The global quest for digital transformation has found a new champion in the form of digital public infrastructure (DPI). The United Nations has identified DPI—digital building blocks operating at a societal scale in fields like digital identity and digital payments—as a high-impact initiative for achieving the sustainable development goals. “First-mover” countries and donor groups are rallying to spread DPI among other nations through initiatives like the 50-in-5 campaign that seeks to encourage DPI adoption in 50 countries in 5 years (by 2028). Toolkits and playbooks on the subject abound.
As an early adopter and vociferous campaigner of DPI, India has played no small part in this story. Its G20 presidency in 2023 nudged the world’s leading economies to come to a consensus on the meaning of DPI and its role in fostering resilience, innovation, and inclusive growth. Much of what was described as DPI in this context flowed from India’s experiences with projects like Aadhaar for digital identification, the Unified Payments Interface (UPI) for digital payments, and more recently, the account aggregator framework for data management in the financial sector. A host of such interventions built around the idea of standardization of “open” application programming interfaces (APIs) are collectively described as the “India Stack.”
In a recent paper, “Stack is the New Black?: Evolution and Outcomes of the ‘India-Stackification’ Process,” I trace the evolution of India Stack from an idea promoted by an industry think tank to becoming the dominant model of digital transformation in India. This stack is commonly described as consisting of four layers—presence-less, paper-less, cash-less, and consent—with each layer containing multiple DPI solutions. Besides the examples cited above, the indiastack.global portal, which is a part of India’s pitch for the internationalization of its DPIs, lists applications like DIKSHA (online education), DigiLocker (document certification and management), and Aarogya Setu (COVID contact tracing) as some of the other components of India Stack.
The global discourse on DPI underlines expectations of inclusiveness, safety, resilience, trust, and accountability in the design of such interventions. The interpretation of these values (and assessment of their satisfaction) is, however, left largely to domestic implementing agencies, often without independent regulatory oversight. In India’s case, the use of state coercion in the proliferation of digital infrastructure has proved to be a pain point for citizens. Examples range from official diktats for the denial of services and welfare benefits to those without Aadhaar to local campaigns by panchayat officers and community health workers to compel enrollment for the new digital health IDs under the Ayushman Bharat Digital Mission (ABDM).
Projects like Aadhaar, ABDM, Aarogya Setu, and DigiLocker, illustrate one type of DPI governance model, where the infrastructure is owned and managed directly by the government. Private sector involvement in such projects comes from interactions with select individuals and businesses in the technical development process and subsequent adoption as users of the system. For instance, the use of Aadhaar-based authentication APIs for know-your-customer checks by financial businesses or proposed data exchanges between hospitals and diagnostics labs under the ABDM.
In the second model, the government acts as a promoter or endorser of the DPI, but its ownership lies with a separate industry-owned corporate entity. The National Payments Corporation of India (NPCI), which owns the UPI system among several other payment initiatives, illustrates this structure. NPCI’s shareholding is held by a consortium of banks and payment entities, which includes public sector undertakings but the government itself is not a shareholder. The Open Network for Digital Commerce (ONDC), created to increase e-commerce penetration in the country, follows a similar model. Promoted by the Ministry of Commerce and Industry, the ownership of ONDC vests in a mix of banks and financial institutions with a quality standardization body and a digital solutions entity as its founding members.
In 2011, the Technical Advisory Group for Unique Projects (TAGUP) headed by India Stack proponent, Nandan Nilekani, articulated the idea of vesting the ownership of digital infrastructures in “private companies with a public purpose.” The adoption of a “not-for-profit” structure for entities like the NPCI and ONDC has become one of the ways to emphasize their public purpose. This implies that the profits earned by these entities cannot be distributed to their members and must be re-invested into the company’s activities. Besides keeping a check on the incentives of shareholders, this ownership model can facilitate better efficiency in decision-making and flexibility in recruitment and procurement processes compared to a government-run setup. These advantages are, however, accompanied by various competition and governance concerns emanating from this structure.
