How Jio Saves 60,000 Crores Per Year for India?

In a research report from Institute for Competitiveness (IFC), the Indian citizens have saved at least 60,000 crores in a year after Reliance Jio started its services. Jio was officially launched in September 2016 and was able to quickly attract a huge customer base with its mind-blowing free and cheap offers.

One can understand the level of impact by looking at the fact that after Jio started its services, the cost of 1GB high-speed data has dropped by whopping 96% from Rs 152 to Rs 6. This has led the Indian economy save at least 60,000 Crore INR in annual savings for consumers and will expand India's per capita GDP by about 5.65 per cent, said the report.

Jio has made data accessible and affordable, with average prices per GB dropping drastically, bringing the internet within the reach of a previously inaccessible group of the Indian population. Such a drastic reduction in data prices has also allowed newer segments of society to use and experience it for the first time.

"As per our calculations, even the most conservative estimate shows that due to Jio's entry, the annual financial savings to the consumers would be to the tune of USD 10 billion," said the report by Institute for Competitiveness(IFC). It said econometric analysis shows that through widespread network effects, Jio's entry would enhance India's GDP by about 5.65 per cent, if everything else in the economy remains constant.

The effect on GDP growth due to higher Internet penetration will not just be a contribution of the telecom sector but also the various externalises that arise out of the internet economy, it said. IFC analysed Jio's entry to measure the impact of internet penetration on economic growth. The model used data from 18 states from 2004-14 and showed that a 10 per cent increase in internet penetration led to per capita GDP rising by 3.9 per cent, if all else remains constant.

"Since Jio's entry into the Indian telecom markets on September 2016, the face of the industry has not remained the same. It changed the basis of competition by offering free lifetime calling to its consumers in an industry that derived 75 per cent of its revenue from voice," the report said. Within six months of Jio's launch, India became the highest mobile data user in the world consuming over 1 billion GB data every month as compared to 200 million GB earlier.

At the end of 2017, Jio users consumed almost 10 GB data, 700 minutes of voice and 134 hours of video every month on an average. "Data usage in the country has soared. India is now only second to China in terms of app downloads. Such levels of digital consumption were unprecedented a year-and-a-half ago," it said.

Click Here to Read our earlier post about Jio Impacts.