Nandan Nilekani's presentation on the rapid changes that are happening in India over the last decade and a half. India is going through non-linear changes by using Digital Public Infrastructure (DPI). This presentation joins the dots and presents the big picture.
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In 1991, India faced a Balance of Payments Crisis.
In 2021, we have a healthy surplus.
Source: World Bank 2
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In 2008, we were the world’s most unbanked.
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In 2019, BIS said what India did for financial Inclusion in 9 years,
would’ve taken 47 years by traditional means
Source: BIS Paper by Derryl D'Silva , Zuzana Filkova , Frank Packer and Siddharth Tiwari
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The price of data fell exponentially, & the use of
smartphones grew proportionately
Source: Blume Research. NPCI statistics 4
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In 2016, India used mostly cash
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In 6 years, India became the world’s
highest volume of digital payments
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India delivered 2.15 billion vaccine doses
in just 2 years
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India is making irreversible,
non-linear changes
Each change acts as input to
the next
leading to combinatorial
innovation
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Aadhaar
eKYC
Direct Benefit Transfer to low-cost Bank Accounts Deep penetration of 4G Connectivity & Smartphones
Each change is enabled by a new approach to solving societal
problems using Digital Public Infrastructure
Sources: dbtbharat.gov.in & Blume research
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A digital nation needs digital infrastructure
In India, advertising-dollars
cannot subsidise the creation of
platforms.
India needed to build its own
micro transaction economy for
India-2 & India-3.
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Source: Zenith Advertising Expenditure Forecast, World Population (census.gov)
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Giving every resident a unique ID
Everyone can prove “I am who I claim to be”
We built up Digital Public Infrastructure
layer by layer to make the India Stack
Identity Layer
Payments Layer
Allowing anyone to pay anyone else!
Interoperable, fast and cheap
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Data Layer
Enabling consented, secure sharing of data
Users decide how to use their data
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Starting with a Digital Identity
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Name
DoB/Age
Gender
Address
Mobile/Email
1234 5678 9012
A Unique
Lifetime
Identity
Aadhaar
Authentication
Aadhaar
eKYC
Are you who
you claim to be?
Paperlessly share
KYC/AML details
Aadhaar
eSign
Digitally Sign
Documents
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Then spread the ability to digitally transact
Instant digital payments
Enabled by private players
Built on top of an open payment network
Run as per regulations of the central bank.
Sources: NPCI Statistics
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These little gains can add up to a lot!
MoRTH estimates ~350 Mn
Litres of Fuel was saved in
2021 preventing 9.8 Mn Tons
of CO2 emissions
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FasTag + GST + eWaybill cut waiting times at
borders from days to minutes
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Digilocker makes transactions paperless
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152 Mn
Users of Digilocker as of
February 2023
5.6 Bn
Issued Documents Document Issuers
2311
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Account
Aggregator
Account
Aggregator
India’s DPI for financial data sharing, Account Aggregator,
empowers users with their own data
Bank
Mutual Fund
House
Insurance
Provider
Tax Data
Credit & Insurance
Personal Finance
Management
Wealth
Management
Robo Advisors
Financial Information Providers Financial Information Users
Account
Aggregators
3. Data Flows to FIUs
End-to-End Encrypted
1. Consent to
share data
2. Request Data
through Open APIs
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AA enables 1.1 Billion accounts to share banking, securities, insurance, & pensions data
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Government Apps
Govt Use Only
Databases
Governments
Public Only
Single Provider
Cautious Innovation
Market Apps
Walled Garden
Platforms
Private Tech
Companies
Private Only
Lack of interoperability
Lack of competition
Diverse govt and
market apps
Interoperable DPI
DPI Approach
Addresses diversity & choice
Encourages Innovation & competition,
Ensures openness and sovereignty
National
Information
Utilities
DPIs combine the best of Public & Private provision
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Privacy as a default,
not an add-on
By design, DPIs in India :
● Collect minimal data
● Data to be used only with consent & notice
● Data is federated i.e. no honey pots
● Access to data is regulated
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DPIs help make the government efficient
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Source: dbtbharat.gov.in, RBI Annual Statistics Handbook
$310 Billion
Cumulative Value of all cash payments
through Direct Benefits Transfer
1.05 Billion
Number of Beneficiary Transactions in
2021
4.06x
Centre Gross Tax Collection
from FY09-10 to FY21-22
3.58x
GDP Growth (in current prices)
From FY09-10 to FY21-22
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Domestic Investors & their autopay
SIPs have kept markets afloat
According to a
Jefferies India report,
annual equity
allocation works out to
Rs 2.52 trillion.
