India’s digital economy refers to the economic activities that emerge from connecting individuals, businesses, devices, data, and operations through digital technology. It encompasses the online connections and transactions that take place across multiple sectors and technologies, such as the Internet, mobile technology, big data, and information and communication technology.
Major Highlights
- India’s digital economy stood at 11.74% of the national income in 2022-23 and is likely to rise to 13.42% by 2024-25.
- Growth: India’s digital economy is expected to grow almost twice as fast as the overall economy, contributing to nearly one-fifth of national income by 2029-30.
Why in the News?
The State of India’s Digital Economy (SIDE) Report 2024, published by the Indian Council for Research on International Economic Relations (ICRIER), highlighted that India is the 3rd largest digitalized (behind the US and China) economy in the world in terms of economy-wide digitalisation.
Key Drivers of Digital Economy Growth in India?
- Expanding Digital Infrastructure: India’s digital infrastructure is bridging urban-rural divides and fueling a vibrant digital economy. For eg- Initiatives like BharatNet are providing high-speed internet to rural areas.
- Rising Smartphone Penetration: Affordable smartphones and low-cost data have positioned India as a mobile-first economy. It enhanced access to online education, digital payments, and entertainment.
- Global Capability Centers (GCCs): India hosts 55% of the world’s GCCs, which provide essential services like IT support, R&D, and business process management.
- Start-Up Ecosystem and Innovation: India’s startup ecosystem is a major driver of digital innovation. Initiatives like Start-Up India and strong funding have helped tech startups address unique market needs.
- Digital Financial Inclusion: Programs such as UPI and Jan Dhan accounts are transforming financial inclusion in India.
Key Issues Associated with India’s Digital Growth.
- Digital Divide: India’s digital growth is uneven, with significant gaps between urban and rural areas, and among different socio-economic groups. As of 2023, rural internet penetration- 37%. Also, India’s digital literacy rate – 37%, according to the National Association of Software and Service Companies (NASSCOM).
- Cybersecurity Threats: India faces increasing cybersecurity challenges as digital adoption rises, including data breaches, phishing attacks, and ransomware incidents.
- Data Privacy and Protection: The absence of strong data protection frameworks until recently exposed citizens to risks like unauthorized data collection and misuse.
- Infrastructure Bottlenecks: Challenges such as low broadband speed, patchy 5G rollout, and insufficient fibre-optic networks hinder progress.
- Regulatory and Policy Challenges: Frequent regulatory changes and overlapping jurisdictions create confusion and compliance burdens for businesses.
- Inefficiencies in Public Digital Systems: They face challenges such as low user adoption, data accuracy issues, and occasional technical glitches.
- Environmental Impact of Digital Expansion: Rapid digital expansion has led to increasing e-waste and energy consumption in data centers.
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Steps can be taken to Strengthen and Secure the Digital Landscape in India?
- Bridging the Digital Divide: India must expand its digital infrastructure to rural and remote areas while ensuring affordability and accessibility. For eg- Programs like BharatNet create a robust public Wi-Fi ecosystem, particularly in underserved regions.
- Enhancing Cybersecurity Framework: India needs a comprehensive cybersecurity strategy that includes capacity building, real-time threat detection systems, and stringent regulations. For instance- Expanding the Cyber Surakshit Bharat initiative to SMEs and startups can ensure wider adoption of security best practices.
- Strengthening Data Privacy and Protection: Effective implementation of the Digital Personal Data Protection Act, 2023 is crucial for safeguarding citizen data.
- Promoting Digital Literacy: Digital literacy programs should extend beyond basic usage to include cybersecurity awareness, online etiquette, and skill enhancement.
- E-Waste Management and Sustainability: India needs a national e-waste management framework focusing on collection, recycling, and upcycling. For eg- Linking Swachh Bharat Mission with e-waste collection initiatives can create awareness and streamline processes.
- Boosting Startups and Innovation: Simplified regulatory frameworks and targeted funding can nurture startups.
- Ensuring Inclusive Digital Access: Policies should focus on making digital services accessible to people with disabilities as well as marginalized communities.
- Aligning with Global Standards: India should harmonize its digital regulations with global frameworks while maintaining its unique socio-economic context. For instance – Creating bilateral agreements for cross-border data flow and intellectual property sharing can foster international collaboration.
Conclusion:
India’s Draft Digital Personal Data Protection Rules, 2025, mark a significant step towards a secure and inclusive digital future. With the rapidly growing India’s digital landscape, addressing the digital divide, cybersecurity challenges, and data privacy concerns remains crucial. Also focused efforts on enhancing digital infrastructure, promoting digital literacy, and ensuring data protection will be key to realizing the full potential of Digital India.