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Contents
Synopsis: India’s demographic dividend may finally be realized through the digital dividend
How COVID helped in India’s digital transformation?
Though, Covid left indelible scars, but it propelled India to the top of the league of digitally connected nations.
Compelled to adapt their lives and livelihoods to a 4×5” smartphone screen, the virus forced the entire populace to embrace new habits and behaviours.
Covid ensured serious adoption of smart phones, making it a transaction device, penetrating every strata of our society.
Today, Indian citizens armed with just three things -a bank account, a smartphone and a digital identity can meaningfully transact online, find a job, learn a skill, invest money, take a loan or get access to online services anywhere.
How has India emerged as a destination for venture capital?
– Spread of e-commerce: India’s digital startups have seized this transformation opportunity. They no longer have to burn cash, shower discounts to create new habits.
Instead, there’s a massive surge in demand, and improved unit economics, as Indians are willingly paying for digital convenience and access.
UPI and QR codes, combined with efficient and speedy delivery logistics infrastructure, have brought e-commerce to every small town and village.
As a result, we today have over 700 million of our citizens connected, over 150 million transacting e-commerce customers, and digital aids like Whatsapp being used at mass-scale by small businesses.
India has an astounding total addressable market of 400 million of online orders for meal deliveries.
Given the enormous potential, it is no surprise, therefore, that India has emerged as an attractive destination for venture capital, with $30 billion (Rs 2,10,000 crore) expected just this year to give wings to unicorns.
How digitalisation will be beneficial for India?
Firstly, low transaction costs, high velocity of transactions, transparency and ease of discovery will all combine to create massive productivity gains in every sector.
For example, each time a Citizen’s charges his FASTag digitally, or use kirana store, or order a meal home via online UPI transfer, a tiny fraction of efficiency gets released, and someone gets productively employed.
Secondly, as the digital trails of economic transactions become shareable and auditable and usable, it will allow millions of small businesses to gain instant access to credit and move from being credit-starved to credit-rich.
Thirdly, India is now seen as the champion of the open and democratic internet, and a global hub for technology innovation and startups. Its mobile-first software development capabilities and deep local markets give it the experience and confidence to create digital products for the world.
Fourthly, the demand for digital talent is soaring, both domestically and internationally. Now “Code in India” should be our new paradigm to export our skills and capabilities to the world. Here the good news is already: Millions of young graduates are taking notice of the fact that learning how to code is the key to a great future.
What are the challenges that needs to be addressed due to increasing digitalisation?
Disruptions: Digitisation will leave no time for incumbents to react, especially since digital-first businesses have reset the equation. Unless legacy businesses learn to adapt, many of them will replaced by a digital upstart.
Monopolies: As digital platforms become more powerful, regulation will have to rapidly evolve to avoid monopolisation and cartelisation.
Denial of Labour rights: Platforms are already exploiting labour, categorising them as gig-workers and denying them employment benefits. This needs to be addressed.
