digital economy essay upsc

Digital Economy

A digital economy refers to an economy based on digital technologies connected through the internet.

1 Components of Digital Economy
2 Trends in Emerging Technologies
3 SWOT Analysis of the Digital Economy
4 Way Forward

Components of Digital Economy

The different technologies and economic aspects of the digital economy can be broken down into three broad components:

1. Core aspects of the digital economy: It comprises of fundamental innovations (semiconductors, processors), core technologies (computers, telecommunication devices) and enabling infrastructures (Internet and telecoms networks).

2. Digital and information technology (IT) sectors: It comprises sectors that produce key digital products or services ( e.g- digital platforms, mobile applications and payment services).

3. Digitizing sectors: These include sectors where digital products and services are being increasingly used (e.g. for e-commerce). It also comprises sectors such as finance, media, tourism and transportation, where digital technologies are transforming the way processes operate. Further, digitally literate workers, consumers and users are crucial for the growth of the digitized economy.

State of Digital Economy in India

Digital Consumers: India is one of the top three global economies with respect to the number of digital consumers. As per Indian telecom services performance indicators released by TRAI, India had 560 million internet subscribers in 2018.
Digital Adoption: India has the second-fastest rate of growth of digital adoption among mature and emerging digital economies( which includes Brazil, China, USA, Russia etc), as per TRAI. The adoption of public digital platforms like Aadhar, and UPI have led to faster digital adoption.
India’s digital divide is narrowing fast as less affluent states are fast catching up with more affluent states.
Between 2014 and 2018, 7 out of the 10 states with the highest rate of growth in internet subscriptions had per capita GDP lower than India’s average.
Among the lower-income states, Uttar Pradesh alone added 36 million internet subscriptions.
Digital economic value: A report released by the Ministry of Electronics and Information Technology, in partnership with McKinsey has pointed out that India can create over $1 trillion of economic value from the digital economy in 2025, with half the opportunity originating in new digital ecosystems that can spring up in diverse sectors.

Global Best Practices

The Swedish Experience :

Sweden is one of the top five cashless economies in the world. It has adopted effective policies to facilitate transactions using mobile or plastic payments through digital infrastructure.
As on December 2015, the population of Sweden was estimated at 9.85 million people literacy was almost 100%.

The Kenyan Example

Kenya has taken adequate measures to facilitate online payments for government services with an aim to reduce fraud and ensure better targeting.
According to World Bank’s Global Findex report, 58% of the adult population in Kenya had active mobile money accounts in 2014. It was the highest in the world. Kenya is an example where mobile technology and a rise in smartphone ownership have helped in improving online payments despite low Internet penetration.

Trends in Emerging Technologies

1. Blockchain Technologies: Blockchain technologies are a form of distributed ledger technologies that allow multiple parties to engage in secure, trusted transactions without any intermediary. Besides its use as cryptocurrency, it is also in use for digital identification, property rights and aid disbursement.

2. 3D Printing: Three-dimensional (3D) printing, also known as additive manufacturing, can disrupt manufacturing processes by boosting international trade in designs rather than in finished products. For example, in Africa, such ventures exist for medical supplies in Uganda and for filling import gaps in Nigeria. 3. Internet of Things:

Internet of Things (IOT) refers to the system of internet-connected devices that are embedded in various everyday objects enabling them to communicate with each other by data transfer.
Its applications vary from energy meters, RFID tagging of goods for manufacturing, logistics management, monitoring weather conditions in agriculture, etc.
As per a 2018 Ericsson report, there were more “things”(8.6 billion) connected to the Internet than people (5.7 billion mobile broadband subscriptions) in 2018. It has further forecasted that the number of IoT connections would grow by 17 per cent a year.

4. 5G Mobile Broadband : Fifth-generation (5G) wireless technology is critical for IoT due to its greater ability to handle massive volumes of data ( 5G networks can process around 1,000 times more data than today’s systems).

5. Cloud Computing: The cloud is transforming business models. It offers several benefits such as reducing the need of inhouse IT experts and offering flexibility for scaling and maintenance. Some cloud services provide office-like application tools. It is cost-efficient as it reduces the need of purchasing licensed software.

6. Automation and Robotics: Automation and robotics technology are being used widely in manufacturing processes. For instance, robots are mainly used in the automotive, electrical/electronics and metal industries.

7. Artificial Intelligence

Analysis of large volumes of digital data is propelling the developments in AI, including machine learning. For instance, AI is already in use in areas such as voice recognition and commercial products (such as IBM’s Watson).
As per ITU, such technologies can generate an additional global economic output of around $13 trillion by 2030, contributing an additional 1.2 per cent to annual GDP growth.

8. Big Data Analytics

A key technology that runs across all the emerging technologies in the digital economy is big data analytics. This refers to the capacity to analyse and process massive amounts of data.The amount of data generated in the evolving digital economy is constantly and rapidly increasing.
A white paper by IBM on Marketing Trends for 2017 noted that 2.5 quintillion bytes of data are created every day.

Government Initiatives to spur the digital economy

Direct Benefit Transfer: Subsidy and benefits disbursements directly to bank accounts.
Government e-Marketplace: Online marketplace for procurement of goods and services by various government departments.
e-NAM: Pan-Indian electronic trading portal for agricultural commodities.
Soil Health Card: Crop-wise recommendations of nutrients and fertilisers required for individual farm.
BHIM App: Bharat Interface for Money (BHIM) is a mobile payments application based on NPCI’s Unified Payments Interface (UPI). It can be used to send or receive money from other customers and pay utility bills.

SWOT Analysis of the Digital Economy

Convenient Mode of Payment: Digital economy provides an ease of transaction to the customers. It further offers other benefits, such as reduction in transaction cost of carrying and doing transactions in cash.
Lower Risk: With proper cybersecurity, online payment is relatively risk-free, whereas there are always safety issues with physical cash
Reduction in the Cost of Printing Money: Printing of new currency notes and replacement of soiled and mutilated currency notes involves cost. For instance, in 2015, printing currency cost the RBI Rs 27 billion. Thus, the cost can be reduced if the economy moves towards a digital economy.
Decrease in Crime Rate: Many illegal activities like drug trafficking, prostitution, financing of terrorism and money laundering are carried out only in cash. A digital economy will make it difficult to carry out such operations.
Good for the Banking Sector: A digital economy will help the banking system. Once people get used to digital payment and transfers, there would be less demand for cash holding. Thus, this would leave more cash in the banking system and thereby enable more savings.
Economies of Scale: Interconnected networks in the digital economy would allow information flows across and between the networks. This would enable economies of scale due to fixed infrastructure costs of installing the networks.
Availability of e-services: Digital platforms that enable real-time data updates, would increase accountability and facilitate monitoring, quality checks and timely intervention by the higher administrative authorities.
Poor quality internet: Internet access is the backbone of a vibrant digital economy. However, it is plagued by issues related to quality and reliability, call drops and weak signals. Existing networks have been strained further by limited spectrum availability and usage, affecting the provision of quality services.
Digital access and literacy: A vast number of Indian population does not have access to devices such as laptops, computers, smartphones, etc. As per the NITI Aayog Strategy document, digital literacy in India is estimated to be less than 10 percent of the population.
Skill Gaps: Digital economy would require competent professionals with adequate skills to take the lead. However, India has been lacking in it.For instance, A NASSCOM report has pointed out an employee deficit of around 1.4 lakh jobs in the Artificial Intelligence (AI) and Big Data Analytics segment across various sectors in India, which is expected to increase to 2.3 lakh by 2021.
Digital gender gap: According to a study released by LIRNE Asia, an information and communications technology (ICT) policy think tank, India has the highest gender gap in mobile phone and 3rd highest in access to the Internet.
Access to power: Uninterrupted access to power is essential for a digital economy to function efficiently. For instance, blockchains require a substantial, reliable electricity supply for proper functioning. However, around 22% of rural households across the country still do not have access to electricity.
Inequality: The influx of frontier technologies of the digital economy may create inequality within the various regions of India. For instance, the deployment of 5G may further increase the urban-rural digital divide, as setting up 5G networks in rural areas with lower demand will be commercially challenging.

