Macro matters: Digital India

Digitalisation has underpinned the growth of the world’s most populous nation

India, vector flag, virtual abstract 3D object from triangular polygons on a blue background

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India’s growth story since the turn of the century is a familiar one to most investors. The country’s economy has enjoyed a remarkable period of expansion, benefiting from multiple tailwinds including a young and growing workforce, accommodative monetary and fiscal policy and increasing consumerism.

This has resulted in India’s GDP increasing at an average annual rate of 6.2% since 2010, even when accounting for a 5.8% fall due to the Covid pandemic in 2020, according to the IMF. This growth is mirrored from a fund’s perspective, with the IA India sector returning 235.7% over the past decade, according to FE Fundinfo data.

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Underpinning all of this is the rapid digitalisation of the country’s economy. Indian prime minister Narendra Modi’s government launched the ‘Digital India’ scheme in 2015 with three main aims: the development of secure and stable digital infrastructure; delivering government services digitally; and universal digital literacy.

Since then, the state has progressively digitalised its interaction with its citizens by increasing online accessibility to activities such as the payment of taxes and gaining licences and certificates.

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To achieve this, India has invested extensively in digital public infrastructure through the development of the India Stack, a nationwide digital identity, payment and data-management system, which has been instrumental in achieving greater financial inclusion and efficiency across almost all sectors.

One key tenet of digital infrastructure in India is the ‘Aadhaar’ biometric digital ID card, which has played a substantial role in the nation’s rapid development. Although a voluntary system, the majority of the population has been issued with a digital identity, improving access to a range of financial services.

To read the rest of this article visit the November edition of Portfolio Adviser Magazine

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