Issue: October 2016
Cover Story
Textiles’ – the word brings up images of beautiful drapes – cotton, silk, chiffon, lace. Whether it is the material draped on the figurine of the lady...
  Tapping Sustainable Energy Alternatives
  The second lead article, which is also focus article, is written by Shri N Bhadran Nair. Citing a report of the World Health Organisation, the author has advocated for tapping sustainable energy alternatives
  Financing Renewables in India
  The third article is written by Shri P C Maithani, Adviser, Ministry of New and Renewable Energy. He has focussed on renewable energy resources
  Steps to Achieve India’s Solar Potential
  The special article is written by Sumant Sinha, Chairman and Managing Director of ReNew Power. He opines that India must also honour its global commitments on curbing greenhouse gas emissions
  Reaping the Information Dividend through Social Media
Dr. Sanjay Tiwari

June 01, 2013 | Dr. Sanjay Tiwari  , Social Media

India is on a threshold of becoming a lead economy of the world as her demographic dividend will be the highest-i.e. the largest population between the age group 18-59 years - within not so distant future. While talking of the return from this vast working human resource known as demographic dividend, it would be pertinent to look into another big opportunity which has recently emerged and likely to grow in what is termed as information driven economy. In the age of information-led economy, it is the information dividend which can yield socio-economic benefits to the large section of masses. In recent years social media and its various forms have brought significant contribution to the economic growth and development.

The attachment of information with technology has led to the growth of so many countries with India no more an exception as the impact of information dissemination leads to democratic decision making and policy formulation for better governance. The composite impact of convergence of information, technology, media and particularly social media leads to easy life, faster accessibility of services, transparent governance, cost effective delivery of goods, growth of business and employment opportunities and many more. With the advent of internet and web based technology people have come closer because the usage and accessibility of faster and efficient communication networks including quicker social networking sites like; twitter, facebook, you tube, LinkedIn etc. which provide blogging, micro-blogging, video-blogging chatting, information sharing services are gaining importance day by day. The dependence of a large number of working class on the information disseminated by the social media which is blessed with technological innovations and IT revolution has changed the lives of the people as they are now more connected than ever before with cost saving social media. Before analyzing the combined effect of yield-return provided by information dividend through social media-on growth, it would be advisable to examine that why development and growth of social media has become so crucial in India?
In the recently presented union budget 2013-14, the concerns are expressed on burgeoning current account deficit (CAD)-which is due to trade deficit arising as a result of decreasing export of Indian products and services world-wide. Therefore, the competitiveness of Indian exports becomes a questionable issue and how India can reap the rich dividend distributed by information facilitated by internet enabled social media? How inclusion of the social media facilitates the business growth including the growth of small scale sector? Also, in view of the New Manufacturing Policy (NMP) which targets to make share of manufacturing in GDP to 25% by the year 2022, how social media can be utilised to raise the competitiveness of manufactured products of Indian companies is an important issue to consider? How the information infrastructure project can help in developing social media in India?

Rise of Internet and Social Media in India

The role of social media and its implication on economic growth is well researched and as the largest democracy of world with huge customer base, India acquires significant position as still the potential of information yield remains untapped. According to the Internet and Mobile Association of India (IAMAI) and Indian Market Research Bureau (IMRB) report the growth in the number of social networking users can be attributed to the rising Internet penetration in India, through increasing affordability of smartphone and consequent mobile Internet use. Internet being the pre-requirement for the spread of social media is important for study as social media interaction and information sharing are possible only through internet or web connectivity.

As per the authentic sources, more than three quarters of Internet users in are India engaged in social networking. That accounts for nearly 65 million social media users in urban India. India is the third largest internet user country in the world having 140 million internet users. India has 5.7% users of internet users world-wide and has 11.4% population penetration of internet users as on 30th June, 2012. And there are more than 200 million computer literates in India and 950 million mobile owners in India. According to McKinsey Global Institute Report (2011) on Internet matters: the nets sweeping impact on jobs, growth and prosperity, China and India have already 500 million internet users which are estimated to go up to 1200 million users by the year 2015.

