Without any warning, in November 2016, India’s prime minister Narendra Modi announced the scrapping of all bills over 500 rupees in an alleged attempt to fight corruption and route all the “black money” to the formal banking system. The demonetization, a bold move that made 86 percent of India’s currency disappeared overnight, plunged the country into panic, especially for those who rely on the informal economy to survive, and dealt a heavy blow to the economy. While the decision and its implementation attracted lots of criticism, the Harvard Business Review argued that the move was only the first step towards a radical digital transformation.
Ever since demonetization, which, on the other hand, enabled a rise in digital payments and debit cards, the country has been rapidly moving toward a digital-first economy. Over the past decade, India has set up a wide range of digital platforms whose number and scope have recently grown to include every aspect of life. In an International Monetary Fund (IMF) working paper, India’s Digital Public Infrastructure (DPI) is defined as “a world-class infrastructure to support its sustainable development goals.” The paper also claims that India’s journey in developing a far-reaching DPI “highlights powerful lessons for other countries embarking on their digital transformation.”
In terms of economic development, India is aiming to leverage technology to induce economic growth and development. The DPI, which consists of shared building blocks – namely applications and platforms run in an interoperable manner – was one of the key priorities during India’s G20 Presidency. Formerly-known as “India Stack”, the set of widely used DPI consist of three main pillars which provide identity, payments systems and data exchange. Together, these three layers ensure online, paperless, cashless, and digital access to a wide number of services and government schemes.
The first to be implemented was Aadhaar, an unprecedented identification program – the largest in the world – that collects the demographic and biometric data of every single Indian citizen. Fingerprints and iris scans are linked to a name, address, bank account, telephone number, taxes and state benefits. Enrollment to the project that began in 2010 on a voluntary basis is now essential for everyday life. A 12-digit number is the gatekeeper to access services provided by the DPI. Aadhaar was met with much criticism and a constitutional bench of the Supreme Court heard various cases relating to Aadhaar on diverse grounds including privacy, surveillance, and exclusion from welfare benefits.
Then, the Unified Payments Interface (UPI) was created, a real-time payment system used on mobile devices to instantly transfer money from one bank account to another. As of November 2022, the platform had over 300 million monthly active users and it enabled over 2,348 transactions every second. Then came DigiLocker, labelled as “an initiative to a paperless governance”: it provides a cloud account that allows access to digital authenticated documents including drivers’ licenses, medical records, vehicle certificates and students’ report cards. Launched in 2015, DigiLocker records 150 million users with a repository of billions of documents.
DigiLocker was the flag-ship initiative under the “Digital India” program launched in 2015, that brought significant improvements in technology infrastructure with the aim of enhancing social equality, employment opportunities, and digital literacy. The government started various programs to boost manufacturing, attract foreign investment, and encourage innovation in the field of IT, electronics, and telecommunications. Under the digitalization-drive, India is seeking to position itself as a global hub for technology research and development. The move toward the digitalization of many services is run in partnership with the public and private sector, startups, NGOs and academia.
The government’s push towards an universal adoption of technology however is almost matched by a lack of access to it. While internet users are growing steadily – a number expected to reach 900 million by 2025 from the current 759 million – the digital divide remains a huge obstacle to digitalization. According to an Oxfam report, approximately 70 percent of the population has poor or no connectivity while more than 60 percent of Indian households are digitally illiterate. “When we create a digital infrastructure, we must acknowledge how many people are using these technologies – there are two aspects: one is creating DPI, and the other one is creating digital policies. Are these policies inclusionary or exclusionary?,” explains Osama Manzar, founder and director of the Digital Empowerment Foundation, a pioneer in promoting digital literacy in India’s remote areas for the past 20 years, to Reset DOC. “If it is made mandatory to log-in to receive a service, we must make sure nobody is excluded.”
He cited the example of a social security measure that aims to guarantee the right to work in rural areas, which 400 million people apply to every year. “Now it is mandatory to do online attendance checks with a photo and geolocalization by using an app, or else you won’t get paid. This is absolutely exclusionary”, argues Manzar. “We have digital exclusion based on divide, on literacy, affordability but also lack of meaningful connectivity – 2G doesn’t allow one to access online services, watch videos, do online payments, etc., so this is huge barrier,” he says. According to the International Telecommunication Union (ITU), while over 55 percent of Indians have access to broadband, only 20 percent has the ability to use the Internet. “Under these circumstances, technology is actually benefitting only a low percentage of people, it is not making life easier for the bottom of the pyramid. We should not punish the people who are not connected.”
Moreover, since 2018, India has shut down the Internet more than any other country in the world in the name of “public order”, says a report by Human Rights Watch and the Internet Freedom Foundation. “The push for a ‘Digital India’ has made Internet access fundamental to every aspect of life, which means that any disruption in Internet access causes severe harm to people’s lives… This disproportionately harms the most marginalized communities, denying them access to basic services” says Jayshree Bajoria, Associate Asia Director at Human Rights Watch, to Reset DOC. “The authorities shut down the Internet as a matter of routine policing procedure, harming millions of lives and also the country’s economy. India is a growing global player and is seen as a leader in technological innovation. However, these shutdowns harm its reputation globally and set a bad precedent”.
During India’s G20 presidency, Prime Minister Narendra Modi has repeatedly pushed for the adoption of a state-backed digital payments platform. After the US payment sanctions against Russia, many countries felt it was time for payments sovereignty. Modi has showcased its infrastructure as a sovereign, self-owned technology stack.
India has also been working on a modular and open-source version of Aadhaar to be used in other countries. Exporting its technology is one of the country’s most recent aims, and in parallel building its global influence as a third force between the US and China. The Economist labelled the plan as “India’s low-cost, software-based version of China’s infrastructure-led Belt and Road Initiative”. An ever-growing number of organizations is working to export India’s technology to other developing countries, leveraging on its reputation as a tech hub. The lesson from India is that in absence of a regulatory framework, the population is exposed to privacy breaches and surveillance – so, especially in authoritarian contexts, the adoption of DPI will need to balance privacy with data collection and technology.
Cover photo: an Indian visitor receives cash from a bank employee after withdraw money from his bank account through an Aadhaar card or Unique Identification (UID) card during a Digi Dhan Mela, held to promote digital payment, in Hyderabad on January 18, 2017 (credits: Noah Seelam/AFP.)
If you like our analyses, events, publications and dossiers, sign up for our newsletter (twice a month) and consider supporting our work.