Prime Venture Partners Podcast

He quit his own company to build Aadhaar, UPI, ONDC for India - Dr.Pramod Varma

• Prime Venture Partners: Early Stage VC Fund • Season 1 • Episode 149

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In this special episode, we hosted a very esteemed guest Dr.Pramod Varma, the Former Chief Architect Aadhaar, UPI, & India Stack, CTO EkStep Foundation, Co-Chair CDPI.dev, Co-Founder FIDE.org. 


He played an integral role in architecting India’s digital health infrastructure, vaccination and immunization infrastructure (Co-WIN & DIVOC). He is the Co-Founder of FIDE, co-creator of the open source Beckn Protocol, the base protocol for India’s new efforts such as Open Network for Digital Commerce (ONDC.org), Kochi Open Mobility Network, Namma Yatri, and ONEST.


He is an advisor to Unique Identification Authority of India (UIDAI), National Payment Corporation (NPCI), Goods and Services Tax Network (GSTN), National Health Authority (NHA), Securities and Exchange Board of India (SEBI), Open Network for Digital Commerce (ONDC), Turing Institute Identity Initiative in the UK. 


Pramod holds a Master’s and Ph.D. degree in Computer Science along with a second Master’s in Applied Mathematics. He is passionate about technology, science, society, and teaching.


In this podcast episode we spoke about the below topics, dive in:


0:00 - Journey of Aadhaar's Chief Architect

10:45 - The Impact of Aadhaar on India

26:45 - India's role as Global Leader in Technology

35:43 - The Role of AI in India

40:30 - Tips for Indian Entrepreneurs


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Sanjay Swamy:

Everybody knows you as chief architect of Aadhaar, but what about the Pramod before then?

Dr.Pramod Varma:

We were naive and you know quite Bangalorean. In that sense you know tech product, we can do anything in life. There was a parliamentary discussion Is it a card or not a card? And we were wondering is?

Sanjay Swamy:

that the real issue.

Dr.Pramod Varma:

As Nandan always calls, trend is your friend and let the entrepreneurs do what they are good at doing. Data is the biggest digital capital you know. Somebody asks why did you shift? Why did you quit your role? Either midlife crisis or whatever you want to call it. Two areas if you want, if you're an Indian entrepreneur, to think about is AI for dramatic efficiency and dramatic improvement in user interface.

Sanjay Swamy:

Hi everybody, welcome to the next episode of the Prime Venture Partners podcast. Hi everybody, welcome to the next episode of the Prime Venture Partners podcast, where we bring amazing stories with an entrepreneur bent of mind. And I have a very special guest today, good, close friend, someone who I have the privilege of also calling a colleague, dr Pramod Verma, someone who just has been an extraordinary player in this entire journey of the digitization of India. But maybe Pramod will start a little bit while we reflect on some of this and look at the path ahead, a little bit about everybody knows you as chief architect of Aadhaar, but what about the Pramod before then? What led to that? So Maybe you can give us a quick snapshot of your early days and your early career.

Dr.Pramod Varma:

There's no before Pramod, after Pramod, it's the same Pramod. But pleasure to be here, it's you know. I know you for long and I've been a huge fan of your imagination capability.

Sanjay Swamy:

On Twitter.

Dr.Pramod Varma:

We have had wonderful conversations early days as well. But before Aadhaar I have been a computer science. Computer scientist by design, by education, Started my early career in Infosys for a couple of days, but really that didn't last. By then we had founded a product startup in Boston and that was a beautiful turning moment, Even in Infosys itself. I was actually coding in the internet in 94.

Sanjay Swamy:

Very early mosaic time, not even netscape some of our listeners were not born, then okay, some of the listeners are not born mosaic was the first browser that came out before it's right, I remember, yeah, and at that time we were developing very early days, so I got transported to Boston and we were doing product startup.

Dr.Pramod Varma:

I think developing a product requires a very different mindset, highly scalable enterprise product. But that allowed us to create a lot of design principles, you know sort of distilled design principles that work well, for a product has to fit into many environments. Product has to be sold as many use cases as possible. Product has to create evolvability, because same product has to upgrade, change, continue. It's not a one-time effort, so you have a longer view of the architecture, evolvability and so on. And because it has to be fungible for different purposes, we designed everything as APIs in 1999. We had 1,000-odd APIs, very, very early days of APIs. We were not even called APIs at that time, literally.

Dr.Pramod Varma:

You know post, know RPC calls, socket calls and all we used to do. But now by then HTTP had come. So we were very ahead then adopting HTTP based, now called REST APIs. But then all the APIs built that 2003 I came back to start the engineering in Kormangala Came back, continued as a CTO, global CTO for them. We got acquired in 2005, a good exit. But then we continued in the larger company as a global chief architect and CTO role until 2009. And then everything changed.

