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The History of Internet Growth in Indian Economy

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July 13, 2017 in Economics


Twenty-five years after the economic liberalization, it is the digital India movement that is propelling the growth of the Indian economy. As the number of users is increasing at a rapid pace, the country already boasts of 391 million Internet user base, a number that is expected to grow by 160 million in one year. The country’s average data consumption is estimated to reach anywhere between 7GB to 10GB per user per month. All of the above numbers have an interesting story to tell with respect to the growth of internet in the country.

The Internet Growth Pattern

It was in August 1995, that Videsh Sanchar Nigam Limited (VSNL) officially introduced wired Internet into the lexicology of the Indian population. The speed compared to today’s standards was poor – 9.6 Kbit/s, but it created a path that allows leading broadband providers to offer speeds of up to 100Mbps. Prior to that, it was being used only for education and research purposes by the Educational Research Network (ERNET).

Some Milestones:

1) Hotmail – Sending messages, letter and images in an instant was the brainchild of an Indian entrepreneur which truly set the pace for Internet revolution in 1997. This was made possible with the introduction of ISDN.

2) Google was launched, which allowed the population to search for anything from the comfort of their homes

3) It was in the same year that ICICI bank launched its very first online banking portal.

4) In 1998, Sify became India’s first ISP.

5) In the coming years, Indian Railways launched its online ticket booking portal – the IRCTC, which revolutionized rail ticketing in the country.

Since then, internet has transitioned from its presence in bulky desktop paraphernalia in cyber cafes to sleek laptops and hand-held devices.

Internet & GDP

As the people of India, kept buying new internet broadband connections and mobile data for homes and services, it is understood that it is bound to create an impact on the GDP.

1) In 2013, the internet contributed to 2.7% of the country’s GDP – which was a larger contribution than that of healthcare and military.

2) Internet’s contribution to India’s GDP is also projected to grow from 5% to 7%. Fast internet broadband connections in rural and urban areas offered by the leading providers along with cost-effective plans are seen as a major contributor.

3) eCommerce industry is projected to cross 17 billion in 2018.

4) There will be a surge in digital payment transactions from 30% to 40% by 2020.

5) By 2020, this number is already expected to reach 4%.

The Final Word

Access to internet broadband is now regarded as the catalysts for economic development of any country. Plans started by the Government of India – like Digital India and NDSAP – are also transforming the Indian economy into an even-more, internet-friendly nation. The growing internet broadband penetration in the country is giving birth to newer and better opportunities in sharing information, expanding businesses and enhancing communications. With users and GDP increasing, Internet continues to take mammoth steps in the direction of economic development in India, – giving justice to the Digital India campaign.

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