Opportunities

Improve the ease of operations: Transition to a digital economy has the potential to reduce the operational costs of businesses. For instance, adhering to the compliance requirements in a digital form would take minimal time.
Data as a resource: Data is the driving force behind all technologies of the digital economy. The transformation of data into useful information would aid better decision making.
Financial Inclusion: Digital economy provides scope to extend banking facilities to unserved and under-served areas through technologies such as mobile banking, common service centres etc.
Tap the leakages: Use of technologies to transfer subsidies of welfare schemes would help in stopping the leakages by making the process more transparent. For instance, DBT of subsidies under the PAHAL scheme has helped identify and block around 3.34 crore duplicate accounts, helping save thousands of crores.
Black Money: Digitisation of financial transactions helps in maintaining a digital record and trail of such transactions. Thus, it provides opportunity to the authorities to track and verify transactions in future.
Tackle Tax Evasion: Digital Economy could help in tackling tax evasion. For instance, the Aadhaar-PAN linkage gives maximum disclosure about the individual to all authorities including the Income Tax Department. It helps the tax authorities to track transaction and check the income tax profile of the individual/entity.
New job opportunities: As per a report released by the Ministry of Electronics and Information Technology, the value created by the digital economy has the potential to support 60-65 million jobs by 2025. Such job opportunities could include drivers of IoT enabled trucks, delivery agents in e-commerce companies.
The growth of digital economy has further exacerbated the risks of job loss and unemployment. For instance, the influx of machine learning and artificial intelligence will make a number of low-skilled jobs redundant.
Emerging technologies, such as 3d printing may also allow developed economies to use robots to “reshore” manufacturing jobs. This would lead to a stream of back-migration and affect the remittance economy
The quality, speed and price of services are developing at a much faster rate due to better access to global digital platforms for research and development.
Many critics have raised concerns that it may lead to disruption in the existing industries as new ways of doing business would come up. Any dearth in the adoption of new technologies may hamper the business interests of several firms.
Cybersecurity Concerns: The regulatory framework for cyber security is inadequate. Hacking and denial-of-service attacks have led to the disruption of services, both in the government and private sector banks.
Data and Privacy: Digital economy depends on the availability of structured and unstructured datasets. The growth of digital economy will further raise the concerns of data security and privacy of individuals.

Initiatives by the National Payment Corporation of India (NPCI) :

UPI / UPI 2.0: UPI is a payment system that allows money transfer between any two bank accounts by using a Smartphone. It is based on the immediate payment service (IMPS) platform. UPI 2.0 added new features such as allowing the customers to link the overdraft account to UPI, checking the invoice before making payments to the merchants etc.
BHIM: Bharat Interface for Money (BHIM) is a mobile payments application based on NPCI’s Unified Payments Interface (UPI). It can be used to send or receive money from other customers and pay utility bills.
BharatQR: BharatQR (developed by NPCI, Mastercard, and Visa) is an integrated payment system. It facilitates the transfer of money from one bank account to another.
Aadhaar Enabled Payment System (AePS) : AePS is a bank led model which allows online interoperable financial inclusion transaction at PoS (MicroATM) through the Business correspondent of a bank using the Aadhaar authentication.
National Automated Clearing House (NACH) : It is a web based solution to facilitate interbank, high volume, electronic transactions which are repetitive and periodic in nature, for instance subsidies, salaries etc.
Vittiya Saksharta Abhiyan : The main purpose of this campaign is to encourage, create awareness and motivate people to use a digitally enabled cashless economic system for transfer of funds.

Way Forward

Broadband connectivity: Proper implementation of the new National Digital Communications Policy, 2018 would provide universal broadband coverage at 50 Mbps to every citizen and enable 100 Mbps broadband on demand to all key development institutions (such as: educational institutions, hospitals etc).
Promoting higher education as centre of innovation: The competitive advantage for a future digital economy lies in developing innovation skills in the workforce. Developing collaborations between higher education institutions and industry, and promoting new innovation clusters and tinkering labs would help in tapping the innovation potential.
Content in Indian Languages: The state governments can play an important role in providing government e-services in Indian regional languages. The promotion of technologies such as Natural Language Processing in regional languages through machine learning can be explored.
Government Procurement: The government is a large buyer of services. Thus, it can act as a market maker to create a scale for the country’s best innovations and technology applications. This would require suitable procurement policies by the government that help the startups to scale up their innovations.

Committees on Digital Payments

Ratan Watal Committee on digital payments(2016)

Payment regulator: It recommended the setting up of an independent payments regulator within the framework of RBI.
Changes in the Payment and Settlements Act: It suggested amending the Payment and Settlements Act to include provisions regarding consumer protection, data security and privacy.
Aadhar Usage: It has envisaged a prominent role for Aadhaar, such as promoting Aadhaar as the primary identification for (KYC) purposes and allowing Aadhaar-based e-KYC.
Cash-handling charge: The committee further suggested that government departments levy a cashhandling charge to discourage cash transactions.
Interoperability: It suggested facilitating interoperability between banks and the payments service providers based on mobile number and Aadhar.
It recommended the creation of a fund to promote digital transactions.
It suggested that all government payments be made digitally .

Nandan Nilekani Panel on Digital Payments (2019)

Role of government: The government should play an important role in the digitisation of payments.
G2C Payments: All government-to-citizen payments, such as salaries, transfers in DBT mode etc should be made digitally.
Payment of bills: All government departments should provide digital payment alternatives for all bills.
Tax discounts: The government should provide tax discounts to firms that undertake digital transactions for conducting business.
Interchange rate: The committee has recommended the interchange rate on card transactions to be reduced by 15 basis points.
Time of transactions: It has recommended RBI to increase the time of transactions for NEFT and RTGS.
National Common Mobility Card: It has proposed the introduction of a NCMC which is interoperable across different modes of transportation and also acts as an ATM debit card.

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India’s digital economy

June 24, 2022

In News: Addressing the meeting of the BRICS Business Forum, Prime Minister said the digital transformation unfolding in India has never before been seen on the world stage

India’s digital economy and the infrastructure sector has a total potential for $2.5 trillion
There are more than 100 unicorns in over 70,000 start-ups in India , and their number continues to grow.
The value of the Indian digital economy will reach $1 trillion by 2025

Advantages of a Digital Economy

Removal of Black Economy: By restricting cash-based transactions and using only digital payments, the government can efficiently expel the black economy.
Empowerment to People: Direct Benefit Transfer, fight against Corruption
Creation of new jobs
Increase in Revenues: Each transaction is recorded, customers will get a bill for their purchase, and the merchants are bound to pay sales tax to the government.
e-governance: Digital economy will pave a way to e-governance, where delivery of all government services would be done electronically

Measures taken by Government

Digilockers: it is a “digital locker” service operated by the Government of India that enables Indian citizens to store certain official documents on the cloud.
Digital Payments: The introduction of Unified Payments Interface (UPI), which introduced the benefits of digital payments in every part of the country.
BHIM app —It is an app to enable digital payments.
Pradhan Mantri Gramin Digital Saksharta Abhiyan to make citizen digitally literate.
BharatNet Project: world’s largest rural broadband connectivity programme using Optical fibre
Lack of connectivity/infrastructure: Slow roll-out of Wi-Fi hotspots and the slow speed
Lack of incentives: Most small and medium scale industry is struggling to adapt to modern technology
Digital illiteracy: Huge digital divide between gender, regions etc
Lack of skilled manpower: Lack of user education and there are limited facilities to train personnel

Way forward

India’s technical and management institutes should revamp their curriculum to integrate and promote digital technologies
Skill development initiatives to train manpower
Stricter data protection laws that govern such cross border digital flows is needed he digital economy is heavily based on intellectual property, strict protection to patents and copyrighted work, whether produced in India or elsewhere is also need to be implemented.

BRICS summit

The BRICS summit is being hosted by China as a chair of BRICS this year
BRICS is an acronym for the grouping of the world’s leading emerging economies , namely Brazil, Russia, India, China and South Africa.
The BRICS Leaders’ Summit is convened annually.
The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S
Together, BRICS accounts for about 40% of the world’s population and about 30% of the GDP
The first BRIC Summit took place in 2009 in the Russian Federation
South Africa was invited to join BRIC in December 2010, after which the group adopted the acronym BRICS.
South Africa subsequently attended the Third BRICS Summit in Sanya, China, in March 2011.

BRICS initiatives

New Development Bank

During the Sixth BRICS Summit in Fortaleza (2014) the leaders signed the Agreement establishing the New Development Bank (NDB).
Fortaleza Declaration stressed that the NDB will strengthen cooperation among BRICS and will supplement the efforts of multilateral and regional financial institutions for global development thus contributing to sustainable and balanced growth.
NDB is headquartered in Shanghai.

Contingent Reserve Arrangement

Considering the increasing instances of global financial crisis, BRICS nations signed BRICS Contingent Reserve Arrangement (CRA) in 2014 as part of Fortaleza Declaration at Sixth BRICS summit.
The BRICS CRA aims to provide short-term liquidity support to the members through currency swaps to help mitigating BOP crisis situation and further strengthen financial stability.

Source: The Hindu

Previous Year Question

Q.1) With reference to a grouping of countries known as BRICS, consider the following statements: (2014)

The First Summit of BRICS was held in Rio de Janeiro in 2009.
South Africa was the last to join the BRICS grouping.

Which of the statements given above is/ are correct?

Both 1 and 2
Neither 1 nor 2

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The Government is working on a comprehensive legal framework for the digital economy.

