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Aadhaar,UIDAI,UPI,IndiaStack - News and Discussions

Discussion in 'World Economy' started by arbit, Apr 5, 2017.

  1. arbit

    arbit 2nd Lieutant FULL MEMBER

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    India
    By Raoul Pal
    March 2017

    Companies that create massively outsized technological breakthroughs tend to capture the investing population’s attention and thus their share prices trade at huge multiples, as future growth and future revenues are extrapolated into the future.

    From time to time, entire countries re-model their economies and shift their growth trajectory. The most recent example was the liberalisation of China’s economy and massive spending on infrastructure, which together created an incredibly powerful force for growth over the last two decades.

    But it is very rare indeed that a country develops an outsized technological infrastructure breakthrough that leaves the rest of the world far behind.

    But exactly this has just happened in India... and no one noticed.

    India has, without question, made the largest technological breakthrough of any nation in living memory.

    Its technological advancement has even left Silicon Valley standing. India has built the world’s first national digital infrastructure, leaping at least two generations of financial technologies and has built something as important as the railroad was to the UK or the interstate highways were to the US.

    India is now the most attractive major investment opportunity in the world.

    It’s all about something called Aadhaar and a breathtakingly ambitious plan with flawless execution.

    What just blows my mind is how few people have even noticed it. To be honest, writing the article last month was the first time I learned about any of the developments. I think this is the biggest emerging market macro story in the world.

    Phase 1 – The Aadhaar Act
    India, pre-2009, had a massive problem for a developing economy: nearly half of its people did not have any form of identification. If you were born outside of a hospital or without any government services, which is common in India, you don’t get a birth certificate. Without a birth certificate, you can’t get the basic infrastructure of modern life: a bank account, driving license, insurance or a loan. You operate outside the official sector and the opportunities available to others are not available to you. It almost guarantees a perpetuation of poverty and it also guarantees a low tax take for India, thus it holds Indian growth back too.

    Normally, a country such as India would solve this problem by making a large push to register more births or send bureaucrats into villages to issues official papers (and sadly accept bribes in return). It would have been costly, inefficient and messy. It probably would have only partially worked.

    But in 2009, India did something that no one else in the world at the time had done before; they launched a project called Aadhaar which was a technological solution to the problem, creating a biometric database based on a 12-digit digital identity, authenticated by finger prints and retina scans.

    Aadhaar became the largest and most successful IT project ever undertaken in the world and, as of 2016, 1.1 billion people (95% of the population) now has a digital proof of identity. To understand the scale of what India has achieved with Aadhaar you have to understand that India accounts for 17.2% of the entire world’s population!

    [​IMG]

    But this biometric database was just the first phase...

    Phase 2 – Banking Adoption
    Once huge swathes of the population began to register on the official system, the next phase was to get them into the banking system. The Government allowed the creation of eleven Payment Banks, which can hold money but don’t do any lending. To motivate people to open accounts, it offered free life insurance with them and linked bank accounts to social welfare benefits. Within three years more than 270 million bank accounts were opened and $10bn in deposits flooded in.

    People who registered under the Aadhaar Act could open a bank account just with their Aadhaar number.

    Phase 3 – Building Out a Mobile Infrastructure
    The Aadhaar card holds another important benefit – people can use it to instantly open a mobile phone account. I covered this in detail last month but the key takeaway is that mobile phone penetration exploded after Aadhaar and went from 40% of the population to 79% within a few years...

    [​IMG]

    The next phase in the mobile phone story will be the rapid rise in smart phones, which will revolutionise everything. Currently only 28% of the population has a smart phone but growth rates are close to 70% per year.

    In July 2016, the Unique Identification Authority of India (UIDAI), which administers Aadhaar, called a meeting with executives from Google, Microsoft, Samsung and Indian smartphone maker Micromax amongst others, to talk about developing Aadhaar compliant devices.

    Qualcomm is working closely with government authorities to get more Aadhaar-enabled devices onto the market and working with customers – including the biggest Android manufacturers – to integrate required features, such as secure cameras and iris authentication partners.

    Tim Cook, CEO of Apple, recently singled out India as a top priority for Apple.

    Microsoft has also just launched a lite version of Skype designed to work on an unstable 2G connection and is integrated with the Aadhaar database, so video calling can be used for authenticated calls.

    This rise in smart, Aadhaar compliant mobile phone penetration set the stage for the really clever stuff...

