From Account Aggregator To ONDC, Economic Survey Touts Potential Of Digital Public Infra

The country’s digital public goods infrastructure, including the UPI, DigiLocker, and CoWIN, found prominent place in the Economic Survey 2022-23, tabled by Finance Minister Nirmala Sitharaman in the Parliament on Tuesday (January 31) ahead of the presentation of the Union Budget 2023-24 on February 1.

Touting the ambitious account aggregator (AA) framework, the survey noted that more than 110 Cr bank accounts are currently eligible to share data on the AA network. 

With 23 banks already onboarded on to the system, as many as 33 Lakh users have already linked their accounts to the framework. Of these, 32.8 Lakh users have already successfully shared data via different account aggregators, the Survey said. 

The AA framework is a data-sharing protocol that aims to compile financial data from multiple sources to ensure seamless sharing of the information with financial institutions and service providers. In simple words, it will allow quick sharing of user data with financial entities for disbursal of loans to credit-starved small and medium enterprises in India’s hinterlands.

The Economic Survey 2022-23 also shed light on the building blocks of the under-construction AA framework:

• In total, 27 financial institutions have been onboarded as Financial Information Providers (FIPs)
• 12 public sector, 10 private sector and 1 small finance banks have gone live on the platform as FIPs
• Four life insurance providers have also joined the network as FIPs
• 119 financial institutions, in total, have gone live on AA network as FIUs
• FIUs include 93 RBI-regulated, 12 SEBI-regulated and 12 IRDAI-regulated entities
• 2 PFRDA-regulated entities have also logged in on the network as FIUs

“The MSMEs have also benefited from access to digital platforms for their marketing needs and easy payments. With the Open Network for Digital Commerce (ONDC) creating opportunities for MSMEs to access ecommerce technology and diversify their target markets, this trend will likely strengthen further. Moreover, onboarding GSTN as a Financial information provider on the Account aggregator platform will open up avenues for access to credit for MSMEs,” the Economic Survey said. 

Talking about the launch of the ONDC, it said that it has played a significant role in democratising digital payments, enabling interoperability, and bringing down transaction costs. Besides, ONDC provides better market access to merchants and will spur ecommerce adoption in the remotest corners of the country. 

On the popular Unified Payments Interface (UPI), the document said that the payments system accounted for 52% of the total 8,840 Cr digital transactions in the financial year 2021-22 (FY22). 

Between March 2018 and December 2022, UPI-based transactions grew 121% and 115%, on average, in terms of value and volume respectively, according to the survey. 

The report also said that more than 23 Cr UPI QR codes have so far been deployed by merchants across the country for accepting digital payments since 2017. It also pointed out that a mere 25 Lakh devices were accepting merchant payments prior to that. 

The survey also praised the National e-Governance Services Limited (NeSL)-backed Digital Document Execution (DDE) platform which was launched in 2020. 

The platform aims to eliminate the need for the manual process and the physical presence of a person for executing documents and agreements. It aims to deploy electronic signatures via Aadhaar to verify users online and lower execution time and cost. 

As per the Survey, 23 states and Union Territories (UTs) have currently deployed the platform for digital e-stamping, while 27 banks and NBFCs are leveraging the platform to execute their agreements.

So far, more than 9 Lakh such transactions have been undertaken on the NeSL-DDE platform. 

Taking note of the recent rollout of 5G services in the country, the Survey said that the high-speed network has the potential to spur innovations by startups and private enterprises. 

“The rollout of 5G services can unleash new economic opportunities and help the country leapfrog the traditional barriers to development, spur innovations by startups and business enterprises, and advance the ‘Digital India’ vision,” it added. 

Digital public goods infrastructure has been a major talking point of the central government in the past few years. From the successful rollout of the UPI to beta launch of the ONDC, a slew of state-backed projects have taken off in the past few years. 

While Aadhaar has been the building block, the overall architecture is part of the larger IndiaStack which also includes other in-progress products such as Open Credit Enablement Network (OCEN) and a prospective insurance-related offering. With these projects, the government aims to take the entire mandate of governance online, and keep a check on the implementation of various schemes.