International Journal of Trend in Scientific Research and Development (IJTSRD)

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ISSN No: 2456 - 6470 | Conference Issue – ICDEBI-2018

Impact of Digitalization on tthe

ABSTRACT I. INTRODUCTION
Digitalization or digital transformation is more than India is the fastest growing economy in the world.
just adopting cloud, social, mobile or big data The Indian economy is the seventh largest economy in
technologies. It is about using technology to create
new values or change the business model. Digitally the world measured by GDP and third largest by
transformed businesses typically create an ecosystem Purchasing Power Parity (PPP) after US and China.
where all market participants and consumers The Indian economy has seen a lot of changes from
participate. 1st July, 2015 is a day when an initiative being self-reliant
reliant to opening its door for global trading
was being taken by our honorable Prime Minister by allowing LPG(Liberalization, Privatization and
Narendra Modi towards “making India Digital”. The Globalization) in 1991 under the then Finance
campaign aimed to connect rural areas with high Minister Dr. Manmohan Singh. And since then there
speed internet network and to improve the digital is no seeing back. According to the latest Economic
literacy. Indian economy is growing at a fast pace that Survey 2017-18,18, the Indian economy will continue to
requires the people to be financial literate to take grow more than 7 per cent in 2018-19.
2018 According to
judicious
us decisions. After this digitalization, the Fitch Ratings Agency, India's Gross Domestic
financial transactions have to be done through Product (GDP) will likely slowly accelerate to 8 per
internet. So, Digital financial literacy is gaining cent by FY 2018-19, 19, driven by the gradual
importance. This paper analyses the importance of implementation off structural reforms, higher
financial literacy in today’s world. The finding of the disposable income and improvement in economic
study will identify the obstacles in the execution of activity. The recent steps of the Indian government
various programmes to make India financial literate have shown positive results in the growth of the GDP.
and strategies to execute these policies effectively and According to a Goldman Sachs report released in
efficiently. There are some financial services September 2015, India could grow at a potential 8 per
providers that have taken on a back seat approach an and cent on average during from fiscal 2016 to 2020
observe the developments in this digitalization space. powered by greater access to banking, technology
This is probably a safer approach given the risks and adoption, urbanization and other structural reforms.
costs involved. On the other extreme end, there are
also financial service providers who have yet to The 1990s also saw the entrance of technology in
embark on any digitalization strategy. Howev
However, this India and people were introduced
introdu with the use of
does not mean they will not be able to leapfrog ahead personal computers and gradually the automation took
once they have strategized their digital strategy. every sector by storm and now we can see the virtual
world that exists and anything can happen in it from
KEYWORD: Indian economy, Digital India, uniting the world to initiate a war if not handled
Financial literacy, Financial System properly. But in a developing
ing country like India the
process of digital soundness has been slow and got a
huge push to go digital when the demonetization

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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
shook everyone. Although there have been various the problem. Sources for the secondary data are
initiatives taken by our Honorable Prime Minister Mr originated from the various sources like special
Narendar Modi such as Make In India, Swatch Bharat investigation team report, newspaper and Reserve
Abhiyan, Digital India etc. But it was during this bank of India (RBI) websites.
money crunch when people started recognizing the
benefits of being digitally sound and how useful it is. Digital World and Digital India:
India
Our government has emphasized ongoing cashless as In the Global Information Technology report 2017
it will make transactions smoother and transparent published by World Economic Forum India Ranked at
and eliminates the existence of parallel economy 91stposition in Network Readiness Index among 139
which poses threat to the peace in our country and countries slip down by 2 positions in the overall
also helped in their financial inclusion plan and has ranking. The change is marginal but this drop is an
seen that demonetization has made the accounts indicator of our slower pace than other countries. In
opened under Pradhan Mantri Jan an Dhan Yojana the overviewew given the World Economic Forum, the
operational. As rightly said by Rajat Gandhi on lack of infrastructure (based on which it is ranked
financial inclusion “No matter how many banks may 114th) and low levels of skills among the population
open and how many boots you have on the ground, if (101st) remain the key bottlenecks to widespread ICT
the person does not know about the financial options adoption, especially in terms of individual usage
that are open to him, policies, schemes and financial (120th). A third of the Indian population is still
instruments will mean little. It is important for a illiterate (95th) and a similar share of youth is not
person to know what to look for and only then think enrolled in secondary education (103rd). India’s
of the benefits that he can obtain from it. ” Thus this performance in terms of providing online services and
makes the financial literacy all the more important. allowing e-participation
participation has so far been in line with
Financial inclusion is a quantitative
ntitative term and financial thatt of peer countries, but not the global best. Only 15
literacy is more about the quality. Financial literacy out of 100 households have access to the Internet and
focuses on the understanding one should have to how mobile broadband remains a privilege of the few, with
to use and manage the money efficiently and reduce only 5.5 subscriptions for every 100 people. This is in
the risk and save their money from environmental spite of the fact that affordability has
h long been one of
changes such as changes
ges in the economy, inflation etc. the strengths of the Indian ICT ecosystem, with the
With the demonetization people have also realised country ranking 8th this year in this area. There is a
how important it has become for them to know about deep divide that persists between well-connected
well
their money and what affects it the most and how they metropolitan hubs and remote rural areas, where even
can protect. During this phase digital awareness has the most basic infrastructure re is insufficient. The
also gained importance
mportance and people are also willing to Digital India initiative started by our honorable Prime
learn the new modes available for them to manage Minister Mr. Narendra Modi is one of the necessary
their money in the cashless way. During this time the steps needed for our economy to compete with the
online payment options have helped people to survive digitalization transition going on around the world
the cash crunch they faced and have also become the and aims to close the gap p by fostering investment in
driving force for digital literacy and financial literacy. digital infrastructure, improving digital literacy, and
increasingly providing online services to citizens.
II. OBJECTIVE OF THE STUDY
1. To understand the obstacles in the path of
digitalization and the economic growth.
2. To understand how every step taken towards
financial literacy is affected by various factor
factors and
how they are interrelated and interdependent.
3. To understand the requirement of financial
literacy.