Of this, the annual
contribution through
SIPs in mutual funds
alone stands at over Rs
1.44 trillion.
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ONLY Country
in the world
Building population
scale APIs & open
networks to digitally
transform society
Source: PhonePe Pulse for UPI Transaction data
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India’s IT Services laid the foundation …
A $227 Bn industry that provides India dollars and jobs.
Building macro stability & talent pools that helped start
the DPG & Startup revolutions
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Exits
Acquisitions 1435
IPOs 170
All time Stats
Companies 90892
Funded Companies 7257
Total Funding $139B
Funding in last 24 months $53.6B
$ Funding
Series A+ rounds
# Funding rounds
$40.7B(vs $12.9B) 2601(vs 2100)
842(vs 579)
Exits (Acqs, IPOs)
255(vs 123)
100+ startups have turned into unicorns
90,000+ startups in 2022 Vs ~1000 in 2016
Source: Tracxn Geo Annual Report
2016 2022
~1000
90892
… India’s Startup ecosystem built on top
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We are now a young, connected country
that consumes content digitally
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Source: Livemint. .
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Startups have captured the
imagination of bright minds
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Source: Sajith Pai.
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Startup Alumni are the leading source of Startup founders
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# Startups founded by
Myntra Alumni
$ 2.47 Bn
Funding raised by
Myntra Alumni
318 $ 6.77 Bn
# Startups founded by
Flipkart Alumni
Funding raised by
Flipkart Alumni
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Source: Tracxn.
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Causing even incumbents to rethink
strategy & approach to technology
Digital Natives
Incumbents
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India is upgrading
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From an offline, cash, informal, low productivity
economy
to
an online, cashless, formal, high productivity
economy
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The next three areas where DPGs will disrupt
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Credit eCommerce Logistics
Logistics
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DPGs + Startups are solving three key challenges in
lending leading to an explosion in small ticket loans
Discovery of
creditworthy
borrowers
Reliable third party
data to price risk
Automated Collection from Digital
Cash flows
Information collateral replaces physical collateral
& helps give cheap formal credit to the small guy who could only get it through usurious lenders thus far
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Along with other
technology innovations,
Integrated Logistics
startups are increasing the
efficiency of logistics
DPGs (GST + eWayBill + FasTag) are
Creating a Single Physical Market
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Open Networks for
Digital Commerce
(ONDC)
Will
bring millions of
small retailers to
the era of
eCommerce
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Source: ONDC Strategy Paper
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Photo by Ronnel Ramos on Unsplash
Cheaper Credit,
Wider Discovery &
Better Logistics
will commoditise the
supply chain
Google, Facebook, Stripe & Amazon Web Services
provided full stack to selling digital products.
Credit, ONDC, UPI & Logistics ecosystem
provide full stack to selling physical products
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AI Initiatives like
Bhashini will help
overcome the
final mile
challenges
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Exponential Change
starts gradually,
then happens
suddenly
India Stack
Cheap Smartphones
Cheap Internet
Startup Economy
Formalization
Digital First Taxation
Financialization
Data-led Credit Disbursal
Credit-led Expansion of MSME
$10 Tn Economy
Digital Identity
IT Services
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Photo by indiacontent.in
India is
innovating a
different model
for growth
A technology-led model that is collaborative,
equitable, and democratises opportunity at
population scale.
Wealth won’t trickle down, so we are raising the floor.