scorecardresearch

Learnings from the India Stack

Although the name of this project bears the word India, the vision of India Stack is not limited to one country

digital economy
India’s experience with digital infrastructure platforms as publicgood offers multiple lessons learned in technology, system, and regulatory infrastructure. (Representational image)

By Subrata Chakraborty

Readers would know that India Stack is the name given to a family of Application Programming Interface (API), which is a software intermediary that allows two applications to talk to each other. This infrastructure has given formal identification credentials to all citizens and ushered millions of them— rich and poor—into the digital economy. India Stack is premised on a philosophy of openness, which allows authentication, authorisation, and clearing messages to flow seamlessly between banks, the intermediary channels, and the customer.

Just like the modern web, India Stack did not come out of one place, but through multiple efforts by multiple teams. It is a set of loosely coupled technologies and protocols. The innovation comes from combinatorial use of these technologies, such as, those covering identity layer, payments layer and data empowerment. Each technology tries to do one thing and does it well. For example, identity layer helps a citizen prove “I am who I claim to be”, payments layer allows anyone to pay anyone else, data empowerment enables secure sharing of data. In other words, it is presence-less, paperless, and cashless exercise in carrying out transactions.

India is a large and diverse country with more than 1.3 billion people, 22 languages, 77.7% literacy, estimated per capita income of 128829 rupees, 1 billion mobile users, 400 million smartphones, 600 million internet users, and less than 5% income tax payers.

Despite this size and diversity India could enable access,affordability and agency at scale achieving astonishing results with more than 35 billion dollars of cash transfers to beneficiaries across 430+ schemes. As a result, India now runs world’s largest cash transfer programme. India Stack is disruptive in many ways: it (i) cuts transaction costs; (ii) cuts onboarding costs; (iii) uses broad based ubiquitous inclusive platform; (iv) personalised and contextualised offering at scale; (v) allows combinatorial innovation; (vi) aligns market goals with social goals; (vi) increases trust—allows new business architecture to emerge. Thus, India has built world’s first national digital infrastructure, leaping at least two generations of financial technologies. No wonder, India has become an attractive investment opportunity in the world.

India’s experience with digital infrastructure platforms as publicgood offers multiple lessons learned in technology, system, and regulatory infrastructure. It demonstrates how multiple such systems can be leveraged—such as the India Stack—for development objectives. Using stack as the base, Governments and businesses are diversifying its use. By lowering the transaction costs of serving the poor, India is able to achieve better inclusion. Public digital infrastructure, including hard and soft variants, encourages competition, innovation and inclusion. Through the India Stack and Modular Open Source Identity Platform the Indian experience offers developing countries a path to leapfrog the development phase for digital platforms. Open-source systems offer countries an opportunity to establish low-cost public identity, financial and data exchange systems.

The rest of the world can learn a lot from India’s experience that suggests that open source digital infrastructure offers developing nations an opportunity to simultaneously address access and usage priorities, promoting an inclusive, competitive and innovative digital economy. In fact, the “open system” model proposed here will allow the developing world to catch up with the extant models of the developed world and work harmoniously with them.

As mentioned earlier, India Stack is the moniker for a set of open APIs and digital public goods that aim to unlock the economic primitives of identity, data, and payments at population scale. Although the name of this project bears the word India, the vision of India Stack is not limited to one country; it can be applied to any nation, be it a developed one or an emerging one. This project was conceptualised and first implemented in India, where its rapid adoption by billions of individuals and businesses has helped promote financial and social inclusion and positioned the country for the Internet Age.

The author is former dean and director-in-charge, IIM, Lucknow

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

Most Read In Opinion