 "Nine years of Modi government: Assessing the ‘second order impact’ of pro-poor schemes")
At an event this week, Prime Minister Narendra Modi recounted the adoption of an ‘whole-of-government approach’ since 2014 that enabled the path-breaking success in the delivery of e-governance, e-accountability and transparency to cater to citizens’ needs.
Harnessing technology to revolutionise governance has showcased the Indian government’s ability to create a scalable model of building a robust architecture to deliver Digital Public Goods at population scale, with minimal human interface. This in turn has eliminated middle-men or intermediaries; minimised the discretionary powers of taxation officials or bureaucracy; accelerated the implementation of flagship schemes, and lessened the scope of corruption.
With the Modi-led NDA completing nine years in office next month, it is time to revisit the deliverables of not only the tangible and obvious ‘first-order’ benefits of the Central government’s flagship social sector schemes, but also what the Prime Minister termed as the “second order impact” of these schemes. While most of the schemes were envisioned during Modi 1.0, they achieved optimal penetration during Modi 2.0, and were targeted to achieve 90 percent saturation before the conclusion of the government’s term by May 2024.
While the direct benefits of the signature Central government social sector schemes are well known, their ‘second order impacts’ have been equally transformative, durable and sustainable, as they offered citizens greater ease of living. Due to limitations of space, I will confine the analysis to just a few of the secondary spin-offs of some of these schemes.
For example, with the Har Ghar Nal Se Jal Scheme and Ujjwala Yojna, the direct to home access of piped water and clean cooking fuel to crores of rural homes, has freed householders from the cumbersome burden of fetching water or wood from remote locations. The ‘second order impact’ of both the schemes will be more visible in times to come, as women will have more time for productive pursuits, while children will be able to spend more time on education. Increased access to modern day conveniences will become an enabler to increasing the quantum of labour force participation by women, much needed if we are to achieve 8 percent growth rates. Also, access to such facilities like toilets, water and gas will ultimately help in lowering the dropout rates of females from higher education.
Impact Shorts
More ShortsThe ‘second order impact’ of the Aspirational Districts Programme (ADP) launched in 2018 has been to improve the quality of life of those in the most backward districts of the country. The ADP has made incremental progress in 95 per cent of those 112 districts, where outcomes can be gauged through the reduction in multidimensional poverty (MDP). MDP is measured through key socio-economic indicators such as improvements in education, health, nutrition, skilling, financial inclusion and access to basic infrastructure, even though progress in some districts still remains behind schedule.
India’s economy is propelled by an infrastructure-led growth model. So, while the pace of building physical public infrastructure such as roads, railways, ports and highways has had a multiplier effect in generating jobs and crowding-in private investment, the ‘second order impact’ of the Modi-government building a strong Digital Public Infrastructure (DPI) has greatly impacted the ease of living parameters.
DPI refers to the layering of ‘building blocks’ or platforms, such as digital identification, payment infrastructure and data exchange solutions which have enabled the government to seamlessly deliver digital public goods, and deliver welfare schemes through cashless and paperless mode to beneficiaries. The evolution of DPI through the building block of the JAM Trinity (Jan Dhan, Aadhar and Mobile) was instrumental in mainstreaming access to formal banking, credit and finance for the marginalised.
Within the span of nine years, over 800 million people have acquired a digital identity, and over 600 million people have received access to financial services, (which is 80 percent of the population). Thus, the ‘second order impact’ of opening Jan Dhan accounts has been in achieving the biggest jump globally in financial inclusion. Today, banks can offer ‘anywhere, anytime, low-value credit’ through the UPI network to even account holders lacking credit history or collaterals by tracking digital and financial footprints that help evaluate credit worthiness for granting micro-credit.
It is estimated that “a well-structured DPI architecture has enabled India to achieve in a decade what would have taken 50 years if we had relied on traditional growth models”. The ‘second order impact’ of a well-developed DPI was experienced during the Covid-19 lockdown. Countries with efficient DPI’s were able to effect emergency fiscal transfers to millions of people; their healthcare system could monitor and coordinate vaccine implementation; and their digital payments systems ensured digital commerce could supply goods and services directly to their homes seamlessly.
India, through evolving the ‘India Stack’ became the first country to converge all three foundational building blocks of DPIs by:
- -building a digital national identity for over 1.4 billion people through Aadhaar;
- -introducing real-time payments interface through UPI;
- -and effecting direct benefit transfer schemes to beneficiaries without the need for intermediaries through 470 million new Jan Dhan accounts created.
For the uninitiated, IndiaStack is a set of APIs (Application programming interface) that facilitates governments, businesses, startups and developers to tap into the unique digital Infrastructure to deliver governance and formal finance through presence-less, paperless, and cashless service delivery to be effectuated at population-scale.
The ‘second order impact’ of the ‘India Stack’, with its unique and secure digital architecture, coupled with favourable demographics, cheapest access to data, and ownership of a billion smartphones, has given the world a model for closing gaps in financial inclusion, enhancing retail credit growth volumes, and widening the scope of the e-commerce and fintech industry, thereby increasing digital payments to the highest volumes transacted globally per day. Today, India transacts 11X more digital fast payments than the US or Europe.
In conclusion, improved coordination between different silos of government, accelerated micro-management of project implementation, and the incorporation of feedback loops as essential components of government initiatives make for a global case study of the evolved Indian paradigm of digital governance. In the forthcoming G20 sessions, India will be showcasing its expertise in developing Digital Public Goods and Infrastructure, as it features amongst the ‘Global Best Practices’ which can be replicated to provide solutions at speed and scale to other developing countries.
Bindu Dalmia is former Chairperson for the National Committee for Financial Inclusion and Literacy, Niti Aayog. Views expressed are personal.
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