There has been a continuous progress in ages and the mankind has seen all these progression from the Stone Age to Metal Age to Information Age. With each progression the life has become simpler. With the passing of these ages, the humanity has also witnessed the progression from agricultural revolution to the industrial revolution and is now moving to an information revolution. The information technology as commonly picturized by computers is giving an edge and extending the intellectual power of an individual and ultimately resulted in the newest revolution of Digitisation. This occurrence has drastically changed our entire lives and propelled us into the Digital Age. Digital economy or the internet economy is increasingly influencing our social and economic activities and even the way we live. Most of us are dependent on the digital equipment’s or information technology which has made regular day to day activities easier, convenient and efficient. From electronic alarm clock to picking up call on the cell phone to playing games on play-station to enjoying music on DVD/CD players to working on laptops & computers to switching the navigation in our car to clicking pictures on the camera to shopping on amazon or flipkart to posting blogs on twitter to social networking on facebook and linkedin, we use these electronic or digital devices on and off. On many occasions we don’t even realize that these items are helping us. The term information technology and digitisation has ballooned to encompass many aspects of these terms and the term is more recognizable than ever before. This transformation has given rise to the digital economy which is entirely based on digital technologies.
What is Digital Economy?
A digital economy is one where the structural framework of the economy is composed of digital technologies. According to the OCED, “Digital economy is an umbrella term used to describe markets that focus on digital technologies.”
It refers to the full range of our economic, social and cultural activities supported by the Internet and related information and communications technologies. “These typically involve the trade of information goods or services through electronic commerce. It operates on a layered basis, with separate segments for data transportation and applications” (OECD 2012).
The term ‘Digital Economy’ was coined in Don Tapscott’s in his best-seller ‘The Digital Economy: Promise and Peril in the Age of Networked Intelligence’ (1995). A widely-accepted understanding about digital economy is its activities on and around the digital world.
Thomas Mesenbourg (2001) has provided three main components for Digital Economy.
The OECD report states: “the shift to the predominant use of digital money could both facilitate the entry of new competitors into the financial sector and encourage the emergence of new revenue models for many intangibles, including intellectual property ” and that “it will facilitate the development of new products and services, not only in the financial sector but also in various forms of electronic commerce”.
It is rapidly developing on an international level, and as new and improved forms of technology emerge, it will continue to blur the lines of the traditional economy. Digital economy is one of the most important factor in fostering innovation, competitiveness and growth. The digital economy is not only providing accessibility to previously inaccessible marketplaces but also changing the way information is shared between businesses and individuals and the way of doing the business.
Growth Projection of India’s Digital Economy
As per the projections laid down by the Ministry of Information Technology, India’s digital economy is expected to grow from the current $270 billion to around $1 trillion in the next 5-7 years, aided by the exponential growth witnessed in e-commerce, electronic manufacturing, IT services, financial technologies (FinTech), and telecom among others, Minister for Electronics and IT (MeitY). As per the Ministry, India’s IT exports stood at Rs 7.3 lakh crore in the last fiscal against Rs 7 lakh crore in FY 15-16. Besides, close to Rs 90,000 crore worth of mobile handsets, in value terms, were produced in the country in FY17. At present, the domestic IT sector is worth around $140 billion, communications ($40 billion), electronics manufacturing ($40 billion) and FinTech is close to $50 billion.
Advantages of Digital Economy
The various attributes of a digital economy has not only showcased its usefulness but has also projected its various advantages which has mandated its implementation. It saves time, energy and physical space and makes data recovery very convenient. With the introduction of Digital Libraries, Telemedicine, Digital Medical Records, Online Medical Consultancy, Mailing of Diagnostic Results, Hospital Information System, Expansive Databases, Automated Teller Machines (Atms), Digital Payments Via Wire Transfers of Money Across The Globe, Digital Cash Media like Credit Cards & Debit Cards, Mobile & Cloud-Based World, Tablets & Mobile Phones, Videoconferences, TelePresence (TP) etc, the information can be retrieved and services can be delivered in a moment’s notice. The digital economy has led to better capital use and has accelerated trade, consumer lending, small business lending, trade finance, point-of-sale financing, insurance and competition which has ultimately promoted the efficiency & innovation and has provided an inclusive platform for economic participation.
