www.thesuniljain.com

“The West created monopolies, we democratized data” PDF Print E-mail
Wednesday, 31 March 2021 00:00
AddThis Social Bookmark Button

India has the third largest number of unicorns, but it is way behind the US and China. It has the smallest R&D work force, the smallest scientific manpower of the three countries, and has no tech firms of the size of Google, Microsoft, Amazon, Facebook. But even before Aadhaar and UPI, it had NSE, NSDL, Isro … Infosys co-founder Nandan Nilekani puts it in perspective to Sunil Jain. Excerpts:

 

SJ: How far behind the US and China is India when it comes to tech power?
NN: After the first two phases where we took steps to modernize our banks and stock market, the third phase – in the last decade – was about putting in the digital infrastructure at the individual level … I joined the government in 2009 and Aadhaar now reaches 1.27 billion people. It is the basis for identity for everything. It is used to de-duplicate passports, driving licenses, PAN cards, and now there is a proposal before the Election Commission of India to use it to de-duplicate voter IDs and make it easier for people to vote when they travel.

Today we have more than 700 million unique bank accounts linked to Aadhaar numbers. That, in turn, laid the foundation for the world’s largest direct benefit transfer programme. This also came in handy during the pandemic when the government transferred money into people’s bank accounts … I am talking about 100 million to 200 million people getting money into their bank accounts. This was fundamentally very important because at the same time we saw that in many advanced countries they also had programmes to give money to their citizens, but they took months over it as they had to do mail checks, etc … we have demonstrated to the world the quality of our infrastructure.

The UPI was another major innovation in India. By October 2016, we had reached about 100,000 users and then demonetisation happened … Today UPI does 2.3 billion transactions a month and it's a spectacular success. I go to a vegetable vendor and they take UPI payments. I think we have really managed to democratise payments. It is very high volume and very low costs, small transactions size payments system. There is nothing like this in the world.

SJ: On a scale of one to 10, if America is on ten with a Google and a Facebook etc, where are we?
NN: In areas like social media, search and e-commerce we don’t really have a great story. But in public digital infrastructure, we do have something which is world beating.

SJ: What are the next steps in India’s tech journey?

NN: With Aadhaar etc, we have made things paperless, cashless and presence-less. I can sit in my house on my phone and do an Aadhaar KYC or a video KYC and open a bank account or buy a mutual fund. Being able to buy financial products has dramatically reduced costs and improved efficiency. UPI has a feature called auto pay, in which you can set up business rules saying debit my account every time I take a Ola or every day put Rs 10 in my SIP. Once this rolls out, you will find that subscription-based services will gain huge traction. You will see more SIPs happening and SIPs are a huge source of money for the mutual fund industry. The combination of ASBA and UPI makes it very easy for me to apply for an IPO on my smartphone … suddenly millions of people can participate in a financial economy.

 

SJ: You are working on Beckn … what is that about?
NN: Beckn is an API being developed by a foundation set up by Dr Pramod Varma, me and Sujit Nair who is the CEO. The idea is how do we unbundle these monolithic applications in the sense that, if it is e-commerce you order the product on one site, it would be delivered by some other company and it may be paid by a third company. So, if you can unbundle this people can build an ecosystem. For example, if you want to bring auto rickshaw drivers into the sharing economy, how can they participate in that? How you can combine mass transit with ride sharing? So, I should be able to make a booking on my Ola or Uber and then I book the metro ticket and in one smooth thing I can make the whole end-to-end travel. Basically, it has the potential to unbundle e-commerce and mobility just like UPI unbundled payments. It is a long way from where we are.

SJ: So, I can book a cab on my Ola or Uber app, but somebody who is not on Ola or Uber will be able to service it because Ola and Uber will be plugged into the Beckn API?
NN: Yes, but they have to adopt the protocol. I can also book on Ola and the metro. It is basically unbundling and rebuilding in a way that is more democratic and allows interoperability across systems. What happened in the West was that you had closed loop winner-take-all models, where a few companies became dramatically powerful. We saw that in every sector. The kind of work we do in India is to enable the open loop model so that they are not one or two winner-take-all; China has just two players in payments, and we have but a model where every bank can participate in payments and every front-end distribution channel can participate. That creates for healthy competition and innovation. At a more conceptual level, we are trying to create a more competitive economy, by unbundling the ecosystems of digital commerce.

