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Indias digital transformation

The country can only derive the digital dividend of faster
growth, more jobs and better services by expanding affordable
Internet access to all.
The World Banks recently released World Development Report
(WDR) Digital Dividends provides some answers. The WDR
finds that digital technologies have spread rapidly throughout
much of the world, but their digital dividends the broader
development benefits from using these technologies have
lagged behind.
The contrast with China
At the end of 2014, India had 227 million Internet users,
compared to 665 million in China. Fewer than two out of every
five Indian businesses had an online presence compared to almost
two-thirds of firms in China.
The cost of a 1 Mbit/s residential broadband service in India is 610 times higher than in China. And by most accounts, the digital
divide across age, gender, geography and income within India is
significantly higher than in China. Thanks to its successful digital
ID programme, Aadhaar, India scores higher than China in digital
adoption by governments, but the need now is to use the platform
that Aadhaar provides more widely and effectively.
The slow pace of improvement of the quality of basic
infrastructure expressways, logistics, storage, postal delivery
system and reliable supply of electricity have also hampered the
growth of e-commerce in India. And the excessively cautious
approach of Indian regulators towards disruptive technological
innovations such as mobile money or ride-sharing services has

made it difficult for digital start-ups to enter new markets and

achieve scale.
Making the Internet accessible, open and safe for all Indians is an
urgent priority. The cost of mobile phone access is already low by
international standards. And with a supportive policy
environment involving smart spectrum management, publicprivate partnerships, and intelligent regulations of Internet
markets, the same can be achieved for Internet access. Zero-rated
services for mobile data access have become controversial, though
they could be an intermediate step to fully open and affordable
Internet access for the poorest, provided that the choice of
selecting services is transparent and inclusive.
1. How can we improvise the digital transformation in India?
2. What learnings can be taken from China which has undergone
massive digital transformation?
3. What are the governmental contributions to be taken to
increase the digital revolution in India?

2. Investors lose Rs. 3 lakh cr after stock market rout

In a bloody carnage on Dalal Street, market benchmark Sensex
plunged by 807.07 points on Thursday, its biggest fall in six
months, to settle below 23,000-level after 21 months as fears of a
global slowdown and disappointing quarterly numbers combined
to batter investor sentiment.

Adani Ports, BHEL, Tata Motors, ONGC, Mahindra & Mahindra

and Tata Steel were the top losers.
Cipla and Dr Reddys Lab, however, ended with mild gains.
Among BSE sectoral indices, realty suffered the most at 5.94 per
cent followed by power (4.81 per cent), PSU (3.90 per cent), oils &
gas (3.82 per cent), metal (3.81 per cent), banking (3.81 per cent),
capital goods (3.57 per cent) and auto (3.53 per cent).

1.Who were the top losers in the stock market fall?

3. Why 7.6% growth is hard to square

Questionable changes in methodology and databases

have enlarged the size of the private corporate sector
and contracted the size of the household sector in the
new GDP calculations, rendering the growth projection
Why have the GDP estimates become unreliable after the
revision? To be sure, early on, Indian national income estimates
were not without blemishes. But the revision seems to have
worsened the situation with widely questioned figures. Though
the absolute GDP size for 2011-12 in the new series is marginally
smaller (than that in the old series), its institutional composition
has changed significantly. The private corporate sectors (PCS)
share in the GDP has expanded to 34 per cent now (23 per cent in

the older series); and household (unorganised or informal)

sectors share in the GDP has shrunk to 45 per cent in the new
series (from 56 per cent earlier). How could this happen? It is the
result of changes in methodologies and the databases used.
1. What is the GDP forecast for this year?
2. How is the GDP varying as compared to China?
3. What is the current situation of Manufacturing Sector?
4. Why have the GDP estimates become unreliable after the

Banks balance sheet clean-up imperative for growth, says

Raghuram Rajan
The ongoing clean-up of bank balance sheets will help spur
economic growth and improve the lenders profitability, Reserve
Bank of India (RBI) Governor Raghuram Rajan said on Thursday.
The RBI had conducted an asset quality review (AQR) of banks
and identified specific accounts, which banks have to identify as
non-performing in two quarters, October-December and JanuaryMarch. As a result, bad loans have hit banks profitability in the
third quarter with most of them posting heavy losses.
On the current decline in share prices of banks, Mr. Rajan said:
Part of the reason is that some bank results, mainly public sector
banks, have not been, to put it mildly, pretty. Clearly, an
important factor has been the Asset Quality Review conducted by
RBI and its aftermath.

There are two polar approaches to loan stress. One is to apply

band aids to keep the loan current and hope that time and growth
will set the project back on track, he said. An alternative approach
is to try to put the stressed project back on track rather than
simply applying band aids. This may require deep surgery.