The Vanishing Digital Divide
“Digital penetration is near universal in India.” This is not unrealistic as it may sound when one considers the spread of digital payments – today nearly all Government subsidies are transferred directly to the bank accounts of the beneficiaries – mainly the poor and those living in villages and small urban towns. This would not have been possible were it not for digital technologies. Equally, RuPay and digital payments such as GPay, PayTM, etc., are pretty much household words across the length and breadth of India. So, the payments story as an exemplar of universal digital penetration is incontrovertible. The moot point though is that is digital penetration restricted only to payments. Is there more to digital penetration in smaller urban areas and rural India? The answer is that digital has not only arrived in non-metro India but is also thriving.
Hunkered down during the pandemic in a village, in Tamilnadu, I was missing the comfort of home delivery of food from the restaurants. Lo and behold, about 18 months into the pandemic the food delivery apps were functional in the village with restaurants in the nearby town onboarded on the platform and the army of delivery ‘associates’ in place ready to cater to all the urban emigres escaping the maddening crowds of their cities. Quite obviously Covid was a big impetus to the digitalisation of Bharat fueled by work-from-home, online education, vaccination drives and other pandemic triggered actions.
However, the spread of digital had began even earlier. The IAMAI - Kantar report on Internet adoption in India shows that Active Internet Users[1] (AIU) was 31% of the entire rural population in 2020. Moreover:
-90% of the Internet users in rural India used it every day
-Growth of Internet penetration was twice as fast in rural India as in urban India since 2017 with 2019 being an exception, when internet penetration in rural India expanded by a whopping 45%
-With an overall urban penetration of 67%, a majority of the population in Tier 2 and Tier 3 urban markets are likely to be Internet users.
The usage patterns of internet between urban and rural show some divergence. As the chart above shows, consumption of Entertainment, Communication and Social Media is equally wide among urban and rural users of the Internet. However, eCommerce usage is significantly lower in rural India.
Two factors may be hindering the growth of eCommerce in rural India:
Lack of consumer maturity in non-Tier I cities cannot be a factor in the adoption of eCommerce since other functionalities of the channel have been as widely adopted and a large number of citizen services such as land registration, title deeds, certificates, utility payments are now provided mainly digitally and citizens are using them extensively, even if they do not use the Internet themselves. For example, photocopy shops in small towns now offer services to download and print Government documents for a small fee to those who require them.
Others are finding alternative career opportunities with the Internet. For example, a newly minted business school graduate in the village I was staying in became a Youtuber because he could not find a job owing to the lockdown and had sufficient earnings for him to have given up the notion of being employed.
Going by these trends, in the next 3 – 5 years, Internet usage in the semi-urban and rural markets will be as ubiquitous as in urban India. The earlier Internet entrepreneurs tap into this market, the larger will be their gains. After all, as the adage goes, the early bird catches the worm.
*The author is Karthik Kumar, Director on the Board at ADK Rage
