Developed world can follow India’s lead in digital public infrastructure

digital public infrastructure, DPI
India has taken a lead in rolling out digital public infrastructure, but developed countries face resistance because of concerns over data security and privacy.

India’s pursuit of interoperable digital public infrastructure continues to encounter resistance from developed countries, and New Delhi may need to firmly establish interoperability as a long-term goal. In the Delhi declaration of G20, an official has acknowledged the absence of a consensus on DPIs. Consequently, India will now characterise interoperability as a long-term objective to allow for further discussions in the future.

India has successfully implemented various DPIs, including Aadhar, Co-Win, UPI, and DigiLocker, and aims to extend the benefits of digital public goods to other nations. Having taken an early lead in this field, India must now set a precedent for others to follow. It is increasingly likely that developed nations will also recognise the advantages of DPIs and eventually deploy them.

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During its G20 presidency, India introduced DPI as a tool to enhance financial inclusion for individuals and Micro, Small, and Medium Enterprises (MSMEs), thereby realising productivity gains. India had proposed formalising an interoperable global Digital Public Infrastructure (DPI) framework in the G20 leaders’ communique, making global DPI a focal point of India’s G20 presidency. Nevertheless, this proposal faced opposition from developed countries, which argued that it might negatively impact the profitability of private enterprises and raise data security concerns.

While other nations remain sceptical about DPIs, India has harnessed the power of its Digital Public Infrastructure known as the India Stack. Through this initiative, India has significantly expanded access to formal banking services, revolutionised retail payments with UPI, and strengthened financial data infrastructure through account aggregators. This achievement is noteworthy, especially in a world where 24% of adults lack access to even basic bank accounts, underscoring the importance of DPIs.

In simple terms, DPI is a digital network that enables countries to deliver economic opportunities and social services securely and efficiently to all residents. DPI can be likened to a road network, connecting people and facilitating access to a wide range of goods and services. According to the Gates Foundation, DPI has the potential to be a game-changer, particularly in low and middle-income countries, where it could boost economic growth by an estimated 20% to 33%.

Success story of Indian digital public infrastructure

The success of India’s DPI has garnered global acclaim. For example, the Gates Foundation has praised India for having one of the most advanced DPIs in the world. In just over a decade since India launched its digital identity system, the number of adults with bank accounts more than doubled, reaching 78%, and women’s account ownership increased even more, from 26% to 78%. This system, combined with payment solutions, has facilitated greater female workforce participation by enabling them to receive their wages directly into their bank accounts.

The G20 framework defines DPI as a collection of shared digital systems with the overarching concept that basic digital building blocks should be modularly designed for use by governments, businesses, academia, and civil society to facilitate comprehensive societal development. The term “public” in digital public infrastructure can signify public benefit and access, subject to appropriate governance and oversight by public authorities.

The three primary objectives for establishing DPIs include: 1) identifying individuals and businesses while developing complementary trust services like verifiable credentials and digital signatures; 2) facilitating seamless money transfers between individuals, businesses, and governments; and 3) promoting data sharing with consent across private and public sectors while respecting applicable personal data protection safeguards and governance frameworks.

The perception of G20 proceedings varies, with some viewing the lack of consensus on DPIs as a setback to India’s agenda, while others see it as a positive outcome. It is noteworthy that G20 members reached an agreement on every agenda item (excluding Russia’s invasion of Ukraine), including DPI and the framework. This support can also be regarded as a victory for India.

India’s next step will involve creating a virtual Global Digital Public Infrastructure Repository that compiles DPI development and deployment experiences from various countries, as outlined in the G20 outcome document. On the global front, there is a collective need to address several issues highlighted by the Digital Economy ministerial meeting, which currently hinder the adoption of a global DPI. These issues include inadequate safeguards, sustained financing, and technical assistance. Without addressing these challenges, governments will struggle to prevent data breaches and privacy violations.

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Anil Nair is Founder and Editor, Policy Circle.