India’s Digital Economy Grew 2.4 Times Faster Than The Overall Economy In 2014-19: RBI

India’s digital economy grew 2.4 times faster than the overall economy of the country during the 2014-19 period, the Reserve Bank of India (RBI) said in its monthly bulletin for the month of December.

In absolute terms, the size of the digital economy grew to $222.5 Bn in 2019 from $107.7 Bn in 2014, the RBI said.

In absolute US dollar terms, India’s digital economy exhibited a growth rate (compounded annually, CAGR) of 15.62% between 2014 and 2019.

India’s economy (GVA) grew annually at a compound rate of 6.59% (as per ADB’s IO tables) during the 2014-19 period, the paper said, adding that this shows that India’s digital economy grew 2.4 times faster than the Indian economy itself.

“The CAGR of digital GVA as a percentage of GVA is a normalised measure of annual growth. India posted a growth rate of 9.47%. This again suggests that the digital economy GVA for India grew at a rate faster than the economy-wide GVA between 2014 and 2019,” the central bank said.

As per the RBI’s classification, the digital economy comprises three subsectors – computer, electronics, and optical products; telecommunications; and computer and ICT services.

With increasing internet and smartphone penetration in the country, the government has increased its focus on digitisation. While real-time digital payments platform UPI has become widely popular, the government has also doubled down on digitisation with its India Stack initiative.

India’s digital stack or India Stack is a unified software platform to bring India’s 1.4 billion population into the ‘Digital Age’. It is a set of open APIs and digital public products covering identity, payments, among others. The account aggregator framework, UPI, Open Network for Digital Commerce (ONDC) are among its components.

Earlier this year, Prime Minister Narendra Modi said that the country’s digital economy is well poised to grow to $1 Tn by 2025. PM Modi said that technology-led growth is one of the important pillars of India’s economic recovery from the pandemic.

India has emerged as one of the largest markets in the digital economy globally as well. Recently, Google announced the $10 Bn ‘Google for India Digitization Fund’ to accelerate India’s digital economy. The company is also refocusing its efforts towards AI in the country to make the internet inclusive.

India is likely to have 900 Mn active internet users by 2025, up from 622 Mn in 2020. This would be a 45% increase in the next five years, according to a report from IAMAI.

As the digital economy is growing, the government is also tightening the regulations for the new world. Last month, the government released the much-awaited draft Digital Personal Data Protection Bill, 2022.

The Bill proposes to form the Data Protection Board of India to determine non-compliance with provisions of the Act and impose penalties. Non-compliance with the provisions of the Bill can result in imposition of a financial penalty of up to INR 500 Cr.

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