Sunil Jain: In the closed-system, Ola or Uber is driving it. Who pushes this in the case of a Beckn?
NN: In the case of payments because it is regulated, the RBI had the foresight to do it. But it is also about government policy and interoperability. For example, the two exchanges and the two depositories. By law, the two depositories have to be interoperable. Airlines are a great example of interoperability. What happened in the big tech and hi-tech was things moved so fast that before the regulators could even design interoperability, people built these walled gardens.

SJ: So if the government says that an Ola or a Uber must have systems that are interoperable, we can completely change the game?
NN: It’s not just that. You need many players and there is a whole market-making effort. But broadly, yes, we should encourage interoperability like we have done in payments.


Sunil Jain: What is Open Credit Enablement Network (OCEN)?
NN: This is the third big thing in India after Aadhaar identity and payments, and iSpirit has done a lot of work on this; the issue is how we leverage data in a way that people can use their own data and it is also linked with the issue of winner-takes-all. All of us generate a lot of data in every transaction that we do and that data is being collected by a few companies and then they are monetising it through advertising or whatever. But that data is ours. Is there a way to re-architect this in a way so that I as an individual or I as a small business can use my own data and we call that idea data-empowerment.

The first implementation of that is in financial services, under the leadership of the RBI, but all the 4-5 regulators in the financial services are on board and they have defined a concept called consent manager or account aggregators, who sit between data providers and data users. Suppose I am a small business and I want to get a loan. I go to my consent manager and say go and get my GST record from the GST system, get my bank statement from the bank, get my TDS return from the Income Tax system, bundle all this data in an encrypted way and give it to two or three lenders. The lenders can decrypt this data and use their own algorithms and say this person is credit-worthy and then I get a digital loan. The small business is using its own data to get a loan.

OCEN is really the API. Let’s say I am running an accounting software company. I have a lot of customers and those customers have data, some of which is on my platform like invoices, balance sheets, etc. I can now OCEN to connect to five lenders so that the companies on my platform can go to those lenders using a simple API and get loans from them. It is all about reducing the transactional cost of making these systems work. It will take some time to put all these pieces in place. This is again to the credit entirely of the government because the government came up with the concept of account aggregators. So, suddenly we have a national infrastructure for data empowerment. It is astonishing what has been done.


Sunil Jain: If other people benefit from it, how is the person who is creating the app or the software benefiting from it? Why would somebody want to make a better tele-medicine app or portal when it is going to be say, a Dr Reddy or Apollo Hospitals which will get the money?
NN: They will make money on the transactions, we are talking of very high volumes and very low costs.


Sunil Jain: When you look at India’s R&D-spend or tech manpower, it is quite limited.

NN: We have a constraint, but I think investments will happen there. If you look at all the great companies of the world … GE does very sophisticated R&D in Bangalore. So, a lot of R&Ds happening in the multi-nationals is happening in the Indian companies. It may not be at the scale of a US or China, but it is happening. We are seeing lots of companies doing deep tech using AI. It is quite an exciting time right now.

Sunil Jain: How do we compare with China?
NN: China is much bigger than India in everyday life. But I think the way to think about this is that India is the only young country in an aging world. China is going to rapidly age because of the one-child policy. When you have a young country in an aging world, the demographics are in your favour, and you will definitely be able to get to 5-6% growth. When the rest of the world is growing at 1-2% and you are growing at 5-6% continuously over 20 years. Then you are going to do a significant catch up.

Sunil Jain: So we are getting our formula right?
NN: Paytm is a big user of UPI and is worth $17 billion. PhonePe, which is now part of Walmart, is supposed to be worth a few billion dollars. BharatPe has just become a unicorn and which has done an amazing job of spreading QR codes to retailers. Zerodha has become the largest online stock exchange.