    Phase 4 – UPI – A New Transaction System
    [​IMG]

    But that is not all. In December 30th 2016, Indian launched BHIM (Bharat Interface for Money) which is a digital payments platform using UPI (Unified Payments Interface). This is another giant leap that allows non-UPI linked bank accounts into the payments system. Now payments can be made from UPI accounts to non-UPI accounts and can use QR codes for instant payments and also allows users to check bank balances.

    While the world is digesting all of this, assuming that it is going to lead to an explosion in mobile phone eWallets (which is happening already), the next step is materializing. This is where the really big breakthrough lies...

    Payments can now be made without using mobile phones, just using fingerprints and an Aadhaar number.

    Fucking hell. That is the biggest change to any financial system in history.

    What is even more remarkable is that this system works on a 2G network so it reaches even the most remote parts of India!! It will revolutionise the agricultural economy, which employs 60% of the workforce and contributes 17% of GDP. Farmers will now have access to bank accounts and credit, along with crop insurance.

    But again, that is not all... India has gone one step further...

    Phase 5 – India Stack – A Digital Life
    In 2016, India introduced another innovation called India Stack. This is a series of secured and connected systems that allows people to store and share personal data such as addresses, bank statements, medical records, employment records and tax filings and it enables the digital signing of documents. This is all accessed, and can be shared, via Aadhaar biometric authentication.

    Essentially, it is a secure Dropbox for your entire official life and creates what is known as eKYC: Electronic Know Your Customer.

    Using India Stack APIs, all that is required is a fingerprint or retina scan to open a bank account, mobile phone account, brokerage account, buy a mutual fund or share medical records at any hospital or clinic in India. It also creates the opportunity instant loans and brings insurance to the masses, particularly life insurance. All of this data can also in turn be stored on India Stack to give, for example, proof of utility bill payment or life insurance coverage.

    What is India Stack exactly?

    India Stack is the framework that will make the new digital economy work seamlessly.

    It’s a set of APIs that allows governments, businesses, startups and developers to utilise a unique digital infrastructure to solve India’s hard problems towards presence-less, paperless and cashless service delivery.

    • Presence-less: Retina scan and finger prints will be used to participate in any service from anywhere in the country.
    • Cashless: A single interface to all the country’s bank accounts and wallets.
    • Paperless: Digital records are available in the cloud, eliminating the need for massive amount of paper collection and storage.
    • Consent layer: Give secured access on demand to documents.
    India Stack provides the ability to operate in real time, transactions such as lending, bank or mobile account opening that usually can take few days to complete are now instant.

    [​IMG]

    As you can see, Smart phones will act as key to access the kingdom.

    This is fast, secure and reliable; this is the future...

    [​IMG]

    This revolutionary digital infrastructure will soon be able to process billions more transactions than bitcoin ever has. It may well be a bitcoin killer or at best provide the framework for how blockchain technology could be applied in the real world. It is too early to tell whether other countries or the private sector adopts blockchain versions of this infrastructure or abandons it altogether and follows India’s centralised version.

    India Stack is the largest open API in the world and will allow for massive fintech opportunities to be built around it. India is already the third largest fintech centre but it will jump into first place in a few years. India is already organizing hackathons to develop applications for the APIs.

    It has left Silicon Valley in the dust.

    Phase 6 – A Cash Ban
    The final stroke of genius was the cash ban, which I have also discussed at length in the past. The cash ban is the final part of the story. It simply forces everyone into the new digital economy and has the hugely beneficial side-effect of reducing everyday corruption, recapitalising the banking sector and increasing government tax take, thus allowing India to rebuild its crumbling infrastructure...

    [​IMG]

    India was a cash society but once the dust settles, cash will account for less than 40% of total transactions in the next five years. It may eliminate cash altogether in the next ten years.

    The cash ban digitizes India. No other economy in the world is even close to this.

    Phase 7 – The Investment Opportunity
    Everyone thinks they know about the Indian economy – crappy infrastructure, corruption, bureaucracy and antiquated institutions but with a massively growing middle class. Well, that is the narrative and has been for the last 15 years.

    But that phase is over and no one noticed. So few people in the investment community or even Silicon Valley are even vaguely aware of what has happened in India and that has created an enormous investment opportunity.

    The future for India is massive technological advancement, a higher trend rate of GDP and more tax revenues. Tax revenues will fund infrastructure – ports, roads, rail and healthcare. Technology will increase agricultural productivity, online services and manufacturing productivity.

