Digital Economy : A Leveler Or A Source Of Inequality?

Digital economy is a byproduct of the internet revolution. It refers to commerce that is conducted on the internet between people and companies without the physical interface at the time of ordering or purchase. It could also include sectors like education, entertainment and banking which are now riding on the advantages of convenience and speed of internet based businesses.

Digital economy can be a great leveler for consumers, service providers and sellers if all citizens can access internet and know about the opportunities that are available. However, in the present scenario, a large majority of people are unaware or unable to access internet and utilize the opportunities it provides because of various reasons.

Recent statistics show that about 430- 450 million Indians use internet and approximately 300 millions use a smartphone. In a country of 1.25 billion population almost 2/3rd of the population is not using the internet. In a country with striking  gaps in incomes and lifestyle, digital illiteracy is an additional factor that will increase existing inequalities. The reason for these inequalities can be put broadly under three headings

  1. Lack of information about opportunities
  2. Lack of skills to adapt to the digital economy
  3. Digital economy might also make some jobs obsolete in coming years

Lack of information

It is said that the most valuable thing in the new age is data. Most of the data and information is now on the internet. We live in the age of information. Google, social media, smartphones and messaging apps are instrumental in dissemination of information which can change the economic prospects of a business or individual.

For example a craftsman in a village may not know that he can sell his produce on the internet for a higher price. But someone who is tech savvy will be able to do so and earn more money. Or , trader can buy his work and sell it online for a higher price. A young man or woman with computer and internet skills is more likely to be hired at a departmental store.

Similarly, a student with access to internet can learn more and increase his awareness about the world at a young age unlike a poor kid whose world is restricted to the internet. A villager who is tech savvy can obtain more information about weather, latest farming techniques and government schemes if he uses internet regularly.

Thus, in the digital economy that is fast emerging , information itself is a big commodity. Those who have access to it are at an advantage in comparison to those who are not on the internet both in the domain of employment and economic progress.


Lack of skills to adapt to the digital economy

We might have encountered many times at the ATM of any bank where a person from the older generation asks for help in withdrawing money. This shows that many are unable to adapt to changing times. In future, this divide will manifest in almost all spheres of life.

Digital economy is going to change the way governments are going to function in future. Today the electric bill can paid over internet. You can get customer complaints redressed on Twitter. Governments are auctioning resources online for more transparency. The government is also procuring goods and services online through government e- marketplace. Hence, we can say that digital economy is here to stay !

Thus a citizen will have to learn how to maneuver himself or herself in the new environment. Using E-wallets is becoming a necessity for small businesses like chat stores and pan wallahs as well in the internet age ! A taxi driver who knows how to use a smartphone is at a distinct advantage (as he can sign up for Uber / Ola ) when compare to one who doesn’t know.  Those with skills will move ahead , where as those who are not having it will be left behind.

Digital economy will also make some jobs obsolete

We are noticing that many bookstores are closing down these days due to lack of sales. People are preferring to buy on e-commerce sites as the same books are cheaper on sites like Amazon or Flipkart. Similarly, tailors are running out of business as popular brands are offering discounts on sites like Myntra.

The shift towards digital sales of commodities is going to penetrate practically every commodity. Today we can buy vegetables, fruits and other grocery items online through android apps. This will put many small retailers selling in grocery shops or roadside out of business.

As artificial technology takes over the world, white collar jobs in software industry will also be lost in near future. The scales are going to tip in favor of those who have access to high tech digital software that can learn and outperform real humans in speed and accuracy. This is going to increase the inequalities within societies and among different nations.


The above analysis points to one undeniable fact. That internet and e commerce will soon enter every sector and aspect of our lives and those who are not able to cope up with changes are going to be at a great disadvantage. Yes, digital economy can be great leveler as it provides everyone an opportunity to participate and compete. But that can happen only when all citizens can access and use the internet at a low cost.

It is impractical to expect a vegetable seller who earns hundred rupees a day to compete with an app like Grofers or Amazon by using a smart phone. The person may not be able to afford an internet pack either. The digital economy is definitely going to affect poorer sections adversely if the government doesn’t step in to close the digital divide.

Schemes like Pradhan Mantri Gramin Digital Saksharata Abhiyan can be instrumental in addressing these issues. Until such schemes achieve their objectives, we will have to accept the fact that digital economy will increase inequities in the society.

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