States can grow 1% for every 10% new Internet connections
Economies of Indian states can grow 1.08 percent faster with every 10 percent increase in Internet and broadband connections, says a study released Thursday by Indian Council for Research on International Economic Relations (ICRIER).
Consequently, for every 10 percent increase in Internet and broadband penetration, India could potentially add USD 17 billion to the Gross Domestic Product (GDP), the report said.
"Our first major finding is the existence of a positive and significant coefficient on Internet. The result shows every 10 percent increase in Internet subscribers delivers on average, 1.08 percent increase in output," External Consultant at ICRIER and an author of the report Rajat Kathuria said at the Internet and Mobile Association of India [IAMAI] event here.
"Accordingly, Indian states with higher Internet penetration can be expected to grow faster, and by 1.08 percent points for every 10 percent increase in the number of Internet subscribers," he added.
The report is based on study impact of Internet at the micro level through 17 case studies across 7 impact areas -- agriculture, health, education, employment, BPOs, community development and others.
"If we attain the targets set by Trai in the National Broadband Plan then India can generate an additional USD 87 billion in GDP during the period 2012-2014," Katuria said.
On the impact of increasing mobile penetration, the study says 10 percent increase in mobile can deliver on an average 1.5 percent increase in GDP.
"With every 10 percent increase in mobile penetration growth of 1.5 percent in GDP is a big number. As per World Bank report, in developed countries 10 percent increase in broadband penetration brought 1.38 percent increase in GDP," India's IT and Telecom Secretary R Chandrashekhar said while releasing this report.
He said the report is a measure of changes that people are seeing with increase in penetration of mobile phones and the Internet.
The study has given various recommendations like setting up broadband networks to connect schools, government agencies, hospitals (especially rural telemedicine centres) for achieving growth in economy.
Chandrashkehar said most of these recommendations given in the study are already under implementation.
"This is just beginning. Broadband is next revolution and next decade is going to be far interesting for developments compared to previous decade," he added.
Trai in its recommendations on National Broadband Plan 2010 envisaged provision of 75 million broadband connections in 2012 and 160 million by 2014.
However, as of November India had 13.13 million such subscribers.
The government has recently formed a special purpose vehicle (SPV) to lay optical fibre network across the country for the proliferation of broadband.
Additional Secretary and Universal Service Obligation fund administrator N Ravi Shankar has been appointed CEO of the SPV.