    Telecom, banking, insurance and online retailing will boom, as will the tech sector.

    Nothing in India will be the same again.

    FDI is already exploding and will rise massively in the years ahead as technology giants and others pour into India to take advantage of the opportunity...

    [​IMG]

    I am long the telco sector (Bharti)...

    [​IMG]

    And I am long the Nifty Banks Index...

    [​IMG]

    I think India is going to offer an entire world of opportunity going forwards.

    If I can sum up, it’s in this one chart: the SENSEX in US Dollars. It looks explosive for the next 10 years...

    [​IMG]

    Incredible India indeed.

    http://www.mauldineconomics.com/outsidethebox/raoul-pal-paying-attention


    @PARIKRAMA @Levina @Nilgiri @vstol jockey @randomradio @Sancho @Ankit Kumar 001 @Naagraj @IndiranChandiran et al.
    Missed quite a few. please don't mind.

    Would someone be kind enough to spread the word around in other parts of the world?:angel:
     
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  2. Butter Chicken

    Butter Chicken Lieutenant FULL MEMBER

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    look at /r/India,how some people are crying over Aadhar.

    They would have praised the same system if it was implemented in USA or EU
     
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  3. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    Its unbelievable but as we say, India is Dev Bhoomi, miracles happen on this land only. Chamatkaar ko namaskaar.
     
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  4. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

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    Miracle? That too with aadhar?
     
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  5. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

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    It's a hate club. NRIs bitching about India
     
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  6. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    You may or may not believe but NaMo got 312 seats in UP only bcoz of the miracle of AADHAR. This helped him remove corruption from gas subsidy and deliver gas cylinders to a very number of poor households by linking them to AADHAR based schemes. This is what we call Ujjwala Yojna.
     
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  7. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

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    Then thank manmohan ,pranab mukherjee and nandan nilekani who made the whole system from scratch with political will and technical expertise.
     
  8. Sancho

    Sancho Lt. Colonel Technical Analyst

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    But it would also work better in countries where the bulk of the people know how to use the benefits of the cashless system, where the security levels are high enough and where online sales are increasing throughout the whole society.
    In India this obviously helps the growing middle class, but doesn't help in everyday life buying stuff on the market or in small stores, paying the rickshaw..., not to mention that increased hacking problems will come up, when people don't know how to use online banking and payment in save ways. So those claims of eliminating cash should be taken with a pinch of salt.

    Also telecom, banking and online sales are only a few parts of the economy, while we see manufacturing, construction, or agriculture in trouble and not much effected by FDI so far.
     
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  9. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

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    I'm sure you are not familiar with UPI or India stack. It is a game changer and something very different from what exist in West. Middle class will be the one utilising it and small stores are already started using wallet in a big way which will be replaced by UPI. All cash transactions above 3 lakh is already illigal.
     
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  10. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    Go to any village in India. Thanks to pornography, Indian youth is getting smarter in using internet. They are teaching their old men the benefits of technology.
     
  11. vstol jockey

    vstol jockey Colonel MILITARY STRATEGIST

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    I will not sir. They started it as a money spinner to add to corruption, NaMo used it for betterment of people.
     
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  12. Sancho

    Sancho Lt. Colonel Technical Analyst

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    That's what I meant, but even a growing middle class does not even include half of India population. That means that the effect of this is more limited in Indian society, than it would be in western countries for example. You can even compare it to states within India and I bet there will be once that benefit more (Kerala for example could) , while plenty of others don't.

    So success in certain areas are always welcome, but we shouldn't overestimate it, if it doesn't effect the whole population or the whole economy and that's what the article does to an extend.

    India is still an emerging country and is battling with different speeds of modernisation, cities vs rural areas for examplease and it will remain difficult to bring development to all areas. That's however the biggest difference to more modern countries be it east or west.
     
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  13. Sancho

    Sancho Lt. Colonel Technical Analyst

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    :mrgreen: Which also shows what happens when a society that is not ready for such a big change, gets access to things like the Internet.
     
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  14. Agent_47

    Agent_47 Admin - Blog Staff Member MODERATOR

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    India Stack – A change agent for government, startups and corporates to serve citizens

    Six months ago, when Bill Gates, Chairman of Microsoft, visited Bengaluru and met the iSpirit team, he was curious about ‘India Stack’. He was also eager to know about the rapid pace at which the country managed to register 95 percent of its citizens on an identification database called Aadhaar. The volunteers of iSpirit—a software product think tank—obliged and a crack team consisting of Nandan Nilekani, Pramod Varma, Sanjay Jain along with Sharad Sharma, Founder of iSpirit, made a presentation to Gates about India’s digital revolution waiting in the wings.