On the digital infrastructure, which the government has laid, innovation is happening, competition is happening and billions of dollars of value is being created. The West invested public money on the internet, public money in GPS and that allowed the Ubers and Googles to succeed. So, we are creating something similar here.
The difference is that we are not creating monopolies, and we are helping the small guy. If I am a Rs 200 crore company that is filing GST, I can now request GST to give that data with the sign saying this is authentic data and then I can send it electronically to a bank and the bank can then give me a loan. Today banks find it extremely difficult to give loans to small companies because they can’t go and evaluate them. Now the evaluation is all digital and they can apply AI. So, in fact all this stuff will make it easy for small businesses to get access to credit.
Look at FastTag, it came out of a report I did in 2010 at the request of the then road minister, Mr Kamal Nath and today, thanks to Mr Gadkari, FastTag is ubiquitous. It is raising Rs 100 crore a day. It is incredible. If I go to Coonoor via Salem, it saves me 20-25 minutes because I am able to zip through the toll booths. We are now finally seeing all this technology actually impacting the lives of the people. I came out after getting a haircut the other day and saw a coconut vendor with a card saying Google payments accepted here.
The stuff that is happening is a silent revolution and we don’t notice it because little bits are happening every day. But if you take a decadal view, it is an extraordinary revolution.

 

see https://youtu.be/RhqJ5BkVv_0 for full interview

 

_____________________________________________________

unedited Rishi Ranjan Kala

FULL TRANSCRIPT:

Nandan Nilekani Transcript

Sunil Jain: Where is India placed versus the US in terms of technology and its success? Also wanted you to share your views on the lead ahead?
Nandan Nilekani: When we think about the digital infrastructure of India, we probably have to divide it into three phases. The first phase was right after liberalisation when the government took a huge step forward to modernise our banking and stock market systems with the setting up of the NSE, NSDL, etc. That happened in the 1990s. Second, in the 2000s also there was a big push in the government to do things. So many of the big projects, for instance the passport project, came out of that push. The first 10 years of this century. The third push is what happened in the last 10 years, which is putting in the digital infrastructure at the individual level. Making sure that individuals have access to digital services that include Aadhaar, which is now about 12 years old. I joined the government in 2009 and it has now reached 1.27 billion people. It is the basis for identity for everything. It is used to de-duplicate passports, driving licenses, PAN cards, and now there is a proposal before the Election Commission of India to use it to de-duplicate voter IDs and make it easier for people to vote when they travel.

So I think that has become one fundamental thing and linked to that was the connection to the banking system. The Aadhaar-linked bank account became an important thing, both for seeding the bank account as well as for opening bank accounts using the KYC. Today we have more than 700 million unique bank accounts linked to Aadhaar numbers. That intern laid the foundation for the world’s largest direct benefit transfer programme. The government has been able to move hundreds of thousands of crores of rupees into people’s accounts electronically in real time. That led to the reform of the LPG subsidy system. So earlier, if you remember, the subsidy was embedded into the price of the cylinder and now you buy the cylinder at market price and you get cash which you use to subsidise. So that is a very fundamental reform. It unleashes competition in that sector and is also targeted so you only give subsidy benefit to those who deserve it. It was also a very successful programme.

This also came in handy during the pandemic (Covid-19). During the pandemic, the government had to transfer the money to vulnerable people very rapidly and government tarred money into the bank accounts of the farmers and other affected people all in real time. I am talking about 100 million to 200 million people getting money into their bank accounts. We also had another piece of the puzzle called the Aadhaar-enabled payment system which allowed people to withdraw money from their bank account going to a business correspondent who just had a smartphone with a biometric attachment. So not only people got money into their bank accounts, but in a village they could go to a business correspondent in the neighbourhood and withdraw money. This was fundamentally very important because at the same time we saw that in many advanced countries they also had programmes to give money to their citizens, but they took months over it as they had to do mail checks, etc. Lot of that was actually solved in India. I think on that front we have demonstrated to the world the quality of our infrastructure.

The UPI was another major innovation in India. It was built by NPCI. I have been an advisor on innovation and public policy at the NPCI for the last seven years and I worked closely with the leadership of NPCI like Mr Hota, Mr Dilip Asbe and Aadhaar architect Dr Pramod Varma. We conceived of UPI about 5-6 years back and finally we were able to launch it after a lot of challenges like getting everybody on-board and so on by May of 2016. By October 2016, we had reached about 100,000 users and then demonetisation happened and suddenly the focus came on digital payments. The government took UPI under its wings and it launched its own app called BHIM. Today UPI does 2.3 billion transactions a month and it's a spectacular success. I go to a vegetable vendor and they take UPI payments. I think we have really managed to democratise payments. It is very high volume and very low costs, small transactions size payments system. There is nothing like this in the world.

