India's Digital Public Infrastructure: A Catalyst for Economic Transformation

India's Digital Public Infrastructure, known as the India Stack, has significantly transformed the economic landscape by enabling cost-effective, scalable service delivery. The Aadhaar system, UPI, and other digital initiatives have streamlined financial operations and expanded globally, contributing to formalizing the economy and driving growth.

India's Digital Public Infrastructure (DPI), coined as the India Stack, is revolutionizing the country's economic terrain, according to the Reserve Bank of India's 2023-24 Currency and Finance report. Established on principles of public good, open access, and regulatory equity, the India Stack is a pivotal player in delivering cost-efficient services, especially to marginalized communities.

Since 2009, Aadhaar has evolved into the largest biometric identification network globally, with 1.38 billion ID holders encompassing 98% of India's population. This 12-digit system has revamped identity verification, enabling secure, seamless authentication without requiring physical presence.

The Pradhan Mantri Jan Dhan Yojana (PMJDY) expanded Aadhaar's impact, linking 52.5 crore bank accounts to it. This has been transformative in rural and semi-urban areas, where over 50% of account holders are women. Account ownership surged from 35% in 2011 to 78% in 2021. Aadhaar facilitated 116 billion authentications and 20 billion e-KYC verifications since 2014.

This extensive application has formalized the economy. The Goods and Services Tax Network (GSTN) enrolled 1.4 crore taxpayers, issuing over 400 crore e-way bills, showcasing robust integration into economic operations. Direct Benefit Transfers (DBTs) streamlined subsidy distribution, transferring Rs 6.9 lakh crore for 315 schemes to 176 crore beneficiaries in 2023-24.

The DPI framework saved an estimated Rs 3.4 lakh crore by March 2023, reducing leakages and ensuring benefits reach the intended recipients. The Unified Payments Interface (UPI) has become a digital payments game-changer, integrating multiple bank accounts into a single app for seamless transactions.

UPI transactions skyrocketed from 12.5 billion in 2019-20 to 131 billion in 2023-24, accounting for 80% of digital payment volumes, with nearly 14 billion transactions in June 2024 alone, supported by 424 million unique users. This growth highlights UPI's role in facilitating secure, convenient transactions, contributing to a 50% CAGR in transaction volume and 10% in value over the past seven years.

India's DPI is extending its reach globally. The Modular Open Source Identity Platform (MOSIP) aids other countries in developing digital identity solutions. Collaborative efforts are underway to integrate UPI with fast payment systems in Singapore, the UAE, and Nepal, easing international remittances.

Collaborations with other central banks and foreign payment providers aim to extend UPI and RuPay acceptance internationally. Economic value generated by DPIs is projected to rise to 2.9-4.2% of GDP by 2030, potentially boosting India's growth and total factor productivity.

As India's Digital Public Infrastructure evolves, it is poised to drive economic transformation and improve citizens' lives.

(With inputs from agencies.)