The report, which surveyed 600 Indian firms, found out that core digital sectors already constitute a large and growing portion of India’s economy and could contribute $355 billion to $435 billion of GDP<\/a> (gross domestic product<\/a>) in 2025.
India’s digital economy in 2017–18 accounted for 8% of nominal GDP, or about $200 billion, according to estimates of MGI. The report mentioned that most of this value - nearly $170 billion - comes from core sectors that already provide digital products and services at scale, including IT and business process management (IT-BPM), $115 billion; digital communication services, including telecommunications, $45 billion; and electronics manufacturing, including mobile handsets $10 billion.
The remaining value comes from early scaling of newly digitising sectors and applications like e-commerce<\/a> and direct benefit transfers.
“We anticipate lot more new data driven business models and ecosystems are coming up in agriculture, healthcare, logistics, energy, education and financial services collectively could generate huge amounts of economic value by 2025,” said Anu Madgavkar and Alok Kshirsagar, partners and co-authors of the report.
A sharp rise in number of smartphones<\/a> has contributed to the all-encompassing digital growth in the country. The number of smartphones and internet subscriptions could continue to go up rapidly in the next five years. “We estimate that India could add as many as 350 million smartphones, more than doubling its absolute level. Just as data costs have fallen sharply and sparked a sharp increase in usage, smartphone penetration has grown rapidly as average prices have fallen,” said Madgavkar and Kshirsagar.
The report stated that India could see significant economic growth coming for three distinct sectors and activities, as digital applications are becoming omnipresent.
“First are the core digital sectors of IT-BPM, electronics manufacturing, and digital communication services. These sectors, already well recognised as part of India’s digital economy, are inherently digital in nature or create products and services that help others digitise. Second are newly digitising sectors such as agriculture, financial services, healthcare, and logistics, which have traditionally not been considered sectors of the digital economy but are increasingly using digital applications to become more productive. Third are government services and markets for jobs and skills, both of which are ripe for digital applications that can boost efficiency,” according to the report.
India, according to the MGI report, has the potential to add about 275 million internet subscribers by 2023, to reach a total of more than 835 million subscribers.
This growth would also be contributed by digital communication services, which will potentially have an economic value of $50 billion to $55 billion in 2025.
Meanwhile, India’s data consumption will continue increasing at a fast pace propelled by rising McKinsey, GDP, e-commerce, smartphonespenetration, increased broadband connectivity in remote areas across India under the BharatNet2, and increasingly affordable data costs.
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