So the third phase was able to transform our service delivery, digital payments and really touched the people. In the first two rounds, the stock market reforms only touched the stock market people, a very small part of our population and the second reforms had benefits for people with passports, which is really like 5% of Indians. But in the third round of automation, which began a decade back, it has really democratised and made technology accessible and that is supported by the fact that the mobile industry also did a dramatic job with access. So suddenly we had the trinity of Jan Dhan, Aadhaar and mobile, which has been transformational for the country.

Sunil Jain: On a scale of one to 10, if America is on ten with a Google and a Facebook etc, where are we? What is our number?
Nandan Nilekani: It is not a correct comparison in theses that certainly in the area of building social media and search engines, they (the US) have done an amazing job and this year was an important year because now for the first time in America more than half of the advertising is now digital advertising and 90% of that goes to three companies — Amazon, Google and Facebook. So there has been a consolidation there and the movement of advertising from the traditional models of print and television and so on to digital. India does not have such a big advertising business. The total advertising in India may be about $10 billion and the digital advertising is about $2-3 billion.

Where we are ahead is on the public digital infrastructure that we have built. There we can actually say that we are better. What happened in the US is that internet essentially was up till 1995 a government internet, but in 1995 with the rise of Netscape suddenly internet went private in some sense. So you have Netscape, Microsoft, Google, Amazon and Facebook. The government did not actually invest in improving the internet from an architecture point of view post 2000. But in India in the last 10 years, the stuff we have done like Aadhaar identity, UPI payments and account aggregators, which is about data empowerment. These are actually extensions to the internet only India has done. And now the world is looking at it and thinking maybe we should be doing something similar. So I would say that in areas like social media, search and e-commerce we don’t really have a great story. But in public digital infrastructure, we do have something which is world beating.

Sunil Jain: Talking about public infrastructure, at one time you used to talk about selling mutual funds through Aadhaar and UPI. So suddenly there is a completely new market and for instance it would be profitable to sell Rs 10 worth of mutual funds to people. Can you tell us about this big boom in financial services that is going to happen because of the model which we chose that is the government creates a public infrastructure on which the private sector guys run?
Nandan Nilekani: Fundamentally what digital does is that one, it makes things paperless and  you can do transactions online wherever you are. That was a huge benefit during the pandemic because people couldn’t go into a bank. So UPI makes things cashless. Aadhaar identity verification and video KYC makes it presenceless. So I can sit in my house on my phone and do an Aadhaar KYC or a video KYC and open a bank account or buy a mutual fund. So being able to buy financial products has dramatically reduced costs and improved efficiency. The second thing is that UPI has a feature called auto pay, in which you can set up business rules saying debit my account every time I take a Ola or every day put Rs 10 in my SIP. This can be set up as a programme and this is now getting rolled out. So once this rolls out you will find that subscription-based services will gain huge traction. You will see more SIPs happening and SIPs are a huge source of money for the mutual fund industry. Another great example of this innovation is ASBA and UPI.  ASBA was set up by the SEBI to block money in your account for an IPO and you only debit the account when you get the allocation. Now combined with UPI, so UPI can block the amount and the money gets debited when I get the allocation. Suddenly the combination of ASBA and UPI makes it very easy for me to apply for an IPO on my smartphone. So there are all essentially democratising access to financial services, and making it paperless, presence less and cashless. Reducing costs and suddenly millions of people can participate in a financial economy. It is a very important thing.

Sunil Jain: So the point you are making that you may not get technology to grow the way that Amazon does, but you can expect financial services to really boom?
Nandan Nilekani: The system we have built on regulated industries like financial services will boom. Look at UPI, today we would have maybe 100 million to 200 million people using UPI. There are millions of merchants and we have more merchants who are taking UPI payments than we had PoS machines for the last 60 years. So I think this massive scale up, of course subject to people’s financial purchasing power, is going to be huge. The fact that we have 700 million unique bank accounts linked to Aadhaar, that is a massive democratisation.

Sunil Jain: I believe you are working on an app called Beckn. Could you please tell us what that is supposed to do?
Nandan Nilekani: Beckn is an API being developed by a foundation set up by Dr Pramod Varma, me and Sujit Nair, who is actually the CEO. The idea is how do we unbundle these monolithic applications in the sense that if it is e-commerce you order the product on one site, it would be delivered by some other company and it may be paid by a third company. So if you can unbundle this people can build an ecosystem. For example, if you want to bring auto rickshaw drivers into the sharing economy, how can they participate in that? How you can combine mass transit with ride sharing. So I should be able to make a booking on my Ola or Uber and then I book the metro ticket and in one smooth thing I can make the whole end-to-end travel. It has a lot of use cases like that. Basically, it has the potential to unbundle e-commerce and mobility just like UPI unbundled payments. It is a long way from where we are.

