Digital Public Infrastructure (DPI) is emerging as a transformative tool for economic development, social inclusion, and governance. As nations grapple with multiple challenges, such as financial inclusion, public service delivery, and sustainable development, DPI offers a robust framework for addressing these issues. This article explores the critical role DPI plays in driving global economic growth, with a particular focus on its application in developing countries. It also examines how DPI can be effectively implemented, drawing lessons from India’s success and offering strategies for other nations to replicate these achievements.
The Power of Digital Public Infrastructure
DPI is a set of shared digital systems that are secure, interoperable, and built on open standards to provide equitable access to public and private services at a societal scale. It is governed by legal frameworks and enabling rules to drive development, inclusion, innovation, trust, and competition, while respecting human rights and fundamental freedoms. This infrastructure is not just about laying down digital highways; it’s about creating a comprehensive ecosystem that includes digital identity systems, payment platforms, and consent-based data sharing frameworks.
India’s experience with DPI showcases its potential. For instance, India has issued over 1.389 billion Aadhaar enrollments, which serve as a foundation for digital identity. The country facilitates more than 10 million daily e-KYC (Know Your Customer) transactions and has enabled over 13 billion Unified Payment Interface (UPI) transactions in April 2024 alone, with a cumulative value of $230 billion. Such scale has been achieved by leveraging technology to bypass traditional development stages, resulting in rapid financial inclusion and economic transformation.
Global Challenges and DPI Solutions
The global landscape is marked by challenges like financial exclusion, inadequate access to health services, and the ever-present threat of climate change. Despite significant growth in bank accounts, about 1.4 billion adults, most of them women, remain unbanked. Furthermore, financial resilience is weak, with only 55% of adults in developing countries able to access emergency funds without difficulty within 30 days of an unforeseen expense.
DPI addresses these issues by providing the necessary infrastructure to deliver services at scale. For example, digital financial solutions can help close the credit gap by offering lenders new ways to assess the creditworthiness of potential borrowers. Digital technologies also allow for the efficient transfer of benefits and subsidies directly to those eligible, minimizing diversion of funds and ensuring timely access to necessary resources.
In healthcare, DPI facilitates the collection and analysis of personal health records, enabling better treatment and care delivery. Technologies like telemedicine and wearable devices enhance healthcare access, especially in remote areas. DPI also plays a crucial role in education by making high-quality content accessible to the poorest populations in the most remote locations, thereby democratizing education.
The Economic Impact of DPI
DPI’s role in economic transformation cannot be overstated. Countries adopting DPI are witnessing significant advancements in financial inclusion, economic growth, and social development. India’s experience is particularly illuminating. In just eight years, the country has seen tele density rise to 93%, over a billion people obtaining a digital ID document, and over 2 billion digital payment transactions completed per month. This progress has been driven by DPI initiatives such as the Unified Payments Interface (UPI), which enables instant mobile digital payments, and the Aadhaar Payment Bridge, which facilitated Rs. 3.81 lakh crore cash transfers directly to beneficiaries’ bank accounts in 2019-20.
The economic benefits of DPI extend beyond financial inclusion. It has been linked to increases in household income and growing inclusion in credit via small ticket loans. For instance, the gender gap in bank ownership in India has reduced from 18 percentage points to near zero between 2011 and 2021, demonstrating the inclusive potential of DPI.
Design Principles of Effective DPI
The success of DPI hinges on three core pillars: technology design, robust governance, and market participation. These pillars ensure that DPI remains resilient, adaptable, and capable of evolving to meet the needs of the market as it grows to population scale.
- Technology Design: DPI should be built on the principles of openness, interoperability, and scalability. This enables the establishment of inclusive and evolvable digital ecosystems. DPI must be designed to be interoperable, allowing different systems and components across institutions to interact seamlessly. It should also be modular, enabling easy reconfiguration and adaptation to new requirements and technologies.
- Governance: A robust governance framework is essential for DPI to succeed. This includes the right mix of policies, regulations, and institutions to ensure that DPI ecosystems operate efficiently and transparently. Governance should also extend to the protocols that determine how DPI functions and how market participants interact with it. This ensures uniformity in service delivery and reduces the compliance burden on market participants.
- Market Participation: DPI must encourage market participation to achieve population scale. By fostering healthy competition, market participants are incentivized to innovate and improve user experiences. This collaboration between public and private sectors is critical for scaling DPI and ensuring that it delivers value to all stakeholders.
Global Adoption and Lessons from India
Countries worldwide are increasingly recognizing the value of DPI. From Brazil’s Pix to Singapore’s PayNow and Thailand’s PromptPay, nations are leveraging DPI to drive financial inclusion and economic growth. India’s experience offers valuable lessons. The country has successfully implemented DPI across various sectors, including identity, payments, and data sharing, resulting in rapid economic transformation and social development.
One of the key takeaways from India’s DPI journey is the importance of government-led initiatives like the Pradhan Mantri Jan Dhan Yojana (PMJDY), which played a critical role in driving financial inclusion. Another is the need for targeted interventions that leverage digital platforms to deliver services efficiently and transparently. The Direct Benefit Transfer (DBT) program in India, which uses the Aadhaar Payment Bridge to deliver benefits directly to individuals, is a prime example of this approach.