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Informist, Wednesday, Nov. 13, 2024

 

NEW DELHI – Policies will play a pivotal role in unlocking new growth frontiers in the digital age, Reserve Bank of India Deputy Governor Michael Patra said on Wednesday. Productivity gains from digital technology could be far greater if complemented by robust institutions, policies, and skills that support innovation and facilitate technology adoption, Patra said at a Department of Economic and Policy Research conference in Jaipur.

 

"The interaction of digitalisation with economic growth and productivity is a complex one, yet to be unravelled fully," Patra said. "There is no doubt, however, that digital technologies can generate TFP (total factor productivity) gains by streamlining processes, enhancing the synergy between workers and capital, and driving automation."

However, growth enhancing potential of digitalisation and new technologies will need to be utilised judiciously and by balancing risks and rewards if gains are to be increased while minimising disruptions, the deputy governor said. 

 

Policies will have to prioritise expanding the knowledge frontiers, promote competition to reduce market concentration, and efficiently reallocate resources in order to reap in the benefits of digital technology, Patra said, citing a Organisation for Economic Co-operation and Development report. 

 

Within RBI, there are five policy priorities that drive the central bank's engagement, Patra said. These would be digital financial inclusion, digital public infrastructure, customer protection and cyber security, sustainable finance, and global integration and cooperation, he said. 

 

Patra said that digitalisation has helped Indian banks save 25-30% in customer acquisition costs. Indian banks also saw a 40% reduction in customer wait times at branches, 50% reduction in the compliance monitoring time and shortening account opening time to less than a day, thanks to productivity gains from digitalisation, Patra said, citing an artificial intelligence-assisted review of the latest annual reports of Indian banks.

 

The share of the information and communication technology sector in India's total gross value added has increased over time, Patra said. The contribution of information and communication technology capital to output growth, which was 5.0% during 1981-1991, rose sharply to about 16.0% during 1992-2000. Information and communication technology capital's contribution to gross value added moderated to 14.3% during 2001-2010 and further to 10.3% during 2011-2023, the deputy governor said.  End

 

Reported by Shubham Rana

Edited by Deepshikha Bhardwaj

 

 

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