Digital economy poised to be 20% of GDP by 2026

MUMBAI: The sweeping digitisation of the financial markets and payments system will drive the country’s digital economy, which currently accounts for a tenth of the GDP, and constitute a fifth or 20 percent of the GDP by 2026 says a report prepared by the Reserve Bank.

Several enabling forces have come together to energise this revolution. Although internet penetration was at 55 percent in 2023, the internet user base has grown by 199 million in the recent three years. Our cost per gigabyte of data consumed is the lowest globally at an average of Rs 13.32 ($0.16) per GB and the country also has one of the highest mobile data consumption in the world, with an average per-user per-month consumption of 24.1 GB in 2023, RBI said in its ‘Report on Currency and Finance for 2023-24′, released Monday.

“It is estimated that the domestic digital economy currently accounts for a tenth of our GDP and going by the growth rate observed over the past decade, it is poised to constitute a fifth of the GDP by 2026,” the report said.

In the foreword of the report, Governor Shaktikanta Das said, “digitalisation in finance is paving the way for next-generation banking; improving access to financial services at affordable costs and enhancing the impact of direct benefit transfers by effective targeting of beneficiaries in a cost-efficient manner.” And the country is at the forefront of the digital revolution, he noted.

The country has embraced not just financial technology by speeding up digital payments but has also celebrated India Stack comprising biometric identification, the unified payments interface (UPI), mobile connectivity, digital lockers and consent-based data sharing, the Governor noted and pointed out that the ongoing digital revolution is galvanising banking infrastructure and public finance management systems covering both direct benefit transfers and tax collections, while the vibrant e-markets are springing up and expanding their reach.

In the digital currency arena, the Reserve Bank is at the forefront with pilot runs of the e-rupee, the Central Bank Digital Currency (CBDC), launched in November 2022 for wholesale and in December of the same for retail, which has already crossed 1 million transaction volume.

The digital lending ecosystem is becoming vibrant with initiatives such as open credit enablement network, open network for digital commerce and the public tech platform for directionless credit, says the report.

Das further said fintechs are collaborating with banks and non-banks as lending service providers. They are also operating platforms to facilitate digital credit, while bigtechs are backing payment apps and lending products as third-party service providers.