25/12/2014 8:10 AM IST | Updated 15/07/2016 8:24 AM IST

Why Digital India Is More Than Just Digital Government

Jasper James via Getty Images

In 2006, when the then Prime Minister Manmohan Singh launched India's National e‑Governance Plan the aim was " make all government services accessible to the common man." In August 2014, Prime Minister Narendra Modi articulated a bolder vision. The declared goal for his 'Digital India' initiative is nothing less than " transform India into a digitally empowered society and knowledge economy." The bar has moved higher, and this is not just rhetoric. A tech revolution is sweeping the world--and it has the potential to fundamentally transform India in the coming decade.

McKinsey Global Institute's new research India's technology opportunity: Transforming work, empowering people highlights a set of 12 technologies that will not only rewrite the rules for entire segments of the economy, but also empower people. In other parts of the world, these technologies have already demonstrated potential for large-scale adoption and sizeable economic impact. In India, we estimate that by 2025, the economic impact of a dozen disruptive technologies could be $550 billion to $1 trillion a year.

What are these technologies? First, there are digital technologies, such as the mobile Internet, the cloud, automation of knowledge work, digital payments, and verifiable digital identity. They promise to extend Internet access to hundreds of millions of Indians, provide intelligent low-cost apps, and make it possible to improve delivery of critical services, such as health care and education. The list also includes technologies that will help human beings control the physical world better, such as the Internet of things, intelligent transportation and distribution systems, advanced GIS (geographic information systems), and advanced genomics. Finally, energy-related technologies, including unconventional oil and gas, renewables, advanced energy storage, and efficiency technologies form a crucial part of this set. Indeed without improvements in the energy supply, many other technologies cannot be adopted fully.

Each of this disruptive dozen is promising individually, but when several are employed together, they have the potential to radically alter how things are done. Take India's agricultural sector, which struggles with low yields and a lack of knowledge by small-scale farmers. Advanced genomics and hybridisation are creating drought-resistant and pest-resistant seeds. But when combined with advanced GIS and "automation of knowledge work" technologies (intelligent software that is capable of human-like judgments), farmers can gain expert guidance (delivered by agricultural workers with smartphones or tablets) on where and how to plant different crops on their land, when to water, when to fertilise, etc. The potential increase in agricultural yield when these technologies are used together is much more than any of them could achieve individually.

Before disruptive technologies can improve yields in agriculture or raise productivity across the economy, there are many obstacles to overcome. Adoption of enabling technologies--Internet connectivity, digital payments and verifiable digital identity--must accelerate. The Digital India initiative intends to accelerate the rollout of broadband services to India's villages, create public Wi-Fi hotspots, and shared Internet access. The Reserve Bank of India is attempting to attract new players in digital payments. And Aadhaar (the government's unique identity project) is moving ahead.

India also needs innovative companies to build businesses around disruptive technologies and reinvent how services such as education are provided. Government action alone, for example, will be insufficient to develop computer-based learning systems that adapt to the needs of individual students or equip remote health workers with expert diagnostic systems and low-cost medical devices. Government policies must support innovation in these key areas--and entrepreneurship broadly. A comparable example is India's mobile revolution where supportive government policies and pro-consumer policies by an independent telecom regulator (the 'calling-party-pays' rule, for example, that made local incoming calls free and allowed millions of poor subscribers to communicate via 'missed calls') triggered massive consumer demand, even as liberalised import policies and the entry of global majors created an ecosystem for low-cost handsets. Competition among carriers led to massive innovation throughout the value chain.

The payoff--$550 billion to $1 trillion for India in 2025--is 30 to 50 times the investment planned for the Digital India effort. This does not include the value of the potential social benefits such as bringing health services to 400 million poor Indians. The economic and social dividend can only come with massive private-sector innovation in sectors such as health care, education, agriculture, and infrastructure. The implication is clear: Digital India must encourage, not impede, technology innovators who disrupt conventional models.