Chapters :

Digital Economy – 01


Digital economy refers to an economy that is based on digital computing technologies, although we increasingly perceive this as conducting business through markets based on the internet.

The Digital Economy is worth three trillion dollars today. It is widely accepted that the growth of the digital economy has widespread impact on the whole economy. Various attempts at categorizing the size of the impact on traditional sectors have been made.

India has increasingly realised its huge potential of digital technology given the role played by the IT service sector with its huge skilled manpower. Hence Digital infrastructure has become the core focus area of infrastructure to be built by the government. Hence areas like digital connectivity, financial inclusion, and digital infrastructure for social schemes by use of Aadhaar, developing a robust digital payment system for transparent money economy, cyber security infrastructure etc.

Hence in this chapter we will look at the steps taken in developing the digital infrastructure and expanding the schemes and technologies to build a robust digital economy.


Digital economy has the power to change the lives of millions of people in India.  India is developing a “mobile-first” digital culture, with smartphones fuelling a boom in ecommerce and other forms of business. With a rapidly growing middle class, and a young, tech-savvy population, online personal services are about to take a big jump.

International companies are looking to increase their investment in India’s digital economy.  Improved telecom infrastructure as well as affordable smart phones now gives the opportunity to benefit from services such as banking and retail. According to industry experts, India has the potential to grow to USD 2 to 3 to 4 trillion digital economies by 2022.  Digital economy has the potential to generate huge employment opportunities. Digital skilling has lot of potential as India has rich talent pool that can be used to meet global demand

As the central bank, the RBI has been playing a vital role in promoting payment and settlement of monetary transactions involving the banking system. RBI has developed a well-structured payment and settlement system that facilitate the transfer of money all across the country.

In the payment and settlement front, initiatives taken by RBI in the mid-eighties and early-nineties focused on technology-based solutions for the improvement of the payment and settlement system infrastructure, coupled with the introduction of new technologies. One such important development was the introduction of electronic fund transfer.

INDIA’s Digital Economy:  an overview

With a strong foundation of digital infrastructure and expanded digital access through Digital India Programme of the Government, India is now poised for the next phase of growth — creation of tremendous economic value and empowerment of citizens as new digital applications permeate sector after sector.

India can create up to $1 trillion of economic value from the digital economy in 2025, up from around $200 billion currently

  • India’s digital consumer base is the second largest in the world and growing at the second-fastest rate amongst major economies. India’s inclusive digital model is narrowing the digital divide within the country and bringing benefits of technology to all segments of people.
  • Half the potential economic value of $1 trillion in 2025 could come from new digital ecosystems in diverse sectors, including financial services, agriculture, healthcare, logistics, jobs and skills market, e-governance and other areas.

The Digital India program

It was launched in July 2015, is a flagship program of the Government of India that is transforming the country into a digitally empowered society and knowledge economy. Building on this foundation, India now has a massive opportunity to further scale up its digital economy.

  • Digital India is a Programme to prepare India for a knowledge future.
  • The focus is on being transformative – to realize IT + IT = IT
  • The focus is on making technology central to enabling change.
  • It is an Umbrella Programme – covering many departments.
  • It weaves together a large number of ideas and thoughts into a single, comprehensive vision so that each of them is seen as part of a larger goal.
  • Each individual element stands on its own. But is also part of the larger picture.
  • It is coordinated by DeitY, implemented by the entire government.
  • The weaving together makes the Mission transformative in totality
  • The Programme:
  • Pulls together many existing schemes.
  • These schemes will be restructured and re-focused.
  • They will be implemented in a synchronized manner.
  • Many elements are only process improvements with minimal cost.
  • The common branding of programmes as Digital India highlights their transformative impact.

Vision of Digital India Centered on 3 Key Areas

  • Digital Infrastructure as a Utility to Every Citizen
  • Governance & Services on Demand
  • Digital Empowerment of Citizens.

Trillion dollar Digital Economy

These are the findings of ‘India’s Trillion-Dollar Digital economy’, a new report by the Government of India’s Ministry for Electronics and Information Technology (MEITY), released by the Union Minister for Law & Justice and Electronics & Information technology, Shri Ravi Shankar Prasad in Mumbai today. The report takes stock of the massive digitally-enabled change that is underway and lays out a vision and roadmap for the coming years. The fact-based report is a collaborative effort, with data and inputs from a wide range of government, business and civil society entities, undertaken over the past year.

India has nearly half a billion internet users and their number is rising rapidly in every part of the country. This will create a huge market for a host of digital services, platforms, applications, content, and solutions. Overall, India could potentially see a five-fold increase in economic value from digital transformation by 2025, representing an attractive opportunity for global and local businesses, start-ups, and innovators to invest in emerging technologies (like AI, blockchain, or drones) in ways that are customized to India’s needs.’’

The ‘Team India’ spirit of partnership and collaboration will be critical, across central and state governments, the private sector, industry associations and the social sector. The Minister said at the event, “Working with all stakeholders, India can build on the digital dynamism we have already created to deepen, widen, and scale up its digital economy in the coming years, creating huge economic value and empowering millions of people across all walks of life.”

The report finds that India can create up to $1 trillion of economic value from the digital economy in 2025, with about half of the opportunity originating in new digital ecosystems that can spring up in diverse sectors of the economy. Currently, India’s digital economy generates about $200 billion of economic value add.

India is the second-fastest digitizing economy amongst 17 leading economies of the world, according to the report’s Country Digital Index, that is based on 30 metrics to measure digital adoption in 17 mature and emerging digital economies, including Brazil, China, Indonesia, Russia, South Korea, Sweden, and the United States.

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