Digital Governance: Changing that Red Carpet into a Green One

Observing the tools of Governance in India was like walking in the Museum. Boring. Archaic. Snail-paced. Full of corridors. And a lot of stanchions.

That was some years back.

Today, it may feel like sauntering in the Museum of Tomorrow. For a glimpse of what the future of humanity is going to look like. Dapper. Matrix-like. Fluid. F1-paced. And full of glass skywalks.

UPI’s international expansion, with partnerships in countries like Singapore, France, and Japan, is enabling cross-border digital payments. With upcoming innovations like blockchain, biometric authentication, and voice-enabled transactions, UPI is poised to further simplify and secure digital payments, driving India towards a more digital economy. - Raunaq Rakesh, Aranca

But there is more than shiny glass and gilded lilies in this digitalised land. And that’s exactly what makes digital governance different from how the world of Big Tech has tapped digital powers. In governance, and in India, it is not just about accelerating processes but also making sure everyone is covered in the warmth and safety of the technology blanket. It’s about democratisation, inclusion and of course, real-time action. It’s not about wax. It’s about real humans. Especially those who were standing away from the velvet carpets for so many years.

No Walls, Only Planks

Let’s comb through some numbers first. When compared by their aggregate level of digitalisation, India ranked as the third largest digitalised country in the world (behind the US and China, and ahead of the UK, Germany and Japan). Also, India has been ranked 12th among the G20 countries in terms of the level of digitalisation of the user. As seen in the ‘State of India Digital Economy Report 2024’ by ICRIER, India’s DPI-led Aadhaar and Unified Payments Interface (UPI) have been helping to scale access to public services among millions of unconnected rural residents. It has been observed that India has made remarkable progress on the use of digital payments, especially in the public sector. Just imagine the scale with this figure: UPI Payments crossed 9.3 billion in volume and Rs. 14.75 lakh crore in value around June 2023 – as per a recent NASSCOM report.

Aadhaar-based authentications made it easy to open a bank account, leading to higher adoption of PMJDY (PM Jan Dhan Yojna), from 44 per cent in 2014 to about 77 per cent of the population gaining access to bank accounts in 2023. No wonder, over 30 countries are either adopting or in early discussions to implement UPI, Aadhar, and Beckn in their respective countries for boosting social & financial inclusion.

It all boils down to India’s DPI (digital public infrastructure) foundational stack which has worked as digital utilities and has created foundations for many digital services in the country. The foundation of DPIs is based on the underlying principle of trust in the infrastructure and stakeholders, as spelt out well in the NASSCOM report.

If we zoom out to the global level, the global average value of the E-Government Development Index (EGDI) has improved remarkably, with the proportion of the population lagging in digital government development decreasing from 45 per cent in 2022 to 22.4 per cent in 2024- as spotted in the UN E-Government Survey 2024. The global average EGDI value has risen by 4.59 per cent since 2022 (from 0.6102 to 0.6382), vis a vis an increase of 1.90 per cent during the preceding assessment period. This survey also notes the positioning of India and Bangladesh above the global EGDI average.

The ICRIER report adds how our digital identity network is amongst the world’s largest. India tops the world in terms of the volume of digital transactions, and export of ICT services. We have turned into the largest contributor to global GitHub AI projects. During its G20 Presidency, India was recognised as the champion of DPIs, a new approach to population-scale delivery of public services. Over 4,200 e-government services are provided across the country, recording 160 billion e-transactions in 2023-24.

In other words, whether we are travelling on the road and paying through FastTag or ordering food and using UPI or handling tax via GSTN or fast-tracking any KYC through Aadhar – DPIs have turned into the digital electricity we just cannot live without.

Digital Utilities and Taps

India has successfully built digital public infrastructure focused on Digital Identity, Digital Payment, Consent-based Data and Document Sharing, Digital Health, and Education amongst others at scale, avers Devroop Dhar, Founder, Primus Partners. “Aadhaar has enabled almost every Indian to have a verifiable digital identity, which forms a backbone for robust service delivery and benefit management. Presently, more than 138 Cr. Aadhaars have been generated, which makes their availability and usage almost universal. In FY 2024, India witnessed more than 131 billion UPI transactions (more than 10.9 billion transactions per month), which is the highest among any nation in the world.