India continued to be driven by the use of cash; less than 5% of all payments happen electronically and with the implementation of digital economy there would be disappearance of cash. This will pave way for universal availability of banking services to all as no physical infrastructure is needed other than digital. Since all transactions are done through organized channel that is through banks and financial institutions it results in increase in tax revenue for the government as all cash transactions which were done illegally come into banking system which in turn helps the government in tracking all transactions and levying tax on them which in turn can be used by the government for betterment of economy of the country. The other major advantage of cashless economy is that it is easier to track the black money and illegal transactions because if cash is used directly for doing transactions than it is not easy to track the transactions as the money does not come into the banking system however in case of digital transactions it is easy to track the transaction as all records are there with the banks which result in more transparent transactions which in turn leads to fall in corruption in the economy of the country. Even the RBI has also recently unveiled a document — “Payments and Settlement Systems in India: Vision 2018″ — setting out a plan to encourage electronic payments and to enable India to move towards a cashless society or economy in the medium and long term.
Disadvantages of Digital Economy
One of the few drawbacks of a digital economy is that it requires a substantial initial capital investment when establishing the necessary framework for any system. Although digital technologies get cheaper with each innovative development, they require some seed money for research and development as well as implementation. However, it is natural for any new economic framework to have teething problems. Such shortcomings can be resolved by making available the monetary resources required for such a setup. The digital economy accelerates development and growth, but it equally exacerbates existing social and economic inequities. This is borne out by the numerous digital divides that exist today. A study by the World Economic Forum highlights that in India only 15 of every 100 households have access to the internet. Unless we can provide universal access to all, the digital economy will benefit only a few, exacerbating inequities between the digital haves and have-nots. The digital divide is not only about access but it is also about the degree and quality of participation among those who are already online. Digital access alone does not lead to digital empowerment. In the Indian context, addressing the digital divide requires that we pay attention to what the World Development Report calls the analog components of the digital economy – particularly, education and skilling.
Today, digital has evolved to be the central theme across various industries, sectors, geographical sections and segments. The economy is becoming digital at a very fast pace and the users have begun to embrace new technologies like mobility & video and are adopting online behaviours such as social networking at an astonishing rate. This means that the segment of these users stand exposed to a never-before-set of vulnerabilities and it is important for them to implement IT safely and efficiently using solutions that are reliable and scalable for them. Rapid digitisation in all sectors in India has made the country critically prone to targeted cyber-attacks and ‘WannaCry’ ransomware attack is “just the tip of the iceberg”. The major issue with the digital payments relates to absence of clearly defined security standards/ guidelines for digital payment instruments & liability in case any fraud or loss occurs due to the lack of security measures, contractual terms leading the end customer helpless in case of a fraud incident, limited data encryption, convergence of these technologies across sectors leading to confused accountability, ‘Counterfeit’ app leading to phishing fraud.
The cashless economy which is ultimately the by-product of Digital economy also faces the brunt and poses before the society various disadvantage. The biggest disadvantage of the cashless economy is that not everybody has the knowledge of doing digital transactions and hence its reach is limited to urban and semi-urban centres only and therefore it is very difficult to implement cashless economy in the big country where many sections of the society in rural areas is illiterate and poor. Hence the lack of proper infrastructure and education among citizens is disadvantageous as far as the cashless economy is concerned. Another demerit of the cashless economy is that digital mode of payments like the credit card, wallet payments, internet banking involves some transactions fee which is not the case with cash transactions and hence any individual thinking of doing online transactions will take into account these transaction costs and will not favor online medium of transactions. Hence the presence of transaction cost is a hindrance to cashless economy finding acceptance among the people of the country.
India’s Role on Digital Economy
Realising that digital is the foundation for future success and National e-governance as the core to it, Hon’ble Prime Minister of India, Shri Narendra Modi announced the Digital India Initiative in July 2015 with three key objectives-creating digital infrastructure, providing e-governance on demand and spreading digital literacy. This flagship initiative was received with a lot of applause as well as scepticism-applause because it was a step in the right direction to transform India into a into digital empowered society and knowledge economy and scepticism because of the sheer task of creating the right infrastructure and digital literacy levels in a country as diverse as India.
