McKinsey Global Institute (MGI) states that Digital Finance would boost India’s Gross Domestic Product (GDP) by $700 billion by 2025. Through this, 21 million jobs are expected to be generated by 2025. The report which was titled as ‘Digital Finance for all: Powering Inclusive Growth in Emerging Economies’ is the first report which comprehensively quantified the full impact of digital finance.
The report estimates that the digital finance is expected to boost the GDP growth of all the economies as much as $ 3.7 trillion by 2025. Digital finance is delivered through the internet, mobile phones and cards linked to the digital payment system. It will benefit individuals, government and businesses across the world. It will give a tremendous impetus to GDP which will further widen financial inclusion.
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In India, it is estimated that nearly two-third of GDP is being generated from improved productivity of business and governments as a result of digital payments. The remaining one-third of GDP is being produced from additional investment which broadens financial inclusion of people as well as micro, small and medium size businesses. The balance between the mentioned aspects will come if individuals save time which would enable them to devote additional hours to work.
Norway stands in the first place with respect to digital payments. Around 78% of payments are digital. Whereas it is just 4% in China and 1% in India, Nigeria, Pakistan and Ethiopia. MGI also estimates that around $2 billion Indians are losing jobs every year in forgone income simply because of the time it takes travelling to and from a bank. Faster adoption of digital services will play a significant role through which additional 1.6 billion people across the emerging world would be benefitted.
MGI also stated that a total number of 344 million people could gain access to financial services by 2025. Developing countries could encourage the citizens to use digital services through mobile phones to fill the financial gap. Shifting from cash to digital payments will lower financial service providers’ cost structure and facilitate profitable ways to enlist new customers and create trillions of dollars in new deposits.