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Last week on our “Behind the Markets” podcast, Jeremy Schwartz and I spoke with Arvind Gupta, who heads the Digital India Foundation and is the head of information technology for India’s ruling political party, the Bharatiya Janata Party (BJP). Mr. Gupta is the architect of India’s various digitization efforts.

With initiatives ranging from retina scans that provide unique identification for 1.2 billion people to opening a bank account at the swipe of your thumb, India’s attempts to digitize its economy are straight from the 22nd century!

Mr. Gupta has a humble beginning; he received his undergrad degree from one of India’s oldest and most reputed engineering schools, IIT (BHU), Varanasi. He completed his master’s in computer science and received an MBA degree from the University of Illinois at Urbana-Champaign before becoming the architect of digital India.

What Is India’s Identification System & How Is It Different?

Mr. Gupta noted that India started its Unique Identification (UID) project in 2010 with an aim to provide a unique identifier called Aadhaar to its 1.2 billion people. In 2017, roughly 1.18 billion people have been linked with a UID. What sets India’s UID apart is the fact that it’s completely biometric (i.e., fingerprint and retina scan) based.

Mr. Gupta explained that any sort of identification is based on three levels:

India’s UID is based on level 3, making it not only extremely sophisticated but also most robust!

A Truly Unified Identification Network

In 2010, nearly 400 million people had no identity information in India, while 800 million people had multiple identities due to noncentralized state systems. This made the economy inefficient; Mr. Gupta said that in 2010, when $100 left government coffers as a state benefit, only $15 reached the end person. With UID in place, all those leakages and fake/duplicate claims have been eliminated, making the Indian economic engine more efficient. One dramatic signal of the returns to this digitization effort: The whole digitization project cost India around $2 billion; however, government estimates show savings north of $9 billion by eliminating these leakages alone.