(Commonwealth_ India) A recent report by Ask Capital highlights the transformative potential of India‘s digital economy, projecting it to reach $1 trillion by 2028. This optimistic outlook is underpinned by several enablers, including widespread internet penetration, efficient and affordable 4G and 5G services, and a range of government digital initiatives. Collectively, these factors position India as a global leader in digital innovation and economic development.
India has emerged as a global exemplar in real-time payments, significantly benefiting from homegrown technological advancements such as the Unified Payments Interface (UPI). This innovation has not only revolutionized payment methods but has also paved the way for more digital transactions. The rapid digital transformation underway in India is poised to be a game changer for its economic landscape, fostering inclusivity and accessibility.
The digitization of the Indian economy, alongside the increasing prevalence of smartphones, has catalyzed a remarkable rise in cashless transactions and online shopping. The Indian Council for Research on International Economic Relations (ICRIER) recently reported that India’s digital prowess now surpasses that of developed nations, including Japan, the United Kingdom, and Germany, in terms of overall digitalization.
Government initiatives such as the Pradhan Mantri Jan Dhan Yojana (PMJDY) and Direct Benefit Transfer (DBT) schemes have been instrumental in promoting universal access and enhancing financial inclusion across the nation. As mobile and broadband penetration continues to rise, the foundation is being laid for deeper financial inclusion and the emergence of new digital services.
The proliferation of affordable data and the growing number of smartphone users are propelling India’s digital transformation. As of March 2024, data from the Telecom Regulatory Authority of India (TRAI) indicates that the country boasts nearly 1.2 billion telecom subscribers, with the number of internet subscribers climbing from 881 million in March 2023 to 954 million by March 2024. Notably, nearly half of these subscribers hail from rural areas, highlighting the expansive reach of digital services.
In the past year alone, India added over 73 million internet subscribers and more than 77 million broadband subscribers. The adoption of advanced 4G and 5G technologies has also driven a substantial increase in wireless data usage, which surged from 160,054 petabytes in 2022-23 to 194,774 petabytes in 2023-24—a year-on-year growth of 21.69%.
The digital economy, which accounted for a modest 4.5% of India’s GDP in 2014, is projected to contribute an impressive 20% of GDP by 2026. Between 2017 and 2023, retail digital payments experienced a remarkable growth of 50.8%, with sectors such as finance, education, healthcare, food, travel, and e-commerce undergoing significant digital transformation.
According to the report, UPI is expected to dominate the retail digital payments landscape, contributing to 90% of total transactions in India by 2027. The Reserve Bank of India (RBI) is also set to introduce the Unified Lending Interface (ULI), which aims to simplify access to credit, particularly for small and rural borrowers. ULI will enhance the flow of digital information, such as land records, between data providers and lenders, significantly reducing the time required for credit approval.
Digital initiatives have greatly benefited sectors like healthcare and education. The Ayushman Bharat Digital Mission (ABDM) is establishing an integrated digital health infrastructure, enhancing accessibility through initiatives such as e-Hospital and e-Sanjeevani, the National Telemedicine Service of India. These efforts are vital for achieving Universal Health Coverage.
In education, the COVID-19 pandemic accelerated the shift towards digital learning, transforming traditional classroom environments into virtual learning spaces. This transition has laid the groundwork for a more robust and accessible educational framework.
The e-commerce sector is poised to be a key driver of economic growth, contributing significantly to the surge in digital payment transactions, particularly in rural areas. The report forecasts that digital payments in India are on the verge of an inflection point, with projected growth in value reaching $10 trillion by 2026.
As the Indian economy continues to evolve through innovations and the government’s focus on digitalization, the prospects for a more inclusive economic framework appear promising. With a vast talent pool and a commitment to harnessing digital technologies, India is well-positioned to realize its ambition of becoming a $1 trillion digital economy by 2028. The ongoing digital transformation is not merely a technological shift; it represents a fundamental reimagining of economic interactions, driving growth in unprecedented ways.
