Like all other global economies, India was also severely impacted by the pandemic. The global economic growth contracted by -3.5%. However, the economic recovery of the emerging markets and global economies will be much better as compared to advanced economies.
India, particularly, has been focussed and visionary all through and is on the road to a fast economic recovery. But to achieve a $5tn economy by 2025, the nation needs to chart out a graded action plan. Access to healthcare and education for all, 5G and IoT fuelling industry growth, broadband with seamless connectivity, even in the remotest of areas – seems like a dream? Not anymore! It is a milestone well within our grasp if we use digital networks and technologies to our advantage.
If ~1.2% of GDP is invested towards strengthening digital infrastructure, it will add $500bn-1tn to the $5tn vision (a ~4% GDP growth). On the other hand, investment only in physical infra will result in 2% GDP growth. Accelerated growth can be achieved only if we focus on building and leveraging digital infrastructure in the form of broadband highways, gigabit networks, meaningful use cases and robust IT software capabilities. These advances will serve priority sectors including e-healthcare, e-education, next-gen financial services, and e-governance.
Few simple steps will kick start this journey
We see that digital infrastructure can be a potential game-changer for India and lead to an all-inclusive socio-economic transformation. Then what is stopping us? Though the path to success will have some hurdles, there are some initial steps we can take. These include bridging the digital divide, prioritizing investments, awarding tenders for already planned projects and fast-tracking implementation of the Smart Cities mission. Intent and efforts are not lacking. But the current approach will not take us to $5tn. What we need is a disruptive and cohesive approach.
The goal of building a digital economy is not easy, but is achievable. All we need is to align everything, right from investments to collaboration models, and create the right fundamentals.
Here are our key recommendations that will make India a 5 trillion dollar digital economy going forward:
Prioritization - This is the time the government must recognise the urgency and start prioritising investments towards digital infra projects. Some of the ways to achieve this are forming non-lapsable budgets and introducing stimulus packages to incentivise digital infrastructure.
Investments - While physical infrastructure like roads and urban development are important for nation-building, digital infrastructure spends should be frontrunners for a pie of the planned investments. The governments in leading economies make thorough investments in telecom infra, but in India this share is low. Developed economies (with >$5tn GDP) spend ~1.2% of their GDP for digital infra build. In line with some of the global peers, the government should consider increasing investment for broadband infrastructure, especially where private investment is not adequate.
Collaboration models - This major transformation needs a collaborative approach. We suggest two models. The first one is a PPP model wherein the private sector can work in tandem with the public sector to bring in efficiencies and best practices. The second one is the “wholesale entity” model which comprises participation of central and state governments along with private telcos/ISPs. Though ownership remains with the government, the revenue could be generated by leasing out fibre and other utility applications. This ensures more seamless and timely operations while keeping the vision intact.
Governance and tracking - While India enters into the implementation phase of the digital transformation journey, it is very important to track the progress. On the lines of the global Network Readiness Index (NRI), India must have a India-specific NRI. This index should be used to track digital networks’ build as a metric. This index should be instituted at a granular level so that its impact can be measured, not only nation-wide but also at the state, district and taluka level.
India has declared its ambition to become a leading contributor to the world economy with its Digital India plan. This ambition will be realised as India puts together the required investments and a thought-through implementation plan. All it has to do is to create a robust and resilient infrastructure, which will reap apparent benefits in the decades to come.
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