India’s DPI encounters in market-related contexts have generated two types of competitive effects. The first, and widely publicized, positive effect is that of enabling competition through interoperability among system participants. It is this interoperability that enables an ICICI bank account holder using GooglePay to make an instant UPI payment to a Paytm user with an SBI bank account. Similarly, the ONDC is trying to unbundle the e-commerce value chain into multiple smaller transactions that can be performed by a diverse set of actors. Its goal is to break the silos that lock users into specific networks, such as those run by large e-commerce marketplaces like Amazon and Flipkart, and facilitate interoperability and competition in the process.
However, the DPI deployment experience also raises an important second-order question—can such competition-inducing interventions also end up harming competition due to infrastructural monopolies? The discussions that follow draw upon a 2022 paper in which I argued that India’s digital infrastructure choices could point to the emergence of a new “alt big tech.” This term is designed to capture the state-backed monopoly of these infrastructures, their data aggregation advantages, gatekeeping functions, and control over technical standards to be followed by all network participants. Several of these features are reminiscent of the concerns posed by the big tech industry even though the two groups are very different in terms of their business objectives.
The TAGUP committee had observed that digital infrastructure operators, which they labeled as national information utilities, essentially operate as natural monopolies due to “upfront sunk-cost, economies of scale, and network externalities from a surrounding ecosystem.” The committee, accordingly, recognized a role for having competing information utilities, with interoperability among them. The realpolitik of DPI implementation has, however, prevented this from happening. The failed attempt to introduce a competitor to the NPCI demonstrates this.
As of now, the NPCI is the only entity authorized by the Reserve Bank of India (RBI) to operate as a payment umbrella entity. In 2019, the RBI initiated a move to create one or more competitors to NPCI. This was meant to act as a check on the concentration of payment operations in a single entity, which could pose systemic and operational risks and create monopolistic trends. However, five years hence, the RBI is yet to act on this plan. The RBI has attributed its inaction to the fact that none of the applications that it received were sufficiently innovative enough to merit further consideration. Popular commentary has, however, presented several other arguments, including the threat to NPCI’s powers and concerns about big tech presence in digital payments, as grounds for resistance.
Indeed, the NPCI has achieved many milestones with UPI. The system has grown tremendously in terms of popularity and transaction scale. It has also witnessed new features like the recurring payments mandate and interoperability with the NPCI-owned RuPay credit cards. Furthermore, there have been notable moves toward the cross-border integration of UPI with payment systems abroad, including through its latest tie-up with Google Pay.
Yet, it would be erroneous to view UPI as the pinnacle of India’s payments innovation. There is still much work to be done in addressing issues of rural penetration, consumer fraud, bank server outages, network failures, and indeed, product innovation. Bridging these gaps will require competitive forces within UPI to coexist with viable competitive challenges to the NPCI’s own dominance.
Actions like preferential dealings among NPCI’s product offerings and commercial arrangements with market participants like Google must be seen through the same lens as they would for a big tech entity. The same holds true for NPCI’s other market interventions like specifying market caps for UPI apps, the implementation of which has been deferred multiple times, and deciding the pace at which a new entrant can scale its business. Furthermore, the lack of public accountability and due process guarantees cast a shadow of doubt on the fairness credentials of such infrastructures. Keeping entities like NPCI out of the purview of the public transparency obligations under the Right to Information Act, 2005 is a case in point.
These concerns are not about private DPI ownership per se but the lack of suitable competition, governance, and accountability safeguards, particularly in light of the new power structures fostered by these monopolies. Rather than assuming the public-spiritedness and pro-competitive outcomes of DPI, these features have to be appropriately demonstrated, in law and practice. The responsibility of thinking through these steps lies upon the implementing domestic agencies but also, in part, on the international organizations and donor community that is fueling the global rush toward DPI.
Smriti Parsheera is a lawyer and public policy researcher. She is a Ph.D. candidate at the Indian Institute of Technology, Delhi's School of Public Policy.
India in Transition (IiT) is published by the Center for the Advanced Study of India (CASI) of the University of Pennsylvania. All viewpoints, positions, and conclusions expressed in IiT are solely those of the author(s) and not specifically those of CASI.
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