Raunaq Rakesh, Engagement Lead – Telecom, Media and Technology Sector, Aranca captures how UPI, launched in 2016 by NPCI, has transformed India’s payments landscape, handling 78.97 billion transactions worth INR 116.63 trillion in the first half of 2024 alone. UPI’s success, fuelled by its zero-fee model and interoperability, is expanding globally, with cross-border payment systems like UPI-PayNow linking India with Singapore and other countries.

From toll to tickets to e-commerce to PSUs

Another plank connecting many pillars is Open Network for Digital Commerce or ONDC, launched in 2021, which started with food and grocery but quickly expanded into B2B commerce. “With 370,000 sellers across 600 cities, 70 per cent of which are in Tier 2 and Tier 3 cities, ONDC is democratizing e-commerce for small businesses, adds Rakesh. Its low transaction fees (two to five per cent) and integration with sectors like logistics and finance make it a critical platform for local sellers and small businesses, providing them with access to national markets.”

PSU’s in general analyse the techno economics of any new technology very carefully before adopting the same. PSUs never shy away from trying out new technology that might help in the overall process.  - Sharad Kumar Singh, SAIL

As to PSUs, they are embracing technology with as much creativity and context as private business enterprises are doing- and without missing a beat.

Take the example of SAIL. The Bokaro Steel Plant has taken up the digitalisation of its legacy processes in a big way. “In that journey, implementation of automation is under progress in the area of manufacturing and the business processes. The existing processes are being evaluated and audited for improvement and in many cases, the entire process is being revamped and replaced by a new process, shares Manager Sharad Kumar Singh. “PSUs never shy away from trying out new technology that might help in the overall process. SAIL, Bokaro Steel Plant is taking a big leap by adopting Industry 4.0 practices and the implementation of various projects involving AI and machine learning is in progress. Data analytics is also being used in various business and manufacturing processes. Integration with other units and partners using APIs is being done.”

When it comes to digital lanes, we are not behind anyone else in the use of AI. We have embraced it as bravely and as comprehensively in governance as we have done in private apps and consumer-tech areas. “The use of Gen AI in citizen service delivery has also gained prominence. Organizations such as Railways (IRCTC) and the Income Tax Dept. have been using GenAI chatbots to respond to queries from citizens. The government of India has also come up with the AskSarkar platform, which is a GenAI-based chatbot to interact with citizens and provide more information about schemes and programs.” Dhar illustrates.

Our system is a multilingual marvel by supporting voice inputs in Hindi, Gujarati, and other languages, making it truly inclusive. - Ankush Sabharwal, CoRover

Imagine how users can effortlessly book railway tickets and make payments using just their voice. Ankush Sabharwal CEO of CoRover is beaming as he shares how IRCTC, and CoRover came out with a new strategy of Conversational Voice Payments for UPI - etching a significant leap in the ease of digital transactions. “The system is a multilingual marvel by supporting voice inputs in Hindi, Gujarati, and other languages, making it truly inclusive. This Conversational Voice Payments powered by UPI and BharatGPT, a Sovereign AI, has been seamlessly integrated into AskDISHA, the AI virtual assistant for IRCTC and Indian Railways.

Rakesh observes India’s digital governance integrates AI across multiple sectors, enhancing public service delivery through platforms such as DigiLocker for document management, MyGov Chatbot for citizen engagement, and Ayushman Bharat for healthcare validation.

“SBI’s YONO Krishi, an AI-powered platform offers tailored agricultural advisories to farmers. Using data on soil health, weather patterns, and crop prices, YONO Krishi helps farmers make informed decisions, enhancing crop yields and providing access to financial products like Agri-gold loans.”

Since the Digital India Initiative in 2015, AI has seen a major push. Backed by the INR 103.72 billion government budgetary commitment over five years, AI is transforming healthcare, agriculture, and governance, he stresses.