Sunil Jain: Are we saying that, for example, I can book a cab on my Ola or Uber app, but somebody who is not on Ola or Uber will actually be able to service it because Ola and Uber will be plugged into the Beckn API?
Nandan Nilekani: Yes. Obviously they have to adopt the protocol. You are building and creating interoperability in many ways. I can also book on Ola and the metro. It is basically unbundling and rebuilding in a way that is more democratic and allows interoperability across systems. What happened in the West was that you had closed loop winners take all models, where a few companies became dramatically powerful. We saw that in every sector. The kind of work we do in India is to enable the open loop model so that they are not one or two winners take all like China has just two players in payments, and we have but a model where every bank can participate in payments and every front end distribution channel can participate. That creates for healthy competition and innovation. In some sense at a more conceptual level we are  trying to create a more competitive economy, by unbundling the ecosystems of digital commerce.

Sunil Jain: In this system the point is that when you look at Ola or Uber or Amazon, it is one company who makes a lot of profit who is driving it. So who pushes this in the case of a Beckn?
Nandan Nilekani: In the case of payments because it is regulated, the RBI had the foresight to do it so in general it is easier to pull off in regard to entities. But ultimately it is also about government policy and interoperability. For example, the two exchanges and the two depositories. By law, the two depositories have to be interoperable. So NSDL and CSDL have to be interoperable by law. Airline is a great example of interoperability. What happened in the big tech and hi-tech was things moved so fast that before the regulators could even design interoperability, people built these walled gardens.

Sunil Jain: So you are saying that if the government of India wants to come out with a rule that, let’s say an Ola or a Uber or a Make My Trip, all their systems have to be interoperable, we can completely change the game?
Nandan Nilekani: It’s not just that. You need many players and there is a whole market making an effort. But broadly yes, we should encourage interoperability like we have done in paints. That will create a more equitable system where there will be many players, many winners and not a situation where there is one winner takes all and everybody else is a loser.

Sunil Jain: Why don't you tell us something about Open Credit Enablement Network (OCEN)?
Nandan Nilekani: So the third big thing in India after Aadhaar identity and payments, and iSpirit has done a lot of work on this, is how do we leverage data in a way that people can use their own data and it is also linked with the winner takes all. So what happens is that all of us who have become digital natives, we are generating a lot of data in every transaction that we do and that data is being collected by a few companies and then they are monetising it through advertising or whatever. But that data is ours. Is there a way to re-architect this in a way so that I as an individual or I as a small business can use my own data and we call that idea data empowerment. That is empowering individuals and businesses with their own data and India is the only country in the world where there is a complete policy framework and a digital architecture for data empowerment.

The first implementation of that is in financial services, under the leadership of the RBI, but all the 4-5 regulators in the financial services are on-board and they have defined a concept called consent manager or account aggregators, who sit between data providers and data users. For example, suppose I am a small business and I want to get a loan. I go to my consent manager and say go and get my GST record from the GST system, get my bank statement from the bank, get my TDS return from the Income Tax system, bundle all this data in an encrypted way and give it to two or three lenders. The lenders can decrypt this data and use their own algorithms and say there is this guy’s tax payments and business volume record and he is a worthy guy to give money to and then I get a digital loan. So here the small business is using its own data to get a loan. Whereas when you look at what happened in China, all the data is there with the guy in between and he is then giving it to some bank and the bank is giving a loan. The bank is not seeing all the data and this guy cannot move to another place, whereas in the Indian model, I can move to any lender in the country. So we actually have a brand new model of credit, which I think will be one of the big things when the recovery starts, which is based on data, based on flow and it is more working capital/ cash flow oriented lending and not asset based lending which we have historically done.

OCEN is really the API. It takes this to the next level. OCEN is really the interface. This is like this, let’s say I am running an accounting software company. I have a lot of customers and those customers have data some of which is on my platform like invoices, balance sheets, etc. I can now OCEN to connect to five lenders so that the companies on my platform can go to those lenders using a simple API and get loans from them. It is all about reducing the transactional cost of making these systems work. It will take some time to put all these pieces in place, but I am confident that as we recover from the pandemic, and the fact that we have this seamless digital infrastructure to give credit at scale to millions of small businesses based on data, will have a big impact on the recovery.

