A new report has cast a spotlight on the starkly uneven pace of digital transformation across Indian states. While the country's digital economy is expanding at a rapid clip, significant disparities in connectivity, platform adoption, and cybersecurity measures persist, creating a multi-tiered landscape.
The CHIPS Framework: Categorizing India's Digital States
The study, titled 'State of India's Digital Economy', was released by the Delhi-based economic think tank Indian Council for Research on International Economic Relations (ICRIER) in collaboration with the Prosus Centre for Internet and Digital Economy (IPCIDE). It employs a comprehensive CHIPS framework, evaluating states across five pillars: Connect, Harness, Innovate, Protect, and Sustain.
Based on their overall scores, the report classifies states into four distinct clusters. Advanced digitalizers, with a CHIPS score above 48, include Delhi, Kerala, Karnataka, Maharashtra, and Haryana. These states are home to major tech hubs like Bengaluru, Mumbai, Pune, Gurugram, and Kochi. They are followed by assured digitalizers (scores 41-44), ascending digitalizers (32-38), and aspirational digitalizers (25-29).
Closing the Connectivity Gap and The Rise of Public Platforms
Connectivity, driven by smartphone and internet penetration, remains the fundamental bedrock of digitalization. Nationally, internet usage averaged 63% in 2024, with 11 states exceeding this mark. A promising trend is that the sharpest gains between 2022 and 2024 were recorded by states in the lower-tier clusters, such as Uttarakhand, Madhya Pradesh, Himachal Pradesh, Jammu and Kashmir, Assam, Jharkhand, and Bihar, indicating a catch-up effect.
Beyond access, India's digital narrative is increasingly shaped by usage. The report highlights a pivotal shift: Digital Public Infrastructure (DPI) systems like Aadhaar and the Unified Payments Interface (UPI) have achieved reach comparable to popular private platforms among connected users. Aadhaar enjoys near-universal coverage, and UPI's usage now rivals that of streaming and social media apps. However, this success is not uniform across all public platforms, with tools like e-NAM and e-Sanjeevani still seeing limited adoption.
The Persistent Vulnerability: Cyber Protection Lags
Despite progress, the report sounds a strong caution on cybersecurity. A high level of digitalization does not equate to robust protection. Average fraud losses per incident remain high across all state clusters, including the most advanced ones. Interestingly, the states identified as offering the strongest protection against digital threats—Assam, Rajasthan, Punjab, Madhya Pradesh, and Bihar—are not among the top digitalizers, revealing a disconnect between adoption and safety.
The findings suggest that India's next phase of digital growth will depend less on building new infrastructure and more on strengthening access, driving adoption of all public platforms, and fortifying cyber protection mechanisms. Without addressing these critical gaps, the nation's rapid digital expansion risks being both inequitable and insecure.