Sanjay Swamy:

Got it Great and I think a lot of that mindset and culture has translated into this next big wave that you've been a pioneer of and, you know, core contributor to. So tell us a little bit about how you know you got pulled into Aadhaar and that whole API-ization of identity, so to speak, making it a cloud-based identity, making it a digital identity, which had not really been done anywhere else in the world at the time. It would be great to talk a little bit about those three to five years, that phase of your life.

Dr.Pramod Varma:

It has been fascinating and quite crazy, I would say. The shift was quite, you know, abrupt in 2009, june is when the news came out, and pure serendipity, by the way, it's crazy lucky. I think it's just luck to be right place, right time. I was not in touch with Nandan at all since 94, 95. I think After that I have not been in touch, so I had nothing to do with anything. I was running a product startup engineering, living happily, but on a fine morning, Deccan Herald newspaper. That's where kids should read newspaper.

Prime Venture Partners:

Well, that's some interesting luck.

Dr.Pramod Varma:

You never know when luck strikes you. It says Dr Manmohan Singh. Then the prime minister has invited Nandan Milikani to lead the UID effort, unique Identity Project, effort to give identity for every Indian. That's about it. But that immediately stuck with me saying wow, that's an interesting move to bring somebody from Bangalore. I read his book.

Dr.Pramod Varma:

He had published his Imagining India book just before that 2008, I think and he did talk about identity in that, the importance of identity, importance of digitization and so on. So I said, yeah, our calling you know. Somebody asked why did you shift? Why did you quit your role? I said, yeah, midlife crisis, or whatever you want to call it. Anyway. But I got in touch with Nandan through another connection and I told him I want to join, I want to be part of this project. He said are you crazy? I met him in in his house and he said are you sure you have a? It's your product company. It's not even that you are an employer of some no, you drive the whole product and tech strategy very successful.

Dr.Pramod Varma:

Uh, I might come back from Delhi in six months and do something else. Are you sure you want to do it? And I said absolutely. It was so clear in my mind that I want to do it that I just jumped in. By then he had put Srikant Nathamani in there and Raj Mashruwala, who was you know. He had spending my time and we were sitting in Srikant's house and trying to build and then some of all of you showed up and one by one.

Dr.Pramod Varma:

We had a fantastic diverse group, both technology entrepreneurial crowd and the traditional bureaucrats like Ram Sayak, sama Ganga, ap Singh, all those folks who really brought what it means to run a national ID project. We had no clue. Okay, let's be very clear. We were naive and you know quite Bangalorean. In that sense you know tech product, we can do anything in life, but to run a government project of that magnitude and with rti and government approvals and parliamentary approvals, it's a lot of rigor and you know you tend to learn, is it, my god? No wonder it is slow, no wonder it is large and it wonder wonder they are conservative. They are by design conservative because they can't just blow up money right, they can't do random things and that's, you know. Also corruption, rti, all that thing was starting to be a big talk. So huge appreciation. And you know the initial idea was the first one month. I think it took about 45 days for this team to move from card to no card. So for 45 days I would say maybe 30 days.

Sanjay Swamy:

Although it's still called Azhar card now, but that's another matter. There was a parliamentary discussion.

Dr.Pramod Varma:

Is it a card or not a card? And we were wondering is that the real issue? We have bigger issues, right, but nevertheless it was a new idea. Two or three ideas were very, very new. No one has done, no one has thought about identity without border security, citizenship control mindset right.

Dr.Pramod Varma:

So the identity, sovereign identity, was always associated with border protection, national security, control. Who comes in? Stop bad people. This is the first time somebody said no identity is to survive, to just live. To join the economy, to join the formal system, you need to prove who you are. So identity for development, not identity for national security, was a very first refreshingly first time anywhere in the world we did that. Second is the first time when identity was because of that, identity was kept outside home ministry as a thing. And the third, identity as a platform and not identity as some card to work around, with Identity as a means to unlock many more use cases outside.

Dr.Pramod Varma:

To unlock, we realized we had to do a platform thinking. We were used to it because we have come from the private sector, where API-based platforms were sure we existed. It was nothing new. But government, that was new. What do you mean by API-based platform? What does it even mean? Right? So for government, it had to be something new but brilliant. I'm looking forward. What a strategy call Like few things that got perfectly right, you know, in terms of strategy that subsequently created the next level of design, the next level of design.

Sanjay Swamy:

Wonderful, wonderful. No, I'm sure Aadhaar itself and those probably the two years which is the real formative part of it. You know we could talk forever, but I think fast forwarding a little bit right. I mean, aadhaar was one thing and obviously you played a really critical role in understanding what the government's requirements were. I remember you once telling me you know, in a startup you can say okay if it's 0.1% of the population. You know we ignore that.

