India’s Finance Minister Nirmala Sitharaman stated that India’s digital economy is expected to grow to USD 800 billion by 2030. This growth is anticipated to be driven by increasing internet penetration and rising incomes. In her virtual address to the IIT Bombay Alumni Association, she highlighted that India has over 6,300 fintechs, which are spread across different activities such as investment technology, payments, lending, banking infrastructure, and other fields. Sitharaman pointed out that these fintechs are not concentrated in one area, indicating a diverse digital economy.
She mentioned that the digital economy in India was valued at USD 85-90 billion in 2020 and is expected to increase to USD 800 billion by 2030. The rise in internet penetration, increasing income, and a young population are expected to contribute to this exponential growth. The government has made it easier for retail investors to access stock markets through technology such as e-KYC and e-Aadhaar.
Sitharaman added that the number of retail investor accounts has almost doubled, from about 45 million in March 2016 to 88.2 million by March 31, 2021. She referred to a report that stated a 10% rise in internet penetration results in a 3.9% increase in GDP per capita. In her Budget speech earlier this year, she stated that the government is encouraging digital banking, digital payments, and fintech innovations to reach every corner of the country in a consumer-friendly manner.
In her speech, Sitharaman also mentioned that 75 Digital Banking Units (DBUs) will be established in 75 districts of the country by scheduled commercial banks, as proposed in the Budget. She explained that these DBUs may function from one place but serve several districts to promote better accessibility of banking services, affordability, convenience, and provide more control over their finances for customers by offering a one-stop digital banking account or digital banking.
Furthermore, Sitharaman highlighted the success of Unified Payments Interface (UPI), stating that 4.5 billion transactions amounting to transfers of more than Rs 8.2 trillion occurred in February. These figures indicate the widespread adoption and popularity of digital payments in India.
Sitharaman’s address emphasized India’s bright future in the digital economy, driven by increased internet penetration, rising incomes, and a young population. The government’s efforts to encourage digital banking, digital payments, and fintech innovations, coupled with the establishment of 75 Digital Banking Units, are expected to contribute to the growth of India’s digital economy. The success of Unified Payments Interface further underscores the increasing popularity of digital payments in the country.
