Ministry of Electronics and Information Technology (MeitY) has stated that Indian economy has been digitalising at a remarkable pace over the last decade. Yet, there are no credible and up-to-date estimates on the contribution of the digital economy to national income and employment. Quantifying and understanding the role of the digital economy in driving economic growth, employment, and sustainable development are essential for both policymakers and the private sector. Recognizing the need for this, MeitY has released a comprehensive report titled ‘Estimation and Measurement of India’s Digital Economy.’
This can help align resources and adopt appropriate growth strategies. The cross-cutting and integrated nature of digital technologies makes the concept of a distinct digital economy difficult to define and measure. Moreover, the conventional system of national accounts does not lend itself directly to the measurement of the new economy. The problem is not unique to India. Few countries have attempted to size up their digital economy and even these efforts are works in progress.
With the estimates produced in this report, India will be among a handful of countries, and the first among developing countries, to have used the Organisation for Economic Cooperation and Development (OECD) framework to produce the most up-to-date estimate for the size of its digital economy. The report also provides alternate estimates using the input-output approach advocated by the Asian Development Bank (ADB). The report goes beyond the OECD approach to also include the digital share of traditional industries like trade, banking, financial services, and insurance (BFSI) and education. India’s digital economy is estimated at 11.74% of the national income in 2022-23. In absolute numbers, the digital economy in 2022-23 was equivalent to INR 31.64 lakh crore (~USD 402 billion) in GDP.
Based on the projections in the report, India’s digital economy is expected to grow almost twice as fast as the overall economy, contributing to nearly one-fifth of national income by 2030. In the short run, the highest growth is likely to come from the growth of digital intermediaries and platforms, followed by higher digital diffusion and digitalisation of the rest of the economy. In 2022-23, the digital economy accounted for 14.67 million workers, or 2.55% of India’s estimated work force.
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