Determinants of Digital Divide using Demand-Supply Framework

Abstract

In last two decades, India has seen high economic growth. Concomitantly, there has been increase in availability and use of information and communication technologies (ICTs). However, ICT penetration in India is much less when compared to global averages. There exists a substantive level of inequality in ICT access and use. Empirical studies on extent and nature of digital divide in India are few, especially those with explicit theoretical demand-supply framework, using consistent and reliable pan India data. This paper is an attempt to address these research gaps. It examines the digital divide in India across socio-economic classes and different political-geographic regions. The reduced form demand equations for two ICT instruments – Internet and mobile phone - are estimated separately for households aggregated at subnational level. A multi-variate econometric model identifies both demand and supply side factors shaping differential access by households. Findings indicate digital divide is a reflection of existing socio-economic divide. On the demand side, socio-economic inequality as manifest in the economic conditions of households, social category, occupational profile, age and education status are key determinants of district level digital divide. Further, supply side factors like availability of electricity, mobile network and extent of urbanization also play an important role.