Estimating the Value of New Generation Internet Based Applications in India

The study attempts to measure growth elasticity based on Internet usage and not Internet penetration. It is a refinement in the approach to measure impacts given that subscriptions sometimes do not translate into usage. Thus usage elasticity is conceptually a more accurate estimate of the growth dividend, although it also requires more precise data on usage patterns. This study measures Internet usage elasticity for India using an instrumental variable regression on a panel data set of 19 Indian states. The similar exercise is done for 23 countries in order to draw international comparisons with the Indian estimates. The growth coefficients of usage, a first for India, are a starting point to understand the magnitude of the growth impact of app-based usage.