III. RESEARCH METHODOLOGY

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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
on the basis of its impact on the he government, on the was issued free of cost with 4GB 4G data just by
economy and the society. We have seen a major submitting the photocopy of Aadhaar card and IMEI
change in every sector with the emergence of no of your 4G or LTE or VOLTE enabled handsets
digitalization. The digitalization has created new job and after the end of March 2017 at a price lowest of
opportunities, have led to innovation in very sector all other service providers.
and also led to the growth of the economy
conomy i.e. have Digitalization and Demonetization:
Demonetizatio
helped in the GDP growth of the country. The Digitalization transition through Digital India
government has emphasized on the digitalization as it Programme aims to provide the much needed thrust to
brings transparency, better control, better job the nine pillars of growth areas, namely Broadband
opportunities, it also provides an ease of access to the Highways, Universal Access to Mobile Connectivity,
people and an upward movement in th their quality of Public Internet Access Programme, e-Governance:
e
life. The study conducted by Strategy
Strategy& (formerly Reforming Government through Technology, e-Kranti
e
known as Booz and Company)) Shows that the - Electronic Delivery of Services, Information for All,
increase and effective utilization of digitalization can Electronics Manufacturing, IT for Jobs and Early
increase their GDP. They analyzed that constrained Harvest Programmes. Every pillar has its own
economies realize a 0.5% increase in GDP pper capita importance, complexities in implementation and is a
for every 10% increase in digitalization, while propellant
ellant for the overall growth of the country.
advanced digital economies show a 0.62% increase in
GDP per capita for every 10% digitalization increase. 1. Broadband Highways:
India is known as the powerhouse of the software It covers three components broadband for all rural,
industry and is in a leading position in gl
global sourcing broadband for all urban and National information
market but there is still a great deal of work to done infrastructures.
for its Digital India campaign. Digitalization will be
2. Universal Access to Mobile Connectivity:
helpful if it can reach the maximum people and for
It focuses on network penetration and filling the
that each and every citizen of the country should be
gaps in connectivity in the country.
able to easily access the facilities
cilities for which they not
only need to be connected to internet but also have 3. Public Internet Access Programme:
digital literacy to be able to use facilities provided to To provide Common Services Centres (CSCs) and
them. Post Offices as multi-service
service centres,
4. e-Governance:
The divide between well-connected
connected metropolitan hubs Reforming Government through Technology:
and remote rural areas is one of the main aims of Government Process Re-engineering
engineering using IT to
Digital India
ndia Program. For this the Central simplify and make the government processes more
government is hopeful of achieving the complete roll roll- efficient is critical for transformation to make the
out of broadband network across 2.5 lakh village delivery of government services more effective
panchayats in the country by 2018 as per Bharat Net across various government domains and therefore
programme, which aims to provide broadband needs to be implemented by all Ministries/
connectivity to all panchayats
hayats in the country, the Departments.
panchayats will have an ecosystem that will further
boost the connectivity and bridge the digital divide in 5. e-Kranti :
the country. India has also started collaborating with Electronic Delivery of Services: The Government
various countries and business organizations (like approved the National e-Governance
e Plan
Google, Cisco etc.)tc.) for speeding up its digitalization (NeGP), comprising of 31 Mission Mode Projects
process by infrastructural development, increasing (MMPs) and 8 components. e-Kranti e is an
access to internet and also started the transformation essential pillar of thee Digital India initiative and
of cities to smart city. This Campaign also got some there are 44 Mission Mode Projects under e- e
propellant in the form of free/cheapest 4G mobile data Kranti, which are at various stages of
and cheapest Wi-Fi Fi broadband for the customers. implementation.( includes Banking, Post office,
Company Reliance Jio Infocomm Limited (RJIL) a Income tax, Land records, Agriculture, Gram
subsidiary of Reliance Industries gave push to internet Panchayats etc.)
usage by introducing ground smashing data pack 6. Information for All:
rates, at initiation of the project by Reliance the SIM Online hosting of information
ormation & documents to

