DIGITAL TECHNOLOGY FOR BETTER INDIA

Millions of Indians hope for a better future, with theyll-paying jobs and a decent standard of living. To meet
these aspirations, the country needs broad-based economic growth and more effective public services.
Technology can play an important role in enabling the growth India needs. The spread of digital technologies, as
theyll as advances in energy and genomics, can raise the productivity of business and agriculture, redefine how
services such as healthcare and education are delivered, and contribute to higher living standards for millions of
Indians by raising education levels and improving healthcare outcomes.

A dozen empotheyring technologies

A new McKinsey Global Institute (MGI) report identifies a dozen technologies, ranging from the mobile Internet
to cloud computing to advanced genomics, which could have a combined economic impact of $550 billion to $1
trillion a year in 2025. The selection of the 12 technologies for India was based on a similar process established
by MGIs earlier work on disruptive technologies.1 For India, they used additional criteria to identify the
technologies that would have a direct impact on the countrys economic and social challenges in the coming
decade. As a result, they include technologies such as electronic payments, which are theyll established in other
parts of the world but not theyll developed in India. By 2025, hotheyver, electronic payments could help 300
million Indians join the countrys financial system.
They group the 12 technologies into three areas: digitizing life and work, smart physical systems, and energy
technologies:

digitizing life and workthe mobile Internet, the cloud, the automation of knowledge work, digital
payments, and verifiable digital identity

smart physical systemsthe Internet of Things, intelligent transportation and distribution systems,
advanced geographic information systems (GIS), and next-generation genomics

energyunconventional oil and gas (horizontal drilling and hydraulic fracturing), renewable energy, and
advanced energy storage

Each of these technologies has the potential for rapid adoption in India bettheyen now and 2025 (exhibit).
Exhibit
To assess the potential impact of the 12 technologies on the economy of India and the lives of its people, they
sized more than 40 applications in six sectors of the economy: financial services, education and skills,
healthcare, agriculture and food, energy, and infrastructure. In the case of the government sector, they analyzed
the potential contribution of e-governance initiatives, such as open data and data-driven planning and other smart
city applications, but did not estimate their economic impact. Often, these technologies are used in combination,
providing a greater impact than any one of them alone. For example, Internet of Things sensors in medical
devices can be used together with the mobile Internet and intelligent systems (the automation of knowledge
work) hosted on the cloud to monitor patients with chronic diseases remotely and to alert medical workers
automatically when the system detects a potentially dangerous situation.
The total impact of the sized applications could amount to $240 billion to $500 billion a year by 2025. Given the
contributions of these sectors to Indias GDP, they estimate that across the entire economy, the 12 technologies
could have a combined economic impact of $550 billion to $1 trillion by 2025.

Financial services. The applications they size could have an economic value of $32 billion to $140
billion a year by 2025. That value arises from improved productivity and higher incomes for citizens
using financial services and from lotheyr costs and reduced leakage in government transfers and
payments. As many as 300 million Indians could gain access to banking services and raise their incomes
by 5 to 30 percent thanks to better access to credit and the ability to save and make remittances.

Education and skills. They estimate that remote learning, massive open online courses (MOOCs), and
other digital systems could have an economic impact of $60 billion to $90 billion a year by 2025 thanks
to higher productivity among a larger number of skilled workers. India could have about 24 million more
high-school and college-educated workers and 18 million to 33 million more vocationally trained
workers by 2025 as a result of digitization in the education sector.

Healthcare. Disruptive technologies could transform the delivery of public health by 2025 through
remote health services and digitally enabled healthcare workers, who can tap expert systems to conduct
basic protocols via smartphones and the mobile Internet. By 2025, the total economic impact could be
$25 billion to $65 billion a year, including $15 billion that could be saved through systems to reduce the
problem of counterfeit drugs. Some 400 million of Indias poor could get access to better care through
technologies that bring medical expertise to modestly skilled health workers in remote areas.

Agriculture and food. Technology applications could create $45 billion to $80 billion a year in
additional value in the sector. More than half of that would come from hybrid and genetically modified
crops, precision farming (using sensors and GIS-based soil, theyather, and water data to guide farming
decisions), and mobile Internetbased farm-extension and market-information services. Electronic
payments and other digital systems, for example, could reduce leakage in the public food-distribution
system, and the use of real-time market data and other information tools would cut postharvest food
losses. These improvements could raise the incomes of as many as 100 million farmers and bring better
nutrition to 300 million to 400 million consumers.

Energy. Collectively, the technology applications they size in energy could have an economic value of
$50 billion to $95 billion a year by 2025, including the impact of the carbon emissions avoided. The
largest benefit would come from smart metering, which could save $15 billion to $20 billion a year by
2025 in reduced transmission losses. Unconventional-oil and -gas development might generate value of
$10 billion a year by 2025.

Infrastructure. India has a widely acknowledged infrastructure deficit that successive governments have
attempted to address. Smart highway systems and electronic tolling can reduce road-travel times by 10 to
15 percent. Radio-frequency identification (RFID) tags and other tracking technologies can raise the
efficiency of ports and warehouses by 50 percent. Sensors could help reduce water-system leakage by 15
to 20 percent. In construction, modern methods such as the use of pre-cast parts and project-management
systems could help save $12 billion to $18 billion a year in costs by 2025 and help India build ten million
affordable homes. Together, infrastructure technologies can contribute $30 billion to $45 billion a year in
value by 2025.

Government services. India has made a good start with its national e-governance plan, but it can take
additional steps to capture the full potential of technology over the next decade. Reengineering core
government processes to simplify them and integrating multiple services on technology platforms are
important next steps. Government can also help new businesses and business models prosper through its
open-data initiatives. In addition, it can help accelerate the build-out of fiber-optic backbones, which will
be critical for spreading the mobile Internetitself the foundation for many applications in other sectors
of the economy.

To capture the full potential value of these technologies, India will need to address barriers such as its limited
telecom infrastructure and a lack of computer literacy among Indians. In addition, policy makers can create an
environment in which these technologies flourish by adopting appropriate regulations that protect the rights of
citizens and by helping to foster an environment for innovation. Government can encourage the growth of tech
industries and applications by supporting efforts to create standards and can help entrepreneurs scale up ideas
into major companies through reforms to regulatory systems. Finally, India can raise its investment in research
and development, which in 2010 was 0.87 percent of GDP, compared with 1.7 percent in China and 3.36 percent
in South Korea.

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