India has taken giant strides in digitising of its economy, says a report published by McKinsey. According to the report titled Digital India: Technology to transform a connected nation, India has made unprecedented progress in rapid digitisation of the economy under PM Modi, with a quantum leap in core areas like IT, online retail and digital communication as well as other areas of the economy- financial sector, agriculture and logistics.
A new study by the McKinsey Global Institute reveals that a social media user in India spends 17 hours on an average on the SM apps, significantly higher than the users in China and the US. India has about 560 million active internet users, and the users downloaded 12.3 billion mobile applications in 2018, more than any other country except China.
India stands second on the list of fastest digitising economies after Indonesia when compared to 17 mature and emerging economies, including the US, UK, China, and Brazil. The co-authors of the report Anu Madgavkar and Alok Kshirsagar have stated there is a vast opportunity available in India for digitisation as poorest sections of the society, so far aloof from the progress, have joined the fray with the increasing coverage of affordable internet in the country. They believe that the change in the society is driven not just by the new-age start-ups but also by the incumbents who are rapidly embracing new technologies to support their business.
The digitisation is also expected to add about 60-65 million jobs by 2025 in many sectors of the economy. However, it is also suspected to bring about a lasting change in the nature of jobs and as a result, redeployment, reskilling may be required as the country might be staring at a potential loss of 40-45 million jobs because of automation of jobs.
Despite massive growth in digital economy, India has plenty of room to grow, the report says. Only about 40 percent of the population has an internet subscription. While many people have digital bank accounts, 90 percent of all retail transactions in India, by volume, are still made with cash. E-commerce revenue is growing by more than 25 to 30 percent per year, yet only 5 percent of trade in India is done online, compared with 15 percent in China in 2015. Looking ahead, India’s digital consumers are poised for robust growth, the report predicts.
The report also says that changes brought by digital adoption will disrupt India’s labor force as well as its industries. It estimates that as many as 60 million to 65 million new jobs could be created from the direct and indirect impact of productivity-boosting digital applications. These jobs could be enabled in industries as diverse as construction and manufacturing, agriculture, trade and hotels, IT-BPM, finance, media and telecom, and transport and logistics.
