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India-Australia collaboration on digital public infrastructure in the Pacific

Posted By and on March 4, 2024 @ 06:00

The deployment of population-scale digital public infrastructure (DPI) is gaining traction worldwide and is acknowledged as a necessary and cost-effective intervention to fast-track sustainable development. The G20 also endorsed the ‘Framework for Systems of Digital Public Infrastructure’, a voluntary plan for the development, deployment, and governance of DPI. India has developed state-of-the-art DPI for various purposes, and Australia is the biggest development partner for Pacific Island countries. Together, they are well positioned to make state-of-the-art DPI accessible to small island developing states (PSIDS) there to help fast-track developmental outcomes.

DPI covers digital solutions and systems that enable the provision of vital services between government, businesses, and citizens. These include identification, payment, and data exchange systems. India’s Aadhaar, Unified Payments Interface, and Digital Empowerment and Protection Architecture are examples of such systems which have helped fast-track financial inclusion and enabled the efficient and effective delivery of government services. India has successfully developed and deployed DPI at a population scale for various purposes.

A recent IMF working paper [1] examines India’s journey in developing a world-class DPI. It highlights lessons other countries embarking on their own digital transformation can learn from the Indian experience. The Bank of International Settlements has recognised [2] India’s success in accelerating financial inclusion outcomes by four decades using DPI. Additionally, India’s Aadhaar has enabled seamless verification of individuals and streamlined access to government services and benefits. India’s vaccine distribution and management platform, Co-WIN, has enabled the rapid scaling up of vaccine delivery efforts.

Like India, PSIDS have significant benefits to be gained from the adoption of DPI. The potential to leapfrog development goals by reducing leakages, curbing corruption, and increasing financial inclusion is far greater for low and middle-income countries. India can help provide technical assistance in building DPI, and Australia can help finance the infrastructure needed for it to function.

Australia is the biggest development partner for Pacific Island countries by a large margin, providing an estimated $7.5 billion in aid [3] over recent years. Through its Pacific Digital Economy Program (PDEP), Australia aims to create inclusive digital economies in the small island states by applying digital solutions to meet the needs of vulnerable islanders and narrow the digital divide. India has also increased its focus and attention on the Pacific islands. In 2014, it established the Forum for India–Pacific Islands Cooperation, and in 2019, it announced a US$12 million grant for developmental projects in an area of their choice. In addition, the island states can access a concessional line of credit of US$150 million. These programs can help fund the rollout of DPI in the island states.

As a bridge between citizens, digital markets, and the state, DPI will increasingly shape their interactions. This infrastructure is not values-agnostic and must be built to advance democratic values. India and Australia must build on shared interests, values, and complementarity in promoting open, transparent, and interoperable DPI in small Pacific states.

India has made remarkable progress in rapidly deploying its DPI, but regulatory gaps must be addressed. A robust data protection framework is essential to ensure that data collected from users is used only for its intended purposes and protected from misuse by corporations or the government. After years of debate and discussion, India finally enacted comprehensive data protection in August this year to limit the use of data collected while safeguarding it from misuse.

In addition, it is important to establish a sustainable funding model to maintain the viability of any DPI in the long run. In India’s payments DPI, transactions are free for merchants and users, but costs are incurred by banks, fintech start-ups, and regulatory bodies to build and maintain the infrastructure. The government subsidises some of these costs, which amounted to US$261 million [4] of taxpayer money in the previous fiscal year. If all participants in the ecosystem do not have access to a sustainable funding mechanism, it can lead to a decline in innovation and service quality. Therefore, countries should address these gaps when deploying their own DPI.

Wider adoption of common and interoperable DPI could lead to the setting of global standards, best practices, and innovation for the entire ecosystem. Whether related to regulatory frameworks for data protection, sustainable funding models, or multiple language support, lessons can be learned from taking India’s DPI to other countries.

India has already entered into memorandums of understanding [5] with Armenia, Sierra Leone, Suriname, Antigua, Barbados, Trinidad and Tobago, Papua New Guinea and Mauritius, offering them the code for its DPI at no cost. However, different countries may have differing requirements for how DPI needs to be implemented. This includes customising it for their governance needs and local language support. Concerns over sovereignty might also dictate that local teams must be trained to operate and maintain the systems. This presents an excellent business opportunity for Indian tech firms that build and integrate DPI or train local personnel.

A robust DPI widely adopted among countries in our neighbourhood presents opportunities for innovation, sustainable development, and economic growth. To achieve the goal of a common digital future, India should partner with Australia to promote the adoption of its digital public infrastructure in the Pacific region.


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URLs in this post:

[1] IMF working paper: https://www.imf.org/en/Publications/WP/Issues/2023/03/31/Stacking-up-the-Benefits-Lessons-from-Indias-Digital-Journey-531692

[2] recognised: https://www.bis.org/publ/bppdf/bispap106.htm

[3] estimated $7.5 billion in aid: https://devpolicy.org/aidtracker/destinations/

[4] amounted to US$261 million: https://www.indiabudget.gov.in/doc/eb/sbe27.pdf

[5] entered into memorandums of understanding: https://www.thehindubusinessline.com/news/india-enters-mous-with-8-countries-to-offer-them-digital-stack-dpi-at-no-cost/article67273233.ece

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