How the Digital Economy has flourished for years:
The words attached to Digital have trended for last year or so. We have heard words like Digital India, Digitalization, Digitization, Digital world etc in our day to day life.
Before i start explaining the impact of Digitalization on Indian economy. Let’s first understand the difference between Digitalization and Digitization.
Digitization is more related to converting all our data into bits format and Digitalization is the use of different technology/methods to change business processes.
Though there is a subtle difference between the two, the two words are used interchangeably by all of us meaning the use of Digital Methods to improve our business processes.
Undoubtedly, the incumbent govt has taken great initiatives taken under the leadership of Mr. Modi .
They have taken forward the initiatives started by the last Govt. Overall, the positive impact is for all of us to see.
And though the impact is more visible, we have unknowingly been a part of Digitization for last so many years.
We have all been a part of the Digital World where we have touched the Digitalized business processes by using in our day to day’s life. Think of activities such as making railway reservation online, buying Air tickets, bus tickets online or making payments by credit card, debit card, etc.
For years, promoting Digitalization has been a Governmental initiative to give all services to every citizen on their web portals or electronically, to make the transactions transparent and smooth.
The real changes because of Digitalization are becoming visible today because of the push by govt., which is expected to usher in a new era (like how computerization did in public as well as private sector almost two decades back). Things like paper currency notes will soon be a thing of past.
Slowly we are moving towards Digitalization of Indian Economy with new steps and initiatives.
Digitization explained in layman’s language is simple.
“Ab cash saath rakhna jaruri nahi, sab payment phone se ho jati hai” or we don’t have to carry cash all payments can make through phone.
There are certain factors which compel us to follow Digitalization in our routine life.
On the contemporary, we need certain essential elements to materialize Digitalization in our routine life.
Why Digitization is the need of the hour:
Corruption today is the biggest problem in developing countries. In fact, corruption is a problem we have faced for ages.
It is said, a parallel economy flourishes side by side to our main economy. This economy is run by those who avoid paying taxes to the Govt.
One of the prominent reason for the parallel economy is the dependency on cash-based businesses.
The culprits running the parallel economy do not feel like having bank accounts and other business books which simply means no tax payment to Govt.
With Digitalization Initiatives like Taxations being bought online and steps like Demonetization, the govt is trying to weed out corruption from our system which is expected to lead to a positive impact on Indian Economy.
Role of Digitalization in Banking Sector in India
With digital transactions, one needs to have a proper bank account and essential documents. Banks are the part and parcel of our day-to-day life. Banking includes ATM transactions, online payments, and transfers.
Because of Digitalization of their processes, banks have saved costs and customers have been able to avail benefits such as ATMs, cashless transactions using Credit Card, Debit Cards, etc.
Today, banks are going out of the way to adopt latest technologies so as to enhance customer experience. Another marvelous example of digitalization is mobile banking where banking can be done on the mobile phones.
The feature allows you to literally operate your bank account from your mobile phone.
Digitalization in Banks has not only reduces human errors and save time but has led to cashless transactions which have reduced circulation f fake currency in the market. Thereby, leading to a positive impact on our economy.
2016 is the year which will be always linked to demonetization for the withdrawal high amount denomination Rs. 500 and Rs. 1000 of India’s currency in circulation on November 8.
After Demonetization was announced, cashless payments in October 2016 increased 22%, when compared to October 2015, indicating that Indians have been progressively more accepting of different digital payments modes since 2015.
Source: Monthly Bulletins for 2016, Reserve Bank of India.
IMPS (immediate payment system) transactions increased 116% while IMPS transfers increased 150% over 12 months year ending October 2016. Couples of transactions using (PPIs) prepaid payment instruments that include mobile wallets just increased two times in a year in the same period.
Source: Monthly Bulletins for 2016, Reserve Bank of India.
Impact of Digitalization on Indian Economy:
Digitalization has played a vital role in flourishing the Indian economy. The biggest example is the job opportunities created in the country for youth.
In addition to above, “make in India” drive has given an immense push to youngsters to start new startups and think of creative ideas to contribute to digitalization of India.
The government on its end is pushing and encouraging Indian public to go cashless and reduce reliance on cash transactions. The purpose is to make us adopt digital payments.
Digital transactions make us follow a legal path which is helpful to flourish the economy.
Use of plastic money gives freedom as well as security to citizens of the country because it works on technical grounds.
Digital payments will be helpful to the global world.
Since cash is the primary mode of transactions in money laundering and terrorism funding, a digital society would discourage such laundering and terrorism.
Let’s have a look at couples of statistics related to an impact of digitization on Indian economy in terms of employment, contribution to GDP in comparisons with other countries:
Which Are The World’s Most Cashless Countries?
|Rank||Country||Noncash Payments’ Share Of Total Value Of Consumer Payments||% Of Population With A Debit Card|
Steps by Indian Government in Digitalization:
Digital infrastructure’s backbone is the availability of high-speed internet. With the introduction of better and faster mobile internet connections, the services through Digitalization have been delivered in an efficient way to the citizens of the country.
In addition to above, the government is taking initiatives like “Aadhar Card” or Digital identification for every citizen. The move is expected to give unique and authentic identification to every citizen. This step will mean faster subsidy distribution, reduction of corruption and some other impacts on our economy.
Digital India has made mobile banking easy.
Next important step taken by Government is the introduction of a Common Service Centre. A secure public cloud to share information (I will not vouch for its safe status but as per govt, it is safe ).
At the end of the day, Digitization is helping businesses streamline their processes by slowly taking away dependency away from paperwork.
Banks, I think are the biggest beneficiary of digitalization. Since they now have processes where less staff can do more work.
Digital India has empowered its citizen by giving them digital power like during the journey you don’t have to carry any physical documents.
You can show a soft copy of the ticket and identity card which fulfills the purpose.
Government is pushing Digitalization in the country by promoting e-services to every citizen.
Another initiative – Digital India is all about Promoting development and creating an opportunity for new India in terms of job, technology, and transparency through Digitalization.
I am a firm believer in the idea of digitalization as this is one step which will gradually turn us into an economic powerhouse by cutting down paperwork and decrease our dependency on govt employees which will help cut down corruption.
To see the immediate impact of digitization, all we must do is look at how income tax filing and income tax return processes have been streamlined.
Today, you do not have to go and stand in front of income tax officer to get an income tax refund.
Time is not far when Digitization will change the phase of Indian economy.