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State Resources Must Be Targeted To Those In Need: Jaitley At The Conclave For Financial Inclusion

True inclusion starts when poor can access not just micro finance but formal finance

At the Conclave for Financial Inclusion in New Delhi, India, the United Nations brought together leaders of the financial revolution, with senior-level stakeholders from the government, the banking sector, microfinance institutions, innovators, technology providers, CSOs, intergovernmental organizations, and the UN.

At the conclave, Yuri Afanasiev, United Nations Resident Coordinator in India, said in his opening remarks, “Three years ago, India made a commitment to expanding financial access to its poorest people through the Pradhan Mantri Jan Dhan Yojana (PMJDY), the world’s largest financial inclusion scheme. The PMJDY has been tremendously successful in reaching those who have lived on the fringes of the formal economy for decades.” He also added, “The number of such bank accounts in India has more than doubled, from just over 12 crore in January 2015 to 30 crore in August 2017.”

“Alongside India’s ambitious biometric unique identification system, Aadhar, and the deep penetration of mobile phones and networks, PMJDY or Jan Dhan represents a pioneering effort to transform service delivery. This JAM trinity (Jan Dhan, Aadhar and Mobile) has already allowed the government to directly transfer Rs 74,000 crore in benefits such as old age pensions and scholarships to the bank accounts of 35 crore recipients”, Afanasiev said, adding that “Leakage has reduced, and the Prime Minister’s Office estimated that in 2015-16, such direct benefit transfers saved the exchequer Rs 27,000 crore.”. He also added, “True inclusion starts when poor can access not just microfinance but formal finance. Around 92% of Indians have Aadhar cards and this is a remarkable achievement”.

Afanasiev also added, “The United Nations recognizes that financial inclusion is an enabler for seven of the 17 Sustainable Development Goals, and India has taken the lead in harnessing technology to solve persistent development challenges. The spirit of innovation will drive future attempts at building low-cost and robust financial products that serve citizen needs”. He continued by adding, “For India to herald an age of innovation that truly serves the millions who have been left behind, it must contend with issues of transactional piracy, while allowing for auditory and regulatory access”.

In his keynote address, Mr Arun Jaitley, the Finance Minister of India said, “Aadhar has been an important leap forward for India. Now we are beginning to understand its potential”. He also added, “The 77% zero balance accounts have come down to 20% in the last 3 years”. “How do you incentivise people to not just open accounts, but also use them? This needed a holistic 360-degree view”, said Jaitley.

Jaitley also added, “State resources must be targeted to those most in need” and that “Resource of a state as a subsidy must reach those segments of the population for whom it is specifically targeted”. He also went on to say, “We have strong schemes at the Central and State level ensuring money goes directly into the bank account”. Speaking on the success of demonetization, Jaitley said, “Results of demonetization have been- the volume of cash has reduced, the tax base has seen an increase and there has been more formalization of the economy”.

“For banks to be operational – we have launched insurance and pension schemes incentivising bank accounts”, said Jaitley, adding that “In the last 3 years, India has succeeded in bringing financial inclusion which never previously had economic political imperative to focus”.

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