India’s journey to digital dominance: From Aadhaar to UPI and beyond
India has been a trailblazer in creating an ecosystem of digital public infra and digital technology at scale. Here's where we are, and where we're headed
India has been a pioneer in using digital technology at scale. Various Digital India initiatives and an ecosystem of Digital Public Infrastructure (DPI) have played an integral role in this journey.
|A timeline representing the introduction of various DPIs in the Indian economy|
|2010 Aadhaar → 135+ crore Aadhaar cards generated|
|2013 Direct Benefit Transfer → Approx. ₹28 lakh crore transferred|
|2015 DigiLocker → Authenticated 562 crore+ documents|
|2016 Unified Payments Interface (UPI) → 7.4 thousand crore+ transactions in the Calendar Year 2022|
|2017 DIKSHA → 517 crore+ learning sessions delivered in 30+ languages|
|2021 CoWIN → Administered 220 crore+ vaccination doses|
|2021 Account Aggregator → 120+ financial institutions on board|
This was followed by the introduction of the Direct Benefit Transfer (DBT) scheme in 2013 with the objective of reducing leakages and related delays by having a more sophisticated and efficient way to transfer funds. With the rollout of Aadhaar and the opening of Jan Dhan Accounts, the identification of beneficiaries and direct transfer of cash was made possible. Currently, DBT disburses both cash and in-kind benefits for 310 schemes under 53 ministries. Since its inception, the DBT scheme has transferred a total of ₹27,72,081 crore to the beneficiaries (as on January 17, 2023).
The in-kind DBT transfers, introduced in FY18, accounted for only 10.8% of the total benefits dispensed that year. However, in-kind transfers have become more popular and accounted for approximately 57.5% of the total transfers for FY22. While these schemes suggest the large-scale nature of social benefit transfers in India, several concerns have been highlighted in the past. These include payment failures during back-end processing, disruptions to the payment schedule, and Aadhaar and bank account-related errors while cashing out.
In 2015, the Ministry of Electronics and IT introduced its flagship initiative of DigiLocker under the Digital India programme. This provides paperless storage and access to over 600 essential documents such as PAN cards, driving licences, Aadhaar cards, school mark sheets, insurance policies and so on. There are 140 million registered users on DigiLocker that have authenticated over 5.62 billion documents.
The education sector has also become a part of India’s digital journey. Launched in 2017, Digital Infrastructure for Knowledge Sharing (DIKSHA) is a national platform for school education. Built on open-source technology, it allows players in the education ecosystem to participate, contribute and leverage a common platform to achieve learning goals at scale. Solutions available on DIKSHA include energised textbooks, learning tools for children with hearing or visual disabilities, 24x7 availability of digital content through PM eVIDYA and professional development programmes for teachers, among others. This platform became particularly popular during the pandemic as it became an essential tool for students and teachers amid lockdowns and social distancing norms. As per the latest metrics, DIKSHA has delivered over 5.17 billion learning sessions (number of times learning activities undertaken) accounting for over 60 billion minutes to students across India.
Other major initiatives include CoWIN and Account Aggregator (AA) platform. Amid the pandemic, India achieved a remarkable feat by developing CoWIN which facilitated the acceleration of the vaccination programme and delivered digital vaccine certificates to the citizens. India has now administered more than 2.20 billion doses. The AA platform, though still in its nascent stage, will allow a seamless flow of information between financial institutions, thus enabling customers to easily access a wide variety of financial products and services. The platform has onboarded 26 financial institutions as Financial Information Providers (FIP) that includes 12 Public Sector Banks and 10 Private Sector Banks, and 94 financial Institutions as Financial Information Users (FIUs).
Open Network for Digital Commerce (ONDC) aims to provide a common platform for all enterprises to list their goods and services, while giving customers more independence and increased options to choose from. This is also expected to provide a level playing field to MSMEs. Unified Health Interface (UHI), which serves as one of the foundational layers in the Ayushman Bharat Digital Mission (ABDM), aims to enable interoperability in health services, while providing improved access to those services. OCEN is a set of open standards that is expected to improve access to lending and other financial services. Combined with the AA framework, Open Credit Enablement Network (OCEN) has the potential to reform the credit ecosystem in India. Lastly, Aadhaar 2.0 is poised to increase system security to align itself with other advancements in the DPI ecosystem.
While India’s digital transformation story is credible, there are also certain underlying constraints that need to be overcome to make this story universal. The basic requirement to access these services is a reliable internet connection. As per the subscription data released by the Telecom Regulatory Authority of India (TRAI) as of October 31, 2022, there are approximately 820 million broadband users in the country of more than 1.40 billion. It seems that the rise in the number of broadband users has slowed down considerably in recent years. Similarly, in a Lok Sabha session held on December 7th, 2022, the Minister of State for Communications stated that out of 644,131 villages in India, 38,901 villages do not have mobile connectivity. Thus, to improve access and scale up the solutions offered by digital technology, the government should strive towards building a more extensive broadband network that can reach the remaining population.
India has already demonstrated the promise and potential of using DPIs and innovative technology for its development challenges. Under its G20 presidency, India has the capabilities to navigate the digital cooperation efforts within the G20 nations to carry forward the vision of digital transformation that can improve the socio-economic welfare across nations.
Akarsh Bhutani is the program coordinator and research assistant with the Political Economy program at Carnegie India
The views expressed are personal