A recent Report on Currency and Finance (RCF) by the Reserve Bank of India (RBI) stated that India’s digital economy is poised to constitute a fifth of GDP by 2026 from one-tenth at present.
Key Highlights of the Report:
- The Report on Currency and Finance (RCF) for the year 2023-24’, was released by the Reserve Bank of India.
- It emphasised that digitalisation in finance is paving the way for next-generation banking and improving access to financial services at affordable cost.
- India is at the forefront of the digital revolution, and embraced financial technology (FinTech) by speeding up digital payments.
- It also celebrated India Stack comprising biometric identification, the Unified Payments Interface (UPI), mobile connectivity, digital lockers and consent-based data sharing.
- The digital revolution is galvanising banking infrastructure and public finance management systems covering both direct benefit transfers and tax collections.
- Vibrant e-markets are springing up and expanding their reach and digital economy currently accounts for a tenth of India’s GDP.
- Based on the growth rates observed over the past decade, it is poised to constitute a fifth of GDP by 2026.
- Although internet penetration in India was at 55% in 2023, the internet user base has grown by 199 million in the recent three years.
- India’s cost per gigabyte (GB) of data consumed is the lowest globally at an average of Rs 13.32 (USD 0.16) per GB.
- India 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.
Benefits of India’s digitalized Economy:
- The flagship UPI has revolutionised the retail payment experience for end-users, making transactions faster and more convenient.
- In the digital currency arena, the Reserve Bank of India is at the forefront with pilot runs of the e-rupee, the central bank digital currency (CBDC).
- Initiatives such as Open Credit Enablement Network, Open Network for Digital Commerceand the Public Tech Platform for Frictionless Credit were successful.
- Fintechs are collaborating with banks and non-banking financial companies (NBFCs) as lending service providers.
- 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.
- Loans in the retail segment are being enabled by online payments and innovative credit assessment models with instant disbursements.
- E-commerce is being boosted through embedded finance.
- Digitalisation is changing the way financial institutions operate and interact with their customers and provide financial products and services.
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Frequently Asked Question:
What is the Report on Currency and Finance (RCF) 2023-24?
The RCF 2023-24 is an annual report released by the Reserve Bank of India (RBI) that reviews and analyzes the country’s financial and economic conditions, highlighting significant developments in digital finance and other related areas.
What is the significance of India’s low data costs and high data consumption?
India’s low cost of data at Rs 13.32 per GB and high average mobile data consumption of 24.1 GB per user per month reflect widespread access to and use of digital services, promotes digital economy.
What is India Stack?
India Stack refers to a suite of digital infrastructure components in India, including biometric identification, UPI, mobile connectivity, digital lockers, and consent-based data sharing.