World Bank Praises India's Digital Public Infrastructure (DPI)

11 Sep 2023

Recently, India's Digital Public Infrastructure (DPI) has received accolades from the G20 Global Partnership for Financial Inclusion, a document prepared by the World Bank.

It highlights the profound impact of DPIs in India, particularly in enhancing financial inclusion, crediting the Indian government for its transformative policies.

Key Points

Remarkable Progress: India achieved what would have taken five decades in just six years, thanks to the Digital Public Infrastructure (DPI).
The financial inclusion rate surged from 25% in 2008 to over 80% in the past six years, a leap shortened by up to 47 years due to DPIs.
Ecosystem Variables: While DPIs played a crucial role, other factors like an enabling legal framework, national policies for account ownership expansion, and Aadhaar for identity verification were pivotal.

What is DPI?

Digital Public Infrastructure (DPI) refers to a comprehensive framework of digital tools, platforms, and services that are designed to enable seamless and secure interactions between government agencies, citizens, businesses, and other stakeholders in the digital ecosystem.
DPI is a key component of a country's digital transformation strategy and aims to provide the foundational digital infrastructure needed to facilitate various digital services and transactions.
DPIs are interoperable, open, and inclusive systems supported by technology and provide essential, society-wide, public and private services that play a critical role in accelerating this digital transformation in an inclusive manner.

Key Elements of India's DPI Ecosystem

Aadhaar: Aadhaar serves as a strategic policy instrument, promoting social and financial inclusion, driving public sector delivery reforms, aiding fiscal budget management, enhancing convenience, and fostering citizen-centric governance.
Aadhaar holders can voluntarily utilize their Aadhaar credentials for private sector purposes, and private entities are not required to seek special permissions for such utilization.
DigiYatra: DigiYatra revolutionizes travel with a Biometric Enabled Seamless Travel (BEST) experience powered by a Facial Recognition System (FRS).
India witnessed a significant air passenger traffic volume, exceeding 188 million passengers in various airports across the country during the fiscal year 2022, including over 22 million international passengers.
DigiLocker: DigiLocker boasts an impressive user base of 150 million individuals, storing a staggering six billion digital documents, all achieved with a modest budget of INR 50 crore over a span of seven years.
Users can securely store a diverse range of documents, including insurance records, medical reports, PAN cards, passports, marriage certificates, school diplomas, and various other documents in digital format.
UPI: UPI, short for Unified Payment Interface, has achieved a remarkable milestone, surpassing eight billion transactions per month and facilitating transactions worth USD 180 billion monthly, equivalent to a staggering 65% of India's annual GDP.
Currently, UPI stands as the largest among the payment systems operated by the National Payments Corporation of India (NPCI), including the National Automated Clearing House (NACH), Immediate Payment Service (IMPS), Aadhaar-enabled Payment System (AePS), Bharat Bill Payment System (BBPS), and RuPay, among others.

Achievements of India’s DPI

PMJDY Growth: The Pradhan Mantri Jan Dhan Yojana (PMJDY) saw a threefold increase in accounts, from 147.2 million in March 2015 to 462 million by June 2022, with women owning 56% of these accounts.
Jan Dhan Plus Impact: The Jan Dhan Plus program encouraged low-income women to save, leading to over 12 million women customers and a 50% increase in average balances in just five months, potentially attracting $3.1 billion in deposits with 100 million low-income women.
Lower Cost of Compliance: India Stack digitized and simplified KYC procedures, reducing banks' cost of compliance from $0.12 to $0.06. This attracted lower-income clients and generated profits for new product development.
Cross-Border Payments: The UPI-PayNow interlinking between India and Singapore, operationalized in February 2023, facilitates faster, cheaper, and more transparent cross-border payments, aligning with G20's financial inclusion priorities.
Data Sharing Control: India's Account Aggregator (AA) Framework strengthens data infrastructure, enabling data sharing with consent through an electronic consent framework regulated by RBI.
Cumulative Data Sharing: A total of 1.13 billion accounts are enabled for data sharing, with 13.46 million cumulative consents raised as of June 2023.
Data Empowerment and Protection Architecture (DEPA): DEPA grants individuals’ control over their data, allowing them to share it across providers, fostering innovation and competition without heavy investment in client relationships by new entrants.
Government to Person (G2P) Payments: India established one of the world's largest digital G2P architectures using DPI, facilitating $361 billion in direct transfers to beneficiaries through 312 schemes from 53 central government ministries.
Savings and Impact: As of March 2022, this resulted in total savings of $33 billion, equivalent to nearly 1.14% of GDP.
Unified Payments Interface (UPI): More than 9.41 billion transactions, valued at about Rs 14.89 trillion, occurred in May 2023 alone.
Significant Share of GDP: In the fiscal year 2022–23, UPI transactions accounted for nearly 50% of India's nominal GDP.

DPI's Private Sector Benefits

Efficiency Improvements: DPI in India streamlined and reduced the complexity, cost, and time of business operations, leading to enhanced efficiency for private organizations.
Cost Reduction Examples: Some NBFCs achieved an 8% higher conversion rate in SME lending, 65% savings in depreciation costs, and a 66% reduction in fraud detection costs.
Onboarding Cost Decrease: Banks reduced customer onboarding costs from $23 to $0.1 with DPI utilization.