(Sanghnomics is a weekly column that tracks down and demystifies the economic world view of Rashtriya Swayamsevak Sangh (RSS) and organisations inspired by its ideology.)
India’s Digital Public Infrastructure (DPI) emerged as a significant issue during the recent G20 summit hosted by India. Initially aimed at promoting financial inclusion, the initiative has gradually evolved to bridge the digital divide, achieving remarkable progress for the world’s most populous nation. Developing countries, particularly in Africa and the Indian subcontinent, are now eager to adopt this model and seek India's assistance to enhance governance within their borders. During his visit, newly elected Sri Lankan President Anura Kumara Disanayaka and Prime Minister Narendra Modi signed several agreements, with a key India aiding Sri Lanka’s digitisation efforts. In an era defined by rapid technological change, India has positioned itself as a leader in leveraging DPI to transform governance. This initiative is not merely a technological triumph; it represents a socio-economic shift that is reshaping the relationship between the state and its citizens. India's DPI—encompassing Aadhaar, the Unified Payments Interface (UPI), and various e-governance platforms—has created a groundbreaking model for inclusive growth, transparency, and efficiency. This framework has not only revolutionised governance in India but has also inspired its adoption in other developing regions, including Africa and within the Indian subcontinent itself. Understanding this transformation requires an exploration of its historical, social, and economic contexts, as well as its broader implications.
Emergence of DPI in India
India's journey towards establishing a Digital Public Infrastructure (DPI) began in the late 20th century, coinciding with the economic liberalisation of 1991 and efforts to modernise governance and stimulate economic growth. However, these initiatives often faced setbacks due to bureaucratic inefficiencies, corruption, and widespread denial of access to finance and public services for large segments of the population. A pivotal change occurred in 2009 when the Unique Identification Authority of India (UIDAI) launched the Aadhaar programme, recognising the increasing demand for a universal identity system. The Aadhaar initiative aimed to provide a unique biometric identity for every citizen in this diverse and populous nation. By the mid-2010s, the government began integrating Aadhaar with various public services, ranging from subsidy distribution to tax filing, thereby laying the groundwork for a more expansive DPI ecosystem.
The Digital India initiative, launched in 2015, significantly accelerated this transformation. This ambitious programme aimed to "transform India into a digitally empowered society and knowledge economy," focusing on infrastructure, digital services, and digital literacy. The convergence and momentum from these initiatives have underpinned the development of a Digital Public Infrastructure (DPI) that seamlessly integrates governance, financial inclusion, and citizen engagement.
Visible Impact
The most significant social impact of India's Digital Public Infrastructure (DPI) has been its role in bridging the digital divide. Prior to the introduction of Aadhaar and the Unified Payments Interface (UPI), access to government services was often hindered by geographical, linguistic, and socio-economic barriers. For many, particularly those from rural and marginalised communities, obtaining welfare benefits, accessing banks, and pursuing education proved to be formidable challenges. By providing digital identities to over 1.3 billion individuals, Aadhaar has integrated millions into formal governance structures. This is particularly crucial for women and marginalised groups, many of whom lacked the conventional documents typically required by traditional identity systems. Furthermore, initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY) have linked Aadhaar to bank accounts, facilitating direct benefit transfers (DBTs) and significantly reducing reliance on intermediaries.
The linkages of welfare schemes have significantly reduced leakages and fraud. Subsidies intended for cooking gas (PAHAL), food grains, the Public Distribution System (PDS), and employment guarantees through MGNREGA are now credited directly to beneficiaries' accounts with complete transparency and accountability. By 2022, the central government estimated that direct benefit transfers (DBTs) had saved the exchequer over $27 billion, as ghost beneficiaries were eliminated and administrative costs decreased. The Unified Payments Interface (UPI) has democratised access to financial services, enabling even the smallest merchants and individuals in rural areas to participate in the digital economy. In 2023, UPI processed over 10 billion transactions each month, not only simplifying payment processes but also fostering entrepreneurial growth through a low-cost, real-time payment solution.
Economically Viable
The high impact of Digital Public Infrastructure (DPI) on India's economic growth is particularly evident in its role in formalising the informal economy and integrating more citizens into the financial system, which has expanded the tax base and increased revenues for public expenditure. Studies suggest that the widespread adoption of digital payments and identities could boost India's GDP by 1-2% annually. Additionally, the digital ecosystem has spurred job creation in fintech, e-commerce, and IT services. Startups leveraging UPI have generated millions of employment opportunities, exemplified by innovations from companies like PhonePe, Paytm, and BharatPe. Furthermore, the e-Shram portal provides social security schemes for informal workers, safeguarding their economic interests.
Influencing Governance in the Developing World
The Indian success story of Digital Public Infrastructure (DPI) has inspired other developing nations to explore similar models. This influence is particularly pronounced in Africa and the Indian subcontinent, where countries face comparable challenges of financial exclusion, weak governance, and inadequate infrastructure. African nations, characterised by diverse populations and varying degrees of technological readiness, have drawn significantly from India's DPI model as they seek to address these pressing issues.
Examples of Aadhaar's influence can be seen in foundational ID projects like Ethiopia's and Kenya's Huduma Namba initiative. Essentially, these systems aggregate identity data to enhance service delivery and mitigate corruption. African nations have accelerated this process by adopting India's technical expertise and open-source platforms. For instance, Nigeria launched the eNaira, while Ghana introduced GhIPSS, which is modelled after UPI, to promote cashless transactions and boost financial inclusion. These initiatives have lowered transaction costs and broadened access to financial services for previously unbanked populations, thereby improving economic participation.
Other immediate neighbours have also adopted initiatives inspired by the Indian model. For instance, Bangladesh's National Identification (NID) system and the mobile financial service bKash reflect concepts similar to Aadhaar and UPI for transferring benefits and conducting various financial transactions. These collaborations have enabled the Government of India to share its experiences bilaterally with other nations, facilitating smoother adoption and adaptation of these systems. Nepal has integrated UPI for cross-border payments, enhancing its financial connectivity with India. Similarly, Sri Lanka is exploring digital ID systems akin to Aadhaar to streamline governance and improve service delivery. In most instances, these efforts are supported by India through technical assistance and knowledge-sharing initiatives, often involving workshops and collaborative projects.
Conclusion
Far more than a mere technological achievement, India's Digital Public Infrastructure (DPI) represents a transformative milestone in governance and development. By integrating citizens into the digital economy, enhancing transparency in processes, fostering innovation, and creating blueprints for inclusive growth, its impact resonates from Africa to the Indian subcontinent. This demonstrates its potential as a catalyst for addressing shared challenges and unlocking new opportunities in the developing world. The willingness to share knowledge and expertise will bolster the digital capabilities of partner nations, allowing India's success story to extend well beyond its borders.
Earlier Sanghnomics columns can be read here.
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