Middle class propelled e-commerce market: Economy Review

New Delhi : The Indian Economy Review prepared by the Ministry of Finance ahead of the Interim Budget (Feb 1) said that the proliferation of internet connectivity and smartphones in India, coupled with rapid urbanisation and the rising influence of India's middle class, have propelled the e-commerce market.

During the Covid pandemic, the Aarogya Setu and CoWin apps helped track and contain the spread of the virus and facilitate the vaccination of many people in a short period of time.

Using these digital infrastructure, India was able to provide support to many households quickly. In the first months of the pandemic, about 87 per cent of poor households received at least one benefit.

The Indian Economy Review said the PM eVIDYA was another initiative launched with the use of digital technology to bridge learning gaps during the pandemic. The digital world has also built several e-commerce platforms for merchandise, food, and transport services that proved critical during the lockdowns.

As per a report by UNICOMMERCE on 'India E-Commerce Index 2023136', the overall order volume witnessed a growth of 26.2 per cent in FY23, indicating a flourishing e-commerce landscape in India, supported by a 23.5 per cent rise in annual Gross Merchandise Value (GMV) as compared to FY22.

India's e-commerce market is expected to reach $163 billion by 2026, with online sales accounting for over 25 per cent of the sales across major non-grocery retail categories.

The Review said the PMJDY, launched in 2014, put to great use the Indian Stack to enable direct benefit transfers straight into the bank account of the beneficiary using the Aadhaar and mobile connect.

In an exemplary upscaling of public services, the PMJDY accounts have grown three- fold from 14.7 crore in March 2015 to 51.5 crore as of January 10, 2024, bringing a significant proportion of India's population into the formal banking system, the review added.

According to the Finance Ministry, this has been accompanied by a rise in the average deposit per account. The DBT mode has so far (December 2023) transferred more than Rs 233.6 lakh crore. DBT has led to the removal of duplicate/fake beneficiaries and the plugging of leakages.

As a result, real savings of Rs 2.7 lakh crore (as of March 2022) has accrued to the government.

The IMF's working paper on 'Stacking Up the Benefits: Lessons from India's Digital Journey' highlights that as of March 2023, roughly 4.5 million individuals and companies benefited from easier access to financial services through the Account Aggregator since it was first launched in August 2021.

The Digital Document Execution platform of National E-Governance Services Limited (NeSL), an information utility set up under the IBC, is one such financial service that rapidly completes the loan documentation of a beneficiary.

With the payment layers capturing the credit and spending behaviour of the borrower and, in the process, the default risk, the use of collaterals is diminishing in cases where the risk is negligible.