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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
facilitate open and easy access to information for a virtual access to the money and with the concept of
citizens, e-kranti
kranti in the banking sector it will become easier for
the people to avail the financial services provided by
7. Electronics Manufacturing:
them. Having a bank account is not the only matter of
It focuses on promoting electronics manufacturing
in the country with the target of NET ZERO concern but also having the knowledge that how their
money gets affected by economic situation of the
Imports by 2020 as a striking demonstration of
intent. country and various other factors for having a control
overr their finances is also important. When people are
8. IT for Jobs: financially literate, they are more likely to explore the
It focuses on providing training to the youth in the products and services offered by banks and use them
skills required for availing employment for their benefits. This accelerates the pace of
opportunities in the IT/ITES sector. financial inclusion, where everyone can accessacces the
9. Early Harvest Programmes: basic banking facilities rather than relying on the
It consists of those projects which are to be orthodox systems of money market such as borrowing
implemented within short timeline. money from money lenders on illogical interest rates.
Financial inclusion and financial literacy are two
Digitalization is a boon and needs to be utilized essential ingredients of an efficient economy.
econ Thus
properly with the recent case of demonetization we financial literacy is what also needs the attention of
can assess that it has helped people during the the masses and with all the latest advances happening
demonetization from Nov. 8 2016 to Dec. 31 2016 around, it is becoming a matter of prime concern.
when the country faced cash crunch, when Rs. 500 Financial education is “the process by which financial
and Rs. 100000 notes were scraped and new currency consumers/investors improve theirthei understanding of
was circulated in replacement of old notes. This step financial products and concepts and, through
not only shook the tax evaders but also pushed India information, instruction and/or objective advice,
to become more digitally sound country and has also develop the skills and confidence to become more
highlighted the benefits and need to go cashless ( or aware of financial risks and opportunities, to make
have a less cash based economy).Demonetization has informed choices, to know where to go for help, and
also increased the transactions from mobile wallet and to take other effective actions to improve their
digital payment channels. Pay tm said it hit a record financial well-being.”
of 5-million
million transactions a day, processing Rs. 24,
000crore worth of payments, less than a week int
into the The financial literacy level majorly depends upon the
Indian government's decision to demonetise Rs.500 education and income of the individuals; the social
and Rs.1, 000 notes making it the largest digital factors such like family size, family background, age,
payments company in the country It may be seen as a regions nature
ure of employment have a little impact on
temporary phase but the ease of access and this. With the digitalization there is an ease of access
availability has made more of a good alternative than to the money as the banking system has evolved with
the paper or plastic money. With the adaptation of the time and provides the customer with different
technology in the banking
anking sector more and more facilities like online payment of their monthly
transparency came in the flow of money in the expensess such as electricity bills, payment of
economy. premiums etc. With all this growth and development
people need to aware about the problems associated
Pradhan Mantri Jan Dhan Yojana gave push to with digitalization of finances.
financial inclusion that everyone whether from urban
area or from rural area should have a account so that Financial literacy:
everyone is connected in the economy and According to a survey conducted by Standard &
demonetization led to the operation alization of Jan Poor’s, over 76%
6% Indian adults lack basic financial
Dhan accounts which were opened under the scheme. literacy and they don’t understand the most basic and
It also had multiple benefits like people who did not key financial concepts.
had the identity proofs registered themselves for
Aadhar card and other identityy proofs and will also Another survey of “Financial Literacy among
help in direct transfer of benefits to the concerned Students, Young Employees and the Retired in India”
person. Digitalization in this situation helped to have conducted by IIM-A
A supported by CITI Foundation
Founda

