Question

There is a hot wave in India to adopt digital transactions for all economic activities. Discuss the challenges and opportunities for India in this regard

Answer 1

Approach:

• You can start with how the digital revolution changed the structure of the economy.
• How India responded to adopt digital transactions for all economic activities.
• Discuss various opportunities and challenges in different sectors with respect to Indian digital economy

Digital revolution, also known as ‘The Internet Economy’ is generating new market growth opportunities, jobs and become the biggest business opportunity of mankind in recent years. New and emerging digital technologies are changing the way industries and business work. There are many instances where the market is adjusting well to digital transformation. New technologies, customer with new habits and global threats will open opportunities and threats in different sectors.

There is hot wave in India to adopt digital transaction for all economic activities. India as an economy and a community is ready to respond to change and to grasp the opportunities of the digital economy. With Digital India, the government aims to make the country a faceless, paperless, cashless society. It has come up with a six-point formula.

• All cash counters in government offices should put up BHIM-UPI QR codes for accepting digital payments;
• Cash counters can send an indent to customers’ phones to enable payment through UPI;
• Campaign to cover all merchants through BHIM-UPI;
• Getting more vehicles to adopt FASTag;
• All government utility bills to carry a QR code; and
• Push to National Common Mobility Card in metros to cover common transportation needs.

Indian digital economy opportunities:
It is expected that it can improve the Indian economy in the long run by increasing tax compliance, financial inclusion, consequently improving the state of the economy. It can boost the GDP by increasing the availability of funds for lending and also by reducing transaction costs if the economy moves to digital modes of payments.

Other opportunities

1. Removal of Black Economy:
2. Increase in Revenues:
3. Empowerment to People:
4. Paves the way to E-governance:
5. Creation of new jobs:

Indian digital economy challenges: (key words)

• Technologies
• New competitors
• New regulations
• New customers
• New business models
• New global threats
• Data and Privacy
• Internet access and Governance
• Work and Wage effects
• Skill, Capability, Infrastructure gaps
• Policy-making for a Digital era
• Cyber security
• Digital technology is spreading at a rapid pace and so are crimes:
• Digital players have begin to dominate the market
• Digital technologies will change the way work is done

Way forward:
Indian is still at a nascent stage of digital revolution. To be successful, the government needs to continuously re-imagine its services and innovate the way it engages with customers. Public policy is essential to the success of the digital economy Identifying a country’s unique drivers of digital momentum is necessary. Continual digital evolution is the key to succeed.