Achieving inclusive economic transformation and social impact in India necessitates sustained financing at scale over an extended period. This long-term investment is essential for driving systemic changes and generating positive outcomes across key sectors such as education, healthcare, infrastructure, and social welfare. By strategically and persistently channeling significant resources into these areas, we can address fundamental barriers to development and create an environment where economic growth is both inclusive and equitable. Such financing must focus not only on immediate needs but also on building the capacities and institutions that foster enduring progress, ultimately leading to meaningful and lasting improvements in human development.
The Indian government’s vision of "Viksit Bharat" (Developed India) serves as a strategic framework aimed at driving inclusive socio-economic development. This vision goes beyond mere aspiration, addressing the dual challenge of increasing per capita GDP while bridging the economic gap between different societal segments. Over the past decade, policies have aimed at narrowing this chasm and improving infrastructure to enhance the quality of life. However, significant challenges remain, particularly in creating livelihood opportunities for the 80 crore people in the productive age cohort and ensuring access to credit for these means. The demographic dividend could become a double-edged sword if not managed carefully, underscoring the need for a robust and inclusive financial services sector.
To truly support the Viksit Bharat vision, reimagining the formal financing sector is crucial. It is essential to make credit available for skilling, upskilling or even working capital for those seeking livelihood means, at smaller ticket sizes. Traditional financing institutions are not able to address these consumer segments due to biases in credit assessment and high distribution costs. Leveraging India’s extensive Digital Public Infrastructure (DPI) can ensure inclusive access to financial services, thereby aligning with the essence of Viksit Bharat. Advanced technologies like artificial intelligence and machine learning can transform credit assessment processes, enabling more accurate and inclusive evaluations by analysing alternative data sources such as transaction histories and social media activities.
There is immense potential at the bottom of the pyramid that can be harnessed if capital is made available. Financial institutions that cater to these segments with tailored credit products can generate significant returns. By providing access to appropriate financial instruments, individuals can be empowered to contribute meaningfully to the economy, driving both personal and national growth. Investors and financial institutions can tap into this vast, underserved market, fostering a more inclusive and prosperous economic landscape. However, challenges such as lack of formal documentation and irregular income streams in the informal sector require innovative solutions and tailored approaches to effectively serve these crucial yet underserved markets.
Developing innovative financial products tailored to different population segments is vital. Tools such as micro-loans, peer-to-peer lending platforms, and digital wallets can bridge the financial inclusion gap, empowering individuals and small businesses to invest in their futures and drive economic growth. Political mandates alone cannot address the financial needs of underserved segments effectively. Instead, regulatory frameworks must normalise and support how regulated financial entities manage anticipated risks associated with financing these perceived-risky consumer segments. Such frameworks should provide guidelines for handling potential losses while incentivising institutions to engage actively with these markets.
The vision of Viksit Bharat encompasses robust economic growth that benefits all. Infrastructure development, digital transformation, and industrial modernisation are setting the stage for a more dynamic and resilient economy. Initiatives like smart cities, expanded transportation networks, and enhanced rural connectivity are critical to bridging the urban-rural divide, creating jobs, and stimulating local economies. Sustainable development is also a cornerstone of this vision. Climate change poses another critical challenge. India must navigate its development path while mitigating the impacts of climate change, which threaten agriculture, water resources, and overall sustainability, consequently impacting lives and livelihood. Balancing economic growth with environmental stewardship through investments in renewable energy, sustainable agriculture, and green technologies will help mitigate climate change impacts and create new economic opportunities.
Currently, climate financing in India for both mitigation and adaptation remains weak. An integrated approach to climate financing across all financial regulatory systems needs to be driven at the Financial Stability and Development Council (FSDC) level as a priority item. This includes developing and implementing a formal, India-specific climate taxonomy to standardise and streamline investments in climate-related projects. Such an approach is essential to effectively address climate change impacts on agriculture, water resources, and overall sustainability, ensuring that India's development path is resilient and environmentally sustainable. Prioritising climate financing will enable India to balance robust economic growth with environmental stewardship, fostering a sustainable and inclusive future.
Financial inclusion is a cornerstone of Viksit Bharat. Ensuring that all citizens have access to financial services empowers individuals and communities, fostering a more inclusive economy. Initiatives like Pradhan Mantri Jan Dhan Yojana have made significant strides in bringing millions into the formal banking system. The resilience of India’s financial services sector is integral to realising the vision of Viksit Bharat. Strengthening regulatory frameworks with increased and tighter supervisory standards, promoting digital financial services, and enhancing financial inclusion will build a financial ecosystem that supports sustainable and inclusive socio-economic development.
These can ensure that Viksit Bharat is not just a vision but a lived reality for every Indian. Through strategic and persistent efforts, India can uplift one-sixth of humanity with progress and dignity for all, driving developmental politics over mere politicking and creating a prosperous future for all its citizens.
