The Need for Financial Inclusion

Overcoming poverty is not a gesture of charity. It is an act of justice. It is the protection of a fundamental human right, the right to dignity and a decent life. While poverty persists, there is no true freedom.
                                                                                                                        -Nelson Mandela


A rather important concept, policymakers across the globe have grappled with the issue of reducing the scope of the informal sector since colonial times. To put things into perspective, an estimated 2 billion working-age adults have no access to formal banking services, which are regulated by financial institutions. The stark reality is that most of the working-age adults lack access to sustainable financial services, which excludes them from reaping the benefits of the economic growth of a country.

The process of economic growth, especially when it is on a high growth trajectory, must strive to ensure participation from all quarters of the society. Despite having higher economic growth than most developed countries in recent years, a vast majority of India’s population still remains unbanked. In order to achieve inclusive development and growth, financial inclusion is important as global trends have shown. In India, the term financial inclusion was first used in April 2005 in the Annual Policy Statement presented by the then Governor of Reserve Bank of India, Y. Venugopal Reddy.

Even though this new socio-economic concept, namely financial inclusion, has gained ground in India, we still lack on many fronts and haven’t been able to make the Indian economy a financial inclusive economy. Financial inclusion of the unbanked masses is a critical step that requires political will, bureaucratic support and dogged persuasion by the government and other financial institutions.

In simple words, financial inclusion can be thought of as the delivery of banking administrations at a reasonable cost to the immense segments of burdened and low-income population of a country. With a majority part of the population of the country, being bereft of any financial security, financial inclusion helps in encouraging savings and securing the future of the citizens of all sections. Unrestrained access to public goods and services is the sine qua non of an open and efficient society.

This rather-new concept, being introduced at the rural level as well as the financially backward pockets of cities, presents a win-win situation for everyone involved – the banks/NBFC’s intermediaries, and the left-out rural/urban population. Financial inclusion extends the resource base of the financial system by developing a culture of savings among a large segment of the rural population and plays its own role in the process of economic development. Furthermore, by bringing the left-out population within the vicinity of the financial sector, financial inclusion helps in the protection of wealth and other resources in exigent circumstances.

The perceived advantages of financial inclusion, both at the macro and the micro levels, can be listed as:

(1) Macro-level advantages

  1. Higher and better productivity.
  2. Faster growth in the economy.
  3. Increase in employment and income opportunities.
  4. Helpful in plugging the leakage through distribution channels.
  5. Possible reduction in poverty.

(2) Micro-level advantages

  1. Buffer against avoidable expenditure.
  2. Rational utilization of saving.
  3. Increase in risk-taking ability.
  4. Smoothing consumption.
  5. Safety of assets from major disruptions.

Even though it is a new social-economic concept on the Indian economic landscape, the gradual progress being made by the government is remarkable by every standard. The first step towards achieving comprehensive financial inclusion is to achieve credit inclusion for the disadvantaged and vulnerable sections of our society. This, coupled with tailored government policies and improvement of the market functioning mechanism, should encourage the financially excluded to enjoy the rewards of the economic growth of the country.

By- Rohitanshu Kar

War times

War. War is something that brings fear with its name alone. It is that symbol which tells us that soon peace will be gone, and families will be broken into such tiny pieces that can’t be glued back together, even if we tried our level best. War makes one realise that no rich is at a better position than the poor on the judgement day. If anything, people of the same sects come together to save themselves irrespective of their economic status. War times are as dark and scary as a stormy night, just that our wait for a bright, sunny day is really long.
It is really frightening to imagine how our lives could change within minutes, how our happiness could turn into despondence and whether it could be our final day yet. Wars show us the hard reality; that no one is selfless or kind enough to help you before they help themselves.
But as humans, we always hope for a better tomorrow. Our ancestors were right when they taught us to look for positivity when we are deep drowned in negativity. I know nothing can nullify the damage, both emotional and physical, caused by war but we shouldn’t forget that every night has a morning, and everything will change, eventually.
We all are so consumed in looking and examining the negative sides of war that we have forgotten to look at the better side of it. War, as I mentioned earlier, invokes the feeling of brotherhood in some who always fight for wealth and differentiate between rich and the poor.
War makes you a much stronger person than you thought you could ever be. It sure does leaves its scars on us but those scars are the ones that remind us that we have survived a tough time, a really tough one. It constantly tells us to never be dejected, as you have seen the worst and yet here you are, alive, if not living.
In the end, I would only ask you to look for a source of light amidst the never-ending darkness.