So, what’s new or different about digitalisation in governance – isn’t every big company already on these new wheels? Well, the twist here is that India has made sure there is a pronounced effect of openness, inclusion, democratisation and modularity in all these digital leaps. We are doing it ‘the horizontal way’. Not creating another wall of digital divide, but breaking the ones we had so far. So be it Fastag, ONDC or UPI, it is not just the ones in digital ivory towers who are enjoying the speed of technology but also people on the bottom rungs of social and digital pyramids. Tech literacy or tech-affordability does not come in the way of using these digital utilities – at least, that’s how they have been designed.

No Have-Nots here

India has made significant progress in driving financial inclusion, with the JAM (Jan Dhan, Aadhaar, Mobile) trinity playing a key role, Dhar affirms. “Financial inclusion is now nearing 90 per cent of the adult population with more than 53 Cr. Pradhan Mantri Jan Dhan Yojna (PMJDY) accounts (more than 55 per cent of them are women accounts).”

Rakesh echoes that UPI has revolutionised financial inclusion in India, bringing over 400 million unbanked individuals into the formal banking system. Its zero-transaction-fee model and seamless interoperability make it ideal for micro-transactions, with 53 per cent of value from sectors like groceries and pharmacies, particularly benefiting rural areas. Its integration into Direct Benefit Transfers (DBTs) can minimise leakages by over 40 per cent, ensuring that subsidies and welfare payments reach beneficiaries, reducing cash dependency and driving transparency in financial governance.

To top that, digital NBFCs and interoperable bits are also helping drive the country’s financial inclusion. As Shreevar Narayan, CTO, Ecofy recounts, Digital NBFCs are instrumental in accelerating digital governance in India by enhancing financial inclusion, transparency, and efficiency. “UPI has revolutionised transactions by enabling instant, secure, and cashless payments, which facilitates easier loan disbursements and repayments for our customers.”

We cannot ignore the impact made here – while underlining inclusion in the area of commerce too. This has happened due to ONDC. Dhar counts this as another example of Open Network DPI, which helps e-commerce grow exponentially without burdening the buyer or seller with higher costs. “The Economic Survey of FY 24 noted that ONDC has completed more than 68 million transactions and is growing rapidly. More than 12 million transactions were reported in July 2024, which once again highlights the upward trend. The advent of account aggregators has led to the development of a consent-based data-sharing model, which is also a key DPI. It enables the user, and not the service provider, to control the data and promotes data empowerment and protection. As of August 2024, around 90 million people use Account Aggregators, with nearly 50,000 Cr. of the loan being facilitated through it.”

UPI has led to revolutionary growth in P2P and P2M payments with more than 131 billion UPI transactions (more than 10.9 billion transactions per month) seen in FY 24. Sep 2024 was a landmark month wherein the number of transactions crossed 15 billion in a month for the first time. - Devroop Dhar, Primus Partners

Narayan chimes in. “ONDC, aiming to democratize digital commerce, offers the potential to expand access to green products and services through a unified network. These digital infrastructures enhance interoperability, reduce costs, and increase accessibility, supporting our mission to accelerate the green ecosystem.”

ONDC is reshaping e-commerce by offering small businesses an open, affordable digital marketplace, points out Rakesh. By integrating over 400,000 Grameen e-stores and supporting 95,000+ restaurants, ONDC is breaking the monopolistic hold of large e-commerce players, allowing smaller merchants to thrive. ONDC has empowered around 5,700 Farmer Producer Organisations (FPOs), collectively completing over 23,000 transactions in Q4 FY24. Inclusive growth is also a hallmark of ONDC’s impact, with over 10 lakh women from 76 Self-Help Groups (SHGs) gaining employment opportunities, and small businesses registering strong growth.”

ONDC’s integration with metro services and MSME Global Mart will further boost ‘small business’ visibility and accessibility.

It’s interesting to see how technology has bridged many gaps, specially financial ones, in regions like Africa. As Johnson Idesoh, Group Chief Information and Technology Officer at Absa Group shared in an interview earlier, “It is important to note that there is no ‘one-size-fits-all’ approach when it comes to some of the unique Pan-African issues we face. Simply stated, issues and opportunities vary from market to market. Digital solutions are critical in enhancing financial accessibility, however, challenges still persist across the countries with differing levels of infrastructure development, including internet and mobile phone networks and ultimately connectivity.” That’s exactly a cue for India to pull up its socks ahead.

