With the government's digital initiatives, India's financial ecosystem has undergone a paradigm shift over the years.
A recent report by Ask Capital said India is set to become a US$1 trillion digital economy by 2028 with government digital initiatives as well as enablers such as deep internet penetration, efficient and affordable 4G and 5G services.
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India has become a global example of real-time payments, benefiting from homegrown technological innovations like UPI. India's digital transformation will be a game changer for economic growth.
The increasing use of smartphones along with the digitalization of the Indian economy over the past few years has promoted cashless transactions and online shopping.
According to the Indian Council for Research on International Economic Relations (ICRIER), India's score on digital skills has overtaken developed countries like Japan, the United Kingdom and Germany in the overall level of digitalization.
Government initiatives such as Pradhan Mantri Jan Dhan Yojana (PMJDY) and Direct Benefit Transfer (DBT) schemes have helped in increasing universal access and financial inclusion in the country.
Increasing mobile and broadband access will deepen financial inclusion and spur new digital services.
Advanced and new digital lifestyle and life-saving services like digital entertainment, online education, tele-medicine, digital health and disaster response will leverage better mobile and internet services.
Affordable data, increasing number of smartphone users and growth in e-commerce are driving India's digital transformation.
Data from the Telecom Regulatory Authority of India (TRAI) shows that India will have around 120 crore telecom subscribers by March 2024. The total number of internet subscribers is expected to grow from 881 crore in March 2023 to 954 crore by the end of March 2024, of which almost half are from rural areas. More than 7.3 crore internet customers and more than 7.7 crore broadband customers were added in the last one year.
Driven by the adoption of 4G and 5G technologies, the total volume of wireless data usage is expected to grow from 1,60,054 PB during 2022-23 to 1,94,774 PB during 2023-24, an annual growth of 21.69 percent.
The digital economy, which contributed 4.5 percent to India's GDP in 2014, is expected to contribute 20 percent to the GDP by 2026.
Retail digital payments are expected to grow by 50.8 percent between 2017 and 2023. Sectors like finance, education, healthcare, food, travel and e-commerce are already undergoing massive digital transformation.
According to the report, UPI is expected to contribute 90 percent of total retail digital payments in India by 2027.
RBI is planning to launch Unified Lending Interface (ULI). This will make it easier for small and rural borrowers to take loans. ULI will also facilitate digital information like land records to flow seamlessly between data providers and lenders, thereby reducing the time taken to approve loans.
Sectors like healthcare and education have received a major boost from the Digital India initiative. Healthcare schemes like Ayushman Bharat Digital Mission (ABDM) are becoming the backbone to support integrated digital health infrastructure of the country. As e-hospitals have made healthcare facilities more accessible, e-Sanjeevani, India's national telemedicine service is another step towards digital health to achieve universal health coverage.
In the field of education, COVID-19 gave a new direction to school education, with school classroom lectures shifting to digital screens.
The e-commerce sector is expected to be another key driver of growth going forward, leading to increased digital payment transactions in rural areas.
The report said that digital payments in India are about to reach a turning point and its value is expected to grow to US$10 trillion by 2026.
The growth of the Indian economy is becoming more inclusive through the government's emphasis on innovations and digitalization and with a large pool of talent, India is expected to move towards becoming a US$1 trillion digital economy by 2028.
