Can India Achieve Financial Inclusion within the Next Few Years?
Thursday, July 24, 2014
The new Government of India has made financial inclusion one of the corner stones in its modernization aspirations for the country. In his first budget speech earlier this month, Finance Minister Arun Jaitley set the target of a financial account for each woman and each man in every Indian household by August 2015. This ambitious target is a recognition of how important access to basic financial transaction services — and ultimately to better savings, credit and insurance options — are for full economic citizenship in a country where more than 80 percent of people live and work in the informal economy.
The Finance Minister also put his weight behind the recent financial sector reform design of the Reserve Bank of India (RBI). Connecting every Indian family with the formal financial system within a year is a steep aspiration. And while it might take it little longer, a recent visit to India convinced me that over the past few months, the pieces have come together for India to make huge progress.
Using the key levers the government has at its disposal in the context of supporting a sustained market development effort, here are the elements that promise a real breakthrough: