India’s DPI-IndiaStack differs from systems in many advanced countries, in India, the three crucial areas—identity, documents, and payments—are developed by state actors, ensuring proper convergence of ideas and coordination
During a conversation with students at the Indian Institute of Management in Mumbai on 30, 2024, S. Jaishankar, Minister for External Affairs, remarked that India’s Digital Public Infrastructure (DPI), commonly known as India Stack, is often a topic of conversation when he travels abroad. He noted that people worldwide are curious about India’s success story in this area. Having attended the same event, he found myself reflecting on similar discussions during my own international trips, where the curiosity about India’s DPI was equally evident among both foreign audiences and the Indian diaspora.
However, despite its widespread use, he noticed a surprising lack of awareness about DPI among many young people in India. During job interviews, he asked candidates about their understanding of DPI-IndiaStack, and it became clear that many are either unfamiliar with it or only have a vague idea, even though they regularly use its features. This gap in awareness suggests a broader issue, which is why I’m writing this article to address the following questions: What is DPI-IndiaStack? How does it differ from digital initiatives in other countries? What impact does it have on our economy, society, and governance? And what should we be cautious about?
Understanding DPI-IndiaStack
DPI-IndiaStack comprises three digital layers: identity, documents, and payments. It leverages the latest digital technology to create a public infrastructure that is universally available to all individuals and entities that wish to develop systems and applications upon these layers. Globally, there are efforts to develop similar digital public infrastructures in various countries. The Center for Strategic and International Studies’ paper, *Unpacking the Concept of Digital Public Infrastructure and Its Importance for Global Development,* and the UNDP Explainer offer valuable insights into these international efforts. DPI-IndiaStack was a key topic of discussion at the recent G-20 Summit in New Delhi in September 2023, as highlighted by the T-20 Report submitted at the conference.
As for India, DPI-IndiaStack is a remarkable success story. he said ” experiences as a user and as a senior government official have shown how actively DPI-IndiaStack is used to enhance governance, particularly in welfare programs”.
Rishi Agrawal, CEO, and Co- founder of Teamlease Regtech, “Digital Public Infrastructure (DPI) has been a cornerstone in the growth of the digital economy, fostering inclusivity and creating a level playing field by emphasising open access, interoperability, and scalability. The JAM trinity—comprising Jan Dhan, Aadhaar, and Mobile—has been instrumental in promoting digital inclusion. Aadhaar has simplified identity verification by reducing the need for multiple identity documents (such as Voter ID, ration card, and birth certificate) to just one. This has made establishing and verifying an individual’s identity more straightforward and efficient.
Similarly, the Jan Dhan Yojana has empowered individuals and businesses by enhancing financial inclusion and improving access to affordable banking, credit, and insurance services. The proliferation of smartphones with high-speed internet constitutes the third prong of the trinity, which has collectively spurred digital innovation. This innovation is evident in the variety of digital products and services available today, where identity verification and online payments are now just a click away. Individuals and businesses no longer need to endure long queues and carry extensive paperwork to access government services, instilling a sense of confidence and capability.
The Three Layers Of DPI-IndiaStack
Identity Layer: The first layer, the identity layer, establishes a person’s identity in a robust and reliable manner, supported by biometric data and other information such as gender, age, and address. This layer eliminates the need for costly physical due diligence, streamlining transactions for beneficiaries of government schemes and private transactions alike. In India, the Aadhaar system provides this identity layer, securely storing information such as name, gender, biometrics, date of birth, and address. Linked to mobile numbers, Aadhaar offers a reliable platform for identity verification, operated by a statutory authority under the Aadhaar Act. The Unique Identification Authority of India (UIDAI) explains the functional advantages of Aadhaar, which have been acknowledged by the Union Government in the Economic Survey for 2022-23, as reported by the *Deccan Herald*.
Documents Layer: The second layer is the documents layer, created by the Ministry of Electronics and Information Technology through the DigiLocker platform. DigiLocker serves as a digital repository for electronic storage of documents from various authorities, such as the UIDAI, Income Tax Department, universities, and road transport authorities. Documents like Aadhaar, PAN cards, driving licenses, school certificates, and degrees can be directly sent by issuing authorities to an individual’s DigiLocker account. This system reduces the time and cost associated with traditional document verification processes.