Sanjay Swamy:

But in India if you say 0.1% of the population does not have either fingerprints or iris to scan. Well, that's 10 million people. It's more than the country of Singapore, right? And then also the practical issues of rolling this out at scale. I often tell people look, we enrolled Singapore every week for seven years in a row right and literally over and over and over again. Row right and literally over and over and over again. But having to do that at scale the early days when we had to transport the data by pen drive to over the course of the rollout where internet became pervasive in India, I think a lot of things were happening sort of concurrently also, right.

Dr.Pramod Varma:

Brilliant and much of the design played into the trend, as Nandan always calls trend is your friend. People who can watch the trend, can play into what's coming up and play into that trend and much of our design actually API-based thinking QR codes. We embedded all the ideas mobile friendliness.

Sanjay Swamy:

You know, one idea you and I brainstormed, I think for the first time was for the Jeevan Praman right.

Prime Venture Partners:

Where senior?

Sanjay Swamy:

citizens get. And yesterday I did my mother's life certificate again, because June 30th was the deadline and she's just turned 88. And you know, I said, Mom, you should take a selfie now, right?

Dr.Pramod Varma:

So the future-proofing of the API to be, you know, initially biometric, initially with centers, now it's on your own cell phone with face auth right, it's quite… Unlocking value for various segments. But all these were not done by UIDI. Two things that UIDI did not do very nicely is one we never diluted the idea of security and privacy. In fact we overdid security. In my mind, security is never overdone, but from what it used to be a norm, for example, when we talk about pen drive, we did not even in the enrollment center where you enroll you remember that discussion right.

Dr.Pramod Varma:

Where we were saving. We wouldn't even save the data without public cryptography. That means by the time it went to the hard disk, it was already encrypted. So we did all kinds of advanced technique, knowing that India, edges of India, is actually not trust zone.

Dr.Pramod Varma:

It is not even demilitarized zone. It's actually no trust zone. Anything goes on the laptop. So we had to really be careful about that design. We never diluted. We really did a brilliant job thinking through that. And privacy I think we were very clear that one day or other, as we digitize a society, people start asking questions what happens to my data? Who is protecting? Is there surveillance? Is there being sold? Does somebody else have access to data? You know all those questions are bound to come and should come in a. Is there surveillance? Is there being sold? Does somebody else have access to data? You know all those questions is bound to come and should come in a good democracy. And it came subsequently. But we were very prepared, very, very prepared for it. That extreme minimalism you know, for attributes two optional fields and biometric two APIs.

Sanjay Swamy:

Data birth, gender mobile number email address optional and 10 biometrics and two APIs. That's it.

Dr.Pramod Varma:

But does that Singapore every day, you know, for seven years. So very deep, very narrow, very deep, but then work with the ecosystem to unlock all kinds of possibilities, such as Jendhan accounts, DBT, direct benefits, transfer, of course, jeevan Pramana's life certificate and many others, yep.

Sanjay Swamy:

And also many things for the private sector right, EKYC and things like that. For the banking sector and things like that I remember we used to talk about. The cost of KYC was like 1500 rupees and if you had to do a mutual fund you know you had to at least save 3 lakh rupees for it to be viable for them to bring you into the system. And then when we eventually went with the OTP based also, it basically became free.

Sanjay Swamy:

I remember you telling me the cost of an authentication is like 0.1 Nayapayasa or something like that, which is basically zero, zero.

Dr.Pramod Varma:

And it's amazing how you can collapse the cost and that when you collapse the cost of onboarding, collapse the cost of verifications, collapse the cost of processing through digital means. It simply expands the pie. Collapses the cost of processing through digital means. It simply expands the pie. Yeah, and that expansion of the pie is that allowing marketplace entrepreneurs like you know, zerodha or Funpay, all these guys you know to be able to massively expand market.

Dr.Pramod Varma:

So when policy supports this, through regulatory policies, the government policy, tech creates that impetus to do the same thing at, you know, literally 5 rupees instead of 1500 rupees or 10 rupees. Suddenly, a driver working in Uber can actually start doing systematic investment of 200-500 rupees and 1000, which is, unless we formalize, provide the same products that you and I have access to to the next five hundred million people, and then subsequently.

Sanjay Swamy:

Through securitization, yeah through securitization.

Dr.Pramod Varma:

There's no other way India is going to formalize the society. We will have the great divide. So that leads me to the next thing.

Sanjay Swamy:

Right, so that promote leads me to the next thing. Right, Because many of us including myself, you know moved back into the private sector and, you know, through venture capitalism, trying to create sort of companies that leverage this opportunity. Of course, you know, hopefully financial success will happen, but that's an outcome of continuing to conceive bigger and bigger things or building on top of this platform, perhaps even taking some elements of this global for greater good, without necessarily any sort of direct commercial thing. So tell us about that journey. Right, Because you went from Aadhaar to India Stack and then conceived UPI and then, after that, of course, a lot of the government projects that were in place got rethought to have similar philosophies, like even starting with GST and all of this stuff API first.

