Oct 6 – India’s financial ecosystem has undergone a significant shift in recent years, driven by the government’s digital initiatives.
A recent report by Ask Capital predicts that with factors such as deep internet penetration and affordable 4G and 5G services, India is on track to become a $1 trillion digital economy by 2028.
India has emerged as a global leader in real-time payments, largely thanks to homegrown technological innovations like the Unified Payments Interface (UPI). This digital transformation is set to be a game changer for the country’s economic development.
The increased use of smartphones has accelerated cashless transactions and online purchases. According to the Indian Council for Research on International Economic Relations (ICRIER), India’s digital prowess now surpasses that of developed nations like Japan, the United Kingdom, and Germany in terms of overall digitalisation.
Government initiatives such as the Pradhan Mantri Jan Dhan Yojana (PMJDY) and Direct Benefit Transfer (DBT) schemes have significantly improved universal access and financial inclusion across the country. Enhanced mobile and broadband penetration is expected to further deepen financial inclusion and boost new digital services.
Digital services, including entertainment, online education, telemedicine, and disaster response, will benefit from improved mobile and internet connectivity. As of March 2024, data from the Telecom Regulatory Authority of India (TRAI) shows nearly 120 crore telecom subscribers. The total number of internet subscribers rose from 88.1 crore in March 2023 to 95.4 crore by March 2024, with nearly half from rural areas. Over the past year, more than 7.3 crore internet subscribers and 7.7 crore broadband subscribers were added.
The adoption of 4G and 5G technologies has driven total wireless data usage from 160,054 PB in 2022-23 to 194,774 PB in 2023-24, reflecting a yearly growth rate of 21.69%. The digital economy, which constituted 4.5% of India’s GDP in 2014, is projected to contribute 20% of the GDP by 2026.
From 2017 to 2023, retail digital payments surged by 50.8%. Sectors such as finance, education, healthcare, food, travel, and e-commerce are all experiencing large-scale digital transformations. The report anticipates that UPI will account for 90% of total retail digital payments in India by 2027.
The Reserve Bank of India (RBI) plans to roll out the Unified Lending Interface (ULI) to streamline credit access, particularly for small and rural borrowers. This initiative will enable seamless digital information flow between data providers and lenders, significantly reducing the time required to approve loans.
Healthcare and education sectors have benefited greatly from digital initiatives. The Ayushman Bharat Digital Mission (ABDM) aims to create a robust integrated digital health infrastructure, while e-Hospitals and e-Sanjeevani, India’s National Telemedicine Service, enhance healthcare accessibility.
The shift to digital education, accelerated by the COVID-19 pandemic, has transformed classroom experiences, leading to increased engagement with digital platforms. The e-commerce sector is poised to drive further growth, with rising digital payment transactions in rural areas.
The report concludes that digital payments in India are on the verge of reaching an inflection point, with an expected value of $10 trillion by 2026. With innovations and a strong government focus on digitalisation, India is on track to achieve its goal of becoming a $1 trillion digital economy by 2028, fostering a more inclusive growth trajectory.
Source: capitalfm
