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YogenderKumar
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While digital technology now touches most Indians, there is insufficient appreciation of how far India has come within a short period. Digital infrastructure has greatly reduced friction in transactions whether financial or otherwise. This infrastructure and what will be built on it in the near future promise significant productivity gains. The best-known components of India's digital infrastructure, of course, are what we now call the JAM trinity. It consists of the Jan Dhan bank accounts, Aadhaar biometric identity and mobile telephony. While these three components represent the front end, there is a lot more to our digital infrastructure.
Two additional important columns of this infrastructure are Public Finance Management System and Unified Payments Interface. PFMS is an end-to-end solution for processing, tracking, monitoring, accounting, reconciliation, and reporting of financial flows into and out of the central government. It constitutes a unified platform for tracking releases of financial flows and their utilisation down to the last mile. Through the banking system, it connects the central government financial flows digitally to state governments, businesses and even households.
The UPI is a platform that allows real-time transfer of funds between two bank accounts whether located in the same or two different banks. Created by the National Payments Corporation of India, it is an entity promoted by the Reserve Bank of India. As of February 2019, 134 banks subscribed to it. Therefore, it links nearly all bank accounts, whether held by the central and state governments, businesses or households. It has full interoperability among different user interfaces, meaning that the sender and recipient may have different apps on their mobiles and they may have accounts in different banks and yet they can transact directly with each other.
It was on the strength of this system that recently Prime Minister Narendra Modi could transfer Rs 2,000 each to bank accounts of 10 million farmers under PM-Kisan scheme with a few clicks of a mouse. Today, government transfers can be initiated from PFMS and can directly flow to bank accounts of state governments, vendors and individuals with no intervention whatsoever by banks.