While the Indian government has been taking various steps to make India a digitally driven economy with some evident positive results, is it really ready to handle all existing micro challenges and penetrate digitisation into India’s remotest areas and roots? “I was both amused and amazed when my vegetable seller connected with me over a video call to show me all the fresh produce he had just brought from the farm. I e-shopped my veggies for the first time! I wouldn’t have imagined grocery shopping in this fashion up until a few months ago before WhatsApp messenger introduced the option of video calling,” Beenu Verma, a homemaker residing in New Delhi shares with us. “I paid my bill through Paytm,” she exclaims!
And so it’s true, the world is a more connected place now, with the concept of “global village” making more sense than ever before. Those who don’t have the luxury of an iPhone or iPad, now have the messenger WhatsApp handy to video-chat and connect. Thanks to not just the advancement of user friendly applications (apps) and gadgets, but also internet connectivity that is slowly improving even though it still has a long way to go. While ladies like Verma are finding their daily dose of happiness and thrill in the improved connectivity that they never experienced before, the Indian government is making sure there is no break in the connection. And this is not just for the exchange of smiles that will surface across cities and even villages but mainly for the economic growth of the nation.
It hasn’t been long since the Union Budget for 2017-18 was announced with an aim to promote digital economy by reducing cash transactions, bringing more economic activity into the formal sector and curbing corruption. And with all the plans already in action, the dream of ‘Digital India’ is not far away but is yet to turn into a reality. However, the basics are yet to be put in place with an access to reliable, stable and high-speed internet service provided all over India.
The government has already started taking steps in that direction. The government launched the National Digital Literacy Mission (NDLM) with the aim to provide digital literacy to every Indian and achieve making one person in every family digitally literate. An initiative of Indian Prime Minister Narendra Modi, it is part of the digital revolution that is slowly enveloping the country. The mission has been quite a success with it surpassing its target of training 5.2 million by 2018, by training 8.2 million people by 2016 itself.
Not just this, several branches of the government have joined hands with private players to achieve the target. The Indian Railway Catering and Tourism Corp (IRCTC) in partnership with Google has made 120 railway stations internet-enabled and registered about 15,000 people daily who were using internet for the first time through this medium.
“Up-till now, internet has reached the first 100 million Indians or ‘India 1’,” Rajan Anandan, vice-president India and south-east Asia at Google Inc., said at a tech conference in New Delhi, adding that: “These are consumers who have high personal disposable income, they are well connected and well educated. Way forward, we will see problems being solved for ‘India 2’ and ‘India 3’—the next 200 million to 600 million Indians.” He also said that in two to three years, about 600 million Indians will access internet through broadband.
Industry body The National Association of Software and Services Companies (NASSCOM) would agree as it recently shared on its social media platform, that India’s internet base has already surpassed that of the United States of America (US) and today is second largest after China; and by 2020, India will have more than 200 million people transacting online. By then, 70 pc of e-commerce transactions will be happening via mobile phones, it says. This data is also a confirmation that mobile has become the first source of accessing internet in India, skipping computers or laptops.
But while statistics and data show a hopeful image, the reality is that India is in dire need of an updated definition of broadband if it is to realise its dream of a digital India. According to a report by US content delivery network, Akamai Technologies, India is ranked 105th in the world when it comes to average internet broadband speed. It also has the lowest ranking in Asia-Pacific, with 14 countries including China having faster internet speeds than India. Reports show that India’s average speed is less than the global average at 5.6 Mbps. All levels of businesses and even government sectors face problems when they rely on the use of heavy interactive elements such as videos and real time communication to engage within or outside their organisations, making glitch-free e-communication a longing. So, services like e-governance, e-commerce, smart cities and mobile banking are still an advanced connection away.
Talking of mobile banking, last year, the ‘World Development Report 2016: Digital Dividends’, pointed out that India had the most restrictive market regulation in retail finance and banking, but now defying this seems to be the top agenda of the present government. Prime Minister Narendra Modi has been working towards making India a cashless economy driven by technology and tech-savvy people. At the dawn of 2017, Modi launched a mobile app on the Unified Payment Interface (UPI). BHIM (Bharat Interface for Mobile) as the application is called, is common across all banks and financial institutions, making room for smooth transactions. “Right now, business happens by the way of (currency) notes and coins. That day is not far when all business transactions will be conducted through the BHIM app,” the Prime Minister had said.
GST means digitisation
Ace investor Rakesh Jhunjhunwala says that while GST will have a much deeper impact on India’s economy than reforming the taxation system, India would grow at a double digit pace in the near future regardless of the new tax regime. “If you ask my personal judgment, post 2019-2020 we are poised for double-digit growth,” Rakesh Jhunjhunwala said in a recent interview to ET Now. “I personally feel India is poised for double-digit growth, GST is an aid to it, even without GST we would have reached there,” the billionaire investor added.
