Digital Economy

How is India leading the Digital Economy Front and a small tribute for the minds behind it

The Story of India’s Digitization starts in 2009 more than one and a half decade back when a fine

gentlemen named Nandan Nilikekani, the silent architect of India’s Prime Digital assets. Quit his job

in one of India’s Prime IT firms to join the then government to work on the idea of Aadhar. Aadhar or the INDIA STACK, under his leadership laid the foundation for future digital assets of India to come.

2014, the first manifestation of these digital edifice came to light with the launch of JANDHAN account. With the data base of over 1.2 billion Indian Aadhaar eased out the process for a layman to join the formal banking infrastructure as a costumer and thus get exposure to the facilities it brings. How exactly did this happen? Well, you would go and jab your thumb in the finger print scanner at your local branch and the details from your Aadhar database would auto fill your bank form this has resulted in opening of over 47.8 Cr accounts with over 1.3 trillion rupees deposited in these banks.

2016, The third stage of this story happens in 2016 with the launch of Jio disrupting the entire market Jio created mobile data package for users and a price no other country could imagine thus a young India with already 300 million smartphones on its palm became the biggest market for data. The effects of this event on the Indian socio-economic & political life deserve a book on its own.

But with this the JAM trinity was in place where your Jandhan account spoke to Aadhar through your Mobile. Using this network government was able to provide 300 billion dollars’ worth of direct social security transfer over the 2 years of pandemic. In a normal year India is pumping around 70 billion dollars through JAM which is directly reaching in the bank accounts of 60 million Indian families.

2016, The other big change that happened in 2016 was the launch of UPI, this is one interface is the Kohinoor in the Crown of India’s Digital Economy Story , The worlds fastest Real time payment

system. This one instrument bought our local vendors from suppliers to distributors to retailers in the fold of the white economy and because it solved some basic hassles for local vendors like carrying around cash or circulating money restrictive to physical transfer. UPI came as an answer for Data rich smart phone vendor in this country to these hassles significantly cutting out their working capital

cycle as well as their cost of capital. Since launch the NPCI data shows UPI Transactions are hitting new high every month only in the past month of March 2023 UPI did 8.651 billion transactions. UPI’s impact on National Income can be understood from Freidman version of Quantity theory of money equation which says in an economy (M*V=P*Y) which is Money * Velocity = National Income shown

by P (Price) * Y(Economic Activity) Soo even if an economy has constant money increasing its velocity by cutting Working capital cycle as done by UPI results in Rise in National Income.

Coming up next ONDC the next chapter in the Indian digital economy story. Open network for digital commerce plans on doing to in E-Commerce what UPI did in Digital Payments. Also it plans to put forward an alternative to the monolithic architecture of the current E commerce players. Where the end-to-end process will not be always controlled by one platform. Thus, customers get significantly more options to choose from and have a custom package of vendor & Shipping if they prefer soo.

With Such new exciting chapters adding every other day. I conclude by simply saying this story has just begun and I invite everyone to be a part of it it’s a change that happens once in a century.

Jai Hind.

-- Gaurav Bhadoria