From Aadhaar to AI: India's digital revolution sets global benchmark, but data privacy looms large

After successfully demonstrating the prowess of India’s digital public infrastructure (DPI) during the G20 Summit held here last year, the country is turning its focus towards the increased digitalisation of the economy as it aims to become developed by 2047. It is building on initiatives like the identity system Aadhaar, the Unified Payments Interface (UPI), and the document-storing platform DigiLocker that have ensured services are delivered efficiently, transparently, and directly to citizens. Finance Minister Nirmala Sitharaman, in her Union Budget speech on July 23, lauding the technologies for improving productivity and bridging inequality, said, “Public investment in digital infrastructure and innovations by the private sector has helped in improving access of all citizens, particularly the common people, to market resources, education, health, and services.” The focus now is on scaling this ecosystem, ensuring its responsible use, and exploring new frontiers. But this journey to a fully digital India is fraught with challenges that require careful navigation, especially since other countries too have shown an interest in adapting the India Stack bouquet of digital services to their own conditions. Embracing Change The DPI ecosystem, built on a foundation of trust, needs more robust governance frameworks that prioritise transparency and accountability. There has been significant progress in adopting digital governance processes, says Santosh K. Misra, Partner at consultancy firm PwC. Almost all citizen and business services are offered on mature e-governance platforms, and more services are being added to this bouquet. Obtaining permits and licences has become smoother. “Healthy competition amongst government ministries and state governments triggered by the ease of doing business and National e-Governance Service Delivery Assessment rankings is yielding good results,” he says. But the government now needs to think in terms of ease of running business. It can incorporate disruptive innovations like Generative AI (Gen AI) to operate grievance management. This would significantly reduce costs, says Misra. Some innovations of the government are encouraging in this regard, like DIGIT, said to be the world’s largest open source technology platform for public service delivery. These are “improving coordination for employees and vendors, simplifying administration for officials, and enhancing policy-making for [officials] and researchers”, says N. S. N. Murty, Partner and Consulting Leader, Government &amp; Public Services, at professional services firm Deloitte India. One area that needs immediate attention is balancing data privacy with the need for data sharing between digital public goods (DPGs). Clear standards and classification systems are needed to enable seamless exchange while safeguarding citizens’ interests. Regulators must take the lead here, Misra says. “For example, in the case of a financial sector DPG, the appropriate regulators (RBI, Irdai, Sebi, etc.) can play a critical role in protecting citizens against potential misuse. Ensuring ‘informed customer consent’, ‘inclusive consent’ and reducing the information arbitrage in the market between citizens and service providers is key.” In any such policy, human rights, privacy, and data protection must be placed at the forefront, Murty adds. “We need a societal lens looking at these developments, and the response needs to be socio-technical with baked-in civil rights protection in governance frameworks,” he says. To ensure smooth data exchange between DPGs, the government should adopt a robust framework for data interoperability that includes standard protocols and secure APIs. It must prioritise user consent and transparency and give citizens control over their data. “Implementing strict data protection regulations can help safeguard privacy, and India’s Digital Personal Data Protection Act 2023 is a step in the right direction,” Murty adds. In addition to that, regular audits, cybersecurity measures, and continuous monitoring are essential to protect against data breaches and misuse. DPGs at Scale In her Budget speech, Sitharaman detailed the government’s vision for DPGs. “Turning to the services sector, I propose the development of DPI applications at the population scale for productivity gains, business opportunities, and innovation by the private sector. These are planned in the areas of credit, e-commerce, education, health, law and justice, logistics, MSME, service delivery, and urban governance,” she said. This requires innovative approaches. Sushant Rabra, Partner- Digital Strategy at professional services firm KPMG in India, says, “Public-private partnerships can play a crucial role in funding and deploying DPGs at scale. Leveraging cloud-based solutions and open source technologies can reduce costs and enhance scaleability. We must also focus on capacity building and training to ensure effective utilisation by the intended beneficiaries.” Some potentially transformative DPGs are already in the works, like satellite-based toll collection that will remotely monitor and charge vehicles based on distance travelled, AI-enabled language translation platform Bhashini, and the Indian Regional Navigation Satellite System, or Bharat Navigation Stack. There are, of course, many more areas where DPIs can be used. Rabra says future DPGs include advanced digital identity solutions, e-health platforms, and enhanced digital education tools. “These innovations aim to bridge the digital divide and provide more inclusive services.” For example, the National Digital Health Mission is expected to revolutionise healthcare delivery by creating a unified digital health ecosystem. Murty has high hopes for smart chatbots that could be tailormade for local and contextual needs. “However, success depends on robust data security measures and ensuring accessibility for all users,” says Murty. For that to happen, large-scale capacity-building programmes are essential. This includes training citizens and government officials in the latest digital tools and keeping them abreast of the best practices. AI requires strong ethical guidelines to prevent biases, and the Indian government has taken the lead. Misra says, “The Ministry of Electronics and Information Technology has already taken the lead in this area by launching ‘India AI Mission’ with a Budget allocation of nearly `10,000 crore, working on the seven pillars of data, compute, skill, innovation, trust, start-up financing, and application development.” India is also pioneering regulation of AI through the Global Partnership on Artificial Intelligence (GPAI), of which it is the chair. These efforts can increase the appeal of India’s DPI to other countries. Pabitra Margherita, Minister of State for External Affairs, said during the recent BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) Business Summit, “India’s DPI is respectful of personal data, privacy, and intellectual property rights; adoption of the same by the region will foster ease of doing intra-regional business exchange.” The world is taking note as the next leg of India’s DPI journey begins. Those new products, too, may find an audience beyond these borders. @imNavneetDubey

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From Aadhaar to AI: India's digital revolution sets global benchmark, but data privacy looms large

India's digital transformation has been fuelled by initiatives such as Aadhaar, UPI, and DigiLocker. Moving ahead, the country needs to incorporate emerging technologies and address data privacy concerns as more countries seek to emulate the digital infrastructure