Impact of Digital Infrastructure on Indian Economic Growth.

Introduction

Advancement in Information and Communication Technology since the 20th century has given rise to global collaborations and expansions leading to rise in productivity and overall growth of nations. Digital Infrastructure comprises facilities which enable transparent integration and management of data, programs and equipment which facilitate functioning of Information and Communication Technology. With 5.07 billion people accessing internet according to Digital 2022 October Global Statshot Report (1), channelization, management and storage of data has become of utmost importance. In India, the focus is on development of infrastructure sector of the nation as a strong infrastructure will act as a multiplier of growth for the nation. In order to meet India's aim of reaching a US$ 5 trillion economy by 2025, government plans to spend US$ 1.4 trillion on infrastructure through 'National Infrastructure Pipeline' in the next five years. (2). Along with economic and social infrastructure India also acknowledges the role of strong digital infrastructure to achieve economic growth and stand out in global economy.

Harnessing its digital potential, India with nearly half a billion internet users has taken the road to the development of strong digital infrastructure by introducing DIGITAL INDIA in 2015. Platforms like UMANG (Unified Mobile Application for New-age Governance), BHASHINI, BHIM (Bharat Interface for Money), AAROGYA SETU, Digi locker and various other digital services have flourished and helped India achieve its growth objectives and gain recognition globally. Chart 1 depicts components of Digital India program initiated on 1 July, 2015.

According to neoclassical steady state Growth model of Meade, growth of output is determined by 3 factors; Marginal Productivity, Returns to Scale and Technological Progress. State of steady growth rate is attained at neutral technical progress, constant population growth rate and income growth rate. On similar grounds, Solow presented exogenous growth model drawing base from Harrod and Domar, by giving importance to invention of new technology to achieve growth beyond steady state. Various theories support the relation between growth of information and communication technology and economic growth. Jorgenson and Vu (2007) revealed that IT investment has increased more in industrialized and developing economies than in other regions facilitating economic growth. Matambalya and Wolf (2001) revealed growing mobile phone usage, faxes and other digital tools have positive impact on economic development by using data from 150 companies between 1999 and 2000 in Kenya and Tanzania. The results depicted significant and positive influence of ICT on economic growth.

Review of Literature

Narayana, M. R. (2011) considered growth of postal and telecom services (both public and private), information and telecommunication services and found linkage between telecom services and economic growth in India by estimating changes in telecom GDP. However, Thompson and Garbacz (2011), based on analysis of 43 countries, concluded that mobile broadband has a positive and direct effect on GDP in both high and low income countries, but fixed broadband has an effect no different than zero due to increased reliance on mobile broadband. The study also presents impact of mobile broadband on GDP as depicted in Chart 2. Similarly, Erumban and Das (2016) documented economic growth being influenced both directly (investment) and indirectly (increased labor productivity and total factor productivity) by ICT.

Praharaj, Han and Hawken (2017) considering 100 cities of India concluded that extend of digital infrastructure availability enabled differentiated growth of cities to become Smart Cities. The study revealed that 1 in every 5 households in 100 cities owned a computer with domination in Delhi with 42.5 percent computer owners. Further, 9.8 percent of households in 100 cities have access to internet connection on computer at home. Similarly, Bulturbayevich and Jurayevich (2020) highlighted the importance of shifting to e-payments, creation of digital production to ensure quality, establishing data centers for efficiency resulting in economic growth and enhancement of labor productivity. Similarly, according to Goldbeck and Lindlacher (2021) internet availability leads to urbanization, transition from primary sectors of employment to secondary sectors i.e., contribution of manufacturing sector to be higher than agriculture in regions where strength of internet connectivity is greater. Overall, the study based on 10 Sub-Saharan...