As far as internet users using social media sites are concerned, India has 46 million members of the biggest networking social site Facebook out of total 800 million Facebook users worldwide while there are 15.5 million, 5 million and 5 million users of Orkut, Twitter and ibibo social networking sites (SNWS) respectively. According to Internet and Mobile Association of India (IAMAI), the number of social media users is expected to grow to 66 million by June, 2013. Youth and college-going students form the largest user base of social networking, accounting for 84% of active internet users, or 20.3 million. The rise of internet users also depends on the telephone connectivity and telecom reforms during the last few years have enhanced the growth of telephone and wireless users which is an indicator of growing social media.

According to data available in the Economic Survey, 2012-13 tele-density, which is an important indicator of telecom penetration, increased from 18.22 per cent in March 2007 to 73.34 per cent as on 31 December 2012, with urban tele-density at 149.55 per cent and rural at 39.90 per cent. As on 31st Oct. 2012, the total no. of telephones were 935.18 million out of which 904.23 million were wireless and 30.95 million were landline phones. Wireless phones accounts for 96.7 percent of all telephones in India.

Internet, social media and GDP

It has been proven that internet plays a role in contribution to the GDP of a country. As per recent study by McKinsey Global Institute Report (2011) internet contributes 3.2% of the GDP in India while developed nations like Sweden, UK, South Korea and Japan have equal to or more than 4 percent of GDP contribution by internet.

Thus, India still has a potential for growth of its internet penetration and social media can facilitate the trend. The study also reveals that in India the percentage of total internet contribution comes from private consumption (20%), private investment (28%), public expenditure (5%) and trade balance (47%). Nations around the world have recognised the contribution of broadband infrastructure to speed up growth and spurt development as according to a World Bank Report (2010), a 10 percent increase in broadband penetration leads to 1.38% increase in per capita GDP in developing economies.

Social media is dependent on internet penetration; India still possesses a lot of potential for the growth of internet penetration which would ensure parallel growth of social media. As per report by Gartner-leading IT research firm- the world wide social media revenue stood at $11.8 billion in 2011 which is expected to reach $16.9 billion in 2012 and $ 34 billion in 2016 . In India total mobile service revenue is projected 12.5% Compound Annualized Growth Rate (CAGR) during five years (2009-13) period.

Social Media and Business Growth

Internet and social media also have a tendency to improve the business prospects of a country as observed in a study entitled Going Social: How businesses are making the most of social media done by the management consultancy firm KPMG (2011) that more than 70 percent of organizations operating around the world are now active on social media and adoption of social media is widespread for businesses in the emerging markets of China, India and Brazil who on average are 20 to 30 percentage points more likely to use social media than counterparts in the UK, Australia, Germany or Canada.

This is due to the fact that, social networks tend to be consumer-focused and, therefore, provide a cost-effective marketing channel. But they also enable retailers and wholesalers to capture a rich source of customer information to better direct their product development and planning.

The changing life style, aspiration to use branded products, increasing income of middle class, fashion consciousness, changing tastes and preferences are factors which contribute to the growth of e-commerce which includes e-business, e-shopping, on-line retailing, e-gifting and many more. Social media has accelerated the growth of e-commerce as India has vast population of the aspiring youth who are users of SMNSs. For instance, Dell, which sells laptops and accessories, claimed in 2009 that it had sold products over Rs.29.2 crore purely via its Twitter account at dell outlets.

According to the data provided by Social Media Marketing Industry Report (2012) based on survey of some companies, 94 percent of all businesses with a marketing department used social media as part of their marketing platform and about 60 percent of marketers are devoting the equivalent of a full work day to social media marketing development and maintenance. 43 percent of people between the age group 20-29 years spend more than 10 hours a week on social media sites.

