As leaders from across the world converged in New Delhi for the G20 summit, what stood out were images of ambassadors and delegates lining up to make payments through the Unified Payments Interface (UPI).
While many lauded the initiative, others were bewildered at the state-of-the-art technology which processed transactions in a span of seconds. As the G20 fever peaked, India left no stone unturned to tout its digital public infrastructure (DPI), also called India Stack, of which UPI is the biggest and most popular foundational block.
From mega displays of Digital India to booths helping delegates experience the state-backed DPIs, authorities have put the entire India Stack juggernaut on display in New Delhi. At many of these meetings, Indian officials also actively pitched the digital payments stack to representatives of various countries and called for collaboration in the digital payments space.
However, this was not unexpected. DPI is the centrepiece of India’s G20 Presidency, which aims to advance financial inclusion globally through technology. Amid ongoing geopolitical tensions, India’s digital pitch was unanimously accepted at the bevy of G20 meetings organised in the country in the past many months.
The big clincher for India during its Presidency has been building a consensus on how to shape the future of DPIs effectively. For the first time in history, a description of open DPI was collectively adopted by a group of countries at the meeting of G20 Digital Ministers in Bengaluru in August.
In contrast, the same meeting during Indonesia’s presidency in 2022 concluded without an agreement on a joint declaration. Eventually, at the November 2022 G20 leaders’ declaration in Bali, members half-heartedly recognised the importance of ‘advancing inclusive cooperation on digital trade, expanding affordable and high-quality digital infrastructure’.
This was a major win for India, which has banked on the robustness of its digital public goods and arrived on the global stage as a strategy player in the domain.
One of the world’s largest and fastest-growing digital markets, India has looked mainly at DPIs as a way of governance and a building block to create jobs and enhance connectivity while facilitating services to citizens.
A Multi-Layered Ecosystem
Back in 2009 when Aadhaar was launched to build a unique identification system for Indians, hardly anyone thought it would serve as the foundation block of India’s DPI ecosystem. While the project was initially envisaged to offer digital identity proof, it was later bundled to ascertain identity for availing government schemes and subsidies.
Aadhaar came in handy as the government first envisaged the idea of JAM (Jan Dhan-Aadhaar-Mobile) trinity back in the 2014-15 Economic Survey. This entailed linking Jan Dhan accounts with Aadhaar and mobile numbers to plug the leakage of government subsidies. This gave Indians the first taste of a digital public infrastructure. It also brought millions of unbanked Indian households under the ambit of banking, bringing a treasure trove of data.
Part of the ‘mature layers’ of the larger India Stack, Aadhaar, coupled with the ‘paperless layer’ (DigiLocker), upended the state-backed DPI ecosystem. It streamlined the delivery of services. Alongside, a bevy of services were launched, such as E-Hospitals, E-Pathshala, My Scheme, UMANG, and Meri Pehchaan to deliver government services to individuals.
However, two major developments changed the course of India’s DPI experiment – demonetisation and Covid-19 pandemic. Launched months before the government undertook the demonetisation exercise, UPI came in handy as people lined up to exchange notes. At the time, a mere 30 banks were live on the UPI network but the number has since scaled to 473 banks and fintechs currently.
The open payments network saw widespread adoption as it changed the very thesis of payments in India. The development spawned a new wave of fintech startups as new products such as QR code and soundboxes gave birth to India‘s fintech revolution and juggernauts such as PhonePe, Paytm and Google Pay.
The identity, paperless and payments layers consolidated into mature layers, which resulted in India becoming the first country globally to develop all three foundational pillars of digital public infrastructure.
Complementing these offerings were other products such as eKYC, Aadhaar-enabled payments system (AEPS) and e-Sign, which brought down paperwork and visits to one’s local office, bringing government services to citizens’ fingertips. Bharat Bill Payments Systems (BBPS) and card network RuPay also leveraged these offerings to bring easy banking solutions at users’ doorsteps.
Building New Elements
On the sidelines, officials were also building other elements of the India Stack – the nascent layers. This included the health consent layer and the financial consent layer.
The National Health Stack began to take shape when the pandemic broke out. Under this, a slew of offerings were rolled out, including the globally sought-after CoWin platform as well as the Aarogya Setu app. In addition, the government also envisaged offerings such as National Health Electronic Registries, a National Health Analytics Platform, Digital Health IDs, Health Data Dictionaries and streamlining supply chain management for drugs.
Bits and pieces of the NHS have been incorporated under the Ayushman Bharat Yojana while much work is still afoot.
In addition, the government also launched multiple products such as Government e-Marketplace (GeM) to digitise the procurement process of government agencies and the National Single Window System to help apply for approvals according to business requirements.
There is also the TReDS platform which helps facilitate MSMEs to unlock working capital by converting their receivables into cash. This sets the stage for the financial consent layer, which will be led by the account aggregator (AA) framework which aims to rejig the entire financial services ecosystem.
As these products pan out, the government has also focused on using the DPI to transform how ecommerce functions. The Centre’s ambitious Open Network for Digital Commerce (ONDC) is deploying open protocols to boost adoption of ecommerce in India and bring smaller merchants on the ecommerce bandwagon.
Another project that is in the making is the Open Credit Enablement Network (OCEN), which will create a decentralised open credit network, codifying the flow of credit between borrowers, lenders, and credit distributors as per set standards.
India’s Shining Star
After DPIs made waves in the country, the government appears to be intent on taking the India Stack global. At the G20 summit, Indian officials showcased the products to global leaders and also actively sought their cooperation to take these products across the world.
The National Payments Corporation of India (NPCI) has already struck partnerships with countries, central banks and firms across the world to expand the market for their products. It even launched NPCI International Limited, its international arm, to strategise its expansion overseas and create dedicated products.
The BBPS has also seen interest from other nations even though the cross-border bill payments system is still rolling out products in a staggered fashion, largely targeted at Indians living abroad.
The government has also made no qualms about its pitch that DPIs have sped up financial inclusion and productivity gains. India’s G20 Presidency has also embedded DPIs as a key pillar within the G20 financial inclusion agenda. These recommendations cover five aspects:
Use of DPIs for accelerating financial inclusion
Fostering well designed DPIs
Regulatory and supervisory aspects of DPIs
Institutional and governance arrangements by DPIs
Ensuring customer protection.
In the words of finance minister Nirmala Sitharaman, India considers this a strong legacy of its G20 Presidency. Going forward, the Centre intends to pitch for implementing these norms, ensuring that ‘DPIs remain areas that will continue to be heard across the G20 forum’.
With India’s digital governance pitch emerging as the bedrock of India’s G20 Presidency, the posture might as well succeed in reinvigorating the group’s relevance in current turbulent times. As more and more people join the digital fold, India could be looking at creating an unparalleled digital public infrastructure juggernaut, provided it continues with the brisk pace of innovation.
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