Internet-linked services and its penetration will generate $100 billion or 3.3 per cent to India’s gross domestic product (GDP) by 2015 up from $30 billion or 1.6 per cent to GDP in 2011.
And, while it facilitates about six million direct and indirect jobs at present, this could grow to 22 million by 2015. However, for this to happen, India must follow an inclusive path of Internet expansion, management and consulting firm McKinsey & Company said.
According to the report – Online and upcoming: The Internet’s impact on India – done by the company over the last three months, India will be second only to China in terms of citizens using the Internet by 2015.
India would have more than 330-370 million people connected online by then. China is expected to have 583 million people on Internet.
The US, which was at number two with 245 million Internet users in 2011, is expected to be ranked third with 279 million users by 2015.
“Productivity or output per user could grow to 40-50 per cent in India and SMEs that use the Web actively report double the growth in revenues and profits than those who do not,” Chandra Gnanasambandam, Principal at McKinsey & Company, said.
Bigger than education
Looking at the Internet as a sector of the Indian economy, the report’s findings show that it is already bigger than leisure and hospitality or the utilities sector. By 2015, it could be bigger than the education sector, and about the same as the healthcare sector or the mining sector, he said.
However, the impact of the Internet in India is constrained by current obstacles in the ecosystem.
While India scores well on the availability of human and financial capital, it rates poorly on Internet infrastructure, engagement, the e-commerce platform, ease of Internet entrepreneurship and the impact of e-Governance.
“Low-cost, high-speed connectivity needs to be extended to semi-urban and rural India. Today, Internet penetration among India's rural population is just one-twelfth that of the urban population,” Anu Madgavkar, Senior Fellow, McKinsey Global Institute, said.
If India can aspire to an overall 40 per cent Internet penetration by 2015, rural penetration would need to grow by five times. Then, it might cross the target of 330-370 million and reach 500 million Internet users by 2015, she added.