IT WAS ON August 20, 2014, that the cabinet chaired by Prime Minister Narendra Modi approved Digital India, a programme aimed at transforming India into a digitally-empowered society. It identified broadband highways, universal access to mobile connectivity, e-governance, electronic delivery of services and electronics manufacturing as key areas that would drive growth.
The most visible among the many initiatives under the programme has been Unified Payments Interface (UPI), launched by the National Payments Corporation of India in 2016. UPI hit a billion transactions for the first time in 2019. In July 2022, UPI managed 6.28 billion transactions, which was the highest ever on the platform since its launch. The total transaction value in the month was Rs10.62 lakh crore. The transaction volumes almost doubled in a year and transaction value went up 75 per cent.
“Payment modes, especially UPI, are playing a major role in promoting financial inclusivity in the country,” said Anand Kumar Bajaj, MD and CEO of PayNearby, a fintech that offers financial services. “Initiatives by the RBI and the NPCI, such as UPI Lite, which aims to boost small-ticket offline digital payments, and UPI123Pay, which allows transactions through feature phones without an internet connection, will push its uptake and fuel the digital payments space in the future.”
The growing e-commerce segment and the wider availability of the facility at stores are among the major reasons behind the success of UPI. In 2020-21, more than 22 billion transactions were processed over UPI. It is expected to grow to 160 billion in the next four years. “There has been a tremendous push by the government and regulators over the last decade to drive various digital initiatives,” said Vishal Maru, executive vice president (financial institutions and merchant services) of the payment solutions provider Worldline.
Driven by the increasing smartphone penetration and inexpensive data, the digital boom is not restricted to the big cities. According to the latest report by the data and analytics firm Kantar and the Internet and Mobile Association of India, there are 69.2 crore active internet users in India. Rural India has 35.1 crore users, whereas urban areas have 34.1 crore. By 2025, there will be 90 crore internet users in the country.
The so-called JAM trinity—linking the Aadhaar identity and mobile phone number with bank account—not just boosted digital payments, but also facilitated direct transfer of subsidies. More than 023 lakh crore has been sent directly to bank accounts of the beneficiaries through direct benefits transfer in the past eight years. Prime Minister Modi said around Rs2.25 lakh crore had been saved by direct transfer of subsidies.
The government is now pushing another ambitious project—Open Network for Digital Commerce. Based on open-source technology, this is aimed at promoting open networks for exchange of goods and services. ONDC protocols would standardise operations like cataloguing, inventory management, order management and order fulfilment, and enable small businesses to use any ONDC-compatible application. “This will provide multiple options to small businesses to be discoverable over network and conduct business. It would also encourage easy adoption of digital means by those currently not on digital commerce networks,” said Som Prakash, minister of state for commerce and industry, in Parliament.
Enhancing local electronics manufacturing is also a big focus-area under the Digital India Mission. From just two mobile phone manufacturing units in 2014, India now has 200 and has emerged as the second-largest mobile handset manufacturing hub in the world.