Internet’s Share in GDP Could Touch $100 bn by 2015

With the number of internet connections and the usage of computing devices on the rise, India’s internet industry can contribute up to $100 billion (about Rs 5.5 lakh crore) to the country’s gross domestic product (GDP) and generate about 22 million jobs by 2015, according to a study. 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, said the report, Online and Upcoming: The internet’s Impact on India, released by consulting firm McKinsey and Co. India has around 120 million internet users at present.

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Internet contributed to 1.6 per cent of Indian GDP, or about $30 billion (in real purchasing power parity terms), in 2011. At present, Internet-linked consumption and expenditure contribute to an estimated $1.7 billion or almost three per cent 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 (small and medium enterprises) and individual consumer segments benefit from inclusion,” Chandra Gnanasambandam, partner at McKinsey and co-author of the report, said. “India will add more Internet users than any country in the world over the next three years, as average penetration rises from 10 per cent today to 28 per cent — still far lower than the projected global average of 43 per cent,” the report said.

India will also have a unique feature—three out of four new users from the country will be mobile-only users. Mobile-based internet users will form 55 per cent of the total user base in 2015 in India, compared to just 15 per cent in other aspiring countries, it said. Besides, it is likely to create more jobs. With increased Internet penetration, 22 million 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 the cost of access to increase Internet usage, increase digital literacy and create favourable business environment for internet-based enterprises.

-Business Standard

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