Executive Summary
This paper lays out the current state of Digital Public Infrastructure (DPI) and clears some intellectual ground from which follow-on research can be launched in the future.
When the first Aadhaar card was issued in 2010, few could have predicted its eventual role in administering vaccines during a pandemic. However, the Covid Vaccine Intelligence Network (CoWIN) app played a crucial role in restoring normalcy post-pandemic, benefiting both public health and the national economy. The adoption of DPI has significantly improved public service delivery in India, facilitating more effective transactions, interactions, and communication over the past decade compared to earlier years.
Nevertheless, the popular discourse in India, perhaps inspired by the JAM Trinity (Jan-Dhan, Aadhaar, and mobiles), has conflated DPI with India Stack (e.g., Aadhaar, Unified Payments Interface [UPI]). This is not the definition of DPI according to the 2023 G20 Delhi Declaration. Digital solutions originating from and/or controlled by the private sector, including for-profit companies and foreign multinational corporations (MNCs), also qualify as DPI if they are as accessible and affordable as the India Stack. Consequently, freely available digital solutions like Google Maps, WhatsApp, Twitter (now X), ChatGPT, and Wikipedia are considered digital, public, and infrastructure, alongside Aadhaar, UPI, Digilocker, FASTag, Goods and Services Tax Network (GSTN), Government e-Marketplace (GeM), among others.
It is crucial to distinguish between adoption and outcomes. Substantial data is available in the public domain regarding the coverage of Aadhaar, transactions on the UPI platform, Micro, Small and Medium Enterprises (MSME) registration on Udyam, registration of organisations and professionals on GSTN, and vehicle registration with FASTag. These parameters represent the adoption and usage of DPI. However, the outcomes that Publicly Available Digital Infrastructure (PADI) adoption can potentially deliver on the economic outcomes of DPI adoption include increased income, employment, consumption, productivity, and Gross Domestic Product (GDP) growth. There are also non-economic outcomes, such as socioeconomic equity, financial inclusion, ease of living, and ease of doing business. The success of DPI interventions should be measured by their ability to deliver these outcomes, rather than merely by adoption, which is a means to an end.
The paper examines economic outcomes such as GDP before and after PADI adoption, using the UPI launch as a proxy for one of the most visible PADI interventions. It finds no significant correlation in a state-wise comparison between net state domestic product (NSDP) and DPI adoption. A review of published literature, such as the National Association of Software and Service Companies (NASSCOM) Report for FY22, estimates DPI’s contribution to India’s GDP at less than 1%, even when making aggressive assumptions, such as the entire time-saving from using FASTag translating into incremental GDP at average national productivity. These trends suggest that while DPI is a useful tool, it is not the engine that can drive economic growth independently.
Another counter-intuitive trend emerges in the payments landscape. The currency in circulation (CIC) has not decreased despite an increase in digital payments. This is because, despite the rise in digital payments by volume, there is little shift in value. Most UPI adoption has replaced low-value debit card transactions and, to some extent, low-value cash transactions.
An interesting trend is beginning to emerge—though it is too early to draw conclusions—in the nature of consumption. When Private Final Consumption Expenditure (PFCE) was studied by dividing it into two categories: (i) impulse purchase items (low-value and discretionary goods and services), and (ii) other items (medium- to high-value or essential goods and services), the paper observes that their growth rates were in opposite directions. The growth rate of impulse purchase items has been accelerating, while that of other items has been moderating. These trends need to be monitored over time to determine if they persist or if they are merely a passing phase, necessitating further research and monitoring.
In light of the above context, the paper recommends that the provision of resources needed by citizens to access the DPI “bus” must be ensured by the State for all citizens. The paper proposes that the government should consider enacting a “Right to Digital Empowerment” Act (RiDE), which would ensure that all resident citizens of India have access to a smart device, the Internet, digital literacy, and all other necessary resources needed for unhindered and unencumbered access to all relevant PADI artefacts.
Finally, government entities as well as private-sector DPI service providers should publish quarterly and annual state-level and national data on the adoption and usage of each Digital Public Good (DPG), so that its impact can be researched further.
Q&A with authors
What is the core message conveyed in the paper?
Definition of Digital Public Infrastructure (DPI) should go beyond India Stack (i.e., Aadhaar, UPI, ONDC, Fastag, etc.) to include digital goods originated outside India and/or created /owned / controlled by private sector (e.g., Google Maps, Uber, Namma Yatri, Amazon, etc.). Since all such digital goods contribute to digital economy and eGovernance in similar ways, irrespective of their ownership (Private vs Govt) and geographic origin (India vs foreign), a more appropriate definition of Digital Public Infrastructure will be Publicly Available Digital Infrastructure (PADI).
DPI (PADI) is a tool that facilitates economic activities, but not an engine that can drive economic growth. It increases speed and convenience, and to some extent, possibly nudges up consumption of non-essential / impulse purchase goods & services slightly, but whether it makes any discernible impact on overall consumption or income level or distribution remains inconclusive.
What presents the biggest opportunity?
The biggest opportunity is democratization of entrepreneurial opportunities for micro and small businesses, as DPI(PADI) replaces CapEx barrier with OpEx barrier. With ONDC or Amazon or other eCommerce platforms, now it is relatively easier for people with limited resources and/or in remote locations to become self-employed or to set up small businesses initially with limited capital vis-à-vis the traditional brick-and-mortar approach.
Coupled with fintech that enables digital payments, online credit, and Direct Benefit Transfer (DBT) from Govt. to citizen, the shift from cash + brick-and-mortar to cashless + digital way of socio-economic life can transform the way India lives and works.
Eventually, the entire subsidy regime can be shifted to DBT regime, thereby reforming sectors like electricity, food, fertilizers, education and healthcare.
What is the biggest challenge?
The biggest challenge is the digital divide in the Indian society, along the fault lines of gender, income and urban / rural geography.
People below the poverty line, those in rural areas, and women often lack digital resources (e.g., smartphone, access to internet) as well as digital literacy (basic working knowledge of English language as well as how to use smartphone for online activities). They tend to lose out on many benefits of DPI.
The problem is further exacerbated by poor governance processes around internet shutdown by local police and administration for routine matters of law and order, forgetting that 24X7 uninterrupted access to internet has become as basic a necessity as electricity.
To address all of the above problems, the paper recommends legislating Right to Digital Empowerment (RiDE) Act by the Parliament of India.
