India’s digital public infrastructure (DPI), loosely the India Stack and more, is a marvel of our times, shaped in a unique partnership between governments (Union and States), regulators, the private sector, selfless volunteers, startups, and academia/think tanks. Engendering sustained collective action at scale between so many disparate entities itself is magical and the outcomes are India’s answer to Web 3, perhaps even superior in many ways.
Much has been spoken and written about India’s DPIs, and as such, this article does not seek to repeat all of that, but instead about what is coming next, and who is driving it. What began as a foundation with Aadhaar created by Nandan Nilekani and R.S. Sharma in 2009 has led to many more Lego blocks, coming on top of it, and on its side, to create a superstructure which delivers consistent, affordable, and across-the-board value to citizens, government and the corporate sector — wherever it gets used imaginatively.
The rebirth of Aadhaar happened in 2014 when Prime Minister Narendra Modi gave it a canvas far wider and bigger than what was originally envisaged, and enabled it to become the rocket ship to launch good governance on. Today, over 1,700 Union and States government schemes ride atop it.
Aadhaar and the private sector
The judgment of the Supreme Court of India had affirmed privacy to be sacrosanct, and led to an unintended slowdown of the opening of Aadhaar to the private sector to unlock its value even further. The rapid adoption and attendant visible ease of doing business in day-to-day transactions for citizens, has now led to a gradual opening of Aadhaar, beginning with voluntary usage, for various private sector applications.
Aadhaar holders can voluntarily use their Aadhaar for private sector purposes, and private sector entities need not seek special permission for such usage. Also, between government departments (intra- and inter-State) Aadhaar data can be shared, but with the prior informed consent of the citizen. Banks and other regulated entities can store Aadhaar numbers as long as they protect it using vault and other similar means, as in Unique Identification Authority of India security regulations. A new private sector-friendly UIDAI is racing ahead to incentivise Aadhaar usage, to become richer and more meaningful.
These three changes will lead to the next leap frogging of the India Stack as a whole, under a rare alignment of a dynamic political executive and inspired volunteers. Proof that this is work in progress is that Aadhaar authentications have shot up to 2.2 billion per month, and the cumulative number over the past 12 years has crossed 100 billion. Taking just one example, the Goods and Service Tax Network (GSTN) and then account aggregator could not have happened without an Aadhaar number and Permanent Account Number (PAN) database existing. Thus, the Lego blocks keep building one on top of the other.
Think of the kind of greenfield market innovation on top of Aadhaar which it can potentially create or unlock. The United States CLEAR programme (an expedited airport security/airport identity verification process) is now active at 51 airports with about 15 million members at a cost of $369 per annum for a family of four. In contrast is a slightly different variant, the DigiYatra, which is totally free of cost for the Indian traveller. Digi Yatra is a Biometric Enabled Seamless Travel (BEST) experience based on a facial recognition system (FRS), again through a partnership between industry and government, which ensures seamless identification of passengers at key check points such as airport entry, security check and boarding gate clearance. The pilots have shown that about two lakh passengers have utilised this successfully. Air passenger traffic in India was estimated to be over 188 million in airports across India in the financial year 2022, out of whom over 22 million were international passengers. When Digi Yatra reaches a third of them, it will lead to further second order effects and more innovation.
Take DigiLocker, one of the least known DPIs, which today has 150 million users, six billion stored documents, and done with a tiny budget of ₹50 crore over seven years. Plans are afoot to expand it to many countries around the world, and with this microscopic budget. When one applies for a passport now, one need not even upload any portable document format (PDF) any more or submit some notarised papers. A simple consent on the passport application form allowing it to fetch the relevant data from DigiLocker does the magic. Zerodha, Upstox, RazorPay, Equal and many other insurance and fintechs would not exist today but for the DigiLocker APIs, for their Know Your Customer/Client happens through it, almost instantly.
Here is another example. When DigiLocker was used in a Karnataka Police recruitment drive to verify the academic credentials of candidates, it led to the process being cut down by about six months.
Today, it is a travesty that there is no single portal where industry can see all the necessary (and many unnecessary) compliances, whether at the Union or the State level. If an Enterprise DigiLocker can be created, then it can lead to as many downloads of PAN, GSTN and the other documents as needed by multiple departments across many States, saving huge costs and headaches for businesses.
Let us consider just one more metric, namely, the unified payment interface or UPI which is breaking records under the visionary leadership at the National Payments Corporation of India. It has now crossed eight billion transactions per month and transacts a value of $180 billion a month, or about a staggering 65% of India’s GDP per annum. This does beg the question whether the growth of UPI impacts GDP significantly. Or, is it GDP neutral? In other words, does it merely take away a part of the existing payments through UPI transactions? Or, does it allow those who never transacted before to come onto the platform and increase the size of the cake? The jury is still out on this.
India’s DPI marks our second war for independence — economic freedom from the day-to-day drudgery of life and transactions, which has made it become our new business backbone that is powering India towards a $25 trillion economy by the 100th year of our political independence. Imagine what new Cambrian explosion will happen when ChatGPT meets India Stack!
The views expressed are personal. @srivatsakrishna
