Digital public infra can deliver global solutions
As demonstrated by India through UPI, a carefully designed and principled DPI can provide solutions at scale to the challenges of our interconnected world. Countries should form a coalition of the willing to adopt a common framework that places data privacy at its core
Over the last few years, the world has been beset by many challenges, occupying the focus of the G20: The pandemic, the war in Ukraine and its aftermath, the climate crisis, the sovereign debt crisis, and the recent cost of living crisis. Through this, our societies have been challenged to the core. However, there has been one silver lining on the horizon: The power of carefully designed Digital Public Infrastructure (DPI) to provide transformational solutions. The transformational impact of DPI is a defining theme of India’s G20 presidency.
Throughout history, it is a well-established fact that economic development is the key to providing opportunities critical for tapping the potential of an economy. Typically, as countries develop, incomes rise, and institutions strengthen to deliver change. This process takes time, often cycles of half-a-century or more. Today, despite advances in digital technologies, a large swathe of the population is not part of the formal financial system (about 1.4 billion); and so, they are unable to reach the national marketplace quickly. This is because less than one-third of countries globally have a fast payments system, in spite of international efforts to jump-start the process; and, so, are unable to make tangible gains in finance, health and commerce through data empowerment as consumers have poor access to their data, no control over where it is stored, or how it is processed or sold. India’s experience has shown that effective and inclusive DPIs – interoperable digital platforms that address a specific need such as identity, digital payments, and trusted data sharing, but when put together, create a powerful stack (India Stack) of integrated applications — can help countries shorten the learning and adoption curve of evolutionary processes. One rough estimate suggests that a well-thought-out DPI framework allowed India to achieve in a decade what it would have otherwise taken nearly 50 years if it had relied on traditional growth processes.
The scale of challenge (and achievement) in India cannot be understated. In just a decade, over 800 million people acquired a verifiable identity; over 80% of the population (600 million) received access to financial services, with the single biggest jump in financial inclusion ever measured. India’s Unified Payments Interface (UPI) is an example of how the regulator (e.g. the central bank) and the regulated (e.g. commercial banks) can together run a payment system that is voluntary, instant, costless, operates around the clock in a modular, interoperable fashion that enables participation by a variety of firms, ranging from banks to boutique fintechs and big tech. It provides all the network benefits that big tech systems usually provide, but without the monopolistic outcomes. Today, UPI is running at nearly eight billion transactions a month.
India’s example is not unique.
The Covid-19 pandemic demonstrated the power of DPIs. Countries with effective DPIs could provide emergency fiscal transfers to hundreds of millions of people; their health systems could support and coordinate vaccine deployment across large populations; their education systems could offer platforms for learning during lockdowns; and, their digital commerce platforms augmented by digital payment systems could blunt the worst ravages of the lockdowns.
And finally, data. Technological developments over the last two decades have led to an explosion in the availability of data and the collection of large amounts of valuable consumer data – often referred to as big data. In such a setting, it is important to be clear about who has control over this data, where it is stored, with whom and under what conditions it is shared. The privacy laws of most countries describe the set of principles that define how personal data are handled. However, despite these legal measures, consumers rarely know the benefits of data that pertain to them, and are usually unable to access their data stored in proprietary silos in incompatible formats. Individuals need a way to take back control of their data. Given the enormity of data involved, the need to keep it secure, and with low transaction costs, any system that gives individuals control of their data will need to be digital. India’s Data Empowerment and Privacy Architecture offers a techno-legal solution that allows individuals to determine what can be done with their data by using a consent-based data-sharing system.
Looking ahead, the G20 and other countries can form a coalition of the willing — countries that believe in the power of DPIs to deliver services and solutions at scale — to share best practices and adoption of a common framework with respect to standards and regulations. Different countries may wish to adopt different models due, in part, to different starting points. However, capacity constraints in advanced and emerging countries should not preclude them from benefiting fully from these innovations. In-country technical support and a global strategy for the financing of DPIs will be essential.
Whatever the particulars of the adopted DPI might be, the principles underlying the design of the system in India remain relevant. India’s motto for its G20 presidency — One Earth, One Family, One Future — speaks of our interconnected destiny. It also speaks of India’s aspirations for the world to leapfrog ahead.
Amitabh Kant is India’s G20 Sherpa and former chief executive officer, NITI Aayog
The views expressed are personal