Digitalization has emerged as one of the most significant drivers of structural economic transformation in the twenty-first century, fundamentally reshaping production systems, financial markets, governance institutions, entrepreneurship, and patterns of socio-economic development. In India, the rapid expansion of Digital Public Infrastructure (DPI), digital financial services, e-governance initiatives, and technology-enabled innovation has accelerated economic modernization while simultaneously creating new opportunities for financial inclusion, productivity enhancement, and institutional efficiency. This review critically examines the multidimensional impact of digitalization on the Indian economy through an integrated analysis of its influence on agriculture, manufacturing, services, entrepreneurship, public administration, and financial systems. Rather than viewing digitalization merely as technological adoption, the study conceptualizes it as a process of institutional and structural transformation that reshapes economic relationships, governance capacity, and developmental trajectories. The review further evaluates emerging challenges—including digital inequality, cybersecurity, artificial intelligence governance, employment transitions, and regulatory preparedness—and identifies policy priorities necessary for sustaining inclusive and resilient digital growth. By synthesizing contemporary scholarly literature and policy developments, the paper contributes to a more comprehensive understanding of India's evolving digital economy and provides a conceptual framework for future research on technology-led development in emerging economies.