Cloud, Aadhaar, Mobile (CAM)

Sameer Kochhar

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In 1985, perhaps the best year in his term, Prime Minister Rajiv Gandhi made a startling statement. Addressing young bureaucrats, he said only about 15 per cent of every rupee, that is 15 paise of every single rupee, spent for the poor actually reached the poor and the rest disappeared in a mysterious swamp somewhere in-between. He said, he reached this conclusion based on historical and existing evaluations and estimates given to him by officials in the field. His assertion became one of the oft-quoted postulations in India’s governance debate ever since. 

Three decades later, technology had travelled many light-years. There would be hardly any worthwhile comparison between the technologies of now and then. Today, they can conjure up answers to most of mankind’s important problems, including bridging the wide chasm between one rupee and 15 paise.

Yet, things have improved only marginally in India, even though there is no credible ballpark figure to reason what percentage of money spent on the poor travelled the full distance, having negotiated the swamps. 

Well, of course, India has made a dent on its poverty level. But the grim reality is that the gains made thus far are outweighed by losses suffered through delivery slippages, manifest in different ways. In other words, outcomes are measly, even as the money spent in the name of social welfare programmes spiralled, blowing a hole in prudent fiscal management. The reason behind the sorry state is not far to seek: it’s not a failure of economics; it’s a failure of governance. More than that, it’s the lack of political will to put technology to use to improve governance.

I remember having organised a National Consultation in March 2015,1 in which one of the country’s foremost technology stalwarts remarked that in India, technology made giant strides only when there was little or no regulation. He cited the phenomenal boom in e-Commerce experienced in the 2010s as a classic example, with his tone turning acerbic when he remarked something to the effect that in India, rigid, compartmentalised environment in which much of our government operates stifles innovation.

In India, the debate has always been about regulation, or the lack of it. Regulation in India is often synonymous with over-regulation and the lack of regulation has sometimes spawned the next big idea. The telecom boom in the 2000s is another example I can cite: telecom regulation stymied landline’s progress well into the 21st century, but a diminished space for mobile telephony regulation definitely changed the way we go about our daily lives now, for the better, of course.

But I would venture to add that wherever regulation has not impeded innovation, lack of official imagination kicked in to stall diffusion of technology, be it stealing a march over others in biometric technology to establish unique identification, as in many emerging nations like Brazil2 or early tapping the power of the ubiquitous mobile devices, as Kenya has done with M-PESA3.

India had finally woken up to the promise of technology in bridging the yawing gap when it invoked biometric technologies in 2009 to create an unique identification (UID) number for every citizen in the form of the Aadhaar card. It coincided with the surge in smartphone penetration and strides made in cloud computing. The summoning of the political will in recent years to leverage all of them—and having made the Direct Benefit Transfer (DBT) programme and the Jan Dhan financial inclusion drive close at hand in the scheme of things—have created unprecedented hope that India is on the verge of overhauling its public and private services delivery modules and moving towards electronic cash. 

The Narendra Modi government, which breathed life into India’s drifting financial inclusion efforts by rolling out Pradhan Mantri Jan Dhan Yojana (PMJDY) in 2014, has coined a term to denote the ecosystem: JAM (Jan Dhan, Aadhaar, Mobiles).4 “If the JAM Number Trinity can be seamlessly linked and all subsidies rolled into one or a few monthly transfers, real progress in terms of direct income support to the poor may finally be possible. The heady prospect for the Indian economy is that, with strong investments in state capacity, that Nirvana today seems within reach. It will be a Nirvana for two reasons: the poor will be protected and provided for; and many prices in India will be liberated to perform their role of efficiently allocating resources in the economy and boosting long-term growth. Even as it focuses on second generation and third generation reforms in factor markets, India will then be able to complete the basic first generation of economic reforms,” the document explains in language laced with spiritual undertones.

We have reasons for optimism. All the three elements have been a resounding success: the Jan Dhan Yojana charted the world’s blockbuster financial inclusion effort, Aadhaar enrolments are on track to encompass the world’s second most populous nation and India is projected to become the world’s second largest smartphone market by 2017, as estimates by the international research firm Strategy Analytics show.5

JAM is bound to be the backbone of efforts to transfer subsidies and benefits of other social welfare schemes, with the goal of plugging leakages and ensuring that full benefits reach the targeted population.

