Indian digital economy ranked 28th on user spending: report

Indian users and firms rank well in “harnessing” the technology that they already have access to, the report says. File
| Photo Credit: Reuters

While India is the 3rd largest economy in the world, its “user” economy ranks 28th in the world, a report by the Indian Council for Research on International Economic Relations (ICRIER)’s Prosus Centre for Internet and Digital Economy (CIDE) found. “This means while India as a country has achieved high level digitalisation at the aggregate level, the level of digitalisation for the average Indian remains fairly modest,” the report said.

The density of internet connectivity, which is comparable with other countries, is therefore not as high as the relative size of the digital economy as far as users’ spending is concerned. This stark disparity notwithstanding, the CIDE report says that there is much potential for greater investments to improve investments in digital penetration.

“In fact, India’s digital economy is growing at twice the rate of its overall economy, and is expected to become one fifth of the economy by 2029,” the report says, echoing a similar finding by another ICRIER report released with the Ministry of Electronics and Information Technology in January.

Overall, the report uses a “CHIPS” framework to conclude that while India is the third largest overall economy, and the 28th largest digital “user” economy; it ranks eighth in an ‘overall’ combination of these two ranking systems. The framework uses criteria like access quality, affordability, “data intensity,” the fintech industry, AI readiness, and green energy investments.

Digital ‘harnessing’

Indian users and firms rank well in “harnessing” the technology that they already have access to, the report says. This strength is largely owed to India’s “high [information and communications technology (ICT)] services exports and the third-highest market capitalisation of its IT sector, following U.S. and China.”

Within India, “Southern and Western States are far advanced in digitalisation than the Eastern and Northern States,” the report says.

India overall has a “long way to go,” the report says. “India’s strength in the innovation pillar is reflected through … decentralised finance, a strong start-up culture and high valuations for unicorns,” but “the country lags in relative adoption of Consumer [Internet of Things (IoT)] and metaverse, with scores much below the median score for G32 countries. It also scores poorly in AI infrastructure and slightly below the median in AI research.”