India's digital output multiplier increases sharply in recent years

India has emerged as a leader in the digital revolution taking place globally but there are few credible estimates on the size of digital economy which hampers evidence-based policy making, according to a RBI research study titled Measuring India's Digital Economy by Dhirendra Gajbhiye, Rashika Arora, Arham Nahar, Rigzen Yangdol and Ishu Thakur. This study tries to fill that void by measuring the size of India's digital economy using Input-Output tables and provides estimates on employment generated by the digital economy.

India's core digital economy (hardware, software publishing, web publishing, telecommunication services, and specialized and support services) increased from 5.4 per cent of Gross Value Addition (GVA) in 2014 to 8.5 per cent in 2019. Including the sectors that have witnessed digital disruptions, the share of digitally dependent economy hover around 22 per cent in 2019.

India's digital economy grew 2.4 times faster than the Indian economy, with strong forward linkages to the non-digital sectors. The digital output multiplier has increased over time, highlighting the role of digital economy investments to drive growth. The employment estimates show that 4.9 million people were employed in the core digital sector. Considering the total digitally dependent economy, around 62.4 million workers are employed in digitally disrupted sectors.

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