Date post: | 09-Apr-2017 |
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Economy & Finance |
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Digital Future of the Indian Economy
Sy BanerjeeAssociate Professor Marketing,
University of Michigan Flint
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CONTENTS
Digitization – Beyond iPhone and Online Shopping The Two Narratives • A: The Shades of Dark and Light (Indian Economy 101)• B: Digitization- Global Patterns Current Day• C. Demonetization, Digitization and Financial Inclusion• D. State of Digitization within India• E. Regulations/ Policy Issues for Future Developments
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A. THE SHADES OF LIGHT AND DARK Population : 1.32 Billion, GDP : $ 2 Trillion +101 Billionaires, 4th highest among nationsFast growing Middle class, Potential $1 Trillion Digital Economy
BUT Only 3.81% pay income taxes
Missing 500 Million?
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The Tax Decline (2008-2016)
APRIL 29,2016
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INCOME DISTRIBUTION &POVERTY
Gross Enrolment RatioMalnutrition age<5
Lack of access to Capital
Cognitive Impairment
Productivity
Sanitation/ Hygiene
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NEED OF THE HOUR:SOCIO-ECONOMIC and FINANCIAL INCLUSION
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B.DIGITIZATION-GLOBAL PATTERNS
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M-POWERING ECONOMIC GROWTH
10% substitution from 2G to 3G -> GDP per capita growth by 0.15 %
100% in mobile data use -> GDP per capita growth by 0.5 %
10% mobile penetration -> GDP per capita growth by 0.15 %
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M-PESA:VOLUNTARY DEMONETIZATIONMobile MoneySending money to a relative in the villageSelling livestock at village marketOr crops after the rainy season Extended financial inclusion to 20 million KenyansClue: Airtime as currencyStarted in 2007 by Vodafone (Funded by DFID, UK)In 2013, 43% of Kenya’s GDP flowed through itWith 237 million person to person transactions
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M-POWERMENT: APPLICATIONSFunction Where, When
Activism and Crisis Management
Tahir Square uprising against Mubarak regime. January 28, 2011 mobile phone networks in Egypt went dead. Ushahidi: Crisis Monitoring Visualizer
Education Nokia + Mxit = MoMath : Mathematics teaching tool in South Africa
Healthcare MAMA, South AfricamUbuzima, RwandaMaternal and child health care
iCow Kenya: SMS and voice service that allows dairy farmers to track their cows gestation, acting in effect as a veterinary midwife. Farmers are also given tips on breeding and nutrition.
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ENABLING DEVELOPMENT & EQUALITY
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C. Demonetization, Digitization and Financial Inclusion
Black-Already digitized for disclosed income sources-Few Key Players, Large Amount of Undisclosed Income-Hold 5-7% of wealth as Working Capital/ Cash Inventory, Rest invested in sectors, offshore Few motives for further digital conversion
Informal Economy -92% of working people (2000)-Distressed categories like Toddy Tappers, Carrier of head loads, - scavengers, drivers of animal driven vehicles, loaders unloaders- Contributes To almost 50% of the GDP
Trade-offs for digitization and Financial DisclosureCost Burden of Govt Regulations,Loss of freedom of operations Lack of financial inclusion, access to capitalDebt Traps – 300,000 Farmer Suicides in 20 yearsAbuse, exploitation and lack of labor regulation/standards(Caste based discrimination)
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D. DIGITIZATION IN INDIAMixed Effects
Demonetization
Formal Sector
(-) (substitution of impulse purchases)
(+) Necessary items(-) Cash on Delivery (almost 70%
of e-commerce in India, 80-90% in
tier II towns
Informal SectorLoss of business and livelihood
Embrace financial disclosure and inclusion
Digital Payments
eMarketer cut growth estimates from 75% to 55%
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VISION OF DIGITAL INDIA
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Rural M-Apps
Disintermediation of Agricultural Produce Trade
Pregnancy/ Maternal health tracking and improvement
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DETERMINANTS OF M-PAYMENT READINESS
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DIGITAL PAY ECOSYSTEM AVATARS
BPCL +ICICI
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E. REGULATORY AND POLICY ISSUES
Medium Term Recommendations to Strengthen Digital Payments Ecosystem, Page 142, GOI-Committee on Digital Payments December (2016)
What are the Govt’s data governance/ sharing terms with private players?- (Example: Cyber Security Law passed by Standing Committee, National
People’s Congress, PRC, November 7, 2016).
What are the relevant Privacy laws?- 43A, IT Act (2000)-Article 21- Implies under Life and Liberty (Kharak Singh vs State of UP)-2015- Centre Attorney General Mukul Rohatgi’s statement: that privacy is not a fundamental right- Sectoral Privacy Laws- RBI
How do we identify and Protect sensitive personal data or information (SPDI)?(SPDI- 72a, IT Act 2008)-Deep history of socio-cultural-religious divides- Future entrant wireless devices: IOT- Lifestyle Data- Health Data
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THANK YOU !