The digital economy is the worldwide network of economic activities, commercial transactions and professional interactions that are enabled by information and communications technologies (ICT) .
It can be succinctly summed up as the economy based on digital technologies.
The digital economy reflects the move from the third industrial revolution to the fourth industrial revolution.
The third industrial revolution, sometimes called the digital revolution, refers to the changes that happened in the late 20th century with the transition from analog electronic and mechanical devices to digital technologies.
The fourth industrial revolution builds on the digital revolution as technologies today continue to bridge the physical and cyberworlds.

Advantages of The Digital Economy

Increased productivity: The digital economy has increased the productivity of businesses as they can now use technology to automate their operations and processes.
Increased competitiveness: Businesses can use technology to improve their products and services. This has increased the competitiveness of businesses.
Reduced costs: Digitisation has helped businesses replace manual tasks with automated processes. This has reduced the costs of businesses and has led to lower prices of products and services for consumers.
Better & Convenient Products: Today, digitised businesses can offer their customers better products and services at lower prices. New business models like e-commerce and m-commerce have made it possible for customers to shop anytime, anywhere.
Increased employment opportunities: The digital economy has generated new job opportunities as new businesses are springing up. It has also created new job roles spread all over the world.
Improved quality of life: The digital economy has made it possible for people to work from anywhere in the world. This has improved the quality of life of people as they can now balance their work and personal life.
Faster transactions: The digital economy has made it possible for businesses to conduct transactions faster as they can now use online payment methods.
Improved efficiency: Digitisation of processes has helped businesses become more efficient by removing error-prone manual tasks.
Innovation: The digitisation of businesses and its processes leads to innovation with respect to not just offerings but also the way businesses operate.
Increased transparency: The digital economy has increased the transparency of businesses as they can now use technology to share information with their customers.
Improved communication: Increased connectedness in the digital economy has made it possible for businesses to communicate with their customers more effectively. They now have a number of channels through which they can reach their customers including social media, email, and SMS.
DigiLocker: It was launched in 2015 to create a cloud-based platform to issue, exchange and verify essential documents or certificates.
MyGov: It was launched in 2014 to bring the government closer to the people by providing an interface (online forum) for exchange of ideas.
BharatNet: It was introduced to connect all 250,000 Gram Panchayats (GPs) in the country and provide 100 Mbps internet connectivity.
Smart Cities: It was initiated in 2015 to transform all Indian cities into smart cities by leveraging various technologies.
Digitisation of Post Offices
Pradhan Mantri Jan Dhan Yojna
Digital India

Disadvantages Of Digital Economy

The digital divide: One of the biggest disadvantages of the digital economy is the digital divide. This is the gap between those who have access to technology and those who don’t. This has created a new form of inequality in the world.
Cybercrime: The increased use of technology has also led to an increase in cybercrime. This is because criminals can now use technology to commit crimes like identity theft, fraud, and money laundering.
Data security: With businesses collecting more and more data about their customers, there is a risk of this data being leaked or stolen. This can lead to a loss of trust between businesses and their customers.
Unemployment: The digitisation of the economy has led to job losses in some sectors as businesses have replaced human workers with technology. This has increased unemployment in these sectors.
Privacy concerns: As businesses collect more data about their customers, there are concerns about the misuse of this data.
Heavy investments: The digitisation of businesses requires heavy investments in technology. This is a challenge for small businesses which might not have the resources to invest in technology.
Monopoly: The digitisation of the economy has led to the rise of a few big companies which have become very powerful. This has created a monopoly in some sectors.
Addictive nature: The digital economy is very addictive in nature. This is because it is designed to keep people hooked on their devices. This can lead to a number of problems like addiction, anxiety, and depression.
Potential environmental impact: The increased use of technology in the digital economy has led to an increase in the number of e-waste and heavy carbon footprint.
There is a need to leverage today’s emerging technologies , such as IoT and prescriptive analytics, to better connect with existing and potential customers and to be more responsive while also being more efficient and effective.
To compete in the years ahead, organizations — whether they are for-profit businesses, service-oriented entities, such as healthcare systems, or nonprofit and government institutions — will need both leaders and employees who are able to innovate.
Become better prepared to explore how best to develop or use emerging technologies or risk being left behind as the digital economy moves forward.

Source : TH

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30 August, 2022

Digital Economy in India UPSC

Economic Issues
e-governance
Cyber Security
Data privacy
Telecom sector
Industrial Revolution

Digital Economy In India

Image Source - Inc42

A comprehensive legislative framework for the digital economy is being developed by the government.

About digital economy

The information and communications technology that enables the global network of economic activity, commercial transactions, and professional relationships is known as the "digital economy" (ICT).

The economy based on digital technologies is a brief summary of it.

The fourth industrial revolution

The transition from the third to the fourth industrial revolution is reflected in the digital economy.
The transition from analogue electronic and mechanical devices to digital technology, often known as the third industrial revolution or the digital revolution, occurred in the latter half of the 20th century.
The fourth industrial revolution expands on the digital revolution as modern technology keeps bridging the real world and the virtual one.

Advantages of The Digital Economy

Productivity increases as a result of the digital economy because businesses may now employ technology to automate many tasks and procedures.
Technology can be used by businesses to enhance their goods and services and boost competitiveness . Because of this, commercial competition has intensified.
Cost savings: Digitization has enabled firms to automate jobs that formerly required manual labour. Due to decreasing operating expenses for firms, consumers now pay less for goods and services.
Better and more practical items are now available to clients thanks to digitized enterprises, who can also give them more affordable pricing. Customers may now shop whenever and wherever they want thanks to new business models like e- and m-commerce.
Employment prospects have increased as a result of the emergence of new enterprises in the digital economy. New job positions have also been developed and distributed globally.
A higher quality of life is now possible thanks to the global reach of the digital economy. People now have the ability to balance their personal and professional lives, which has improved their quality of life.
Transactions are completed more quickly thanks to the digital economy because firms can now employ online payment options.
Efficiency gain : By eliminating manual tasks that are prone to error, firms Innovation: As organizations and their processes become more digital, new products and services are developed as well as new ways for them to run.
Transparency has increased as a result of the digital economy because companies may now utilize technology to communicate information with their clients.
Communication has been improved as a result of the digital economy's increased connectivity. Businesses can now communicate with customers more successfully. They now have a variety of avenues, such as social media, email, and SMS, via which they can communicate with their clients have become more efficient as a result of process digitization.

Initiatives by the Government

DigiLocker: This cloud-based platform for issuing, exchanging, and verifying critical documents or certifications was introduced in 2015.
MyGov: This platform was introduced in 2014 in an effort to improve communication between the public and the government.
BharatNet: It was established to offer 100 Mbps internet connectivity to all 250,000 Gram Panchayats (GPs) in the nation.
Smart Cities: In 2015, a plan to use various technologies to make all Indian cities smart cities was launched.
Post Offices are being digitalized.
Pradhan Mantri Jan Dhan Yojna
Digital India Program

Disadvantages

The digital gap is one of the most significant drawbacks of the digital economy. This divide exists between people with and without access to technology . As a result, there is now a new kind of inequality throughout the world.
Cybercrime : As technology is used more frequently, cybercrime has also risen. This is due to the fact that fraud, money laundering, and identity theft are now crimes that may be committed by criminals using technology.
Data protection : Businesses run the danger of having their consumer data stolen or exposed as they gather more and more information about their clients. This may result in a decline in customer and business trust.
Unemployment: As firms replaced human labour with technology, the digitalisation of the economy has resulted in job losses in several areas. In several industries, unemployment has increased as a result.
Privacy worries : As companies gather more information about their customers, there are worries about how this information might be used improperly.
Heavy investments are needed in technology for the digitalization of businesses. Small businesses may not have the resources to invest in technology, thus this is a barrier for them.
Monopoly: The digitalization of the economy has resulted in the establishment of a small number of large, extremely strong enterprises. This has led to monopolies in some industries.
Utilizing current emerging technologies, such as IoT and predictive analytics, can help businesses engage with current and potential customers more effectively, be more responsive, and operate more efficiently.
Organizations, whether they are for-profit companies, service providers like healthcare systems, or charity and governmental institutions, will need innovative leaders and staff if they want to compete in the years to come.
Learn more about developing or utilizing emerging technologies, or risk falling behind as the digital economy develops.

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Daily News Analysis

DIGITAL ECONOMY

Disclaimer: Copyright infringement not intended.

India’s digital economy and the infrastructure sector has a total potential for $2.5 trillion - Prime Minister Narendra Modi. Addressing a meeting of the BRICS Business Forum, Mr. Modi said the digital transformation unfolding in India had never been seen before on the world stage.

What is the digital economy?

