Digital Public Infrastructure as a Driver of Financial Inclusion in India

Abstract

Financial inclusion has been a significant force in promoting sustainable economic development. Even though India has a robust financial system, several Indians have been excluded from the financial ecosystem. With the introduction of Digital Public Infrastructure (DPI), millions of Indians can engage in economic development activities through modern digital means. However, the degree to which DPI has promoted financial inclusion and the factors that hinder the process must be discovered. This paper aims to review the role of Digital Public Infrastructure in promoting financial inclusion in India. The paper will review how far digital platforms have promoted India’s banking system and identify the opportunities and challenges brought about by the informal digital payment system. The study will adopt a qualitative research design. The study will use secondary data from RBI reports, National Payment Corporation of India reports, World Bank data, books, journals, and articles. The paper will focus on India’s DPI, which comprises the Aadhaar identity scheme, UPI, Digi Locker, and Jan Dhan–Aadhaar–Mobile data authentication, termed JAM. DPI has enabled millions of Indians to bank, while parallely making transactions cheaper and faster, thus promoting financial inclusion in the country. It has also enabled financial empowerment, particularly among women, rural Indians, and poor Indians. The study also tries to understand the various factors that hinder DPI from achieving total financial inclusion in India. Some of them include the digital divide, cybersecurity challenges, and data privacy concerns. Tackling the issues affecting DPI’s capacity to promote financial inclusion requires upgrading India’s digital infrastructure, promoting financial and digital literacy, and boosting cybersecurity and data privacy measures. India’s DPI is a great opportunity for achieving financial inclusion and sustainable economic development in the country.