The Ministry of Finance’s recently released report, ‘The Indian Economy – A Review’, has lauded India’s digital transformation, highlighting the success of the Digital Public Infrastructure (DPI) and its significant role in delivering services with a citizen-centric focus.
The report noted that as the pandemic disrupted economic activities, the government responded swiftly, leveraging the strength of digital public infrastructure, commonly known as India Stack. This digital backbone facilitated online, paperless and cashless access to various public and private services, transforming transactions that were once considered time-consuming and contact-intensive.
Comprising three interconnected layers — the Identity Layer (Aadhaar), Payments Layer (Unified Payments Interface, Aadhaar Payments Bridge, Aadhaar Enabled Payment Service), and Data Layer (Account Aggregator)— India Stack has reshaped the services sector.
THE IMPACT OF INDIA STACK
The identity layer, anchored by Aadhaar, provided a digital identity to a vast majority of Indians, significantly boosting financial inclusion. As per the report: “Before Aadhaar, only one in 25 citizens had any form of formal identification, and just one in four had bank accounts.”
The payments layer, including the UPI, witnessed a surge in cashless transactions, growing from Rs 0.07 lakh crore in FY17 to an impressive Rs 143.4 lakh crore in FY24 (April-December 2023). Similarly, the data layer transformed the Know Your Customer (KYC) process, reducing e-KYC costs from Rs 1000 to Rs 5.
The Pradhan Mantri Jan Dhan Yojana (PMJDY), utilizing India Stack, propelled direct benefit transfers, reaching 51.5 crore accounts by January 10, 2024. Direct Benefit Transfer (DBT) mode has transferred over Rs 33.6 lakh crore (December 2023), leading to savings of Rs 2.7 lakh crore for the government by eliminating duplicate beneficiaries and plugging leakages.
PANDEMIC & E-COMMERCE
Furthermore, the report noted that India’s digital infrastructure played a crucial role during the pandemic with apps such as Aarogya Setu and CoWin aiding in tracking and containing the virus. The PM eVIDYA initiative, leveraging digital technology, addressed learning gaps during the pandemic, showcasing the adaptability of India’s digital ecosystem in times of crisis.
Meanwhile, it was also highlighted that by 2026, the Indian e-commerce sector is projected to grow to a value of $163 billion, with online sales making up more than 25% of the country’s primary non-grocery retail categories. The e-commerce sector in India has been driven by the country’s increasing urbanisation, middle-class influence, and the widespread use of smartphones and internet access.
The report said that India’s digital success has garnered global recognition. The International Monetary Fund’s Working Paper on India’s digital journey pointed out the benefits, while ACI Worldwide identifies India as a leader in Global Real-time payment transactions.
It also noted that India’s rapidly expanding population, top-notch DPI, and proactive regulations have supported the development of the fintech sector. India is the third-largest developing fintech economy in the world, after the US and the UK.
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