By Rameesh Kailasam & Munish Chawla
Leaders from G20 nations met in New Delhi early September as part of the G20 summit and pledged to promote an essential and fundamental need for humanity today: social and financial inclusion. The G20 declaration is a reminder that no one should be left behind in the pursuit of a more prosperous world and resonates with India’s philosophy of Antyodaya, or the upliftment of everyone, especially the poorest and marginalised.
The fourth G20 Global Partnership for Financial Inclusion (GPFI) meeting followed this in Mumbai a week later and member-nations agreed to work towards universal financial inclusion under the G20 Financial Inclusion Action Plan. The GPFI report prepared by the World Bank states that India’s digital public infrastructure and JAM (Jan Dhan, Aadhaar, and Mobile) trinity have contributed to a drastic increase in financial inclusion from 25% in 2008 to over 80% in the last six years.
Social inclusion refers to the process of enabling everyone to participate fully in the society, regardless of their background or circumstances. This includes having access to education, healthcare, employment, and other essential services. Financial inclusion refers to the ability of individuals and businesses to access and use financial services, such as bank accounts and credit and insurance. Promoting social and financial inclusion and better access to multiple forms of livelihood amongst this the poor, vulnerable, and marginalised can make a significant impact in uplifting millions and promote ease of living.
The recently held Global Fintech Fest ’23 highlighted the importance of inclusion, resilience, and sustainability in the fintech ecosystem, especially amongst vulnerable segments, and appreciated UPI’s role. The government’s partnerships with banks, fintech companies, payment providers, and users helped UPI to be a grand success and contributed to the cause of financial inclusion. digital public infrastructure (DPI) like Aadhaar, UPI, ONDC, and DigiLocker are tools for social and financial inclusion and steps in the right direction.
While there is consensus on the importance of social and financial inclusion, there still needs to be more clarity on what the big actionable items should be. To start with, livelihood is a fundamental component especially for the vulnerable segments. A paradigm shift is needed to look beyond jobs and include self-entrepreneurship as an important pathway to create more work opportunities. Prime minister Modi has rightfully said that once we make vulnerable segments aware of how to earn money, they will either learn themselves or seek help from the skilling ecosystem to skill, reskill, or upskill themselves.
The government has been supporting livelihoods through schemes like MNREGA and initiatives like National Career Services (NCS). There are abundant work opportunities for work seekers, the big challenge is to undertake match making to enable them have access to primary, secondary and tertiary trades to supplement their income. With innovation combining AI and voice technology, making NCS a digital public infrastructure similar to UPI can make this platform global.
Access to financial products like bank accounts, minimum health and life insurance cover, small contributions to Systematic Investment Plans, Daily Recurring Deposits, and so on are basic essential products that can gradually bring about financial inclusion for all. Besides technology as an enabler, these sections will also require these services to be delivered to them through banking correspondents or channels like post offices and self-help groups. While Jan Dhan accounts, Aayushmaan Bharat, and Pradhan Mantri Jeevan Jyoti Yojna have done their bit, it is important for banks, fintech, and emerging startups to consider this opportunity to engage with these vulnerable segments to enable financial literacy and inclusion.
The government has through DBT transferred over Rs 1.8 trillion to farmers’ accounts under the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme. Common Service Centers (CSCs) from the ministry of electronics and IT have also played a vital role in this area. However, being a country of scale, many beneficiaries still may not have access to digital documents or may not be able to use digital channels on their own. To address this challenge, there is a clear need to use a combination of old and new tech that combines voice, IVRS, AI, and assisted models to reach out to beneficiaries at their doorstep.
Digital and financial literacy and awareness building is a non-negotiable essential component for financial and social inclusion. The Digital and Financial Literacy Missions and Sebi doing its bit by making mutual funds reserve 0.02% of their assets under management (AUM) for investor education programmes are the right steps. Regulators like RBI and IRDA need to follow suit to increase awareness. Finance minister Nirmala Sitharaman, at GFF ’23, called upon the industry to develop innovative models to raise digital and financial awareness.
By working together, the government, startups, industry, and civil society can help ensure that everyone has the awareness and skills they need to earn and save and participate in the financial and digital ecosystem.
Rameesh Kailasam & Munish Chawla, respectively, CEO, indiatech.org and co-founder & Chief Happiness Officer, Jeevitam. Views are personal.