How Digital Public Infrastructure is Reshaping India’s Economy

India’s digital transformation is unlike any other. Over the past decade, the country has built a technology stack that is not just revolutionary in scale but also unique in structure. Digital Public Infrastructure (DPI) is the backbone of this transformation, enabling seamless payments, digital identity, and efficient data sharing. Unlike traditional infrastructure projects, which take decades to show impact, DPI has fundamentally altered how India functions within a span of just a few years.

At the heart of DPI is Aadhaar, the world’s largest biometric identity system. With 1.38 billion users, Aadhaar has become the foundation for everything from government subsidies to digital KYC in financial services. It is not just a national identity number. It is an enabler of economic inclusion, ensuring that even the most underserved communities have access to banking, credit, and government benefits. The impact has been profound—over 600 million Indians now have access to formal financial services because Aadhaar simplified authentication and reduced fraud in subsidy disbursement.

The second pillar of DPI is UPI, which has redefined digital payments in India. In 2024 alone, ₹245 trillion ($3 trillion) worth of transactions were processed through UPI, accounting for 83% of all digital payments. Unlike traditional card-based systems, which rely on expensive infrastructure, UPI is built on open protocols. This means that a small shop owner in a remote village can accept digital payments without needing a credit card machine or a bank-issued PoS terminal. The simplicity and efficiency of UPI have made India the largest real-time payments market in the world.

But the real power of DPI lies in its second-order effects. It is not just about digitizing payments or identity verification. It is about creating a platform for innovation. The Account Aggregator (AA) framework is a prime example of this. Built as an extension of DPI, it allows individuals to securely share their financial data with lenders, insurers, and fintech companies, unlocking new opportunities for credit access and investment.

Before Account Aggregators, accessing a person’s financial history was a slow, paperwork-heavy process. Now, a small business owner can share their bank statement digitally in seconds, making it easier for lenders to assess risk and disburse loans efficiently. This shift has significantly expanded credit availability, particularly for India’s growing base of micro, small, and medium enterprises (MSMEs).

DPI has also transformed the way India delivers welfare benefits. Before Aadhaar and Direct Benefit Transfers (DBT), government subsidies were plagued by inefficiencies and corruption. Middlemen would siphon off funds meant for the poor, and leakages were common. Now, benefits are directly transferred to Aadhaar-linked bank accounts, eliminating fraud and ensuring that subsidies reach the intended recipients. The government estimates that ₹2.23 trillion ($27 billion) has been saved since 2014 due to DBT reforms, a staggering number that highlights the efficiency gains from DPI adoption.

Another game-changing initiative is ONDC (Open Network for Digital Commerce). While UPI transformed digital payments, ONDC aims to do the same for e-commerce. Today, online marketplaces are dominated by a few large platforms, forcing small businesses to either comply with their terms or be left out of the digital economy. ONDC is designed to break this monopoly by creating an open protocol where sellers and buyers can interact without being tied to any single platform. If successful, it could reshape India’s e-commerce landscape, bringing millions of new businesses into the online ecosystem.

DPI has also extended its reach into healthcare and education. The ABHA digital health ID, with over 440 million users, is building a unified health record system, allowing patients to store and share their medical history digitally. This is critical in a country where access to healthcare is fragmented and medical data is often lost when patients switch providers. Similarly, DigiLocker, a government-backed digital document storage system, has seen widespread adoption, ensuring that citizens can securely access education certificates, driving licenses, and other important documents without physical paperwork.

The global impact of DPI cannot be overlooked. India is now exporting its digital infrastructure model to other countries. Nations in Africa and Southeast Asia are studying UPI, Aadhaar, and Account Aggregators to build their own versions of digital public goods. The idea that governments can provide digital infrastructure at a national scale, allowing the private sector to innovate on top of it, is now being replicated worldwide.

However, the rapid expansion of DPI comes with challenges. Cybersecurity risks are growing as more personal data moves online. While India has implemented stringent data protection laws and encryption measures, concerns remain about how citizens’ data is stored and shared. Additionally, digital exclusion is still a problem—while DPI has made financial services more accessible, millions of Indians still lack smartphones or reliable internet access, limiting their ability to fully participate in the digital economy.

The government and private sector are working on solutions to bridge these gaps. Feature phone-based UPI transactions, offline digital payment options, and community-led digital literacy programs are being rolled out to ensure that DPI does not widen economic inequalities. As India moves toward becoming a $5 trillion economy, ensuring broad and inclusive participation in the digital economy will be crucial.

India’s DPI story is far from over. The next frontier is cross-border transactions, digital lending, and AI-powered governance. With a strong foundation in place, India is now in a position to lead the world in public digital infrastructure. The Indus Valley ecosystem has leveraged these advancements to build fintech, e-commerce, and healthcare startups that are scaling faster than ever before. The question is no longer whether DPI will succeed. The question is how much more it can unlock for India’s economic future.

The world’s fastest-growing digital economy is not in the West. It is here, in India.

Sources: Indus Valley Report 2025

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