Next digital leap: DPI 2.0 can drive innovation and economic growth

The first phase of strengthening digital public infrastructure (DPI) in India has solved a foundational problem: Digital identity, financial inclusion, and developing basic state capacity for public service delivery. In this regard, the NITI Aayog’s latest road map on DPI marks a shift in India’s digital strategy, from building access to engineering economic outcomes. Recognising that India’s growth constraints are structural  — including fragmented demand, high transaction costs, thin credit markets, and persistent informality — the proposed DPI framework aims to embed digital infrastructure directly into economic sectors. DPI 2.0 envisions a set of eight targeted sectoral transformations. For micro, small, and medium enterprises, this means enabling enterprises to move from local, informal operations to networked, formal market participation. In agriculture, it means improving price discovery and value realisation through data-driven systems. In credit, it involves turning data on invoices, transactions, and land into collateral substitutes, potentially expanding formal finance to millions currently excluded. Thus, across sectors, DPI can reduce friction, make information verifiable, and expand market access.

 

Further, instead of relying only on centralised platforms such as Aadhaar and Unified Payments Interface, it emphasises open and interoperable networks. Thus, the state’s role shifts from being a provider to a market enabler, creating shared infrastructure, while leaving innovation to entrepreneurs. The emphasis on district-level execution is equally significant. It recognises that scaling up DPI 2.0 will require a significant expansion of the entrepreneurial base, potentially up to a million startups by the next decade. Thus, artificial intelligence (AI) should not be leveraged as a job-displacing force but as a capability multiplier. According to a Nasscom report referenced by NITI, DPI initiatives already contribute about 1 per cent to GDP, and this could reach 4 per cent by 2030.  More importantly, it is expected to drive total factor productivity, enabling economic growth as network effects deepen. There is also a strategic dimension. By lowering transaction costs and improving domestic efficiency, DPI could act as a buffer against external shocks, from volatility in energy prices to geopolitical disruption.

 

Yet constraints remain. India’s local innovation capacity remains uneven, particularly outside major urban centres. Data systems are fragmented, raising challenges for interoperability and trust. AI readiness is limited, with a gap between pilots and real-world deployment. Institutional capacity, especially at state and district levels, may prove the biggest bottleneck in translating design into outcomes. Without addressing these, the risk is that DPI will remain an impressive architecture with uneven real-economy impact. There is also a deeper tension. The push towards productivity and market efficiency must not overshadow the social foundations of development. Digital systems can enable access, but they cannot be a substitute for investment in health, education and  building human capability. Addressing these gaps, while safeguarding trust, competition, and openness, will remain crucial. The success of DPI 2.0 will, therefore, depend not only on how well it builds markets but on whether it ensures that more citizens are able to participate meaningfully in them.