Data’s Getting Democratic

Context: UPI is changing the credit game for consumers and small businesses, especially for those who do not possess the temperament to operate a bank account.

Concept of India stack

• India Stack is the digital backbone of UPI, One Nation, One Ration Card, Account Aggregator (AA) framework, One Nation, One Jab project etc.
  • It is the software bridge that allows two software applications to talk to each other — permitting businesses, government to tap the open digital infrastructure built on foundation of Aadhaar.
• Based on Four pillars:
  • Presence-less: Digital access and verification using Aadhaar.
  • Paperless: Digital records allowing portability.
  • Cashless: One interface allowing for interoperable payments between bank accounts and wallets.
  • Consent based: Allows entities to access an individual’s data.
• Advanced system: Earlier a person making an online payment would have had to log in to their account and green light the custodian of their money to release the payment.
  • But, in UPI consent to be vested with third-party operators like digital wallet providers. Hence, accelerating financial transactions.

Significance of UPI based system

• Credit empowerment: Digital transactions are capturing new credit histories belonging to a class of people who previously could never access formal credit.
  • Now, consumers can avail small-sachet loans with ease.
• Data Democracy capturing low-cost, high-value transactions resulted in creation of open digital ecosystem through Aadhaar.
• Creation of Unified Economic Entity: With the help of One Nation, One Ration Card, One Nation, One Jab project& Account Aggregator (AA) framework monetising individual data.
• Unlock health data: Through National Digital Health Mission that will ensure access to affordable and effective healthcare using data.
• Ease of Use: With the help of interoperable payments on a real-time basis. Digital wallet providers leveraged UPI to accelerate financial transactions resulted in an unprecedented spurt to online financial transactions.
• Towards indigenisation: Renewed trust in indigenously developed technology.
• Creation of Economic GPS (global positioning system): With direct benefits transfer (DBT) through Aadhaar, Jan Dhan and mobile (JAM).
  • This ecosystem includes 1 billion-plus cell phone connections, of which 400-600 million are smartphones, 600-800 million internet users, and the 430 million Jan Dhan no-frills bank accounts owned by poor.
• Reduction in Corruption: Better directed transfers eliminated rent-seeking intermediaries resulting in savings in leakages was a staggering Rs 1.7 trillion.

Conclusion: Adaption of UPI is growing exponentially that may possess challenges like data misuse and privacy issues that could undo the recent gains. Hence, it is time to commit to the new data law.