New Research: Digital Light at the End of the COVID Tunnel for India?

New research from Digital Planet explores how India can translate its digital momentum into job creation and recovery from the COVID-19 pandemic. The report, titled “Digital Light at the End of the COVID Tunnel for India?”, provides a bespoke benchmarking framework as a tool for policy prioritization and action to realize the potential of a digitally enabled India.

The report is designed as a blueprint for policymakers and decision-makers tasked with translating the ideal of “digital inclusion for everyone” into “economic growth opportunities for all.” The framework is predicated on the use of international benchmarks as a policy tool. This approach builds on Digital Planet’s recent research from the Ease of Doing Digital Business 2019 scorecard, which measures various parameters of the barriers and boosters to entry, growth, and exit of digital businesses across 42 countries, using 236 variables.

India’s already precarious economic situation at the start of 2020—hobbled as the country was by a combination of lagged knock-on effects of ill-conceived policies like demonetization and a lack of bold ideas in planning for the future—was only exacerbated by one of the most stringent global lockdowns in the second half of March, which brought the economy to a virtual standstill and put over a fourth of the labor force out of work. A phased reopening at the end of May has left the country in the difficult position of fielding a large and growing outbreak while its fragile healthcare system is being pushed to the brink.

India’s state of readiness for socially distant work and business continuity leaves much to be desired. In our recent research on readiness for remote work, in light of lockdowns worldwide, we scored 42 countries on several crucial dimensions: the robustness of key platforms essential to business continuity (technology-mediated remote work, e-commerce, digital media, and digital foundations); the proliferation of digital payments to facilitate transactions; and the resilience of internet infrastructure to traffic surges. Of the countries studied, India fared the poorest.

Equally admirable are the sheer size and scale of India’s digital consumption and economic ambitions. India is already the second-largest internet market, behind China; its 600 million active internet users have been consuming nearly three times as much data on their phones as Americans. It is all but true that “Indians will be data-rich before they become economically rich.” India, furthermore, is unique in its stated aim of achieving a $1 trillion digital economy by 2025, with its digital economy expected to account for a fifth of its overall goal of transforming into a $5 trillion economy over the next five years. The COVID-19 shock has rendered this aspiration all the more bold.

The pre-COVID moment was ripe with possibility. Putting aside the enormous disruptions caused by the pandemic, India, like several economies of the “digital south,” has been experiencing a confluence of several trends: urbanization, a youthful demographic bulge, and the fierce urgency of overcoming immediate physical obstacles to progress. All of these pointed to the potential for a “digital dividend.” With or without the COVID shock, the moment is now for India to forge a pathway for Indians to translate the recent surge in digital uptake and accompanying data affluence into economic well-being and a higher quality of life in this decade.

This brings us to the central theme of this report: the progress that India has experienced in its digital inclusion has not, in any meaningful way, translated into inclusion in the form of economic opportunities. To be sure, this dichotomy isn’t unique to India; large swaths of the digital south are faced with the same inclusion paradox. Can digital uptake be a lever for rebuilding economic momentum and job growth, which will be sorely needed as India attempts to recover from the downturn in the wake of COVID-19?

We posed a similar question at the India’s Digital “Turn?” Unconference, an open-forum interactive event hosted by the IBGC in February 2020 that was informed and inspired by this research. At the event, featured Catalysts—who were representatives from multiple different sectors and industries—led discussions on the structural and infrastructural changes required in the near, medium, and long term for India to realize its digital ambitions. That dialogue with experts informed many of our recommendations presented in this research report. A video recap of the India’s Digital “Turn?” Unconference can be found below. 

The data for this analysis is drawn from over 60 data sources, comprising public databases such as those from the World Bank and the World Economic Forum; subscription services such as GSMA and Euromonitor; and proprietary sources such as Akamai, Chartbeat, and the Private Capital Research Institute. The underlying logic of our framework is inspired by a key rationale that drives the World Bank’s Doing Business survey: reforms create jobs—i.e., the easier it is to do digital business in a country, the greater the job-creation potential of said businesses. The four types of digital platforms in our study—e-commerce platforms, digital media, sharing-economy platforms, and online freelance—serve as both the leading indicators of digital business opportunities, writ large, in a country and the job-creation potential, for high-skilled, low-skilled, and medium-skilled workers, of digital businesses.