Digital Public Infrastructure
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It is no coincidence that as India Chairs the G20, Digital Public Infrastructure is on the agenda.
DPIs was invented in the US, with the US Government investing in the Internet and GPS. This laid the foundation for all the innovations we see today. It is the DPI that corporate giants like Amazon, Google and Facebook could build their businesses that are based mainly on advertising revenue and subscriptions.
We have become a society with a very high level of digital
exposure. Digital Public Infrastructure has to drive
economic growth, inclusion, innovation and create
competition, and a more equitable society. All of these
goals are all shaped by the digital infrastructure that you
have.
Inclusion in India requires low cost technology at your
fingertips. DPI's are really a rounding error in cost. DPI
needs deep conviction, not deep pockets. Climate change
is going to cost trillions of dollars, Debt relief is going to
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cost billions, but the cost of implementing DPI maybe just
a few billions and that too will be recovered by efficiency
gains. The Government has saved US$ 25 billion by
streamlining benefits with the help of Aadhar, which cost
just US$ 1.5 billion.
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India Stack
• Digital Identity
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Giving every individual a Unique ID so that everyone can
prove "I am who I claim to be." A billion people have a 12
digit id to confirm who you are.
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80 million identifications are done per day.
KYC - about 5 million transactions per day. Jio could
claim market share by using the Aadhar based KYC
which allowed them to enrol a million customers a
day. Zerodha and Paytm also did the same.
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Aadhar e-sign. Sign on the phone for loans etc.
through Aadhar linked signatures.
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• Allowing anyone to pay anyone else – •
inter-operable, fast and cheap.
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Aadhar was linked to the banking system.
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The Jan Dhan Yojana programme where people
opened bank accounts and started receiving money
in real time. This has made Government spending
much more efficient. $ 310 billion has been transferred
so far through Direct Benefits Transfer.
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UPI came in 2016 and allowed for cashless transfer of
money. It has 250 million users already. More than 50
million merchants have a QR code. It does not require
WIFI or electricity or even POS machine. India took 70
years to reach 6 million POS machines and reached 50
million QR codes in 3 years.
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Digilocker makes transactions paperless and stores
your documents - Aadhar details, Vaccinations
Certificates, Drivers Licence, Vehicle registration etc.
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RFID FasTags have reduced the waiting time at State
borders from days to minutes. Rs 5 billion are to be
collected this year via FasTags. It removes leakages,
increases productivity and helps us monetize the
roads.
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GST uniform tax for the whole country. There are 13.7
million registered GST tax payers. India's tax collection
is growing at a much faster pace than India's GDP. 71.4
million Direct tax filers. The tax to GDP ratio has gone
up to 11.7%. More and more companies are becoming a
part of the Formal industry and compliance has
improved dramatically.
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There are 1.35 billion Aadhaar numbers, 7.3 billion UPI
transactions per month, 9.7 million registered MSMEs
with Udyog Aadhar numbers and 130 million
Digilocker users. The value of being inside the system
will outweigh being outside the system.
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• Enabling consented secure sharing of
data. Users decide how to use their
data.
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Credit Super Cycle
For this you need to discover the borrower, you need
reliable data to determine the risk of the borrower and
you need a collection system to get money
automatically from his business flows. Hence in the
coming years the volume of credit, the velocity of
credit, the veracity of the data and the variety of credit
is going to explode. And this is good credit based on
real data and real business performance through
digital sales, GST data and electronic Balance Sheets.
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Logistics
With Fastag, GST, eWay bills we are building a single
market, with more and more integrated logistics
happening. The first multi-modal logistic hub is
coming up near Chennai and there will be more going
forward. These Multi-Modal Logistic parks will have a
hub-and-spoke model to improve the country's
freight logistics sector by lowering overall freight costs
and time, cutting warehousing costs, reducing
vehicular pollution and congestion, improving the
tracking and facilitating traceability of consignments
through infrastructural, procedural, and IT related
interventions.
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E-Commerce
Open Network for Digital Commerce (ONDC) will
bring millions of small retailers to the area of
e-commerce. Any retailer, any supplier, and any
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delivery person can plug into this. The Wholesaler gives
credit to the retailer and that is why the bond is strong.
The full stack has been built for inventory, credit, payments and logistics to sell physical products. Further with
Bhashini, this will be available in 22 regional languages.
This has resulted in a massive start-up economy. In 2016,
there were 1000 start-ups in India. In 2022, there were
90,000 (3rd highest in the world), out of which many have
turned unicorns (valuation of US$ 1 billion). Because of
funding issues, they are focusing more on profitability to
form Centaurs (US$ 100 million in Annual Recurring Revenue). Start-ups beget more start-ups. 113 people left
Myntra and 318 people left Flipkart for new start-ups and
all together they raised US 9 billion. Even well established
companies are forced to rethink their strategy and
approach to technology, to keep up
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The equity market has been range-bound now for 19
months. As mentioned earlier equity returns are based on
Sentiment and Liquidity in the short term but over the
long term, they are based only on earnings. Sentiment
"RISK ON" is beginning to improve if you look at Crypto
rebound and also FII inflows into equity in April, after
many months of outflow. That has also improved the
liquidity in our markets. Further since the Silicon Valley
Bank failure, the US balance sheet has swelled up by over
US $ 300 billion due to acting as a "lender of last resort" to
other banks, and hence are carrying out Quantitative
Easing in effect. The Corporate earnings results on the
whole have been good so far except for some large cap IT
companies. With the markets being flat for 19 months,
valuations are automatically improving. The next few
years are looking good for India.
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RBI has paused the interest rate hikes for this month.
Hence they are concentrating more on growth as inflation
is within the Central Bank’s comfort zone. Globally, due to
losses that banks are facing because of the rapid rise in
Government Security interest rates, Central banks will be
slowing down their interest rate hikes and at some stage,
they will turn and start cutting interest rates. Hence debt
too is still looking attractive with possibility of capital
gains with interest rate cuts.
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It is expected that gold and silver, although taking a bit of
a pause now, will do well going forward as several banks in
the US are in trouble, and more people are running back
to the gold market. As calls for recession increase, it is
positive for gold as a store of value. Central banks across
the world are continuing to buy gold.
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