‘UPI delivered more than 9.41 bn transactions worth Rs 14.89 trillion in May 2023’
In an emphatic testimony to India’s successful tryst with reshaping a destiny marked by years of deprivation of thousands from the net of financial benefits, the G20 Global Partnership for Financial Inclusion (GPFI) document prepared by the World Bank has lauded the transformative impact of digital public infrastructures (DPI)s in India over the past decade under the Modi Government. The G20 is looking to equitable growth and a shared future for all by leveraging DPI in advancing financial inclusion and productivity gains.
The report is strategic, both in terms of opportunely capturing a time that marks India’s stewardship of the grouping in 2023, as well as the country’s ambitious steps to tap DPIs to harness and advance financial inclusion goals. The G20 GPFI policy recommendations have been crafted under the Indian G20 Presidency and are projected as essential reading for those embracing digital transformation. The report comes amidst a growing recognition of the potential of DPIs to help countries leapfrog their digital transformation and increasingly allow households and businesses digitally access the services and products they need. This report also complements the work done by the Digital Economy Working Group (DEWG) under the G20 India Presidency. One of the priority areas for the DEWG this year is to develop a suggestive framework and descript for DPI that outlines core principles.
Traditionally, DPIs, have been generally understood as interoperable, open, and inclusive systems supported by technology to provide essential, society-wide, public and private services. However, as the report suggests, digital transformation is changing the way the world interacts and transacts and making financial lives increasingly automated and integrated. This brings DPI to the forefront as an enabler that can facilitate better and more inclusive service delivery and innovation across sectors — from individuals opening an account without leaving home to individuals transferring funds with a simple click on their phone to businesses applying remotely for licences.
The report identifies India’s Unified Payments Interface (UPI), a digital payments system, and commends its role as a key digital public infrastructure that enables individuals, businesses and governments to transfer money between one another easily and securely. This is done using an instant, real-time fast payment network in the country that can map payment accounts to a single payment identifier, which can be a virtual payment address (VPA) or as simple as one’s mobile number. The UPI platform has gained significant popularity in India — the GPFI document observes — with more than 9.41 billiontransactions valuing about Rs 14.89 trillion transacted in May 2023 alone. For the fiscal year 2022-23, the total value of UPI transactions was nearly 50 per cent of India’s nominal GDP. The system supports various payment methods, such as QR code–based payments, UPI Lite, UPI123Pay, UPI credit, thus facilitating seamless real-time fund routing, merchant payments as well as a convenient way to schedule and pay P2P collect payment requests. The report credits UPI’s wide adoption to a user-friendly interface, open banking features and private sector participation. An important outcome of these efforts, as per the report is that in the last decade, India has built one of the world’s largest digital G2P architectures leveraging DPI. This approach has supported transfers amounting to about USD 361 billion directly to beneficiaries from 53 central government ministries through 312 key schemes. As of March 2022, this had resulted in a total savings of USD 33 billion, 46 equivalent to nearly 1.14 per cent of GDP.