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India's Digital Transformation by Nandan Nilekani.pdf

Nandan Nilekani discusses India's remarkable digital transformation over recent years, highlighting the shift from cash reliance to a thriving digital economy marked by innovations such as the Aadhaar identity system and the rapid growth of digital payments. The document emphasizes the role of digital public infrastructure in enhancing financial inclusion, government efficiency, and citizen empowerment. It concludes with the notion that India's unique model of technology-led growth is collaborative and equitable, aiming to democratize opportunities across the population.

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Digital Transformation•
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Nandan Nilekani 2023 | India’s digital transformation Nandan Nilekani, 2023
Nandan Nilekani 2023 | In 1991, India faced a Balance of Payments Crisis. In 2021, we have a healthy surplus. Source: World Bank 2
Nandan Nilekani 2023 | In 2008, we were the world’s most unbanked. 3 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
Nandan Nilekani 2023 | The price of data fell exponentially, & the use of smartphones grew proportionately Source: Blume Research. NPCI statistics 4
Nandan Nilekani 2023 | In 2016, India used mostly cash 5 In 6 years, India became the world’s highest volume of digital payments
Nandan Nilekani 2023 | India delivered 2.15 billion vaccine doses in just 2 years 6
Nandan Nilekani 2023 | 7 India is making irreversible, non-linear changes Each change acts as input to the next leading to combinatorial innovation
Nandan Nilekani 2023 | 8 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
Nandan Nilekani 2023 | 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. 9 Source: Zenith Advertising Expenditure Forecast, World Population (census.gov)
Nandan Nilekani 2023 | 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 10 Data Layer Enabling consented, secure sharing of data Users decide how to use their data
Nandan Nilekani 2023 | Starting with a Digital Identity 11 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
Nandan Nilekani 2023 | 12 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
Nandan Nilekani 2023 | Digital Payments are everywhere now! 13
Nandan Nilekani 2023 | 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 14 FasTag + GST + eWaybill cut waiting times at borders from days to minutes
Nandan Nilekani 2023 | Digilocker makes transactions paperless 15 152 Mn Users of Digilocker as of February 2023 5.6 Bn Issued Documents Document Issuers 2311
Nandan Nilekani 2023 | 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 16 AA enables 1.1 Billion accounts to share banking, securities, insurance, & pensions data
Nandan Nilekani 2023 | 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 17
Nandan Nilekani 2023 | 18 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
Nandan Nilekani 2023 | DPIs help make the government efficient 19 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
Nandan Nilekani 2023 | 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. 20
Nandan Nilekani 2023 | ONLY Country in the world Building population scale APIs & open networks to digitally transform society Source: PhonePe Pulse for UPI Transaction data
Nandan Nilekani 2023 | 22 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
Nandan Nilekani 2023 | 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 23
Nandan Nilekani 2023 | We are now a young, connected country that consumes content digitally 24 Source: Livemint. .
Nandan Nilekani 2023 | You can see the difference already 25 2016 2020
Nandan Nilekani 2023 | Startups have captured the imagination of bright minds 26 Source: Sajith Pai.
Nandan Nilekani 2023 | Startup Alumni are the leading source of Startup founders 113 # 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 27 Source: Tracxn.
Nandan Nilekani 2023 | Causing even incumbents to rethink strategy & approach to technology Digital Natives Incumbents 28
Nandan Nilekani 2023 | India is upgrading 29 From an offline, cash, informal, low productivity economy to an online, cashless, formal, high productivity economy
Nandan Nilekani 2023 | The next three areas where DPGs will disrupt 30 Credit eCommerce Logistics Logistics
Nandan Nilekani 2023 | 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 31
Nandan Nilekani 2023 | Along with other technology innovations, Integrated Logistics startups are increasing the efficiency of logistics DPGs (GST + eWayBill + FasTag) are Creating a Single Physical Market 32
Nandan Nilekani 2023 | Open Networks for Digital Commerce (ONDC) Will bring millions of small retailers to the era of eCommerce 33 Source: ONDC Strategy Paper
Nandan Nilekani 2023 | 34 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
Nandan Nilekani 2023 | AI Initiatives like Bhashini will help overcome the final mile challenges 35
Nandan Nilekani 2023 | 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 36
Nandan Nilekani 2023 | 37 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.