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Over the past few years, India has made digital financial inclusion one of its most important policy priorities by seeking to bank the unbanked in order to transfer welfare benefits directly to the people. A panel at the Raisina Dialogue 2018 explored India’s growth in the digital payments space and addressed how lessons from India can be instructive for other emerging economies. The growth of Aadhaar, a unique public data infrastructure, has enabled people to bypass several steps when obtaining essential banking services. As panellists noted, Aadhaar has enabled the country to leapfrog technologically by ensuring transparency and promoting inclusivity through the Jan Dhan programme. Aadhaar has led to the creation of IndiaStack, a suite of layers built on a digital identity that facilitates authentication, storage, and payments online. The IndiaStack has also created an ecosystem where data can be utilised as a public good, allowing private actors to innovate on top of the platform to provide better, more targeted services. It cost the state some US$2.4 billion to build the Aadhaar infrastructure; and there are now over one billion Indian citizens on the platform. This means that providing citizens with their unique identity had cost India an average of two dollars per person. Aadhaar’s success story lies in how states managed to bring people into the ecosystem in a manner that was not only efficient but also quick and inexpensive. Cash is a huge competitor for the digital payments ecosystem, with only 15 percent of transactions worldwide being carried out online. In India, leading up to the last two years, over 95 percent of all transactions were in made by debit card. Aadhaar has been critical in transforming the payments ecosystem since then. The speed with which one can put merchants and consumers on-board using Aadhaar ekyc has proven to be a successful model. As a panellist put it, India has the potential to become a “normative superpower” on financial inclusion and digital payments. The growing payments ecosystem, however, has to be secured at the same time, to protect the people – consumers and merchants—as well as the processes and data. European economies

are currently leading the conversation on security risks and solutions for the payments sector; India must pay heed to such developments. Fin-tech startups and smaller enterprises will play a huge role in realising the goal to digitise all transactions. Using data analytics, MSMEs and SMEs that have traditionally and historically had a better record of repayments can compete with the bigger players and potentially disrupt the market. Data can also be analysed to promote financial inclusion for all, leading to an increased flow of resources from the banking system to those below the poverty line. The next biggest disruption that India will undertake is to wipe out credit cards, debit cards and ATM machines. People will instead transact at zero cost using only their smartphones and their own biometrics. This, in turn, will lead to an upsurge in the data collected on financial transactions which can enable younger companies to expand their markets. People are keen to eliminate the middlemen and use their own devices to carry out financial transactions. Innovations such as the Bharat QR and the United Payments Interface (UPI) can be an instrumental layer on which the private sector can develop their solutions. India has pioneered a novel public-private partnership for the digital age, with both the state and the startups competing to serve the people.

MODERATOR Tidhar Wald, HEAD OF GOVERNMENT RELATIONS & PUBLIC POLICY, BETTER THAN CASH ALLIANCE PANELLISTS Amitabh Kant, CEO, NITI AAYOG Vijay Shekhar Sharma, FOUNDER AND HEAD, PAYTM Porush Singh, INDIA AND DIVISION PRESIDENT, SOUTH ASIA, MASTERCARD Arvind Gupta, HEAD, DIGITAL INDIA FOUNDATION Agnieszka Wierzbicka, EXPERT, MINISTRY OF DIGITAL AFFAIRS, POLAND