With the highest 10% of the population holding 57% of India’s national income as of 2021, India stands as one of the poorest and most unequal countries in the world. Governments and businesses remain in search of the most effective methods to lift Indians out of poverty. Recent research has explored the benefits of demonetization and digitization in India at the individual and government level.

India has come full swing in embracing the digital age, with Aadhaar – the national biometric digital identity program – covering 99.7% of the nation’s adult population as of December 2021. The COVID-19 pandemic has further strengthened the drive to go online, with an increase in sellers on almost all e-commerce platforms. Digitization in India will help the nation make strides in poverty reduction.

Digitization and Improving the Economy

According to McKinsey, “60 million to 65 million [jobs] could be created through the direct impact of productivity-boosting digital applications” by 2025. Furthermore, with more than 10 million businesses brought to a common digital platform through the 2013 Goods and Services Tax Network, digitization is incentivizing businesses to go online, thus, enhancing cooperation and streamlining India’s fragmented and informal marketplace. Outside the commercial world, digitizing sectors such as agriculture, education and health care can create up to $150 billion of incremental economic value by 2025 as it can raise output and save on costs and time.

Digitization and Improving Government Services

Not only can digitization help boost the economy and provide jobs to millions but it can also improve the government services essential to the positive well-being of citizens. To improve urban service deliveries in Andhra Pradesh, the government and World Bank designed AI platforms to monitor municipal services. By using drones and Geographic Information System mapping, the World Bank updated town plans and geo-tagged citizens’ issues with “online visibility” to enhance transparency and hold municipal engineers accountable for resolving issues within a certain time period.

By linking applications for piped water supply to AI, the project also provided new water connections to more than 200,000 homes in 110 municipalities between 2015 and 2019. In this same time period, “revenue from property taxes and water charges more than doubled,” enabling the government to collect sufficient resources for civil projects.

The Downside of Digitization

Despite its promise for socio-economic transformation, digitization has a long way to go in lifting all classes of Indians out of poverty. As access to digital services is still largely reserved for the upper class, those living in poverty remain excluded from the advantages of e-commerce. Therefore, in some ways, digitization may be entrenching poverty instead of reducing it. This problem proves even more serious for Indian women, only about a third of whom have internet access and rely on education as their primary form of social security in 2022.

Hope for the Future

While many Indians are yet to experience the benefits of digitization, Prime Minister Narendra Modi’s Digital India program, launched in 2015, centers around the internet as a utility for all citizens. The program’s goals include “universal digital literacy” and “easy access to a Common Service Centre” for all.

With more efficient government services and more Indians gaining access to the formal marketplace, digitization in India promises a future of reduced poverty.

– Imogen Scott
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