Sanjay Swamy:

API first, mindset right and evangelizing that for the greater good actually right. For the greater good actually right. We're, all I would say, indebted to you for really having sort of set aside personal commercial benefits to just saying, look, this is the right thing to do, right. And then, eventually, now, of course, we're getting into this phase where we were talking a lot about this great data unlock for India and going to a data rich economy, and now we're entering this age of AI, right? So I'd love for you to trace some of this right. What motivate, what inspired you to continue, you know, staying the course, and what have some of these big moments been that continue to give you that adrenaline rush?

Sanjay Swamy:

right, which is you know, and, as you said, you woke up from 7 am this morning. You know you've been at it non-stop, right?

Dr.Pramod Varma:

so share some of those inspiring moments and no I think one thing we learned I think you are all part of that. We realized you are part of the financial inclusion team of other, when you are volunteering, imagining what the ecosystem can do if we build one small thing. You know, like gps. One, one small thing ecosystem tend to, entrepreneurs tend to. Given the right policy support and entrepreneur environment support, they will know, undoubtedly.

Dr.Pramod Varma:

In fact, we throttled our api because the supreme court all kinds of pushback in one sense. Otherwise a lot more entrepreneurs would have used those APIs or QR codes and so on. Right, which hopefully we should see, because you can't give 1.4 billion people identity and tell them not to use it. Right, it's quite silly Because photocopies will continue. It's very silly, right? So we should our actual imagination that if you build infrastructure that is reusable by entrepreneurs and if you create a basket full of combination right Bunch of things, the combinatorial power that will get emerged from the entrepreneurs would create a non-linear development cycle in India, economic development cycle. Otherwise, we will eventually get to good shape. I know the country is in the positive direction, but we can compress. We don't have to wait for 30 years development. We can do it in 5 years or 10 years.

Sanjay Swamy:

I think there's that study that said that the inclusion of people into the banking system India would have in 7 years done what we would have done in 46 years, or something like that.

Dr.Pramod Varma:

So it's amazing compression of development cycles. If we create technological underpinning called infrastructure, digital public infrastructure, now called create policy support, and let the entrepreneurs do what they are good at doing, you will see amazing combination playing out, the trifecta playing out, policy, infra and innovation playing out. And there we don't have to argue anymore innovation at the cost of inclusion, because inclusion agenda has never been an entrepreneurial agenda, primary agenda. If you can go there, you will go, but it has to make economic sense and business sense to go.

Dr.Pramod Varma:

But what if we can actually collapse the cost, as we discussed earlier, create that impetus for 100, 200, 300, 500 million people to be able to do the same thing, what you and I otherwise could do, you know, banking, job lookups, participation, establishing trust contracts, signing establishing trust contracts, signing micro transactions that being able to do so, the success of Aadha gave me personally a tremendous that satisfaction and the feeling that a small team can actually, if you get this combination right infra policy and innovation playground thing right we can do crazy stuff. And the at Aadhaar, we were okay, ha ha, let's continue. Then we did e-sign, dg, locker and UPI all in the same year. By the way, 2014, 2015 we did all these things. 2015 is when Digital India was also launched. By the way, prime Minister, after one year since he came up, we launched eSign in 2015, digilocker in 2015, and piloted UPI in 2015.

Sanjay Swamy:

Right right.

Dr.Pramod Varma:

That it was a slam dunk for me, saying, wow, this is crazy, we can actually repeat it. Sometimes you feel, okay, lucky, once in a long opportunity. We did, master did it. But repeating other success would be hard. And India, we see it's not. Actually, we seem to be pulling off again and again and again. So that gave us even more confidence post-UPI that this is absolutely the way Indians will participate formally in the digital economy for jobs, insurance, production, various financial and non-financial opportunities that they want to see, instead of just watching YouTube. 80 million people watching YouTube, which is a good thing, but that's not enough. They need to be able to transact and interact in the society.

Dr.Pramod Varma:

Right, we were very convinced and then by then you know it made sense for me to stay back, because we were imagining the next one, because that's when we 2016, you remember, we made Nandan made that seminal talk about data as an asset, personal asset. Data is the biggest digital capital Land not there, money not there. People don't have land or money. So what is the next capital people can own Is data being not oil to extract, data being a soil for individuals to build their life. So my digital footprints tell me I'm a taxpayer, I can do this. I can do that. That ended up with account aggregators, samati and the deeper strategy that we did still playing out because we had COVID years slowing down.

