India's digital revolution...

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India's digital map!

Venture-capital firms are funding hackathons to encourage software developers to come up with new ways to use the technology.

Verifying identity, and in turn reputation, is ever more important in business: consider star-rating systems devised by firms such as eBay, an auction giant, or Uber, a ride-hailing firm. Web users now often establish their identity using logins for Facebook, Google or WeChat to access third-party services such as newspaper websites. But none can claim to rest on a person’s real, verified legal identity in the way Aadhaar-accessed services can.

A potential borrower could allow a lender to have access to anything linked to his Aadhaar number: his bank statement, utility-bill payments, life-insurance policy, university diplomas and much else besides. “It increases trust,” says Mr Nilekani. “You can combine proven legal identity with lots of data. You become trustable.” Sean Blagsvedt, the founder of Babajob, compares India Stack to the advent of the social-security number system in America, which paved the way for credit bureaus, credit cards, mail-order services and, later on, e-commerce.

The economic consequences are sizeable. Instead of borrowing against assets, as is currently the norm in India, people could borrow against projected cashflows proven by past tax returns, for example. Better yet, “digitally driven” credit would shift people into the formal economy and away from the informal realm where nine in ten Indians currently work.

In theory it remains voluntary to enroll in Aadhaar. In practice it is compulsory, since it is becoming the only way to gain access to important social services. Wary of relying on a state-backed scheme, American tech giants have treated it cautiously. Google has expressed enthusiasm for its potential, but it and Apple have yet to agree to install Aadhaar-compatible scanners on their phones. (to read full content please subscribe to the Economist magazine in India, Pakistan and Afghanistan)

December 24, 2016

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