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UPSC Sansad TV: AIR- Government’s Efforts for Rapid Growth of Digital Economy.

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Digitalization in the Indian economy:

  • Digital Economy refers to the full range of economic, social and cultural activities supported by the Internet and related information and communications technologies.  Some experts regard it as the third industrial revolution.
  • Some people consider the digital economy as a major growth enabler.
  • Digital payments, Make In India, Start-Up India, Skill India are among the key drivers of the digital economy.
  • Digital Payments: The UPI-based BHIM (Bharat Interface for Money) app has become widely popular, enabling secure and convenient peer-to-peer transactions.
  • E-governance: The Digital India program has made significant strides in providing e-governance services. Initiatives like the e-visa and the Digital Locker system have streamlined government services, reducing paperwork and enhancing accessibility.
  • E-commerce: India’s e-commerce market is projected to reach $200 billion by 2026. Major players like Flipkart and Amazon have expanded their reach, and the COVID-19 pandemic accelerated the adoption of online shopping.
  • Startup-ecosystem: India is home to a burgeoning start-up ecosystem. Since India’s first unicorn in 2011, India is now home to 110 startup unicorns, who are collectively valued at $347 Bn, including companies like Paytm, Ola, and Zomato.
  • Financial Inclusion: Digital financial services provide access to banking for the unbanked and underbanked. The Jan Dhan Yojana initiative resulted in millions of bank accounts being opened, promoting financial inclusion.
  • Broadband and Internet Usage: In India, there has been a notable upswing in broadband adoption, resulting in a total of 765 million mobile broadband subscribers as of 2021.

Problems faced in digitalizing the economy:

  • Key challenge is unequal access to the internet.
  • With the rise in digital transactions and data sharing, concerns about privacy and data security are significant.
  • As digitization increases, the risk of cyber threats and attacks escalates. The average cost incurred due to a data breach in India ranks third with $2.32 million.
  • The rapid pace of technological change requires a skilled workforce. Only around 42% of India’s workforce possesses digital skills, emphasizing the need for widespread digital literacy and upskilling.
  • Navigating complex digital regulations, taxation on e-commerce, and intellectual property issues can be challenging for businesses.
  • Ensuring high-speed internet access and reliable digital infrastructure remains a challenge, particularly in rural areas.
  • Digitization disrupts traditional business models, leading to challenges in certain industries and job markets. Traditional retailers, for example, face competition from e-commerce giants.

Measures needed:

  • Digital revolution must include communities and regions that were previously not part of information and communication technology (ICT) advancement.
  • Sectors must be opened to new digital business models through reductions in regulatory restrictiveness.
  • Implement widespread digital literacy programs, targeting both urban and rural populations. This will empower individuals to access and utilize digital services effectively.
  • Enact robust data protection laws and regulations to safeguard individuals’ privacy and ensure responsible data handling by organizations.
  • Strengthen cybersecurity infrastructure and awareness to mitigate cyber threats. Collaboration between government agencies and the private sector is crucial in this regard.
  • Encourage MSMEs to adopt digital tools and e-commerce platforms by offering incentives and training programs. This can boost their competitiveness in the digital age.
  • Government services: Continue efforts to digitize government services, making them accessible and user-friendly.
  • Digitalization has positively impacted India’s economic growth. However, ensuring widespread access to digital opportunities is essential. Addressing challenges and investing in technology can sustain growth and enhance citizen welfare.

SANSAD TV 27-2-24