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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
reveals that high financial literacy is not widespread RECOMMENDATIONS
among Indians where only less than a quarter 1. The initiatives took by the government can only
population have adequate knowledge on financial be successful if people get involved in the
matters. There is lack of understanding among Indians transformation. The Schools and Colleges can
about the basic principles of money and household create awareness among the people of their
finance, such as compound interest, impact of locality about the initiatives and imparting
inflation on rates of return and prices, and the role of knowledge to the people.
diversification in investments.”In some studies it is
2. For doing
oing so they also need to have the knowledge
revealed that financial literacy affects the financial about the program and how to use the facilities
behaviour of the people and thus through pr proper
provided by the government.
education they will be motivated to take the right
financial decisions, get to know about the financial 3. Community centres can be formed were people
products and services available to them and also who are more literate about the issues can help the
inculcates a habit of saving and protecting their other people and experts can visit them
the to give the
money. guidance from time to time.
4. Organizations can guide their employees and
Digitalization has revolutionized the waway we used the make them literate regarding the financial aspects.
banking services and with the technological
advancement and interconnectivity of the various 5. RBI and SEBI have already taken many steps to
services with the services provided by the banking create awareness among the people about the
sector there is need to speed up our country’s literacy importance of financial literacy
teracy and also provided
rate, digital literacy rate and financial literacy rates as the online modules for financial literacy on their
they all together have an impact on the proper websites.
utilization of the Digitalization. 6. People should be imparted with the knowledge of
Financial literacy along with computer literacy is a factors which affect their savings and how they
must to mobilize the savings in the economy and put can maximise their saving or the facilities
forth the growth of the economy and puts the available for them to help them
th to do so.
society’s
y’s development on fast track. Many initiatives
have started but their reach is narrowed or hampered 7. People should also be made aware about the
by various factors. But to keep our pace of Digital security of their personal information regarding
transition with the world we also need to speed the their accounts and online frauds.
pace of digitalization along with these basic 8. The banking system must also be made robust as
requirements
rements or basic knowledge or skills which can people need to trust the system before they go
obstruct the overall transformation or held us back to with the technologicall advancement.
achieve this goal.
CONCLUSION:
Obstacles in the process of Digitalization
Digitalization: The digitalization brings innovation, ease of working,
1. The resistance to change people show during new job opportunities and growth in the economy. It
emergence of new technology. helps to bring transparency in the system and more
mong the people for change is
2. Building trust among transparent are the flow of funds in the economy less
difficult. is the problem of tax evasion, parallel economy etc.
But with all these benefits available it also makes it
3. Lack of knowledge about its use and benefits. necessary for the people to have basic financial
4. Infrastructure requirements and their knowledge and a push towards the importance of the
unavailability also hamper the reaching of these financial literacy. With the help of which they can
basic facilities to the people. protect theirir money in situations like inflation,
depression, and know about different financial
5. The basic hindrance is the lack of literacy and products and services to save it for their better future.
literacy is not just to be able to write ones name Digitalisation can also play an important role in
and do the signature but to have an understanding achievement this goal as it can have a greater reach to
of the changes going in the technology, society the people.
ople. By this we can reach on a conclusion that
and the country for their own betterment. the new technology needs to harnessed well and for

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International Journal of Trend in Scientific Research and Development (IJTSRD) ISSN: 2456-6470
2456 | IF: 4.101
this it is not only the availability but also the 12. www.strategyand.pwc.com/media/file/Strategyand
knowledge to use it and get benefits from it. _Maximisi ng-the-Impact--of-Digitization.pdf
Questions arose on the readiness of the workforce to 13. www.thediplomat.com/2016/12/indias-
www.thediplomat.com/2016/12/indias
embrace digitalization. The financial services industry
demonetization-time-for-digital
digital-economy
has many legacy systems which have to be compatible
to the new digital technologies. Some of these
systems are so complex that any integration to the
legacy is almost not feasible. Hence, the workaround
to ensure
sure the integration is made possible. In worst
cases, it is almost not possible to do anything other
than to change the legacy systems. New technology
means new skill sets’ to be acquired. At times, it is
rather difficult to change certain mindsets to adoadopt
new skill sets. With so many changes happening on
the technology side, it is not surprising to see
resistance from all levels in the organization. There
are new responsibilities resulting from the digital
transformation affecting the whole organizations
organizations.

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