India’s digital economy to contribute a fifth of national income by 2030: Govt

India’s digital economy is expected to grow almost twice as fast as the overall economy, contributing to nearly one-fifth of national income by 2029-30, the ministry of electronics and information technology said in a report.In less than six years, the share of the digital economy will become larger than that of agriculture or manufacturing in the country. In the short run, the highest growth is likely to come from the growth of digital intermediaries and platforms, followed by higher digital diffusion and digitalisation of the rest of the economy, the report said.

When it comes to India, the domestic cloud services market and the global capability centre sector are the two fastest-growing segments. The adoption of artificial intelligence for streamlining operations, improving customer experience, and launching new services is likely to propel the cloud services market to a compounded annual growth rate of 24% over the 2024-27 period and may reach $20.3 billion, the IT ministry said in its report.

Among the various traditional sectors, such as the banking and financial services industry, the retail segment, education, hospitality, and logistics, though there is digital growth, it is not necessarily uniform, the report said.

“For example, retail sales are digitalising much more than wholesale sales. Firms are also investing in digital methods for customer acquisition and business development. Chatbots and AI applications are fairly commonplace,” the IT ministry said.

In the banking sector, for example, though more than 95% of the payment transactions for both public and private sector banks are digital, the categories such as processing of loan applications and investments are less digitised, the report said.

“While the digital share of transactions for banks is observed to be very high, the digital share of revenue is low, as some of the highest revenue-generating activities are largely offline. Other financial services institutions are relatively less digitalised than banks,” the IT ministry report said.In other sectors such as retail and education, companies that started with a digital-only channel have also invested in physical brick-and-mortar stores, the report noted.

“As expected, the digital economy has been growing much faster than the rest of the economy. While the overall economy, measured in nominal GVA (gross value added), was growing at a rate of 11.8% over the last 10 years, the sectors comprising the digital-enabling industry were growing at 17.3%,” the IT ministry report said.