Dr.Pramod Varma:

While UPI took off, everything else slowed down At the same time Ekster Foundation, where we are right now sitting. We did diksha education for schooling Foundation, where we are right now sitting. You know we did diksha education, you know, for schooling. Now we are doing skilling, gig economy, unlocking that part, abdm, aishman Bhairav, digital Management. We were doing health stack. Some of them are just still early days. I would think much to go. Healthcare is a big topic. We are starting. Access to justice Access to justice is a broken environment, very, very sad environment for us. So and you know, including Chief Justice has been pushing for digital as a means to unlock access to justice. Under trials, millions of under trials, not even getting us. You know they're hanging around in jail. You know it's just unfair situation going on. We have to solve there. And then we are reimagining commerce opportunity, which is ONDC.

Prime Venture Partners:

Beacon Protocol effort.

Dr.Pramod Varma:

So the more we think the good thing about India is that we are not dearth of problems. We have done a lot of problems. That means people like us can do that. Jugal bandi, you on the entrepreneurial side, funding, and we as creating that, small blocks, unlocking that can create some compounding effect, or what you call a domino effect. What can I trip? One that creates a series of domino falling is a very key thing. So it doesn't seem to end the capital protocol thing is just continuing.

Sanjay Swamy:

Much to do in India. Not everybody should do what I'm doing. It's a terrible thing to do.

Dr.Pramod Varma:

I'll tell you why. Actually, somebody was asking how can we join? I said, maybe it's good that you are an entrepreneur, because real solutions, solutions will come from entrepreneurs or innovators, both public sector and private sector. It's not that public sector can't innovate, they can innovate as well. Not everybody can build a GPS or highway. I think there will be a few people who are doing it.

Sanjay Swamy:

Many can leverage.

Dr.Pramod Varma:

Many can leverage, but we engage during the design and so only request to entrepreneurs is engage during early design, contribute it, because some of these pieces can unlock such powerful ripple effects, snowball effects subsequently that it will be powerful in India as we look forward to next 2047, 100 years.

Sanjay Swamy:

Yeah, exactly, it's amazing. So, along the way, pramod, you know there's so much happening here, right, and maybe in the podcast we'll also share some of the links that you know you would recommend for our audience, right, like the Beckham Protocol and things that you mentioned Along the journey. I think the world has started looking at this, right? I think when Aadhaar started, I remember I remember, you know, uk had cancelled their id program everybody said this would never work. They'd spend four billion dollars, and I think we were looking to spend 50 rupees per enrollment at the time that was a dollar now, not even that, but we pulled off a lot, right, and um, all the naysayers suddenly turned into saying, oh, wow, there is something here, you know, and let's at least understand it to some extent and now perhaps start adopting it. Right, and you've been a great champion of both sharing what we have done here very openly as well as helping others.

Sanjay Swamy:

So what do you see? You know, say, 10, 15 years from now, from a global perspective, how will people look at? I mean, people are already looking at India with envy. You know that we have seen. How will people look at? I mean, people are already looking at India with envy. You know that we have seen, but how will people look at this and how do you see this perhaps replicating itself as a right way to do business in perhaps other emerging economies and maybe even in developed economies?

Dr.Pramod Varma:

Yeah, so we were lucky enough to get support from the policymakers and the government to do a lot more. So I think India did it faster. It's hard for many, so I'll answer the second part first, what other countries we are doing. So we have Center for DPI. We engage, we have global DPI funds, digital public infrastructure funds, philanthropists and other people are funding it. So we do have these efforts going on across the world, but what we see is that imitating itself is hard. So we are starting to think about what part of this needs truly government. Can we minimize the need for heavy build inside the system? But can we create a set of standards, protocols, interoperability, guidelines and policies that triggers a market? So, as you see, you will see the navigation, and that was a full platform story. Full software story. Dg locker was part APIs and part platform. A full platform story. Full software story. Digilocker was part APIs and part platform.

Sanjay Swamy:

The government could offer, but private sector could also replicate.

Dr.Pramod Varma:

Yeah private sector can also issue salary slips and all that thing. Credential world, but they have their own credentials. Esign was the first protocol approach I attempted and that is working because it was pure APIs and market was building it. Upi we did a protocol, upi protocol but a lightweight switching because a payment requires net settlement, so that needed NPCI to be in the middle. By the time Sahamati account aggregator came and by the time ONDC came with Beckham protocol, it became fully decentralized.

Dr.Pramod Varma:

This is also the trend. This is because the world we are seeing a lot more decentralization of execution, decentralization of production, decentralization of consumption. All this including energy and everywhere. It was a very traditionally industrial model, it was a produce one place, distribute to the rest of the country. That's actually starting to hit the wall. You know, everywhere you will see now decentralized production, decentralized storage, decentralized consumption. So what is happening now we are seeing a trend of what we are looking for is an internet-like imagination where a set of protocols and standards like HTTP and HTML can hold a large decentralized network together and create economy of scale, because if everybody was silo then nobody scales, but scale together as a network topology like internet, and not as a platform topology. So that trend is playing out in every sector, every sector.

