FEATURE
INCLUSIVE GROWTH IN INDIA: WHY STILL A MIRAGE?
INTRODUCTION
India as on date saves and invests over 35 percent of its GDP. Though this rate helped the growth process keep humming, the naked truth is that the net – poverty, malnutrition, hunger, lack of healthcare and education continues to afflict 70 percent of the population, mocking at the socialist – cum – welfarist philosophy oriented policies of various governments since 1947. This is inspite of the fact that since the dawn of the 21st century, India aspires to become a great power at par with China? India sent even a mission to moon; accomplished an improved but still below global – standard infrastructure; braved the global recession and even has achieved a respectable GDP growth rate of 7.5 to 8.5; there are more than 500m cellular phones; is among the top 10 automobile markets in the world; being the champion of IT and Outsourcing business globally. Yet, India which is rich otherwise continues to be poor with 40 percent of its populace still living below poverty lines. This is attributed due to lopsided distribution pattern of national resources and productive activities. Though poverty reduction has taken place since 1991 it has not yet reached wider spectrum of our 1.3 billion population.
During the last few years, from the corridors of those who mattered in India’s growth process a new slogan has been coined viz ‘financial inclusion’ on the same pattern as of ‘Garibi Hatao’, ‘Kapda, roti and makan’, Aaam admi" etc. raised by the leaders of all hues since independence. Yet, the fate of this new slogan "phobia" too is also likely to fade away in the realm of passing time.
FINANCIAL INCLUSION
Infact, during the last six decades, none of the optimistic aspirations of the poor which were supposed to have turned out to improve their standard of living have become true. Prime Minister as late as on June 21, 2010 had even constituted a committee on financial inclusion which is supposed to recommend measures to inter – connect all individuals including from remote rural and tribal areas through an efficient and effective financial system so as to enable them to inculcate habit of saving, provision of cheap, adequate and timely credit, insurance products to the needy household sectors and to promote small time entrepreneur. These measures were found imperative because six decades of planned process failed to secure inclusive growth of all sections of Indian Society, without any real financial benefits. Therefore, there is the need for increased scope for easy access to financial institutions like Banks, Mutual Funds and services.
It is obvious that India has miserably failed in securing financial inclusion because even after four decades of nationalization of banks almost 70 percent of the population is still deprived of banking facilities. Marginal farmers, landless labourers, migrants, urban slum dwellers, self – employed, unorganized industrial sector, women and old people are still excluded from the purview of financial inclusion process is a blot on India’s economic history which aims to emerge as a global power in the near future. Nearly 70 percent of the physically challenged in India live in rural India and literacy rate among them is hardly 38 percent.
At the same time, financial inclusion is the key to the sustained overall growth process in India. It is a sad reality that India still has 400m people who live on less than Rs.30 per day and have no access to institutional financial services. They become victims of borrowings at a high rate of interest even at a time when India boasts of reforms, liberalization and globalization of banks and financial sectors.
Regretfully, Indian policy makers have no access to even the basic datas on financial institutions on the issues related to inclusion. In reality, it would have served as an elixir for export growth from the agricultural sector, which in turn would have accelerated the process of employment, better standard of living with improved educational opportunities, health care, housing etc. in rural areas.
Financial inclusion, when implemented with a serious concern, approach, policy formulations and implementation shall create a pool of opportunities for socio – economic revolution. Therefore, both the government and corporate sectors must realize that financial inclusion is not a charity but a serious business process for improved growth. Accordingly, women who constitute a major segment of micro – borrow
must be empowered to procure adequate credit on soft terms as a development objective.
Montek Singh Ahluwalia, Dy. Chairman, Planning Commission, rightly observed in Jan 2010 that "financial inclusion is a very important part of whole strategy for the inclusive growth and also for the whole strategy of financial development." In this context, in India much of the progress on financial inclusion must come forth as a result of policies. Banking and other financial institutions must, however, ensure that even while treating financial as inclusion as part of overall business, must imbibe strategies through multiple channels and on different directions. Micro – finance both in South and Eastern India, which is spreading very fast must be adopted in the rest of the country.