I could be done by lenders, wealth management companies, insurance guys, personal finance companies, etc. This is where we have talked about how India has led. This is again to the credit entirely of the government because the government came up with the concept of account aggregators. Where we got involved is in making it a digital info of a thing. This is done at the level at the Financial Stability and Development Council (FSDC), which means all the financial regulators sit on that. So the account aggregator infrastructure in India is not only endorsed by the RBI, it is also endorsed by PFRDA, IRDA, SEBI, IBBI, etc.

So suddenly we have a national infrastructure for data empowerment. It is astonishing what has been done.

Sunil Jain: My question here is that if there are other people that are going to benefit from it, how is this person who is creating this software benefiting from it? For instance, why would somebody want to make a better tele-medicine app or portal when it is going to be say, a Dr Reddy or Apollo Hospitals which will get the money?
Nandan Nilekani: They will make money on the transactions. They have to go to the model, which is very high volume transactions where each transaction is a very low cost. Otherwise we cannot reach a billion people. Think of it like digital sashes.

Sunil Jain: But when you look at R&D per million, or when you look at the amount India spends on science & tech, or when you look at the number of engineers that India has, don’t we have a constraint out there?
Nandan Nilekani: We have a constraint, but I think investments will happen there. If you look at all the great companies of the world, like GE’s largest or second largest centre is in Bangalore. The Jack Welch R&D Centre and they do very sophisticated R&D there. So a lot of R&Ds happening in the multi-nationals is happening in the Indian companies. It may not be at the scale of a US or China, but it is happening. Lots of things are being developed. We are seeing lots of companies doing deep tech using AI. So it is quite an exciting time right now.

Sunil Jain: So don’t think we need to feel inferior about the fact that China is ahead of us or the stuff like that. We are developing at a reasonable pace you think?
Nandan Nilekani: China is much bigger than India in everyday life. But I think the way to think about this is that India is the only young country in an aging world. The only young country when China is going to rapidly age because of the one-child thing they did 40 years back and now they are facing the consequences. So when you have a young country in an aging world, the demographics are in your favour and you will definitely be able to get to 5-6% growth. And the rest of the world because of its demographics is growing at one or two percent and you are growing at 4% or 5% or 6% continuously over 20 years. Then you are actually going to do a significant catch up.

Sunil Jain: So essentially what we are saying is that we are now getting it right in the sense that we are creating public infrastructure with public money which is going to help a large number of companies. So that is how we are getting our formula right?
Nandan Nilekani: If you look in the startup space, a company like Paytm is a big user of UPI. It has a $17 billion valuation. PhonePe, which is now part of Walmart, is supposed to be worth a few billion dollars. There is a company called BharatPe, which just became a unicorn and which has done an amazing job of spreading QR codes to retailers. Zerodha, which has become the largest online stock exchange. It's done that because they have built a superb application, which allows people to open an account in a few seconds using Aadhaar. I am sure it is worth a lot of money. So you are seeing now that on the digital infrastructure, which the government has laid, innovation is happening, competition is happening and billions of dollars of value is being created. That is exactly the model of the West. The West invested public money on the internet, public money in GPS and that allowed the Ubers and Googles to succeed. So we are creating something similar here.

Anant Goenka: But what happens to the small guy? What happens to the sub-Rs 100 crore or sub-Rs 200 crore companies?
Nandan Nilekani: They will benefit. There are now 10 million or 11 million people on the GST platform now. They are filing their GST returns and they are filing their invoices with the GST model and the GST system is going to make that data available in a secure way back to these companies. So If I am a Rs 200 crore company that is filing GST, I can now request GST to give that data with the sign saying this is authentic data and then I can send it electronically to a bank and the bank can then give me a loan. Today banks find it extremely difficult to give loans to small companies because they can’t go and evaluate them. Now the evaluation is all digital and they can apply AI. So in fact all this stuff will make it easy for small businesses to get access to credit.

Similarly in e-commerce, small businesses will get access to markets. So like that if we can get more and more companies on this digital highway, they will actually see growth coming.