The digital economy refers to economic activity that uses electronic communication and digital technologies to provide goods and services. The main building blocks of the digital economy are

The internet. This enables firms to offer goods for sale and enables consumers to browse for goods that they need.
E-mail. Electronic communication enables very cheap, instantaneous communication across the world. It can be used to send information and requests very quickly.
Digital automation . Firms can use the processing power of computers to make decisions on output, prices and how to reach consumers.
Digital payments – credit cards, Apple Pay, Google pay, bitcoin, bank transfer. A digital economy is moving us towards a cashless society.
Increasingly the digital economy relies on AI, mass use of electronic data and automated technology
Social media . To a lesser extent, social media is an aspect of the digital economy. With individuals using it share recommendations about business.

Essential Elements of Digital Economy

Digital Economy facilitates and executes the buying and selling of products and services through electronic transactions undertaken by means of the internet. Its essential elements are:

Digitalization and using Information and Communication Technology (ICT), rigorously.
Knowledge codification
Conversion of information into commodities
Organizing work and production in modern ways.

Hyperconnectivity, i.e. emerging interconnectivity of people, firms, systems, etc. as a result of the internet, mobile technology and Internet of Things (IoT).

Examples of the digital economy

Airbnb – This enables tourists to book online. It has also made it possible for individual households to let our their house/room to tourists. Before the digital economy it was not practical.

E-commerce site : Amazon market place/Ebay.

Netflix – This enables consumers to purchase tv-series and films over the internet, without need for any physical good.

Advantages of the digital economy

Greater information

The internet has enabled consumers to have greater information and choice. For example, it makes it easier to compare prices between firms. It also brings information to a person’s fingertips.

Time saving

For the user, time is a determining factor when making purchases, managing their finances, traveling or even working.

Reduced costs

The digital economy considerably reduces the costs for the merchant and the maintenance of his business.

Increases flexibility

The flexibility that financial technology provides can be seen at all levels of exchange transactions - From the user and the numerous payment methods to the possibility of buying from anywhere in the world.

Provides more information and decision-making power

The power of decision for the user defines many things and the use of the digital economy is exactly that, more information for better decision making.

Process reinvention

The digital economy removes many of the barriers that previously defined the way certain processes are carried out. A clear example is work, which took a 180º turn with technological advances that allow, for example, working from home, making tele-working one of the most widely used alternatives today due to the multiple benefits it combines.

Lower barriers to entry

In some markets, aspects of the digital economy make it easier for new firms to enter. The digital economy has brought many new services which were inconceivable before, such as online home deliveries for grocery to dating apps.

Creates significant data which can give new insights

The mass production of data can help inform governments and charities about what is happening in the economy. For example, in tracking of COVID-19 spread, the use of an app on mobile phones may indicate where local hotspots emerge.

Contributes to Economic Growth:

The widespread digital economy has recorded tremendous growth and innovation as well as it can be broadly applied to other economic sectors.

Creates new jobs

Digital economy has given a boost to jobs too. In the last few years, the development of mobile apps has solely created millions of jobs worldwide.

Improves public services

A set of global access to broadband and a powerful information and communication technology services ecosystem provides a platform to improve service delivery in core sectors.

Rise in e-commerce

A recent growth in e-commerce transactions has been reported in the last few years. And all credit goes to the digitalization of commercial activities, due to which developing, buying, distributing, selling and tracking of products and services, has become much simpler, competitive, and profitable.

Digital delivery of goods and services

From aviation to banking, entertainment to education and insurance to hotel booking, one can easily get the goods and services of their need, online.

Transparency

In the digital economy, major commercial transactions take place online, which eliminates cash transactions, and ultimately increases transparency and reduces corruption.

Expands business opportunities

Digitalization enables small firms and businesses to actively participate in international buying and selling of goods and services.

Limitations of Digital Economy

Cybersecurity

An exponential increase in cyber threats has been reported in recent years due to increasing digitalization in the economy. Except if cybersecurity is countered successfully, it will not be easy to develop a safe and trusted environment, which is conducive to the growing business.

Disruptions in labour markets

Though it is assumed to create new job opportunities, there is also a risk related to the speed of labour market changes and destruction of basic jobs. As everything will be digitized and automated, processes that involve labour and manual work will be avoided and is replaced by technology-oriented work, which will result in loss of jobs and may also widen income inequality.

Strong infrastructure requirement

It requires strong infrastructure concerning internet, telecommunication and mobile industry. For the development of such industries, heavy investment is required, so as to link all the cities, towns and villages.

With the emergence of the digital economy, consumers can get easy and quick access to information, due to the digitization of the content. Moreover, sharing of information with their friends and acquaintances is now just a click away.

Monopoly power

Despite the potential for new start-ups, many aspects of the digital economy have become dominated by firms with monopoly power. For example, Amazon has cornered the market for online sales, meaning many firms have to go through the Amazon market place to reach consumers who go to Amazon out of habit. Similarly, Google and Facebook have all developed very strong brand loyalty and market share in their respective markets. This has made a few tech giants very profitable.

Addictive nature of technology

Whilst, in theory, the internet can save time, e.g. finding bus times is much easier with internet than paper copies, this time saved may be outweighed by the time we waste checking Facebook, twitter, internet searches. Also, the sheer volume of information can cause us to drown in information and lose sight of what we actually need. More choices do not necessarily lead to better outcomes.

Privacy issues

Harvesting and using data has become big business. Facebook collects a large range of data on its users and this has been bought by political interests who can give very targeted political ads to its users.

Bypassing of labour laws

The digital economy has created a trend towards using self-employed freelancers, who are not protected by the same labour laws. For example, delivery drivers for Uber drivers have often been employed on zero-hour contracts. This enables firms to cut labour costs, be more flexible, but it can leave workers without sick pay or employment protections.

Social media has led to more graphic content

The anonymous and distant nature of social media has exacerbated trends to personal attacks and the posting of conspiracy theories or posting of violent/sexual images. The digital economy has enabled the proliferation of content that is damaging to human well-being.

Disruption patterns.

The pace of digitalization can lead to structural unemployment, with some unskilled workers increasingly losing out to skilled workers. Combined with the monopoly power of big tech firms, it is causing an increased inequality in society, which may lead to feelings of alienation and unfairness.

Environmental costs

Digital economy does not always imply a ‘green solution.’ Data centres use electricity and cause CO2 emissions. In the US, data centres account for around two per cent of U.S. electricity use in 2014.

A bigger potential cost is how the digital economy encourages a ‘throw-away’ culture. E.g. the planned obsolescence of mobile phones and computers, encouraging consumers to buy new models, leading to greater use of raw materials.

Some Initiatives taken to digitize India

Infrastructure

Under this initiative, the Government provides multiple programs that facilitate a reliable digital infrastructure. The following are some of the programs under this:

AADHAR: One of the key strengths of ‘Digital India’, wherein every resident of the country is given a unique identity number.
Bharat Broadband Network (BBNL): This is the custodian of Digital India. The creation of the National Optical Fiber Network (NOFN) has been mandated in India.
Centre for Excellence for Internet of Things (CoE-IT): The main objective of the center is for creating domain capability and innovative applications.
CERT-IN: This is formed with the intention to secure Indian cyberspace.
Common Services Centres (CSCS): CSCs are the access points for the delivery of essential public utility services, healthcare, social welfare schemes, financial, education, and agriculture services.
Cyber Swachhta Kendra: The purpose of this is to generate secure cyberspace by detecting botnet infections in India and to notify, enable cleaning, and secure systems of end-users so as to prevent further infections.
Deen Dayal Upadhyaya Gram Jyoti Yojana : This is one of the flagship programs of the Power Ministry (MoP) and is designed to provide a continuous power supply to the entire rural India.
DigiLocker : A digital wallet to empower citizens digitally.
Digital Saksharta Abhiyaan (DISHA): This aims to provide IT training to 52.5. lakh persons.
Digitize India Platform : This platform provides digitization of scanned document images or physical documents.

Under this initiative, the Government has introduced multiple online services to facilitate greater reach and accessibility:

Accessible India Campaign and Mobile App : This nation-wide flagship campaign is for achieving universal accessibility for enabling people with disabilities to gain access to equal opportunity.
Agrimarket App: This mobile application aims to keep farmers abreast with the crop prices and avoid distress sale.
Beti Bachao Beti Padhao: This aims to provide equal opportunity to a girl child, a chance to be born and be educated.
BHIM (Bharat Interface For Money): This makes payment easy and quick using UPI.
Crime and Criminal Tracking Network & Systems (CCTNS): This aims for nationwide networking infrastructure for the evolution of an IT-enabled state-of-the-art tracking system around ‘Investigation of crime and detection of criminals.’
Crop Insurance Mobile App: This app can be used to compute the insurance premium for notified crops based on the area of coverage, amount, and loan amount in the case of loanee farmers.
Digital AIIMS: A distinctive health identification number for every patient visiting AIIMS was generated on an Aadhar platform.
E-Granthalaya, E-Panchayat, E-Hospital, E-Pathshala, E- prison: All of these provide digitalization of services like libraries, hospitals, schools, and prisons.

