Going into this year’s Union Budget, expectations were high from all sections of society and industry on the impetus required to boost jobs, manufacturing and infrastructure. It is good to see Finance Minister Nirmala Sitharaman’s maiden Budget addresses those issues with a concerted focus on MSMEs, start-ups, digital inclusion, ease of doing business and infrastructure investments. Further, aiming for 100 per cent rural electrification by 2022 and committing to transform the education and banking sector augur well for the economy.
One of the key highlights is the government’s renewed commitment to ‘Digital India’. Already, considerable progress has been made in expanding the reach of digitisation and the internet in the past few years. India now accounts for 10 per cent of the world’s internet user base, the second largest after China, with the world’s highest per capita data consumption at nearly 9 GB per month. With the Budget proposals on expanding rural internet connectivity to bridge the urban-rural divide, creating a payments portal for MSMEs and incentivising digital payments in general — the journey towards a $5-trillion economy is likely to hasten.
But, why is digitisation so important for our economy? For one, it has the power to transform businesses and bring them into the formal economy. Proposals in the Budget such as digitising payments for MSMEs through a payments portal, encouraging cess-free digital payment options for businesses and discouraging cash usage will play a key role in uplifting the business ecosystem in the country by reducing their cost of doing business.
As demand for digital services increase, allied industries such as internet infrastructure, digital payments, internet-based start-ups and logistics, among others, can catalyse these opportunities for growth, job creation and fostering a new league of entrepreneurs.
But more than just being a catalyst for easing business, the digital economy has the potential of ensuring that economic growth trickles down to every citizen. The reach, impact, and real-time access to all citizens, has propelled the government to aggressively work towards building the digital infrastructure in the country. Already, the trinity of JAM (Jan Dhan bank accounts, Aadhar, and Mobile) have ensured equitable distribution of state benefits to the last man in the queue. Presenting citizens the right opportunities and digital access can have a compounding impact on the individual’s growth and also propel inclusive economic growth.
According to the World Economic Forum, a 10 per cent increase in digitisation triggers a 0.50 to 0.62 per cent gain in per capita GDP of any country. Studies show that it also fuels job creation, having a significant impact on the overall economy.
Complementing the efforts on business and economic front, the Budget announced various proposals to boost the education ecosystem with the creation of a New Education Policy to bring reforms in higher education, establishment of National Research Foundation to promote research and innovation and the Study in India programme to attract foreign students. These will play a pivotal role in transforming the education landscape in the country and reaping the benefits of demographic dividend. Innovation remains key growth driver for India.
It was also heartening to see the Budget call for multi-stakeholder participation to unleash India’s true digital potential. The finance minister has stressed on adopting the PPP model to drive growth. It is likely to bode well for the economy if that philosophy is extended across the board from infrastructure, digitisation, regulatory framework and social inclusion. If that happens, this Budget has certainly set us firmly on the path of becoming a $ 5-trillion economy in the next few years.
The writer is CEO, Flipkart