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Pathways for digital inclusion

The remarkable transformation of India’s digital landscape has been made possible by pioneering digital public infrastructure (DPI) experiments. Functionally mimicking physical infrastructures, these DPIs are digital pathways that enable a seamless provision of essential services, benefiting society. The Indian DPI ecosystem envisioned as “India Stack” has been pivotal in unlocking the power of identity, payments, and data sharing to drive economic growth and foster a more inclusive digital economy. Imagine the India Stack as interconnected yet independent “blocks of a stack”. Each block serves as a vehicle for financial and social inclusion across sectors, ultimately catering to our diverse population. Its transformative ability lies in its potential to be used across multiple use cases, enabling the creation of novel solutions that drive innovation, inclusion and competition in the digital realm through its modular layers.

India has so far had a successful run in creating DPIs that have seen wide adoption. The World Bank estimates that Aadhaar has facilitated financial inclusion. The Jan Dhan-Aadhaar-Mobile trinity has played a pivotal role in transparent direct benefit transfers of welfare subsidies to bank accounts of the underserved. On the payments front, Unified Payments Interface — the interoperable electronic payment system — has empowered us to conveniently transfer money from one bank account to another bank account digitally and in real-time.

From promoting financial as well as digital inclusion of citizens belonging to less privileged socio-economic backgrounds and empowering small businesses to improve access to healthcare, Indian DPIs hold the promise to bridge the wealth gaps and build an efficient and resilient digital economy that supports citizens and organisations. The next decade of India’s DPI journey will witness sector-specific DPIs such as account aggregators, Open Network for Digital Commerce, Ayushman Bharat Digital Mission and Agristack. To unlock the enormous benefits and efficiencies of DPIs, their adoption and acceptance at the population scale are paramount, requiring a comprehensive approach to cater to diverse needs, situations, and experiences.

As India leads the conversation on DPIs and digital transformation at the G20, it is an opportune moment to steer the wheel towards inclusive DPIs, both globally and locally. Through knowledge and resource sharing, while simultaneously scaling local DPI initiatives, we can ensure that no one is left behind. Reflecting on past experiences and developments occurring internationally, we can draw several key lessons to inform our path forward.

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First, the importance of placing users at the forefront. We must prioritise user-centric design to reduce the risks arising from the use of technology and prevent the exacerbation of extant inequalities amongst rural and urban populations, genders or economic groups. To avoid reinforcing disparities in DPI usage, enabling compatible protocols for feature phones, assisted-tech models and Interactive Voice Response System should be explored and implemented, offering handholding support to consumers with limited smartphone access or low digital literacy. The RBI’s launch of UPI123Pay is a notable step towards inclusivity, which gives feature phone owners an app that enables them with most UPI features. The RBI has even enabled cardless cash withdrawals at ATMs through the UPI app.

Second, inclusion should be a key policy objective for DPI participants, embedded within the regulatory framework. Several jurisdictions, including Nigeria, the UK and Brazil, have embraced open banking with the aim of financial inclusion within the regulatory framework itself. Estonia’s information policy emphasises avoiding information disparities between regions or communities — an important consideration for data-sharing DPIs equipped with advanced consent technologies, where there is a risk of the ecosystem benefiting only digitally-savvy consumers. By prioritising inclusion from the outset, DPIs can create an ecosystem that benefits all individuals, regardless of their digital literacy, thereby cultivating a more equitable and accessible digital economy.

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Third, to truly drive inclusivity, DPI participants must identify the underserved target segments and proactively develop use cases tailored to their needs. For instance, for the MSMEs, who have limited access to formal sources of credit, the account aggregator ecosystem holds immense potential to enable access to low-cost, low-ticket-size, collateral-free sources of credit by utilising the digital trail of all consented transactional data, including cash flows generated by the enterprise. Moreover, monitoring the impact of DPIs on vulnerable consumers through disaggregated data collection is essential to prevent the deepening of gaps for underserved customers and foster equitable growth.

Lastly, to meaningfully adopt any DPI at the population scale, it is necessary to build engagement with the DPI. In a country like ours, where digital connectivity and literacy pose obstacles, it becomes crucial to address these challenges. Offline channels must be considered, alongside building institutional capacity to generate trust and awareness. It would not only ensure last-mile access but also foster digital comfort among vulnerable consumers, empowering them to leverage these tools for their benefit. For instance, business correspondents are a vital cog on which banks rely to increase access to and usage of financial products. Exploring the potential of leveraging these trusted human points of contact to mitigate further exclusion risks can be immensely valuable for DPIs in the financial sector as they move forward.

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The writer is Research Fellow, Vidhi Centre for Legal Policy

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