India’s digital

transformation
Nandan Nilekani, 2023

Nandan Nilekani 2023 |

In 1991, India faced a Balance of Payments Crisis.
In 2021, we have a healthy surplus.

Source: World Bank Nandan Nilekani 2023 | 2

 In 2008, we were the world’s most unbanked.

In 2019, BIS said what India did for financial Inclusion in 9 years,
would’ve taken 47 years by traditional means
Source: BIS Paper by Derryl D'Silva , Zuzana Filkova , Frank Packer and Siddharth Tiwari Nandan Nilekani 2023 | 3
 The price of data fell exponentially, & the use of
smartphones grew proportionately

Source: Blume Research. NPCI statistics Nandan Nilekani 2023 | 4

In 2016, India used mostly cash

In 6 years, India became the world’s

highest volume of digital payments Nandan Nilekani 2023 | 5
India delivered 2.15 billion vaccine doses
in just 2 years

Nandan Nilekani 2023 | 6

India is making irreversible,
non-linear changes

Each change acts as input to

the next

leading to combinatorial
innovation
Nandan Nilekani 2023 | 7
 Each change is enabled by a new approach to solving societal
problems using Digital Public Infrastructure

Direct Benefit Transfer to low-cost Bank Accounts Deep penetration of 4G Connectivity & Smartphones

eKYC

Aadhaar
Sources: dbtbharat.gov.in & Blume research Nandan Nilekani 2023 | 8
 A digital nation needs digital infrastructure

In India, advertising-dollars
cannot subsidise the creation of
platforms.

India needed to build its own

micro transaction economy for
India-2 & India-3.

Source: Zenith Advertising Expenditure Forecast, World Population (census.gov) Nandan Nilekani 2023 | 9
We built up Digital Public Infrastructure
layer by layer to make the India Stack

Enabling consented, secure sharing of data

Data Users decide how to use their data
Layer

Allowing anyone to pay anyone else!

Paym Interoperable, fast and cheap
ents L
ayer

Giving every resident a unique ID

Identi Everyone can prove “I am who I claim to be”
ty Lay
er

Nandan Nilekani 2023 | 10

Starting with a Digital Identity
Name
DoB/Age
Gender
Address
Mobile/Email
1234 5678 9012
A Unique
Lifetime
Identity

Aadhaar Aadhaar Aadhaar

Authentication eKYC eSign
Are you who Paperlessly share Digitally Sign
you claim to be? KYC/AML details Documents
Nandan Nilekani 2023 | 11
 Then spread the ability to digitally transact

Instant digital payments

Enabled by private players
Built on top of an open payment network
Run as per regulations of the central bank.
Nandan Nilekani 2023 | 12
Sources: NPCI Statistics
Digital Payments are everywhere now!

Nandan Nilekani 2023 | 13

FasTag + GST + eWaybill cut waiting times at
borders from days to minutes

MoRTH estimates ~350 Mn

Litres of Fuel was saved in
2021 preventing 9.8 Mn Tons
of CO2 emissions

These little gains can add up to a lot! Nandan Nilekani 2023 | 14

Digilocker makes transactions paperless

152 Mn 5.6 Bn 2311

Users of Digilocker as of
Issued Documents Document Issuers
February 2023 Nandan Nilekani 2023 | 15
India’s DPI for financial data sharing, Account Aggregator,
empowers users with their own data

Financial Information Providers Financial Information Users

1. Consent to
share data
Bank Credit & Insurance

Mutual Fund Personal Finance

House Account
Account
Account Management
2. Request Data Aggregators
Aggregator
Aggregator
Insurance through Open APIs Wealth
Provider Management

Tax Data Robo Advisors

3. Data Flows to FIUs
End-to-End Encrypted

AA enables 1.1 Billion accounts to share banking, securities, insurance, & pensions data
Nandan Nilekani 2023 | 16
DPIs combine the best of Public & Private provision
Public Only DPI Approach Private Only

Single Provider Addresses diversity & choice Lack of interoperability

Cautious Innovation Encourages Innovation & competition, Lack of competition
Ensures openness and sovereignty

Diverse govt and Market Apps

Government Apps market apps

Govt Use Only Walled Garden

Databases Interoperable DPI Platforms

National Private Tech

Governments Information Companies
Utilities

Nandan Nilekani 2023 | 17

Privacy as a default,
not an add-on
By design, DPIs in India :
● Collect minimal data
● Data to be used only with consent & notice
● Data is federated i.e. no honey pots
● Access to data is regulated

Nandan Nilekani 2023 | 18

 DPIs help make the government efficient

$310 Billion 1.05 Billion

Cumulative Value of all cash payments Number of Beneficiary Transactions in
through Direct Benefits Transfer 2021

3.58x 4.06x
GDP Growth (in current prices) Centre Gross Tax Collection
From FY09-10 to FY21-22 from FY09-10 to FY21-22

Nandan Nilekani 2023 | 19

Source: dbtbharat.gov.in, RBI Annual Statistics Handbook
Domestic Investors & their autopay
SIPs have kept markets afloat

According to a
Jefferies India report,
annual equity
allocation works out to
Rs 2.52 trillion.

