"Estimation and Measurement of India's Digital Economy"- a report published by the Ministry of Electronics and Information Technology (MeitY) stated that India’s digital economy is projected to grow almost twice as fast as the overall economy, potentially contributing up to 20 per cent of the national income by 2030. The report highlighted the accelerating influence of digital platforms and technologies across the nation’s economic landscape.

Short-Term Growth Drivers

In the near term, the most significant growth is expected to stem from digital intermediaries and platforms. This expansion will be further bolstered by increased digital adoption and the digital transformation of traditional industries. Currently, the digital economy accounts for 2.55 per cent of India's workforce, employing approximately 14.67 million workers in the fiscal year 2022-23. Moreover, it contributes 11.74 per cent to the national income, translating to an impressive Rs 31.64 lakh crore (USD 402 billion) in GDP.

Key Contributors to the Digital Economy

1. Digital-Enabling Industries

Sectors like information and communication services, telecommunications, and the manufacturing of electronic components, computers, and communication equipment collectively contribute 7.83 per cent of India’s gross value added (GVA). These industries form the backbone of India’s digital economy.

2. New Digital Industries

Big Tech companies, digital platforms, and intermediary-dependent firms have emerged as significant players, contributing nearly 2 per cent of the GVA. This category includes businesses that leverage digital platforms for operations, marketing, and customer engagement.

3. Traditional Industries’ Digital Contributions

Traditional sectors such as Banking, Financial Services and Insurance (BFSI), trade, and education are making strides in digital integration. Together, these sectors contribute another 2 per cent to the national GVA, showcasing the growing importance of digital transformation beyond the Information Communication Technology (ICT) sector.

Beyond ICT: The Digital Economy’s Expanding Horizon

The report underscores how digitalisation is transcending its traditional boundaries in the ICT industries. Digital platforms and technologies are now permeating brick-and-mortar sectors, reshaping industries such as retail, manufacturing, and healthcare. This diffusion reflects the increasing adoption of digital tools across all facets of the economy.

Challenges in Measuring Digital Growth

Despite these advancements, the Ministry acknowledged that the report's estimates are conservative. Limitations in data availability, particularly from smaller digital platforms, informal sectors, and traditional industries like health and logistics, have led to an underrepresentation of the digital economy’s true size.

Significance of Accurate Data

MeitY highlighted the importance of accurate data collection to enable informed policymaking and strategic investments. Better insights into the digital economy can help identify opportunities for targeted interventions and support sustained growth. For businesses, understanding digital contributions within their sectors can drive innovation, enhance competitiveness, and inform strategic decision-making in a globalized market. India’s digital economy is set to play a pivotal role in shaping the country’s economic future, unlocking opportunities across industries while driving technological innovation and inclusion.