QUES . Can digitization help in bringing inclusive growth in India? What steps should be taken to realize the goal of inclusive growth in the digital economy?
RELEVANCE – UPSC GS MAINS PAPER III ; TOPIC – Inclusive growth and issues arising from it.
ANSWER HINTS:
Digital economy refers to an economy that is based on digital computing and networking technologies like internet, Information Technology etc. Digitization has been the buzzword of 21st century with focus on digital economy.
How the digitization promotes development?
Digitization through Internet connectivity promotes development by three main mechanisms:
inclusion, efficiency and innovation.
• More and more people can be included into the mainstream through digital means. Like M-Pesadigital payment system has brought financial inclusion and Ali Baba’s business –to –business e commerce model has integrated many small and medium enterprises,Aadhaar are all examples of inclusion, efficiency and innovation.
• For businesses, the internet promotes inclusion of firms in the world economy by expanding trade, raises the productivity of capital, and intensifies competition in the marketplace, which in turn induces innovation. Which in return will further help creating new employment opportunities for large sections of population.
• It enables citizens to access public services, strengthens government capability, and serves as a platform for citizens to tackle collective action problems. Better service delivery in areas of health, education, government schemes for the benefit of disadvantaged section will help in their development and mainstreaming. As India does not suffer from lack of schemes but from their proper implementation, digitization can help.
These benefits are neither automatic nor assured, but in numerous instances digital technologies can
bring significant gains.
Government of India’s efforts in the field of digitization:
Digital India programme: to provide assured access to digital services.
Digitization and rural economy: National Optical Fiber Network to provide digital connectivity all villages and boost village level employment.
Digitization and agriculture: e-NAM is envisaged to benefit farmers by helping them getting better
price of their crops. E-Mandis to provide price information, Kissan Call centers, precision agriculture,
etc. are other methods which can help farmers to be part of inclusive growth.
Digitization and MSME: MSME virtual cluster. Virtual Clusters is a dedicated web-portal which will
enable small businesses located anywhere in the country and the other stakeholders like banks, other
financial institutions, various Government bodies, NGOs, industry experts, consultants and trainers,
academia, research & technical institutions etc. to come together. This will facilitate the stakeholders
to leverage the expertise of each other to their mutual growth and benefit.
Digitization and STs: government has started a web portal to help STs find out the prices of minor
forest produce, a web portal to facilitate equitable access and benefit sharing of the biodiversity will
help STs gain from digitization.
Digitization and Women: women have been selling their produce through e-retail methods, women
SHG have gained significantly from e-retail methods. Through gender digital atlas better targeting of
girl related schemes can be done.
Apart from these mentioned Digitization can bring inclusive growth to North East, SCs, disabled
through various services like financial inclusion, health, education, skill development, etc.
Challenges associated with digitization
Digitization has lead to concentration, inequality, and control
Nearly 60% of world population is offline and thus hampering their participation in the digital economy in any meaningful way. Polarization of labor markets because technologies replacing low skill jobs and augmenting high skill jobs, policy capture by elites because of public sector investment in digital technologies in the absence of accountable institutions and because the economics of the internet favor natural monopolies.
The absence of a competitive business environment can result in more concentrated markets, benefiting
incumbent firms. Not surprisingly, the better educated, well connected, and more capable have received
most of the benefits—circumscribing the gains from the digital revolution.
Therefore there is need to make digitization process universal , affordable, open and safe. This can be done through:
• Regulations: Regulations that promote competition and entry by lowering the barriers to digital adoption, increasing competition through effective regulation and enforcement and tailoring “new economy” regulations to ensure competition.
• Skills for the digital economy: Start early with foundational skills, rethink curricula and teaching methods and develop advanced technological skills and encourage lifelong learning.
• Institutions that are accountable to citizens: Improve informational services and monitoring, strengthen e-government delivery and citizen engagement, deepen collaboration and participatory
policy making.
• Digital safeguards and Developing privacy policies: Digital safeguards needs to be created to secure the large amount of data that has been collected. For example security of data collected through Aadhaar needs to be secured through laws and proper infrastructure.
