Digital fastest spinning wheel of India's economy

Mumbai: India's digital economy is growing 2.4 times faster than the overall economic growth as technology adoption is pretty strong, said a research paper in RBI's Bulletin.

"India's digital economy grew 2.4 times faster than the Indian economy, with strong forward linkages to non-digital sectors; digital output multiplier has increased over time, highlighting the role of investments to drive growth and 62.4 million (11.6%) workers are employed in the digitally dependent economy," the Reserve Bank of India stated in its bulletin.

The RBI research aims to measure the size of India's digital economy and how it interacts with other non-digital sectors.

As per the research paper, following the Asian Development Bank's 2021 framework, the core digital economy is estimated to be 5.40% or $0.11 trillion of the Indian economy's overall gross value added (GVA) in 2014 ($1.99 trillion), which increased by more than 15% annually in absolute terms to contribute to 8.5% of the economy's GVA in 2019.

"Our estimates are broadly in line with ADB findings," the RBI research paper said. "The rate of growth of the core digital economy was 2.4 times faster than the annual growth rate of the whole economy. The core digital economy prominently acts as a supplier of value-added to the non-digital sectors because the forward linkages are stronger than the backward linkages."

The RBI research paper added that to increase the ability of the digital economy to act as a pull force policies such as 'Make in India', and the PLI scheme that incentivises domestic production, are crucial for India's growth going forward.According to data provided in the RBI paper, a digitally dependent economy was around 22.4% of the overall economy in 2019."While there has been a phenomenal growth of the core digital economy, the size of the digitally dependent economy has not grown at a comparable pace," the paper stated. "This may be because digital innovations impact the economy over a longer term."