    In the end, Gates saw the ‘India Stack’ as the shining beacon of technology to propel change. He is known to have used the words “cutting-edge” and was overheard saying, “there are few countries which can boast of a digital infrastructure as sophisticated.” He added that the vision of transforming India through application of technology had received new impetus.

    On India Stack, Nilekani, Co-founder of Infosys and former Chairman of Unique Identification Authority of India (UIDAI), says, “This is a technology platform that delivers complete services to citizens transparently and is focussed on improving lives.”. He adds that it was a product of several years of innovation starting with the UIDAI’s Aadhaar platform. “This is India’s single most important innovation to formalise India’s domestic economy through digital services,” he says.

    Whatis India Stack?

    In simple terms, India Stack is:

    • A paperless and cashless servicedelivery system.
    • The stack is a new technology paradigm that is scalable to handle massive data inflows, and is poised to enable entrepreneurs, citizens and governments to interact with each other transparently.
    • It is an open system to electronically verify businesses, people and services.
    • It gives the data to the concerned individual and lets him decide who he can share the data with. The smartphone will be the delivery platform for services such as digital payments, identification and digital lockers.
    • It is the largest application programming interface (API) on the planet.
    • Poised to change the lives of 1.1 billion Indians.
    This open API policy was conceived around 2012, when the Central government realised that it cannot deliver citizen services on its own efficiently. So it proposed, based on its experience with Aadhaar, an open-data initiative supported by an open API policy, which would pave the way for private technology solutions to build services on top of Aadhaar. This was a significant development because it was the first time that the government conceded it needed entrepreneurs to build on top of a stack to deliver services.

    Here are the 5 tenets of India Stack and the Startups leveraging it
    Paperless identification: Aadhaar’s 12-digit unique identification number, floated by the UIDAI in 2009, has more than one billion Indians registered who have became the basis for the India Stack. The government uses the platform to transfer subsidies directly into the beneficiaries’ accounts. Today, Jandhan Yojana (the subsidy scheme) and Aadhaar, along with mobile, are termed as the JAM trinity for public services. The JAM has delivered direct benefits of Rs 61,000 crore in the form of fertilizer subsidies and other welfare schemes. Over 190 million accounts have been opened so far as per records available on Jandhan website. All theseaccounts have been opened after using Aadhaar, which has helped beneficiariesreceive money in their accounts.

    “The advantages of such a system are that all leakages in the subsidy and welfare system disappear,” says Nilekani.

    This system of identification and delivery of services is already being used by the startup world. One only has to visit the 50,000 merchants aggregated by Novo Pay to understand how money transfers happen digitally for citizens with the aid of the local kirana store. Novo Pay uses the Aadhaar platform to verify citizens to enable them to open bank accounts or transfer money to any bank across the country, or make payments for bills or buy products through the kirana network.

    “We use Aadhaar to deliver banking services to citizens. Novo Pay’s network operating centre also tracks the business cycle of each kirana which gives them an overview of the financial services that consumers experience,” says Srikanth Nadhamuni, Co-founder of NovoPay. In the future, the company can also work with banks to verify and provide loans to people through the kirana network. “We are going after the long tail and it is a business that takes years to build, which when it reaches critical mass can change financial services in the country,” says Nadhamuni. The smartphone can also become central to verification because all the information goes to the registered phone number.

    [​IMG]
    (from L-R) Sridhar Rao, CEO Novopay with Vinod Khosla, Chairman Khosla Labs and Srikanth Nadhamuni, Chairman Novopay
    Paperless payments: Novo Pay also allows mobile payments through the smartphone. This can become India Stack’s signature delivery mechanism to make India a digital cash economy. The paperless payment is a brainchild of the National Payments Council of India (NPCI), which is a consortium of Indian banks. This organisation along with iSpirit floated the Unified Payments Interface (UPI), which will make mobile payments cardless and completely digital. It will break the back of foreign payment platforms or switches (MasterCard and Visa), which so far charged high commissions to settle rupee transactions.

    The UPI allows consumers to transact directly through their bank account with a unique UPI identity, which syncs to Aadhaar’s verification and connects to the merchant, the settlement and the issuing bank to close a transaction. In a single swipe the transaction is complete, without any middleman (like the Visa and Mastercard switch) to facilitate the transaction.

