Make Internet More Accessible, Affordable and Open to Accelerate Development, says New World Bank Report

May 10, 2016

NEW DELHI, May 10, 2016 ─ At least 8 in 10 individuals in India own a mobile phone and digital technologies are spreading rapidly. With nearly a billion people still not connected to the internet, the opportunities for increasing access to digital technology for creating higher growth, more jobs, and better public services are significant for India, says a new World Bank report.

According to the World Development Report 2016: Digital Dividends, launched in India today, the aggregate impact of digital technologies has fallen short and is unevenly distributed. Therefore, greater efforts must be made by countries across the world to connect more people to the internet to create an environment that unleashes the benefits of digital technologies for everyone.

The report recognizes India’s early success in digital technology when it became a global powerhouse for information services. India is currently the largest exporter of ICT services and skilled manpower in the developing world. The Business Process Outsourcing (BPO) industry today employs more than 3.1 million workers, 30 percent of them are women. In rural India, a three-year awareness program on opportunities in the BPO industry increased women’s enrollment in relevant training programs, as well as school enrollment among young girls, by 3–5 percentage points.

Biometric registration, authentication, and payments in India’s National Rural Employment Guarantee Scheme, the world’s largest workfare program, reduced the time for paying beneficiaries by 29 percent and leakages by 35 percent, a recent survey report estimates. All this has the potential to significantly raise the efficiency of government service delivery.

Apart from increasing access, the report calls upon countries including India to seize these gains by strengthening the analog foundations of their digital economy. 

“The digital revolution is transforming the world, aiding information flow and creating huge opportunities for growth and poverty reduction. India’s Aadhaar program is today a model for many countries and recent initiatives like Digital India has the potential to generate greater digital dividends among all sections of its society,” said Onno Ruhl, World Bank Country Director in India. “However, to reap the full benefits will require affordable and wider access to the internet and skills that enable all workers to leverage the digital economy.”

Even while having the largest number of offline population in the world, India has the third highest number of internet users by absolute number, only behind China and the United States. Moreover, adoption of digital technologies shows great variation within the country: very high for government and relatively low for businesses, especially among small and medium enterprises. 

The WDR metrics of connectivity and complements shows at the end of 2014, India had more than 200 million internet users, compared to 665 million in China. Fewer than two out of every five Indian businesses had an online presence compared to almost two-thirds of firms in China. Total spectrum allocated to mobile communications in India is 288 MHz as opposed to 630 MHz in China. The cost of residential broadband service in India is 6-10 times more expensive than in China.  

Making the internet accessible, open and safe for all Indians must be a priority and is vital to close the digital divides, the WDR says. A supportive policy environment involving smart spectrum management, strong competition policy in the telecom and internet market, public-private partnerships, and smart regulations can go a long way in expanding connectivity and bridging digital divides in India, the report adds.

But greater digital adoption will not be enough. To get the most out of the digital technologies, India also needs to strengthen the `analog foundations’ of its digital economy – by strengthening regulations that ensure competition among businesses, by adapting worker’s skills to the demands of the new economy, and by ensuring that government institutions are accountable.

There is little doubt about the transformative potential of digital technologies. However, they are not a shortcut to development, though they can be an accelerator when used in the right way. Countries still have to build the basic foundations of economic development, but now they can use the internet to achieve them much faster – namely a favorable business climate, strong human capital and good governance,” said Deepak Mishra, and Uwe Deichmann, Co-directors of the report.

Countries that are investing in both digital technology and its analog complements will reap significant dividends, while others are likely to fall behind. Technology without a strong foundation risks creating divergent economic fortunes, higher inequality and an intrusive state, the report concludes. 

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