Nageswaran: India’s gaming ban is a down payment to secure its demographic dividend

Given how dirt-poor India was in those days, Rajagopalachari was willing to accept the trade-offs involved in not following market-economy principles in certain areas. India is not dirt-poor anymore. It is a lower middle-income country with aspirations to become developed by 2047. But the trade-offs are still relevant, and they do exist.

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Humans often don’t contemplate the counterfactual, let alone comprehend it. In the case of India’s recent bill on the Promotion and Regulation of Online Gaming that got the approval of  Parliament last week, followed by the President’s assent, it is easy for many to argue conceptually that the games would go underground, and so would gamers. They may well be right. What they fail to appreciate is the counterfactual scenario: the unbridled growth of gaming in the country and its consequences. Let me provide some orders of magnitude here.

The ubiquity of smartphones, the cheapness of data in Indian mobile telephony and the inherent human predilection for gambling have combined to create a monster of huge proportions. A report by Lumikai published in November last year on  the state of India’s interactive media and gaming provides graphic details. The details pertain to the financial year ended 31 March 2024. 

India added 23 million new gamers to cross 590 million gamers that year. India was the world’s  second-largest market by mobile gaming downloads, 3.5 times larger than the US and Brazil. The average weekly time spent on games in India increased by 30% from 10 to 13 hours. Paying users were 148 million; 43% of such gamers were first-time earners in the age bracket of 18-30; 66% of them were from non-metro cities; and 44% were women. Also, 83% of users used UPI or digital  wallets to make in-game payments. 

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The National Payments Corporation of India (NPCI) has started releasing data on merchant categories of digital payments. It shows that monthly online gaming expenditure was around ₹6,200 crore in December 2022. This rose to a peak of ₹13,703 crore in July 2024. By July 2025, the figure was slightly over ₹10,000 crore per month. This equates to an annual run rate of around ₹1.2 trillion. Then we wonder why private consumption and household financial savings are not growing as fast as we would like to see them grow.

The government’s decision to enact a law to regulate online gaming while banning some has been taken in the interest of realizing India’s  demographic dividend. India needs to create at least eight million jobs per year, as per calculations shown in the Economic Survey for 2023-24. 

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Jobs will go to those equipped with education, skills, attitude and mental as well as physical health.  The consumption of ultra-processed foods, social media and online gaming—a deadly troika—threatens to erode India’s demographic dividend significantly. 

Developed countries are facing these challenges too, but they have already tasted the fruits of development. Yet, they are taking action, banning social media for children under 15 and even 16 in some cases. India is still a developing nation and can ill-afford being poisoned by the toxic offerings that a combination of technology and private-sector greed have enabled. 

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Apart from financial losses, suicidal tendencies and incidents, addiction to online gaming and social media usage renders humans economically unproductive and socially reclusive. When it comes to employability, it is far too easy to zero in on education and skilling as essential ingredients. That is not wrong, but what’s wrong is to ignore the contribution of the deadly troika towards wiping out the effects of education and skilling, thereby preventing their accumulation by the country’s youth.

There is vast empirical research, with Indian data, that shows the pervasive ill-effects of social media consumption by adolescents. We have  covered this issue extensively in the last two  Economic Surveys and recently wrote about it in Mint (shorturl.at/a8yNT). Consumption of ultra-processed foods and online gaming completes the picture. Most humans consume all these three simultaneously, chipping away at their physical, mental and emotional health.

Also Read: The journey of India’s online gaming industry

The government and India’s parliamentarians, cutting across party lines, have made the first and most important down payment towards securing the financial, mental and physical health of Indians, particularly the young population. Note that in 2023-24, 43% of gamers were first-time wage earners aged 18-30. They deserve our praise and gratitude. However, more payments need to be made to tackle the other two elements of the deadly troika. It cannot happen any sooner.

These are the author’s personal views.

The author is the chief economic advisor to the Government of India