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Adoption of digital technologies to boost key economic sectors says McKinsey report

March 28, 2019
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According to a report by McKinsey Global Institute (MGI), surveying 600 Indian firms, the widespread adoption of digital technologies across India on the back of increasing internet access could boost key economic sectors by 2025. As per the report, the core digital sectors constitute a large and growing portion of India’s economy and could contribute $355 billion to $435 billion to the gross domestic product (GDP) in 2025.

The report stated that India’s digital economy accounted for eight per cent of the nominal GDP or $200 billion in 2017-18. As per the report, approximately $170 billion value comes from core sectors that already provide digital products and services at scale. Out of this $170 billion, $115 billion comes from the IT and business process management (IT-BPM), $45 billion from digital communication services (including telecommunications) and $10 billion comes from electronics manufacturing (including mobile handsets). The remaining $30 billion comes from early scaling of newly digitising sectors and applications like e-commerce and direct benefit transfers.

As per the report, a sharp increase in the number of smartphones has contributed to the digital growth in the country. Further, the number of smartphones and internet subscriptions is expected to continue increasing rapidly in the next five years. Moreover, India could experience significant economic growth for three distinct sectors and activities, as digital applications are becoming more widespread.

According to the report, India has the potential to add around 275 million internet subscribers by 2023, in order to reach a total of more than 835 million subscribers. This growth would be contributed by digital communication services, which will have an economic value of $50- $55 billion in 2025.

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