Digitalization and its impact on indian economy



Digitalization and its impact on indian economy

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Digitalization has empowered the economy of our country. It helps in increasing the quality of our life. There has been a drastic change in the cash-based economy to a cashless economy. The digital transactions in the year 2017-18 were 2070 crore in comparison to 1090 crore in the year 2016-17 (Deccan Chronicle, 2018).

India is moving towards digitalization with the interlinking of the four levels i.e. expanding digital infrastructure, increasing technological adoption, growing digital communication, and unprecedented data explosion.

The digital infrastructure has been increased with the help of public and private initiatives. This can be seen as smartphones or mobiles penetration on the internet has increased. The aadhar linked bank accounts have been increased. There are almost 450mn internet users. Jio has taken an initiative of by providing high-speed broadband in 30 cities all over India. Low-end smart users have been provided with “Go” edition for nearly 40 million users. India Stack is there to provide a unified payment interface. NOFN (National Optical Fiber Network) has the objective of connecting the Gram Panchayats all over the country and providing them with 100 Mbps connectivity. The tax collection system is digitalized and centralized. There is an online registration system and tax compliance system. Bharat-QR has been helped to increase their merchants with the help of BijliPay online payment system.

The traditional banking system has been changed into the digital innovative system as shown below


Bank bazaar, Kissht, Simpl, Rubique

Payment methods

Paytm, mpesa, Citrus

Mobile-only banks

Airtel bank, digibank, India post payment bank

Industry convergence

Ola money, jio money, Airtel Money

The Ola has collaborated with diverse business and provided innovative digital product to the consumers. It has entered the e-commerce industry and entered the food delivery industry. They have an in-app booking with Zomato, Food panda etc. In collaboration with banks such as ICICI, YES Bank and SBI they have ATM equipped OLA cabs. They have started connected vehicle platform in collaboration with Microsoft. They have an integrated business with flight and hotel booking in collaboration with Make My Trip, Oyo etc.

The digital infrastructure helps the government to provide digital services which are transparent. Because of the transparency, there is less corruption. This has also helped the businesses to have economies of scale and increase in their market area. This has provided the citizen with a better quality of life and opportunities.

The government is having some of the projects that will convert certain areas to smart cities.



Area of innovation


Smart Road and Smart Services

scrutiny, lighting of street,

management of traffic and solid waste management

Jabalpur 311 and PuneConnect

Mobile application

Real time traffic, parking information, payment of bills and taxes

New Delhi

Solar Rooftops

Use of renewable source of energy

Pune Transport Command

Control Center

Real time traffic, driving quality, health monitoring and tracking public transport


India First Digital State

Aadhaar Enabled Citizen Services (AECS), The Accelerating Change and Transformation in

Organization and Networking (ACTION), 3. Computer Emergency Response Team-Kerala (CERT-K)

Andhra Pradesh

Center of excellence

Fiber grid, e-Pragati initiative


India’s first digital village

In partnership with ICICI villages going cashless, security cameras

Source: ASSOCHAM India: Digital India Targeting Inclusive Growth.

The various sector of the economy has grown by the effect of digitalization

Financial sector: eKYC’s have reduced a lot of documentation and has increased penetration of banking in the country. UPI transactions have greatly improved and currently at 80million transactions a month. Aadhaar based identification has resulted in faster transactions and opening of accounts. The new age startups are coming up with mobile application based lending.

Logistics: It is moving towards building digital freight forwarders who will enable better supply-demand match along with Instant Price Discovery thereby bringing the freight costs by 20%. India’s 20% warehouse capacity is expected to be modernized from less than 1% by the year 2025 with the use of warehouse management solutions and Internet of Things inventory management. Optimization of the trucking fleet is also expected to improve with SaaS based fleet management solutions.

Healthcare: The mHealth market has gone up in India and is expected to be an 800 million business by 2020. There has been an increase in fitness and wellness startups and technology enabled home healthcare services.

The biggest challenge that the government is facing is the infrastructure condition of the country. High connective telecom facility is required throughout the country for which RoW permission is required. But the state government is delaying the process and levying different charges on it. RoW requires permission from Ministry of Railway and Ministry of Environment which is a tedious task. BharatNet that aims at providing the broadband at the gram panchayat level is not able to achieve the target because of lack of electricity in the rural area of the country. Another challenge is the data security issue. There should be an integrated policy at the national level which should serve as a benchmark for the minimal amount of measures that are required in the data security. Citizens should be educated about the cybersecurity issue and the preventive measures required to be taken at an individual level. Inadequate digital literacy is the reason for the delay in digitalization. According to the records, nearly 12 crores of the rural population does not have access to the computers. The facilities that are available are not in the local language which results in the minimum usage by the residents.

The transaction charges levied on the usage of the debit and the credit cards reduce the customer base of the e payment services. India rank on 15 levels with respect to financial literacy. Lack of financial knowledge hinders the usage of the digital platforms. Trust and security also result in less usage of the online payment portals. Active participation is hindered because of the internet speed available. The e-education facility provided by the government face the difficulty of lack of quality. Because of lack of knowledge and internet speed, it is not being utilized at an optimal level. In the healthcare sector, there is no unified platform. It faces the difficulty of shareability.

To overcome the obstacles awareness should be spread at the grass root level. Participation of the students should be increased so they can further spread the awareness about financial literacy. The online literacy program advertisement should be increased. People should be educated about the corrected method of use of the computers and data security. Awareness should be spread in the rural area.


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Expanding Digital Infrastructure

Unprecedented Data Explosion

Growing Digital Communication

Increasing technological Adoption

Author’s Bio: 


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