Digital Economy Defined
The concept Digital Economy in
the recent past as gained a lot of momentum. It has changed the picture of the
whole economy and has emerged as one of the main factors for boosting the
financial system of any country. People are more relying on the plastic money
or e-money where the actual cash is not required and more easily and
conveniently people can spend the money. Thus, increasing financial and digital
literacy alone will not be enough. Some things are better addressed through
regulation. If there are things that are clearly negative for the consumers,
then they don't need to exist. The global revolution in mobile communications
is creating opportunities to connect poor households to affordable and reliable
financial tools through mobile phones, and other digital interfaces.
The digital economy is referred
to an economy that is based on digital computing technologies. It is also
termed as internet economy. The three main components of the ‘Digital Economy’
– e business infrastructure, e business and e-commerce. The Internet Economy or
Internet of everything is expected to generate new market growth opportunities,
jobs and has the potential to become the biggest business opportunity for the
mankind in next 30-40 years.
Evolution of Digital
Economy
The digital economy is
continually evolving. First fueled by the growing use of personal computing
devices, enterprise computing capabilities and internet access, it is now being
driven by more advanced digital technologies, notably wireless networks, mobile
devices, positioning technologies (i.e. GPS), embedded sensors and real time analytics.
Economists say the growing use of these technologies, coupled with the
increasing use of digital technologies is conventional commercial environments,
is blurring the distinction between the digital economy and the traditional
one.
However, the digital economy is
not simply about moving business transactions from face to face to online. The
digital economy is about transforming the many facets of business interactions
and transactions and also enabling economic innovations. For example, the
digital economy both is enabled and has given rise to the advent of new digital
currencies and payment processes, for example Bitcoin and the digital wallets.
Benefits of Digital Economy
There are numerous benefits for
digital economy. This has been identified by organizations all over the world
including governments of many developed and developing countries, who have made
conscious efforts to digitize the economy to improve the efficiency of tedious
governmental processes as well as provide convenience to citizens.
It is seen that people around the
world rely on mobile communication, internet access and social media for
interaction with each other, sharing information and obtaining new knowledge
and services, while governments and businesses increasingly prefer the internet
for disseminating information, delivering services, communications, marketing
and doing business in general. As per the World Development Report 2016, the
digital technologies in many instances have boosted growth, expanded
opportunities, and improved service delivery. Digital technologies have the
power to deeply transform the economy as a whole and across various sectors. It
is being observed that the more efficient use of digital technologies is a key
driver for a more competitive economy, growth and jobs.
As technologies continue to
develop rapidly, so does their user friendliness. Gadgets these days are easy
to handle and use superior technologies and software at lower costs. Thus, a
digital economy is efficient, cost effective as well as convenient.
Prospects in India
India is currently in the midst
of a large effort to modernise its financial services and move individuals into
electronic financial space. The year 2017 is an important milestone and will
mark the transition from a cash economy to a less cash and a digital economy.
Goldman Sachs predicts that India - comprising 15% of the world population,
with a growth rate of 7 to 8%, could be the second largest economy by 2030.
India’s new leadership considers the digital economy as a major growth enabler.
The Department of Electronics
& Information Technology of India published Internet of Things policy
estimating IoT industry in India grow up to INR 940 billion, by 2020. Focus
areas include agriculture, health, water quality, natural disasters,
transportation, security, automobile, supply chain management, smart cities,
automated metering and monitoring of utilities, waste management, oil and gas.
The Aadhaar innovation is India’s
singular contribution to accelerating development in the social sector through
biometric technology. Lauding it in its World Development Report for 2016, the
World Bank said, “A digital identification system such as India’s Aadhaar, by
overcoming complex information problems, helps willing Governments promote the
inclusion of disadvantaged groups.”
However, there are several
challenges peculiar to India that may constrain a full-scale digital transition
in the foreseeable future. On the surface, this transition may not appear to be
profoundly deep. But as it pans and plays out, the tectonic shift will have
much wider implications and the policy executioners will have to contend with a
diversity of exponential societal
changes. The race to go digital cannot be turned into a marathon sprint. India
culturally believes in cash and a paradigm shift in thinking will need time and
resources. It will actually involve a migration to new social and cultural
patterns and habits. In a way, it is more of a cultural-economic revolution.
The new revolution will have
better chances of success if it is driven less by financial punditry and more
by empathetic governance. People take to new technologies when they see clear
benefits, have greater confidence in the markets and services, find it convenient and can afford
it. The painful reality is that providers too often focus on short-term
incentives at the expense of long-term consumer trust and loyalty.
Increasing financial and digital
literacy alone will not be enough. Some things are better addressed through
regulation. If there are things that are clearly negative for consumers, then
they don’t need to exist. But changing the financial framework is also not
enough. Consumers will have to walk that extra mile if they want to reap the
harvest of these new financial tools.
Building inclusive digital
economies requires the collective action of Governments, industry, financiers,
and civil society. Before speeding ahead, we need to build the infrastructure,
align the policies, and create the tools that will enable the poor to
comfortably board the digital train.
When we design solutions that
recognise all as equal partners, we have a real chance of making it to the
goalpost. Each society is at different stages of the digital financial
inclusion and the necessary solutions and interventions must be appropriate for
the cultural and economic context.
By respecting the cultural
outlook of the people and embracing their concerns we enlist their support, and
that is what paves the way for lasting and sustainable success.
The drastic digitization over the
past few years has indeed affected almost every sphere of our lives. One of the
most recent effects has been the move towards a cashless economy in India.
Starting with the note ban in November, 2016 due to the sudden withdrawal of
the notes of INR 500 and INR 1000 denominations from the economy overnight, the
Indian economy had gone cashless, least paper transactions will be involved,
substituted by more digital transactions with the help of internet banking,
digital wallets, Point –of-sale machines, credit and debit cards etc.
Conclusion
The digital economy is
characterized by the digitization of many products and services and by the use
of Internet and other networks to support economic activities. Such
computerization changes the manner in which business is done and considerably
improves economic activities and competition. Digital economy or the internet
economy is increasingly influencing our social and economy activities and even
the way we live. The internet and its accessory activities including Information
and Communication Technologies have given birth to new products, services,
jobs, enterprises and even markets.
For a populous country like India,
any future strategy for financial inclusion will call for technology to reach
the bottom of the pyramid. In essence, the future for digital economy is
limitless, and as long as it enhances the way of the global community, it will
be a successful economy for decades to come.
For More Detail:
Download
