The increasing number of Internet and broadband connections can give the Indian economy the much-needed fillip by pushing the gross domestic product (GDP) northwards to $100 billion by 2015.
According to a report, Online and upcoming: The Internet’s impact on India, by consulting firm McKinsey, Internet’s contribution to India’s GDP could treble to $100 billion by 2015.
In India, Internet generated 1.6% of the GDP or about $30 billion (in real purchasing power parity terms) in 2011. At present Internet-linked consumption and expenditure contributes to an estimated $ 1.7 billion, or almost 3% of the global economy.
“The GDP impact of the Internet could treble, as the user base and engagement levels grow, and the as-yet untapped SMEs and individual consumer segments benefit from inclusion,” Chandra Gnanasambandam, partner McKinsey and co-author of the report said.
India will be second only to China in terms of citizens using Internet by 2015, as more than 330 million Indians should be connected online by then. India has around 120 million internet users at present.
“India will add more Internet users than any country in the world over the next three years, as average penetration rises from 10% today to 28%- still far lower than the projected global average of 43%. India will also have a unique feature-three out of four new users from India will be mobile-only users. Mobile-based Internet users will form 55% of the total user base in 2015 in India, compared to just 15% in other aspiring countries,” the report added.
Besides, it is likely to create more jobs. With increased Internet penetration, 22 indirect jobs would be created by 2015.
However, the report warned that for Internet's share in GDP to increase, India must follow an inclusive path of Internet expansion. The government must extend rural infrastructure investments in the hinterlands, reduce cost of access to increase Internet usage, increase digital literacy and create favourable business environment for Internet-based enterprises.
Earlier, this year, a report prepared by the Indian Council for Research on International Economic Relations (ICRIER), The Internet and Mobile Association of India (IAMAI) and the Department of IT had said that a 10% increase in internet penetration can increase the GDP by 1.08%. This will help the country add $17 billion annually.
The report had said that the number of internet users goes up, the growth impact of the internet will improve significantly.
