Management Perspectives

The rapidly evolving technology landscape is disrupting the competitive environment. For most, this means undergoing a digital transformation is no longer optional. Approximately 89 per cent of organisations1 are planning to adopt or have already adopted a digital business strategy. Yet shockingly, about 70 per cent of these programs fail to reach their goals2 . The implications are significant—from lost investments, frustrated stakeholders, unsatisfied customers, and lost ground to competitors—all of which can be fatal for a business. The size of the Indian internet economy will grow from USD 175 billion in 2022 to USD 1 trillion by 2030, according to a report by Google, Bain & Company, and Temasek, published in June 2023. Against the current 4 to 5 per cent, the internet economy will contribute 12 to 13 per cent to India’s GDP by 2030. With the second-largest internet population in the world (880 million internet users in India in 2023), this revolution is possible due to the creation of robust digital public infrastructures (DPIs) such as UID (Aadhaar), UPI (unified payment interface), FastTag, DigiLocker, ONDC (open network for digital commerce), and many more. Innovative digital solutions built on top of such digital infrastructures have benefited individuals, businesses, and government departments alike. In addition to the hard infrastructures like roads, rail, air, and ports, such soft infrastructures play a vital role in the overall growth and development of an economy. It also enables sustainable digital development and consumption among individuals and businesses, making its contribution towards realising UN’s sustainable development goals.

DPI Architecture

India’s DPI is built upon three layers: identity layer, payment layer, and data layer. These layers are guided by the principles of open source, interoperability, trust, and consent. Enabled by Aadhaar’s unique identification system, the identity layer provides and authenticates a unique ID to every resident. UPI-supported payment layer allows interoperable, cheap, and fast payment from anyone to anyone with ease. Governed by the Reserve Bank of India’s (RBI) rules and sectoral guidelines & standards, this layer includes banks, financial intermediaries (including payment gateways), NBFCs, and application providers. Finally, the data layer provides a secured and trusted mechanism of data sharing based on users’ consent. The data protection policies and regulations provide the safeguards for secure data transmission among various stakeholders.

Applications of Indian DPIs:

Following are some of the popular applications of DPIs in India: 

• Aadhaar: Under the aegis of the Unique Identification Authority of India (UIDAI), Aadhaar is a 12-digit unique identity number based on the biometrics and demographic data of residents. It is the world’s largest biometric-based identification system which is a crucial building block of India’s DPI. Aadhaar is a proof of identity that forms the basis of e-KYC and facilitates citizens to avail themselves of a range of government schemes and subsidies. 
• UPI: Unified Payments Interface links bank accounts to any UPI-enabled app, making online payments fast, reliable, secure, and hassle-free. As a cashless method of payment, it has changed the spectrum of the online payment landscape in the country by revolutionising the financial inclusion of the marginalised sections of society. This has made lives easy for micro and small businesses at every nook and corner of the country. 
• FASTag: National Payments Corporation of India (NPCI), jointly with the National Highways Authority of India (NHAI), developed the National Electronic Toll Collection (NETC) program. Based on the Radio Frequency Identification (RFID) technology, FASTag enables an electronic toll collection system in India. Linked with the vehicle owner’s unique FASTag ID, the money gets automatically deducted from the linked bank account without any human intervention. This has significantly reduced the problem of traffic congestion (at toll booths) and provided a smooth flow of vehicle movement that, in turn, helped in fuel-saving, pollution control, and transparent collection of cashless toll payments across the country. 
• DigiLocker: An initiative of the Ministry of Electronics & IT (MeitY) under the government’s Digital India programme, DigiLocker is a cloud-based wallet for secure storage, sharing, and verification of digital documents. The issuers of these documents include banks, insurance companies, central and state (educational) boards, central and state government departments, among others. With 261+ million registered users, DigiLocker has issued more than 6.7 billion documents electronically through 1703 issuers. 
• Open Network for Digital Commerce (ONDC): An open network to promote small retailers to join the e-commerce wave in India that can increase the existing e-retail market of 4.3% (of overall retail) to its optimal potential. Through a system of network partners and ecosystem partners, ONDC promises to create an equal level playing field for small retailers in the e-commerce space. In comparison to existing platform-centric models, ONDC is a network-centric model. At present, with ten live domains (categories), ONDC is available in 586 cities across India, having 4.18 lakh sellers/service providers on its network. 
• National Academic Depository (NAD): Powered by DigiLocker, NAD has approx. 2,400 registered higher education institutes, universities, and boards storing and publishing over 800 million academic records, enabling smooth transfer and sharing of documents among students, institutes, and verifying agencies. This is a fast, reliable, easily accessible, and secure method for document sharing and verification by minimising paper waste and unnecessary expenses. 

Ayushman Bharat Health Account (ABHA): Under India’s digital health mission, the Government of India initiated Ayushman Bharat Digital Mission program. The idea is to create a unique 14-digit ABHA number for citizens that connects various stakeholders in a healthcare ecosystem to provide easy, hassle-free, and seamless access to personal health records and healthcare-related data sharing among various stakeholders (doctors, hospitals, labs & pathologies, insurance providers, and public healthcare programs). With 3 lakh registered healthcare professionals, the platform already has 358 million ABHAlinked health records for 587 million ABHA numbers.

Benefits of DPIs

Given its nature and ease of integration— with existing infrastructure and services— the DPIs have become more like utility services. It enabled the financial inclusion of marginalised sections of society through proper authentication and direct benefit transfers to the beneficiaries of government schemes and subsidies, credit to the J-A-M (Jan-Dhan, Aadhaar, and Mobile) trinity. This has further fueled the growth of micro and small businesses through e-KYC, sharing and storage of e-certificates (through DigiLocker), and easy & reliable payment integration through UPI. Using DPIs, startups and private players are now providing innovative solutions to unique problems, ranging from education, healthcare, digital payments, logistics, agriculture, and many more. By making vital services available to all citizens and organisations, all-encompassing digital public infrastructures (DPIs) promote a more accessible and equitable digital economy for all.

The way ahead

In the recently held G20 summit under India’s presidency, the G20 Digital Economy Working Group (DEWG) identified three priority areas: digital public infrastructure, security in the digital economy, and digital skilling. Some of the focus areas that will further boost the growth of the digital economy in India include: the creation and usage of content in vernacular languages to cater to diverse linguistic communities; investment in digital infrastructure, mostly in rural and far-fetched areas, to improve stable internet connectivity through reliable and affordable broadband networks; and most importantly, laws and regulatory provisions to safeguard data protection, privacy, and secure access to digital services. According to a report by NASSCOM and Arthur D Little International (a Bostonbased management consulting firm), the economic value created by DPIs in India will reach to somewhere between 2.9 per cent to 4.2 per cent of GDP by 2030, from 0.9 per cent in the year 2022. Further, around 30 countries around the globe have shown interest in adopting or are at the initial levels of implementation of UPI and Aadhaar-like systems. This has helped India to secure a leadership position in the digital innovation space globally.