Finance Minister Arun Jaitley, in his Budget speech in February 2015, talked about the idea of making India a cashless society, in order to circumscribe the flow of black money. Can JAM do it?

As discomfiting as the problem of massive fiddling in India’s social welfare programmes JAM is taking aim at, the trinity could offer only limited solutions to the much bigger prize of electronic cash and bringing about the velocity of money: the productive use of the black and idle money in circulation. It is now understood that the velocity of money changes over time and is influenced by a variety of factors.6

Even in weeding out corruption, bribery, duplication and deceit in the social security programmes, the results might fall short. JAM without efficient use of cloud computing can create neither effective service delivery modules nor an electronic cash society. Besides ensuring a perfect or near-perfect social security welfare delivery, India has to take on bigger challenges of curbing tax evasion, black money, money laundering and the endemic fakery of government-issued documents. 

For instance, the income tax department has been wrestling with the problem of multiple PAN cards. Lately, it has started seeding PAN with Aadhaar numbers to eliminate duplicate PAN holders. To this effect, it is seeking Aadhaar numbers in the Income Tax Returns from all taxpayers who have a UID. Once completed, it is expected to eliminate the use of multiple PANs by the same person.

All the more reason why we must pioneer another model: Cloud, Aadhaar and Mobile (CAM). This allows the country to shorten the chain of linkages and try new business models for delivering government and other services like banking transactions. The lowest transaction cost for low-value, high-volume ought to be CAM, rather than JAM.
The rapid development of technologies including smartphones, cloud-based solutions and real-time payments were not anticipated until recently. Their impact on payments continues to be felt and will shape the industry for the foreseeable future. CAM removes ‘smart’ or ‘dumb’ cards from the picture. It would let telecom and payment service providers handle e-payments, DBT as well as cash-out. All currency movement can be converted into e-cash and all government services can be available as self-service on mobiles. No leakages, no middlemen. A unique Indian model.

In economic terms, the “velocity of money” increases. A Moody’s report7 evaluated the impact of electronic transactions to 0.8 per cent increase in GDP for emerging markets and 0.3 per cent increase for developed markets. Moody’s Analytics studied 56 countries that make up 93 per cent of the world’s Gross Domestic Product over a five-year span – 2008 to 2012.

For India, the savings to the national exchequer goes up with every passing year. An analysis by consulting firm McKinsey & Company in 2010 revealed that an electronic platform for government payments to individual households could save an estimated Rs. 1,000 billion a year to the national exchequer—with a large portion of that amount coming from savings, thanks to e-payment flows between the government and households in welfare programmes.8 It noted that the one-time cost of setting up a national e-payment infrastructure is Rs. 600-700 billion, which means the direct financial returns from e-payments will cover the cost of building the infrastructure within a year.

“Advances in technology and new business models have provided them with a powerful tool—an electronic payment or “e-Payment” system. There is a compelling case to be made for automating government payments, which includes efficient and reliable financial interactions with poor households in the informal economy as well as full financial inclusion of India’s poor,” the report said.

The term ‘unique India model’ I mentioned above was drawn in a positive sense—a unique model gives very little scope for steamroller regulation to undercut the promises of cloud services: Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS) and Infrastructure-as-a-Service (IaaS). In other words, a unique model, where all possibilities and opportunities that cloud computing manifestly demonstrate are leveraged, utilised and fully adopted to orchestrate maximum gains to India’s economic growth and socioeconomic development.

For starters, cloud computing, often simply “the cloud,” is the delivery of on-demand computing resources—everything from applications to data centres—over the Internet on a pay-for-use basis. Though cloud computing has changed with time, it’s division into three broad service categories remained the same: SaaS, PaaS and IaaS.

Cloud-based applications—SaaS—run on remote computers, or “in the cloud”, owned and operated by others. The cloud connects to users’ computers via the Internet, usually, a web browser. There is no software purchase for installation, update or maintenance. A user can sign up and start using it, where apps and data are accessible from any connected computer or smartphone. The data in the cloud remains safe from the user’s computer glitches. The service can scale to the usage needs. SaaS is a distribution model that delivers software applications over the Internet; these are often called Web services. Microsoft Office 365 is a SaaS offering for productivity software and email services.