The Digital India vision provided the intensified impetus for further momentum and progress for e-Governance and promoted inclusive growth that covers electronic services, products, devices, manufacturing and job opportunities. It ensured that government services are available to citizens electronically and brought public accountability through mandated delivery of government’s services electronically. The government’s mega initiatives of ‘Digital India’ has already resulted in proliferation of digital devices and given traction to the IT industry. Heavy push on investments in the sector, couple with breakthrough indigenous innovations has enabled the IT industry to become the fastest growing sector in the country. Furthermore, with demonetization turning out to be a boon for the IT industry, cashless transactions and online banking are going to further drive players in the space. The centralization of taxes, increasing dependence on e-Governance, incentives and benefits to IT industry and the growing startup landscape are all examples of an India gradually going digital. “Digital payments are to finance what the wheel is to transport,” As per Watal Committee Report-December 2016. The various e-Governance Initiatives were taken for making this project a success in the field of transportation, payment of bills and taxes, public services, municipal services, road and traffic, rural e-governance initiatives, local information, land records panchayat services, education and health across urban and rural by devising and implementing various projects under these fields namely CFST (Citizen Friendly Services of Transport), Vahan and Sarathi, OSRTC (The Orissa State Road Transport Corporation), HRTC (Himachal Road Transport Corporation), FRIENDS-By Kerala Government, E-SEVA (Electronic seva)-By Andhra Pradesh Government, BWSSB (ganakeekruthaGrahakaraSeve, water billing, and collection system)-By Bangalore Government, DOMESTIC-by Daman and Diu, E-Pourasabha Municipal Application, E-Mitra-By Rajasthan Government, SAMPARKby Chandigarh Government, E-Suvidha-By Uttar Pradesh Government, LokMitra-By Himachal Pradesh Government, Mahiti Shakti-By Gujarat Government, OLTP-By Andhra Pradesh Government, E-Panjeeyan & SDO Suite-By Assam Government, Palike, Rural Digital Services (Nemmadi), TRIS (Tripura Registration Information System) , BHOOSWADEENA, I-GeoApproach Internet Geometric-By Madhya Pradesh Government, RSPCB (Rajasthan State Pollution Control Board), CFST (Citizen Friendly Services of Transport Department)-By Andhra Pradesh Government , Gyandoot, BELE, AGMARKNET, SEEDNET, Mustard Procurement Management System, E-JanSampark, Prajavani, WebPortals for Hyderabad and Cyberabad Police, Intranet Portal of Chandigarh Administration, E-DISHA EkalSewa Kendra, ESamadhan, Bhoomi-By Karnataka Government, Comprehensive Modernization of Land Records (CMLR)-By Andhra Pradesh Government, Land Record Computerisation, Gyandoot, Land Records Management System-State Government of Punjab, Devbhoomi-State Government of Uttarakhand, BhuLekh-State Government of Uttar Pradesh, E-Dhara-State Government of Gujarat, E-GramViswa Gram Project-e-Gram connectivity Project by Gujarat, RajNidhi- jointly by Rajasthan state’s Department of Information Technology and Rajasthan State Agency for Computer Services (Raj Comp), Raj-SWIFT- The Rajasthan State’s Department of Information Technology (DoIT), Support for P & RD sector in Assam: NIC, Assam State Centre, SamanyaMahiti -State Government of Karnataka, Online Vaccination Appointment for International Traveller, SMS based Integrated Disease Surveillance System, Hospital OPD Appointment, CASCET, Online Scholarship Management System, AISES (All India School Education Survey), CAPnic, VHSE Examination Management System
Provision for boosting Digital Economy in Union Budget 2017-18
The Union Budget for FY 2017-18 laid down the provisions for boosting the Digital Economy. BHIM (Bharat Interface for Money), a Mobile App based on the Unified Payment Interface (UPI) was launched by Sh. Narendra Modi, the Prime Minister of India, at a Digi Dhan Mela in December 2016 to facilitate e-payments directly through banks and as part of the 2016 Indian banknote demonetisation and drive towards cashless transactions. As per the Union Budget, 125 lakh people have already adopted the BHIM app. The BHIMAadhar App, a merchant version of Aadhar Enabled Payment System was also launched in April 2017 alongwith two new schemes (Referral Bonus Scheme for individuals and a Cashback Scheme for merchants) for promoting the usage of BHIM as highlighted and committed under the Budget. A Mission has been set up with a target of 2,500 crore digital transactions for FY 2017-18 through UPI, USSD, Aadhar Pay, IMPS and debit cards. A proposal to mandate all Government receipts through digital means, beyond a prescribed limit, is under consideration. Banks have targeted to introduce additional 10 lakh new POS terminals by March 2017. They are encouraged to introduce 20 lakh Aadhar based POS by September 2017. The Budget proposed to create a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems.
Conclusion with the Future of Digital Economy
The digital economy carries with it great promise but this promise can only be realised if we take these issues into serious consideration. In essence, the future is limitless for the digital economy, and as long as it enhances the way of the global community, it will be a successful economy for decades to come. A move towards digital economy has multi-faceted benefits for any economy but for this we need to avoid technological determinism and put people back at the centre as the drivers and recipients of economic change. Sound policy frameworks need to be evolved to shape the trajectories and governance of emerging digital technologies and a push towards digital economy calls for greater digital infrastructure. Hence government should address all the issues related to digital infrastructure and digital divide through both universal and affordable access and by equipping people with the necessary education and skills to safely navigate the digital space to realise the benefits of digital economy.