Michael Debabrata Patra: Unlocking new growth frontiers in the digital age

Inaugural address by Dr Michael Debabrata Patra, Deputy Governor of the Reserve Bank of India, at the Conference "Digital Technology, Productivity and Economic Growth in India", organised by the Department of Economic and Policy Research (DEPR) of the Reserve Bank of India, Jaipur, 13 November 2024.

The views expressed in this speech are those of the speaker and not the view of the BIS.

I. Introduction

This year's Nobel Prize in physics celebrated the role of artificial intelligence (AI) in revolutionising the way we work and live. It is widely believed that AI and robotics will usher in a new wave of secular innovation, much like past breakthroughs in steam power and personal computers. Silently, new technologies are offering a way out of the cross currents of diverging macroeconomic and policy pathways, geopolitical tensions, geoeconomic fragmentation and climate change in which the global economy is transfixed. Accordingly, these technologies are heralding a brighter future, arguably holding the key for many emerging and developing economies to escape the middle-income trap. It is estimated that generative AI itself could increase global GDP by $7-10 trillion over the next three years. Large language models are estimated to increase the productivity levels of workers by 8 to 36 per cent.

Over the past three decades, the digital revolution has been transforming the world, eclipsing all past revolutions. It is estimated that the global digital economy accounts for more than 15 per cent of global GDP. Digital technologies are reshaping our lives through their impact on economic growth, employment, consumer welfare and living standards. These technologies are democratising innovation and entrepreneurship, being less costly than conventional technologies to scale up and are seen as transfiguring innovators into entrepreneurs.

India is at the forefront of the digital revolution. Financial technology (FinTech) is speeding up digital payments. The India Stack is expanding financial inclusion, galvanising banking infrastructure and public finance management systems covering both direct benefit transfers and tax collections. Vibrant e-markets are springing up and expanding their reach. It is estimated that the digital economy currently accounts for a tenth of India's GDP; going by growth rates observed over the past decade, it is poised to constitute a fifth of GDP by 2026.