THE IMPACT OF TECHNOLOGY
ON THE ECONOMIC GROWTH OF
INDIA
According to a recent report by the World Bank, the Indian
economy is set to expand by 8.3 per cent in 2021, 7.5
percent in 2022 and by 2023, India is expected to grow at 6.5
percent. The economic impact of COVID-19 pandemic in India
has been quite disruptive and there has been a setback. The
digital era has brought unprecedented change to technology,
business, society and the situation have started to break the
inertia of digital adoption and cloud will continue to be critical
as part of the evolution. Business across verticals have been
affected from the global crisis, but there are certain industries
which are showing the sign to change the game for the
economy in the years to come.
Industries like healthcare and pharmaceuticals, BFSI, e-
commerce and retail and manufacturing are early adopters of
emerging technologies. Organizations in these industries have
reacted to difficulties introduced by the pandemic and are
focusing heavily on creating strategies in the new normal to
up their game in next five years. The string that ties together
in all the four industries is modern technology and cloud plays
a role to help all these four industries catapult into a game
changer for the Indian economy. New-age technologies will be
giving India a chance to carve itself a unique identity as a
global hub for cloud solutions.
Industry 4.0, Digital supply chain, digital twins, Digital
Assistance etc. are some of the technologies that will help in
the economic revival by 2025. Emerging technologies are
beginning to enable industries to rebuild India’s economic
status in a post Covid world and these industries will be the
real game changers in the time to come. Companies related
to these verticals are embarking on their journeys and
starting from different points to use smarter products,
smarter manufacturing and smarter supply chains. The
smarter organizations are leveraging the huge potential of
emerging technologies to their advantage, and once the
economy bounces back, these companies will be one of the
frontrunners and will capture a bigger percentage of the
market.
Agrees Prasad Rai, Vice President, Global Strategic Clients
Group, Oracle India, “With the Indian economic contraction
since the last year, the economy is looking forward to revive
and many industries in India have shown the potential to be
game changers in the nation’s economic development. The
role of these game-changing corporations is going to be
pivotal for the recovery of the Indian economy post-
pandemic. We have seen that through the pandemic, data
and analytics became increasingly essential. Industries that
had well defined processes based on year of historical data
found themselves at a complete loss since that data was no
longer relevant when everything changed overnight. They
needed to quickly analyze new data and employ artificial-
intelligence and machine-learning to “re-learn” what was the
new normal in customer behavior. On the contrary,
organizations that have invested in digital resources quickly
were much more secure and prepared even as the country
was hit by a huge second wave.”
Prasad Rai observes that the potential game-changers from
sectors like healthcare and pharmaceutical, banking,
manufacturing, and retail and e-commerce have progressive
technologies like modern cloud, AI, ML, IoT, Blockchain, and
big data analytics at the heart of their transformation.
Employment generation has been a highly debated issue in the
Indian context for the last several years. The proponents of new
technologies have been arguing that Indian economy has
witnessed a surge in employment due to recent path breaking
initiatives of the government. ‘Digital India’ movement, among
several such initiatives is expected to result in employment
creation through the use of digital technologies in manufacturing
as well as services sectors. However, there are many who argue
that in fact there has been loss of employment. Although the
government is yet to release all official data on employment,
privately maintained databases such as ‘Prowess’ show that the
average annual growth of employment in consumer goods
manufacturing, financial and non-financial services have
witnessed a growth of 2.50, 18.45, and 1.12 percent respectively.
In view of the divergent opinions on what affected employment in
recent years, the study aims at identifying the factors that
influenced employment in the Indian economy. The specific
research questions of the study are: (i) How technological
intensity in different sectors is affecting employment in Indian
firms, and (ii) The role of sector-specificity in creation/reduction
of employment due to adoption of advanced technologies. The
remainder of the paper is as follows. The review of literature is
presented in Section 2 while Section 3 formulates the
hypotheses. Section 4 describes methodology and data whereas
results are presented and discussed in Section 5. Finally, Section
6 summarises the findings of the study
This study evaluates the impact of change in technology on
output in Indian economy in relation to economic factors which
influence final demand. Development requires technological
changes across the sectors. All such changes are captured by
technology matrix of Leontief model. Each pair of rows and
columns of technology matrices relates to one sector. Rows depict
the pattern and structure of supplies of output of one
industry/sector to the rest of the economy (B to B Business).
Output is also supplied to meet the final demand, which
comprises these: Private final consumption, Government final
consumption, Investments and Exports – Imports. This matrix is
based on inter sector transactions in the economy. The number of
sectors into which the economy is classified is a matter of data
availability and the refinement of the change in technology
matrix. The change in the structure of the economy and hence,
the structure of each sector has a direct effect on the growth of
output. On analyzing demand vector with relation to technology
matrix gives us total output within given technology in an
economy.
Digitization and Industry 4.0 has fast forwarded industries by
10 years, and this is going to be a cause of why India's
sees tremendous economic growth in the time to come.”
This is also true for a sector like e-commerce, which has seen
exponential growth in the past one year.
New technologies could also generate employment if
technological change is likely to result in the creation of new
markets. Emergence of mobile telephony in recent times is a case
in point. Latest technologies might create employment if they
offer improvement in services. The emergence of Internet-
enabled information processing activities in services sector is
another example. The Internet-enabled services such as financial
transactions in the banking sector may be considered as the
realisation of any-where, any-time, and any-one aspect of new
technology. And such technologies not only provide better
services but also create employment in services sector. In view of
these recent technological developments, it may not be so
appropriate therefore to label technological development as
employment reducing.
BIBLIOGRAPHY REPORT
https://www.expresscomputer.in/artificial-intelligence-ai/how-technology-is-playing-a-big-role-in-
reviving-indias-economy/79656/
https://economics.ucsc.edu/research/downloads/Singh_Paper_IGIDR25th_2014.pdf
http://www.ipedr.com/vol18/17-ICERI2011-S00033.pdf
