Why in the news?

As per RBI findings, India’s core digital economy saw a rise from constituting 8.5% of GVA in 2019 to 12.5% in 2023, marking a growth rate of 15.6% over the span of 2019-2023.

What is digitisation?

• Digitization refers to the process of converting information, data, or physical objects into digital format. Digitization enables information to be stored, accessed, and manipulated electronically, often leading to increased efficiency, accessibility, and flexibility compared to traditional analog methods.

Origin in World 

• The origin of digitalization can be traced back to the late 19th century when Herman Hollerith developed a punch card system for tabulating data.
• Alan Turing’s theoretical work on computation in the early 20th century laid the foundation for the development of the first electronic computers in the 1940s, which were pivotal in digitizing various forms of information.

Origin in India 

• Late 20th century: The origins of digitalization in India can be traced back to the late 20th century, with the advent of personal computers and the internet.
• Early 2000s:The government’s concerted efforts to drive digital transformation in the country began in the early 2000s with the launch of the National e-Governance Plan (NeGP) in 2006
• 2015: The NeGP aimed to make government services available to citizens electronically by improving online infrastructure and connectivity. This laid the foundation for the more comprehensive “Digital India” initiative, which was launched by Prime Minister Narendra Modi in 2015

Status of Digitalization in the Indian Economy

• Enhancement of E-Governance: The Digital India initiative has brought about substantial enhancements in e-governance services. Programs such as e-visas and the Digital Locker system have effectively modernized government services, leading to a reduction in paperwork and greater accessibility for citizens.
• E-Commerce market: India’s e-commerce market is expected to reach $200 billion by 2026. Major players like Flipkart and Amazon have expanded their reach, with the COVID-19 pandemic accelerating online shopping adoption.
• Digital transaction: The BHIM (Bharat Interface for Money) app, utilizing the Unified Payments Interface (UPI), has garnered immense popularity, enabling secure peer-to-peer transactions. By August 2023, UPI had processed more than 10 billion monthly transactions, amounting to INR 18 trillion ($204.77 billion).
• Startup Ecosystem in India: India’s rapidly growing startup ecosystem currently encompasses 110 unicorns valued at $347 billion, featuring prominent companies such as Paytm, Ola, and Zomato. These unicorns exemplify India’s prowess as a technology-driven entrepreneurial center.
• Digital Financial Inclusion: Digital financial services, propelled by programs such as Jan Dhan Yojana, have advanced financial inclusion by facilitating the opening of millions of bank accounts for those previously excluded from or underrepresented in the banking system.
• Surge in Broadband and Internet Usage: India has experienced a notable surge in broadband adoption, boasting 825 million mobile broadband subscribers as of July 2023. This uptick has resulted in heightened data consumption and escalated online engagement, especially among Generation Z.

Key challenges related to digitalisation in India:

• Lack of skills: Rapid technological change increase the demand of skilled workforce. Only 42% of India’s workforce possesses digital skills, highlighting the need for digital literacy and upskilling.
• Regulatory challenges: For businesses, especially startups, grappling with intricate digital regulations, e-commerce taxation, and intellectual property matters continues to present significant challenges.
• Privacy issues:The surge in digital transactions and data exchange has sparked notable concerns regarding privacy and data security. These concerns are being tackled by the Personal Data Protection Bill, which introduces regulatory intricacies.
• Cybersecurity: As digitization increases, the risk of cyber threats and attacks grows. India faced 91 lakh cybersecurity incidents in 2022, ranking third globally in the average cost of data breaches.
• Digital Divide: Despite advancements, there remains a digital gap, with rural areas experiencing restricted internet and technology accessibility, resulting in approximately 50% of the population being offline.

Measures to address these challenges:

• Digital Skills Development: Implement comprehensive digital literacy programs to enhance the skills of the workforce.
• Regulatory Simplification:Streamline digital regulations, especially for startups, to reduce complexities and facilitate smoother operations.Provide guidance and support to businesses on e-commerce taxation and intellectual property matters.
• Privacy and Data Security: Enforce the Personal Data Protection Bill to address privacy concerns and ensure data security.Enhance awareness campaigns to educate the public about data privacy and protection measures.
• Cybersecurity Measures: Strengthen cybersecurity infrastructure to combat the increasing cyber threats and attacks.Invest in advanced cybersecurity technologies and training programs to build a resilient defense system.
• Closing the Digital Divide:Expand digital infrastructure in rural areas to improve internet and technology accessibility.

 Steps taken by government:

• Cybersecurity Framework: Enhance cybersecurity infrastructure and awareness, emphasizing collaboration between government agencies and the private sector under National Cyber Security Policy of 2021.
• Data Protection Laws: Enacted data protection laws and regulations, like the Digital Personal Data Protection Act, of 2023, to ensure privacy and responsible data handling.
• Expansion of Broadband : Accelerate efforts to expand broadband connectivity in rural and remote areas, leveraging public-private partnerships like the BharatNet project.
• Digital initiative: Comprehensive digital literacy initiatives targeting both urban and rural communities, exemplified by programs like the Pradhan Mantri Gramin Digital Saksharta Abhiyan (PMGDISHA).

Conclusion: 

Need to Implement widespread digital literacy programs to equip individuals with the necessary skills to navigate the digital landscape and emphasize upskilling and reskilling initiatives to meet the demands of rapid technological advancements.Encourage collaboration between the government and the private sector to drive digitization initiatives.

Mains PYQ

Q Implementation of Information and Communication Technology (ICT) based projects/programmes usually suffers in terms of certain vital factors. Identify these factors and suggest measures for their effective implementation. (UPSC IAS/2019)

Q Has digital illiteracy, particularly in rural areas, coupled with lack of Information and Communication Technology (ICT) accessibility hindered socio-economic development? Examine with justification.(UPSC IAS/2021)

Get an IAS/IPS ranker as your 1: 1 personal mentor for UPSC 2024

Attend Now