The India Stack describes a collection of government-backed APIs upon which third parties can build software with access to government IDs, payment networks, and data. The digital infrastructure is interoperable – or “stacked”  – meaning that private companies can build apps integrated with state services. This public-private partnership approach provides consumers with seamless access to services incorporating welfare payments to loan applications.

Part of the India Stack involves an innovative, consent-based solution called the Account Aggregator (AA). This enables electronic sharing of data between participants, such as investments and bank accounts, as well as providing further automation to fintech ecosystems. Lending is expected to be the biggest application of the AA, which will extend the India Stack from payments into credit, personal finance, wealth management, and insurance. Further, India has aggregated all financial regulatory powers into a single agency called the International Financial Services Centres Authority (IFSCA) to enable regulatory innovation and deeper integration of Indian financial services into the global ecosystem.

Proponents of India’s DPI model cite the usual perks of digitalization, including operational efficiencies and reduced costs. Enabling financial inclusion, in terms of adding growth across developing countries, is by far the most compelling argument for the system. Open APIs and easy integration into payments and other capital markets infrastructures (such as ID verification) will provide safe and easier access for everyone to credit, savings, and investments.

Detractors, on the other hand, have strong concerns about breaches involving digital privacy, especially in those countries which lack strong data protection regulation as afforded by citizens of the EU. Cybersecurity and data breaches also cause concern. There are additional worries about equal access to the system since not everybody has internet access, the same degree of digital literacy, or, indeed, literacy in general. Luis Breuer, the IMF’s senior resident representative to India told the FT: “The big challenge here is dissemination of technology and to what extent will it reach the bottom half of the pyramid. To the extent that [digital public infrastructure] leads to productivity gains, you might have some inequality issues become even more exacerbated.”