So what’s stopping us?

In the ICRIER report, it was seen that the rural-urban divide is even higher at 58 per cent, vis-à-vis the world average at 49 per cent. India is doing well in the production of newer technologies (such as AI) but lags behind in the adoption of older basic technologies (such as broadband and internet).

Also, richer states and union territories (UTs) in India have relatively higher levels of digitalisation than poorer states (the good news is - the gap is shrinking).

There is also the problem of accuracy followed by corruption that can emerge on this path. In the 2024 study published in the Economic & Political Weekly which surveyed around 3,000 MGNREGS workers across eight villages in Jharkhand, it was found that while Aadhaar-linking had decreased errors of inclusion by 16.8 per cent, it had also led to a corresponding increase in exclusion errors by 22.4 per cent.

Ask Dhar and he candidly contends that some of the key challenges that may impact effective digital transformation include data privacy and security, data localisation and sovereignty, lack of scheme saturation and resistance to change. “With Governments having a significant volume of citizen data including biometrics, it is imperative that data privacy and security is given utmost importance. Security needs to be inbuilt in design, failing which digital solutions may face a trust deficit. Additionally, with the growing importance of AI in Government service delivery, there is a need to train the AI models using Indian data, especially in local language, failing which it may be difficult to get optimum benefit from AI solutions.”

There are more roadblocks to watch out for. According to a 2024 NASSCOM-Arthur D. Little report ‘Digital Public Infrastructure of India’, DPI adoption challenges entail include lack of interconnectedness among government ministries, lack of real time data availability, limited language expansion for users to access in preferred languages, and future partnerships beyond government services. Rakesh contends that legacy environments and system fragmentation hinder the seamless integration of AI and digital tools, especially as new platforms like UPI and ONDC scale. For instance, UPI’s two-step transaction process leads to reconciliation issues, with over a billion monthly transactions causing credit-reversal failures.

Security concerns are also significant, with UPI facing 80,000 fraud cases per month, accounting for 50 per cent of financial fraud in India. Similarly, ONDC faces challenges in unifying disparate platforms, with issues in creating common standards for APIs, leading to potential integration problems and inconsistent customer experiences. Standardisation and quality control, especially in returns and grievance redressal, are emerging pain points as ONDC expands into less price-sensitive segments, Rakesh reminds.

Dhar also points out that while Aadhaar-based verification ensures that there is no duplication in the beneficiary list and everyone availing of a benefit is eligible for the same, however, there is scope of exclusion in many cases. Therefore, the need of the hour is scheme saturation, wherein every person eligible for a scheme should get the benefit of it and no one is left behind.”

The UN Survey – however- points out that India exemplifies these challenges but has proactively sought to address them. There are initiatives on the way - such as BharatNet, which aim to provide high-speed Internet to rural areas, and programmes focusing on digital skill development and the promotion of digital services nationwide.

Up next there is so much more to look forward to as Rakesh augurs. ONDC is set for exponential growth, projected to handle 100-200 million transactions per month by 2030, generating $250-300 billion in GMV. Expanding into sectors like transportation, logistics, and B2B services, ONDC could add $60-80 billion to India’s economy by 2030. Its integration with metro services and MSME Global Mart will further boost ‘small business’ visibility and accessibility.

Also, while the first wave of AI focused on solving simple problems and providing viable solutions, the next wave will tackle complex challenges and deliver personalised solutions. Generative AI is expected to play a crucial role, potentially contributing $1.5 trillion to India’s GDP by 2030, driving data-driven governance, enhancing decision-making, and delivering more personalized public services.

Clearly, we have repaired a lot of the digital-divide valley with these DPI lawns and there is so much that is waiting to blossom ahead. Would it be through AI? Or Quantum Computing? Or Blockchain? Who knows?

As Larry wonders to Teddy in the ‘Night at the Museum’ “I have no idea what I am going to do tomorrow.” And Teddy answers with a wise smile. “How exciting!”

By Pratima H

pratimah@cybermedia.co.in