Emerging economies are caught in a persistent suboptimal cycle known as the low-level equilibrium trap, which is often characterized by inefficient institutions and high transaction costs. These structural barriers discourage investment, dampen innovation and limit the effectiveness of governance. This paper aims to investigate how digital transformation – through the case of India’s JAM trinity – can serve as a catalyst for breaking this suboptimal cycle through streamlining service delivery, enhancing transparency and reducing systemic inefficiencies.
This paper is a case study drawing on data from different sources such as relevant newspaper reports, interviews, research articles on the policies and statistics from multiple sources.
First, India has experienced a big push in reducing transaction costs over the past few years through the implementation of the JAM trinity (Jan Dhan–Aadhaar–Mobile). This intervention has significantly reshaped welfare delivery and financial inclusion, marking a decisive step away from the low-level equilibrium trap that previously constrained development. Second, the digital transformation has provided an irreversible boost to India’s institutional capacity – as observed in many subsequent phenomena – designing and scaling effective welfare programmes, minimizing leakages and facilitating the formalization of the economy. Third, while technology served as a vital enabler, the deeper and irreversible institutional transformation was driven by entrepreneurial political leadership, which altered state capacity through systemic policy reorganization.
While the case study method suffers from lack of generalizability, this paper has invoked a theoretical framework to analyse the generalizability of the framework.
The success of digitalization in India shows that any country with high transaction cost based institutions, may gain from digitalization.
Digital transformation is unconventional yet effective way to ensure social justice by reducing leakage of the welfare schemes and empowering marginalized people.
To the best of the authors’ knowledge, this is the first paper to demonstrate, through a case study of digital transformation, how entrepreneurial politics can facilitate the big push for a developing country. This paper is first to use the framework of institutional change and nature of political competition in a study related to digital transformation
