India has used digital public Infrastructure to achieve 80% financial inclusion in 6 years: World Bank

The World Bank, in a report it has prepared for G-20 ahead of the Leaders’ Summit, has praised India’s use of Digital Public Infrastructure to enhance financial inclusion and delivery of public goods and services.

In the report, titled ‘G-20 Policy Recommendations for Advancing Financial Inclusion and Productivity Gains Through Digital Public Infrastructure’ the World Bank has said that the impact of DPI goes beyond inclusive finance, to supporting health, education, and sustainability.

"The India Stack exemplifies this approach, combining digital ID, interoperable payments, a digital credentials ledger, and account aggregation. In just six years, it has achieved a remarkable 80% financial inclusion rate—a feat that would have taken nearly five decades without a DPI approach," said the foreword to the report. The foreword has been written by Queen Maxima of the Netherlands.

Elsewhere, the report stated that UPI has been widely adopted, benefitting from a user-friendly interface, open banking features, and private sector participation.

“The UPI platform has gained significant popularity in India; more than 9.41 billion transactions valuing about Rs 14.89 lakh crore were transacted in May 2023 alone. For the fiscal year 2022–23, the total value of UPI transaction was nearly 50% of India’s nominal GDP,” it said.

Other systems mentioned were Singapore’s Singpass, the Philippines’ PhilSys, and the UAE's UAE-Pass among the digital ID systems; Brazil’s Pix, Türkiye’s FAST, and Thailand’s PromptPay under fast payment systems; as well as Estonia’s X-Road, Singapore’s MyInfo, Australia’s Customer Data Right, and the UK's Open Banking.

The document also cites India’s Data Empowerment and Protection Architecture (DEPA) and Account Aggregator (AA) Framework. On Fast Payment Systems, it noted that in some countries, such as India and Brazil the adoption has been "particularly quick and transformative".

The document goes on to say that an aspect that makes DPIs unique, and that can further reduce existing constraints, is their ability to complement each other or be integrated in end-to-end workflows.

The World Bank report is part of the G20’s Financial Inclusion Action Plan for 2024-2026, shaped under India’s presidency. Its cornerstone is Digital Financial Inclusion, which aims to use the latest banking, payments and direct transfer technology in G20 and non G20 countries to provide financially excluded and underserved populations with a range of formal, affordable financial services suited to their needs.

India is using its leadership of G20 to pitch the strides it has made in financial inclusion with the use of Aadhaar and UPI. It has offered many non-G-20 members, who have attended as invitees, technological and financial help to set up their own unique identity and fast payment systems.

There is a larger issue at play here, as India wants to expand its goodwill and sphere of influence with digital infrastructure, the same way that China did with physical infrastructure in the last two decades.