85 percent of all businesses that have a dedicated social media platform as part of their marketing strategy reported an increase in their market exposure while 58 percent of businesses that have used social media marketing for over 3 years reported an increase in sales over that period.

The power of social media in terms of convincing the customers, disseminating speedy and accurate information about the product, reduced operating costs, spontaneous feedbacks and response, brand building and customer relationship is well established as founded in various studies. Thus, use of social media in business leads to value addition to their products, promotion and revenue generation and ultimately helping the customers.

The impact of usage of internet by the small and medium scale industries on the growth of companies is well studied. In a study conducted by Mckinsey (2011), out of more than 4800 small medium enterprises (SMEs) in 12 countries including India, it was found that on an average companies using internet with high intensity grow twice as quickly as low web-intensity companies, export twice as they do, and create more than twice as many jobs.

The leverage of the usage of internet by SME sector can further lead to better performance and competitiveness of products manufactured under SME sector in India as the export constitutes about 40 percent and there lies enough scope for its growth once the product information is made available through social media using internet. The trade deficit may be brought under cap.

Similarly, small scale companies can integrate their marketing practices with social media and capitalize the synergy to make their products demandable in domestic markets as well because social media helps them for cost effective product promotion, disseminate their offerings to a large segment of customers, improve their design to satisfy the changing needs, deliver and take feedback thus improving the competiveness and ensuring the accessibility of offerings to remotest areas of the country.

Social media and Information Infrastructure Project

How social media can be made more useful for the people? For reaping the benefits of information dividend, the information infrastructure is a must as the Government of India is planning to establish the National Optic Fiber Network, with an aim to provide broadband connectivity to India's 2,50,000 panchayats by the year 2014 and, as per reports, with the deployment of 3G, 4G and BWA India could have 36 crore mobile broadband connections by the year 2016. According to Sh. Sam Pitroda, Prime Minister's advisor on infrastructure, innovation and information, Union government approved over Rs 6000 crore to launch and build this network.
The network would be like super highways where everybody would be connected and information will reach to the remotest person. The real benefit of video conferencing was for education and there were similar benefits for health, vocational education and other activities. The Government initiative to make the information accessible to each citizen through the information infrastructure with 27 missions in 17 states, e-courts, Akash Ganga projects etc. which are meant for making the information available to the people is a step to grow the social media and related business.

Once the information infrastructure is established, it will boost up connectivity of people with government, business, small scale industries and open avenues for the growth of personal computing devices ranging from the smart phones, tablets to the PCs. The peripheral services provided by the increased use of the hardware would definitely multiply the growth driven by consumption, income, investment, employment, entrepreneurship and revenue. The people having information access will become connected to the social media networks and the dividend could thus be distributed.
Now the government has initiated taking help of the websites for receiving public opinion on various policy issues. The experiment is showing positive results as the people are coming up with their own suggestions on policies- which is a much democratic way to policy formulation.


In the information led economy, social media has emerged as a powerful influential apparatus to ensure growth as reflected and empirically tested in various studies. Since social media is an outcome of internet and IT, the information sharing about products, services, business practices, enterprises, governance, policy formulation and behaviour changes which are driven by increasing income level, spiraling aspirations of middle class, changing habits of consumers and cost effective mode; its impact on business, entrepreneurs, investment, consumption and employment is inevitable. The multiplier effect of social media on the growth of web-based technology, peripheral services, innovative tele-communication devices, mobile telephony, tablets and PCs cannot be taken lightly.
The increasing information needs of the people have made the business, small scale industries, entrepreneurs, banks, financial service organizations, public services like-health, education, police, and judiciary think that they must integrate and adopt proper information infrastructure as it not only enhances their performance but also contributes to the economy as a whole. There is a strong need to understand and en-cash the rich information dividend by optimizing the use of social media and its various forms by both the public and private sectors in harnessing the hidden potential for economic growth and development.




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