India has created a number of publicly accessible digital platforms over the last 10 years that have significantly improved the lives of its people. They have been renamed "digital public infrastructure" (DPI). “The benefits of digital transformation should not be confined to a small part of the human race,” said Prime Minister Narendra Modi at the G20 summit in Indonesia last year.
DPI involves a triad of identity, payments and data management. It all began with Aadhaar, or "foundation," a biometric digital identity system implemented in 2010 by the Congress-led administration and currently used by almost all of India's 1.4 billion citizens. Next came the Unified Payments Interface (UPI), which makes digital payment as easy as sending a text or scanning a QR code. Launched in 2016, the platform accounted for 73% of all non-cash retail payments in India till March. The third DPI pillar involves data management. Using their 12-digit Aadhaar number, Indians can access online documents whose authenticity is guaranteed by the government called Digilocker. Several other digital platforms have recently been launched or soon will be launched.
Some believe that the Indian alternative to the Western-run global financial infrastructure, which includes New York clearing processes and the fast communications network that hundreds of banks rely on for international transfers. America’s weaponisation of this system after Russia’s invasion of Ukraine last year, which included sanctioning most Russian banks, spooked governments from Brasília to Beijing. The exit of Western payments systems such as Visa and MasterCard from Russia was less extreme, but also disruptive. In the event of a future crisis, domestic payments systems based on UPI could be insulated; they would be harder for American sanctions to target. In February NCPI connected UPI with Singapore’s digital payments systems, PayNow. It performed a similar action in April with the UAE system. Theoretically, Indians can now use UPI in Dubai's stores and eateries.
Bulelani Jili, a Harvard academic who studies technology in Africa, recalls a Kenyan official gushing about India’s institutes of technology. Yet DPI technology can be unreliable. Aadhaar has performed poorly in places with bad internet connections or where manual workers have worn finger pads. The system also suffers security breaches. Experts say it is very easy to access it with false credentials or spoof fingerprints. India’s technology offer, says one analyst, includes a lot of “hot air”.
Such problems could lead India’s projection of digital power to backfires. UPI applications have an advantage over rival systems like Visa and MasterCard since the government forbids them from charging fees to consumers or businesses.