Of this, the annual

contribution through
SIPs in mutual funds
alone stands at over Rs
1.44 trillion.

Nandan Nilekani 2023 | 20

ONLY Country
in the world

Building population
scale APIs & open
networks to digitally
transform society

Source: PhonePe Pulse for UPI Transaction data

Nandan Nilekani 2023 |
India’s IT Services laid the foundation …

A $227 Bn industry that provides India dollars and jobs.

Building macro stability & talent pools that helped start

the DPG & Startup revolutions

Nandan Nilekani 2023 | 22

 … India’s Startup ecosystem built on top
90892

$40.7B (vs $12.9B) 2601 (vs 2100)

$ Funding # Funding rounds
~1000

842 (vs 579) 255 (vs 123)

Series A+ rounds Exits (Acqs, IPOs) 2016 2022

90,000+ startups in 2022 Vs ~1000 in 2016

All time Stats

Companies 90892
Funded Companies 7257
Total Funding $139B
Funding in last 24 months $53.6B

Exits
Acquisitions 1435
IPOs 170
100+ startups have turned into unicorns
Source: Tracxn Geo Annual Report Nandan Nilekani 2023 | 23
We are now a young, connected country
that consumes content digitally

Source: Livemint. . Nandan Nilekani 2023 | 24

You can see the difference already

2016 2020

Nandan Nilekani 2023 | 25

 Startups have captured the
imagination of bright minds

Source: Sajith Pai. Nandan Nilekani 2023 | 26

 Startup Alumni are the leading source of Startup founders

113 $ 2.47 Bn
# Startups founded by Funding raised by
Myntra Alumni Myntra Alumni

318 $ 6.77 Bn
# Startups founded by Funding raised by
Flipkart Alumni Flipkart Alumni

Source: Tracxn. Nandan Nilekani 2023 | 27

 Causing even incumbents to rethink
strategy & approach to technology
Digital Natives
Incumbents

Nandan Nilekani 2023 | 28

 India is upgrading

From an offline, cash, informal, low productivity

economy

to

an online, cashless, formal, high productivity

economy
Nandan Nilekani 2023 | 29
The next three areas where DPGs will disrupt

Credit eCommerce Logistics

Logistics
Nandan Nilekani 2023 | 30
DPGs + Startups are solving three key challenges in
lending leading to an explosion in small ticket loans

Discovery of Reliable third party

creditworthy data to price risk
borrowers

Automated Collection from Digital

Cash flows

Information collateral replaces physical collateral

& helps give cheap formal credit to the small guy who could only get it through usurious lenders thus far
Nandan Nilekani 2023 | 31
DPGs (GST + eWayBill + FasTag) are
Creating a Single Physical Market

Along with other

technology innovations,
Integrated Logistics
startups are increasing the
efficiency of logistics

Nandan Nilekani 2023 | 32

 Open Networks for
Digital Commerce
(ONDC)

Will

bring millions of
small retailers to
the era of
eCommerce

Source: ONDC Strategy Paper Nandan Nilekani 2023 | 33

 Cheaper Credit,
Wider Discovery &
Better Logistics
will commoditise the
supply chain
Google, Facebook, Stripe & Amazon Web Services
provided full stack to selling digital products.

Credit, ONDC, UPI & Logistics ecosystem

provide full stack to selling physical products

Photo by Ronnel Ramos on Unsplash Nandan Nilekani 2023 | 34

AI Initiatives like
Bhashini will help
overcome the
final mile
challenges
Nandan Nilekani 2023 | 35
Exponential Change
starts gradually, $10 Tn Economy

then happens Credit-led Expansion of MSME

Data-led Credit Disbursal

suddenly Financialization

Digital First Taxation

Formalization

Startup Economy

Cheap Internet

Cheap Smartphones

India Stack

Digital Identity

IT Services

Nandan Nilekani 2023 | 36

 India is
innovating a
different model
for growth
A technology-led model that is collaborative,
equitable, and democratises opportunity at
population scale.

Wealth won’t trickle down, so we are raising the floor.

Photo by indiacontent.in Nandan Nilekani 2023 | 37