In a remarkable transformation fueled by robust government initiatives and unprecedented technological advancements, India is on track to become a $1 trillion digital economy by 2028. A recent report by Ask Capital highlights the nation’s accelerated digital ecosystem, underpinned by widespread internet penetration and the proliferation of affordable 4G and 5G services.
India has emerged as a global leader in real-time payment systems, thanks to indigenous innovations like the Unified Payments Interface (UPI). This digital leap is not only simplifying transactions but also significantly contributing to the country’s economic development. The digitalization wave, coupled with the surge in smartphone usage, has driven a substantial increase in cashless transactions and online purchases across the nation.
The Indian Council for Research on International Economic Relations (ICRIER) reports that India’s digital prowess now surpasses that of developed nations such as Japan, the United Kingdom, and Germany when evaluated on an aggregate level. This leap in digital capabilities is largely attributable to government schemes like the Pradhan Mantri Jan Dhan Yojana (PMJDY) and Direct Benefit Transfer (DBT), which have been instrumental in enhancing financial inclusion and ensuring universal access to financial services.
Telecom growth has been a cornerstone of this digital surge. As of March 2024, the Telecom Regulatory Authority of India (TRAI) recorded nearly 120 crore telecom subscribers, with internet subscriptions climbing from 88.1 crore in March 2023 to 95.4 crore in March 2024. Notably, close to half of these internet users reside in rural areas, signaling a democratization of digital access. The adoption of 4G and 5G technologies has spurred a 21.69% annual growth in wireless data usage, reaching a staggering 1,94,774 petabytes in the 2023-24 fiscal year.
Economists predict that the digital economy, which constituted 4.5% of India’s GDP in 2014, will account for 20% by 2026. Retail digital payments have already surged by 50.8% between 2017 and 2023, with sectors such as finance, education, healthcare, food, travel, and e-commerce undergoing extensive digital transformation. The Ask Capital report forecasts that UPI will dominate retail digital payments, contributing 90% of the total by 2027.
In a bid to further streamline financial services, the Reserve Bank of India (RBI) is set to launch the Unified Lending Interface (ULI). This initiative aims to simplify credit access, particularly for small and rural borrowers, by enabling seamless data flow between lenders and data providers, thereby reducing credit approval times.
Healthcare and education sectors have significantly benefited from digital initiatives. The Ayushman Bharat Digital Mission (ABDM) is establishing a robust digital health infrastructure, while services like e-Hospital and e-Sanjeevani are making healthcare more accessible and contributing to Universal Health Coverage. The education sector witnessed a digital pivot during the COVID-19 pandemic, with traditional classroom lectures transitioning to online platforms, a trend that continues to evolve.
E-commerce is another pivotal area driving India’s digital economy, with increasing digital payment transactions in rural regions underscoring the sector’s expansive reach. The Ask Capital report anticipates that digital payments in India will hit an inflection point, projected to reach a value of $10 trillion by 2026.
As India continues to innovate and harness its vast pool of talent, the country’s inclusive growth model, supported by government-led digitalization efforts, positions it firmly on the path to achieving a $1 trillion digital economy by 2028. This digital metamorphosis not only promises enhanced economic prosperity but also ensures that the benefits of growth are widely shared across the diverse tapestry of Indian society.
