On a recent visit to rural Andhra Pradesh we stopped to buy a cup of tea from a chaiwallah, an informal entrepreneur selling tea by the roadside. After producing a hot cup of masala chai, she gave us a QR code to make our payment. This lady in a remote rural location not only had a digital bank account that allowed her to receive digital payments, but she had the proof of identity needed for such an account: a unique 12-digit number linked to her biometrics, her Aadhaar. Moreover, she clearly trusted digital payments through the United Payments Interface (UPI). It was easy enough to use it that she preferred it to cash.

Digital public infrastructure (DPI) (in this case, the “India Stack”) is at the heart of a revolution that is transforming the Indian economy. An intermediate layer between physical infrastructure (like broadband) and sectoral applications (like social security) DPI provides the building blocks for offering transformative digital services—such as systems for digital identity and payments—at scale. DPI rose to prominence globally during the COVID-19 pandemic enabling digital government-to-person payments through cash transfers. India Stack is one example of such DPI; others include Brazil’s Pix fast payment system or Australia’s Consumer Data Right.

The story of India Stack begins in 2009: Approximately 400 million Indians did not have a form of individual identity, which meant that the majority of the population was unbanked and lacked access to credit. This also meant that many were unable to claim public services and the benefits that were their due because of the high cost of verifying their identity through manual processes and physical documents. This was the start of the Aadhaar project, which offered a universally accessible ID, a foundational form of digital identification. By 2022, around 1.3 billion Indians, nearly 95 percent of the population, could digitally prove who they are. The Aadhaar project morphed into India Stack during the mid-2010s to include components such as payments and financial data governance, in addition to identity. The payments component, UPI, allows for seamless peer-to-peer payments. These payments, in terms of volume, have increased from less than a billion transactions in FY 2018 to over 83 billion in FY 2023. Finally, the data governance component enables the secure storing and sharing of data, ensuring that ownership and control over the data reside with users. This in turn allows citizens to leverage the data trail they leave while using Aadhaar and UPI.

India Stack is a unique approach to developing digital infrastructure through a partnership between the government and the private sector. As such it is different from a corporation-centered partnership like the DC commercial Internet or a government-centered partnership like Beijing Paternal Internet. The interoperable, low-cost, and open-source nature of India Stack allows for the model to be quickly and affordably replicated in other developing economies. Such a model offers an inclusive, bottom-up approach to development and growth that developing countries need but which has heretofore been sorely lacking.

Read the full article about digital public infrastructure by Sreevas Sahasranamam and Jaideep Prabhu at Stanford Social Innovation Review.