Can big data help create a trillion dollar economy for India? According to a report by IBM and Kalaari Capital, India has the potential to generate $1 trillion in digital revenue by 2022, and $1 trillion of economic value from the digital economy by 2025. The report adds that looking at the current numbers, it seems like India is well on its way to becoming a trillion-dollar digital economy with the adoption of new technologies which are driving digitisation. India has a robust business ecosystem and all sectors are participating with a varying degree of adoption. But it is the startups who have seized the opportunity and are charging ahead in the race, big time.
According to a McKinsey report, the suite of emergent technologies has the potential to add an economic value of $550 billion to $1 trillion per year in 2025. India’s adoption of 12 general-purpose technologies and applications such as digital payments, cloud-based services, internet of things, automation, mobile internet and adaptive learning, among others, will bring about a transformation. Much of the value created by these empowering technologies will also help the poorer sections of the population.
Key Factors Which Can Pave The Way For A Trillion-Dollar Economy:
- Expanding digital infrastructure
- Data explosion
- Increasing technology adoption
- Digital consumption
Digital Infrastructure For A Digital-First Economy: With India moving ahead towards a digital-first economy, a robust infrastructure will enable India to have similar economic opportunities as other developed global economies will help achieve sustainable and inclusive economic growth. A recent news report indicated that India’s Aadhaar project, flawed as it may be, helped in creating digitised identities for the unbanked population in India.
According to industrialist Mukesh Ambani, Aadhaar enabled companies to acquire a million customers a day. The next step, Unified Payments Interface (UPI), enabled monetary transaction with mobile phone and personal identification number replacing the need for a credit card. The next Indian initiative India Stack pegged as the technology for 1.2 billion Indians, is a series of secured and connected systems that allows people to store and share personal data such as addresses, bank statements, medical records, employment records and tax filings, among other, and enables the digital signing of documents. The user controls what information is shared with whom, and electronic signature occurs through biometric authentication.
India’s Data Explosion: According to Open Signal, 2017 was the year 4G exploded in India. The country is billed as one of the fastest growing mobile markets in the world with the current subscriber penetration estimated to be 40 percent which is expected to double to 80 percent by 2022. Smartphones kicked off a massive data explosion and the trend is expected to continue with a Cisco report stating that IP traffic in India will reach 4.0 exabytes per month by 2019. Mobile data traffic is also expected to increase and M2M connections are estimated to triple, reaching 10.5 billion by 2019.
Tech Adoption By India Inc: According to the IBM and Kalaari Capital report, there is a rapid change in the Indian business ecosystem with Tier I leadership teams increasingly focusing on digitisation (Wipro launched Holmes while Infosys launched Nia). Indian startups who are finding a niche in the global markets are also providing an economic push, resulting in growth in emerging tech. These disruptive technologies are bringing about new business models. For example, India’s banking sector is credited for using technology to digitise business operations and to create new delivery models, such as online brokerage, mobile banking, and online insurance sales.
Capacity Building And Digital Literacy: India has made sustained efforts to strengthen the physical infrastructure that will help the country re-engineer some of the core government processes and also integrate other services on technology platforms. An expanding digital infrastructure provides a strong base for a data-driven economy and it can also facilitate in realising a trillion-dollar digital economy. The government also needs to address the barriers to technology adoption and foster digital literacy.
Digital literacy can be achieved by setting up special-purpose government-sponsored technical organisations which are focused on training and capacity building. In due time, the government will also have to provide policies and regulation and create standards with laws on copyright, data ownership and intellectual property. The country is already following global best practices for implementing large-scale innovations.
R&D Spending: Another area which can help the country realise a trillion-dollar economy from data and physical infrastructure is investment in R&D. Presently, the R&D spending in India, at just 0.87 percent of GDP, and is exponentially lower than countries like Brazil, China, US, UK and even South Korea. India should attract more R&D investment, forge tie-ups with global corporations and the domestic private sector. The government should also tie up with the private sector to build technical know-how and expertise in areas such as data analytics and setting up CoE.