Reflecting on the nationalisation of banks and the long road to achieving significant financial inclusion, Charan Singh, Distinguished Fellow, SKOCH Development Foundation and Co- Founder, EGROW, highlighted a stark fact – until 2014, nearly half of India’s population lacked access to formal banking. However, the Prime Minister’s mission-mode initiative in 2014 led to a revolution–50 crore unbanked individuals joined the formal financial system, pushing India’s financial inclusion to an unprecedented 97% of households.

Of course, the transformative impact of the JAM Trinity (Jan Dhan, Aadhaar and Mobile) and the rapid adoption of digital banking cannot be denied.

This digital leap, powered by mobile penetration and UPI adoption, set the stage for a broader transformation. As Singh pointed out, “The digital revolution is not just about banking; it encompasses every aspect of our economy, from Make in India to Start-up India.” India’s telecom sector, with over 65 crore smartphone users and expanding 4G and 5G networks, has laid a robust foundation for the digital economy. However, there is need to address challenges like digital trade barriers and the regulatory environment.

Bridging Divides in the Digital Economy

Amitabh Nag, CEO, Digital India Bhashini Division, brought attention to three significant divides—digital, literacy and language—that persist despite the progress made. He shared how the National Language Translation Mission (NLTM), launched in 2021 that aims to bridge these gaps using AI-driven solutions. The Bhashini project leverages artificial intelligence (AI) for text-to-text translation, speech recognition, text-to-speech synthesis and optical character recognition in 22 scheduled languages.

Nag emphasised the mission’s inclusive approach: “No language should be left behind.” By creating over 300 AI models and training them with 24 crore parallel sentences, the mission is not only breaking down linguistic barriers but also fostering digital literacy. The initiative’s voice-first strategy transcends language and literacy divides, enabling users to interact with digital platforms seamlessly.

However, the challenges remain immense. As Nag highlighted, many Indian languages lack sufficient digital data, requiring innovative field-based data collection efforts. Despite these hurdles, the Bhashini exemplifies how technology can be a powerful equaliser, ensuring that India’s multilingual and multicultural fabric is reflected in its digital ecosystem.

Taxation and Regulation in the Digital Economy

Suranjali Tandon from National Institute of Public Finance and Policy (NIPFP) shed light on the complex regulatory landscape of the digital economy. She addressed the global debate on taxing digital giants like Google and Amazon, which often pay minimal taxes despite generating significant revenues across multiple jurisdictions. “The effective global tax rate for these companies was around 2% in 2016-17,” she noted, underscoring the need for a fair and transparent taxation framework.

India has taken steps to address this imbalance by taxing profits generated within its borders, even as this has led to trade tensions and retaliatory tariffs from other nations. The issue remains unresolved globally, but it is felt that the next few years would see countries aligning their tax policies to ensure equitable outcomes.

She also touched on the rise of cryptocurrencies and their implications for transparency and financial inclusion. While crypto-assets offer potential for innovation, they also pose risks related to illegal transactions and regulatory evasion. “Governments, especially in the G20, are keen to understand the source and flow of money in these opaque systems,” she explained. Balancing innovation with robust regulation will be critical as India navigates this rapidly evolving space.

Defining and Measuring the Digital Economy

The challenge of defining and measuring the digital economy remains. Gursharan Dhanjal, Vice Chairman, SKOCH Group, questioned whether the digital economy should be measured by output, innovation or its impact on society. He emphasised on the need for a clear framework, pointing out that traditional metrics like GDP often fail to capture the nuanced contributions of digital transformation.

Dhanjal also highlighted the role of intelligent modeling and indigenous innovation in driving India’s digital progress. He cited examples like the development of semiconductor manufacturing and AI-driven platforms, which fill critical gaps in India’s technology ecosystem. These initiatives not only contribute to economic growth but also reduce dependence on imports, creating a more resilient and self-reliant digital economy.

Balancing Innovation and Inclusion

It is important to ensure that the benefits of the digital economy are equally distributed. Singh cautioned against the “creamy segment” of society disproportionately benefiting from digital innovations, leaving marginalised communities behind. He stressed the need for robust cybersecurity measures and a regulatory framework that balances innovation with protection.

With AI and automation reshaping industries, there is a growing need for reskilling and upskilling to prepare the workforce for new roles. As Singh noted, “Job reorientation is a Herculean task in a country with diverse languages, topographies and contributors to GDP.”

Path Forward

From addressing regulatory challenges to fostering innovation and inclusion, the path forward will require concerted efforts from policymakers, businesses and civil society. The digital economy is not just about technology; it is about its impact on every citizen and every corner of the nation.
By bridging digital divides, ensuring transparency and embracing innovation, India can chart a course toward a more inclusive and sustainable digital future. It should serve as a reminder of the transformative potential of the digital economy and the responsibility that comes with it.