Listening to the Customer is Key to Expanding Inclusion

August 2021


As the second wave of the pandemic died down in India, the economy began a patchy recovery – Markit  PMI for Manufacturing soared sharply in July into expansion zone, from the contraction seen in June, while the  PMI for Services continued to show contraction for the third consecutive month. The  GST collection moved back up above the Rs. one trillion marks, after the blip in June, while  e-way bill generation in July came in at 6.42 crore, the highest in four months. CMIE reported the  unemployment rate falling further in July from the peak in May. The  Nomura Business Resumption Index has shot up to 99.4, just a tad short of pre-pandemic levels.

The worst appears to be over, for now. The RBI retained its  9.5% growth estimate for this year, flagging downside risks from vulnerability to further waves of the pandemic, high global commodity prices, and financial market volatility.

With the pandemic, government welfare payouts increased significantly crossing Rs. 5.5 trillion last year. The Prime Minister launched a new digital payment solution -  the e-RUPI. This is slated to be a  digital voucher which can be redeemed at specified merchants, without a card, digital app, or internet banking access. While the current initiative is aimed at accessing healthcare at specific centers, the solution is expected to expand to other services over time.

Direct Benefit Transfers have a vital role in smoothening income and consumption flows for poor households and India stands out as a global leader in the systems set up for transparency and efficient delivery. However, in a country as vast as ours, glitches do persist and   V Anantha Nageswaran and Sumita Kale have listed some critical measures, including grievance redressal, that are needed to improve on the system’s efficacy. A  CGD and MicroSave policy paper looks at the implementation of the Pradhan Mantri Garib Kalyan Yojana during the lockdown last year and highlights the importance of beneficiary-centricity in the delivery.

Indians have increasingly turned to digital payments and transactions on the UPI platform crossed  3000 million in volume and Rs. 6 lakh crore in value in July 2021. With innovative fintech models, digital lending has also picked up and CGAP has  a note out reporting results from surveys in three countries including India last year. While we still await the recommendations from the RBI Working Group on Digital Lending, it is important to keep the spotlight on the urgent need for an effective consumer grievance redressal mechanism.

Some Other Highlights

•     In an interview at the BFSI Leadership Summit, Swati Chowdhary talks of the  gender gap in banking. .
•    Sunaina Kumar reviews the  experience of the National Rural Livelihoods Mission over its first ten years. Self Help Groups are now also being refocused as bank sakhis.
•    Snegdha Gupta and Misha Sharma have a paper out on  measuring financial inclusion through the demand side.
•    Fabrizio Valenti makes a  case for tax reforms needed to make business correspondents a viable proposition.
•    R S Sharma and Ashok Pal Singh write on the  potential transformation in government welfare payouts through the new e-RUPI.
•    In his  latest working paper on India’s financial sector, Ajay Chhibber examines the stresses in the system and makes an interesting and radical suggestion to shift all PMJDY accounts to the Indian Post Payments Bank.
•    V. Anantha Nageswaran and Deepti George give their views  on the RBI Consultative Document on microfinance regulation for India, including a call for an overarching set of principles to prevent mis-selling by retail lenders.

Editor: The Indicus Centre for Financial Inclusion was launched in 2011 to distil and disseminate information on accelerating the poor’s access to high-quality financial services. ©Indicus Centre for Financial Inclusion. All rights reserved. 4thJanuary 2019

Copyright © 2015 - All Rights Reserved