PaaS creates a cloud-based environment with everything required to support the complete lifecycle of building and delivering web-based (cloud) applications—sans the cost and complexity of buying and managing the hardware, software, provisioning and hosting. With PaaS, a user can develop applications and get to market faster. The user can deploy new web applications to the cloud in minutes and reduce complexity with middleware as a service. Google App Engine is an example of PaaS.

IaaS provides users with resources including servers, networking, storage and data centre space, on a pay-per-use basis. You can rent cloud infrastructure—servers, storage and networking—on demand, in a pay-as-you-go model. Since a user doesn’t have to invest in owning hardware, IaaS is best suited for start-ups or businesses testing out to a new area. As the infrastructure scales on demand, it’s great for workloads that fluctuate rapidly.9 IaaS providers such as Amazon Web Services (AWS) supply a virtual server instance and storage, as well as application programme interfaces (APIs) that let users migrate workloads to a virtual machine (VM).

Public clouds are owned and operated by companies that use them to offer rapid access to affordable computing resources to other organisations or individuals. With public cloud services, users don’t need to purchase hardware, software or supporting infrastructure, which is owned and managed by providers. Leading public cloud providers include AWS, Microsoft Azure, IBM/Soft Layer and Google Compute Engine.

A private cloud is owned and operated by a single company that controls the way virtualised resources and automated services are customised and used by various lines of business and constituent groups. Private clouds exist to take advantage of many of cloud’s efficiencies, while providing more control of resources and steering clear of multi-tenancy. And a hybrid cloud uses a private cloud foundation combined with the strategic use of public cloud services. 

The goal of hybrid cloud is to create a unified, automated, scalable environment that takes advantage of all that a public cloud infrastructure can provide, while still maintaining control over mission-critical data. The reality is: a private cloud can’t exist in isolation from the rest of a company’s IT resources and the public cloud. Most companies with private clouds will evolve to manage workloads across data centres, private clouds and public clouds—thereby creating hybrid clouds.

Cloud offers several attractive benefits—and remedies to many of the problems—for businesses and end-users. It provides self-service provisioning where end-users can utilise computing resources for any type of workload on-demand. Its elasticity allows users to scale up as computing needs increase and then scale down again as demands decrease. The pay-per-use feature measures computing resources at a granular level, giving freedom to users to pay only for the resources and workloads in use.

All in all, cloud offers immense possibilities and opportunities for making cash payments electronic, removing ‘smart’ or ‘dumb’ cards from the chain and in increasing the velocity of money. 

Cloud-based offerings have lowered investment and operational costs. According to the authoritative World Payments Report, 2014, “in the near future…, sourcing partnerships will help PSPs [payment services providers] to address their growth and operational strategies and to re-evaluate their core capabilities.”10

It goes on to mention the knock-on benefits a digital payment system would have on cross-border transactions, such as “payments occur in the corporate sector, where payments are made for the global trade of goods and services and in capital markets transactions and the retail sector, which encompasses remittances (made by expatriates) and business-to-consumer (B2C) transactions.”

A World Bank-commissioned study in 2014 echoed this sentiment.11 It lists the enormous advantages of the widespread adoption of digital payments in all their forms, including international and domestic remittances. “Digitising has the potential to dramatically reduce costs, increase efficiency and transparency, help build the infrastructure and broaden familiarity with digital payments. When governments shift their social, salary and procurement payments, taxation and licensing receipts to electronic form, it creates a foundation upon which the private sector and person-to-person payments, such as international and domestic remittances, can build,” the study says.

“Public and private sectors can converge around a payments platform and enable innovation and competition in additional financial services. A safe, reliable, secure and affordable platform, open and shared among market participants, will act as the catalyst of financial inclusion and will foster adoption of basic financial services at a large scale.

“The private sector is a critical partner in this endeavour and there is a real opportunity to catalyse private-sector growth. Yet governments need to offer a clear vision and tangible incentives in order to ensure that the private sector is an effective, competitive, transparent and efficient partner. Part of this requires that a level playing field be set up, whereby governments do not create disproportionate hurdles for a broad and growing range of providers to participate in the global financial system. Limiting innovation and competition will ultimately lead to non-competitive solutions in the market and reduce the availability of reliable, safe and secure financial systems. Empowering a diverse range of private-sector providers will increase competition, reduce costs, empower consumers, increase the scale needed for sustainability and drive financial inclusion,” the study argues.

