India’s digital revolution: It’s going great guns, but India must remain open to foreign technologies and capital
Abstract:
While digital technology now touches most Indians, there is insufficient appreciation of how far India has come within a short period. Digital infrastructure has greatly reduced friction in transactions whether financial or otherwise. This infrastructure and what will be built on it in the near future promise significant productivity gains.
The best-known components of India’s digital infrastructure, of course, are what we now call the JAM trinity. It consists of the Jan Dhan bank accounts, Aadhaar biometric identity and mobile telephony. While these three components represent the front end, there is a lot more to our digital infrastructure.
Two additional important columns of this infrastructure are Public Finance Management System (PFMS) and Unified Payments Interface (UPI). PFMS is an end-to-end solution for processing, tracking, monitoring, accounting, reconciliation, and reporting of financial flows into and out of the central government. It constitutes a unified platform for tracking releases of financial flows and their utilisation down to the last mile. Through the banking system, it connects the central government financial flows digitally to state governments, businesses and even households.