Digital Public Infrastructure (DPI) in India

Digital Public Infrastructure (DPI) in India

News: According to World Bank report, India’s use of Digital Public Infrastructure (DPI) has achieved an 80% financial inclusion rate in just six years.

Background:
• The G20 Global Partnership for Financial Inclusion document prepared by World Bank has lauded transformative impact of DPIs in India over the past decade under Modi government.

What is Digital Public Infrastructure?
• In essence, DPI is a digital network that enables countries to safely and efficiently deliver economic opportunities and social services to all residents. It can be compared to roads, which form a physical network that connects people and provides access to a huge range of goods and services.
• India, through India stack, became the first country to develop various types of DPI for services to people. For example, Aadhar, Digiyatra, UPI, Digilocker etc.

What are 3 pillars of DPI in India?
• Flow of people through a Digital ID system. For example, Aadhar
• Flow of money through real time fast payment system. Example, UPI
• Flow of personal information through consent based data sharing system. Example, Account aggregator.

What are Data protection initiatives for DPI?
• Aadhar Act, 2016
• Digital Personal Data Protection Bill 2023 – Aims to protect privacy of individuals
• National Cyber Security Policy 2023
• Cyber Swacchta Kendras.

What are the achievements of DPI in India?

Financial Inclusion

• JAM Trinity has propelled financial inclusion rate from 25% in 2008 to over 80% of adults in last 6 years, a journey shortened by up to 47 years thanks to DPIs.

Jan Dhan Accounts

• The number of PMJDY accounts opened tripled from 147.2 million in March 2015 to 462 million by June 2022; women own 56 percent of these accounts, more than 260 million.

UPI

• More than 9.41 billion transactions valuing about Rs 14.89 trillion were transacted in May 2023 alone.
• For the fiscal year 2022–23, the total value of UPI transaction was nearly 50 percent of India’s nominal GDP.

DPIs’ Potential Added Value for the Private Sector

• The DPI in India has also enhanced efficiency for private organizations through reductions in the complexity, the cost and the time taken for business operations in India.
• Even some NBFCs have been enabled 8% higher conversion rate in SME lending, a 65% savings in depreciation costs and 66% reduction in costs related to fraud detection.
• According to industry estimates, banks’ costs of onboarding customers in India decreased from $23 to $0.1 with the use of DPI.

Lower Cost of Compliance for Banks for KYC

• India Stack has digitized and simplified KYC procedures, lowering costs; banks that use e-KYC lowered their cost of compliance from $0.12 to $0.06. The decrease in costs made lower-income clients more attractive to service and generated profits to develop new products.

Cross-Border Payments

• The UPI-PayNow interlinking between India and Singapore, operationalized in February 2023, aligns with G20's financial inclusion priorities and facilitates faster, cheaper, and more transparent cross-border payments.

Data Empowerment and Protection Architecture (DEPA)

• It Grants individuals control over their data, enabling tailored product and service access, and fostering innovation and competition. 

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