In India, an unbelievable 95 per cent of the economy is cash-based. The annual report of the Reserve Bank of India for 2013-14 estimated that the amount of currency in circulation stood at Rs. 12.83 trillion with a compounded annual growth rate of 10 per cent over the past two years. About 5 per cent of the amount is with banks. This implies that almost the entire amount is in daily circulation, which is reflected in the Rs. 32.1 billion cost of just printing the notes. Adding and running ATMs costs banks Rs. 1,520 crore a year. RBI Governor Raghuram Rajan had commented in September 2014 that it costs banks about Rs. 75 per transaction when a customer uses an other-bank ATM and that customers transacting less subsidise the frequent transactors.12 Even by liberal estimates, the direct cost of running a cash-based economy is close to 0.25 per cent of India’s GDP.13

Payment, safety and security are the key challenges in building a cashless society. But innovation that thrives in an open environment and lowering of barriers in the participation of the economy could foster competitiveness and fairplay. So, how can we bring more and more services to the market? How will India construct a “safe, reliable, secure and affordable platform, open and shared among market participants, will act as the catalyst of financial inclusion and will foster adoption of basic financial services at a large scale”?

How can India “increase competition, reduce costs, empower consumers, increase the scale needed for sustainability and drive financial inclusion”?
Cloud is certainly a win-win proposition here.

Aadhaar might be the best anti-status quo device ever conceived in India. Its implementation would mean that the beneficiaries of the government-run social welfare programmes would not be sitting ducks.

The rent-seekers would be out of the way and the system steers clear of innumerable slippages and leakages that plague the system. With Aadhaar being used extensively in India, the poor are the biggest winners. Ram Sewak Sharma, the then Secretary, Department of Electronics & Information Technology (DeitY), in a chapter in this book has already dealt with the topic succinctly, including some social concerns surrounding Aadhaar and therefore, I would limit my words on the topic.

The bane of most social services is that even the best-designed schemes falter at the implementation stage: the hurdle is too high for any government to do full justice to the targeted beneficiary. Some schemes have come to grief completely due to a combination of political expediency and patronage system it promotes. However, under the DBT Scheme, with the use of the Aadhaar card, it is expected that the benefits would directly reach the bank account of the intended beneficiary. 

The 11-digit Aadhaar number provides the accurate method to home in on financial inclusion and leak-proof delivery of welfare schemes devised by the government. It basically provides the biometric identification platform to verify and authenticate an individual who is benefiting from them. The Aadhaar-based financial inclusion provides the ability to link a bank account to an Aadhaar number and using the whole micro-ATM infrastructure makes payments of money to people foolproof and transparent. Wherever social welfare programmes involve cash transfers; pensions or scholarships, Aadhaar numbers can come in handy to route the money to the Aadhaar-linked bank accounts of right beneficiaries. 

Biometric technologies offer the cutting-edge method to thwart multiple enrolments by the same individual, a problem that has made social welfare programmes woefully leaky and pilferage-prone in India. The Aadhaar-based biometric authentication can be verified and authenticated in an online, cost-effective manner, which is sinewed to eliminate duplicate and fake identities at the point of delivery. Unique identity authentication makes sure that people get what they are entitled to and they can confirm the transaction, weeding out invalid or downright bogus beneficiaries and chances of diversion, pilferage or leaks. This increases accountability and transparency in the system of delivery of benefits, as the authentication is verifiable all down the line. Precise targeting of beneficiaries is the only way available to the government to slash its subsidy bill, which gets all the more unwieldier with each passing year.

Further, the DigiLocker is designed to decrease the use of physical documents and to provide authenticity of the e-documents.

The Aadhaar-enabled payment system (AEPS) managed by the National Payments Corporation of India (NPCI) guarantees simultaneous online authentication of a transaction, user, device and operator, that takes place in real-time. It’s hard to escape the electronic audit trail and end-to-end visibility. Unique authentication reduces operational risks. AEPS is location agnostic and geared to address low-value micropayments in remote locations. It secures interoperability at the retail device level, without mandating banks’ interoperability, while giving greater service provider choices to the customer. Above all, AEPS is cost-effective, compared to other cash-out modes like money order and mobile wallets.