I give you another example of this. I went for my vaccination (Covid) last week and I got the vaccination done at Dr Devi Shetty’s hospital. Within five minutes of my vaccination, I got a digital certificate, a printed copy which is digitally signed, encrypted with a QR code that ensures there is no fraud. Sametime a few days back, my friend in Seattle, which is the capital of technology on the west coast of the US and has some of the biggest companies in the world. He got his vaccination and he just got a piece of handwritten paper. There is no comparison as the leapfrog in India is extraordinary.

Anant Goenka: What are your views on crypto currencies?
Nandan Nilekani: I am going to unpack this. First of all, I think everybody agrees that blockchain is a great technology and we can apply it for things like supply chain, cross border transactions. On crypto currencies, some people believe they could be banned, but my personal view is don’t think of crypto as a transactional currency because it will never be able to meet the transactional efficiency of UPI. UPI does 2.3 billion transactions a month and the architecture built by NPCI is for one billion transactions a day at almost zero cost. So bitcoin can never compete on transactional efficiency. Think of it as an asset class. As an asset class where just like I keep some money in gold or real estate, I can keep some money in bitcoin and you can put a set of rules around it. Remember in India in 1968, we had something called the Gold Control Order, passed by Morarji Desai, where everybody was criminalised for holding gold. And then as part of liberalisation in 1990 we said no its okay let people buy gold. So I think we should have a model of cryptos like Bitcoins or Ethereum, an asset class which I can hold and you have to declare it and pay taxes on it. All that is required.

Then there is the question of the digital rupee. I believe that yes, the RBI can definitely look at the digital rupee and it can use the distribution architecture of UPI to reach 200 million people, No other country can do this. The UPI architecture allows multiple stored value accounts. So on UPI I can have a bank account, a wallet, a bitcoin account, or a digital rupee. So I think depending on which aspect you are talking about, my view is digital rupee yes, bitcoin as an asset class, use blockchain for applications and I don’t think we need stable coins because the digital rupee is a government cleared stable coin.

Anant Goenka: The question is if you find that it is going to be inefficient to transact then investing in itself, you will see that at some point it plateaus (the value)? Globally, you think crypto currencies will be a transactional currency?
Nandan Nilekani: In India definitely I don’t think it will be transactional because we have a superior transaction system. Maybe possible in the West. But I have a feeling that will come from this so-called central bank digital currencies like the digital dollar, or the digital rupee, which will be zero transaction cost fiat currencies. That is the way the central bankers are thinking about. You need to have a set of rules. Just like the Liberalised Remittance Scheme (LRS), where we say everybody can transfer $250,000 a year abroad. So we have liberalised. It's the same for this.

Anant Goenka: Have you ever envisioned a situation where there is big client (institutional B2B) of Infosys, for instance in the US who says that they want to pay in bitcoin?
Nandan Nilekani: I mean I haven’t heard that yet, but it’s possible, but not yet.

Sunil Jain: What does the government need to do now? Does it need a task force, or another Nandan Nilekani to do a Aadhaar kind of thing?
Nandan Nilekani: I think now we are much more broadband in the system. We have a lot more officers in the government who are technology savvy. As you know in the late 1970s, the IAS was opened to engineering graduates so we have a lot of IITians and others at the highest levels of the government. They have got deep experience in building technology. Ajay Bhushan Pandey was working in UIDAI with me and then he became the revenue secretary and did amazing work on improving GST, applying AI. Ram Sewak Sharma is now leading the covid vaccine thing. I think the value of tech has been understood. When you can credit money into bank accounts of 150 million people in real time people will say wow there is something here.

I think today it is very broadband and the acceptance level is very high. You were talking about FASTag. It actually came out of a report that I did in 2010 at the request of the then road minister, Mr Kamal Nath and today, thanks to Mr Gadkari, FASTag is ubiquitous. It is raising Rs 100 crore a day. So it is incredible. So I go to Coonoor via Salem and it saves me 20-25 minutes becauseI am able to zip through the toll booths. So I think we are now finally seeing all this technology actually impacting the lives of the people. I came out after getting a haircut the other day and saw a coconut vendor with a card saying Google payments accepted here.

The stuff that is happening is a silent revolution and we don’t notice it because little bits are happening everyday. But if you take a decadal view, it is an extraordinary revolution.

To be fair to the government, whenever I have gone with a suggestion they have been very open and accepted it. So I had a great experience working in the government.

 

 

 

Last Updated ( Tuesday, 30 March 2021 23:23 )
 

You are here  : Home Miscellaneous “The West created monopolies, we democratized data”