By Arshiya Chaturvedi
India assumes the G20 presidency in December 2022, with the primary agenda of securing the world and reviving growth. With a believed moral obligation to represent the interests of the global south, India strives to serve as an example to the rest of the world, especially developing nations, that “digital” is the new way of running a country efficiently. A slew of government-backed initiatives are underway to transform India into a digitally empowered nation. However, India should keep in mind that for this ambitious digital upgrade to succeed, it will need to be supported by effective policy regulation in space.
The Open Network Digital Commerce (ONDC) initiative was launched by the government to democratize the country’s current e-commerce ecosystem. ONDC also aims to break the monopoly of platform-based e-commerce, and also prevent data accumulation by one entity thereby providing a level playing field to smaller players. The RBI’s Account Aggregator Framework on the other hand, aims at bridging the supply-demand gap in retail lending. Account aggregations also referred to as financial data aggregation entails gathering financial data from various sources and putting it in one location.
Along with the traditional sources of financial information like loans and credit cards, it also gathers information from cash flow and investment-based inputs. It also covers income from various sources, expenses, invoices, receipts, deposits, equity investments, tax returns, etc. These RBI-approved and regulated Account Aggregators assist customers in securely and digitally accessing their financial data from their banks and sharing it, if desired, with other participating financial institutions. Recently the Goods and Service Tax Network (GSTN) has been included as a Financial Information Provider under Account Aggregator Framework.
Nandan Nilekani while explaining the relation between Account Aggregator (AA) frameworks, the Open Network for Digital Commerce (ONDC) and the Unified Payments Interface (UPI), pointed out that together these can revolutionize the Indian supply chain ecosystem. The ONDC network provides the infrastructure to unbundle the supply chain whereas the Account Aggregator system democratizes credit seeking processes.
Further the Unified Payment Interface is India’s instant payment system, enabling seamless money transfer digitally within national boundaries. The NPCI recently launched services for an integrated bill payment system through platforms like UPI Lite, Rupay Credit Card linked to UPI and Bharat Bill Pay System. This is done to further democratize the space and also extend the reach of digital payments to many new users across India and abroad, facilitating cross-border trade. Together these will assist in enhancing the lending and payment ecosystem, strengthening the national supply chains thereby facilitating business and economic growth in India.
To further smoothen out the process and realize the benefits of these initiatives to the fullest, the government has been pushing for linking different ids with Aadhar under its One Nation, One Identity mission. It is also important to note that the KYC system, a critical but cumbersome part of the process in the above-mentioned initiatives, needs to be optimized.
It is proposed that the linking of different ids into one multipurpose ID card will make identification and verification easier, more reliable, faster, and less expensive. It will help in streamlining the government system and will enable the government to weed out bogus and duplicate identities in the system. This will in turn facilitate the effective delivery of the government’s various welfare programs and other developmental initiatives like providing better access to public goods among others. Linking of Aadhar and Pan Card will also enable the government in setting up a technologically-driven meticulous and fool proof surveillance system, tracking all the transactions, asset purchases and expenses incurred by an individual, which will prevent tax evasion.
But alongside these benefits, it is critical to consider some of the serious risks involved, such as privacy and data protection. In the absence of an effective data protection law and clarity on the process of integration, there exists a substantial risk of leaks. The 12-digit unique identity project has always been criticized over concerns regarding the privacy and security of personal data collected by the UIDAI.
There have been several cases of Aadhar data breaches, for instance, recently, the Aadhar data of millions of Indian farmers got leaked online because of a flaw in the government of India website. This new aadhar data leak has exposed 11 crore farmers’ sensitive personal- information (those enrolled on the Pradhan Mantri Kisan Samman Nidhi). The government’s push for linking Aadhar and other Ids like Pan Cards and voter ids will lead to the creation of an ecosystem that is not sufficiently secured. This will increase the risk of many such cyber-attack incidents.
The recent AIIMS Delhi critical data breach of crores of individuals in the country has reflected the serious ramifications of these data leaks. It is crucial to understand that such risks can be amplified as the accumulation of multiple data sets by interlinking them will make them more vulnerable to internal errors and foreign attacks as these become a single target or single point of failure.
Therefore concerns around leakages of critical data of citizens is very important a consideration along with other issues like targeted disenfranchisement, exclusion of minorities, voter profiling, etc. that threaten electoral democracy and free and fair elections
Arshiya Chaturvedi is a research associate at CUTS International. She specializes in Ease of Doing Business, Competition, International Trade Law, International Relations and Consumer Protection.
Disclaimer: The views expressed are not necessarily those of The South Asian Times