taken digital advertising very seriously viewing the huge opportunity. As per IAMAI-IMRB, the digital advertising market that was pegged at Rs. 1,140 cr in 2010-11 has grown at a CAGR of 35% to Rs. 5,200 cr in 2014-15 and is expected reach Rs. 7,044 cr by 2015-16.
- E-commerce industry:Higher mobile and internet penetration across the country shall boost the e-tailing market in India resulting in the industry forecasted to grow at a compounded rate of 45% over the next four years reaching USD 28[x] billion in 2019-20 with buyer base increasing to 110 million.
- IT sector: IT sector that had been primarily driven by exports will witness surge in domestic opportunities with growth clocking 15-17%[xi] in the coming years leading to significant job openings and encourage skill development and innovation among the IT players.
- Auto industry:As per KPMG’s Global Automotive Executive Survey (GAES), during 2016-25 the auto industry worldwide would witness business model disruptions driven by connectivity and digitisation. The trend shall also impact the automotive industry in India driving players to be more customer-oriented and offer customised experiences.
Apart from the direct benefits to these sectors digitisation would also have ripple down effect across all the major sectors of the economy. Further, in addition to the financial benefits it would have a profound impact environment protection through promoting paperless work culture, use of smart traffic control technologies to assist in decongestion resulting in fuel savings and implementation of efficient metering systems having potential of reducing electricity and water wastages.
Digitisation, that had been long ignored in India, has become the need of the hour for the country to sustain the sheer size of its economy and propel growth in the coming years. It shall play an important role in transforming the way things operate by reducing corruption, enhancing accountability, connecting the rural population with rest of country and in general making life easier for citizens.