Nobel laureate Michael Spence praises India’s advanced digital payments and identity systems, highlighting their global influence and potential for export as the country approaches upper-range growth while strengthening security measures.
Michael Spence has said India’s digital payments and identity infrastructure is among the strongest anywhere in the world, arguing that the country is now well placed to build on a growth model that combines scale, consumer demand and a fast-improving financial system. Speaking to The Economic Times, the Nobel laureate said India is a rapidly rising middle-income economy operating close to the upper end of its potential growth range, even though its physical infrastructure still has room to improve.
Spence singled out the country’s biometric identity framework, the Unified Payments Interface and data-sharing systems built around consumer consent as the foundation of that edge. He said India is not merely a model for its peers but is already being studied by other emerging economies, with the government offering to share parts of the architecture, including source code. That view comes as India continues to strengthen the security around its digital-payment network. The Bureau of Indian Standards has introduced new norms covering biometric authentication, QR-code payments and digital-currency security, while the National Payments Corporation of India plans to begin biometric authentication for UPI transactions from 8 October, moving away from the current PIN-based process.
The scale of UPI helps explain why the system has drawn so much attention. Data compiled by DPiMap shows that by 2025 the network had processed 19.47 billion transactions worth ₹25.08 trillion, supported by 691 participants across person-to-person, merchant and government payment use cases. That breadth has helped India turn digital payments into a mass-market utility rather than a niche financial product, strengthening the case that its fintech infrastructure could be exported to other developing economies.
On the broader economic picture, Spence drew a contrast between India and China. China, he said, remains ahead by around 10 to 15 years on per-capita income, but its dependence on external demand and its large export surplus are creating more friction abroad. India, by contrast, has a domestic consumption base that accounts for about 65 per cent of gross domestic product, compared with roughly 40 per cent in China, giving it a more stable footing for sustained expansion. He also warned that the global economy is moving towards what he described as “variable geometry” , a less cooperative order built around shifting alliances , and said lower-income countries without bargaining power may struggle in that environment.
Spence also sounded a cautionary note on the wider financial system. He told The Economic Times he did not expect “a catastrophic collapse”, but said falling market valuations alongside heavy debt burdens could still trigger “a pretty big shock” and create “a whole lot of chaos”. He linked that risk to higher US interest rates and a stronger dollar, which can add pressure to emerging markets through currency depreciation and rising import costs. Looking further ahead, he said artificial intelligence is likely to lift productivity over a five-to-10-year horizon as companies adjust their business models and workforces, and he suggested India could become a major AI player later this decade once incomes rise and the country can support the necessary infrastructure.
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