Empowerment

Under this initiative, the Government provides e-governance, skill development, and infrastructure development initiatives:

Aadhar Enabled Payment System (AEPS)
Digidhan Abhiyaan
National Mission on Education using ICT
North East BPO Promotion Scheme (NEBPS)
NREGA – Soft
PayGov India
Smart Cities
Pradhan Mantri Jan- Dhan Yojana (PMJDY)
Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
PAHAL (DBTL)
Targeted Public Distribution System (TPDS)
Visvesvaraya PhD Scheme For Electronics and IT

Significant achievements made by India in this field

SWOT Analysis of India in this field

Future Potential

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Digital India Programme

Last updated on December 31, 2023 by ClearIAS Team

Digital India is a flagship programme of the Government of India launched in 2015. Read here to know the program in detail.

Digital India is a flagship programme of the Government of India with a vision to transform India into a digitally empowered society and knowledge economy.

It was launched in July 2015.

E-governance initiatives in India gained momentum in the mid-1990s for wider sectoral applications with an emphasis on citizen-centric services.

The major Information and Communication Technology (ICT) initiatives included major projects like railway computerization, land record computerization, etc., which focused mainly on the development of information systems. Later on, many states started individual e-governance projects aimed at providing electronic services to citizens.

These initiatives did not make the expected impact due to isolated and less interactive features. Hence, more comprehensive planning and implementation were required to establish a connected government.

Digital India is an umbrella programme that covers multiple Government Ministries and Departments. It weaves together a large number of ideas and thoughts into a single, comprehensive vision so that each of them can be implemented as part of a larger goal.

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e-Kranti: National e-Governance Plan 2.0

The national-level e-governance programme called National e-Governance Plan (NeGP) was initiated in 2006.

There were 31 Mission Mode Projects under the National e-Governance Plan covering a wide range of domains viz. agriculture , land records , health, education, passports, police, courts, municipalities, commercial taxes, treasuries, etc.
24 Mission Mode Projects have been implemented and started delivering either a full or partial range of envisaged services.

All new and ongoing e-governance projects as well as the existing projects, which are being revamped, should now follow the key principles of e-Kranti namely:

Transformation and not Translation
Integrated Services and not Individual Services
Government Process Reengineering (GPR) to be mandatory in every MMP
ICT Infrastructure on Demand
Cloud by Default
Mobile First
Fast Tracking Approvals
Mandating Standards and Protocols
Language Localization
National GIS (Geo-Spatial Information System)
Security and Electronic Data Preservation

The portfolio of Mission Mode Projects has increased from 31 to 44 MMPs. Many new social sector projects namely Women and Child Development, Social Benefits, Financial Inclusion, Urban Governance eBhasha, etc., have been added as new MMPs under e-Kranti.

Vision Areas of Digital India

The vision of the Digital India programme is to transform India into a digitally empowered society and knowledge economy.

The Digital India programme is centered on three key vision areas:

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1. Digital infrastructure as a core utility to every citizen

High-speed internet as a core utility
Cradle-to-grave digital identity
Participation in digital and financial space through mobiles and banking
Easy access to a Common Service Centre (CSC)
Shareable private space on a public cloud

2. Governance and services on demand

Seamlessly integrated services across departments
Services available in real-time from online and mobile platforms
All citizen entitlements to be portable and available on the cloud
Digital transformation for ease of doing business
Electronic and cashless financial transactions
Leveraging Geospatial Information System (GIS) for decision support systems and development

3. Digital empowerment of citizens

Universal digital library
Universally accessible digital resources
All documents/certificates to be available on the cloud
Availability of digital resources/services in Indian languages
Collaborative digital platforms for participative governance

Digital India: Programme pillars

Digital India aims to provide the much-needed thrust to the nine pillars of growth areas, namely:

Broadband Highways
Universal Access to Mobile Connectivity
Public Internet Access Programme
e-Governance: Reforming Government through Technology
e-Kranti – Electronic Delivery of Services
Information for All
Electronics Manufacturing
IT for Jobs
Early Harvest Programmes

Digital India Initiatives

The Government has taken up many initiatives under the Digital India campaign:

DigiLockers: This flagship initiative aims at ‘Digital Empowerment’ of the citizen by providing access to authentic digital documents in citizen’s digital document wallet

E-Hospitals: It is a Hospital Management Information System (HMIS) which is a one-stop solution for connecting patients, hospitals, and doctors through a single digital platform. Till February 2021, as many as 420 e-Hospitals had been established under the Digital India campaign

E-Pathshala: Developed by NCERT, e-Pathshala showcases and disseminates all educational e-resources including textbooks, audio, video, periodicals, and a variety of other print and non-print materials through the website and mobile app

BHIM: Bharat Interface for Money is an app that makes payment transactions simple, easy, and quick using Unified Payments Interface (UPI)

Digital India Bhashini: It is India’s Artificial Intelligence (AI) led language translation platform.

Digital India GENESIS: (Gen-next Support for Innovative Startups) is a national deep-tech startup platform to discover, support, grow and make successful startups in Tier-II and Tier-III cities of India.

My Scheme: It is a service discovery platform facilitating access to Government Schemes. It aims to offer a one-stop search and discovery portal where users can find schemes that they are eligible for.

Meri Pehchaan: It is a National Single Sign On (NSSO) for One Citizen Login. It is a user authentication service in which a single set of credentials provide access to multiple online applications or services.

Chips to Startup (C2S) Programme: The C2S Programme aims to train specialized manpower in the area of design of semiconductor chips at bachelor, master, and Research levels, and act as a catalyst for the growth of Startups involved in semiconductor design in the country.

Indiastack global: It is a global repository of key projects implemented under India Stack like Aadhaar , UPI (Unified Payment Interface), Digilocker, Cowin Vaccination Platform, Government e MarketPlace, DIKSHA Platform, and Ayushman Bharat Digital Health Mission .

Digital India week 2022

The Digital India Week 2022 under the Digital India Programme, to strengthen the Ease of Doing Business and Ease of Living.

The theme for the week was ‘Catalyzing New India’s Techade’.

Way forward

The Digital India programme aims at pulling together many existing schemes. These schemes will be restructured, revamped, and re-focused and will be implemented in a synchronized manner. Many elements are only process improvements with minimal cost implications. The common branding of programmes as Digital India highlights their transformative impact.

India’s aim for the digital revolution will help is pushing all sectors and jurisdictions of the economy. The advances in governance, reforms, start-ups , and demographic advantage will push the country towards being the fastest growing digital economy.

Also read: Payments Infrastructure Development Fund (PIDF) scheme

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Digital Economy: A Leveller or a Source of Economic Inequality - UPSC PDF Download

Science-technology.

With more and more technological developments, the internet has become a means to make life easier. It has transformed many sectors of the economy and has aided significantly in boosting the country's economic growth. It is no surprise that the digital economy is expanding its reach across the length and breadth of the country and has become an integral part of people’s lives. While going digital has made things simpler in almost all spheres of life (economic, political, social, commercial, etc.), whether it is actually beneficial or not is up for debate. It goes without saying that having a digital economy has made the day to day activities much smoother; it would be incorrect to assume that it hasn’t created problems.

A Leveller or a Cause for Inequality?

The benefits of the digital economy are there for everyone to enjoy. Some of the major advantages offered by the digital economy in India are: -

An Increase in Online Businesses: Also known as e-commerce, the availability of a well-developed internet network along with facilities such as online banking, trading, video conferencing, etc., makes it so much easier for individuals to carry out their work. Owing to these facilities, marketing, buying and selling, money transactions, etc., have become so much easier, closer to home, and have significantly helped in the empowerment of the underprivileged sections of the Indian society.
Higher Transparency and More Proof: Once something is on the internet, it stays out there forever, no matter whether you delete it from one domain or another. It never fully disappears. This is a massive advantage, especially when it comes to money transactions and other kinds of agreements entered by the people. For instance, once a person makes a payment online, the transaction record is saved online and is easily accessible as and when required. This has made life simpler for individuals and offers protection in case of instances of fraud, theft, or other forms of cyber-crimes.
Easy Availability of Services: Not only does the internet provide a means to easily conduct essential activities, but it also allows people to access necessary services conveniently. Information regarding necessary steps, benefits available, documentation required, etc., for different government schemes. Many government agencies have their own apps which allow the users to avail themselves of the essential services within a few minutes.

