The foundation for the India Stack was laid down over a decade ago with the introduction of the biometric digital ID system for all Indians, the Aadhaar. Today, the moniker, India Stack, includes multiple other digitally enabled components: eKYC, AEPS, UPI, IMPS, eSign, DigiLocker, Account Aggregator, and Digital Signature.
Digital public infrastructure (DPI) consists of crucial technology components that promote innovation, inclusiveness, and competition. It is built on three main pillars: Identity, Payments, and Data management. This digital public infrastructure is an opportunity for businesses across sectors to foster India’s economic and social development by driving financial inclusion.
The United Nations member countries had in 2015 taken up 17 SDGs as an urgent call for action to achieve The 2030 Agenda for Sustainable Development. The goals – recognised by both developed and developing countries – include no poverty, zero hunger, good health and well-being, quality education, gender equality, clean water, and sanitation, affordable and clean energy, decent work and economic growth, industry, innovation and infrastructure, reduced inequalities, sustainable cities and communities, responsible consumption and production, climate action, life below water, life on land, peace, justice, and strong institutions, and partnerships for the goals.
India initially aligned with 13 of the 17 UNSDGs and built an SDG India Index using the National Indicator Framework to assess the advancement towards achieving the SDGs at both the national and sub-national levels.
According to the SDG India Index Report 2020-21, the country has adopted 16 goals, 70 targets, and 115 indicators.
India Stack, DPI, and SDGs
Broadly, India Stack is an interconnected technology system network that facilitates efficient and secure digital interactions between the government, businesses, and citizens. India’s innovative approach to leveraging this digital public infrastructure has been instrumental in its progress towards achieving some of the SDGs faster.
These digital capabilities and platforms also provide a robust framework for data management, privacy, and security, thereby ensuring responsible and ethical use of data in driving sustainable development.
For instance, the Aadhaar system, a biometric identification program that assigns a unique identification number to every Indian resident, has revolutionized service delivery by providing seamless access to government schemes, subsidies, and benefits.
The Indian government estimates that by 2030, this digital public infrastructure (DPI) could contribute to a 20-33 per cent potential acceleration in overall economic growth. As a nation, India has made substantial progress in areas such as reduced inequalities (i. e. through direct transfer of wages into women’s accounts).
The existing components of the DPI hold a huge potential for SDGs across impact areas. For instance, UPI, which is a robust mobile-based payment DPI and allows digital payment transactions for interbank, peer-to-peer, and person-to-merchant, has 260 million users from across India and can enable equal access to the 80 million unbanked women who continue to get salaries in cash (according to government data cited in a UNDP report). Government organizations and private companies can use UPI to ensure direct transfer to women employees and thereby achieve the gender equality goal.
Each distinct layer of the India Stack – Presence less Layer, Paperless Layer, Cashless Layer, and Consent Layer – facilitates the advancement of the sustainable development goals. The consent-based interoperable nature of the infrastructure helps innovate and accelerate digital and financial inclusion in the country.
DPI as an enabler of ‘decent work and economic growth’
In terms of connectivity, DPI plays an important role in bridging the digital divide and bringing the underserved and unserved communities within the purview of new-age innovations. DPI catalyses innovation and economic growth, fostering entrepreneurship and job creation. It encourages equitable and sustainable development by enabling people to engage in the digital economy on an individual and community level.
Financial Inclusion and Decent Work and Economic Growth go hand-in-hand. DPI enables secure sharing of customer credit information across India’s banking and financial services ecosystem across urban and semi-urban areas. Financial service providers can seamlessly interact with users (such as micro, small, and medium enterprises) to digitise the process of originating, underwriting, and servicing a loan.
This DPI can play a significant role in achieving the crucial development goal of decent work and economic growth, by bridging the credit gap and ensuring decent work and economic growth, the 8th sustainable development goal.
As a prominent digital lender to the MSMEs, NeoGrowth has aligned its business activities to six of the 17 sustainable development goals and uses the existing DPIs such as e-KYC, Aadhaar, DigiLocker, eSign, and UPI, to achieve these goals. The loan application is fast-tracked with integrations with different components of Digital Public Infrastructure including Account Aggregator, Aadhaar, e-KYC, and the digital payment data of MSMEs.
DPIs for ‘industry, innovation, and infrastructure: The NeoGrowth Way
Digital Public Infrastructure (DPI) is transforming the financial services industry through democratised data access and its intelligent use by new-age digital lenders. DPI facilitates the seamless flow of data, enabling digital lenders to access a vast pool of information on potential borrowers. Together with cutting-edge analytics and machine learning, this improved access gives lenders the ability to make better credit-go/ no-go decisions. With diverse and alternate data sources including digital financial transactions, lenders can assess the creditworthiness of borrowers. By moving away from the traditional methods of credit and risk assessment, lenders can extend credit to a wider demographic.
For the larger industry, digital lenders such as NeoGrowth have shown a way to integrate the DPI systems and provide seamless services to MSMEs primarily driven by technological innovation.
NeoGrowth is among the first few NBFCs to go live on the Account Aggregator ecosystem, a digital platform that helps an individual access and share information securely and digitally from one financial institution they have an account with to any other regulated financial institution.
Digital lenders are significantly helping address the MSME credit gap in India using DPI. By integrating account aggregator information, credit bureau scores, proprietary data, and other internal metrics, lenders can thoroughly assess potential borrowers and provide hassle-free loans that leverage the digital payments ecosystem.
Digital lenders can tailor financial products, interest rates, and repayment terms based on individual risk profiles, enhancing affordability for borrowers and stronger risk mechanisms. This data-driven approach contributes to building a more inclusive and resilient financial ecosystem, addressing key aspects of sustainable development such as economic growth and reduced inequalities.
What next?
At a time when India is promoting having Global DPI for the G20 nations, along with government institutions, India’s business ecosystem could also have exemplary processes and mechanisms in place using the DPIs. However, it is important to address the challenges of inclusivity, privacy, and data protection to ensure that the benefits of DPI are accessible to all. With a focus on leveraging technology for the greater good, India can lead the way in achieving the SDGs and building a more sustainable and equitable future for all.
Authored by Arun Nayyar, MD and CEO, NeoGrowth
