India, a fintech miracle
21 Jul 2022 — DESIGN AND EVANGELISM — THE OTHER SIDE
1991. An epochal moment in the history of Indian finance. With the gulf war and an exponential rise in prices, India had to weasel out into a new dawn of economic prosperity.
With only two months worth of foreign exchange reserves left, the nation had to pull herself out of a do-or-die situation. The need was that of a new economic policy which could help usher in a whole new era of opulence.
The lingering need for economic freedom became a reality with the introduction of liberalisation, privatisation and globalisation. With the liberalisation that came along that year, the state dropped its requirement as the arbiter of what happened with the economy. The industrial license raj was abolished with de-regulation of markets. Along came the banking reforms that changed the economic trajectory of the country. The protection and state-supported industrialisation had to go away, with easy access to foreign markets for the local consumer market. The result was quite immediate.
With the turbocharged economy, the GDP went from a 2.14 kharab Indian Rupee economy in 1991 to a 3.97 kharab Indian Rupee economy in the year 2000. It is an almost doubled economy in just 10 years!
Fast forward to the year 2009.
Only one in five Indians had a bank account.
The gargantuan task was to digitise an economy which was yet to develop its economic weight. The UIDAI was set up and Aadhaar — the foundation for India Stack, as we know it today, came into action.
With the honourable Prime Minister launching India Stack Global, a repository and a dashboard of key Digital Payment Index (DPIs) initiatives in the Digital India week 2022, India Stack has come a long way. DPIs are the parameters that have been defined by the RBI in order to measure the penetration of digital payments in the country.
The Unified Payments Interface (UPI), which debuted in April 2016, has complemented the India Stack. While payment applications like Google Pay built on UPI are merely the enablers, India Stack has emerged to be an umbrella platform with key drivers —such as Aadhar, eKYC, DigiLocker and UPI —to bring financial freedom to Indian masses.
With countries like France accepting UPI in its geographical boundaries, UPI is touted to be one of the biggest Indian exports to the world. Further innovations in the realms of health and commerce, will pave the way for India to emerge as a fintech jagatguru.
India is set to cross China as the most populous country in the world by 2023. It calls for an indigenous and robust health infrastructure. The Health Stack holds the capability to make that happen.
The Health Stack is intended to provide a comprehensive picture across verticals and facilitate quick development of a variety of healthcare solutions. The breadth of the National Health Stack entails inclusion of private clinics and hospitals within the ecosystems of primary and secondary healthcare. An estimated 700 million+ rural Indians will directly benefit from this mass inclusion.
The same open network concept might be used in commerce, where users' access to choice, consistent simplicity of use, high levels of trust across different websites, and seller transparency —unleash real value.
By 2020, only 9% of MSME and retailers in India were conducting their business online.
There is the other 91% of retailers who would need to join in on the digital commerce revolution with—ONDC.
India is the only nation in the world that holds the potential to emerge as an export hub as a decentralised and democratic nation, and ONDC is all poised to help the country grow in this direction. Giving SMEs a fair chance to eventually export to neighbouring countries may prevent big-tech from monopolising the Indian market.
The success of UPI is expected to be replicated widely abroad, as we continue to develop our horizons of digital commerce. The API frameworks for UPI would now be introduced to the entire world —the same way American private players introduced Visa and MasterCard.
By expanding credit lines for millions of Indians, UPI credit will open opportunities and stimulate the economy. The India Stack is expected to serve as the cornerstone for fintech innovation. India already has the groundwork to enable financial products like insurance, credit, payments, and deposits as the rest of the globe begins to understand the possibilities.
With Setu on board, you can pave the way towards financial freedom for your business. Know more about us, here.