India continues to lead the global digital revolution, achieving remarkable growth in its digital economy and public service delivery. Addressing the conference on ‘Digital Technology, Productivity and Economic Growth in India’ on Wednesday, Reserve Bank of India Deputy Governor Michael Patra revealed that the daily e-transactions for public services have surged by 56% in 2024 compared to the previous year.
Highlighting the impact of digitalisation, Patra stated that Rs 6.9 lakh crore was disbursed through digitally-enabled Direct Benefit Transfers (DBT) under 314 schemes in the financial year 2023-24, benefiting a staggering 176 crore recipients. These DBTs have cumulatively saved the government an estimated Rs 3.5 lakh crore as of March 2023.
‘India is uniquely positioned to unlock new growth avenues with its robust digital public infrastructure, a thriving IT sector, and a burgeoning youth population, including one of the world’s largest AI talent bases,’ said Patra.
Generative AI and Semiconductor Development Drive Economic Growth
Forecasts predict generative AI will contribute $359-438 billion to India’s GDP by 2029-30. The adoption of AI in production processes by Indian firms has increased from 8% in 2023 to 25% in 2024. To bolster its technological advancements, India has also committed Rs 1.25 trillion to develop its semiconductor industry.
Patra noted the pivotal role of the India Stack in accelerating financial inclusion and strengthening public finance systems, covering areas such as direct benefit transfers and tax collections. FinTech innovations are driving digital payments, while vibrant e-markets continue to expand across the country.
The digital economy currently accounts for 10% of India’s GDP, and with consistent growth, it is projected to constitute 20% by 2026.
Banking and Public Infrastructure Reap Benefits
AI-driven innovations have significantly enhanced banking productivity in India. Key advancements include:
- Monthly savings of 14,500 person-days.
- A 25-30% decline in customer acquisition costs.
- Reduction in paper usage by 84 tons.
- Savings of four lakh litres of fuel by customers avoiding branch visits.
- A 40% reduction in wait times at branches.
- Halving of Know Your Customer (KYC) costs through Aadhaar integration.
- Shortening account opening times to less than a day.
Challenges in the Digital Frontier
Despite the progress, Patra cautioned against challenges posed by new technologies, including disruptions to traditional technologies and labour markets, substantial resource investments, potential cyber threats, and ethical concerns surrounding data privacy and misuse.
