India's digital economy grew 2.4 times faster than economy in 2014-19: RBI article

India's digital economy grew 2.4 times faster than the economy between 2014 and 2019, generating around 62.4 million jobs, said a paper published in the latest bulletin of the Reserve Bank of India.

In absolute terms, the size of the digital economy has grown from $107.7 billion in 2014 to $222.5 billion in 2019.

In absolute US dollar terms, India's digital economy exhibited a growth rate (compounded annually, CAGR) of 15.62% between 2014 and 2019, while India's economy (GVA) grew annually at a compound rate of 6.59% (as per ADB's IO tables).

This shows that India's digital economy grew 2.4 times faster than the Indian economy itself, said the article authored by Dhirendra Gajbhiye, Rashika Arora, Arham Nahar, Rigzen Yangdol, and Ishu Thakur from the Department of Economic and Policy Research, RBI.

The CAGR of digital GVA as a percentage of GVA is a normalised measure of annual growth.

India's core digital economy (hardware, software publishing, web publishing, telecommunication services, and specialized and support services) increased from 5.4% of Gross Value Addition (GVA) in 2014 to 8.5% in 2019.

"India posted a growth rate of 9.47 per cent. This again suggests that the digital economy GVA for India grew at a rate faster than the economy-wide GVA between 2014 and 2019," it said.

RBI said the views expressed in the article are those of the authors and do not represent the views of the central bank.

The industries with the highest forward linkages from the aggregate core digital economy in 2019 are construction, renting of machinery and equipment, food beverages and tobacco, textiles and textile products, and electrical and optical equipment.

The rate of growth of the core digital economy was 2.4 times faster than the annual growth rate of the whole economy. The core digital economy prominently acts as a supplier of value-added to the non-digital sectors because the forward linkages are stronger than the backward linkages.

"To increase the ability of the digital economy to act as a pull force by spurring innovation, generating efficiencies and improving services, policies such as Make in India, PLI scheme, which incentivise domestic production of computers, electronics etc. are crucial for India's growth going forward," it said.

As per the article, the digitally dependent economy was around 22.4% of the overall economy in 2019.