India’s Digital Economy Contributes 11.74% to National GDP in 2022-23, Says New MeitY Report

India Takes Major Step in Measuring Digital Economy’s Impact on Growth and Employment.

The Indian economy has witnessed remarkable digitalisation over the past decade, yet up until now, there has been a lack of credible, up-to-date estimates of the digital economy's contribution to national income and employment. To address this gap, the Ministry of Electronics and Information Technology (MeitY) has released a comprehensive report titled ‘Estimation and Measurement of India’s Digital Economy,’ which provides crucial insights into the role of digitalisation in driving economic growth, employment, and sustainable development in the country.

As digital technologies increasingly intersect with various sectors of the economy, defining and measuring the digital economy becomes a complex task. The report highlights the challenges in applying traditional national accounting systems to the new economy, noting that India, along with other countries, faces difficulties in sizing up the digital economy accurately. Despite this, India has made a significant leap, becoming one of the few nations globally—and the first among developing countries—to adopt the Organisation for Economic Cooperation and Development (OECD) framework to estimate the size of its digital economy.

The report also includes alternative estimates using the input-output approach, as suggested by the Asian Development Bank (ADB), and examines the digital contributions within traditional sectors such as trade, banking, financial services, insurance (BFSI), and education—areas not typically included in the OECD framework.

Key Findings of the Report

• Digital Economy Contribution to GDP: The digital economy contributed 11.74% to India’s national income in 2022-23, equating to INR 31.64 lakh crore (~USD 402 billion) in GDP.
• Digital-Enabling Industry: The information and communication-related services, telecommunication sectors, and manufacturing of electronic components and communication equipment (ICT sector) account for the largest share, contributing 7.83% to Gross Value Added (GVA).
• New Digital Industries: New-age digital industries such as Big Tech, digital platforms, and intermediaries contribute nearly 2% to GVA.
• Traditional Industries with Digital Contribution: The digital share of three traditional sectors—BFSI, trade, and education—accounts for 2% of national GVA, underscoring the deep integration of digital technologies into conventional industries.

The Growing Role of Digital in India’s Economy

The findings of the report highlight the gradual shift of India’s digital economy beyond the ICT industry into almost every aspect of the economy. The significant digital contribution of traditionally non-digital sectors like banking, trade, and education demonstrates the increasing reliance on digital platforms and the digitisation of brick-and-mortar businesses across the country.

The report’s estimates indicate that India’s digital economy is steadily evolving, not just through emerging digital platforms but through a broad diffusion of digital technologies across diverse industries. This transformation is driving productivity and opening new avenues for economic growth.

Implications for Policymakers and the Private Sector

The publication of this report is a pivotal moment for India as it offers critical data to help shape future policy decisions and investment strategies. For policymakers, this is an opportunity to fine-tune digital initiatives, foster innovation, and guide the growth of the digital economy with evidence-based insights. On the private sector side, the report offers clarity on the impact of digitalisation on traditional industries, allowing businesses to adapt and innovate to leverage the full potential of the digital economy.

Conclusion

India’s digital economy is rapidly becoming a cornerstone of the nation’s economic growth. As this report highlights, digital technologies are not only transforming traditional sectors but also fostering the growth of new industries, enhancing efficiency, and creating new employment opportunities. By measuring and understanding the digital economy’s impact, India is better positioned to capitalize on the opportunities of the digital era, ensuring sustainable development and long-term prosperity.