Regulation of the Digital Ecosystem in India

Despite several transformative progresses made in the digital payment sphere, it is continuing amid a sea of regulatory uncertainty. Rapid adoption has thrown up the new policy in regulatory challenges.

Why digital ecosystem is on rise?

• Increased penetration of smartphones
• Coronavirus pandemic has further accelerated the process of digital inclusion
• Adoption of Time-Saving Products and Services
• Growing Interest in Customized Products

How digital ecosystem is changing India?

• Jan-Dhan-Aadhaar-Mobile (JAM) trinity: Ensuring delivery of government schemes to its beneficiaries without leakage or misuse.
• SVAMITVA Yojana: Provided digital land records to the rightful owners by leveraging the power of drones and GIS technologies.
• Bharat Net: provided high-speed broadband to all the village.
• Common Service Centers (CSCs):  offering banking, insurance, state and central government services, passport and PAN card services, digital literacy, rural eCommerce services and pre-litigation advice etc.
• Digital payments revolution: UPI and Aadhaar-Enabled Payment Systems (AEPS), AEPS-based micro-ATM at CSCs and post offices.
  
  

How this growth is posing challenges?

• It raises the need of reasonable safeguards for an inclusive and stable ecosystem.
• Issues arises such as consumer and data protection, privacy, payment safety, etc.

Recent Government measures for regulating the sector:

• In 2022 itself, the Ministry of Electronics and Information Technology (MeitY) has announced the
  • draft amendment to the IT Rules 2021 (June 2022)
  • the draft India Data Accessibility and Use Policy (February 2022)
  • National Data Governance Framework Policy (May 2022)
  • the New cyber security directions (April 2022)
• India is also working on a complete overhaul of its technology policies and is expected to soon come out with a replacement of its IT Act, 2000, which is expected to look at ensuring net neutrality and algorithmic accountability of social media platforms, among other things.

Required Interventions:

• A co-regulation model with components of a statutory oversight body, industry-led self-governance and multi-tiered grievance redressal mechanisms. 
• Encouraging innovation and limiting unintended negative consensus.
• Amendments in existing laws as well as allocation of business across ministries.