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Digital Revolution, Financial Infrastructure and Entrepreneurship: The Case of India

Panagariya, Arvind

Digital Revolution has been sweeping across the world over the last three decades. This revolution has spread far more rapidly, especially in developing countries, than was the case with either the Industrial or Agricultural Revolution. Indeed, the spread has been so rapid that China has become its major driver with India emerging as one as well.

This paper is devoted to two aspects of the Digital Revolution as it impacts India: financial technology or fintech, and innovation and entrepreneurship. As in other countries, the spread of digital technologies has led to a dramatic transformation of financial infrastructure in India. On the one hand, this has improved efficiency and on the other it has led to increased financial inclusion. The government’s payments system has evolved to a point that it can make payments directly to individuals and firms through bank accounts. Individuals are seamlessly able to transfer funds from their bank accounts to those of others. Businesses and customers can transact digitally in real time.

Digital technologies have also helped democratize innovation and entrepreneurship. Unlike conventional technologies, digital innovations are less costly to commercialize on average. Scaling up of conventional innovations requires a large volume of investment. In contrast, many digital innovations lend themselves to scaling up at low costs. As a result, in the digital space, innovators themselves are often seen as turning into entrepreneurs. The sharp division between innovators and entrepreneurs that existed in the past has greatly diminished.

I divide the paper into three parts. Part 1 focuses on the spread of financial technologies in India. Part 2 considers how the digital revolution has helped spawn and transform the nature of entrepreneurship in the country. Part 3 offers some concluding remarks.

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More About This Work

Academic Units
Entrepreneurship & Policy Initiative
Publisher
Entrepreneurship & Policy Initiative, School of International and Public Affairs, Columbia University
Series
Entrepreneurship & Policy Initiative Working Paper Series
Published Here
January 14, 2020