Payments Layer : The payments layer, developed by the National Payments Corporation of India (NPCI) under the Reserve Bank of India, includes digital payment systems like RTGS, NEFT, and the popular UPI. These systems have facilitated the formalization of the economy by replacing cash transactions with digital ones. UPI’s revolutionary design and the widespread availability of internet services have enabled instant digital transactions, even in remote areas. This ease and reliability have led to the widespread adoption of UPI by small businesses across the country.
JAM Trinity
A significant use of DPI-IndiaStack is the JAM Trinity for the targeted distribution of government welfare programs. The acronym stands for Jan-Dhan Account (J), Aadhaar (A), and Mobile number (M). This trinity has become a major tool for Direct Benefit Transfer (DBT) to beneficiaries of government schemes. The system has helped eliminate fake names and duplicates, ensuring that assistance reaches beneficiaries directly in their bank accounts. This process has resulted in significant cost savings for the government.
Abhishek Gupta, Founder and Managing Partner, Pierag Consulting LLP, “The digital public infrastructure (DPI), is vital for India, as it digitises the public services to drive modernisation in governance and fuel economic growth. By digitizing services such as financial transactions through UPI, education, healthcare, business, and more the government and institutions are serving the cause of financial inclusions and promoting innovation. It strengthens the digital dream, underpins smart city development, and aids disaster management. For DPI to achieve its full potential, financial awareness must be at its core—empowering every citizen to not only access but also harness the power of digital solutions for a more inclusive and equitable future. While the advancements are moving at a great speed, it is critical to note that DPI systems handle vast amounts of sensitive data, making them attractive targets for cyberattacks. The risks can include data breaches, identity theft, and misuse of personal information. Ensuring robust cybersecurity measures and privacy protection is of paramount importance in this journey.”
Comparison With Other Countries
India’s DPI-IndiaStack differs from systems in many advanced countries. In India, the three crucial areas—identity, documents, and payments—are developed by state actors, ensuring proper convergence of ideas and coordination. This state-driven approach contrasts with many advanced countries where these platforms are primarily developed by private entities, leading to coordination challenges. Additionally, strict data protection and privacy laws in advanced countries can make it more difficult to develop and integrate these layers.
Subash Vasudevan, CBO and Co-founder, iBUS Networks, “DPI is a catalyst for societal transformation. It has empowered citizens and revolutionized governance. The G20 DPI task force report underscored the profound impact of digital public infrastructure on our country. DPIs have already generated a significant economic value equivalent to 0.9% of India’s GDP facilitating access to essential services like finance, health, and education through digital IDs, aiding financial inclusion and service efficiency. While the public discourse on DPI often revolves around UPI, it’s paramount for us to recognize the underpinning that facilitated this remarkable success – the robust growth of the telecom industry in our country. Connectivity, mobile, and data are integral to the success of any digital public infrastructure.”
Impact On Society, Economy, & Governance
DPI-IndiaStack has significantly impacted the creation of a platform of trust for identities, documents, and payments, enhancing efficiency in economic transactions and boosting economic development. Trust plays a crucial role in economic and social progress. Studies by scholars like Paul Zack, Stephen Knack, and Christian Bjornskov highlight the correlation between trust and growth. Societies with higher levels of trust tend to experience higher economic growth and wealth. DPI-IndiaStack helps establish trusted business relationships, reducing transaction costs and facilitating economic contracts.
Areas Of Caution
While DPI-IndiaStack’s development is commendable, there are areas that require caution. For the identity layer, stories of individuals possessing more than one Aadhaar card, particularly criminals, highlight potential vulnerabilities that need to be addressed. Similarly, the DigiLocker platform, though well-conceived, has not achieved the same level of ubiquity as the identity and payments layers. Document-issuing agencies must be fully onboarded to maximize the platform’s potential.
In the payments layer, while NPCI has done an excellent job, instances of fraud and compliance issues with fintech companies, such as the recent case with PayTM, underscore the need for continuous vigilance and improvement. Data protection and privacy are also emerging as significant concerns, as the three layers handle personal data. India’s new data protection and privacy law is a step in the right direction, but its implementation will take time.
Finally, it’s important to recognise that trust in economic development cannot be built solely through digital platforms. Building trust in the physical world remains essential. Our Constitution emphasises fraternity as an enduring value, and undermining this can lower the trust factor. Digital systems and social systems of trust must work hand in hand to achieve a balanced and effective approach to economic development.