While the advantages offered by the digital economy are noteworthy, it goes without saying that the digital economy is responsible for creating some inequalities in Indian society as well, such as:

Unemployment: It goes without saying that an internet driven economy has made life less complicated, but it has also become a cause for concern. With almost everything being done online with the help of software, there is a decrease in the demand for manpower. Fewer and fewer people are required to do a particular work, which has thrown many people into unemployment. For example, when it comes to bank work, the easy availability of banking apps, Paytm, Google Pay, etc., has put many people out of work. Also, for people with a lesser understanding of the internet, it becomes difficult to find a suitable job.
Increased Cyber Crimes: Even though every activity on the internet can be traced, it does not mean that cybercrime no longer exists. In fact, it is quite the opposite. With almost everyone having access to the internet, some with greater knowledge of its functioning and loopholes, there have been increased cases of cybercrime, including hacking of bank accounts, thefts, illegal transactions, etc., which have eroded the trust of people in the prospects of the digital economy.
Lack of Security: The ease with which unauthorized entities can access data on the internet can turn out to be quite harmful. Many companies, businesses, and even government agencies store large amounts of data online or on computers. Anyone who knows how to hack into another system, even a secure one, can easily gain access to important and confidential data and can also use it to their advantage.

Steps to Tackle The Issue of Inequality

With constant technological developments, it is good to move along with those changes; it is good to learn new ways of life. However, the problem arises when people get so absorbed in that new life that they do not realize the harm it is causing to themselves and others. In such situations, it becomes important to identify what the problem is and how to find a solution to it. Here are some ways to bridge the gap that was and continues to be created by the digital economy:

Stricter Cyber Laws: While cybercrime has been on the rise in recent years, thanks to easier access to the internet, the laws for cyber crimes are still not well-defined. There should be improvements in cyber laws so that the victim is provided immediate attention and relief and the culprits are caught in time. There should be increased awareness about such crimes, and efforts should be made to make the internet more secure. Users should be educated about the do’s and don’ts while using the internet to secure their digital space.
Education: Since almost every sector of the economy uses the internet and its related services to carry out daily functions and run businesses, more and more people should be taught how to use the internet. They should be encouraged to develop skills related to the internet so that they have a better chance of finding employment. This is especially the case with rural areas. While people in small towns and villages do have access to the internet, it is often limited. If they, too, are taught how to perform online banking, purchasing or selling items online, or even promoting a local business online, they would benefit immensely.
Empowering people: The fact that many business activities are being conducted online and it has become important to have basic knowledge of the functions of the internet for anyone to land a decent job. These trends indirectly contribute to problems such as unemployment. It is the government’s responsibility to create more job opportunities in all sectors and all regions of the country. Efforts must be undertaken by the central government and the state governments to ensure that people, irrespective of their lack of knowledge of the internet, have a way of earning a livelihood.

Over the years, the government has made efforts to transform the traditional economy into a digital economy. It is in no way wrong to hope for an economy that keeps growing steadily while making things easier for the people. But it is also important to be fully aware of the country's situation and its people before giving priority to major changes such as the ones mentioned above. It is necessary to assess both the positive and negative impacts of such a transformation and then develop a balanced approach that satisfies the needs of all stakeholders.

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Digitalisation Drive – Essay for IAS Exam Preparation

October 22, 2019 by Sandeep

500+ Words Essay on Digitalisation Drive

India has now transformed into a digitally enabled country and e-governance activities can be seen at every step of business and services. Major initiatives were taken by the government to transform the country into a digitally powered electronic hub.

Digital India Land Record Modernisation Program (DILRMP)

It is a very useful initiative undertaken by the government of India. It was launched way back in 2008. This is basically a database system for storing land records in the digital format. It was initiated with the purpose of seeing higher efficiency and reducing land disputes.

All data pertaining to immovable properties were computerised under one umbrella under this program. Such a high level land record database management system was conceptualised to facilitate easy land registration and streamline other documentation process.

Land disputes are a major part of land dealings and an efficient network of a high level database was much needed. GIS information with complete map depiction and necessary survey details are recorded for every land that is registered under this online system.

By streamlining the land records system, all kinds of old immovable properties, newly registered lands, lands under disputes and others were brought under a single net of operation and scrutiny. It was a citizen friendly process and this digitalisation drive proved economically successful to the government.

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EShakti or Digitisation of SHGS

It is a digitalisation drive undertaken by NABARD . SHGS or self help groups like voluntary organisations and NGDs need financial affiliations too. To include these SHGs under the financial ambit and digitisation the accounts they hold, an exclusive portal by name ‘ EShakti ‘ was created.

The process of digitisation of SHGs was conceived under two groups. One is the inclusion of all transactions carried out, in a digital manner. The second one pertains to storing or recording financial data and transactions. This recording is now enabled in the digital format under the E shakti scheme.

If we are to look at the progress made so far, the government has been able to record, create a database that includes all SHG members. This is the toughest part of the whole scheme as member inclusion in the database involves a lot of networking, researching and bringing together relevant data and holding them together with the right connections.

Once the SHG record keeping is ready and updated, the next step of carrying out financial transaction the digital way will follow easily.

The advantages of digitizing this scheme has many benefit. Right from ensuring transparent and smooth transactions, the outreach to remote and distant locations can also be assured. A good connectivity with banks can be provided and credit systems can be equivalently distributed.

UPI, BHIM and AADHAAR linkages

UPI stands for Unified Payments Interface. It links your mobile app with your bank account through your registered mobile number. To link your account with the UPI app in your mobile to make payments, you should first ensure that the account number that you link with the app should have the same mobile number.

If you are holding and wishing to link with multiple accounts, then you will be provided with separate PIN numbers. The UPI system allows you to make payments at any time on any day. It is constituted by the government with the help of banks across the country. The advantage here is that the person receiving the payment will not get any details about your bank account.

BHIM – It was launched by Mr. Modi in December 2016 to ensure fast and reliable payments without any delay. Banks have a major role to ensure fast, secure and reliable payment system. The National Payments Corporation of India were enticed with the task of developing BHIM app on the interface namely UPI.

The BHIM app is named after the honorable Dr. B.R. Ambedkar and in a path to showcase India’s progress from cash-compulsory transactions to cashless transactions. The AADHAAR number is linked with all our bank accounts and PAN numbers to make different data sets have one common set of data. This ensures high level of efficiency and cost-effective transaction methodologies.

Digitally connected India

India is aiming to be a superpower by the year 2020. For a country to become a superpower, digital connectivity, technology enabled transformation and infrastructure are considered basic drivers. India’s inception into the digital world began as early as the 1990’s.

India started seeing a major giant and hub in the e-space of operating business and this has led to what we see today as our digitally empowered India. The strengthening of broadband through high speed connectivity and covering almost all urban and rural areas was the first step. Almost every household, be it in the rural or the urban circles have access to mobiles.

Digitalisation of government services and making online services citizen friendly was the next offer. This required a host of multi-service centres. Using online repositories at every step of life and bringing in a transparent system of e-governance further elicits the factor of digital India.

E-Kranti or electronic delivery of basic services such as education and healthcare are totally transforming the way we live. Enabling a citizen friendly charter to bring in a space for online participation through social media is sought out. Using IT for business economic growth, governance, services, manufacturing etc. has created a huge momentum and rapid growing bandwidth for digital India.

Universal access to mobile connectivity

We cannot imagine our everyday lives without mobiles today. We use our mobile phone for not just making calls, but for mobile banking, doing online shopping, conducting e-commerce transactions like online ticket reservation, etc and also for a host of other useful applications. Everything that was possible on our computer having an internet connection a few years ago, is now possible on our mobile phone itself.

But providing universal access has its own issues as well. First issue to be addressed is the reach of our mobile networks and secondly, the share of connectivity and related issues. Today mobile towers have been placed by telecom giants even in the most remote corner of the country.

But providing clarity in network and addressing speed issues remain of concern. More than 50,000 villages in the country still remain deprived of good mobile network connectivity. The north eastern part of India still remains an isolated stretch that has not yet attained full capacities in terms of network penetration.

Information technology being the driving force between creating huge, sustainable mobile networks has changed the very basic way of operating business . GPRS maps and tracking thieves using sensor based technologies, mobile operated devices and easy access to knowledge on the mobile are great achievements in this regard.

Good WiFi operating zones with excellent speed, reliable connections and excellent mobile operational facilities are a long way ahead with the growth of technology.

National Rural Internet Mission

The rural face of India is quite different from the urban spheres. Digital India can be well felt and experienced at every step in urban livelihoods but not to a very great extent in rural parts of India. The necessary infrastructure and budget allocation create major hindrances to develop rural spots on par with urban hotspot. Also, to a major extent, education and awareness have a very big role to play in terms of rural development and sustenance of technology there.

Gram panchayats linked digitally to service centers, which are digitally operated online hubs are major areas of development seen in rural areas in the past few years. Also, the digitalisation of post offices in rural parts of India cater to rural livelihood to a very large extent.

If the government is able to implement a successful model of bringing about internet to the doorstep of every rural household, then the farming community can see great progress and development in their occupation. Online selection of seeds, marketing their product online, online credit system, online loan availing system etc. can be successfully developed to reach out to every rural household.

Kisan call centres can be supervised to create awareness and help farmers use internet facilities to develop a broadened farming system. Government should take initiatives to educate farmers regarding use of internet for their dairy farming needs.

