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India’s App Economy- A Socio-economic Analysis

By Isha Pande

App economy refers to the gamut of economic activity involving and encompassing mobile applications. Mobile and internet applications have led to a revolution in the way business is conducted. The sale of these apps, advertisement revenue or promotion generated by free apps, and the devices on which apps are devised to operate, form a part of the app economy. This economy has witnessed an extraordinary rate of growth in India. India’s app economy is growing at such a rapid pace that it should now be one of the targets for all upcoming app developer or marketer. India recently featured as the fourth largest app economy worldwide as per App Annie. As per Forbes, India outgrew the US to become the world’s second largest market in app downloads, as a result of 12.1 billion downloads in 2017. The “Make in India” programme by the government of India is an additional prop to enhance the app economy.

India is presented with a unique opportunity comprising of remarkable characteristics and a considerable amount of service deficits as a direct result of the rising growth of apps globally. Accessibility to the internet also shows tremendous potential with smart cities, agriculture, health and education, seeking to reap the numerous benefits of technology. This is largely due to a convergence of two aspects: the provision of subsidies on 4G data in combination with an influx of low-cost smartphones from China. An Indian Council for Research on International Economic Relations (ICRIER) study focussed on evaluating the socioeconomic impact of web usage and the effects of Internet applications on the nation’s GDP. It also sought to highlight recommendations for sustained growth. According to research conducted, in 2015–2016, a 17 per cent increase in the total internet traffic in India led to a rise of Rs. 7 lakh crores in the GDP, out of which roughly Rs. 1.4 lakh crore was an outcome of Internet-based app services. This means that the internet is responsible for 5.6 percent of India’s GDP in 2015–2016. Its contribution is reckoned to increase up to about sixteen percent or Rs. 36 lakh crores by 2020, out of which apps are expected to contribute to 50 per cent of the country’s domestic income.

The study undertaken by ICRIER gave rise to numerous revelations. One major revelation exhibited that a single app often brought about multiple socioeconomic reverberations; either a combination of economic and social development or even diverse aspects of economic growth or social empowerment. Apps like “Practo” generated a new database system of approved doctors and specialists based on specialization and patient reviews, resulting in access to information and reduced asymmetry. Taking a step towards including the differently-abled in mainstream society, the app “Inclov” sought to convert physical spaces to expedite accessibility to facilities for the differently-abled. It also enabled matchmaking for the differently-abled and collaborated with hotels to generate employment for them, as a step towards social inclusion.

In an effort to promote business, “MakeMyTrip” started a certification program that allows budget hotels to market their business and identify potential customers through their platform. This means that smaller businesses and individuals are supplied with a platform to promote and advertise their products and services. Applications like “Truecaller” have enabled women’s safety. The feature of caller identification has provided women with the option to manage and block calls from unwanted numbers or people. At the same time, “Mooshak” is trying to alter people’s perspectives on the use of regional and native languages by popularizing the use of vernacular languages in a country where the usage of English is considered elite.

The above-mentioned case studies have also identified potential challenges that might restrict the future growth of the app economy. The study categorized these as demand and supply side challenges. The supply side consists of challenges like limited availability of network infrastructure or Internet connectivity and accessibility in the regions the apps choose to serve. Demand side problems identified were mostly affiliated to the provision and availability of content in local languages. In the state of Madhya Pradesh, an e-governance app,”MP Mobile” is not being utilised to its full potential due to the large non- English-speaking population in semi-urban and rural regions. Data privacy also emerged as a huge concern among app users. Research and development must acknowledge these exigencies with caution, particularly while considering digital payment apps.

Mobile and internet networks have the ability to completely transform livelihoods and businesses provided that access is provided to one and all. Powerful devices, smartphone applications, accompanied by easily available high-speed networks and technological innovation can lead to job creation and a major productivity enhancing influence on the economy as a whole. Undoubtedly, the tremendous growth of the app economy in India as well as globally signifies a significant change in human socioeconomic evolution. The study not only establishes the economic impact of the sector, but also explores the different ways through which the app economy creates positive socioeconomic value for citizens of the country. Further, the study shows that apps provide an efficient and effective approach to reach particular vulnerable segments of society, fill market gaps, and correct specific market failures. Any policy formulation for the sector must thus ensure that above all, it does not disrupt the innovative forces that drive this force.

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