Sanjay Swamy:

So we are now asking… Including offline sectors.

Dr.Pramod Varma:

Including offline.

Sanjay Swamy:

It's amazing Transport everywhere you will see this playing out.

Dr.Pramod Varma:

Ai also will play this out, although now it's both combinations centralized, inference and everything else. . talk about that later. But you will see,

Sanjay Swamy:

Compute is on the edges and if you bring the data privacy and all of those elements into it also right.

Dr.Pramod Varma:

And because you want it to be, you also have resilience issues. Anything centralized potentially can get and people. Because you want it to be, you also have resilience issues. Anything centralized potentially can get attacked.

Sanjay Swamy:

It's in the point of failure grid.

Dr.Pramod Varma:

That's where we are failing the centralized grid structure. If grid fails, bangalore goes shut down right electricity grid I am talking, so we have to start seeing.

Sanjay Swamy:

Bangalore is shut down for many other reasons.

Dr.Pramod Varma:

For the matter but we are seeing resilience and us in argument for decentralization as well, not just technological development. So multiple reasons. We are seeing this decentralization trend playing out Okay and you will see many designs of the future. If that's where the future is going, should we take a new country of the path India? If that's where the future is going, should we take a new country of the path India took, or jumpstart.

Sanjay Swamy:

So this is the leapfrog opportunity, leapfrog opportunity for many of the African nations or some other nations.

Dr.Pramod Varma:

Maybe they should not be imitating India fully. I mean, identity is a necessary element.

Dr.Pramod Varma:

India itself was sort of a leapfrog from the prior generation and now there's a new generation that's happening Leapfrog of which is why it's taking us to discussions such as Finternet. And the discussion is about what? If we can create a borderless, open, universal financial infrastructure where the flows can be programmed, regulated, controlled, no problem. So nobody is losing their autonomy and control. But infra why should every country set up one more infra Then? Now we have to keep interconnecting them Because, while domestic economy is there, cross-border economy is equally important for many countries India, we have a large economy, domestic, many countries, we don't have domestic economy.

Dr.Pramod Varma:

The problem is cross-border is what's the use of putting some digital API here? How many countries will talk to our API? Even UPI, we found it hard to connect to Singapore, now France, three, four years. It takes bilaterally 190 plus countries. We will be dead and gone. We will be still integrating. So we need a new way to imagine an internet like one-time infrastructure, connected through secure protocols and standards, where the flows can be programmed by entrepreneurs right On top. So we are imagining it very different, vague, for maybe people who have not thought about it, but entrepreneurs who are thinking about maybe make some sense. What I am saying you know it is that you can now start imagining, given the decentralization trend and for privacy resilience reason. Anyway, that's a good thing. Technology is anyway pushing towards that and that allows to create what's called a universal infrastructure towards that and that allows to create what's called a universal infrastructure and regulated flows on top.

Dr.Pramod Varma:

A very beautiful combination to play out, and we are starting to imagine all those possibilities for next set of things India will do. We'll definitely do it in that way, and we are seeing ONDC playing out that way, and each of this is a 10-year game. Whatever you do, whatever you say, it's a 10-year game.

Sanjay Swamy:

Now, that's very interesting, right, I think, the statement that you know technocrats overestimate the impact in the short run, but underestimate in the long run. I think we are seeing this in spades, this time right Over and over and over again right, we still don't get it though. Everything that we to discuss about Aadhaar and would have frustration at the rate at which it was getting rolled out, but if we look back over a 15-year period, we wouldn't have imagined it would have been this big.

Dr.Pramod Varma:

By the way, we started discussion in 2013. 2014, we were writing protocols. So, 2014 to 2024.

Sanjay Swamy:

So UPI has had a couple of interesting catalysts. Right One was the demonetization moment and then subsequently COVID also where it became necessary.

Dr.Pramod Varma:

No, I think brave people get luck also. I think I think when you attempt something bold, something that unlocks significant value in the society, I think luck comes in your way. You'll be surprised I think you just had to be bold yeah.

Sanjay Swamy:

So let's talk a little bit about this wave of AI now. Right, the new generation of you know we are seeing companies talking about some very interesting things. Right?

Sanjay Swamy:

One of the larger companies in our portfolio is expecting to reduce its workforce by 50 to 60 percent right to do in some way scary because they're all white collar opportunities, right, and yet at the same time, you know they're going to be better companies that way, right, and, of course, new companies starting out.

