Infotech dividend: Going digital could boost India’s labour productivity

Subscribe to enjoy similar stories. One of the most famous quips about India that has long held good is British economist Joan Robinson’s “Whatever you can rightly say about India, the opposite is also true." A telling example is the contrast between our high position in the world’s GDP league table, where we rank third in terms of purchasing power parity, and our abysmal 119th spot when it comes to per capita income. But one measure on which we have unanimity, even among argumentative Indians, relates to the rapid adoption of digital technology.

From a country that had one of the world’s lowest tele-densities not so long ago, we are more connected today than people in most other countries. According to the latest State of India’s Digital Economy report of Delhi-based Indian Council for Research on International Economic Relations (Icrier), based on aggregate levels of digitalization, as measured by its new CHIPS framework, India is now the third largest digitalized economy. We trail China and the US, but are ahead of South Korea, the UK and Singapore.

Unlike many countries that relied on fixed-line telephony and broadband access, India has charted a unique course by riding on the world’s second-biggest mobile and internet network by number of users. Few countries, says the report, see such high data traffic per smartphone. A major reason for this, doubtless, has been the low cost of mobile internet access in India.

While that is good news, what’s better still is the impact that going digital could have on our labour productivity levels. One of the big bugbears in our development process has been how poorly we fare on this measure of the efficiency of labour in producing goods and services. This is partly a consequence