What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvements. (10M, 150W)

The question  “What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvements." was asked in the Mains 2023 GS Paper 3. Let us look at the model answer to this question.

Answer: The Digital Revolution in India started with the Government of India initiating the Digital India programme in July 2015 to transform India into a digitally enabled knowledge-based economy. Digitalization plays an important role in boosting growth, creating jobs, and improving productivity.

Some of the Advantages of Digital India Are

  • There is an increase in electronic transactions related to e-governance.
  • An optical fibre network of 2, 74,246 km has connected over 15 lakh Gram Panchayats under the Bharat Net programme.
  • A Common Service Center (CSC) is created under the National e-Governance Project of the Indian government which provides access for information and communication technology (ICT). Through computer and Internet access, the CSCs provide multimedia content related to e-governance, education, health, telemedicine, entertainment, and other government and private services.
  • Establishment of digital villages along with well-equipped facilities such as solar lighting, LED assembly unit, sanitary napkin production unit, and Wi-Fi choupal.
  • Internet data is used as a major tool for the delivery of the services and the urban internet penetration has reached 64%.

Status of Digitalization in the Indian Economy

  • Digital payments: As per PwC India report, UPI transactions are likely to reach 1 billion per day by 2026-27.
  • E-commerce: The market is rapidly growing due to convenience and affordability factors, with a projected value of $175 billion by 2025.
  • Smartphone and Internet penetration: India currently has some 650 million smartphones along with the second-largest internet user base in the world. Hence there are many potential users for digital products and services.
  • Economic growth: It estimated digital transformation to create $1 trillion worth of economic value by 2025, resulting in 60 to 65 million jobs.

Problems Faced in Digitalisation

  • Data protection: A comprehensive law was missing. Only recently a Digital Personal Data Protection Act, 2023 was passed.
  • Digital literacy: Lack of digital literacy reduces the acceptance of new digital products.
  • Cybersecurity: Ransomware incidents in India have gone up by 53 per cent in 2022 over the incidents reported in the previous year, according to the CERT-In.
  • Poor digital infrastructure: Many rural areas still lack access to high-speed internet.

Suggested Improvements

  • Awareness generation and education of digitally illiterates. They should be taught about Cyber hygiene.
  • Need to develop digital infrastructure such as high-speed internet and data centers.
  • Effective implementation of the new Data protection law.
  • Expand and improve government services online and Implement a single-window clearance system

With the recent focus of the government on Open Data Initiatives, Big Data and Industry 4.0, the status of digitalisation in India is poised to improve.