Indonesia wants to share lessons on digital public infrastructure as India faces criticism

Digital public infrastructure (DPI) has been hailed as a way for governments to meet their development goals, catalyze innovation and unlock market bottlenecks. But as countries such as Indonesia and India promote their DPI stacks, some observers are starting to criticize these projects as government interventions into digital markets.

Indonesia pitches its digital public infrastructure project

Indonesia is arguing that its digital public infrastructure (DPI) project holds lessons for the world thanks to its ability to deliver cash transfers fast by relying on applications such as verification with biometrics, Know Your Customer (KYC) processes and data exchanges. Indonesia launched its Kartu Prakerja as an upskilling program in April 2020 to boost workforce competitiveness by handing out training vouchers. During the COVID-19 pandemic, Kartu Prakerja adopted a second mission of delivering government cash handouts. In a new policy brief published by the Delhi-based think tank Observer Research Foundation (ORF), a group of researchers from the Kartu Prakerja project and Indonesian government agencies, lays out how Kartu Prakeja works. Prakerja Application Programming Interface (API) is based on RESTful Web Services and acts as a communication bridge between partners, such as digital platforms, training providers and payment companies. The program uses APIs for user registration, selection of beneficiaries, and cash disbursement. Beneficiaries are verified through the Population and Civil Registration Agency with the verification process relying on face biometrics and liveness-checking technology. The system then cross-checks the beneficiaries’ data with other government agencies to ensure they are eligible and checks whether they are already receiving assistance from other social protection programs. “Digital public infrastructure] can ensure [conditional cash transfers] are delivered fast, on a large scale, and to the right people, in an inclusive and secure manner,” the ORF report notes. This month, ORF also released a policy brief on the interoperability of digital public infrastructure systems.

Digital public infrastructure projects face criticism in India

India has established itself as a leader in digital infrastructure projects (DPI) and has long been promoting its “India stack” to other countries. But some experts are arguing that too much government input into the digital economy does not benefit the market. Anupam Manur, professor of economics at the public policy think tank Takshashila Institution, argues that government intervention in the digital markets has costs and can create deep distortions. “The government’s intervention into payment via the Unified Payments Interface (or UPI) was justified on the grounds that it is a public good (it isn’t) and that lowering transaction costs can benefit everybody (it can),” writes Manur in an opinion piece in Money Control. But “justifications grow thinner” when considering government-run or backed enterprises such as the Unified Payments Interface (UPI), Open Network for Digital Commerce (ONDC), government procurement platform Government e-Marketplace (GeM) indigenous mobile app store mSeva and the Open Network for Digital Commerce (ONDC). Some of these projects, including mSeva and the GeM, have been inefficient, he adds. India’s DPI initiative is a collection of digital platforms designed to provide Indian citizens with access to government services, including the country’s digital identification system Aadhaar. The nation has been promoting its blueprint for digital public infrastructure to countries across the world as part of its G20 Presidency. Although most developed states have been less than enthusiastic about India’s pitch, seven countries have agreed on adopting India’s model of building and deploying digital projects