There is a simple explanation for the Japanese government’s failure to make multiple visits to 111-year-old Sogen Kato’s home to pay his respects (he was never home). While his family was collecting his pension, he had been dead for 30 years. This sparked a nationwide investigation that identified 300,000 people who were thought to be alive but had died. India’s Aadhaar program has reduced these pension scandals, improved the efficiency of government spending (117 times since 1991) and facilitated digital payments (42% of global transactions). The next trajectory for digital public infrastructure (DPI) lies in the integration of AI. This will improve the nation’s capacity and reinforce the new tone from the top of Jan Vishwas.
The past few years have been tough for the Indian technology industry. There is no reliable horse in the AI generation race, DeepSeek is coming out of China, and the automation of code generation is dampening the job outlook for software services. However, a recent meeting of the National Council for Applied Economic Research (NCAER) suggested three reasons for optimism about this digital revolution in AI. India is the world’s largest natural data institute. The integration of DPI and AI could be the biggest rethinking of the Indian state since 1947. Also, the adoption of AI may create more jobs than the generation of AI. Let’s take a closer look at all three.
First, India went from a data-poor country to a data-rich country in just a decade, thanks to three bold entrepreneurial moves in 2016: Jio, UPI, and GST. For decades, India’s economic policy relied on regular surveys and delays, as well as uneven and incomplete administrative data. But now, with DPI’s digital leverage, we are the world’s largest natural data lab for financial inclusion, benefits targeting, enterprise structuring, platform economics, and digital governance. UPI’s 23 billion monthly transactions create one of the largest behavioral datasets in the world. 200 Crore GST payments will create real-time visibility into supply chain, invoicing, production and consumption. FASTag’s 4.5 billion payment transactions create a large-scale mobility and logistics dataset. Additionally, with more than 27 billion Aadhaar certifications per year, the number of direct benefit transfer beneficiaries has increased by 16 times. For the first time, developing countries are using population-scale digital data to accelerate development, rather than waiting for traditional statistical systems to catch up. The work is hardly done – rigorous academic research, well-funded think tanks to bridge theory and practice, and open public data commons are just emerging – but the future looks very different from the past.
Second, India’s political rethink since 1947 has created the world’s largest democracy in the world’s most hierarchically barren soil. But why haven’t we created the world’s largest economy?Besides the delusional 1956 Second Five Year Plan, another charge for the failure of the agricultural to non-agricultural transition is weak state capacity. Historically, the government has increased state capacity through increases in administrative machinery and personnel (government spending has increased 53,000 times since the 1947 budget of 198 million rupees). DPI enables better resource allocation, improved service delivery, early fraud detection, and faster response. But the reimagined citizen interface is being blunted by a lack of interoperability (digital silos are more powerful than physical silos), governments’ internal technology capabilities, and a mindset that seems content with PDFs when they should be aiming for APIs. AI’s ability to use unstructured data will help overcome data integration and interoperability challenges within strong consent architectures and the recently articulated principles of Jan Vishwas Siddhant. Multilingual interfaces will open up labor and education markets, and AI will improve public health spending. India will be the first major country to integrate AI into population-scale DPI. The US built AI on a private sector data ecosystem, and China built AI on a platform-centric digital ecosystem. DPI without AI is infrastructure, and AI without DPI is intelligence. AI and DPI are enhanced state capacities.
Finally, India’s anxiety about the impact of AI on jobs is understandable if it boils down to the winner-take-all nature of search and the intense nationalism that prevents access to frontier models, such as the recently rescinded restrictions on frontier AI models such as Claude 5. But bringing AI into the daily lives of citizens and businesses requires more ingenuity, organizational acumen, and human capital than the generation of AI itself. You don’t have to build a car to drive. Build roads (AI applications) that help people unlock economic and social value. Introducing AI into DPI could make India the use case capital of the world, similar to the American nation, which used its defense budget to promote Silicon Valley during the Cold War. India’s Corporate DPI (Universal Corporate Number, Entity Digilocker, API Setu, Single Source of Truth for Regulation) currently being introduced, combined with a Universal Lifetime Social Security Account (Aadhaar punji) for all citizens, could spark a formalization revolution similar to what NPCI did in payments (private innovation at the non-profit layer). This would reduce information asymmetries, lower transaction costs, improve credit allocation and worker-employment matching, improve supply chain and logistics efficiency, and accelerate the creation of high-wage non-farm private sector jobs.
The Arthashastra suggests that strategy is most powerful when strength, timing, and choice of location are mutually reinforcing. Our strength in DPI, combined with a new tone from the top on Jan Vishwas (an NCAER study suggests that 66 percent of connected Indians use the Internet for entertainment, but only 11 percent for online government services), could enable new endeavors with a destiny of greater national capacity, citizen satisfaction, and mass prosperity. And this is a promise we keep.
Sabharwal is the co-founder of Teamlease Services and co-author of Made in India. Mr. Bapna is Curtis L. Carlson, Professor of Business Analytics and Information Systems at the University of Minnesota.
