Digital transformation is reshaping how governments handle public finances, from tax systems to financial reporting. While developed nations have long used advanced technologies like AI and blockchain, SAARC countries are rapidly adopting these tools to modernize their economies.
This article examines the digital progress in SAARC nations, compares their strategies with those of developed economies, and provides actionable insights for future improvements.
Digital Transformation in SAARC Countries
Afghanistan
Afghanistan has taken steps toward digitizing payroll and revenue systems despite political and infrastructural challenges. Over 73% of civil servants now receive salaries digitally, and mobile money services are growing. However, internet access remains limited, financial literacy is low, and cybersecurity risks persist.
Key Initiatives
- e-Government Program – Digitized revenue collection and tax payments.
- Afghan Payment System – Aims to streamline financial transactions.
- AfghanX – Digital literacy initiative to improve workforce skills.
Challenges
- Weak digital infrastructure.
- Public distrust in digital systems.
| Progress Metrics | Status |
| Digital Salary Payments | 73% of civil servants (2024) |
| Mobile Money Adoption | Expanding under EMI regulations |
| Key Challenge | Low financial literacy |
Bangladesh
Bangladesh’s Digital Bangladesh Vision has significantly increased mobile money usage (56% in 2023) and improved tax efficiency. Biometric verification (Porichoy) and automation (a2i program) have reduced corruption and enhanced service delivery.
Key Initiatives
- Mobile Money (bKash, Nagad, Rocket) – Financial inclusion growth.
- Accounting Software (Tally ERP 9, QuickBooks) – Widely adopted by businesses.
- National Household Database – Streamlines tax and subsidy distribution.
Challenges
- Rural-urban digital divide.
- Low female participation in digital finance.
| Progress Metrics | Status |
| Mobile Money Accounts | 56% (2023) |
| Tax Leakage Reduction | Significant (exact data N/A) |
| Key Challenge | Cybersecurity threats |
Bhutan
Bhutan’s Digital Drukyd initiative prioritizes financial inclusion through mobile payments and QR codes. The government is working on a digital ID system to integrate with banking for better transparency.
Key Initiatives
- GIFT Platform – Digital government payments.
- E-commerce Expansion – Supports international card payments.
Challenges
- Limited broadband coverage.
- High costs of digital services.
| Progress Metrics | Status |
| Mobile Finance Adoption | Growing in rural areas |
| Digital ID Progress | Under development |
| Key Challenge | Internet affordability |
India
India is a regional leader in digital finance with Aadhaar, UPI, and GSTN. Aadhaar has saved $40 billion by eliminating fake subsidies, while UPI processed 241 billion transactions (as of June 2024).
Key Initiatives
- AI Credit Scoring – Expands credit access.
- GSTN – Centralized tax processing.
- TallyPrime – Used by 70% of SMEs.
Challenges
- Cybersecurity threats.
- Rural digital literacy gaps.
| Progress Metrics | Status |
| UPI Transactions (2024) | 241 billion |
| Fake Subsidies Eliminated | 90 million (via Aadhaar) |
| Key Challenge | Fraud prevention |
Nepal
Nepal is modernizing tax collection with blockchain pilots and Electronic Fiscal Devices (EFDs). Mobile wallets (eSewa, Khalti) are improving financial access.
Key Initiatives
- Integrated Tax System (ITS) – Simplifies compliance.
- Treasury Single Account (TSA) – Better fund management.
Challenges
- Slow SME adoption of digital tools.
- Internet reliability issues.
| Progress Metrics | Status |
| Mobile Wallet Users | Increasing yearly |
| Blockchain Pilots | In testing phase |
| Key Challenge | SME digitalization |
Pakistan
Pakistan’s Raast payment system and AI-powered IRIS for tax audits are transforming financial management. Easypaisa and JazzCash drive mobile money growth.
Key Initiatives
- Track & Trace System – Monitors taxable goods.
- Asaan Mobile Account (AMA) – Targets the unbanked.
Challenges
- High cash reliance.
- Regulatory gaps in FinTech.
| Progress Metrics | Status |
| Raast Transactions | Rapidly increasing |
| Tax Evasion Reduction | Moderate progress |
| Key Challenge | Cash dependency |
Sri Lanka
Sri Lanka is digitizing tax systems with LankaPay and SL-UDI (digital ID), but cash reliance slows adoption.
Key Initiatives
- IRIS – Risk-based tax audits.
- Cloud Accounting (QuickBooks, Xero) – Gaining traction.
Challenges
- Low internet penetration.
- Need for stronger cybersecurity laws.
| Progress Metrics | Status |
| Digital Tax Filings | Gradual increase |
| FinTech Innovation | Regulatory sandboxes in place |
| Key Challenge | Digital literacy |
Lessons from Developed Economies
Developed nations use AI, real-time payments, and data analytics to enhance tax compliance and reduce fraud. Below is a comparative analysis:
| Country | Key Innovation | Impact |
| Austria | AI tax audits | €185M additional revenue (2023) |
| Poland | AI for VAT fraud detection | VAT gap fell from €6.6B to €1.7B |
| Italy | VeRa algorithm (AI) | Prevented €6.8M fraud (2022) |
| UK | Faster Payments Service (FPS) | Real-time transactions since 2008 |
| Sweden | Swish mobile payments | Phishing countermeasures in place |
Comparative Recommendations for SAARC
| Country | Digital Strengths | Recommended Improvements |
| Afghanistan | Digital payroll systems | Expand internet infrastructure |
| Bangladesh | Mobile money growth | Strengthen cybersecurity |
| India | UPI, Aadhaar success | Integrate AI for fraud detection |
| Nepal | Blockchain experiments | Improve SME digital adoption |
| Pakistan | Raast payment system | Reduce cash dependency |
| Sri Lanka | Digital ID development | Enhance digital literacy programs |
Conclusion
SAARC nations are making notable progress in digital financial management, but challenges like cybersecurity, infrastructure gaps, and low digital literacy remain. By adopting AI-driven audits, real-time payments, and blockchain—as seen in developed economies—SAARC countries can reduce fraud, improve transparency, and foster inclusive growth. Regional collaboration and targeted SME policies will be essential for building resilient digital economies.
Final Thought:
The future of public financial management hinges on technology, transparency, and trust. SAARC nations have a unique opportunity to leapfrog outdated systems and create more efficient, fraud-resistant digital economies.