Digital Revolution in India Offers Hope for Eliminating Poverty

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SEATTLE, Washington — While India is still home to hundreds of millions of people living in poverty, those numbers are falling fast due to sustained high economic growth that is setting the nation up to be a future world power. The digital revolution in India is playing a large part in the economic change. Despite a long history of income inequality, India is witnessing a growing middle class that is driving new consumer markets and changing the contours of its economy.

Digital Revolution in India

According to a report by McKinsey Global Institute, extreme poverty in India fell from 45 percent in 1994 to 22 percent by 2012 even though there was considerable growth in population. One of the hallmarks of these shifting tides is the digital revolution in India that has been taking hold since smartphones and 4G streaming have become commonplace within its teaming urban centers.

McKinsey reports that there were 200 million smartphone users and 350 million internet subscribers active in India in 2015. This number has only increased to more than one billions smartphone users and 462 million people using the internet currently. This trend is being boosted by significant rural-to-urban migration as poor villagers seek opportunities in India’s cities.

Digital India

Since Prime Minister Narendra Modi was elected in 2014, the Indian government has taken an active role in encouraging digitalization through a range of state initiatives, referred to by Shailender Kumar in the Hindu Business Times as “a slew of digital initiatives [that]will improve governance through e-payments, e-health, digital literacy and financial inclusion.” Modi’s unexpected move to “demonetize” India in 2016 has garnered global attention, which has been attributed to short-term job losses and economic slowdown. However, it also demonstrates a willingness for government leadership to steer India’s digital transformation.

Modi’s government has spearheaded ambitious programs through its Ministry of Electronics and Information Technology that could potentially orientate Indian lives around a digital infrastructure in future years. Digital India is one such example. Digital India is a government program established in 2015 around the key values of making digital infrastructure a “core utility [for]every citizen,” giving citizens the power or digital technology and making government and services accessible through digitalization.

Meghraj, the GI Cloud Program

Among the many programs initiated recently through the Ministry of Electronics and Information Technology, GI Cloud—nicknamed “Meghraj” is one of the more ambitious. The GI Cloud program proposes to create a multi-level, national cloud-sharing infrastructure providing affordable, reliable data storage for all. The cloud eliminates financial barriers and creates economic growth through services, products, offering a much cheaper alternative to owning the expensive hardware required for data storage, which is a powerful incentive for new, businesses, start-ups and non-profit organizations.

Rather than act as a tool for indiscriminate wealth generation, the stated intention of programs like these is to enable those who are not well-off to benefit from access to digital technology and services. According to Minister Shri Ravi Shankar Prasad, programs like Digital India and initiatives like Meghraj are “more for the poor and underprivileged,” and aim to provide digital service to more people who would normally not be able to access the digital world. Accessing digital services can play a huge role in reducing poverty.

Market Changes

Government policy is not the only driving factor of the digital revolution in India. In fact, changes in consumer tastes and behavior lie at the heart of the movement. Recently reported in the Wall Street Journal, India now makes up the largest youtube audience by country worldwide. Moreover, Indians’ prodigious streaming habits win them another number one ranking for monthly data usage, with smartphone users burning through an average of 8.48 gigabytes per month.

Already many are anticipating new market opportunities through India’s increasing streaming activity. KPMG analysts estimate it could spur an increase of the national annual marketing revenue from $2 million to $6 million within five years. Global powerhouses Google, Facebook, Amazon and Netflix are all reportedly vying for a stake in this emerging industry.

Challenges Ahead

As the world’s fastest growing economy, India’s main challenge is to ensure the even distribution of that growth across income levels. Economist Moin Qazi suggests digital technology offers the greatest potential for reducing the gap between wealthy and poor clientele, but warns, “building inclusive digital economies requires the collective action of governments, industry, financiers, and civil society.” While the government appears to be stepping up, how the private sector and global tech companies will contribute to equitable Indian growth remains to be seen.

What is being seen are the positive changes that the digital revolution in India is having on the economic growth of the country. If this continues, India should see a significant decrease in overall poverty rates along with economic growth.

– Jamie Wiggan

Photo: Flickr

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