States can grow 1% for every 10% new Internet connections

Economies of Indian states can grow 1.08% faster with every 10% increase in Internet and broadband connections, says a study released today by Indian Council for Research on International Economic Relations (ICRIER).

Consequently, for every 10% increase in Internet and broadband penetration, India could potentially add $17 billion to the Gross Domestic Product (GDP), the report said.

"Our first major finding is the existence of a positive and significant coefficient on Internet. The result shows every 10% increase in Internet subscribers delivers on average, 1.08% increase in output," External Consultant at ICRIER and an author of the report Rajat Kathuria said at the Internet and Mobile Association of India [IAMAI] event here.

"Accordingly, Indian states with higher Internet penetration can be expected to grow faster, and by 1.08% points for every 10% increase in the number of Internet subscribers," he added.

The report is based on study impact of Internet at the micro level through 17 case studies across 7 impact areas -- agriculture, health, education, employment, BPOs, community development and others.

"If we attain the targets set by Trai in the National Broadband Plan then India can generate an additional $87 billion in GDP during the period 2012-2014," Katuria said.

On the impact of increasing mobile penetration, the study says 10% increase in mobile can deliver on an average 1.5% increase in GDP.

"With every 10% increase in mobile penetration growth of 1.5% in GDP is a big number. As per World Bank report, in developed countries 10% increase in broadband penetration brought 1.38% increase in GDP," India's IT and Telecom Secretary R Chandrashekhar said while releasing this report.

He said the report is a measure of changes that people are seeing with increase in penetration of mobile phones and the Internet.

The study has given various recommendation like setting up broadband networks to connect schools, government agencies, hospitals (especially rural telemedicine centres)for achieving growth in economy.

Chandrashkehar said most of these recommendation given in the study are already under implementation.

"This is just beginning. Broadband is next revolution and next decade is going to be far interesting for developments compared to previous decade," he added.