Low internet penetration cost India $100 billion in GDP since 2004; 10% increase in penetration to add $ 17 billion annually
BestMediaInfo Bureau | Delhi | January 20, 2012
“India will have 175 million broadband connections by 2014,” said R Chandrasekhar, Secretary, DoT and DIT & Chairman Telecom Commission, Ministry of Communications and Information Technology at the launch of a report titled India: The Impact of Internet at the India Digital Summit, 2012. The report has been jointly prepared by ICRIER, DIT and IMAI. This tentatively translates to 700 million internet users in India vis-a-vis shared connections. The Government has already laid down optical fibre in majority of rural areas, and the rest of the villages in the country will be covered within the next couple of years.
According to the report India stands to add US$ 17 billion in GDP annually for every 10% increase in internet and broadband penetration. Further, an additional US$ 87 billion in GDP during 2012-2014 can be generated if targets are achieved as per TRAI’s National Broadband Plan. However, missing the targets set by the National Broadband Plan in 2004, India lost approximately US$ 100 billion in GDP in the interim. The report shows that States with higher internet penetration can grow by 1.08% points for every 10% increase in the number of internet subscribers. Developing States of India have chances of greater growth dividend than developed States if there is higher internet penetration. E.g., if Bihar had half as many as internet subscribers as that of Punjab, it would have resulted in an increased growth of 7.02% in the State’s per capita income.
The report comprehensively studies impact of internet at the micro level through 17 case studies across 7 impact areas, viz. Agriculture, Health, Education/Training & Employment, E-Commerce/ BPOs, Financial Inclusion, and Community Development. The case studies show that internet promotes efficiency on a scale and speed that was previously unimaginable and that the opportunity cost of absence or disruption of access can be very high. At the same time, the report reinforces the growing power of internet in enhancing efficiency, bridging information problems, expanding reach and allowing speedier redressal of problems.
With India crossing the crucial 120 million (approximately) internet users in December 2011, it is expected to enter a critical period of growth with the possibility of becoming the largest internet using country in the world in this decade. With growing internet base, the convenience of shopping, accessing government services, healthcare, education and financial inclusion, combined with attractive deals will certainly boost the economy.
According to the recommendations of “India: The Impact of Internet” report, internet penetration can witness an exponential growth if broadband has a price point of around Rs. 200. The trigger point in lower price point has been reflected in massive adoption of mobile phones and cable TV. The report also recommends speedy implementation of optical fibre network to reach 250,000 gram panchayats in the next 3 years. If the core network is established, access of internet will become comprehensive. It further recommends that broadband network be established in schools, government agencies including hospitals especially rural telemedicine centres.