The ‘Big Bull’, as he is commonly referred to for his Warren Buffet-type style of investing for long term, said that the effect of GST will be quite far-reaching as it will result in a digitised economy and efficient logistics supply chain. GST will enable authorities to have digitalised records of every purchase, Rakesh Jhunjhunwala said, adding, “First, it will lead to digitisation. Anybody who has a business with a turnover of more than Rs 20 lakh in India will have to digitalise their business and that is going to bring in tremendous efficiency in the way we work.”
Reserve Bank of India Governor Urjit Patel said the goods and services tax (GST) will not only create a national market but will also broaden the tax base, which in turn will lower the overall taxes in the long-term. He also said he is not “overly pessimistic” about employment scenario in the IT sector, stating that mushrooming start-ups can compensate for job losses.
“The prudent point is that GST itself is part of the digitisation revolution, which along with the reforms on the information tax side in terms of the processes and operations, have the potential to broaden the tax base considerably,” Patel said. Patel said GST is a precursor to a low tax regime in the country at a later stage. He said the broadening of tax base is an important outcome of the new uniform taxation regime and other initiatives on e-payments and digitisation. Besides creation of a national market, GST will also reduce many inefficiencies within the states while moving goods from within a state and also across the country, the Governor said.
Internet of Things (IoT)
In fact, India is set for a “digitization revolution” which, in turn, would fuel the growth of the Internet of Things (IoT). IoT is bridging the physical, digital, cyber and virtual worlds and this requires extensive information processing capabilities. IoT applications are gradually moving from vertical, single-purpose solutions to multipurpose and collaborative applications interacting across organizations in different industry verticals. IoT itself, fuelled by the advancement of digital technologies, is dramatically changing the way companies engage in business activities and how people interact with their environment. The disruptive nature of IoT means we need to assess the requirements for its future deployment across the digital value chain in various industries and application areas.
Reinventing IoT to cater to digitization requires far-reaching changes—from talent sourcing to building appropriate “high speed” broadband infrastructure. Fortunately, companies can adopt an approach that delivers results quickly while still reshaping IoT for the long term. This approach will also require focusing on business areas such as online commerce and customer relationship management. With the explosion of data, the role of information technology is shifting from that of an enabler to a strategic partner. The digital wave, in this backdrop, is turning out to be a disruptor in multiple industry verticals.
Among other things, IoT has made the mode of payments so easy that there is no direct access to the customer at the time of purchase. The process—where customers can pay their bills through any of the multiple acquirers via multiple banks and points of sale terminals to the merchant/brand—is possible with help of IoT. For a country such as India, digitization coupled with IoT could be a real game changer.
Complete digitisation of India is still a few years away, states PwC’s recently released report titled ‘Global Entertainment and Media Outlook 2017–2021’. According to the report, internet advertising is one of the most promising sectors for industry enthusiasts. With a growth rate of 18.6% till 2021, the sector can open up a lot of opportunities. However, full digitisation of India is a distant reality, considering the factors for the country’s slow adoption rates for online mediums.
The report also forecasts that India’s entertainment and media industry could clock over INR 2,90,000 crore by 2021, given its advantage of being one of the fastest growing markets despite being the least digitised among the 54 markets covered by the report. “The E&M market of India needs to be nurtured as we have the growth potential, which will take us to the eighth or ninth position by 2021,” says Frank D’souza, Partner and Leader, Entertainment & Media, PwC India.
A macro challenge pointed out by the report is that the E&M industry is facing a significant level of uncertainty concerning the speed of change in areas such as 5G networks, Internet of things (IoT), virtual reality, and IPv6 protocols and the viability of business models surrounding these technologies. “When infrastructure channels open up a little more, enterprise businesses start depending on internet and technology starts validating itself through IoT. That is when life will start being dependent on the internet and we will actually reach that stage of digitisation,” says Suveer Bajaj, Co-founder and Director, Foxymoron.
Gautam Mehra, Social Media Head, iProspect Communications, voiced a similar opinion. “The market is growing 17%–20% year-on-year if you look at the spend but our base is not more than 7% of all the spend. We are still a few years away from what a developed market is,” he explains. Speaking about the Asian markets, China and India represented the most populous ones by the report and are said to hold vast potential. It was also pointed out that the internet usage in India is an overwhelmingly mobile phenomenon and only 8% of data traffic in India will course through broadband in 2021. Sanjay Mehta, Joint CEO, Social Wavelength, feels that this growth is just a matter of time. “The internet market is INR 6,000 crore industry now. It has tremendous potential and is already delivering and will continue to grow,” he opines.