Aadhaar, which means foundation in Hindi, is the foundation of the India Stack and is an identity program for all residents of India. Despite its opt-in nature, about 1.12 billion have Aadhaar identity cards today.
The intent of the program, which was initiated in 2009, is to eliminate the inefficiencies in the public distribution system as well as to facilitate the disbursement of cash transfers directly from the government to the intended beneficiaries, cutting out middlemen.
The 12-digit card number is linked to an individual’s biometric and basic demographic data including a photograph, iris scans, fingerprints, name, address, date of birth and gender.
The Aadhaar database containing this information is the largest biometric database in the world and was built using internet-scale technology.
Aadhaar is purely an identification tool, so having an Aadhaar card affords no privileges to an individual; unlike a driver’s license for example,which allows one to drive.
The goal, therefore, is to build an identity platform and allow others to build an ecosystem around it, or link services to it – hence, the India Stack. The Aadhaar database can be queried (or pinged) by a bank to verify a person’s identity: Is this person who they say they are? the database returns a binary (yes/no) response to the query.
The other layers in the India Stack interact with the identity (Aadhaar) layer to facilitate digitisation.
Document or credential issuers can send digital documents such as birth certificates, degrees and diplomas, driver’s licenses and digital medical records to the digital locker which can then be used by an individual (using the consent layer) to share documents with those who may demand them such as health insurance providers.
This removes paper from the system as well as fraudulent documents.
The cashless layer facilitates mobile payments. The Immediate Payment System (IMPS) provides an immediate (and 24×7) interbank funds transfer service through mobile phones using a mobile money identifier linked to a bank account.
The Unified Payment Interface (UPI) is built on IMPS and is an open source platform which uses a single virtual identifier that may be linked to multiple bank accounts as well as mobile wallets.
The India Stack sets up most of the infrastructure required for India’s digital transformation. It provides secure identification to nearly all Indian residents hence eliminating a basic barrier to financial inclusion. It reduces transactions costs as well as fraud and paperwork. However, since it is a platform infrastructure, it’s up to the private sector and the central and state governments to use the open APIs (application programming interfaces) to find use cases and build applications which utilise the platform.
The India Stack is gathering pace – with Telcos and the financial sector leading the charge.