Kalea Power of EMQQ Global writes of her recent research trip to India and the growth of digitisation in the country.
“In India we have a saying, ‘There’s always room for one more.’” This insight from our Mumbai tour guide perfectly describes what we saw during our two-week research trip through Mumbai, Bangalore, Delhi, and Amritsar.
From watching five people pack into an auto-rickshaw built for two, to weaving through the unimaginable density of vehicles, motorbikes, rickshaws, CNGs, and pedestrians on the roads and markets… From witnessing the religious and cultural diversity in the mosques and temples that dot the same streets… It’s clear that it’s not accurate to describe India as merely a “country.” India is – more aptly put – a union of states, as someone in a meeting in Delhi said. How else can you describe a land uniting 17 per cent of the world’s population (1.4 billion people), more than 2,000 ethnic groups, six major religions and 121 spoken languages (22 of them official)?
I saw this for myself at a dinner with a group of young Indian dancers in Mumbai. In a group of 15, each person was from a different state in India (there are 29 total), spoke anywhere from three to five languages, and communicated amongst themselves in English. Three-quarters were “veg” and only a quarter “non-veg” according to their cultural beliefs and in total represented three different religions.
Our guide’s saying, evoking inclusion and community, was perhaps most visible at the Golden Temple in Amritsar, the holiest shrine in Sikhism. The temple is home to the world’s largest langar (community kitchen) where anyone of any background can find a free meal or a place to sleep. Completely run by donations and volunteers who cook 24/7, the langar feeds 100,000 people every day, and tens of thousands more during religious festivals.
At a business and policy level, we saw this concept reflected in government digitisation initiatives like the Unified Payments Interface (UPI). When meeting with Paytm in Mumbai, one of India’s preeminent fintech companies that helped build the tech behind UPI and now offers innovative subscription-based payment solutions for vendors, we gained insight into the real-time digital payment system. Launched in 2016, UPI now accounts for 68 per cent of all payment transactions by volume. The UPI QR code is ubiquitous in India; operated by companies like Paytm, Phone Pe and Google Pay, it can be found in kirana stores (mom-and-pop shops), individual ice cream sellers parked in tourist areas, and even in chai stalls and fruit stands in the Dharavi slum, made famous by 2008 film Slumdog Millionaire. When buying tickets for a monument like the Taj Mahal or Humayun’s Tomb, you get a significant discount when paying with UPI or card, while cash-paying customers pay full price. (This is in line with Modi’s 2016 demonetisation campaign, which kickstarted India’s revolution in digital payments).
In an economy that is 50 per cent driven by consumption alone and where 90 per cent of that commerce happens at kirana stores, simplifying transactions and reducing payment transfer delays through UPI has a massive rippling effect. Improving cash flow for sellers and buyers alike encourages the establishment of new businesses and drives consumption. In 2021 alone, UPI unlocked USD12.6 billion in cost savings and USD14.6 billion of economic output in India. Beyond India’s megacities, UPI has started to find its footing in cash-dominant semi-rural and rural stores; in 2022, UPI transactions saw a 650 per cent increase in those regions. While urban areas rapidly digitise, India’s efforts to promote digital financial inclusion ensure the rural consumer doesn’t get left behind.
After effectively digitising payments, India is now turning its attention to revolutionising e-commerce. In our meeting with Invest India in Delhi, the national investment promotion and facilitation agency, we got a glimpse into the Open Network for Digital Commerce (ONDC). This government initiative will make “digital commerce in goods and services available equitably to all Indian citizens,” according to ONDC’s Strategy Paper. Currently in testing and set to launch in mid-2023, ONDC will support a decentralized ecommerce network that all players – from Flipkart, Amazon, Uber and Zomato, to supermarkets, retailers and the 13 million kirana stores operating in India – can plug into. With all players in food, fashion, payment and travel accessible in one super-app, ONDC will enable any buyer to connect with any seller on the open network. The super-app will increase visibility of all merchants, including small and medium sellers that are often digitally excluded, expand choice and improve pricing for consumers, and drive healthy competition and a level playing field in an industry dominated by giants in other markets (think Amazon, Alibaba).
Having spent many years living and working in other emerging markets like Kazakhstan, Uzbekistan and Russia and following their efforts to improve market efficiencies and digitise, I find India’s journey incredibly compelling. India is conquering its unique conditions – which could easily impede another country’s journey – head on. Its mind-boggling density, ever-growing population, staggering ethnic and linguistic diversity, low smartphone/internet penetration, and limited infrastructure are the same conditions that are enabling India to leapfrog traditional consumption/development stages and go straight to digital, creating more efficient public and private services than we in the US could ever imagine.
India’s digital transformation has been commended by many, including the IMF in a recent working paper, as a world-class example for other countries to look to. Unlike many emerging markets where the private sector steps in to fill public service gaps, India’s government is a key innovator in the market and even a catalytic actor in the country’s digitisation journey. (When is the last time you heard a government described as a catalyst?). The goal behind Digital India is not merely to digitise specific public services, but rather build digital building blocks that can be used by both government and private players to “enable society-wide transformation” (IMF). India’s focus on building a digital environment that empowers, unites and supports innovation across the entire ecosystem is – to my mind – what sets it apart from the rest.
In India, “there’s always room for one more,” and everything the country’s doing will ensure that this fast-rising tide indeed lifts all boats.