A total revolution of the way government services are rendered is the sole motto of eKranti . A totally digital revolution involving creation of databases, preserving traditional data and converting them into digital format, processing data online and catering to citizens needs in the digital way in easiest and quickest manner possible are other takeaway of the process.

It brings under its umbrella, a host of services and prospects to work together in creating a digital nation at all levels. Mobile banking and internet banking have already created big parts of the digital economy today. Including tertiary roles apart from primary services is a due role on the radar of the banking sector.

Improving credit and loan facilities through online process is also a necessary and huge step. Setting up seed and crop prices in real time can be facilitated using online methods and this is being digitised.

Improving latest cloud technologies, ensuring smart software installation and ensuring implementation of standard protocols in governance will create a digital charter for citizens. This will further facilitate smooth business handling, transparency in government functions, a high level system of addressing grievances of citizens etc.

Necessitating required changes through automation and digitization can pave way for long lasting cyber generated information handling. Improving security at every level of digital space is equally essential.

Increased computerisation revolution

Life without mobiles and computers is hard to imagine today. If we need fresh facts and vegetables and unable to go to the market, they will be easily delivered at our doorstep with just one click of a button technologies are emergency very fast and it has created a huge revolution all over the world and not just in India.

But with the host of advantages, steps should also be taken to eliminate chances of hacking networks, infusion of viruses and online threats into networks etc. They say, digital spaces are both a boon and bane if handled improperly. Cyber attacks on various government websites can lead to crucial data theft and malfunctioning of website at the required rate.

India is all set to become the next superpower, if the digital India mission takes shape in all its colours and hues at the pace it is going now. Digital India including cashless transactions and fast, reliable services are mandatory goals for our government today.

Ensuring speed in networks and keeping connectivity to the most remote part of the country is all an essential goal and task of digital India. We as citizens should join hands with the government in securing this mission and creating a developed digital space for India.

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AIR Spotlight Indias Digital Economy

AIR Spotlight - India’s Digital Economy

AIR Spotlight is an insightful program featured daily on the All India Radio Newsonair. In this program, many eminent panellists discuss issues of importance which can be quite helpful in IAS exam preparation. In this article, the topic of discussion is India’s digital economy.

Participants:

Sharad Kohli, Economic Analyst.
Sonu Sood, AIR Correspondent.

India has come a long way in the sphere of digitization. The article will discuss the different aspects of the digital economy.

Background:

The digital sector has been the fastest-growing sector in the country. This kind of exponential growth has never been experienced before.
Finance Minister Nirmala Sitharaman said that India’s digital economy is expected to witness exponential growth to $800 billion by 2030 on the back of rising internet penetration and increasing incomes.

Components of Digital Economy:

The components of the digital economy are discussed below:

The government:

The first component of the digital economy is the government which is the enabler. The government provides the platform for the digital world.

Policy and Regulations:

Certain policies and regulations are made in favour of the digital economy that leads to the successful growth of the digital economy.
Internet facilitates digital services.

Other components:

Electricity infrastructure, the telecom industry, digital service providers, human capital, knowledge workers, etc. are the other components combined that provide a platform for the digital economy.

FinTechs in India:

India has over 6,300 fintech, of which 28% are into investment technology, 27% into payments, 16% into lending, and 9% into banking infrastructure, while over 20% are into other fields.
The combined valuation of India’s fintech industry is set to surge to $150 billion in the next three years.
The majority of the startup unicorns are from the fintech sector and the easy availability of funding has helped them grow.

Fintechs in different aspects:

Financial literacy:

The government is trying hard to work on literacy but there are still some people in villages who cannot read and write.
Even among such sections of the population, we can see financially literate people who use digital payment applications for day-to-day transactions. It implies that fintech has penetrated every aspect.

Banking infrastructure:

Nowadays, there is no need to go to the banks and stand in a long queue for any kind of service.
Digital banking has made it very easy and convenient to access any kind of banking service just by pressing a single button.

Direct Benefit Transfer (DBT):

The DBT scheme’s primary goal is to mitigate leakages during funds transfer and offer benefits directly to the citizens.
Now, with the help of fintech in the DBT, the government can easily provide the benefits to the beneficiary’s account with just one click. One example of this is the PM Kisan Samman Nidhi scheme .
The Jan Dhan Mobile (JAM) trinity has strengthened the financial infrastructure of the country. Know more on the JAM Trinity in the link.

Health and Digital Technologies:

Digital technologies are being used to improve health information systems from the community level to district, national, and even global levels.
Their use also improves the timeliness and accuracy of public health data collection, reporting, and facilitates disease monitoring and surveillance.

Education and Digital Technologies:

The Covid-19 pandemic has led to a shift from offline to online learning platforms. The direct interactions with the teachers were very less but at least digital technology kept the education going on even during the pandemic.
Digital technologies have brought an irreversible change in many things that we do today.

Retail investors:

The government has made it easier in terms of smooth and easy access to the stock markets, with technology such as e-KYC and e-Aadhaar helping the retail investors come into the market.
The total number of retail investor accounts has almost doubled, from about 45 million as of March 2016 to 88.2 million by March 31, 2021.

Conclusion:

The importance of digitization today in our lives and in the life of our country is just like the beating heart in a human body. The digital transformation has made it possible for each and every citizen to access many kinds of services.

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Digital economy: A leveller or a source of economi

Digital economy: A leveller or a source of economic inequality

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The State of India’s Digital Economy Report 2024

Author(s): Dr. Deepak Mishra , Dr. Mansi Kedia , Dr. Aarti Reddy , Ms. Krithika Ramnath

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The State of India’s Digital Economy Report 2024

Central Message

India’s global ranking significantly improves when the full scope and spectrum of digitalisation is taken into account

Six Takeaways

1. Digitalisation has made dramatic progress, but the way it is being measured has not. 2. Using a new approach, the Connect – Harness – Innovate – Protect – Sustain (CHIPS) framework, the SIDE 204 report benchmarks the scale and depth of India’s digital transformation with respect to G20 countries as well as for the Indian States. 3. India is ranked third at aggregate level and 12th at the user level among the G20 countries, 4. India’s rapid digitalization is being driven by: large base, high growth, facilitated by DPIs, and strong gender and geographical convergence. 5. At the sub-national level, Karnataka, Maharashtra, Telangana, Gujarat and Haryana take the top five spots. Dispersion in the level of digitalisation across Indian states is less than that for G20 countries. 6. Organizations preparing global indices should provide both perspectives – aggregate and average user – to obtain a complete picture of a country’s digitalization.

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The digital economy is no leveller, it’s a source of inequality

Associate Professor of Creative Industries & Digital Media, University of Nottingham

Disclosure statement

Andrew White does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

University of Nottingham provides funding as a founding partner of The Conversation UK.

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When we think about income and wealth inequalities we are tempted to lay blame on the old way of doing things. In Capital in the Twenty-First Century , Thomas Piketty picks out inherited money as a driver of unsustainable disparities between the global rich and poor. Oxfam recently pinpointed the high-profit finance and pharmaceutical industries as engines of inequality that distribute wealth to the wealthy.

This view is consistent with those who place their faith in the digital economy as some kind of solution. It is held up as an alternative to traditional forms of economic activity, and one which can generate sustainable growth and narrow inequality. Lower barriers of entry into its markets (“anyone can start a business on the internet!”) is said to widen opportunities and lead to a more equitable distribution of wealth.

It is for this reason that many politicians and academics continue to advocate the aggressive expansion of the digital economy, especially into areas which have not witnessed much of this type of economic activity. Sadly, it’s not quite as simple as that.

Creative licence

The expansion of the digital economy has gone hand-in-hand with the growth of the creative industries. The UK’s pioneering development of policy on the creative industries in the late 1990s was predicated partly on the desire to exploit the intellectual property generated by burgeoning digital technology. That applied particularly to those single operators and small businesses that proliferated in the cultural and creative sectors.

Similar policies have been used in countries at varying levels of development in the early years of the 21st century. Look at the UN’s enthusiastic promotion of the creative economy, and its suggestion that these kind of structural reforms could work in both the developed world and in emerging markets . This explains why much research on developmental economics focuses on narrowing the so-called digital divide in order to give more equal access to a global economic system which promises prosperity for all.

But what if the problem is the digital economy itself rather than our incapacity to fully exploit the opportunities it seemingly presents? The first chapter of Michael Lewis’s book Flash Boys opens with a story about construction workers on a project to lay a tunnel for fibre-optic cables as straight as they possibly could, even if this involved digging through mountains or river beds. The reason: to connect financial exchanges in New York and Chicago by the shortest possible route and give the operators a crucial few milliseconds advantage when processing transactions.

A huge amount of money is required to carry out such projects, and to buy the supercomputers that can manipulate the data and run the trading programs. It starts to look like a rigged game and it is difficult to see how a digital economy in which financial speculation is so prominent can reduce inequality.

