India is undergoing a rapid digital transformation, driven by rising internet penetration, mobile connectivity, and the expansion of digital financial services. At the heart of this transformation is Digital Public Infrastructure (DPI), a set of digital systems which includes Aadhaar (digital ID), UPI (digital payments), and DigiLocker (digital data storage). These systems serve as the foundation for various digital services, improving financial inclusion, streamlining governance, and enhancing access to social benefits. The government has actively promoted digitalization through initiatives like Digital India, a nationwide program launched in 2015 to expand digital infrastructure, improve online service delivery, and promote digital literacy. However, while these advancements promise inclusive growth, they also raise concerns about the persistence of (digital) inequalities. Gaps in access, affordability, and digital literacy continue to exclude large sections of the population, particularly in rural areas and among women.

Despite this major progress in its digital infrastructure, India still faces a significant digital divide. Internet penetration and computer ownership remain far lower in rural areas compared to urban centers, limiting access to digital services, online education, and e-governance. The gender gap in digital access is equally pronounced, as women face multiple barriers, including lower mobile phone ownership, limited control over digital devices, and social norms that restrict internet use. Additionally, affordability remains a pressing issue. The high cost of smartphones, computers, and data plans makes digital participation difficult for low-income households, reinforcing existing inequalities. Even among those with digital access, a significant usage gap remains. Many lack the skills needed to engage effectively in the digital economy. Digital literacy remains a major obstacle, particularly for lower-income groups, hindering their ability to leverage technology for financial transactions, employment, and education.

DPI has been at the forefront of these efforts, integrating digital identity, finance, and data storage into a unified framework. Today, nearly 98% of Indians have an Aadhaar ID, which has become essential for accessing financial services and government benefits. For example, its integration with the Direct Benefit Transfer (DBT) system has made welfare payments more efficient, reducing corruption and ensuring subsidies reach those who need them. Several major programs have leveraged this digital infrastructure to enhance social service delivery. The government’s Jan Dhan Yojana (JDY) program has played a key role in expanding financial inclusion by enabling millions, particularly low-income individuals, to open zero-balance bank accounts using Aadhaar verification. This initiative removed documentation barriers that previously kept many outside the banking system. PM-KISAN, a direct income support scheme for farmers, ensures timely cash transfers through Aadhaar-linked bank accounts, reducing bureaucratic delays.

The widespread availability of bank accounts through JDY laid the foundation for India’s digital payment revolution, spearheaded by the Unified Payments Interface (UPI). UPI has fundamentally reshaped India’s financial landscape by allowing seamless, real-time transactions even for those without traditional bank accounts. This has particularly benefited small businesses and informal workers, who now have greater access to digital financial tools.

India’s digital transformation extends beyond finance. With the expansion of digital infrastructure, sectors such as education and governance have also undergone significant changes. The government has leveraged digital platforms not only to improve financial inclusion but also to expand access to essential services like education and skill development. The COVID-19 pandemic accelerated this shift, making online learning platforms more critical than ever in bridging educational gaps. Digital Infrastructure for Knowledge Sharing (DIKSHA), a platform for school education, provides digital resources and teacher training, while the Study Webs of Active Learning for Young Aspiring Minds (SWAYAM) platform offers free higher education courses at universities across India. These initiatives aim to make learning more accessible,especially for students from underserved communities.

While these advancements mark significant progress, digital transformation in India remains incomplete due to several persisting challenges. The gender divide continues to limit digital participation, as women and girls face economic and social barriers to technology access. The problem extends beyond gender—many individuals, including elderly citizens and informal workers, struggle with digital literacy, preventing them from fully utilizing digital financial tools, employment portals, and government services. Without targeted training programs, the benefits of digital transformation will remain out of reach for large sections of society.

Another major challenge is digital device gaps. While mobile phone usage has increased, issues such as poor internet connectivity, power outages, and unreliable networks continue to hinder meaningful digital engagement, particularly in rural and semi-urban areas. Ironically, over-reliance on digital platforms also risks creating a new form of exclusion. Farmers, elderly citizens, and low-income workers often struggle with digital payment systems or Aadhaar-based verification. If digital services do not provide offline alternatives, those without the necessary skills or resources may be left behind.

India’s digital transformation presents a pivotal opportunity for inclusive growth, but persistent gaps in access, affordability, and literacy threaten to leave millions behind. While DPI has laid the foundation for financial and social inclusion, barriers like gender inequality, digital illiteracy, and weak infrastructure must be addressed to ensure that digital progress benefits all. A truly inclusive digital future requires affordable access, large-scale digital skills training, and localized solutions that recognize the diverse needs of India’s population. Without decisive action, the digital divide will only widen, reinforcing existing inequalities. Technology alone is not enough. Targeted policies can bridge the gap and ensure that India’s digital revolution is one of empowerment, not exclusion.

Yoon Jae Ro ✉️

Research Fellow, Center for Emerging Economy Studies