As the RBI’s Payment Systems in India: Vision 2012-15 noted: “UIDAI is providing Aadhaar numbers to all residents of India. The overlay of Aadhaar technology on top of the existing payment system infrastructure is one of the ways to address identity and address proof requirements. Similarly, the Aadhaar authentication (finger print, iris) services could enhance the security for payment transactions.”14

While the electronic platform is making payments more reliable, service providers and facilitators are investing in the right technology to become even more effective. The RBI’s vision document says: “To accomplish the vision of a less-cash society, if not cashless society, the key elements which would impact all our efforts towards creation of a modern and widespread payment system are: Accessibility, Availability, Awareness, Acceptability, Affordability, Assurance and Appropriateness (7 As).”

The DBT infrastructure and processes underpin a transition from paper-based to an electronic mode to mitigate systemic risks. To promote e-Payments, the RBI has brought together relevant stakeholders so that they can address the barriers in the way. Through various notifications, it has modified policies that control the National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) payment systems and cheque collections. NEFT and RTGS are inter-bank electronic funds transfer systems—they allow an account holder to send funds from his account in one bank to another account in either the same bank or in another bank, all through the Internet. Unlike cheques, these e-payments are quicker, less cumbersome, transparent, cheaper and more efficient, for both banks and account holders. Once laid down with clarity, the basic infrastructure and connectivity will attract private businesses with more services for the poor.

For the outsized role cash plays in India’s economy to diminish, protocols that talk to one another seamlessly across multiple platforms have to be in place. The Aadhaar authentication platform is designed to midwife the seamless economic progression. 

The telecom industry is already accelerating the digital shift. India’s smartphone market is one of the most thriving in the world and as mentioned earlier, all set to become the world’s second largest by 2017. In future, telecom industry obviously won’t face much obstacles to winkle a vibrant market out of this, given the government helps it with an enabling regulatory mechanism.

It must, if it believes its own words. In the ‘Wiping every tear from every eye’: the JAM Number Trinity Solution policy document the Government says: “With over 900 million cell phone users and close to 600 million unique users, mobile money offers a complementary mechanism of delivering direct benefits to a large proportion of the population. Moreover, 370 million of these cell phone users are based in rural areas and this number is increasing at a rate of 2.82 million every month. Mobile money therefore offers a very viable alternative to meet the challenge of last mile connectivity. Given that Aadhaar registrations include the mobile number of a customer, the operational bottlenecks required to connect mobile numbers with unique identification codes is also small.

The central bank is also bullish on mobile banking, which it enthusiastically describes as having a potential of “epic proportions”. 

“There is no gain-saying the fact that mobile banking is an ideal solution to accelerate financial inclusion in terms of Availability, Accessibility and Affordability and as such it needs to be integrated to the banks’ business and operating models. Increasing the adoption of mobile banking would help the objective of less cash society with huge benefits to all stakeholders. Hence, banks ought to redesign their business and operating process to accelerate the adoption of mobile banking, with process change being a critical success factor. The potential of mobile banking is of epic proportions and with right kind of investments in awareness/education, the adoption of mobile banking would gain traction,” says the Report of the Technical Committee on Mobile Banking.15

However, the report candidly admits that “Despite the potential for mobile banking and the regulatory provisions enabling greater use of mobiles as a channel for financial services in general and for financial inclusion in particular, banks are facing some challenges in taking mobile banking to the desired level. These challenges are essentially on two fronts: (a) customer enrolment related issues; and, (b) technical issues.”

But we have global experiences to learn from. Forbes calls Kenya “the world’s most advanced mobile payments market.”16 Within e-Payments, Kenya is certainly the most advanced ecosystem for mobile payments in the world with the early and enormous success of M-PESA,17 a mobile phone-based money transfer service. M-PESA is now the world’s leading mobile payments provider.

