India is digitising fast but the pace is leaving many behind

• India is the second fastest growing digital economy according to McKinsey, a management consulting company that analyses decisions in the public and private sector.
• Digitisation of the Indian economy could result in a $435 billion contribution towards the country’s GDP.
• That opportunity is dependent on reskilling the workforce, digital adoption of private companies and the policies implemented by the government.

India is digitising faster than all other countries except one — and it’s not China. Between 2014 and 2017, India has grown 90% in terms of digitisation, second only to Indonesia, which showed a growth of 99%.

In absolute terms, India is still behind most developed nations like South Korea, Sweden and the UK, but its digitisation growth rate creates a $435 billion opportunity by 2025, said a McKinsey’s Digital India report.

With that growth, come 65 million in jobs. But since the nature of work is going to change because of digitisation, a lot of employment opportunities will require new skills. McKinsey estimates that nearly 45 million workers will need retraining and redeployment. The primary reasons for this is that there will be a need for digital literacy across the board and future jobs will require workers to be more skill intensive.

So, it’s not just about the new job market but also about transforming the education system to create effective training programs at the most basic of levels so that the upcoming generation is equipped to fully take advantage of these opportunities.

McKinsey estimates that India’s jobs and skills sector is estimated to grow to $70 billion by 2025, second only to financial services. And the education sector is estimated to grow to $50 billion.

However, that growth could slow down due to ineffective government policies and low private sector participation.


So far, both the public and private sectors have been an impetus to growth of digital consumption. Telecom operators have brought in cheaper data plans and government’s Aadhaar biometric digital identity programme enrolled nearly 1.2 billion citizens.

The firms have gone down the road of digitisation are pulling ahead of their peers at a faster rate.


But, according to the McKinsey report, digitisation in private sector, while rapid, is largely uneven.


It’s not about the size of the business since large firms are ahead of the curve by employing technology at scale, like research into emerging technologies, and small businesses are more accepting of digital payments. It’s more about the level of digital strategy, organisation and capability of individual firms.

Unlocking the digital potential of India’s economy is going to require widespread adoption and implementation. From supply chains to shop floors, McKinsey estimates that the economic value created will be proportional to the extent to which digitisation takes place.

Currently, only 40% of India’s population has access to the Internet and 90% still uses cash as their primary mode of conduction financial transactions. Even when it comes to shopping, only 5% of transactions are conducted online.

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