India Stack, which powers facilities in India like Aadhaar, UPI and DBT, is poised for global adoption:
India Stack, the set of open APIs and digital public goods, that was created to combine the prowess of identity, data and payments as India’s population scales up, has become a globally recognized tool for digital transformation. Very recently, 8 countries – Antigua, Barbuda, Trinidad and Tobago in the Caribbean, Sierra Leone in Africa, Suriname in South America, Armenia in East Europe and Papua New Guinea in South East Asia – have decided to introduce the system in their respective countries. Thus, the name that bears the word India, has transcended beyond the country’s borders. It has demonstrated that it can be applied to any nation, be it a developed one or an emerging one. From its simple beginning as a concept for the rapid adoption of digitization by individuals and businesses en masse, it has now formatted as a tool for financial and social inclusion and is preparing the world to assimilate the Internet Age.
Some 6 or more countries, including Mauritius and Saudi Arabia, are in talks with the Indian Government for the adoption of India Stack in their respective countries.
Nandan Nilekani, who was the first Chairman of UIDAI, which in fact demonstrated the high value of India Stack, had said that this digital public infrastructure will come to be adopted by some 50 countries in the next five years.
SMALL BEGINNINGS
India Stack had in fact its origins in 2009 when India launched a biometric digital ID system. The government encouraged people to share their fingerprints and photographs. The immediate product to come out of its stables was Aadhaar, followed by the eKYC system for paperless identity validation. Subsequently, it facilitated the development of e-Sign functionality that enables users to attach legally valid electronic signatures to documents. The ubiquitous Unified Payments Interface, or UPI, framework is built on India Stack for easier cashless payments using QR codes, and DigiLocker came to be set up as a hub for the verification of documents and certificates. The latest in the platform is the Open Network for Digital Commerce (ONDC), which is intended to democratize the e-commerce world.
India Stack is now a part of the G20 agenda. The idea is to use it as a facilitator for identifying the principles that should regulate the use of digital public infrastructure (DPI) and to develop a framework that encourages collaboration between countries.
According to IndiaStack.org, there were some 67 billion digital identity verifications, 14.05 trillion in real-time mobile payments per month, and 8.6 billion real-time mobile payment transactions each month.
CONSTITUENT LAYERS
It will be worthwhile to understand what constitutes India Stack. It has 4 major layers – the Consent Layer, which is an open personal data store, owned by the Reserve Bank of India, the Cashless Layer, which is an interoperable payment network, which is now owned by National Payments Corporation of India, or NPCI, which manages the IMPS, AEPS, APB and UPI payments systems, the Paperless Layer, which is the storehouse of information where entitled entities can redeem the information, which is owned by the Department of Electronics and Information Technology and which has as its functionalities the e-Sign, e-KYC and the Digital Locker, and the Presence-less Layer, which is a unique digital biometric identity with open API access, owned by the Unique Identification Authority of India, or UIDAI, and which manages the Aadhaar and Mobile Aadhaar systems.
Besides the functionalities mentioned above, India Stack also manages the Direct Benefit Transfer (DBT), the system that facilitates the direct transfer of subsidies and benefits from the government to beneficiaries’ bank accounts and the Aadhaar-enabled Payment System (AePS), which enables individuals to perform basic banking transactions like cash withdrawals and balance inquiries using Aadhaar authentication, even without a bank account.
MASSIVE OPERATIONS
The platform works on a truly massive scale. Indians coming from all its states, from urban or rural areas and with varying socio-economic divides, languages and working areas, use at least one or more of India Stack products every day in areas like identity, payments, data or networks. The services that India Stack offers, in fact, seamlessly converge into a unified digital infrastructure, catering to various layers of the value chain. And the core principle is treating digital infrastructure as a public facility for digital, financial and social inclusion.
While India Stack has truly facilitated development of innovative solutions and startups that make use of digital technology to address societal challenges and improve access to services for all segments of the population, it has directly contributed to achieving financial inclusion by having a crucial role in providing secure digital platforms for banking, payments and financial services. It enables people who were previously excluded from formal financial systems to access digital payment methods.
India Stack’s open APIs have scaled up innovation as startups and businesses are able to build new services on top of the existing infrastructure.
SOME CONCERNS
There are, however, concerns expressed by experts in the functionalities of India Stack. There are questions of data privacy, security and digital inclusion that these experts raise and it remains a key challenge for the system. For example, there have been instances of data breaches and identify thefts in the Aadhaar system, raising questions about the security and privacy of citizens’ personal data. Similarly in the domain of inclusion, concerns have been raised in the case of individuals who do not have access to smartphones, the internet or digital literacy, which results in a digital divide.
There are also concerns that the government and private entities are able to collect unprecedented amounts of data without any data protection laws in the country. Such data affords opportunities for surveillance and abuse.
Nevertheless, India Stack, and its underlying technology have thrust the country into a fast-developing digital economy, which is estimated to grow from $175 billion in 2022 to $1 trillion by 2030. The platform constitutes a vital tool for the country’s growth and prosperity, besides in offering core identity and in connecting the diverse landscape.
CASH TO CASHLESS
The transformation it has brought in is iconic. Imagine a decade ago when people across the country have been tendering bank notes in business or other transactions. Today, there is little or no currency but just a smartphone or a laptop. Similarly, a digital ID card is user-friendly and economical. Open-access software standards facilitate digital payments between banks, fintech firms and digital wallets. And access to people’s personal data is controlled through consent.
What is unique is that India Stack’s infrastructure is interoperable – in fact ‘stacked’- allowing private companies to build apps integrated with state services to provide consumers with seamless access to everything from welfare payments to loan applications.
Now, the platform is set to be more sophisticated and future-proof. There are plans to introduce a new layer – an AI Layer. The plan is to have a smart dataset program and build the AI Layer.
GLOBAL INTEROPERABILITY
What pleases technology professionals, who are keen watchers of India Stack, is the potential it offers for global interoperability and technology standardization. With more and more countries evincing interest in the platform, they feel there could be a truly global interoperable system across the world covering areas like payments and identity systems, even while creating a global standard for digital infrastructure. Such standardizations, they believe, can increase interoperability, streamline global trade and make cross-border transactions faster and easier.
India Stack has indeed metamorphosed from an innovation confined to the Indian shores to a global activity, which is proof of the far-sightedness of the Indian innovators. What has indeed brought the global attention is the platform’s substantial impacts on financial inclusion, innovation and government service delivery. Maybe it will be a tool in the days to come where countries would work more cohesively to build inclusive and effective digital ecosystems, thereby creating a more connected, inclusive and prosperous world.
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