Sanjay Swamy:

I mean, sam altman has already talked about a unicorn with one employee. I'm still hoping to see if I can start that myself on the side, but that's another matter. But, um, you know, this is the direction we are going to go, right. Of course, one of the thinking here is that india actually has never had that much of senior talent, has had a lot of, you know, high quality junior talent and the combination of that with the co-pilot actually will play to India's strengths and more opportunity will come here. But, as we see this evolving right from the entrepreneur opportunity, given so much of digitization happening and the first wave of that has happened how do you see both building on top of dpi as well as, uh, um, you know, solving real problems in india, right, the importance and the impact of ai, and is there anything that will need significant amount of localization? Or will the global, global lms and stuff be just as important here?

Dr.Pramod Varma:

I think AI is a continuum we are playing out and every once in a while you get a step function upgrade and at that time we go crazy as techies and entrepreneurs and say, okay, this has solved the world problem. Agi, everything has come God has.

Sanjay Swamy:

3,000 companies are dead today.

Dr.Pramod Varma:

But I think it's a continuum. I don't think we have solved everything, even through LLM, and we will not solve. Every once in a while you will see a step function and then you will create that and every one of those technological improvements or step function upgrades is inevitability. I think we just have to realize but good thing about what is playing out for India. Partly somewhere, some sectors, it will be bad, but majority of India is in a low performing blue collar, grey collar, agri environment.

Dr.Pramod Varma:

Given that much of India wouldn't even care if some high end programming jobs disappeared. We would care, probably. Some of our computer scientists and people come and ask me should I take BTech computer science? And I really think twice. Should I tell him the real story? Or it's okay to do BTech computer science Because either you're a deep computer scientist or you're nobody. You might be better off taking other engineering.

Dr.Pramod Varma:

But I think you will see the impact of some of this AI playing out in few sectors very harsh, but most sectors it will be a productivity boost and for Indians, much of Indians, it will be a productivity boost because they are in an axis. This time mostly physical blue collar, grey collar job sector, including agri or service industries and so on. Nobody is going to robots are not going to deliver food. These poor boys have to drive up and down. So I think the service industry will continue and many of those efforts will continue, but I think white collar we might see that impact, few impacts. So, leaving that negative impact which we have to deal with, my overall optimism continues, saying that AI is going to be hugely beneficial for India, is that DPI has taken India to probably at best. Aadhaar has reached 1.4 billion UPI has reached maybe 400, 500 million, including AEP is now on UPI. By the way, if you combine all that thing, yeah, upi does probably at best 400, 500 million people. Yeah, 1.4 billion people. Esign and DigiLocker has not reached anywhere Like they're all 100 million, 200 million range, right, and healthcare and all is much even below 100 million. So the more complex the transaction environment ID was easy, payment is slightly better, healthcare, education, decision-making is much more complex. So if you want bulk of India to participate in the digital interactions and transactions, either through assistants or through self, you will need to reimagine a new paradigm of interface.

Dr.Pramod Varma:

It cannot be same combo box form filling drama that we do Hundreds of fields. Nobody knows what to fill. Even we ourselves struggle half the time filling forms. What does this form field even mean? But we have access, so we will call our relationship manager somebody and we will fill this damn thing up. Most people struggle. They don't know what to feel. I think we are going to see AI playing out in what's called bringing the next 500 million people, or 300, 400 million people, into the transaction and interaction economy. For that you need voice, you need better interfaces, simpler mechanism to reach and also significant cost reduction. Cost reduction, let's say insurance claims. If you don't dramatically reduce claim insurance, nobody is going to buy insurance Because it doesn't make any sense. Much of the cost is going to just processing insurance papers. Doesn't make sense for next 500 million people can't deal with that thing. Complexity Much of our design is catered to us.

Sanjay Swamy:

The top 10% is right Traditional financial growth and we are sort of the self-service group, Also high value group.

Dr.Pramod Varma:

ARPU for us is high. So you know, unit economics for banks will work out lending form. They'll send you some 16 page investment form. No problem for you.

Sanjay Swamy:

Either somebody is filling for you and you're just signing Sideways, upside down, stand on your head and then you're done.

Dr.Pramod Varma:

Or you know you are able to read and comprehend Because the quantum of transaction you do are high end right. So the top 10% is easy. How do you do 1 rupee insurance?

Sanjay Swamy:

This is that whole transition of small number of high value to high number of low value, right? How do you?

Dr.Pramod Varma:

do 10,000 rupee lending for two weeks for a small shopkeeper who wants a bridge loan for two weeks for 10,000 rupees. Banks can't do that Cost structure is simply not viable. So reduction of cost and easier interaction into the computing digital economy both needs AI. Dpi alone won't solve it. Entrepreneurs will try to program the old way.

