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The State of India’s Digital Economy (SIDE) 2023 by ICRIER-Prosus Centre for Internet and Digital Economy (IPCIDE)

New Delhi, 24th February 2023: Shri Saurabh Garg, CEO UIDAI, today launched the ‘State of India’s Digital Economy Report (SIDE) 2023’ and inaugurated the first annual ICRIER-Prosus Centre for Internet and Digital Economy (IPCIDE) conference in New Delhi.

The day-long conference, a T20 side event, featured discussions on the digital economy of India and cooperative federalism, digital safety and inclusivity and the role of start-ups in promoting India’s digital economy. A T20 panel discussion on DPIPs was also held. The conference hosted an experiential session for exhibiting immersive and other emerging technologies with exhibits by ChatGPT, Parallax Labs, Dassault Systems, NEAR Foundation, and VVDN Technologies.

Releasing the SIDE report, Shri Saurabh Garg said “India’s Digital Public Infrastructure has proved to be an efficient model for delivering digital services and promoting digital inclusion. The SIDE 2023 report is well-timed; it will support the government’s endeavours for building a more robust DPI ecosystem.”

India’s G20 Sherpa, Shri Amitabh Kant, said in the keynote address: “At the G20, we are working in partnership with countries to promote digital public infrastructure to help deepen financial inclusion, improve efficiency of service delivery and solve global challenges by leveraging technology. IPCIDE’s report provides much needed insights into our approach which we can build on in the future.”

The Report has two parts. India’s progress in the digital economy relative to G20 countries has been traced in Part One. For this, the report makes use of indicators better suited for Indian conditions rather than those that facilitate cross-country comparisons usually preferred by global ranking studies. Comparisons across the states are also included in this part.

The ‘Connect, Harness, Innovate, and Protect’ framework (CHIP) proposed in the report has been used for tracking the participation in the digital economy of three key agents, individuals, businesses and governments.

Part One of the report finds that India’s performance stands out compared to its G20 peers on the ‘innovate’ pillar that measures the development and adoption of emerging technologies. The same is also seen in case of the ‘harness’ pillar with impressive pace of adoption of digital technologies and digital services in the country. The ‘connect’ pillar, which is an evaluation of the universality, affordability and quality of access, shows mixed results. Despite the second largest population of digitally-connected people, India still has unacceptably high digital divides across geography, gender and income. While 97% of the total police stations in the country are now connected to the internet, the same is true for less than a quarter of government schools and just over half of government-aided schools. The weakest link in India’s digital transition is the fourth pillar, ‘protection’, which is an assessment of the susceptibility to cybercrime and privacy breaches, and requires urgent policy attention.

Sehraj Singh, Managing Director, Prosus said: “We set up IPCIDE to support people and organizations working at the intersection of technology, economics, and policy to accelerate solutions rooted in Indian economic realities. We hope that the SIDE 2023 report will provide unique insights to policymakers that will enable them to foster a progressive, inclusive, and sustainable digital economy in India.”

Part two contains an evaluation of the benefits and risks of five DPIPs currently in operation in India: Aadhaar, Unified Payment Interface (UPI), Ayushman Bharat Digital Mission (ABDM), Digital Infrastructure for Governance, Impact & Transformation (DIGIT), and the Account Aggregator Framework (AA). Key findings of this section are:

·         DPIPs have been successful in achieving scale, and tend to accelerate inclusion, improve efficiency, and facilitate innovation.

·         Aadhaar has led to an overall savings of INR 2 trillion (GoI) and has brought down costs of verification through eKYC, leading to savings in costs for customer acquisition from Rs. 500 – 700 per person to Rs. 3.

·         UPI is currently the cheapest alternative among available digital payment channels, but this is because of subsidies adding up to almost Rs. 1,500 crores given by the government for offsetting the mandated zero merchant discount rate (MDR).

·         The focus must shift now from technology to the other determinants of success, such as regulation and institutional design, implementation capacity. 

·         The high levels of saturation have not eliminated the risk of exclusion in the Aadhaar-based system for authentication.

·         The current adoption of Ayushman Bharat Digital Mission (ABDM) is driven largely by the public sector in contrast to the Aadhaar enrolment, which was largely led by private sector agencies.

Based on these findings, IPCIDE has recommended a seven-step checklist that follows a project implementation life cycle from identification of the DPI to impact assessment.

Pramod Bhasin, Chairperson, ICRIER said: “By measuring and analysing India’s digital transformation using information that are specifically relevant to the Indian context, the SIDE report is a unique homegrown production that should be of interest to anyone trying to stay up-to-date on India’s rapidly evolving digital economy.”


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