How the Digital Economy has flourished for years:

We have been hearing Digital India, Digitalization, Digital world etc for last one year and most of us feel that the words are famous because of the initiatives taken by the incumbent government headed by Mr. Modi .

But unknowingly we have been a part of Digitization for last so many years.

Most of you have used digital platform for years unknowingly becoming a part of digital world by making railway reservation online, buying Air tickets, bus tickets online or making payments by credit card, debit card, etc.

Promoting Digitalization is a Governmental initiative to give all services to every citizen on their portals or electronically, to make the transactions transparent and smooth.

The latest push is going to usher in a new era (like how computerization did in public as well as private sector almost two decades back) where currency notes will be a thing of past.

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.

Role of Digitization in Banking Sector in India

With digital transactions, one needs to have a proper bank account and requires essential documents. Banks are the part and parcel of our day to day life.  Banking includes ATM transactions, online payments, and transfers.  Reduction of costs for banks and customers as well by using ATMs, cashless transactions etc.

Thus banks always try to adopt latest technologies to enhance customer experience. Another marvelous example of digitization is mobile banking means banking can be done on the mobile phone. You can do all kind of transactions through your phone. Moreover, Digitalization reduces human errors. With the increasing cashless transactions, fake currency threat will be reduced.

In a year that will be remembered for demonetization for the withdrawal high amount denomination Rs. 500 and Rs. 1000 of India’s currency in circulation on November 8–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 last year.

 

mobile banking 2016

digital transaction 2016

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 Digitization on Indian Economy:

Digitization has played a vital role to flourish the Indian economy. The biggest example is to create job opportunities in the country for youths. Now everybody talks about IT.  On another side “make in India” drive has given an immense push to youngsters for a new startup and made them dynamic entrepreneurs. This all could be possible just because of Digitization.

Recently, in India, the central government implemented a sudden ban on currency notes of Rs. 500 and Rs. 1000 denominations, called demonetization.

The step was taken with an objective to restrain the circulation of “black money” in the country and associated problems as explained above.

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 on couples of statistics related with an impact of digitization on Indian economy in terms of employment, contribution to GDP in comparisons with other countries:

internet contribution to gdp

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
1 Belgium 93 86
2 France 92 69
3 Canada 90 88
4 United Kingdom 89 88
5 Sweden 89 96
6 Australia 86 79
7 The Netherlands 85 98
8 United States 80 72
9 Germany 76 88
10 South Korea 70 58

 

Impact of Digitization in India:

Digital infrastructure means availability of high-speed internet will deliver better services to the citizens. The digital identification means “Aadhar Card” of every citizen, which will give unique and authentic identification to every citizen.

Digital India has made mobile banking easy.

Now it is easier to reach the Digital India scheme as a Common Service Centre has been provided on a public cloud, where one can share the private information. The cloud is safe and secure from any cyber-crime. (I will not say foolproof but its 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 digitization. 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.

Digital India has the best alternative option for proper governance.

Digital India makes easy the progress of the nation by promoting e-services to every citizen. We can conclude that it is secured in many government services for all to use.  Promoting Digital India means moving towards development and creating an opportunity for new India in terms of job, technology, and transparency.

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.