Digital Economy -a leveler or source of Economic Inequality?

A Digital Economy is that economy which uses digital means such as internet, computer, mobile, etc. to
produce and offer various goods and services such as internet banking, online teaching, etc.

Digital economy is essentially a leveler of economic inequality as it helps in achieving efficient use of
scarce resources, thus reducing income disparity and raising overall quality of life in the following ways:

Reducing leakage and better targeting: With the help of digital means such as Direct Benefit transfer
(DBT) and JAM trinity (Jan Dhan account, Aadhar Card and Mobile), Government is able to reduce
leakage in the subsidy and better target the right and eligible beneficiary, thus reducing their overall
economic burden.

Online & Doorstep services: Today, various services can be offered at doorstep such as money transfer,
cash withdrawal, document/certificate preparation, etc. with the help of AEPS, BCs and CSCs, thus
saving time of the beneficiaries which can be utilized in other meaningful economic activities.

Beneficial to Small Businesses and Farmer: Nowadays, farmers can get various services such as weather
forecasting through mobile, can sell their produce at higher prices through e-NAM. Similarly, small and
medium businessmen can sell their goods online through e-marketplace agencies such as Amazon, and
are able to get credit online in less than an hour through psbloan59minutes which will result in more
jobs creation and reduction in inequality.

Access to e-Health and e-education: With the help of internet, it is possible to get access to tele- health
services thus eliminating the need to physically visit the doctor for minor issues. Similarly, even poor
students can get access to quality education through various free and government run platforms such as
PM- eVidya, NPTEL, etc. which will eventually help in raising their earning capability in the long run.

However, India being a developing country faces below mentioned challenges in order to reap benefits
of a digital economy:

Digital Divide: Majority of Indians live in rural areas and don’t have access to high speed internet, mobile
and computers thus causing digital divide among the citizens. Moreover, one-fifth of the population lives
below poverty line who cannot afford monthly mobile expenses.

In December 2017, 65% of urban households had an internet connection compared to 20% in rural india,
according to a 2017 report released by the Internet and Mobile Association of India.

As per Global Findex data, released by the World Bank, 80% of Indian adults now have a bank account.

Therefore, Government must strive towards bridging this digital divide and provide high speed digital
infrastructure specially in rural and hilly areas. Bharatnet project is right step in this direction.

Financial Illiteracy: Financial literacy is a must to avail the benefits of various digital financial services
such as online credit, insurance, investment, etc. However, as RBI’s Financial Inclusion Index,
score…………….Therefore, need of the hour is to make people financially and digitally literate.
Therefore, it can be concluded that Digital Economy is a leveler and very much essential to eliminate
economic inequality and it provides the right channel to achieve zero inequality as envisaged in SDG-10.