- Continued in next issue
WHAT AILS INCLUSIVE PROCESS? - (read our Dec. issue)
Author is Former General Manager of Vijaya Bank
INTRODUCTION
India as on date saves and invests over 35 percent of its GDP. Though this rate helped the growth process keep humming, the naked truth is that the net – poverty, malnutrition, hunger, lack of healthcare and education continues to afflict 70 percent of the population, mocking at the socialist – cum – welfarist philosophy oriented policies of various governments since 1947. This is inspite of the fact that since the dawn of the 21st century, India aspires to become a great power at par with China? India sent even a mission to moon; accomplished an improved but still below global – standard infrastructure; braved the global recession and even has achieved a respectable GDP growth rate of 7.5 to 8.5; there are more than 500m cellular phones; is among the top 10 automobile markets in the world; being the champion of IT and Outsourcing business globally. Yet, India which is rich otherwise continues to be poor with 40 percent of its populace still living below poverty lines. This is attributed due to lopsided distribution pattern of national resources and productive activities. Though poverty reduction has taken place since 1991 it has not yet reached wider spectrum of our 1.3 billion population.
During the last few years, from the corridors of those who mattered in India’s growth process a new slogan has been coined viz ‘financial inclusion’ on the same pattern as of ‘Garibi Hatao’, ‘Kapda, roti and makan’, Aaam admi" etc. raised by the leaders of all hues since independence. Yet, the fate of this new slogan "phobia" too is also likely to fade away in the realm of passing time.
FINANCIAL INCLUSION
Infact, during the last six decades, none of the optimistic aspirations of the poor which were supposed to have turned out to improve their standard of living have become true. Prime Minister as late as on June 21, 2010 had even constituted a committee on financial inclusion which is supposed to recommend measures to inter – connect all individuals including from remote rural and tribal areas through an efficient and effective financial system so as to enable them to inculcate habit of saving, provision of cheap, adequate and timely credit, insurance products to the needy household sectors and to promote small time entrepreneur. These measures were found imperative because six decades of planned process failed to secure inclusive growth of all sections of Indian Society, without any real financial benefits. Therefore, there is the need for increased scope for easy access to financial institutions like Banks, Mutual Funds and services.
It is obvious that India has miserably failed in securing financial inclusion because even after four decades of nationalization of banks almost 70 percent of the population is still deprived of banking facilities. Marginal farmers, landless labourers, migrants, urban slum dwellers, self – employed, unorganized industrial sector, women and old people are still excluded from the purview of financial inclusion process is a blot on India’s economic history which aims to emerge as a global power in the near future. Nearly 70 percent of the physically challenged in India live in rural India and literacy rate among them is hardly 38 percent.
At the same time, financial inclusion is the key to the sustained overall growth process in India. It is a sad reality that India still has 400m people who live on less than Rs.30 per day and have no access to institutional financial services. They become victims of borrowings at a high rate of interest even at a time when India boasts of reforms, liberalization and globalization of banks and financial sectors.
Regretfully, Indian policy makers have no access to even the basic datas on financial institutions on the issues related to inclusion. In reality, it would have served as an elixir for export growth from the agricultural sector, which in turn would have accelerated the process of employment, better standard of living with improved educational opportunities, health care, housing etc. in rural areas.
Financial inclusion, when implemented with a serious concern, approach, policy formulations and implementation shall create a pool of opportunities for socio – economic revolution. Therefore, both the government and corporate sectors must realize that financial inclusion is not a charity but a serious business process for improved growth. Accordingly, women who constitute a major segment of micro – borrow
must be empowered to procure adequate credit on soft terms as a development objective.
Montek Singh Ahluwalia, Dy. Chairman, Planning Commission, rightly observed in Jan 2010 that "financial inclusion is a very important part of whole strategy for the inclusive growth and also for the whole strategy of financial development." In this context, in India much of the progress on financial inclusion must come forth as a result of policies. Banking and other financial institutions must, however, ensure that even while treating financial as inclusion as part of overall business, must imbibe strategies through multiple channels and on different directions. Micro – finance both in South and Eastern India, which is spreading very fast must be adopted in the rest of the country.
- Continued in next issue
WHAT AILS INCLUSIVE PROCESS? - (read our Dec. issue)
Author is Former General Manager of Vijaya Bank
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