The “great lockdown” in the wake of the COVID-19 pandemic has plunged the global economy into the worst economic downturn since the great depression. As of this writing, the novel coronavirus has infected 10 million people globally, claimed the lives of nearly 500,000, and impacted the livelihoods of hundreds of millions, as countries struggle with the grim calculus involved in protecting both public health and economic health.
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.
This lack of readiness is in spite of India’s many recent advances and achievements in bringing digital identity, financial inclusion, and internet access to the masses and deploying the best available technologies to advance the well-being of its citizens. The IndiaStack digital infrastructure—built on the foundations of Aadhaar, “the world’s largest biometric identity,” introduced in 2009 and issued to over 1.25 billion Indians—is, for example, a sui generis accomplishment.
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 such questions at the India’s Digital “Turn?” Unconference, an open-forum interactive event in February 2020, which was informed and inspired by this research. At the event, featured Catalysts—representatives from the global investment community, a philanthropic foundation, India’s leading e-commerce platform, the investment promotion agency of the Government of India, and a global pharmaceutical firm—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.
This report provides a bespoke benchmarking framework as a tool for policy prioritization and action to realize the potential of a digitally enabled India. It 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. We find that benchmarking is an effective mechanism for identifying and evaluating the size of the gaps between one’s performance and the comparable performance of peers both near and aspirational, and this analysis can form the basis for policy prioritization, goal setting, and resource allocation. The approach builds on our 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. 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 Intelligence 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. The questions that guide our benchmarking framework include:
In the spirit of creating aspirational yet realistic benchmarks for this study, in addition to China, we fashioned two mythical nations from peer groups to which India belongs: the Group of Twenty (G20) and the BRICS club. From the latter group, we combined the best attributes—that is, the maximum scores achieved by any one of the four members, Brazil, Russia, China, and South Africa (the “best of BRCS” or just “BRCS”)—as if the benchmark were another country. For the former, we combined the median scores of the G20 members on all the constituent indicators in our model as if the benchmark were another country. While comparisons with China carry some value, given the two countries’ larger geo-strategic context, besting the BRCS would only get India somewhat closer to the goal of a truly inclusive digital economy; the best-performing BRCS member still ranks only 49th on many dimensions of the Human Development Index, so this is at best a stepping stone. The truly aspirational, North Star goal for India is to reach at least the median of the G20 on the disaggregated measures, given India’s above-the-median standing in that group on the aggregate, with China and the BRCS as milestones along the way. In other words, by getting from where it is today on a variety of measures pertaining to the ease of creating digitally enabled jobs to the median of the G20, India would have realized its stated goal of fostering a trillion-dollar inclusive digital economy by 2025.
There are several implications that emerge from this analysis. Our “deep dive” considers how India stacks up against the three benchmarks and informs a set of specific near-, medium-, and long-term recommendations for changes that can move India to the G20 median on all disaggregated measures. The main takeaways and conclusions from our report are summarized below.
This research was supported by a generous grant from The Rockefeller Foundation.