States with higher internet penetration can be expected to grow faster, and by 1.08 per cent for every 10 per cent increase in the number of internet subscribers. So, if Bihar had half as many internet subscribers as in Punjab, it would have resulted in an increased growth of over 7 per cent in the State per capita income, according to a study.
Similarly, States with higher penetration rates show a greater growth with the developed States (having higher per capita income and level of internet penetration) will grow at 2.36 per cent for every 10 per cent increase in the number of internet subscribers, according to India: The Impact of Internet, a study done by the Indian Council for Research and International Economic Relations (ICRIER) sponsored by the Internet and Mobile Association of India (IAMAI) and the Department of Information Technology.
Given the low internet penetration levels in India, it is not surprising to find a lower growth dividend for internet than for mobile (1.08 versus 1.5). Increased internet penetration will add significantly to State level growth demonstrated by the growth impacts seen for the relatively developed States, according to the study.
Internet for social development
Pointing out that internet and broadband are expected to make significant contribution to economic and social development in India over the next 5 years, the study estimates that slow movement of coverage had cost India over 100 billion Dollars in its gross domestic product (GDP) over the past decade. For every 10 per cent increase in internet and broadband penetration, India could potentially add 17 billion Dollars in the GDP, the research has said. Further delay will add such losses, the study says while suggesting that public resources should be applied to increasing levels of internet usage and overcoming demand side obstacles, besides creating a core network of optical fibre throughout the country on an urgent basis.
Further it says that new internet users in India will log on mostly via their mobile phones. Of the 723.28 million access lines, more than 95 per cent are mobile, while fixed access is, in fact, declining. Mobile internet will also be cheaper and more convenient than any other option.
The report also traces the path ways of economic and social impacts for internet at the micro level through 17 cases studies across 7 impact areas: agriculture, health, education, technology, training and employment, e-commerce/BPOs, financial inclusion and community development. These case studies show that internet promotes efficiency on a scale and speed that was previously unimaginable and that the opportunity cost of absence or disruption of access can be very high.
Releasing the report, R. Chandrasekhar, Secretary, Department of Telecommunications said after mobile telephony, broadband was the next revolution India awaited. He said the emphasis was on the providing broadband to 250,000 Panchayats by extending the optic fibre from the district or the block level. For this the government has earmarked Rs. 20,000 crore and established a SPV to execute is. “This is the best example of private public partnership India could have with the government providing the infrastructure and the private sector the necessary content for 175 million broadband connections by 2014,” he said.