Launched in 2007 by telephone operator Safaricom, the mobile money service offers savings, domestic money transfers, airtime purchases, loan disbursal and repayment, bill and tax payments and small-value deposit and withdrawal. The mobile company has tied up with Equity Bank and Postal Corporation to provide an integrated banking solution to its customers through the use of e-Payments by way of mobile phones and smart cards offered by mobile network operators and banks. M-Pesa has more than 15 million subscribers who conduct more than 2 million transactions every day, with a cumulative value evaluated at 60 per cent of Kenya’s GDP. In 2014, the Kenyan government had given licence to three mobile virtual network operators, or MVNOs—Finserve Africa, Mobile Pay and Zioncell Kenya—in an apparent bid to foster competition in the mobile banking market in the country.

Since it launched M-PESA services in India in 2013, Vodafone has put it on an even keel, working through its fully-owned subsidiary Mobile Commerce Solutions Ltd (MCSL) and ICICI bank, the country’s largest private sector bank. Bharti Airtel’s Airtel Money and Idea Cellular’s mobile banking service with Axis Bank are looking up. Apart from telcos, other mobile wallets service providers, like Paytm, who jumped into the bandwagon are also tasting success.

Not all of M-PESA’s pioneering success factors are amenable to be replicated elsewhere, but many of them can be. Prescient studies like the World Bank’s report, M-PESA: Mobile Payments, Improved Lives for Kenyans, World Bank of May 2010, can clue policymakers in about regulatory requirements.

Given India’s lofty ambitions on mobile banking, so much rides on the regulatory environment—or as I mentioned early in this chapter, the lack of it.

The benefits of an e-Payment system far outweigh its costs. According to the World Bank’s World Development Update 2014,18 the use of payment by electronic medium can help save 1.6 per cent of India’s GDP—if we take the size of the country’s GDP in 2012-13, India could save Rs. 1,603.2 billion thanks to electronic payments. The report stated that individuals and small firms that make use of this technology medium, benefit from convenient online authorisations, easier record keeping and the availability of dispute resolution mechanisms. “Importantly, electronic payment instruments must be linked to a deposit account either at a deposit-taking institution (bank) or in the form of e-Money that can be used by banks, other financial firms or mobile network operators,” the report noted. Electronic payments can help manage fraud and leakage risks in government payment programmes and improve transparency and accountability, the report observed.

A cashless society is a great idea, where India, an information technology powerhouse, should break a new ground ahead of other emerging nations. Are we ready to take the next logical steps in our “digital first” strategy? 

References :

1. See
2. See
3. M-PESA: Mobile Payments, Improved Lives for Kenyans, World Bank, May 2010. See theSitePK=469382&contentMDK=22594763&menuPK=476752&pagePK=64165401&piPK=64165026
4. ‘Wiping every tear from every eye: the JAM Number Trinity Solution’, Government of India,February 2015.
5. 2015. India Will Overtake US to Become World’s Second Largest Smartphone Market by 2017, Strategy Analytics, 1 July. See’s-second-largest-smartphone-market-by-2017
6. The velocity of money refers to how fast money passes from one holder to the next. It can refer to the income velocity of money, which is the frequency at which the average unit of currency is used to purchase newly domestically produced goods and services within a given time period. If the velocity of money is increasing, then transactions are occurring between individuals more frequently.
7. The Impact of Electronic Payments on Economic Growth, Moody’s Analytics, February 2013. See
8. Ehrbeck, Tilman, Rajiv Lochan, Supriyo Sinha, Naveen Tahilyani, Adil Zainulbhai, 2010, Inclusive growth and financial security: The benefits of e-payments to Indian society, McKinsey & Co. See
10. World Payments Report, 2014. Capgemini and Royal Bank of Scotland. Available at
11. The Opportunities of Digitising Payments, A report by the World Bank Development Research Group, the Better Than Cash Alliance and the Bill & Melinda Gates Foundation to the G20 Global Partnership for Financial Inclusion, World Bank, 2014. See per cent20Report_Final.pdf
12. 2014. No free lunch; banks free to charge ATM users: RBI, Hindu Business Line, 15 September. See
13. 2015. Ready for a cashless economy?, Mint, 15 June. See
15. Reserve Bank of India, 2014. Report of the Technical Committee on Mobile Banking, February. See
16. 2014. Forbes, 27 June. See
17. The M is for mobile phone and PESA is the Swahili word for money.
18. World Bank, 2014. See

(Sameer Kochhar can be reached at

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