    Here is an explanation of how thissystem works.

    There are several companies offering paperless payments today, like PayTM, FreeCharge and MobiKwik. There is a startup called FonePaisa, which is aggregating all payment apps under one platform to pay the kirana or any business. YourStory reported first on how Flipkart can use PhonePe, a startup that it acquired, to enable payments through the UPI. Let us say that the consumer is browsing through a catalogue and he finds his favourite product. He opts to pay through the UPI method. Flipkart’s system asks the consumer for his or her UPI identity and the consumer inputs it. Then, a bank notification pops up on the Flipkart app or in the bank’s app asking the consumer to authenticate the transaction. The consumer inputs his fingerprint as authentication and the transaction is settled between the banks, the e-commerce company and the customer.

    “Most of us are building this form of payment for even retail transactions. Imagine that this system can bring 50 million mom-and-pop stores online and they can accept digital payments because of the UPI,” says Ritesh Agarwal, Co-founder of FonePaisa, adding that India will have a hybrid payments industry and that there will not be any one payment stack that will remain popular.

    [​IMG]
    FonePaisa’s team is building seamless digital payments for consumes with offline merchants & can build on top of the Aadhaar framework to enable payments.
    However, the UPI will benefit Indians who have never experienced digital payments, and is clearly focussed on bringing 900 million Indians into the digital fold. “The only problem with the long tail is cultural. Will people begin to trust digital cash over physical cash? It becomes a hard habit to break. However, it is an opportunity nevertheless,” says Sarath Naru, Managing Partner of VentureEast.

    Paperless documents: Although digitisation is growing, India consumes the largest amount of paper. According to corporate ratings and research agency India Ratings, the per-capita consumption of paper is 9kg and is all set to double by 2020 because of the growth of the education industry. But with smartphone prices dropping, at least financial services and the healthcare industry can move to a paperless scenario in major cities with the help of India Stack. The Stack’s APIs allow startups to bring solutions that can make documents go digital.

    A large consumer goods company can use the India Stack to file taxes and track the filings made by its entireecosystem, of distributors or dealers to reconcile taxes, to avoid legal complications arising from double taxation. This automated service provided by startups with the India Stack gives the corporate a dashboard and performance analytics on the right amount of taxes paid and owed. Startups like Clear Tax and Tax Mantra can provide this scalability by using India Stack. The platform can also be secured for each corporate with their own digital identity. The use cases for paperless documents are plenty.

    E-KYC: Today, many banks are yet to insist on an e-KYC (electronic Know Your Customer) on their platforms. However, when they integrate their infrastructure with India Stack, the Aadhaar number becomes the defacto KYC. Prepaid digital wallet Oxigen allows e-KYC. Axis Bank has allowed Aadhaar to become the e-KYC platform across all its 2,000 branches.

    “A key challenge for the customers while opening bank accounts is providing address proof, identity proof and physical copies of documents. E-KYC simplifies the customer experience for the Aadhaar-registered individuals to open bank accounts” says Shikha Sharma, CEO of Axis Bank. Only the top 50 banks in India have agree to make e-KYC a norm.

    Digital signature: This would be the last mile to cross, and can be made simple between two or more parties executing contracts over the mobile. Individuals or entities can use the Aadhaar ecosystem to send digital signatures on a certified or legal document. Today, most HR offers are online documents that contain digital signatures. But there is a single source of paper still. Imagine, if the entire document is a digital template. When an employee has to accept an offer, he sends the document duly signed by a digital signature. This has several applications too.

    A road not far away
    In many ways, India is a complex nation. It has cultural differences, yet technology seems to be the tool that can break barriers. Yet, England’s exit from Europe signals a new shift in the world. It is fast becoming a world that is shrinking back into nationalism and protected markets. India has a huge domestic market where services can be streamlined with the help of technology. Any delay on that front can be detrimental, in the form of lack of education and healthcare. “India is a nation of extremes. We are solving problems, but the services aided by technology must reach a larger mass of people faster,” says S D Shibulal, Co-founder and former CEO of Infosys.

    Perhaps the time of change is now. If Bill Gates can see it then all India institutions should get together and use India Stack to bolster the nation’sprosperity.
     
    Last edited: Apr 5, 2017
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  15. GSLV Mk III

    GSLV Mk III Captain FULL MEMBER

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    Wannabe NRIs....
     

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