India's digital public infrastructure is changing the country's economic landscape: RBI

Built on the principles of public good, open access, and regulatory fairness, India Stack has become the cornerstone in facilitating cost-effective and scalable service delivery, especially benefiting the marginalized sections of the society.

Since its inception in 2009, the Aadhaar system has become the world's largest biometric-based identification network, with 1.38 billion identity card holders, covering 98 percent of the population.

This 12-digit identification system has revolutionized the way identity verification is done, enabling secure and seamless authentication without the need for physical presence.

The launch of the Pradhan Mantri Jan Dhan Yojana (PMJDY) further expanded the reach of Aadhaar, linking 52.5 crore bank accounts to Aadhaar. The initiative has been particularly impressive in rural and semi-urban areas, where more than 50 percent of account holders are women. The percentage of account ownership in India has grown from 35 percent in 2011 to 78 percent in 2021.

The Aadhaar system has facilitated over 116 billion authentications and 20 billion electronic Know Your Customer (e-KYC) verifications since 2014.

This widespread use has contributed significantly to the formalisation of the economy. The Goods and Services Tax Network (GSTN) has onboarded 1.4 crore taxpayers and generated over 400 crore e-way bills, indicating strong integration of the system into economic activities.

Direct Benefit Transfer (DBT) has streamlined the delivery of subsidies, transferring Rs 6.9 lakh crore to 176 crore beneficiaries for 315 schemes in 2023-24.

This system will result in an estimated cost saving of Rs 3.4 lakh crore by March 2023, highlighting the efficiency and effectiveness of the DPI framework in reducing leakages and ensuring benefits reach the intended recipients.

Unified Payments Interface (UPI) has emerged as a game-changer in the digital payments space. Its real-time, scalable, and interoperable platform integrates multiple bank accounts into a single mobile application, enabling seamless fund routing and merchant payments.

The UPI system has seen a dramatic increase in transaction volume, growing from 12.5 billion transactions in 2019–20 to 131 billion transactions in 2023–24, accounting for 80 percent of all digital payment volume.

In June 2024 alone, UPI recorded nearly 14 billion transactions, supported by 424 million unique users. This growth underlines UPI's role in facilitating secure and convenient transactions, contributing to a compound annual growth rate (CAGR) of 50 per cent in transaction volume and 10 per cent in value over the last seven years.

India's DPI is not limited to national boundaries but is spreading globally. The Modular Open Source Identity Platform (MOSIP) is assisting other countries in developing digital identity solutions.

Additionally, India is working on integrating UPI with fast payment systems in countries such as Singapore, UAE, and Nepal to streamline international remittances.

Collaborations are also underway with other central banks and foreign payment service providers to expand the acceptance of UPI and RuPay beyond India.

The economic value generated by DPI is projected to grow to 2.9–4.2 percent of GDP by 2030, boosting India's growth and total factor productivity.

As India's digital public infrastructure evolves, it is poised to play a vital role in driving economic transformation and improving the quality of life for its citizens.