Aadhar, Part 2: India Stack


Ok, so Aadhar was now being deployed the way it was designed: for incentive driven usage.

The deployed Aadhar soon took shape into what is now called India Stack. India Stack has 5 elements, as the book, The Aadhar Effect, explains:
  • eKYC: an electronic KYC that would be acceptable proof of identity;
  • Aadhar Payment Bridge: Your Aadhar ID became your financial address. By definition, it would be unique for each person;
  • eSign: Digital signature that one could affix to documents;
  • UPI: Or Unified Payment Interface. “A platform on which payment apps can be built and money transferred”. Examples include the government’s BHIM app, PayTm, Google Pay and WhatsApp Pay;
  • Consent Layer: To share personal data with, say, a bank, university or employer for a limited period for a specific purpose.

Note that not all of these were visualized by Nilekani himself, but he had designed the system in a way that allowed for such innovations.

To see how all this adds value when put together, take this example from the book: authenticate yourself via Aadhar and OTP. Generate an eKYC and submit it the bank where you want to open an account. Apply for a loan and the banks asks for proof of income etc: provide that via the digital locker facility, DigiLocker. Once the loan is sanctioned, the money can be transferred immediately via UPI.

Other applications of Aadhar based systems are under way. Biometric authentication for all financial inclusion programs that involve tax payers’ money. An RBI announcement made eKYC legal for banks to accept, which in turn allowed more rural folks to access the banking system. It also reduced KYC associated costs for banks.

We can also see second, third and Nth order consequences of the India Stack. Just a couple of examples from the book:
  • Going cashless became easier, when money could be transferred so effortlessly via just a phone app. (And since not everyone’s phone has lots of memory, the government’s BHIM app was just 3 MB in size)
  • Vendors to companies get paid much after they deliver the goods: this creates cash flow problems for small vendors. But with DigiLocker records that were eSign’ed, one could go to a bank and show them as proof that money was due, and take a loan on that basis.
  • Farmers in drought hit Karnataka in 2017 got the relief money credited directly and instantly to their Aadhar seeded bank accounts.


The butterfly had flapped its wings, and the effects and possibilities were becoming clearer.

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