Digital Economy

In News

The Government is working on a comprehensive legal framework for the digital economy. 

Digital Economy

• About: 
  • The digital economy is the worldwide network of economic activities, commercial transactions and professional interactions that are enabled by information and communications technologies (ICT). 
  • It can be succinctly summed up as the economy based on digital technologies.
• 4th Industrial Revolution: 
  • The digital economy reflects the move from the third industrial revolution to the fourth industrial revolution. 
  • The third industrial revolution, sometimes called the digital revolution, refers to the changes that happened in the late 20th century with the transition from analog electronic and mechanical devices to digital technologies. 
  • The fourth industrial revolution builds on the digital revolution as technologies today continue to bridge the physical and cyberworlds.

Advantages of The Digital Economy

• Increased productivity: The digital economy has increased the productivity of businesses as they can now use technology to automate their operations and processes.
• Increased competitiveness: Businesses can use technology to improve their products and services. This has increased the competitiveness of businesses.
• Reduced costs: Digitisation has helped businesses replace manual tasks with automated processes. This has reduced the costs of businesses and has led to lower prices of products and services for consumers.
• Better & Convenient Products: Today, digitised businesses can offer their customers better products and services at lower prices. New business models like e-commerce and m-commerce have made it possible for customers to shop anytime, anywhere.
• Increased employment opportunities: The digital economy has generated new job opportunities as new businesses are springing up. It has also created new job roles spread all over the world.
• Improved quality of life: The digital economy has made it possible for people to work from anywhere in the world. This has improved the quality of life of people as they can now balance their work and personal life.
• Faster transactions: The digital economy has made it possible for businesses to conduct transactions faster as they can now use online payment methods.
• Improved efficiency: Digitisation of processes has helped businesses become more efficient by removing error-prone manual tasks. 
• Innovation: The digitisation of businesses and its processes leads to innovation with respect to not just offerings but also the way businesses operate.
• Increased transparency: The digital economy has increased the transparency of businesses as they can now use technology to share information with their customers.
• Improved communication: Increased connectedness in the digital economy has made it possible for businesses to communicate with their customers more effectively. They now have a number of channels through which they can reach their customers including social media, email, and SMS.

Initiative

• DigiLocker: It was launched in 2015 to create a cloud-based platform to issue, exchange and verify essential documents or certificates.
• MyGov: It was launched in 2014 to bring the government closer to the people by providing an interface (online forum) for exchange of ideas.
• BharatNet: It was introduced to connect all 250,000 Gram Panchayats (GPs) in the country and provide 100 Mbps internet connectivity.
• Smart Cities: It was initiated in 2015 to transform all Indian cities into smart cities by leveraging various technologies.
• Digitisation of Post Offices
• Pradhan Mantri Jan Dhan Yojna 
• Digital India 

Disadvantages Of Digital Economy

• The digital divide: One of the biggest disadvantages of the digital economy is the digital divide. This is the gap between those who have access to technology and those who don’t. This has created a new form of inequality in the world.
• Cybercrime: The increased use of technology has also led to an increase in cybercrime. This is because criminals can now use technology to commit crimes like identity theft, fraud, and money laundering.
• Data security: With businesses collecting more and more data about their customers, there is a risk of this data being leaked or stolen. This can lead to a loss of trust between businesses and their customers.
• Unemployment: The digitisation of the economy has led to job losses in some sectors as businesses have replaced human workers with technology. This has increased unemployment in these sectors.
• Privacy concerns: As businesses collect more data about their customers, there are concerns about the misuse of this data.
• Heavy investments: The digitisation of businesses requires heavy investments in technology. This is a challenge for small businesses which might not have the resources to invest in technology.
• Monopoly: The digitisation of the economy has led to the rise of a few big companies which have become very powerful. This has created a monopoly in some sectors.
• Addictive nature: The digital economy is very addictive in nature. This is because it is designed to keep people hooked on their devices. This can lead to a number of problems like addiction, anxiety, and depression.
• Potential environmental impact: The increased use of technology in the digital economy has led to an increase in the number of e-waste and heavy carbon footprint. 

Way Ahead

• There is a need to leverage today’s emerging technologies, such as IoT and prescriptive analytics, to better connect with existing and potential customers and to be more responsive while also being more efficient and effective.
• To compete in the years ahead, organizations — whether they are for-profit businesses, service-oriented entities, such as healthcare systems, or nonprofit and government institutions — will need both leaders and employees who are able to innovate.
• Become better prepared to explore how best to develop or use emerging technologies or risk being left behind as the digital economy moves forward.

Source: TH