India's decade?

June 01, 2023

economics

I've been reading about India's demographic advantage for a while now. Like how the average age is 28 (compared to China's 39), and >40% of population is under 25. But this doesn't explain everything about India.

Recently, the Youtube algo suggested this video to me, which talks beyond the demographics.

Many of these things are common knowledge for people savvy enough, but I'll collect them here anyway (all sourced from the above video with my own notes):

  1. Poverty numbers

    • Between 2016-2022, number of people living in extreme poverty from 124 million to 15 million.

  2. Internet penetration

    • Went from 60 million (5%) in 2009 to 790 million (57%) in 2020. By 2030 it's expected to rise to 90% (that's 1.2bilion people). This means 300-500 million more Indian joining the Internet in the next 10 years.
    • While China also has a huge population with Internet access, the difference is the firewall and the use of English.
    • This is crucial because cheap Internet means access to more opportunities.

  3. Startups

    • Went from 452 startups in 2016 to 84,000 in 2022. That is just wild.
    • $64b invested in 2021 & 2022. More than the previous 8 years.

  4. IndiaStack

    • The possibly the biggest digital infra push in the world, with a potential to leapfrog across various technologies.
    • Aadhar (launched 2009), the biometric identity system, is a big part of this push.
    • e-KYC on Aadhar - allowed the cost of customer acquition for banks to come down to $0.15 from $23
    • UPI: there's been enough written about this, and the amount of change since 2016 is well accepted. 5th largest in the world based on volume.
    • It typically takes 46 years to bring 80% of the population in the financial system. In India this took 7 years. This is due to UPI, Aadhar & e-KYC.
    • An example - Jio acquired 100 million customer in first 170 days of launch (7 customers per second). Wouldn't be possible without e-KYC.

  5. DEPA & AA - Data Empowerment and Protection Architecture - for aggregating all this information.

    • Account Aggregators (AAs) are the base of this, which allow various fintech entites access to financial data about Indians (based on consent).

  6. OCEN - Open Credit Enablement Network

    • Aims to leverage AAs for lending

  7. UHI - United Health Interface

    • If you've been to one of the big hospitals, you probably already have a UHI ID, which allows aggregation of your health data.

Drawbacks

Of course, this all comes with a lot of potential issues, with the government adopting the idea of 'move fast break things'.

  • Aadhar privacy concerns - numerous data leaks and very confusing stance on sharing Aadhar number.
  • UPI scalability - as it's a 0 MDR product, which means banks currently bear the cost.

Other systems are too early, but they will not be perfect. But with the scale of India, moving fast matters more than perfection. These are early days, and there is a lot to be done.

PS: This note will probably be updated in the future, as I keep reading more about the 'India story'.

Most of the video above was sourced from this article, which has more drawbacks and details, totally recommend reading this: https://tigerfeathers.substack.com/p/the-internet-country