Internet penetration can help raise GDP

CIOL Bureau
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NEW DELHI, INDIA: A 10 per cent increase in Internet penetration in India can increase the gross domestic product (GDP) by 1.08 per cent, says a report released on Thursday by the Indian Council for Research on International Economic Relations (ICRIER).


"Indian states with higher Internet penetration can be expected to grow much faster, and by 1.08 per cent for every 10 per cent increase in the number of Internet subscribers," said ICRIER director Parthasarathi Shome while announcing the findings of the study.

In comparison, a 10 per cent increase in mobile penetration can increase the GDP by 1.5 per cent.

India has over 100 million Internet users, while the number of broadband users as per latest data is just over 13 million. On the other hand, the number of mobile users is close to 900 million.


"States with higher penetration rates show a greater growth dividend. The developed states (with higher per capita income and level of Internet penetration) will grow at 2.36 per cent for every 10 per cent increase in the number of Internet subscribers," Shome added.

According to the report, as the number of Internet users goes up, the growth impact of Internet will improve significantly. Broadband, in fact, has a bigger impact on growth.

The government is targeting an ambitious 175 million broadband users by 2014 and has set aside Rs.20,000 crore (about $4 billion) to implement a National Broadband Plan which will extend an optical fibre network to even the panchayat level.

"Attaining the targets set by TRAI (Telecom Regulatory Authority of India) in the recently released National Broadband Plan could generate an additional $87 billion in GDP during the period 2012-14," according to the survey.

The government had missed earlier targets under the National Broadband Plan 2004, which has resulted in India losing about $100 billion in the GDP in the interim, said Rajat Kathuria, one of the authors of the ICRIER study.