2023 · GS Paper 3 · Q2 · 10 marks
What is the status of digitalization in the Indian economy? Examine the problems faced in this regard and suggest improvements.
In short
India's digitalisation is deep in payments and identity, with the digital economy at about 11.7% of GDP in 2022-23, but uneven in access, skills and security. UPI crossed 20 billion transactions in a single month in August 2025, while NFHS-5 shows a wide gender gap in internet use.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 269 words
Payments at scale
UPI crossed 20 billion transactions in a month in August 2025 (NPCI), drawing even street vendors into digital records.
Access and commerce
85.5% of households own a smartphone (MoSPI, 2025), Direct Benefit Transfer reaches Aadhaar-linked accounts, and ONDC opens e-commerce to small sellers.
Trade and taxes
GST e-invoicing formalises business-to-business trade, and India scored 93.55% in the 2023 UN Global Survey on Digital and Sustainable Trade Facilitation (UNESCAP).
Rural and gender divide
NFHS-5 (2019-21) found 33% of women had ever used the internet against 57% of men, so the revamped BharatNet must reach every panchayat.
Skills and language
Low digital literacy and English-heavy content need PMGDISHA-style training and Bhashini's Indian-language tools.
Cyber risk
The 2022 AIIMS Delhi ransomware attack and digital-arrest frauds call for full enforcement of the DPDP Act 2023 and stronger CERT-In capacity.
Fragile business models
Zero merchant charges on UPI and two dominant apps need a calibrated MDR for large merchants and a market-share cap.
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Question from the official UPSC Civil Services (Main) Examination 2023 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.