Dr.Pramod Varma:

They will struggle to scale beyond the first 200 million people. We need to reimagine and AI is giving a tremendous opportunity to efficiency, increase efficiency of the pipe, better document management, better workflows, better everything. Efficiency and interaction. The two areas if you want, if you are an Indian entrepreneur to think about is AI for dramatic efficiency and dramatic improvement in user interface, new generation of user interface. Like Bill Vardo, like that. You should be able to say and you know, ai should know yeah, this is your electricity bill, I know who you are, I can interact and you enter the PIN and then you're done. Interactions become so much more natural for human beings to be able to do and that will be a powerful game for AI to play out.

Dr.Pramod Varma:

And you ask one more question. Maybe I'll answer that Will global LLM solve all these things? I think there will be a. It's a dual strategy and I speak to many AI experts. Personally, I won't claim to be an AI expert at all, but it's very, very clear in my mind that there will exist a Google-like search paradigm. Play the ultimate oracle. You know I can ask any question. God, what you know better search.

Sanjay Swamy:

Right now you have meta AI in WhatsApp.

Dr.Pramod Varma:

Yeah, everybody competing, and you know they can compete at that scale with thousands and thousands of GPUs accumulated scale with thousands and thousands of GPUs, accumulated parameters, accumulated data points accumulated across Facebook and WhatsApp and stuff, or this guy scraping the internet. They have the capital, they have the expertise and they have the computing and data needs to be able to go after that direct use case. But you can do if AI ought to be per. But you can do if AI ought to be pervasive in everything you do. Hr systems work. You will be surprised how broken it is they are today, right In this sense, even with all the SaaS plays and all we are doing, you'll be weirdly behind. You can create tremendous value add in an enterprise, b2b world, product world through narrow AI not AGI like AI.

Dr.Pramod Varma:

The narrow AI might, on and off, depend on the mothership, but I think you will be able to do narrow, fine-tuned AI with not an AI selling story but a value-unlocking selling story whether it's document processing, whether it's insurance processing actual value-unlocking story using AI. But it can be a narrow AI. That narrow AI can work out cheaper, better for you. I think that's what people should not say. Llm story is not there. There is a layer to LLM Narrow LLM story that will play out. It guarantee to play out, no other way. I'm seeing this playing out. I speak to many people. It's very clear in their mind yeah, it's a duality that will play out. One mothership will exist and we'll continue to use that API. No big deal.

Sanjay Swamy:

Yep.

Dr.Pramod Varma:

And some consumer search and all might go off. So Google might have to worry about it, but I don't think SaaS guys should worry about it. I think SaaS guys should be excited about it, Saying I can now create a narrow LLM, fine-tuned, still leverage the big AGI-type API people are building, but I can actually unlock measurable value to a business transportation sector, healthcare sector, insurance sector so many places, so broken.

Sanjay Swamy:

Yeah, I think nothing is going to be at the extreme right. It's always going to be a hybrid solution.

Dr.Pramod Varma:

I don't think people should say it's a done deal. Not at all. I think it is so much potential, especially for Indian entrepreneurs. Don't get skewed. I mean let's say, oh, I want to build an open AI. If you want to build that, then you need a different play, but it's a very good place to be in.

Sanjay Swamy:

I think in all of these right, the platform companies did do very well for themselves the ones that ended up winning but there were 10x more opportunity with the application layer right, and that's great. Great, Pramod. Look as always, we can talk and you always share these nuggets, and every one of them is a one-hour podcast by itself. I really appreciate your time and I think, as a user of a lot of what you've envisioned and built, as a consumer, as an investor in companies that are leveraging this, as companies that are serving large ecosystems of consumers in India, a really big thank you for the amazing work you have been doing over the past 15 years.

Dr.Pramod Varma:

I should thank entrepreneurs and I hope you keep doing this for the next 15 years. I will 15 years. I should thank entrepreneurs and I hope you keep doing this for the next 15 years I will.

Dr.Pramod Varma:

I think we are continuing to reimagine the infrastructure game globally, but everything we are doing necessitate unlocking of that entrepreneurial energy and that's what you guys are doing. So I should be thanking all of you saying that if you don't play on the playground, there's an empty playground. It's as good as not doing the playground. So writing one protocol is easiest part I'm doing Okay.

Sanjay Swamy:

So you're building the playground, we are organizing the matches, but we need those star cricketers that keep coming and bringing home the World Cup over and over again.

Dr.Pramod Varma:

But the good thing about it, I think, is that traditional employer white collar job reducing means we'll have more entrepreneurs, a lot of micro entrepreneurs that will drive and they will need a lot more funding, a lot more tech support, environment support for them to go narrow, solve, solve, solve, solve and still be profitable. But not all of them will become 100 billion or 10 billion or whatever, but there will be 100 million.

Sanjay Swamy:

You have to be in it for the journey. Yeah, many, 50 million, 100 million companies.

Dr.Pramod Varma:

I think that's what we should look for.

Sanjay Swamy:

All right. Thanks a lot, pramod. Thank you for having me and, as always, love to keep having you on our podcast. I appreciate your time.

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