2015 Brookings Financial and Digital Inclusion Report: good news for India

The Brookings Institute released their 2015 report on financial and digital inclusion, which compares digital financial usage and access across 21 countries including India. Amongst other things, we certainly have cause to celebrate in India, for ranking number 1 in country commitment to both digital and financial inclusion. Also, India is the only country to have completed targets in key policy areas that were outlined as a part of the May 2015 ‘Maya Declaration on Financial Inclusion’.
The biggest contributor to this has been the new payment bank licenses and the fact that the new licensees include telecommunication operators, thereby bridging the gap between the Ministry of Telecommunications and the Department of Financial Services. The report also points out that women can benefit from greater access to mobile money and we may well see a reduction in the gender gap in financial access. Further, the usage of smart phones might result in a higher uptake than regular phones.
Both in terms of financial inclusion as well as increased digital usage, India is certainly on the cusp of exciting times. Given the intuitive nature of smart phones and their increasing importance in ensuring uptake of financial services, the next step for the government might well be to remove barriers to availability and affordability of smart phones. We would do well to refer to a 2011 study in Brazil which pointed out that a reduction of taxes by 1 bps led to a doubling of the subscriber base. We would do well to realise that the smartphone is possibly no longer a luxury but a necessity. In the meanwhile, we should uncork the bubbly for a job well done.

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