Digital finance in India will boost gross domestic product by $700 billion and will be instrumental in creating 21 million new jobs by 2025. This finding came in the report, titled ‘Digital finance for all: Powering Inclusive Growth in Emerging Economies’, September 2016 given by McKinsey Global Institute. This report is first to quantify the full economic impact of digital finance over all emerging economies.
Digital finance is financial services delivered through digital means such as mobile and internet. Using this mode implies less use of cash and utility of traditional bank branches. Mobile phones, computers and cards used over point-of-sale (POS) devices link individuals and businesses to a digitized national payments infrastructure, enabling seamless transactions across all parties, as mentioned in the MGI report.
For India, the report emphasized that nearly two-third of rise in GDP is obtained from improved productivity of businesses due to digital payments and one-third is derived from the additional investments made by micro, small and medium-sized businesses.
MGI report estimated that - Indians lose more than $2 billion a year because they feel it takes time to travel to a bank. Also, up to 53% of Indians above the age of 15 still do not have a bank account as many don’t have access to appropriate savings, credit and insurance products and many do not use accounts actively.
Source: ‘Digital finance for all: Powering Inclusive Growth in Emerging Economies’, McKinsey Global Institute report - September 2016