3 years of Modi: Digitisation's success crucial to maximise the impact of reforms

Digitisation holds the key to the success of major reforms initiated by the NDA government.

The government has proposed a slew of reforms, key among them being the drive towards a cashless society, streamlining of government processes, tax collection and enhanced accountability.

That is why India’s technological readiness is critical as it will decide the effectiveness of the proposed reforms.

“The steps taken by Modi government do not create an immediate and strong upside growth but they improve India’s ability to achieve faster over the medium term,” according to a Crisil report.

Over the three years, Digital India, the umbrella project for all digital interactions has grown in a big way. Under the public internet access program, the internet has reached to 40 crore Indian citizens.

The drive to get rural India onto the broadband highway has connected 48,199 gram panchayats with the optic fibre connectivity (OFC) under the Bharatnet campaign. Work is in progress to reach the target of connecting 2.5 lakh gram panchayats by the end of 2018.

Table: The latest progress report on Bharatnet.

In the banking sector, digitalisation of post offices boosted its tie-up with e-commerce giants like Amazon and Flipkart. This played a vital role in bridging the gap between services offered in rural and semi-urban areas. In addition, the availability of 2,505 WiFi hotspots in public domain at 1,227 locations ensured proper connectivity across India.

Several other initiatives like Bharat Interface for Money (BHIM), Unique Identification (UID) for every citizen and launch of antivirus software, M-Kavach, to protect the cyber space has made transactions faster.

However, the tepid response of citizens post the demonetisation deadline has raised doubts on the popularity of the digital payments. The use of digital payments declined soon after sufficient cash entered the market, indicating low approval of digital payments by the public.

Source: CMIE

Nevertheless, the lack of technological readiness may again be a factor behind such a response.

The absence of sufficient technological infrastructure like Automated Teller Machines (ATMs), Cash Deposit Machines (CDMs), Unified Payment Interfaces (UPIs) or core banking facilities added to it.

According to the World Economic Forum’s ranking in technological readiness, India ranks 110th, the worst among its peers. India’s technological infrastructure is poor if looked by the International standards, Crisil said.

The unavailability of resources clubbed with the digital illiteracy adds to the existing inadequacies that the government has to tackle.

In an attempt to formalise India's unorganised sector, the government has succeeded in providing bank accounts to 28.63 crore Indians through the Jan Dhan Yojana and have managed to enroll 114 crore citizens on Aadhaar. However, it still needs to address two factors necessary for running a digital economy -- uninterrupted electricity and internet access.

The availability of electricity is essential for expanding internet or using digital services. Therefore, the lack of uninterrupted electricity and high-speed internet pose severe challenge for the mass usage of digital payments.

In addition, the slow-paced progress in laying down of OFCs is turning down the rate of digitalisation. According to an Infracircle report, the Bharatnet campaign missed its first target to connect one million gram panchayats by March 2017.

A crisil report in May 2017, affirmed the delay stating that optical fibre under Bharatnet has only been laid in 38 percent of gram panchayats so far. The slow progress is a major setback for Modi’s digital drive.