Stuck in the middle with you

There are undoubtedly other sectors of the digital economy where lower barriers of entry do encourage smaller operators. The early development of search engines and social networking were characterised by experimentation by single operators or small groups of people, sometimes students, at home or at university. This pioneering image of isolated entrepreneurs developing great companies from scratch goes hand-in-hand with radical sounding rhetoric about taking on vested interests.

In this worldview, cutting out the middle man, a superfluous type of employee who will not move with the times, is seen as a demonstrably good thing. Thus, taxi drivers who complain about having their business taken away by Uber are often described as inflexible and prone to over-charging. But the middle-man has not disappeared in the digital economy; they have just got richer.

Think of the music industry. Online stores have resulted in the loss of many jobs as a result of physical record stores closing down. However, our changing habits have not cut out the middle-man. We buy most of our music from intermediaries like Apple . Even record labels, seemingly superfluous to the online music industry, continue to flourish .

In other words, while the poorer middle-men – record store assistants, or taxi drivers – have been ruthlessly squeezed, wealthier intermediaries continue to prosper. Even the supposedly lower barriers to entry in these industries have not prevented monopolies emerging in online markets in a way that is not as prominent in markets offline.

A role for universities

It would be easy to finish this piece with a long list of proposed solutions to these inequities. But what is really needed is the necessary intellectual work of persuading wider society that the digital economy does indeed pose problems. This is not helped by the sense that higher education, one of the best placed sectors to lead this debate, is not always up to this task.

While the views that are expressed in this article are shared by many in this sector, It is often difficult to seek institutional support for research in this area when the coalition government’s policy of requiring humanities-based schools and departments to be financially self-sustaining has driven many of them into the arms of big business or into partnership with STEM (Science, Technology, Engineering and Mathematics) colleagues who might not be as interested in a critical examination of the foundations of the digital economy.

Many of these solutions involve digital technology, with big data being the latest whose application promises to address various social and economic woes . How welcome it would be if funding bodies could also increase the number of schemes which ask why the rapid growth of the digital economy over the past two decades has failed both to reduce inequality and save us from the most severe financial crisis since the 1930s.

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EDITORIAL ANALYSIS : Investment lessons from the India-EFTA trade deal

Source: The Hindu

Prelims: Current events of international importance(FTA, tariff, European Free Trade Association (EFTA), etc)
Mains GS Paper II & III: Bilateral, regional and global grouping involving India and affecting India’s interests etc

ARTICLE HIGHLIGHTS

India made a historic trade deal this year with the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway and Switzerland.

INSIGHTS ON THE ISSUE

What is an FTA?

FTA is a pact between two or more nations to reduce barriers to imports and exports among them.
Under a free trade policy: Goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange.
Protectionism: The concept of free trade is the opposite of trade protectionism or economic isolationism .
Preferential Trade Agreement (PTA)
Comprehensive Economic Cooperation Agreement (CECA)
Comprehensive Economic Partnership Agreement (CEPA)

What does FTA cover?

Tariff reduction impacting the entire manufacturing and the agricultural sector
Rules on services trade
Digital issues such as data localisation
Intellectual property rights that may have an impact on the accessibility of drugs
Investment promotion, facilitation, and protection.

FTA between India and EFTA:

India has agreed to include issues such as environment and labor, w hich it has traditionally opposed incorporating in trade agreements.
It focuses on investment facilitation issues, not investment protection.
followed by another $50 billion in the succeeding five years.
These articles codify obligation of conduct — an obligation to make an honest endeavor towards achieving a goal, notwithstanding the outcome or the result.
EFTA countries are legally obligated to make an honest effort to invest $100 billion and generate one million jobs in India.
It will create a template in the ongoing negotiations with the K., the EU, and other countries.

India’s FTA:

● FTAs routinely contain binding rules on both trade and investment.

● india’s ftas signed in the first decade of this century with countries such as japan, korea, malaysia and singapore are based on this economic logic., ● in addition to binding trade rules , they all contain an investment chapter with provisions for protecting investment., ● fta 2.0: india decoupled international trade law from international investment law., ○ ftas with australia, mauritius, and the uae which contain binding trade but not investment rules., ● signing the fta with the uae in 2022: india and uae entered into a bilateral investment treaty., ● decoupling approach to the u.k. where trade and investment agreements are seemingly negotiated as two disparate treaties..

Way Forward

India needs a clear FTA policy, especially in dealing with international trade and foreign investment laws.
India should negotiate trade and investment a s part of one comprehensive economic treaty.
Combining the two would give India a clear negotiating leverage to strike a beneficial deal.
For example, India can argue that it needs more concessions in trade in return for offering something on investment or vice-versa.
Providing enforceable legal protection to foreign investors under international law will boost confidence.
Foreign direct investment levels in India have dropped : A clear and comprehensive FTA policy is imperative for launching India to a higher economic growth trajectory.

QUESTION FOR PRACTICE

What are the key areas of reform if the WTO has to survive in the present context of ‘Trade War’, especially keeping in mind the interest of India?(UPSC 2018) (200 WORDS, 10 MARKS)

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The Significance and Increasing Scope of the Digital Economy: The digital economy is gaining prominence and impacting various aspects of economic activity globally. It emphasizes that the digital economy is no longer limited to a specific sector but is permeating every corner of the economy. India's Recognition of the Digital Economy: India's ...
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India's Digital 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.
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The different technologies and economic aspects of the digital economy can be broken down into three broad components: 1. Core aspects of the digital economy: It comprises of fundamental innovations (semiconductors, processors), core technologies (computers, telecommunication devices) and enabling infrastructures (Internet and telecoms networks).
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India's digital economy will touch $1 trillion by the year 2022. India would be $10 trillion economy by 2030 and half of it would be the digital economy. Fintech sector—the Fintech sector in a recent couple of years has seen a huge jump in growth. Digital currency and online payments platforms have played a major role in financial inclusion.
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India's digital economy and the infrastructure sector has a total potential for $2.5 trillion. There are more than 100 unicorns in over 70,000 start-ups in India, and their number continues to grow. The value of the Indian digital economy will reach $1 trillion by 2025. Advantages of a Digital Economy. Removal of Black Economy: By restricting ...
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The Government is working on a comprehensive legal framework for the digital economy. First is Telecom. A new telecom Bill to replace laws made in 1885 and 1930 is at an advanced stage of drafting. Second will be the data protection Bill. Third is a comprehensive digital India Act that India is preparing to replace the IT Act of 2000 vintage.
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The State of India's Digital Economy Report 2024
Central Message India's global ranking significantly improves when the full scope and spectrum of digitalisation is taken into account Six Takeaways 1. Digitalisation has made dramatic progress, but the way it is being measured has not. 2. Using a new approach, the Connect - Harness - Innovate - Protect - Sustain (CHIPS) framework, the SIDE
UPSC CSE
Digital economy: A leveller or a source of economic inequality (2016) Lesson 23 of 29 • 14 upvotes • 14:25mins. Dipesh Saini. Digital economy: A leveller or a source of economic inequality. Continue on app (Hindi) UPSC CSE Mains 2017 - Essay Discussion. 29 lessons • 6h 35m . 1. Course Overview (in Hindi) 1:49mins. 2. Destiny of a Nation ...
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Insights Weekly Essay Challenges 2017 - Week 4. Archives. 22 January 2017. Write an essay on the following topic in not more than 1000-1200 words:. Digital economy: A leveller or a source of economic inequality
The digital economy is no leveller, it's a source of inequality
Oxfam recently pinpointed the high-profit finance and pharmaceutical industries as engines of inequality that distribute wealth to the wealthy. This view is consistent with those who place their ...
The Big Picture
The Government's Initiatives for Digitizing the Economy. The first move taken was the demonetisation in November 2016. At the time of demonetisation, India's cash to GDP ratio was around 12%. After demonetisation, that ratio came down to around 9% of the GDP. But after that, it grew at a lower pace but steadily.
Is digital economy an answer to energy trilemma eradication? The case
Digital economy plays an irreplaceable role in achieving energy development, and may also have a profound impact on energy supply and consumption. Based on a panel dataset of 30 provinces in China for the period 2006 to 2019, we assess the impact of digital economy on energy trilemma. This study also detects the asymmetric nexus between digital economy and energy trilemma, and investigates the ...
Central Bank Digital Currency
CBDCs are a digital form of a paper currency and unlike cryptocurrencies that operate in a regulatory vacuum, these are legal tenders issued and backed by a central bank. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. A fiat currency is a national currency that is not pegged to the price of a commodity ...
Insights Ias
Source: The Hindu Prelims: Current events of international importance(FTA, tariff, European Free Trade Association (EFTA), etc) Mains GS Paper II & III: Bilateral, regional and global grouping involving India and affecting India's interests etc ARTICLE HIGHLIGHTS. India made a historic trade deal this year with the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein ...

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